Burberry's Market Position and Strategy

Introduction

Brand collaboration is referred to the development of strategic alliance between the two or more brands for the purpose of creating a special and unique product with application of innovation for carving a niche market for attaining competitive advantage in the industry. The brand collaboration is important because it helps to share knowledge and skills, increase profit as well as market share. In this assignment, the brand collaboration idea for Burberry in the UK fashion industry is being discussed to understand the way it would help to strengthen the overall identity of the brand in the market.

SWOT Analysis of Burberry

Analysis

A strong and leading brand position in the market helps the brand to get high recognition which increases their opportunity for sales as well as earning increased finances (Liu et al. 2016). This is because the leading and iconic position of the brand is usually developed by the brand through their high-quality services and products as well as offering increased satisfaction to the customers through their goods and services. Thus, such attributes make it easily memorable to the consumers as a potential business which makes the consumers buy from them as they believe their finances are properly invested. Burberry has been identified by Interbrand in 2017 as a 6th leading brand in the fashion and clothing industry (www.burberryplc.com, 2018). This acts as its strength as their position has made them easily recognisable as potential business in the market which is going to drive them to make increased sales.

Burberry’s has received two royal warrants that are one from Queen Elizabeth II and another from Prince Charles (www.royalwarrant.org, 2018). It means that the royal of the British Empire believe and use their brand and this attribute acts strength for them. This is because the royals use the best and iconic products available in the market and using Burberry’s clothes means the brand provides the best clothing in the industry. Thus, more customers as a result of such factor would try to avail clothes from Burberry indicate their increased growth through improved sales in the market which leads the attribute act as strength for their business. The offering of diverse products for different categories by Burberry means that customers of different nature such as men, women or children can buy from the brand (www.burberryplc.com, 2018). This acts as strength from the brand as wide number of customers can avail their products helping them to attract a large consumer base of different sex and age in the market.

The premium-priced products are seen usually be able to be available by few consumers in the market (www.theguardian.com, 2017). This is because premium pricing means keeping the price of the products which makes the products to be available by limited consumers as many do not have the financial ability to invest such high amount to buy the product. Thus, premium pricing by Burberry acts as weakness for them as they are able to attract luxury consumers only and not the everyday consumers who are present in bulk amount in the market. The product line of Burberry is limited which act as weakness and this is evident as they offer services related to apparels, beauty products and accessories. However, its other competitors have extended their product line to personal grooming agents, furniture and home decor (Abalkhail, 2019). The limited product lines inform that few related products are marketed by the company which lowers the scope of the consumers to avail services from the brand to buy different products of their needs (Ohkita, 2017). Thus, limited product line minimises the scope of the consumers of Burberry to avail the brand for meeting their different demands of goods which acts to lower their interest over the brand, in turn, making it a weak point for their business.

The demands of premium and luxury products are increasing at a faster pace in the UK market (www.burberryplc.com, 2018). This acts as opportunity for Burberry to have improved sales and get increased profits for their business due increase in the demand for their luxury and premium process products in the market. Burberry is presently seen to have 449 directly operated stores and 49 franchises that showcase their products (www.burberryplc.com, 2018). This acts as opportunity for the company to make their products easily available to the consumers in different areas where the consumers can physically examine and analyse the products before buying to make sure they are investing for the best quality. It would lead to increase their reach to wide number of consumers, in turn, increase their customer base.

In the luxury fashion industry in the UK, there is presence of high competition from brands such as Louis Vuitton, Gucci, Prada and others for Burberry (altagamma.it, 2016)). This acting as threat for Burberry as the competitors by offering better quality products would attract their existing consumers towards them making Burberry face lower competitive advantage as well as growth in the market. There are increased numbers of fake replicas being sold for Burberry's products that are also acting a threat for them. This is because fake products damage the brand image of Burberry in the market making their products to be unwanted by the consumers in the market. In 2018, they brought down £28 million counterfeit products from the UK (www.theguardian.com, 2018). Thus, this means that fake products are creating threat towards managing the image of Burberry in the market.

