Essential Marketing - Essay Example

?Essential Marketing Table of Contents Overview 3 2.Identify and explain the environmental factors affecting the marketing of Burberry 3 2.0.Micro Environmental Factors 3 2.1.Macro Environmental Factors 4 3.Explain the criteria and the different segmentation methods which can be used by Burberry 5 4.Using segmentation targeting and positioning principles how and why have Burberry changed their segmentation strategy over time? 6 5.Discuss and explain the rationale of the marketing mix variables used by Burberry 8 5.0.Product 8 5.1.Price 10 5.2.Place 10 5.3.Promotion 11 5.4.Process 11 5.5.Physical Evidence 11 5.6.People 12 6.Discuss and explain the rationale of Burberry’s use of digital marketing tools. What are the advantages and disadvantages of this approach? 12 References 15 Bibliography 17 1. Overview Burberry was established in the year 1856 by Thomas Burberry who is the regarded as the inventor of the gabardine raincoat. This particular product ultimately became one of the signature products for the organisation. The chief visions of the organisation are to attain significant competitive position over the competitors along with increasing the market share considerably (Burberry, n.d.). In the paper, the different business environmental factors, market segmentation methods and the various applications of marketing mix features will be discussed. Various aspects that include the execution of effective digital marketing tools along with its various benefits and disadvantages will also be depicted in the discussion. 2. Identify and explain the environmental factors affecting the marketing of Burberry 2.0. Micro Environmental Factors Burberry is recognised to be a luxury brand which is dedicated towards producing and marketing ready-to-wear garments as well as accessories. The company generally operates in the higher end market sector and targets the higher income group of people. The company, being a luxury brand had been noticed to be widely accepted amid the higher income group of people including the celebrities. Burberry creates products for men, women and children. Based on these aspects it can be stated that being an international brand, Burberry can be significantly affected by various environmental factors such as competition level, economic aspects and social trends (Gillespie & Et. Al., 2010). For instance, the chief competitors of Burberry in the luxury market are LVMH, Gucci and others. Hence, it can be affirmed that the brand faces a significant amount of competition from other luxury brands which can be thus recognised as a major environmental factor that affects the marketing strategies of Burberry. In order to outrun these luxury brands, Burberry has been identified to often attempt to introduce an increased number of collections annually which generally ranges between two to eight annual collections. It is worth mentioning that the company also faces a steep competition in the segment of luxury accessories. In the accessory segment the major competitors of the brand are Chanel and Louis Vuitton. Thus, it can be stated that competition is apparently one of the significant environmental factors that significantly affect the marketing prospects of Burberry. 2.1. Macro Environmental Factors Another significant factor affecting the marketing strategies of Burberry was the economic downturn that took place during the period of 2009. It was found by certain researches that in places like Spain and Japan, Burberry was perceived to be a premium brand rather than a luxury brand. These facts compelled the brand to implement certain cost reduction programmes during the economic downturn in order to attract the customers of the weaker markets such as Spain. The recessional stress acted as a major factor that affected the marketing strategy of Burberry and resulted in restructuring at several places. The economic downturn also compelled the company to include discount strategies in its marketing policies during December 2008. Several other government interventions such as licensing policies also affected the marketing strategies of Burberry to a great extent (SlideShare Inc, 2012). Therefore, economic factors, social trends and legal barriers can also be regarded to have a significant impact over the market competencies of the company. 3. Explain the criteria and the different segmentation methods which can be used by Burberry Effective market segmentation is quite significant for the companies to succeed. Segmentation facilitates the companies to efficiently satisfy the needs of the customers in a better way. It also facilitates the companies in targeting the most profitable audience for the products. In relation to Burberry’s market segmentation, it can target the market in terms of the demographic factors such as age of its customers. Notably, from the perspective of demographic market segmentation, Burberry creates products for all age groups which include men, women and children. Therefore, in this case, Burberry can segment the market in terms of age group such as adults and children. Burberry, being a fashion brand can be regarded to be emphasised more on the young generation. However, segmenting the