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Marketing Strategy of Burberrys Ltd.
Marketing Strategy of Burberrys Ltd. - December 14th, 2010
Wholly Owned Subsidiary of Great Universal Stores plc
Sales: £230.8 million (US$374.1 billion) (1995 est.)
SICs: 2300 Apparel & Other Textile Products; 5651 Family Clothing Stores; 5961 Catalog & Mail-Order Houses
Burberrys are recognized internationally as representing the epitome of true British style. With 55 stores worldwide, two Royal Warrants and six Queen's Awards for export, Burberrys has come a long way since its foundation in 1856.
Burberrys Ltd. is a 140-year-old manufacturer and marketer of men's, women's, and children's apparel, as well as accessories, food and beverages, and fragrances. The Burberry name is virtually synonymous with the tan gabardine raincoat pioneered by the company more than 140 years ago. Writing for WWD (Women's Wear Daily) in 1989, Andrew Collier described the garment as "a mainstay in outerwear worldwide, [that] symbolizes all that is Britain: sturdy and unassuming, equally at home in fine hotels and muddy lanes."
In the mid-1990s, the company had 18 Burberrys stores in the United Kingdom, 20 in Europe, 23 in the United States, and 162 franchised locations in the Asia-Pacific region. Notwithstanding its varied lines, the company's trench coat--offered in about 100 different styles&mdashcounted for approximately 40 percent of its annual sales, or 8,000 raincoats each week. Ironically, however, private label menswear constituted the largest segment of its sales volume. An icon of classic clothing, Burberrys has utilized licensing and brand extensions to appeal to a younger generation of fashion-conscious customers. The brand's worldwide retail sales, including licensees and other retail distributors, total more than US$1 billion. The company is a subsidiary of Britain's Great Universal Stores plc, the very closely held £2.8 billion mail-order and retail apparel conglomerate.
Founder Thomas Burberry was born in 1835 and apprenticed in the drapery trade, establishing his own drapery business in Basingstoke, Hampshire, in 1856. A sportsman, Burberry was dissatisfied with the then-popular rubberized mackintosh raincoat, which was heavy, restricting, and stifling, and therefore unsuitable for extended outings. Inspired by country folk's loose "smocks," Burberry designed a tightly-woven fabric made from water-repellent linen or cotton yarn. While sturdy and tear-resistant, this "Burberry-proofed" cloth was lightweight and allowed air to circulate, making it considerably more comfortable than the heavy mackintosh. The tailor trademarked his cloth "Gabardine," a Shakespearean term that referred to shelter from inclement weather. Burberry developed five different weights of gabardine: "Airylight," "Double-Weave," "Karoo," "Wait-a-bit," and "Tropical." He even patented "Burberry-proofed" linings made from silk and wool.
Burberry was a shrewd marketer, employing trademarking and advertising to great benefit. Illustrated advertisements touting the clothing "designed by sportsmen for sportsmen" drew customers to Burberry's retail outlet, which was established in London's Haymarket section in 1891. Having used a variety of labels to distinguish its garments from imitations, the company registered the "Equestrian Knight" trademark in 1909, an insignia used continuously through the mid-1990s. Also employed in the corporate logo, this image represents several Burberrys ideals. The armor signifies the protection afforded by the outerwear, the "Chivalry of Knighthood" reflects the company's own standards of integrity, and the Latin adverb "prorsum" ("forward") referred to Burberrys' innovative fabrics and styles.
Although the gabardine name was used under exclusive trademark by Burberrys until 1917, Britain's King Edward, one of the first members of the royal family to don the gabardine coat, has been credited with popularizing the Burberry name by requesting the garment by name. Burberry garments have enjoyed a loyal following among royalty and celebrities around the world ever since. The company's clientele has included Winston Churchill, Gary Cooper, Joan Crawford, Humphrey Bogart, George Bernard Shaw, Al Jolson, Peter Falk, Ronald Reagan, George Bush, Norman Schwarzkopf, and Paul Newman. The company also boasts warrants (endorsements of quality) from Her Majesty Queen Elizabeth II and H.R.H. The Prince of Wales. Considered a "rite of passage" by some commoners, a Burberry coat was a prerequisite to a first job interview.
By the turn of the century, Burberrys offered an extensive line of outerwear for both men and women. The company designed hats, jackets, pants and gaiters especially for hunting, fishing, golf, tennis, skiing, archery, and mountaineering. The garments' time- and weather-tested reputation for durability helped make them the gear of choice for adventurers of the late 19th and early 20th century. Balloonists and early aviators wore specially-made Burberry garments that let neither wind nor rain penetrate. Captain Roald Amundsen, Captain R. F. Scott, and Sir Ernest Shackleton wore Burberry clothing and took shelter in Burberry tents on their expeditions to the South Pole in the 1910s.
