Marketing Problem of Burberry Company - Paper Example

2021-08-25 06:58:34
7 pages
1799 words
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Harvey Mudd College
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Case study
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Burberry, an apparel company, was at a marketing crossroads after the retirement of its CEO. The new CEO, Bailey, had to make decisions concerning global trends, how the company would strengthen its control in its brand communication strategies, introducing a digital approach in its marketing endeavors and how the firm would deal with fast fashion and the ensuing trends of fashion shows.

Issues

Bailey was presented with a myriad of challenges which needed to be satisfied if the company was to stay afloat amid the changing business environment. Among them were the issues of clients who were attracted by high-end products, the upcoming markets, and competition within the industry coupled with digital strategies in marketing. The management was spoilt for choice on which front to take its marketing war as all of them were equally important.

Firstly, Burberry management was faced with the issue of prioritizing the luxury customers. The firm's luxury market was categorized into three sections: the aspirational, the absolute, and the accessible. The absolute had the most significant purchasing power despite having the least number of clients. The purchasing power of customers in this group was not affected by the economic status. The aspirational market segment was the other subclass. This section was characterized by professionals, celebrities, and business individuals. Despite their high purchasing powers, their spending was influenced by the different states of the economy. Lastly, in this category was the accessible segment. The accessible segment was made up of the middle class and upper-middle class clients. This parts spending power was greatly influenced by their levels of income and to a greater extent by the economic conditions. The accessible segment had the most substantial number of customers thus its contribution could not be ignored.

Secondly, the firm was faced with the challenge of reaching out to the upcoming markets. Traditionally, the business had markets in Europe, North and South America, and Europe markets. In diminishing order of importance was the Chinese, Brazilian and Indian markets. However, with time these markets surpassed the other two market blocks and continued to grow. Bailey had to devise a way to satisfy this rising stars.

Competition and digital marketing strategies were the other issues facing the company. The industry was characterized by a high evolving competition among its players. Blueberry's significant competitors included Hermes, Prada, Chanel, and Kering among others. Each competitor had a unique way of approaching and utilizing digital technology in their marketing strategies. The management of Blueberry had to find a way of positioning themselves ahead of their most potent market opponents. To achieve this, they had to reach a higher L2 fashion Digital IQ Index than their competitors. Thus they had to study the marketing strategies of each of their competitors.

Lastly, the company had to contend with the ever-changing landscape in the luxury industries. Of importance was the emergence of fast-moving apparels. For instance, H&M leveraged on their superior supply chain and customer knowledge strategies to take advantage of the production gap brought about by slow and smaller scale of products from luxury fashion companies like Blueberry. Thus a large section was warming up to these emerging fashion houses and presented a headache to traditional companies.

Alternatives

The first option that Bailey ought to choose to solve the issue at hand is concentrating on the luxury customer segments. For any business, Customers are an essential component who profoundly determines the growth of the industry. There is a need for Barley to come up with best strategies for attracting and retaining more customers. Consequently, he needs the best strategy to deal with the three different segments that are vital customers. Absolute customer segment ensures that the business keeps on making sales on all seasons since their purchasing power is high. All that is needed to deal with this group is ensuring the quality goods are available every time and the customer service is excellent. Introducing creative products based on culture and psychological reference is the best way to increase sales on the aspiration market segments which have high spending power. The company should ensure there are variety, quality, and faster-changing products which attract this array of customers. Additionally, Bailey should consider the accessible segments who value the status quo and brand.

Pros and cons

Concentrating on luxury customer segment will help the marketer select the customers needs hence manufacture more products based on their tastes and preference. It also promotes the marketing decision making regarding allocating various resources required to increase sales and quality (Baker, 2014). Consequently putting the luxury customer segments into consideration improves the sales and quality of products offered hence overcoming the high competition in the field of fashion. One disadvantage of selecting the luxury customer segments in solving the issue at hand is the availability of many undifferentiated targets who needs unimaginative products. Sometimes it is a hard to decide on the best design, especially for the aspirational market segments customers (Meanmber & Joy 2017).

