The Macro and Competitive Environments: Burberry - Book Report/Review Example

 The Macro and Competitive Environments: Burberry Burberry, the long-standing fashion retailer in the UK with a rich history of traditional styles, currently operates in a highly competitive business environment. Burberry is well-known for its somewhat old-fashioned plaids and dark colours, which had given the business a very strong brand for its previous dedication to this aspect of holding onto tradition in the retail shopping experience. However, with the growth of high volume competition in the retail fashion marketplace, Burberry is losing some of its market share to customers with a stronger brand or the incentives necessary to draw in a higher consumer audience. However, this strong brand reputation has certain products of the business being asked for in advance by consumers, creating a waiting list for new styles and fashion accessories (Burgess and Felsted, 2009). According to a marketing expert, at Burberry customers are “willing to spend where they feel that what they are buying is an investment piece…Burberry is positioned well in that environment” (Burgess and Felsted, 2009, p.22). This shows that many consumers in their rather mass market environment still have positive feelings about Burberry and its clothing brand and see it as a piece of fashion which will have lasting value. The consumer environment, at least for the market which values the brand tradition of Burberry, is favourable for competitive success. However, due to lost market share, Burberry is having to change their marketing focus to draw in a new consumer audience: The younger generation. Burberry is consistently given negative publicity by the media for its failure to adopt a new business model which caters to the youth consumer. This perceived failure seems to have given Burberry less competitive edge in the face of competing retailers with a more contemporary marketing team with a youth focus. For example, one fashion designer was cited describing the new designer fashions for the season and described clothing such as “skin-exposing vests” and a “blouse slipped off the shoulder” (Copping and Friedman, 2009, p.9). These fashion styles seem to be selling in larger volumes at competing retailers, however items such as these are not commonplace on the retail shelves at Burberry, giving them less marketing presence with the youth market. To the business’ advantage, the overall value of the company is £2 billion (Edgar, 2009). This shows high cash availability to devote to different marketing projects which can be designed to outperform competition. The business has been operating for decades, therefore the business has a well-established infrastructure for distribution and for staffing at the organisational level. This experience has given Burberry the ability to respond in a dynamic retail environment which can only be accomplished by its history of operations. This is a high competitive edge and Burberry looks for opportunities to exploit areas of human capital development and supply chain. There is also a great deal of competition, as Burberry pursues new methods of trying to reach the youthful consumer, and these businesses continue to look for new marketing mediums to reach these youth audiences. Currently, Burberry is considering reaching their target market through advertising on Facebook and other social networks (Edgar, 2009). The marketing team at Burberry believes that online advertising in the social environment will bring extended value in a way that is powerful to the brand’s image. The availability of this new marketing medium, the social network, has competition developing similar online advertising models in the hopes of outperforming competition. However, it does show the tit for tat type of competitive marketing which occurs in the retail environment in relation to fashion marketing, making these businesses have to adjust their tactics and choice of medium to advertise their brands. One critic of Burberry offers: “After the damage done to the Burberry brand by the nation’s chavs, surely it would willingly part with a few million to deck out the Queen Vic in a nice Liberty print” (Shrimsley, 2009, p.14). The chavs which are being referred to represent society’s view of individuals with a reputation for heavy drinking, hooligan behaviours, and lower-class lifestyles. Apparently, this group found favour with the Burberry brand and were being labelled as connected to the Burberry brand. This chav scenario seems to have created conflicting brand reputation in different mass market groups and as a result the company has had to work extra hard to undo this damage caused by being associated with what is essentially an undesired market group. The commentary about Queen Vic was an attempt to illustrate that there is a form of social mockery occurring about the Burberry brand and its chav association. At the social level, such commentaries can cause brand problems with word-of-mouth advertising, therefore there is a strong need to reposition this brand in order to give it a new image. If consumers consider the brand to be unimportant or the product of social amusement, it is likely that there are going to be considerable sales declines and less consumer interest. Though these types of social fads usually come and go, the lingering effects of Burberry reputation could cause potential competitive problems at the macro level. There is evidence, also, that Burberry is beginning to be more focused on corporate social responsibility as a means to generate positive publicity and also to give the brand a competitive edge. The clothing brand hopes their move to social networking will “deepen its relationship with customers and attract new devotees” (Edgar, 2009, p.1). Burberry recognises that it operates