Burberry

Reinventing the Brand

It is called doing a Gucci after Domenico De Sole and Tom Fords stunning success at turning nearly bankrupt Gucci Group into a 7 billion (market capitalization) fashion powerhouse. Since 1997 when she took over, Rose Marie Bravos makeover of the 143year-old Burberry brand has followed the same path. The Burberry story began in 1856 when Thomas Burberry opened his first gentlemens outfitters. By the First World War, business was booming as Burberry won the contract to supply trenchcoats to the British army. Its reputation grew when it proved its contribution to the national cause. The Burberry check was introduced in the 1920s and became fashionable among the British middle to upper classes. Later, when it was worn by Humphrey Bogart in Casablanca and Audrey Hepburn in Breakfast at Tiffanys, the Burberry trenchcoat gained widespread appeal. Bought by Great Universal Stores in 1955, the brands huge popularity from the 1940s to the 1970s had waned by the 1980s. A less deferential society no longer yearned to dress like the upper classes and the Burberry brands cachet fell in the UK. This was partially offset by a surge in sales to the newly rich Japanese and other Asians after they discovered its famous (and trademarked) tan, black/red and white check pattern. By the mid-1990s, the Far East accounted for an unbalanced 75 per cent of Burberry sales. British and American consumers began to regard it as an Asian brand and rather staid. Furthermore, distribution was focused on small shops with few big fashion chains and upmarket stores like Harrods stocking the brand. In the USA, stores like Barneys, Neiman Marcus and Saks only sold Burberry raincoats, not the higher profit margin accessories (e.g. handbags, belts, scarves and wraps).

Change of strategy
These problems resulted in profit falls in the 1990s culminating in a 37 million drop in profits to 25 million in 1997. This prompted some serious managerial rethinking and the recruitment of American Rose Marie Bravo as a new chief executive. Responsible for the turnaround of the US store chain Saks Fifth Avenue, she had the necessary experience to make the radical changes required at Burberry.

One of her first moves was to appoint young designer Roberto Menichetti to overhaul the clothes range. His challenge was to redesign Burberrys raincoats and other traditional products to keep them fresh and attractive to new generations of younger consumers. Furthermore, he sought to extend the Burberry image to a new range of products. The Burberry brand name began to appear on such products as childrens clothes, personal products, watches, blue jeans, bikinis, homewares and shoes in order to attract new customers and broaden the companys sales base. Commenting on Menichetti, Bravo said, Coming in, I had studied Hermes and Gucci and other great brands, and it struck me that even during the periods when they had dipped a bit, they never lost the essence of whatever made those brands sing. And I thought, This man will retain whats good and move us forward. Design was further strengthened in 2001 with the appointment of Christopher Bailey (from Gucci) as Burberrys creative director. He created Burberry classics with a twist (for example, recasting the classic trenchcoat in hot pink). Baileys job was to design clothes that met Bravos vision of heritage and classic, but young, modern, hip and fashionable. A second element of her strategy was to bring in advertising agency Baron & Baron and celebrity photographer Mario Testino to shoot ads featuring models Kate Moss and Stella Tennant. Other celebrities, such as the Beckhams, Callum Best, Elizabeth Jagger, Nicole Appleton and Jarvis Cocker, have also featured in Burberry advertising. The focus was to emphasize the new credentials of the Burberry brand without casting off its classic roots. Getting key celebrities to don the Burberry check in its advertising was highly important in achieving this. Bravo once remarked that the famous picture of Kate Moss in a Burberry check bra cut the average age of its customers by 30 years. A third strand in Bravos strategy was to sort out distribution. Unprofitable shops were closed and an emphasis placed on flagship stores in cosmopolitan cities. Prestige UK retailers including Harvey Nichols were selected to stock exclusive ranges. Bravo commented, We were selling in 20 small shops in Knightsbridge alone, but we werent in Harrods. Also, stores that were selling only raincoats were persuaded to stock highmargin accessories as well. Burberry accessories have increased from 20 per cent to 25 per cent of turnover. This was part of a wider focus on gift s the more affordable side of luxury that can drive heavy footfall through the stores. As Bravo said, Burberry has to be thought of as a gift store. Customers have to feel they can go into Burberry and buy

