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

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 andimportance 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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