in a social environment where consumers believe a business should be responsible to the community as well as the environment. Burberry is attempting to gain not only renewed consumer interest in the brand, but is also attempting to build loyalty at the same time, something the brand did not have to consider in previous operating decades. This is largely due to the negative publicity recently received by Burberry and also due to competitors in the fashion marketplace being able to create innovative promotion which is meaningful and relevant to the consumers the business is attempting to reach. The macro environment is also providing Burberry with renewed opportunities to compete with retailers who are affected by the global economic downturn occurring in many industries today. Major name competitors such as Ralph Lauren and Donna Karan are being forced to mark down their product brands in order to ensure customers sales and avoid the holding costs of excess inventory at year’s end (Pearson, 2009). Whistles, another large competitor, is also offering price reductions simply to entice consumers to buy their brands (Pearson). Burberry can offer similar discounts to compete, however this market environment and their strong cash position give Burberry a unique edge in that they look to be more favourable to make it through a difficult economic period. Burberry’s reputation as being a quality garment purchased as an investment piece is something other fast fashion retailers cannot necessarily offer and consumers will likely be willing to make larger priced purchases so long as they know the branded garments will last through an elongated recession. The macro environment, at the competitive pricing level, also looks favourable for Burberry in a variety of ways. With competition consistently changing their marketing principles and strategies to reach multiple demographics, as this is largely a mass market audience for Burberry, there is a push for the use of celebrities as a competitive advertising strategy. Recognisable and familiar celebrities with a lifestyle appeal are appearing in a great deal of print and television advertising by this competitive base, causing Burberry to take similar action. The business uses celebrity endorsement and lifestyle connection in this manner to reach specific niche audiences or their general mass market groups. However, this is a costly marketing activity which can erode from Burberry’s effectiveness in other marketing areas by limiting budget in certain parts of the whole integrated marketing communications strategy. In many ways, the high costs necessary to support a cyclical marketing programme with promotion and concentrated advertising is what categorises the competitive environment for Burberry. However, despite any drawbacks in the macro environment, Burberry has a well-developed logistics infrastructure and seems to understand how to analyse and assess the activities of their competing retail organisations. The company undertakes environmental initiatives, such as creating better waste disposal in the company, as part of their competitive focus on publicising their efforts toward positive corporate social responsibility. However, many of these activities are pressured by consumer demands and the overall business environment, therefore the macro environment drives more positive changes at Burberry, making them competitive and sustainable even in difficult economic periods. Marketing in this macro environment is only made more difficult when consumer incomes are declining or they are restricting their retail spending due to lack of confidence in their economic portfolios. 2. Marketing currently employed at Burberry Burberry currently uses an entire IMC programme, or integrated marketing communications strategy. This strategy consists of different elements which each contribute to the brand reputation they are trying to create, one that is blended with traditionalism and modernism to appeal to the mass market consumer and also the youth group buyers. 2.1 Product placement Burberry uses product placement in television advertising as a means to reach their desired target segments. This is being explored only recently due to regulatory restrictions which are slotted to be lifted on product placement in certain programming (Shrimsley, 2009). This gives Burberry more brand exposure and can lead to their competitive edge if they select the writing programming or content for their desired target markets. 2.2 Catalogue advertising Burberry uses catalogues which depict more youthful consumers as a means of promoting the brand to this market segment. These catalogues have pictures of younger buyers in sophisticated, yet modern scenarios and offer quite an extensive variety of branded product options. However, this is not necessarily the image which Burberry wishes to achieve since they are looking to target a more trend-focused consumer group. 2.3 Word-of-mouth and in-store selling Burberry still relies on its previous reputation for traditionalism and quality to bring in their desired mass market groups as part of word-of-mouth. The business also relies on the training and development of in-store staff to make shopping more of an experience, therefore providing promotion through human capital management. In-store promotions are utilised such as celebrities and catalogue models which illustrate the brand’s diverse selections and their fabric quality. 