Burberry Marketing Plan PDF

Preview

Summary

Marketing plan for Burberry to create a profitable and innovative augmented reality experience both online and instore.
Lecturer Dr. Yang Lui
This was graded 73/100....

Description

Burberry Marketing Plan Integrating Augmented Reality Sophie Nelson - 40240258 2,013 words

1.0Executive Summary As we strive to delve deeper into combining fashion with digital technology, we are planning to develop an Augmented Reality experience for our consumers, which can be accessed both online and instore. Our augmented reality system would allow consumers to try on clothing and accessories virtually, online, or in our retail stores, to offer a personal experience (Batat, 2019). Our objective is to expand our services to offer Augmented Reality in Asia, Europe, and the USA, where we are becoming increasingly profitable, whilst offering a seamless omnichannel experience for consumers and retaining our core customer (Khomami, 2019).

2.0Situation Analysis It is important to consider where our company currently stands in the market and compared to our competitors. SWOT analysis is key in evaluating our marketing strategies used so far.

2.1 Market Summary Burberry has a variety of segments among the population with the need for functional luxury standing out (Jacobson, 2007).

2.1.1 Market Demographics Our target market includes middle-class males and females, with high disposable incomes, and those working in the fashion and social influencing industries. We wish to target a younger market with our increasing digitalisation. We currently operate in the Geographic segments of Asia-Pacific, America, Europe, and the Middle East (Bhasin, 2020), with 431 stores worldwide. Revenue in both Asia-Pacific and America grew by 2% between 2018 and 2019 (Khomami, 2019).

2.1.2 Market Needs

2

Target Segment High income, uppermiddle-class adults

Consumer needs met by augmented reality - An emotional and personalised experience instore (Batat, 2019). - Exclusive mobile features. - In-depth shopping experience when choosing products (McDowell, 2020)

Social media influencers

-

Higher engagement from followers (McDowell, 2020). A study by Shopify (2019) found that viewing products through augmented reality increases conversion rates by up to 250%.

Younger consumers entering the market

-

The ability to try on a product before purchasing creates a new way for young consumers to interact with luxury products (Ogievich, 2019). A report by Burberry (2019) shows demand for luxury goods that they will

widely research before purchasing. Personal shoppers and stylists



The ability to work remotely. Stylists would be able to style clients virtually, saving time and travel costs.

2.1.3 Market Growth Both the Augmented Reality market and the luxury goods market have sustained increases in market value over recent years. An article by TechJury (2019) predicts there to be 1 billion AR users globally, with that figure increasing to 3.5 billion by 2022 (Malik, 2019). The luxury goods market grew by 5% in 2018 – this is shown in figure 1 (O’Connell, 2019). We have also seen an increase in demand from Chinese consumers and an expanding number of young consumers entering the market, with the rise of digital (Khomami, 2019). Figure 1

Value of the personal luxury goods market worldwide from 2009 to 2019 (in billion euros).

3

2.2 Competitive Review Burberry has a unique democratic position within the luxury market, being positioned as a niche somewhere between luxury and super-luxury, offering both classic and contemporary styles. Burberry’s biggest competitors include Coach, Gucci, and Prada (Davis, 2020). Figure 2 shows Burberry’s total revenue in comparison to our top competitors as of 2019 (O’Connell, 2019). Although figure 2 (Arienti, 2019) shows a total revenue below our competitors, it does not show that we are the most successful luxury fashion brand at integrating digital offerings (Hoang, 2017) which will further consolidate our place in the luxury market, where we were ranked as the 7th most valuable brand in the market in 2019 (O’Connell, 2019). Figure 2

Burberry’s total revenue in 2019 compared to 3 top competitors

4

2.3 SWOT Analysis Our SWOT analysis shows that we are in a good position with strengths to balance our weaknesses and several opportunities across both the digital and luxury goods market.

2.3.1 Strengths 1. History with technology: We were one of the first luxury brands to digitalise in 2009 (Milne, 2015). Our mission to become increasingly digital has been consistently followed through, dedicating 60% of our marketing budget to digital media (Barrett and Bradshaw, 2011). 2. Previous collaborations: We have previously partnered with digital companies including WeChat, Apple, and Google (Kolb, 2014) to bring our digital media visions to life. 3. Brand name: Our well-established brand which supports a strong image synonymous with quality. Our brand image combined with digital experiences allowed us to enjoy an increase in repeat purchase rates by 50% in 2017 (Marr, 2017).