The second alternative that Bailey ought to choose to oversee the introduction of digital strategy in marketing and strengthen its control in brand communication is considering the emerging market strategy (Strauss, 2016). Under this alternative, there is need to identify the countries with highest luxury industry to decide on the targets sales and the brand communication techniques to employ. Additionally, the trend in demand for these products in various nations ought to be considered. Barley needs to first strategize on how to outdo the other competitors in the luxury industry in the three best countries; America, Europe, and China. To attract more purchases from the Chinese, Burberry needs to identify the most tourist areas visited by the Chinese worldwide and establish their business. Additionally, face to face marketing should be emphasized in promoting the brand on the Chinese. Consequently, the Indians, Brazilians, and Russians value luxury products hence need to be well-thought-out during the introduction of digital strategy. Every part of the world is moving towards digitalization thus Burberry should be at the forefront to implement digital brand communications and sales in the best luxury sales nations.

Pros and cons

Focus on the emerging markets helps in evaluating the level at which the business is known and perceived in different countries. Consequently, it helps in gathering information about the digital progress of those nation which is essential during the introduction of digital strategy and digital brand communication. It also allows Burberry to know the consumer's tastes and preference and the political and cultural environment of those nations. The leading disadvantage of selecting this alternative is the challenge of predicting the magnitude of the emerging markets. It is difficult to predict the ever-growing global customer and their perception towards the brand. Consequently, introducing digital strategy in various nations is challenging due to increased technological advancements. Some countries like China and America changes technology faster than the rest of the world.

The last alternative that Bailey need to select the decision making is the competitors and their digital strategies. The luxury industry is one of the most competitive industries in the business world. Burberry needs to come up with the best digital approaches to overcome the high competitors like Kering, Louis Vuitton Moet, and Hemes. Most of them utilize the E-business strategy and online marketing. LVMH which is the leaders in the high-quality product in France operates on the digital technology to promote its brands. One of the pros of considering digital strategies used by the competitors is that it offers the best alternatives to consider when introducing the best digital strategy to use in the fast fashion and the new fashion trends (Ryan, 2016). It helps Burberry evaluate the best digital method to incorporate. It is one of the best strategies to promote the company's brand communications and identify with the key customers. The main con of using this alternative is the changing trend in digitalization. The best strategy selected by the competitor in 2015 could not be useful in 2018.Consequently, there is a tendency of shifting the digital strategy often thus a wrong competitor strategy might be selected (Ryan, 2016).

Recommendations

To solve this challenge of which marketing strategy to prioritize, the management lead by the CEO, had to study the alternatives at their disposal. These alternatives to be considered were prioritizing the different subsections of the luxury clients, reaching out to the emerging markets and tackling the challenge of competitors who had advanced digital marketing strategies. In any given company, marketing undertakings are always resourcing intensive processes (Meanmber & Joy 2017). In the case of Blueberry, each marketing alternative was highly capital and time intensive. Thus the company had to decide on one of them and actualize it. That notwithstanding all the three choices were viable each with its benefits and disadvantages.

The best solution was to approach the situation in the perspective of customers. Businesses that are customer oriented in their marketing strategies reap the most benefits in their marketing undertakings. One advantage of prioritizing on the customers is that other marketing strategies can easily be incorporated into it. In this case, a differentiated marketing strategy was most suitable. Blueberrys luxury customers were in three key subdivisions. These were the absolute, aspirational, and the accessible customer bases.

The absolute customer sub-segment despite having few members, it represented the highest purchasing power among the three sections. Their needs are catered by high quality and aesthetic content. Additionally, the group had a high requirement for luxury products adding weight to the need of a specialized marketing strategy. The second segment is the aspirational sub-segment whose members purchasing needs are driven by the need to fit in a high class. This group pushed sales by word of mouth thus widening firms market boundaries. To satisfy the requirements of this subclass, the business had to remodel the emotive sphere of the brand while bringing in the aspect of social and psychological references that suited their price preferences. Last in the customer subdivisions is the accessible segment which comprises of the middle-class and upper-middle-class customers. Their purchasing power was profoundly influenced by the prices of commodities.

Elements in the three alternatives narrow down to the basics of customer targeting. Differentiated marketing allows a firm to cast its net wider by classifying customers in groups. It will ensure that the needs of every customer are met as the business will try to tailor their products to meet the specific needs of each group. Secondly, differential marketing spreads the risky evenly across all the targeted groups. Thus if efforts in one area fail, the subsequent is less compared to a loss in a narrowly focused area. Finally, in this approach, the probable sales volume and effectiveness of scale is higher compared to other undifferentiated approaches.

References

Baker, M. J. (2014). Marketing strategy and management. Palgrave Macmillan.

Castelli, C. M., & Sianesi, A. (2015). Supply chain strategy for companies in the luxury-fashion market: alig...

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