2.4 The digital marketing focus Burberry is devoting a considerable amount of time into developing a solid online presence, which is obvious by reviewing the business’ social networking devotion and the research being conducted about the online marketplace and consumer attitudes. Burberry has “an acute understanding of the power of heightening its brand experience via digital, mobile and social community platforms” (Bussey, 2009, p.1). The online environment, though competitive, can be developed in such a way that relates to consumer lifestyles. For example, if the trend-focused consumer with a taste for exchanging fashions rapidly were interested in the content on Burberry promotional websites, they would likely be more willing to explore the company’s online offerings in the future. Having an understanding of what drives consumers to return to online shopping and browsing and also giving them options in terms of diverse brand offerings is something which is part of Burberry’s new marketing focus for promotion. Burberry also recognises that growth in the international use of mobile technologies is continued to grow in the next decade, therefore they are using new promotional tools to reach their consumer directly. Unlike direct mailing which requires costs of printing and distribution, the mobile device can sustain promotional mailings from Burberry which offer discounts, sales promotion information, or perhaps even the latest fashion spotlight which fits their consumer profile. Burberry is currently developing a very effective online marketing presence. 2.5 Discussion of IMC This integrated marketing focus is necessary in the dynamic and highly competitive retail marketplace in which Burberry must operate. Changing social beliefs can seriously impact the sales potential of retail brands and Burberry must understand which groups are most interested in the fashions and try to appeal to these groups. Failure to connect with their desired target audience can bring unexpected consequences, such as their perceived affiliation with the undesirable chavs in the social environment. This is likely one reason why Burberry continues to rely on an integrated package of marketing to avoid being labelled as only catering to one specific group, therefore impacting perceptions of brand diversity and brand relevance. The goal at Burberry is to create promotional materials which best fit the current values of their desired customers. Burberry seems to understand which customers are most likely to be attracted to the Burberry brand and have developed new marketing innovations which are designed to give a modern feel to the brand. However, reliance on word-of-mouth traditionalism is not providing Burberry with the sales volumes expected by senior leadership, therefore opening the floor for potential recommendations for improving Burberry’s competitive marketing position, especially in terms of promotion. Currently, Burberry is positioned as a brand which is between lifestyle, such as Ralph Lauren, and higher fashion luxury retailers such as Gucci (Burberry, 2009). Burberry relies on its reputation for quality and its traditional reliability as a fashion brand to exercise a moderate pricing schedule which is both competitive and also emphasises the brand’s general positive reputation on the consumer market. This positioning strategy makes it a competitor of both higher priced retailers and lower-cost fashion companies, again giving the business a much higher volume of competition which it must work to outperform in all areas of promotion. The company’s marketing mix takes into consideration the promotion of its products, spotlighting their quality and the benefits of buying Burberry brands. Product is a key selling tactic for the company and must therefore ensure it is part of the integrated marketing campaign. Place is not a significant factor as the business has developed its distribution infrastructure over years of operations and has secured quality relationships with many suppliers across the entire supply and value chains. The retail environment and the online sales environment are both logical marketing channels for the sale of Burberry branded products and are in use to ensure higher sales volumes for Burberry. Price, as previously mentioned, is competitive yet built in comparison to the brand’s long-standing reputation with various mass market groups. This is a competitive tool when businesses are marking down their merchandise and Burberry can temporarily change the scope of marketing to reflect quality over price. This ability to adopt a high price model and then justify its quality when other retailers are unable to make sales expectations reflects a strong competitive strength in marketing for Burberry which should be acknowledged. This aspect of the marketing mix seems well-handled by its marketing leadership and customers are not turned away by the moderately-higher price tags associated with the Burberry brand. In fact, the existence of waiting lists for Burberry products indicates that there are markets who still have very favourable views of this brand and will continue to remain loyal fans of its fashion merchandise offerings. Promotion is clearly the largest success factor for Burberry as the business relies on having differentiation tools available when competitors are able to build higher market share either through advertising or by changing their internal best practices to be more valuable overall in all aspects of marketing. The ability to use television, print and online mediums (as well as the emerging mobile marketplace) gives Burberry diverse mediums to present its brand and fashion offerings and also build some form of connection with its desired markets. These markets are the mass market groups of consumers, generally between 16 and 40, who appreciate high quality merchandise with a flair for being conservative. Using specialised niche marketing tools, the business has the internal flexibility and know-how to appeal to different market groups when sales demands require it or when the business wishes to reposition itself amid changing competitor tactics. Promotion is the only real source of differentiation which Burberry has