market in terms of socioeconomic characteristics is likely to be more relevant in the case of luxury brands. In terms of psychographic market segmentation, socioeconomic characteristics include the lifestyle practices of the target audience and their perception about the prices and brands and thus cause an influence over the market demand of luxury brands. Hence, socioeconomic characteristics of a particular market can also be considered as a vital factor in the segmentation process. Under such segmentation methods, Burberry can target the higher income group of people who are generally more concerned about the quality aspects rather than the prices (Parish & Et. Al., 2004). Similar to other luxury brands, Burberry also earns a large proportion of its revenue on its brand name. Therefore, in this context, Burberry could attempt to attract the young generation of luxury customers who are brand conscious. In case of socioeconomic characteristics, Burberry can also segment the market in terms of higher income group which may also include the celebrities. Hence, it would be quite profitable for Burberry to attract the higher income group. In addition, as Burberry produces accessories also along with apparels and thus under such situation, the company can also adopt the segmentation methods which is based on the different product lines. This kind of segmentation would facilitate Burberry to identify the different target audiences for its apparels as well as its accessories (Nelson, 2012). Thus, it can be stated that on the basis of different criteria that generally include the likings, preferences, living standards, attitudes, emotions and beliefs of the customers, Burberry can largely focus as well as can execute the above mentioned segmentation methods while operating its business functions. 4. Using segmentation targeting and positioning principles how and why have Burberry changed their segmentation strategy over time? Burberry instigated its business with the production of gabardine raincoats which is still considered to be the signature product of the brand. In the year1901, Burberry became engaged with designing new uniforms for the British Army. Hence, it can be affirmed that in the beginning of its business Burberry was not likely to be a luxury brand. However, gradually in the course of time, Burberry immerged as a luxury brand which was dedicated towards creating luxury accessories and ready-to-wear fashion apparels. As a luxury brand, Burberry has been mostly emphasising on the higher income group of people who were quality conscious. During the early stages, Burberry was confined in the creation of apparel of the classic style. Therefore, it can be affirmed that at the beginning, the company was not likely to target on the younger generation to perform its segmentation and positioning strategies. However, recently the company has introduced a new product line which appears under the tag of Burberry Brit. For instance, this new product line mainly focuses on the demand of the younger generation. The products that appear under Burberry Brit are mostly casual and are comparatively less costly than the products of Burberry Prorsum. In this context, Burberry can be noticed in attempting to attract the group of customers who are not likely willing to spend the amount of money that the higher income group usually spends to purchase such products which is considered to be vital for targeting by the company in its current market context with regards to positioning and segmentation. This kind of changes in terms of segmentation and positioning basically took place because of the recession as during the period, most of the competitors of Burberry were focusing on reprising of their products. Therefore, under such circumstances in order to differentiate, Burberry lunched the new sub brand which was targeted, segmented and positioned on the younger generation and also was quite cost efficient. On the basis of targeting and positioning principles, Burberry can change its segmentation strategy by the means of refining its different products. In this context, the organisation can bring greater clarity upon the aspect of brand segmentation by relabeling the various apparels that belongs to both women as well as men. Burberry usually intends to change its segmentation strategy over time because the management group as well as its entire workforce have been challenged with the utmost duty of sustaining the vitality as well as the incorporation of its various products. Moreover, the other reasons also include tracking business operational quality, accelerating the momentum of the brands and refining the aspect of product segmentation among others (Burberry, n.d.). 5. Discuss and explain the rationale of the marketing mix variables used by Burberry An efficient marketing mix is quite significant for the success of any business organisation. The marketing mix concept facilitates the business organisations to identify and understand the market conditions that can affect the operations of the business (Gajic, 2012). 