Burberrys established its first foreign outlet in Paris in 1910 and soon had retail establishments in the United States and South America. It exported its first shipment of raincoats to Japan in 1915. However, it was the First World War that brought widespread acclamation and fame to Burberry. First worn by high-ranking generals during the turn of the century Boer War in South Africa, the Burberry coat was soon adopted as standard issue for all British officers. With the addition of epaulets and other military trappings, the garments came to be known as "Trench Coats," so named for their ubiquity and durability through trench warfare. One Royal Flying Corps veteran wrote a testimonial noting that "During the War, I crashed in the (English) Channel when wearing a Burberry trench coat and had to discard it. It was returned to me a week later, having been in the sea for five days. I have worn it ever since and it is still going strong." The company estimated that 500,000 Burberrys were worn and perhaps more important, brought home, by veterans.
Rainwear became so important to Burberrys that the company soon whittled its lines down to little more than trench coats and tailored menswear for much of the 20th century. The notoriously conservative manufacturer stuck primarily to its well-known raincoats until the 1960s, when a fluke led Burberrys to capitalize on the garments' trademark tan, black, red and white plaid lining. It all started with a window display at the company's Paris store. The shop's manager spiced up her arrangement of trench coats by turning up the hem of one coat to show off its checked lining, then repeated the check on an array of umbrellas. The clamor for the umbrellas was so immediate and compelling that Burberry's made and quickly sold hundreds. This experiment eventually led to the introduction of the cashmere scarf, also a perennial best-seller. By the 1990s, Burberry offered six different umbrella models and scarves in eight color schemes. This turning point in the company's merchandising scheme notwithstanding, rainwear remained Burberrys single largest line into the late 1970s and early 1980s, and menswear continued to dominate.
Burberrys export business increased dramatically during the 1980s, fueled primarily by Japanese and American craving for prestigious designer goods. By mid-decade, exports constituted two-thirds of the British company's sales, with over one-fourth of exports headed to Japan and another 15 percent sold in the United States. By 1996, Burberrys had accumulated a record six Queen's Awards for Export Achievement and ranked among Great Britain's leading clothing exporters. Overseas sales continued to grow by double-digit percentages in the early 1990s.
Realizing that "A fine tradition is not in itself sufficient today," Burberrys sought to broaden its appeal to a younger, more fashion-conscious female clientele. Acknowledging that "The first thing people think of when they hear 'Burberrys' is a man's trench coat," U.S. Managing Director Barry Goldsmith asserted in a 1994 WWD article that "that's the image we're up against." One result was the Thomas Burberry collection, first introduced in Great Britain in 1988 and extended to the United States two years later. The new merchandise was priced 15 percent to 30 percent less than Burberrys' designer lines, bringing a blouse down to $90 versus the normal $150 to $225, for example. Yet it wasn't just the price tags that set this "bridge line" apart from the brand's more traditional garb. The collection emphasized more casual sportswear, as opposed to career wear. "Updated classics" included youthful plaid mini kilts, jumpers, and snug "jean fit" slacks. U.S. advertising executive David Lipman called the line and its model, Christy Turlington, "modernly relevant, yet classically beautiful." At the upper end of the scale, Burberrys launched a personal tailoring service for the ladies. The company's women's division grew 30 percent from 1994 to early 1996 and was expected not only to overtake menswear, but to constitute over 70 percent of total annual sales by 1999.
Although it continued to manufacture 90 percent of its merchandise in British factories, Burberry's also started licensing its name, plaid, and knight logo to other manufacturers. By the mid-1990s, the Burberrys name added panache to handbags and belts, throw pillows and boxer shorts, cookies and crackers, and fragrances and liquor. Childrenswear, stuffed toys, watches, handbags, golf bags, and even a co-branded VISA credit card sported the Burberry check.
Burberry's efforts at product and geographic diversification appeared to be paying off in the mid-1990s. Sales (including a small sister subsidiary, Scotch House) increased by over one-third, from £200.9 million in fiscal 1994 (ended March 31) to £267.8 million in 1996. Net income before taxes grew twice as fast, from £41.1 million to £70 million, during the same period. Given the company's timeless appeal, reputation for quality, strong licensing program, and its backing by British retail powerhouse Great Universal Stores, Burberrys appeared poised to sustain its record of rapid, profitable growth in the mid-1990s.
Principal Subsidiaries: Burberrys Limited (USA); Burberrys (Products) Ltd.
Last edited by anjalicutek; December 14th, 2010 at 10:17 AM..
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