at its disposal in such a changing and dynamic retail sales environment where competition is always changing their brand focus and brand strategies to meet consumer demands. Burberry’s marketing principles and the cycle of promotion through IMC give the brand considerable value over competition. Their largest weakness seems to be in identifying with consumer markets, which is a very important consideration for Burberry as it makes up the entire foundation of their marketing strategy. Undesirable market groups have found favour with Burberry clothing because of its style and fabric aesthetics, therefore Burberry maintains opportunities in a variety of ways to change their business model and improve their product offerings to make them relevant to consumer groups who can shed a favourable light on Burberry’s brand. This is accomplished by devoting considerable resources to promotion and always giving the business a fresh appeal without sacrificing the tradition the business was built upon. Failure to adjust promotion and modernise, it seems, in this retail marketplace saturated with fashion competitors, could spell lost market share quickly and erode brand importance as consumers defect to more flexible and contemporary clothing retailers. 3. Recommendations for marketing Burberry has considerable brand reputation damage which it must undo or make correct in order to build a more positive image within the social community. Burberry is often criticised in widely-read publications for failing to meet investor expectations for reaching new audiences and boosting sales and also regarding their association with social undesirables. This has tarnished the traditional and conservative image which Burberry has relied upon for decades, making it necessary to readjust their existing promotional programme to include a different focus. The first step is to utilise the press release as a new marketing focus which is something that is under-considered and under-developed at Burberry. The company does receive positive investor-oriented releases about overall business health at the profit level, which does inspire higher investor interest. However, the company does not seem to have an active press release strategy which unveils important business information related to lifestyle, the consumer, or other elements of the in-store environment at a time when crucial, negative commentaries have been released. For example, the chav scenario has created a very difficult social change in how the brand is received and assessed by multiple mass market groups of different demographics. The long-standing view of Burberry as being quality and tradition focused is even noticeable in popular culture readings in which just mentioned a character sporting “a Burberry mac” conjures up images of traditional plaid and dark coloured fabrics (Kolb, 2004). This new association with a group of social misfits tends to give more of a Frankenstein-style appeal to the clothing and can likely lead to diminished brand loyalty and likelihood to defect to competing brands. Therefore, when the business is unfairly represented to the consumer audience through media information which suggests that Burberry clothing is unfashionable or unrealistic for consumer values, the company can retaliate with its own dedicated press release function to combat brand reputation damage at the internal level. Spotlighting improvements in clothing diversity or showing sales numbers for the 18-25 year old consumer segment can illustrate that the business is attempting to change its model and is willing to be flexible in a saturated consumer marketplace. This recommended new marketing function seems almost crucial to Burberry success as it can undo misunderstandings or misrepresentations by social commentators who seem poised to create problems with Burberry’s brand image. A further recommendation is for the business to save the costs of product placement which has been considered by Burberry. The Burberry clothing brand does have a legitimate reputation for quality and durability in certain market groups and it is also linked with certain trend-conscious youth groups. Product placement is generally a marketing function which is considered when the brand is just being launched or its sales have fallen so dramatically that it must revitalise the brand with consumer markets. Burberry products in product placement require complicated negotiations and strategic alliances to be developed in order to accomplish it in a way that is meaningful to the desired consumer segments and also depicts the brand in a relevant lifestyle situation. Product placement costs do not seem to be justified since, at nearly every social level, people are familiar with the Burberry brand and know of its overall reputation on the market even though there has been some negative social buzz about the brand. It is recommended to abandon future product placement efforts and save these marketing costs for more rapid adjustment of print and incentives promotions in the event that competition is observed making positive gains with new marketing strategies. Having a contingency print advertisement, which can shift from value-focus to quality-focus or back to consumer-focus, can be a competitive marketing strategy to outperform competitor actions at the promotional level. Also as part of promotion, Burberry should begin highlighting a specific fashion variety which will be the focus of weekly sales promotions. For example, ordering, in advance, a bulk quantity of high-demand winter coats on a volume discount from vendors in the supply chain can be reduced at an advertised special pricing of 70 percent off the retail suggested price. This single sale, at a massive reduction, would be the incentive to get customers to rush the store in order to make sure they get