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Case Study Analysis of Burberry’s Repositioning Strategy

Assignment 2 Brief

Individual Assignment (50%)

Individual Case Study Analysis:

You will need to produce a case study analysis relating to marketing problems facing a business.  The task requires candidate to answer three questions relating to the case study. The word count is 1,000 words +/-10%

Background

MINTEL Fashion Accessories report - UK - January 2018 (Excerpt)

Many of the luxury brands have posted strong results in 2016 and Q1 2017 boosted by an increase in tourism to the UK due to a weak Sterling following the EU referendum. Burberry in the UK saw double-digit sales growth for the six months to 30 September 2017, but reported a slowdown in Q2 as tourism spend slowed as a result of the annualisation of Sterling’s weakness. The company reported a 10% decline in global revenue to £2.8 billion for the year ended 31 March 2017 due to challenging conditions in the US and Hong Kong. A strong performance in the EMEIA (Europe, Middle East and Africa) during the period was driven by the UK and an acceleration in sales in China.

While Mulberry saw turnover in the UK increase 8.6% for the year ended 31 March 2017 driven by an increase in tourism spend in London, global revenue growth for the six months ended 30 September 2017 was flat. UK retail sales for the period were also flat and, given that UK retail sales account for approximately 60% of the group’s total sales, the results are underwhelming and show that the brand needs to do more to boost its appeal in its domestic market. International sales performed better and the group is focusing on expanding further in markets including China, Hong Kong and Japan where consumers are more engaged in luxury purchasing.

Designer brand positioning

For Burberry, accessories represent 37% of total group revenue, with sales in the category increasing by 10% during the first half of 2017. Products that performed well were handbags and small leather goods. Full-price sales for bags increased 16% for the year ended 31 March 2017 driven by new launches such as the Bridle and Buckle bags and more novelty in more established styles. The bags category is seen as having the greatest growth potential in the next few years and will be a central focus for Burberry. As part of the new strategy under its recently appointed CEO Marco Gobbetti, Burberry will move to reposition itself firmly in the luxury sector by extending its price architecture and scaling back sales to lower-end retailers and wholesalers. It will also create new luxury leather goods and accessories to attract new high-end customers.

Burberry’s strategy of moving the brand more upscale echoes a similar move by other designer brands such as Mulberry, LVMH’s Céline and Givenchy. Coach is also responding to the challenges it is facing in the US market by creating a more upscale, edgier look under the guidance of a new designer. While Mulberry attempted to position itself at the higher end of the luxury market, it had to rethink that strategy as it outpriced many of its customers and struggled to compete against some of the more established hard luxury brands. Burberry does not want to make the same mistakes and lose the younger buyers who are extremely important in today’s luxury market. Consumer research for Designer Fashion – UK, November 2017 shows that the 16-24s are the most active luxury shoppers and they tend to buy more accessible entry-level products.

By contrast, some of the luxury designers such as Michael Kors, Prada and Louis Vuitton have reduced the number of new handbag designs. Gucci’s increase in sales has been driven by its renewed brand appeal under Alessandro Michele who has succeeded in attracting younger customers with his new styles. The company has reworked its product offering with older styles in all categories replaced by the new aesthetic. The brand has moved away from discounting and has not run any promotional offers in its stores since Q4 2016. Leather goods account for 54% of sales and benefited from new reworked handbag styles.

Specialists and their retail offering

Monsoon Accessorize is looking to add new market channels and after opening concessions in Debenhams it is looking to team up with other department stores. It has also started trading on online marketplaces including Amazon. As the company looks to create a separate brand identity for Accessorize away from Monsoon, it is opening new stores under the accessories brand with a new design. The flagship Accessorize store at Westfield London in White City, which opened at the end of 2016, features digital panels that stream content from its Instagram site and hanging LED rods that change colours depending on the textures and colours used in the season’s collections. Customers are also able to choose the store’s playlist and curate their own Trend Edits on the Accessorize app, which is then displayed throughout the store, thereby personalising the shopping experience.

Digital activity

Burberry is focusing more on leveraging its digital reach and is investing in making it easier for customers to buy online by fulfilling online orders from stores. It will revamp its editorial content online in order to appeal more to luxury consumers and has relaunched its mobile app and introduced an augmented reality app in October 2017, which allows customers to overlay digital illustrations by a Burberry artist on their own pictures through the camera lens, using Apple’s ARKit function. Users can export the images they create to social media in a Burberry frame and share them.

Task

You are required to answer the following questions:

  1. The article tells us that Burberry intends to go more up-market. Explain the relevance and importance of positioning and repositioning for marketers.  What are the implications for the performance of the business if such a move is successful? (40%)

  2. In the case of Burberry, demonstrate by means of a positioning map, how the positioning of the brand will change as result of this process.  In presenting map, also identify where on the map the following brands would be located: Gucci and Primark (30%).