gift s at various price points. Burberry claim to spend about 2 million a year fighting counterfeits. International expansion was also high on Bravos priority list. A succession of new stores were opened, including flagship stores in London, New York and Barcelona. The New York store on 57th Street was the realization of a personal dream for Bravo, whose vision was to replace the store the company had been running in Manhattan for almost 25 years with one that was bigger, better and far more profitable. It is the biggest Burberry store worldwide and has a number of Burberry firsts: a lavish gift department, a large area for accessories, private shopping and an in-store Mad Hatters tea room. It also offers a service called Art of the Trench where customers can get made-to-measure trenchcoats customized by allowing them to pick their own lining, collar, checks and tartan. The Barcelona store was regarded as vital in helping to reposition the Burberry brand in Spain. Prior to its opening the brand was slightly less fashionable and sold at slightly lower prices than in the UK. The opening of the Barcelona store saw the London product being displayed for the first time as Burberry moved towards one global offering. Besides the USA and Spain, Burberrys third priority country was Japan since it was an enormous market for the company already. The results of this activity were astonishing. Profits soared to 162 million by 2005, a six-fold increase since she took over, and in 2002 Great Universal Stores floated onethird of Burberry, its subsidiary, on the stock market, raising 275 million. Then in December 2005 it demerged Burberry completely, allocating Burberry stores to GUS shareholders in proportion to their holdings in a deal worth 1.4 billion. Burberry did face problems, however. One was the weeding out of grey-market goods, which were offered cheaply in Asia only to be diverted back to western markets at discounts. Not only were sales affected but brand image could be tarnished. Like Dior before it, Burberry was willing to spend the necessary money to try to eliminate this activity. Another problem was that of copycats, which infringed its trademark. Burberry claim to spend about 2 million a year fighting counterfeits, running advertisements in trade publications and sending letters to trade groups, textile manufacturers and retailers reminding them about its trademark rights. It uses an Internet-monitoring service to help pick up online discussion about counterfeits. It also works with Customs officials and local police forces to seize fakes and sue infringers. The fondness with which so-called chavs regard the Burberry check was a third problem. One observer defined a chav as a young, white, undereducated underclass obsessed with brands and unsuitable jewellery. One product with which chavs have become particularly associated is the Burberry baseball cap. They are also associated with violence, particularly at football matches. The sight of football hooligans appearing in the media adorned in beige and black check was not one appreciated at Burberry HQ. In response, the company has stopped producing the infamous cap and has shifted emphasis to other non-check lines, including its Prorsum line of luxury clothing designed by Christopher Bailey. A fourth problem arose in 2005 with the announcement that Bravo had decided to step down as chief executive. The woman who had built Burberry into an ultrafashionable 2 billion global brand would need to be replaced. Her successor is Angela

Ahrendts, who was recruited from the US clothing company Liz Claiborne, which owns such brands as DKNY jeans and Juicy Couture. After a period of working together, Ahrendts took the helm in July 2006 with Bravo taking the newly created role of vicechairperson, a part-time executive position. Ms Ahrendts has made changes to the Burberry product line by making the check more subtle, and using it mainly in linings and discreet areas of garments. She has also placed greater emphasis on higher-margin accessories, such as handbags and perfumes, and top-of-the-range fashion. Burberry has also opened stores in emerging markets such as China, India, Russia, the Middle East and eastern Europe. In 2008, Burberrys first standalone childrens wear store in Hong Kong was opened. It has also built up its presence in the USA, with the opening of its new headquarters in New York and further store openings. She has also improved efficiency by installing new IT systems and replacing 21 scattered distribution centres with three regional hubs in the USA. Her attention has also been focused on better sourcing, in an effort to improve margins. These activities meant that Burberry proved remarkably resilient in the early months of the economic downturn, particularly helped by demand from the middle classes in emerging markets. However, as the recession progressed, Burberry, like other luxury goods businesses, saw profits plummet as it was forced to discount some products to maintain sales, incur the costs of new Offices in London and New York, and restructure its underperforming Spanish operations. Despite the profit downfall, Burberry sales in 2008/9 were up 21 per cent at 1.2 billion, exceeding 1 billion for the first time.