2.3.2 Weaknesses 1. Positioning: Our unique selling proposition and positioning in the luxury or super-luxury markets is not clearly defined and could lead to opportunities for our competitors (CPP-Luxury.com, 2017). 2. High staff turnover: A high turnover rate incurs costs associated with recruitment, training, and efficiency (Gasparini, 2017).

2.3.3 Opportunities 1. Consumer interest in technology: Consumers have shown a growing interest in digitalisation, where 71% of customers would prefer to go to a store that offers augmented reality experiences (Malik, 2019). 2. Increase in customer spending: A report published by Deloitte Global (2019) shows a 5.3% increase in consumer spending on luxury goods between 2015 and 2017.

2.3.4 Threats 1. Augmented reality costs: There are costs associated with the development of augmented reality for use in retail, with feature-rich, custom-build software costing upwards of $300,000 (Golosovskaya, 2019).

5

2. Counterfeit goods: ‘Knock-off’ goods dilute our brand image. We recently destroyed £28m worth of products to guard against counterfeiting (Khomami, 2018). 3. Competitors: Our competition may integrate their brand into the digital market.

6

3.0Marketing Strategy Burberry will focus to push outside of the box and differentiate more from our competitors by continuing to digitalise the Burberry experience.

3.1 Marketing Objectives We have high reaching but achievable objectives which include providing consumers with seamless omnichannel experiences and an enhanced luxury store experience (Burberry, 2019). Delivering long-term sustainable value to our shareholders is also key.

3.1.1 Segmentation We segment the consumer market in the following ways: 

Geographic – We will focus on our North American, Western Europe, and Chinese segments in particular. The US one of the largest markets for luxury goods, with a value of 71 billion euros in 2018 (O’Connell, 2019). China’s share of the global luxury goods market stood at 33% in 2018 and is projected to increase to 41% by 2025 (Rambourg, 2014), representing 75% of the market growth between 2018-25 (MOT Group, 2019).



Demographic – We target our products to males and females aged 18-50, with a high disposable income of no particular race or nationality (Kotler et al., 2016). We are focusing mostly on millennials, who have an increasingly attractive disposable income, are digital in their daily lives, and have become the influencers and critics in society (Davis, 2014).



Behavioural – The purchasing behaviour of our younger target market is very different from that of the older, with younger consumers spending longer researching products before purchasing (Burberry.com, 2019). High-value consumers of luxury products seek the benefit of a personalised and exclusive experience when shopping for high-end goods which is possible with the right technology in place (DeAsi, 2020).



Psychographic – There is a strong psychological need to maintain social status amongst luxury consumers and luxury consumers tend to act similarly, regardless of economic or social surroundings (Husic and Cicic, 2009).

3.1.2 Targeting Our primary consumer target is millennials and our secondary target is existing older consumers, both with high income, seeking an exclusive and immersive digital experience. We are also targeting influencers who may want to promote our brand. Our branded augmented reality experience will allow these customers in the US, Western Europe, and China to engage emotionally with our brand, through the personalised content (Batat, 2019). 7

3.1.3 Positioning We will continue with the theme of ‘functional luxury’ to position ourselves amongst our competitors but will align ourselves with our more superluxury competitors, mentioned in 2.3, by increasing prices to consolidate our place in this market (Yiasoumi, 2018). This is illustrated in figure 3 (Burberry, 2019) and will be endorsed alongside immersive, luxury content (Batat, 2019). Figure 3

Our New Brand Positioning

High price

Low price Fashion-forward

8

Heritage

3.2 Marketing Mix A core element of our marketing strategy is providing our consumers with a more immersive experience.

3.2.1 Product Online shopping is convenient for shoppers, however, the range of services we can provide online is limited as customers cannot feel or visualise the goods entirely (Mooy and Robben, 2002). AR provides a more environment-related interface for online customers (Haung and Liao, 2005) by overlaying elements presented by the computer or phone (our products) in the real world (Poushneh and Vaquez-Parraga, 2017). For our online consumers, this could be a bedroom, office, or themselves, whilst our in-store customers view the products on themselves in a virtual fitting room. Augmented reality will also bring benefits to our in-store retail experience as it can improve brand attitudes through the role of inspiration (Rauschnabel et al., 2019) and will create strong connections with our customers by engaging them in the sensory experience (Batat, 2019). To develop the augmented reality service, a 3D geometrical modelling algorithm would need to be applied for the automatic generation of precise body or space scan data to guarantee the quality of fit (Pachoulakis and Kapetanakis, 2012).