Brand Position of Burberry

Burberry is seen to have positioned itself as one of the staple luxury and fashion brand in the industry by working in a consistent manner over the years. The brand is seen to have aspired to remain in between labels such as Ralph Lauren and Giorgio Armani who are presently placed in the premium section of brand positioning map. These brands along with Burberry has similar target to acquire consumers of similar personality meaning who wish to have luxurious products. The horse logo of Raphael which is printed on all apparel makes it to position as a lifestyle brand even though its prices are lower than Burberry making it stiff competitor of the company (www.theguardian.com, 2018; www.burberryplc.com, 2018; www.bloomberg.com, 2018). Burberry is also seen to be competing with Gucci who have captured 12% of the luxury accessory market share making it a high priced brand for availing accessories (www.businessoffashion.com, 2017). This causes threat for Burberry as they also rely on the accessory segment for their business. In relation to the Unique Selling Proposition (USP), the Barbour is also seen to be close competitor of Burberry as they also specialise in making outwear coats. On positioning the brands on the map, it is seen that Armani has key focus on apparels but in the recent time has also shared it focus on accessories, cosmetics and fragrances (Robinson and Hsieh, 2016). This means stiff competition for Burberry as they have limited product line with key focus on the apparels only whereas it competitors are positioning in the market with wide product lines making it advantageous for the competitors to rule the market compared to Burberry.

Analysis

The cessation of various trade agreements with the EU as a result of Brexit is going to adversely impact business operation of different clothing companies in the UK (transporteca.co.uk, 2018). This is because Brexit leads UK to get out of EU which would make the UK companies unable to enjoy the favourable EU legal structure and face new legal obligations that are more complex to maintain for performing their business operation. Moreover, it is seen that more than 10,000 European employees work in the UK fashion industry. As a result of Brexit, the EU citizens would be unable to freely work within the UK (www.standard.co.uk, 2019). Thus, the political condition of Brexit is going to create employee shortage in the fashion industry where Burberry operates making it hard for them meet to demand of products. This is because they are going to face lack of employees as a result of Brexit making them unable to manufacture the demanded amount of products for the market. The EU imposes 6.5% tax on import of textiles and after Brexit, the British government would impose another undetermined tax tariff (www.voguebusiness.com, 2019). This is going to adversely impact Burberry and others in the luxury fashion industry as they have to pay double taxation for textile and raw materials to be used in manufacturing their products.

The rise in inflation rate means that the prices of the existing products in the market are going to get increased (www.theguardian.com, 2017). Thus, the increased inflation rate in the UK is going to increase the price of the luxury fashion products sold by Burberry and others which may affect to lower the sales. This is because increased price may make the consumers feel that they are paying more than the consumption they are making in the market. However, the consumers of luxury products focus more on the quality rather than the price of the products. Thus, rise in inflation may not have any adverse effect on the sales of the Burberry as long they maintain proper quality. Further, the UK luxury fashion industry has seen to have contributed up to 2% of the country's GDP (www.jetattitudebook.com, 2018). This informs that the industry has an effective economic condition and is growing effectively that provides proper economic growth opportunity for Burberry to operate in the industry.

In the UK, the attitudes and demands of the public are changing at an enormous rate in relation to fashion (www.forbes.com, 2019). This is going to impact Burberry to remain alert all the times and develop strategies to make quick changes as per the changing demands of the consumers in their business to effectively exist in the market. In the UK, there are many luxury and powerful people living in the country (www.telegraph.co.uk, 2015). This means that Burberry has effective opportunity in the UK to get increased number of consumers who are luxurious and has economic ability to avail their products. The UK luxury fashion industry is using social media to attract more consumers towards them by showcasing their products (www.burberryplc.com, 2018). Burberry is already seen to have a wide social media presence which is evident as they have 40 million subscribers in social media (www.burberryplc.com, 2018). Moreover, Burberry is seen to be the first luxury fashion brand who use 3D technology to let consumers understand how they are going to look in real in the selected dress (www.forbes.com, 2019; www.burberryplc.com, 2018). Thus, it ensures that Burberry is at par working with technology upgradation in the UK fashion industry to offer high-quality services.