References
Based on: Heller, R. (2000) A British Gucci, Forbes, 3 April, 846; Anonymous (2002) Burberry, Marketing, 1 August, 17; Voyle, S. (2002) Looking Beyond the Traditional Trenchcoat, Financial Times, 12 November, 12; Anonymous (2003) Retail Brief: Burberry Group plc, Wall Street Journal, 23 May, 6; White, E. (2003) Protecting the Real Plaid from a Lineup of Fakes, Wall Street Journal, 7 May; Barton, B. and N. Pratley (2004) The Two Faces of Burberry, Guardian G2, 15 April, 23; Barns, E. (2005) Are Advertisers Wise to Chase the Chav Pound?, Campaign, 24 March, 18; Callan, E. (2006) Burberry Seeks to Offer Luxury in US Midwest, Financial Times, 7 July, 1; Walsh, F. (2006) Burberry Chief Turns on Charm with 19 per cent Growth in Retail Sales, Guardian, 13 July, 28; Gumbel, P. (2008) The Luxury Market Loses its Lustre, Fortune, 22 August, 27; Kollewe, J. and G. Wearden (2008) Burberry Sees Profits Rise While Laura Ashley Suffers, Guardian, 29 May, 26; Wardell, J. (2009) Burberry Makes Loss For Year, Business Week, 19 May, 64.

Questions
1 How were the clothes bearing the Burberry name augmented to create a brand before the 1980s?

2 3 4

What elements of the brand-building factors discussed in this chapter have been used by Rose Marie Bravo since 1997 to rebuild the Burberry brand? What problems might arise in trying to build Burberry into a global brand? What are the dangers inherent in Burberrys strategy since 1997?

Answers

1. How were the clothes bearing the Burberry name augmented to create a brand before the 1980s?

The Creating a Brand figure in the chapter can be used as a framework for exploring how the Burberry product was augmented.

Augmentation was achieved through:

(i) Quality and Design The quality of the product was established, first through its link to a gentlemans outfitters which won a governmental contract to supply trench coats, and second by its success in doing so. The product was differentiated by its unique check design in the 1920s which, together with its quality, contributed to it becoming fashionable among the British middle-to-upper classes.

(ii) Brand name and image Because of its superior quality and design, the Burberry brand name gained a cachet that enhanced the appeal of the brand. It developed an up-market, exclusive image which reinforced its attraction among the British middle-to-upper classes. This is the classic case of a quality, fashionable and distinctive product creating a favourable image that in turn enhances the perception of the quality of the product. The distinctive Burberry check meant that their customers were recognized as wearing an up-market and exclusive brand. Appearances of the Burberry check on Humphrey Bogart in

Casablanca and Audrey Hepburn in Breakfast at Tiffanys did not detract from its image as the former film was critically acclaimed and the latter had an up-market association which fitted Burberrys positioning.

2. What elements of the brand building factors discussed in this chapter were used by Rose Marie Bravo since 1997 to rebuild the Burberry brand?

The Building Successful Brands figure in the chapter can be used as a framework for answering this question.

Brand building was achieved by:

(i)

Quality: the Burberry brand was associated with high quality clothing. This is an important factor since high quality brands have been shown to achieve greater market share and higher profitability than their inferior rivals in the PIMS study. These quality garments were redesigned to keep them fresh and appealing.