3.2.2 Price We don’t compete on price with our competitors, but more through product differentiation and brand equity as we are a luxury brand. The use of the augmented reality service online and instore will be free. Although, it’s implementation has been found to increase in-store traffic by 30% (Kusumoto, 2020). As for those who prefer to shop online, 40% are willing to pay more if they test products with AR (Drake, 2019). To gain leverage into the high-end luxury market we will include higher-priced goods. This will allow us to break even after the cost of developing the feature, which costs on average $300,000 (Golosovskaya, 2019). In 2019 we pulled in revenues of £2.7 billion in the financial year 2019 (Burberry, 2019).

3.2.3 Place / Marketing Channels We have an indirect marketing channel, comprising of the manufacturer, retailer, customer (Kotler et al, 2016), and have three main channels of distribution: retail, wholesaling and, licencing (Burberry, 2019). We will be 9

solely using retail for this digital service, which will be available online and through our app where our brand targets 150 countries (Burberry, 2019). It will also be available in-store in regions where we are most profitable, shown in figure 4 (O, Connell, 2019).

Figure 4

Number of Burberry stores worldwide as of 2019, by outlet type and region

3.2.4 Promotion / Marketing Communication The best way to advertise to the millennial target market is via our social media platforms, namely Instagram, Facebook, Twitter, and Snapchat. Digital has been the fastest-growing luxury sales channel growing 22% in 2018 (Burberry, 2019) and with an already strong online presence, this is the best way to reach our 39 million followers (O’Connell, 2019). To reach an even wider audience we will communicate non-personally through informative advertising, using an emotional appeal (Kotler, et al., 2016). This will consist of pictorial media and ambient communication 10

using displays and billboards as well as advertising on public transport and in print in fashion magazines across our 3 target geographical areas mentioned above.

4.0Action Plan We have plans in place to be able to maximise the benefits of our visual concept; augmented reality. We will work with a company already developing personalised Augmented Reality, such as Engine Creative; a digital creative agency in the UK (Engine Creative, 2020). Our plans include:    

Launch virtual fitting rooms in-store using Augmented Reality, in 75 stores across the USA, Western Europe, and China in the first two years of installation. Launch Augmented Reality online and on a smartphone through the Burberry app, available in the 150 countries we currently target with this service (Burberry, 2019). To build a more seamless omnichannel experience for consumers using our online, mobile, and in-store sales channels (Kotler, et al., 2016). Firmly position the brand in the top end of the luxury market, alongside our superluxury competitors.

4.1 Implementation To achieve our plans outlined in section 4.0, we will work with a company already developing personalised Augmented Reality, such Engine Creative; a digital creative agency in the UK (Engine Creative, 2020). We will also work closely with several fashion bloggers and social media influencers to capture a younger target market. We want to Escalate the number of converted clicks online and on smartphones using advertising online and on social media to draw traffic to our digital service. To give consumers the same personalised experience across all 3 channels, our marketing team will continue to develop Burberry.com and the Burberry app for smartphones, and the product design team will work closely with the developers of the technology to design and install the instore augmented reality experience.

4.2 Timeline Begin work with augmented reality developers on instore and

Test the first virtual fitting room in our Regent Street Flagship Store in London, UK (Burberry 2020)

Consistent omnichannel experiences enjoyed by our target customers across digital and

April 2020 June 2020

December 2020

June

2021 Thearketing team will select influencers and bloggers and begin collaborating, as well as start media promotion on indirect channels

Have our digital service available across 20 stores in The USA, Western Europe, and China

Bibliography Arienti, P. (2019) Global powers of luxury goods 2019, United Kingdom: Deloitte Global.

Barrett, C. and Bradshaw, T. (2011) Burberry in step with digital age, Available at: https://www.ft.com/content/70689408-d3f2-11e0-b7eb-00144feab49a (Accessed: 1st April 2020).

Batat, W. (2019) The new luxury experience: Creating the ultimate customer experience, Springer [Online]. Available at: http://encore.qub.ac.uk/iii/encore/record/C__Rb2146195__Sluxury__P0%2C3__Origh tresult__U__X6?lang=eng&suite=qub (Accessed: 29th March 2020).

Bhasin, H. (2018) Marketing Mix of Burberry, Available at: https://www.marketing91.com/marketing-mix-of-burberry-burberry-marketing-mix/ (Accessed: 30th March 2020).

