Currently, I am interning at Burberry as a sales and management associate. The company focuses on design and sales of luxury clothes such as shirts, trench coats, skirts, dresses among other items. It is fairing quite well in the past few years despite the stiff competition and sharp decline in its sales. One of its major causes of decline is the sheer drop of outlets in the Asian market. The articles I choose tell of different reasons as to why the Asian market as well as the immediate marketing strategy Burberry used to compensate it. The purpose of focusing on these areas is to understand how the market works and learn from the mistakes other people made while in leadership.
The first article, by Jathy Chu and Megumi Fujikawa, talks about the revamping of Burberry’s image in Japan. Burberry’s products fared badly over the last few decades due to an agreement made between the company and a local vendor (Chu and Fujikawa par 1). The agreement limited the brand to exercise its powers towards the sale and distribution of its products. Hence, the local vendor, Sanyo Shokai, has authority over these processes, leading to its steady decline. The closure of Sanyo Shokai will shrink the market presence of Burberry from its initial 400 stores to two dozen stores (Chu and Fujikawa par 2). The chief executive of the brand’s Asia-Pacific region states that the company suffered immensely from overexposure by the license, and it was a costly mistake. In a bid to regain from the drop, Burberry seeks to focus on expensive items such as trench coats and ditch the cheap clothes such as miniskirts. The reason behind the move is the incline of sales by tourists over the past 15 years.
The second article, by Saabira Chaudhuri, focuses on Burberry’s shares decline due to the weakening Asian demand. Its mid-year report on the big decline of sales growth from its same-store led to the weakening of its share price (Chaudhuri par 2). The decline in sales occurred due to the low spending witnessed in mainland China and Hong Kong. Previously, Burberry recorded great profits from Chinese high spenders in Hong King and mainland China. However, the recent macro environment pushed the shoppers to buy their products from other international destinations. The weakening Euro is another cause for the shift as Chinese tourists find it cheaper to buy products from Europe (Chaudhuri par 6). The wealthier Chinese consumer tends to buy their products in Japan where Burberry commands two percent of the market. Luca Solca, an analyst from Exane BNP Paribas, states that there might be fatigue on Burberry’s brand. The company should focus on creating a new strategy that will help increase its brand in international markets especially Japan.
The third article is a case study by Michel Cao Tuan Phan on the social media strategy by Burberry. The author looks into the brand’s history and financial progress over the years. In 2000, Burberry’s image faced a major brand misrepresentation from its customers (Phan 216). It was responsible for the ‘Chav’ attack. It began after the company rebranded its strategy in 1997 by adopting the slogan ‘Protect, Explore, and Inspire’. It was a successful move and drew in new customers such as the British football hooligans. The group brought down the image for Burberry as it represented brash young people, also known as chavs (Phan 217). They were loutish and anti-social to people around them. With time, bar owners banned anyone who came to their premises with Burberry wear, as they feared violence erupting in their premises. In a bid to recover the image, Rose Marie Bravo created an aggressive communication strategy.
The first step was to define the company’s brands through photos. They hired models and celebrated fashion photographers who would bring their perspective on the realization of each brand. The next step was to intensify on social media marketing. At the time, social media was a massive market that would help broaden the company’s luxury brands and target the international markets. Apart from that, it helped them in diversifying its sales and distribution market through online stores (Phan 218). Its focus was to create a customer base for the young generation, as their products targeted such markets. The final strategy was to launch Burberry Prorsum, the company’s high-end range products for the wealthy customers. The plan bore fruit in the end as the company was in a position to regain most of its markets and expand into new ones.
The three articles show the issues facing Burberry and its bid to stay ahead of its competitors. Throughout its existence, Burberry has had its fair share of challenges in the market. However, they seem to figure out most of the issues and come up with a convincing strategy. The social media strategy proved beneficial to the company as it was in a position to meet its target. The recent strategy of increasing market share in Japan is yet to show its results though the CEO is optimistic about the idea. The articles share a common outlook of the mass market’s impact towards the company. For instance, the British football hooligans led to the decline in sales, same as the decline caused by Sanyo Shokai. The major difference between the articles is time and event. Phan’s article focuses on an event that occurred in the early 2000’s while the other two articles focus on the current events. In conclusion, Burberry’s brand continues to grow and overcome some of the pitfalls. Its main teaching is that simple mistakes such as target market or licensing can ruin a company’s overall image. There is a lot I will learn from the internship especially on how to recover from market changes.
Works Cited
Chaudhuri, Saabira. Burberry Shares Dive on Weaker Asian Demand. 15 October 2015. Web. 3 March 2016. <http://www.wsj.com/articles/burberry-shares-fall-on-weaker-asian-demand-1444895045>
Chu, Kathy and Megumi Fujikawa. Burberry Revamps Its Image in Japan. 14 August 2015. Web. 3 March 2016. <http://www.wsj.com/articles/burberry-revamps-its-image-in-japan-1439547804>
Phan, Michel Cao Tuan. "Social Media and Luxury Brand Management: The Case of Burberry." Research Gate (2011): 213-222. Online.