(ii)

Positioning and Repositioning: Burberry was clearly positioned as an exclusive,

up-market lifestyle brand based upon quality and design. Its distinctive check acted as a signal that the wearer was dressed in a Burberry garment. Rose Marie Bravo recognized that their positioning had tarnished somewhat by the early 1990s and needed revitalization to reposition the brand once more as exclusive chic. She also repositioned the brand as appealing to younger consumers more by using young, glamorous models in a series of advertising campaigns, and redesigning the clothes range to make them attractive to this target market. Positioning was based on the concept of accessible luxury. The range was also stretched to a wider range of products based on the strong positioning of the Burberry brand. (iii) (iv) In terms of the anatomy of brand positioning framework, brand building was Brand domain: the product range and designs were changed to make the brand achieved by: more attractive to younger people. Gift prices were lowered to increase store traffic,

improve accessibility to young people, and increase sales. (v) Brand heritage: a key factor in building sales of the brand was leveraging Burberrys high class British heritage both with their clothing range and to new product lines such as watches, homewares and shoes. Almost all of the models used in Burberry advertisements were British to reinforce its brand heritage. (vi) (vii) Brand values: these were quality, design and exclusivity. Brand assets: the Burberry brand name and distinctive check, both conveying an

image of up-market exclusivity were key assets. More recently,Ms Ahrendts is conscious of the need to keep the check but to make it more subtle. (viii) Brand personality: this provides an opportunity to ask students questions like If Burberry were a person what kind of person would it be? Answers are usually wealthy and discerning. (ix) Brand reflection: the Burberry brand reflects well on self-identity: I feel classy wearing Burberry. Rose Marie Bravo attempted to make the brand not only reflecting wealth and discernment but also cool among younger consumers. Generally, customers feel good about themselves wearing Burberry and believe other people to be impressed when they discover they own Burberry products. (x) Well-blended communications: product redesign and brand stretching, contemporary advertising campaigns, exclusive outlets such as Harrods and Harvey Nichols, and premium prices meant that each of the elements of the marketing mix communicated a consistent image. (xi) (xii) Being first: probably not a major brand building contributor here. Long-term perspective: Burberrys international expansion plans and continuing

marketing effort suggest that the brand is being built for the long-term (although as we shall see when answering Question 4 there may be dangers relating to loss of exclusivity a problem that Ms Ahrendts seems to be at least partially addressing). (xiii) Internal marketing: there is no discussion of this element of brand building in the case which does not necessarily mean that processes to achieve effective internal marketing are lacking. Certainly, Bravos infectious enthusiasm would have a strong motivational effect within the company. 3. What problems might arise in trying to build Burberry into a global brand?

Global branding is the achievement of brand penetration worldwide. Burberry are trying to move towards one global offering as illustrated in the marketing of the London range

of goods at their Barcelona store. Standardizing the product offering produces cost savings in terms of buying power and production economies but differences in national consumer tastes may mean that one global offering may not be successful everywhere. If price is standardized differences in disposable income may also mean different perceptions of value. Nevertheless, Burberry may take heart from the success of Gucci as a successful brand build upon a global offering that seems to appeal to the higher income earners in a wide range of countries.

4. What are the dangers inherent in Burberrys strategy since 1997?

By making the Burberry brand more accessible through widening its appeal to younger generations, increasing its distribution through department stores, widening its product range through brand stretching and lowering the price points for gifts, the danger is that its growing presence on the streets of Europe could be a problem in future years. Paradoxically, its higher sales volumes, while welcome in the short-term, may damage the brand in the longer-term by tarnishing its exclusive image. Already there are danger signs with caps and scarves bearing the distinctive Burberry tan, black, red and white check being worn by football gangs. The negative impact of the chav effect should not be overstated however. Burberry is a global brand with only 15% of sales coming from the UK where the problem occurs. Also its effect has proven to be relatively short lived as fashion trends among chavs has moved on.

Democratizing the brand increases the danger of image dilution, and widespread stretching into other product ranges runs the risk of trickling the brand downmarket and making it less aspirational. This could all lead to a premature burn out for Burberry if it slides down the fashion ladder. Ms Ahrendts seems to have realised these potential pitfalls and focused on high margin (and hence high price) accessories, and perfumes. This has proven to be successful as exemplified by Burberrys Beacon handbag, retailing at 1095, that had a waiting list of customers wanting to buy it. She has also placed emphasis on high end fashion, for example, by extending the cutting edge Prorsum fashion collection designed by her

creative director, Christopher Bailey. While still maintaining accessibility for the middle classes these products showcase Burberry as a luxury brand.

This teaching note was prepared by David Jobber, Professor of Marketing, University of Bradford.