  3. Provide two methods which brands such as Burberry might use to achieve repositioning. (30%).

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Sample Answer

Case Study Analysis of Burberry’s Repositioning Strategy

Introduction

Burberry has been one of the most recognisable British luxury brands for decades, yet the company has faced fluctuating performance due to changes in tourism, currency shifts and rising competition. The Mintel Fashion Accessories report highlights how Burberry is now attempting to move further up the luxury scale in order to secure long term growth. This assignment explores why positioning and repositioning matter for marketers, how Burberry’s place on a positioning map is likely to shift, and which methods the brand can use to make the move successful.

Relevance and Importance of Positioning and Repositioning

Positioning can be understood as the space a brand occupies in the minds of consumers compared to its competitors. It includes perceptions of price, quality, prestige and style. A clear position helps customers immediately understand what a brand stands for. In luxury fashion, positioning is especially important because customers often buy for symbolic value as much as for product function. If a brand’s position becomes confused or dated, customers may drift to trendier competitors or more premium alternatives.

Repositioning becomes necessary when the existing position no longer reflects the expectations of the target market. For Burberry, the mid market and premium accessible space became increasingly crowded with brands like Michael Kors and Coach. At the same time, hard luxury brands such as Louis Vuitton, Céline and Gucci strengthened their appeal among younger buyers. Burberry risked being stuck in the middle without a strong enough identity to justify higher price points or to attract younger, fashion led buyers.

Going further up market is therefore an attempt to reinforce exclusivity and avoid the mistakes Mulberry made when it moved up too quickly. Burberry wants to create a position where craftsmanship, heritage, digital innovation and higher price architecture all work together. This matters because upscale customers expect consistent quality, a distinct aesthetic and a sense of privilege.

If the repositioning is successful, there are several implications for performance. First, Burberry could improve profit margins. Higher priced bags and accessories generally generate stronger margins than mass accessible products. Second, the brand could grow global demand, particularly in China, the Middle East and other established luxury markets. Third, a stronger luxury identity could increase customer loyalty, especially among younger buyers who respond well to brands that feel fresh and aspirational. A successful move could also support stable long term revenue by reducing reliance on discounting, which damages brand image. Finally, stronger positioning in the luxury tier can raise shareholder confidence and improve market value.

If the repositioning fails, the implications could be negative. Burberry might alienate existing customers who find the new pricing beyond reach. It could also struggle to compete with long established luxury houses that have deeper heritage in the high luxury space. In the worst case, Burberry could end up losing both premium and high luxury customers, which would impact sales, reputation and global relevance.

Positioning Map and Brand Locations

A simple positioning map can be created using two variables: price and perceived luxury exclusivity. Price moves from low to high on the vertical axis. Luxury perception moves from low to high on the horizontal axis.

Before repositioning, Burberry sits in the middle of both axes. It offers premium pricing but not at the same level as Gucci or Louis Vuitton. It is seen as stylish and reputable, yet not always at the cutting edge of luxury among younger global consumers.

After repositioning, Burberry intends to move to a higher price level and a higher exclusivity level. This shifts the brand into the upper right section of the map. By focusing on luxury leather goods, reducing discounting and refusing to supply lower end retailers, Burberry aims to match the prestige of the strongest luxury houses.

On the same map, Gucci would appear above Burberry on exclusivity and slightly above or equal on price. Gucci has succeeded with bold designs, cultural relevance and strong global demand. Primark sits at the complete opposite corner. It is low price and low exclusivity because it targets value driven shoppers. This makes Primark a clear contrast to luxury positioning and highlights how Burberry’s new direction takes it further from the mass market.

Two Methods Burberry Could Use to Achieve Successful Repositioning

For repositioning to work, Burberry must take deliberate steps that reinforce the new identity. One method is product strategy. Burberry can introduce more luxurious leather goods with higher craftsmanship, limited editions and signature styles designed to stand apart from accessible premium competitors. This product shift helps justify higher prices and signals exclusivity to consumers. It also links with the observation by Mintel that handbags and small leather goods are the strongest growth category.

A second method is digital innovation and storytelling. Burberry has already relaunched its mobile app and invested in augmented reality experiences that allow customers to personalise digital content. Continuing to develop digital features that blend heritage with new technology can differentiate Burberry from competitors who still rely mainly on traditional retail experiences. Digital storytelling also appeals strongly to young luxury shoppers who want immersive brand interactions. If Burberry pairs digital innovation with more selective distribution and fewer discounts, the repositioning becomes more believable.

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Because customers often buy for status, meaning the brand’s identity matters as much as the product itself.

Only if customers believe the higher prices match the quality and exclusivity.

Gucci has become the standard for modern luxury appeal, especially among younger buyers.

Yes. If prices rise faster than customer perceptions, the brand may lose loyalty.

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