their hands on this new promotional deal. A weekly special price fashion item can be an ongoing promotional tool to expand the integrated marketing communications programme and also rebuild consumer interest in those who might have lost touch with Burberry due to new value-focused concerns and economic worries. The importance of this new weekly sales promotion is that other merchandise does not have to be discounted tremendously and can sustain its normal, everyday pricing. Strategic in-store display and coordination of certain fashion accessories, as part of in-store promotions, can build higher sales in accessory pieces for the browsing consumer or those who have been lured into Burberry for the weekly promotional specials. This single-item merchandise reduction would not impact profitability by any measurable level and can be offset by rising volume sales in other fashion merchandise within the store. This is a traditional marketing focus combined with a sense of value for the worried consumer marketplace. Word-of-mouth was identified as being powerful and important in establishing a new brand image which is flexible and relevant to the modern lifestyle in the social networking environment. Many competitors have product-related websites which give detailed product summaries, the company’s history, and other news releases about company performance. However, no competitors have interactive functions on their online promotional websites, which is a competitive opportunity for Burberry. Fashion-conscious consumers are not only concerned with the style and texture of fabrics, but also how these fashions will be relevant to their unique personal values and psychological needs. At the foundational level of marketing, these are important consumer concepts and fashion is very image-focused and these must be taken into consideration by any retail fashion company. It is recommended that Burberry explore creating more interactive features on their company website, or associated promotional websites under development, to give customers more incentive to remain on the website longer. A virtual dressing room is part of this recommendation and could provide customers opportunities to download their own faces, which can be digitally superimposed on virtual models, which spotlight how certain Burberry brands would look on differently-proportioned consumers. Consumers seem to value interactivity, which is evident in the rise of social networking which occurs often in real-time discussion, therefore such sites could build a positive word-of-mouth and generate more online sales in the process. The costs of developing these interactive online features could be supported with the movement of funds devoted to product placement and put into higher online development funds and support labour. If the interactive content is ingenious and innovative and makes consumers build new respect and interest for Burberry, it is worth the investment and should be developed quickly. Also as part of this online recommendation is for Burberry to consider test marketing more contemporary clothing styles by expanding its supply chain to include more modern fashions which are not congruent to the traditional darks and plaids. For example, offering accessory products, such as a pink blouse with a dark Burberry suit could give an image of more expression and creativity in the product lines, inviting more youth consumers to explore the new offerings. If this different merchandise styles, with unique shoulder and neck cuts and fabrics, can be marketed with the traditional clothing it can be test marketed in different in-store environments to measure consumer reaction and sales interest. If this test market philosophy returns higher interest, long-term purchasing agreements for unique textiles and fashions can be developed to improve diversity of product line. This would not erode the Burberry brand and its traditionalism, but only enhance that a client can have the best of both worlds when buying Burberry fashion products. The final recommendation for Burberry is to consider the impact of its logo on consumer behaviour patterns. Many highly recognised fashion labels fail to create instant identification with their logos, Burberry is one which does not make this connection successfully. With the company now launching a stronger presence on multiple online websites and trying to reach the digital consumer at the international level, it is important that the business make a positive impression with the customer within just seconds before they click off the online content in favour of something more rememberable. Burberry’s logo is traditional and does not spark a renewed brand image or increased creativity as part of redeveloping how the company is positioned between major competitors. It is recommended that Burberry redevelop its logo in a way that is meaningful to consumer lifestyles, such as adding an element of silver or other metallic illustrations, combining modernism with traditionalism in a way that shows progression and a company well-suited for the lifestyle of the 21st Century. This logo can be promoted using press releases and other public relations mediums to get consumers interested in the new Burberry and their different styles which cater to new market values. In both print advertising and the online environment, a rememberable logo is going to capture attention and work to undo some of the reputational damage caused by recent social scenarios. References: Burberry. 2009. Burberry’s need to create a line that is responsive to trend changes and release them on collection-by-collection basis. Viewed 2 Nov 2009 at http://www.slideshare.net/cristencapron/Burberry-985810 Burgess, K. and Felsted, A. 2009. Snoods help Burberry to bolster sales. 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