Bhasin, H. (2020) What is Geographic segmentation?, Available at: https://www.marketing91.com/geographic-segmentation-segmenting-geography/ (Accessed: 10th April 2020).

Burberry (2020) 121 Reagent Street, Available at: https://uk.burberry.com/stores/regent-street-store/ (Accessed: 18th April 2020).

12

Burberry (2019) Burberry annual report 2018/2019, United Kingdom: Burberry Group plc.

Busel, M. (2017) The 6 biggest challenges facing Augmented Reality, Available at: https://haptic.al/augmented-realitys-biggest-threats-3f4726a3608 (Accessed: 7th April 2020).

CPP-Luxury (2017) Burberry shifts strategy towards ultra-luxury positioning, Available at: https://cpp-luxury.com/burberry-shifts-strategy-towards-ultra-luxury-positioning/ (Accessed: 3rd April 2020).

Davis, D. (2020) The 9 most valuable luxury brands in the world, Available at: https://www.businessinsider.com/most-valuable-luxury-brands-in-the-world? r=US&IR=T (Accessed: 10th April 2020).

Davis, S. (2014) Burberry's blurred lines: The integrated customer experience, Available at: https://www.forbes.com/sites/scottdavis/2014/03/27/burberrys-blurred-lines-theintegrated-customer-experience/#73e2a75c3cc6 (Accessed: 11th April 2020). DeAsi, G (2020) 10 Powerful Behavioral segmentation methods to understand your customers, Available at: https://www.pointillist.com/blog/behavioral-segmentation/ (Accessed: 11th April 2020).

Gasparini, R. (2017) Burberry's marketing success, Available at: http://s3.amazonaws.com/academia.edu.documents/51157537/Burberry_Update_2 017.pdf (Accessed: 1st April 2020).

Golosovskaya, A. (2019) How much does augmented reality app development cost in 2019?, Available at: https://invisible.toys/create-augmented-reality-apps/augmentedreality-app-development-cost/# (Accessed: 3rd April 2020).

Hoang, L. (2017) Can luxury challengers take Burberry's Digital Crown, Available at: https://www.businessoffashion.com/articles/fashion-tech/luxury-challengersburberry-digital-crown (Accessed: 3rd April 2020). Huang, T. and Liao S. (2014) 'A model of acceptance of augmented-reality interactive technology: the moderating role of cognitive innovativeness', Electronic Commerce Research, 15(1), pp. 269-295.

Husic, M. and Cicic, M. (2009) 'Luxury consumption factors', Journal of Fashion Marketing and Management, 13(2), pp. 231-245 [Online]. Available 13

at: https://www.emerald.com/insight/content/doi/10.1108/13612020910957734/full/ht ml(Accessed: 10th April 2020). Jacobson, L. (2007) ‘Burberry Case study’, Available at: https://laurenmjacobson.wordpress.com/case-studies/burberry-case-study/ (Accessed 13th April 2020). Khomami, N. (2018) Burberry group, Available at: https://www.theguardian.com/fashion/2018/jul/19/burberry-destroys-28m-stockguard-against-counterfeits (Accessed: 1st April 2020).

Kolb, A., 2014. Burberry, The Most Digitally Advanced Company in the World.

Kotler, et al. (2016) Principles of marketing European edition, 7th edn., United Kingdom: Pearson Education Limited.

Kusumoto, L. et al (2020) Augmented shopping: The quiet revolution, Available at: https://www2.deloitte.com/uk/en/insights/topics/emergingtechnologies/augmented-shopping-3d-technology-retail.html (Accessed: 13th April 2020). Malik, N. (2019) 35 Essential Augmented Reality stats, facts, and trends for 2020 and beyond, Available at: https://citrusbits.com/stats-and-facts-about-augmented-reality/ (Accessed: 1st April 2020).

Marr, B. (2017) The amazing ways Burberry is using artificial intelligence and big data to drive success, Available at: https://www.forbes.com/sites/bernardmarr/2017/09/25/the-amazing-waysburberry-is-using-artificial-intelligence-and-big-data-to-drive-success/#2da03b934f63 (Accessed: 3rd April 2020).

MOF Team (2019) The luxury report: the state of the industry in 2020 and beyond, Available at: https://matterofform.com/the-luxury-report/ (Accessed: 13th April 2020).

Mooy, S. and Robben, H. (2002) 'Managing consumers’ product evaluations through direct product experience', Journal of Product & Brand Management, 11(7), pp. 432446.

Moss, A. (2019) 20 Augmented...