5.0. Product Burberry is involved in the manufacturing and distribution of a variety of products which include a variety of apparels and accessories. In terms of apparels, the company is dedicated towards men’s wear, women’s wear and children’s wear as well. Simultaneously, in the accessory’s segment, the company focuses on handbags, leather products, scarves and other similar fashion accessories. The company also includes a variety of perfumes and shoes in its product range. In addition to these products, Burberry has also introduced certain other non-apparel products which include designer eyewear and watches. Burberry has further introduced a new sub brand which is known as Burberry Brit emphasised more on the casual apparel segment. Under the level of Burberry Brit, the company has introduced several casual apparels which includes jeans and various other simple but elegant clothing for both men and women. In addition, Burberry Brit has introduced several other sports collections as well. However, in the recent times, the company has been noticed to emphasise more on the handbags and shoes as it has been stated by the CEO that the stronger emphasis on shoes and handbags have likely resulted in an increased world-wide growth for the company. Burberry is basically a British company but currently it can be considered as a world renowned international luxury brand which operates in the global luxury market and attempts to target customers from all over the world. Among the markets in which Burberry operates, Europe, America and Asia Pacific can be considered to be the significant regions which contributes the higher percentage of total sales earned by the company. The company also emphasises on several other growing markets which include Russia, China, India and others for the reason that these markets also contribute almost 10% to the total sales of the company. 5.1. Price Burberry is a luxury brand with regards to which it can be affirmed that the products of the company are likely to be quite high priced. Hence, the products of Burberry are generally luxury products which targets higher income group of people. For instance, the products of Burberry which comes under product line of Burberry Prorsum are likely to be more costly. Whereas, the products which comes under the product line of Burberry Brit can be considered to be quite reasonable in comparison to that of Burberry Prorsum. 5.2. Place Burberry is an international luxury brand which tends to utilise all the possible sources for promotion. Burberry operates almost 139 retail stores in the international market which acts as a major source of promotion for the company. These world-wide retail stores seem to be quite facilitating to the company in order to deliver its products to the world-customers. In addition, the company also operates near about 140 concessions at several places throughout the globe save only Spain. Burberry furthermore includes almost 97 franchise stores all over the world with a further intention to instigate 20 to 30 new stores in the near future. All these stores and franchisees together act as to be a major source for Burberry in terms of global promotion of the company. 5.3. Promotion In addition, to the direct retail stores, Burberry also utilises the digital media for the promotion of its products. However, it is worth mentioning that the greater segment of the sales of Burberry is generated from the promotion of its products in the prestige department stores. Burberry also participates actively in fashion runways every year. These runway shows also contribute in the promotion of the company’s products to a great extent. It is worth mentioning that the company follows different promotional strategies for its variety of brands. For instance, for the promotion of its products which come under the tag of Burberry Brit, the company was witnessed to start up with its boutique chain in Europe. Therefore, it can be noticed that the company was emphasising more on the retail stores for the promotion of their products rather than on media publishing or advertising. 5.4. Process Burberry generally executes its sales operations by maintaining efficient standardised procedure along with delivers competent transactions of online sales by implementing high level of technological procedure (Slideshare Inc, 2012). 5.5. Physical Evidence This particular facet of marketing mix fundamentally depicts the effective business operations that are performed by Burberry. It include modernised brand along with standard layout of the retail stores, branded packaging and attractive logos on all of its customer order programs (Slideshare Inc, 2012). 5.6. People The participants or the people engaged with Burberry are highly trained, efficient as well as knowledgeable that contributes largely upon the systematic business operations of Burberry by a significant level (Slideshare Inc, 2012). 