Exploring and proposing a new collaboration for Burberry

At present, Burberry can form new collaboration with Gucci to improve their present market position in the luxury fashion industry in the UK. The key marketing strategy of Gucci is that they ensure quality of the products rather than focus on the price as they think that the quality is remembered long even after the price is forgotten (www.forbes.com, 2018). Thus, forming new collaboration with Gucci by Burberry would be helpful for them to improve the quality of their products to stand out in the market without focussing on the price. Gucci is also seen to have a better social media presence in comparison to Burberry which is evident as Burberry has total of 11.2 million subscribers in Instagram whereas Gucci has 22.3 million subscribers (www2.deloitte.com, 2018). Thus, the improved social media presence of Gucci can be used by Burberry by collaborating with them to expand their target customer base offering them better scope to operate in an advantageous position in the UK luxury fashion industry. Gucci accessories are seen to have boasted to get sales of more than 70% in the UK (www.watchpro.com, 2016). Thus, Burberry by collaborating with Gucci can enjoy the captured accessory market by the firm to sell their products with better competitive advantage due to collaboration with one of the vital luxury brand which would also help them to improve their market growth.

Rationale for choosing the collaboration

In the luxury fashion industry, all the focus is presently in Gucci as its parent company which is Kering has reported a growth of 48.7 % in revenue by selling their luxury clothes and accessories through Gucci (www.bbc.co.uk, 2017). The figures ensure that Gucci is in an effective economic position in the luxury fashion industry. Thus, collaborating with them would help Burberry to identify the core strategies used by Gucci which they are to implement so that such hike in revenue can be experienced by them in the UK fashion industry. In Italy, it is seen that they are seeking all the possibilities that can be arranged to remain in ties with the UK. They are even striking a bilateral deal with London to secure trade with Britain and are even ready break their unity with the EU like the UK (www.express.co.uk, 2018). Thus, this means that Italy is framing position to be in business at ease with the UK. Gucci being an Italian company whereas Burberry being a British fashion firm would have the advantage of forming friendly ties through collaboration to keep in trade even during the political turmoil and trade difficulties created through Brexit. This would help Burberry to share knowledge and workforce from Italy through Gucci to built better fashion products as Italy is considered one of the meticulous regions for origin of craftsmanship of luxury fashion materials.

Risk experienced in collaboration

The risk to be experienced in forming collaboration with Gucci by Burberry is experiencing increased import duties and taxes for importing fashion products of Gucci from Italy. This is because as a result of Brexit the companies importing from other EU countries have to face double taxation (import-export.societegenerale.fr, 2018; www.express.co.uk, 2018). It can be resolved if Burberry avoids importing goods from Italy through Gucci and asks them to share designs and use raw materials present in the UK to manufacture products in the country to be sold in the UK. Gucci has recently faced backlash due to promotion of ‘racist’ sweater in the market (www.theguardian.com, 2019). This may act as risk for Burberry while collaborating with Gucci as it may damage their reputation. In order to avoid such consequences, Burberry require to provide statement that they do not support racism and forming collaboration with Gucci is professional and not supporting their intention to hurt sentiment or raising discrimination in the society.

Launching idea of Burberry in the UK market

In order to launch the collaboration, Burberry can use the London Fashion Week ceremony for 2019. This is because during the fashion week in Britain many eminent individuals from the fashion industry are present at the same time where showcasing the collaboration would be quick publicity (londonfashionweek.co.uk, 2019). Moreover, during the fashion week, there are wide numbers of paper and social media personals present who create news to be circulated to the public. Thus, by launching the collaboration during the fashion week would lead Burberry to spend minimum expenses to public their collaboration at the same time reaching their new designs of apparels framed through collaboration to wider population.

Conclusion

The above discussion informs that Burberry has the strength of being a leading luxury brand in the UK. However, the weakness is limited product line and increased competition is a threat for them. In relation to this, Burberry can form collaboration with Gucci who is one of their key competitors in the market. This would help Burberry to collaboratively explore the UK fashion industry by using strength of one another to gain advantageous position in the industry. During formation of collaboration, increased import tariff may be a potential risk but Burberry can use raw materials to manufacture products in the UK with the help of Gucci to avoid importing readymade products of Gucci from Italy. The launch of the collaboration can be made in the UK fashion week as it would create easy publicity for the collaboration.

References

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