6. Discuss and explain the rationale of Burberry’s use of digital marketing tools. What are the advantages and disadvantages of this approach? Burberry can be significantly noticed to utilise the digital media for its marketing purpose. In this regards, the brand identified the advantages of celebrity endorsements in its promotional activities. It has also featured the cover page of almost 270 magazines in the recent years for the marketing of the brand. Recently, Burberry has featured the cover page of Vanity Fair magazine in which the famous actor Robert Pattinson was dressed in a Burberry coat. In addition, Burberry has significantly been utilising the social networking sites such as Facebook and Twitter for the marketing purpose. The company also apply the use of several other websites such as YouTube for its marketing purposes. In addition, the company has also introduced certain digital campaigns for its marketing initiatives which comprises of websites including podcasts and various behind-the-scene videos. Notably, Burberry has introduced a new social networking site as its marketing strategy with the title of Artofthetrench.com. This website acts as a forum for the people to upload and share their own pictures wearing the trench coat of Burberry. This initiative taken by the company proved to be quite helpful in attracting the young generation towards the brand raising their satisfaction level and loyalty. It was noticed that the introduction of the website resulted in attracting 200,000 distinctive visitors and accounted over 3 million of page views. It is worth mentioning that digital media contributed almost 60% growth for the company in the year 2010. It is in this context that there are several advantages of implementing the digital sources such as internet for the marketing activities. The numbers of audiences of the internet sources are noticed to be significantly rising in the present day. Therefore, the implementation of digital marketing can facilitate the companies to endure with the business environment in the future. Digital marketing also facilitates companies to concentrate on a wider range of worldwide customers by fading the implications of geographical boundaries. Another significant advantage of internet marketing is cost reduction by cutting off several costs such as the cost of transportation which is quite significant in case of general marketing. Implementation of internet marketing also relieves the marketer from bearing the cost of employing numerous staffs that are needed for usual marketing (Muske & Et. Al., 2012). However, there are certain disadvantages of internet marketing as well. One of the major limitations faced in terms of internet marketing is that the online sources are not able to provide a physical experience of the products to the customer which is quite essential in case of several customers. Moreover, the internet sources are often noticed to be a quite inefficient media in terms of providing customer service (Mentorlee, 2012). Moreover, there are millions of companies that operate their websites. Therefore, under such circumstances, it becomes quite difficult for company attract the customer to their website and influence them to go through the company’s web pages. It also requires a significant effort to keep the websites updated with the latest information and it has also been noticed in certain cases that the implementation of digital marketing has compelled the companies to bring about several significant changes in their core business operations. References Burberry, No Date. Brand and Business. Strategy. [Online] Available at: http://annualreview2009-10.burberry.com/pdf/strategy.pdf [Accessed May 15, 2012]. Gajic, J., 2012. Importance of Marketing Mix in Higher Education Institutions. Abstract. [Online] Available at: http://journal.singidunum.ac.rs/paper/importance-of-marketing-mix-in-higher-education-institutions.html [Accessed May 09, 2012]. Gillespie, K. & Et. Al., 2010. Global Marketing. Cengage Learning. Muske, G. & Et. Al., 2012. The Internet as a Marketing Tool. Oklahoma State University. [Online] Available at: http://pods.dasnr.okstate.edu/docushare/dsweb/Get/Document-2491/AGEC-566web.pdf [Accessed May 09, 2012]. Mentorlee, 2012. Advantages and Disadvantages of Internet Marketing. Internet Marketing Strategies [Online] Available at: http://www.mentorlee.com/internet-marketing-strategies/advantages-and-disadvantages-of-internet-marketing.pdf [Accessed May 09, 2012]. Nelson, C., 2012. Objectives of Market Segmentation. Market Segmentation. [Online] Available at: http://www.foreseechange.com/mktseg.htm [Accessed May 08, 2012]. Parrish, E. D. & Et. Al., 2004. Opportunities in the International Textile and Apparel Marketplace for Niche Markets. Journal of Fashion Marketing and Management, Vol. 8 (1). pp. 41-57. SlideShare Inc, 2012. The Marketing Environment. Chapter 3. [Online] Available at: http://www.slideshare.net/mehmetcihangir/the-marketing-environment-presentation-765004 [Accessed May 09, 2012]. Slideshare Inc, 2012. Critique of the 4 P’s. Innovative Marketing & Communications at Burberry. [Online] Available at: http://www.slideshare.net/adeptfouralex/innovative-marketing-communications-at-burberry [Accessed May 15, 2012]. Bibliography Dickman, S. & Australia, M., 1995. The Marketing Mix: Promoting Museums, Galleries & Exhibitions. Museums Australia Incorporated (Victoria). Grail Research, 2009. The Global Fashion Industry – Growth in Emerging Markets. Global Fashion Industry. [Online] Available at: http://www.grailresearch.com/pdf/ContenPodsPdf/Global_Fashion_Industry_Growth_in_Emerging_Markets.pdf [Accessed May 09, 2012]. Read More