Marketing Research Report of Burberry Co PDF

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Marketing Research Report of Burber

CAO Yu B00342612 LIU Wanlin B00484675 JIN Shuang B00331563 WANG Ruozhu B00417377 YUAN Jing B00402796

INDEX EXECUTIVE SUMMARY..................................................................................2 INTRODUCTION............................................................................................... 2 2.1 Problem Definition..........................................................................................2 2.2 Research Objectives........................................................................................4 2.3 Research Questions......................................................................................... 6 3. THEORY AND HYPOTHESES..........................................................................7 3.1 Brief overview of the literature.......................................................................7 3.2 Hypotheses......................................................................................................8 4. METHODOLOGY.............................................................................................. 9 4.1 Research design...............................................................................................9 4.2 Data collection procedure............................................................................... 9 4.3 Measures....................................................................................................... 10 5. ANALYSIS AND RESULTS ................................................................................10 5.1 Consumer behavior....................................................................................... 10 5.2 Brand image.................................................................................................. 13 5.3 Marketing Tools............................................................................................ 15 5.4 Digital marketing.......................................................................................... 18 5.5 Interview analysis......................................................................................... 21 6. CONCLUSIONS AND DISCUSSION................................................................ 22 6.1 Main findings................................................................................................ 22 6.2 Managerial implications................................................................................23 6.3 Limitations and suggestions for further research.......................................... 23 7. Reference List.......................................................................................................25 8. Appendix...............................................................................................................26 Appendix 1 Graphics and Tables........................................................................ 26 Appendix 2 Interview Guideline.........................................................................40 Appendix 3 Online Survey Guideline.................................................................43 1. 2.

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1. EXECUTIVE SUMMARY While many industries have suffered over the past few years, luxury groups are likely to claim a generally worldwide growth. Within the industry, Burberry as a strong English brand presented a remarkable performance continuously. Apart from a series of changes of management team, the decision to purchase back and to fully own their beauty license also attracts public attention. Therefore, our group decided to take this chance to do a throughout marketing research and analysis regarding of Burberry beauty, in order to acquire an overview of the situation. We conducted the research by an online survey as well as individual interviews based on the pre-discussion and hypothesis, and the results are analyzed in five categories: consumer behavior, brand image, marketing tools, digital marketing and interview result. Based on the main findings we conclude, our group comes up with a few suggestive managerial implications for Burberry especially its beauty sector, which is to strengthen its omni-channel marketing worldwide and to enhance the leading position in digital field.

2. INTRODUCTION 2.1 Problem Definition

a. Major Problems Burberry has recently purchased back its beauty license, and it is now ambitious to further develop its cosmetic line to become a bigger player in the luxury business.

The study is a research of the new launched Burberry Beauty cosmetics-related information, including documents and analytical data. Its purpose is to help the brand build a good understanding of the target clients and consumer behavior in order to improve the brand image and marketing strategy in French cosmetics market. More specifically, this analysis aids in defining the original scope, geographic area, and target cosmetics group of clients and make recommendations for the future intervention. The managerial problem is how to develop Burberry Beauty cosmetic business in coherence with its global digital luxury brand strategy? b. Formulation We try to find out the consumer perception of Burberry cosmetic products & brand. Through out the research, we try to find out the perception of the clients in terms of the positioning among different brands in markets and the outstanding characteristics among other brands. Through out the analyze consumer behavior in cosmetic business, we want to know that: (1) Customer preference: whether the customers buy certain products because of our brand heritage or the quality of the product. (2) Consumer behavior: how customers approach the products. For example: shopping online or offline. We also want to know that the marketing impact in cosmetic business. As everyone knows that Burberry is a prestigious brand worldwide. (3) Impact of brand perception and marketing: whether the brand image plays a significant role on purchase of cosmetic products and how does marketing work. We are also interested in the impact of the digital strategy of

Burberry, how effective and important it is to apply digital strategy in luxury world. c. Identification and interpretation Burberry Beauty is relatively new to the market. It has now in-house fragrances and cosmetics, and is now enlarging its cosmetic line. This research is aimed to find out the purchase pattern of the potential consumers, the positioning and perception of the brand, the impact of marketing in cosmetic business, and also whether digital strategy should be adopted.

2.2 Research Objectives

a. Market Potential The global market value of the total cosmetics business is estimated to reach around 180 billion euros, hitting a new record after a steady annual growth of 4-5% since 2010. Asia-Pacific emerging markets remain the strongest driving engines of the growth, while Africa and Brazil show a promising growth pattern in the near future.

Source: Luxury & cosmetics financial factbook 2013, Ernst & Young

Regarding the French market has always remained to be a strong market for cosmetics, with sales in make-ups products exceeding 410 million euros in France in 2011, representing nearly 15% of the total market value in beauty. According to NPD Group, sales of perfumes and cosmetics have been flat and slightly decreasing in the last years, while the sales of prestige beauty market in France (mostly high-end cosmetics sold through selective retail channels) grew by 3% to reach 2,8 billion euros. Research by Euromonitor International has shown a global hunger for super premium cosmetics and other luxury products, while the global market of personal luxury goods has surpassed 200 billion euros since 2012 and is forecasted to keep growing at a 5-6% Compound Annual Growth Rate. Many companies are now expanding product categories to capture the maximum growth of the market, from fragrances to cosmetics and skincare. b. Competitors: There are three kinds of competitors in the market: (1) the super luxury brands that have high status in fashion world and have long stepped in the beauty sector, mostly French houses, such as Chanel, Dior and YSL; (2) historically dominant players in beauty sector belonging to international groups, such as Guerlain, Lancôme and Estée Lauder; (3) new entrants in the business, notably fashion designers like Givenchy, Dolce & Gabbana and Tom Ford, spreading their nets into the premium beauty trade to seize the newly wealthy consumers.

c. Market penetration: Burberry is present in 4 continents, with 58 mainline stores and 153 concession store in Asia Pacific area, 42 mainline and 58 concession stores in Europe and 78 mainline 2 concession stores in Amercias, together with 28 mainline 1 concession stores in the rest of the world. The brand offers a product mix of accessories, which generated 734 million pounds revenue in 2012/2013, men’s wear with 464 million pounds, women’s wear with 618 million pounds and children’s wear with 73 million pounds revenue. The brand sells eyewear and timepieces through licensing partnerships and has been directly operating fragrance and beauty from 1 April 2013. d. Geographic portfolio: Burberry sells its products to the end consumer through both retail (including digital) and wholesale channels. For 2012/13, the revenue from the region Asia Pacific was 745 millions pounds representing 39% of the global revenue, followed by 560 million pounds from Europe, 463 million pounds from Americas and 121 millions pounds from the rest of world, representing respectively 30%, 25% and 60% of the sales.

2.3 Research Questions

a. Structure Part 1 Consumer behavior in the cosmetic industry: to understand the pattern and

factors of consumer behavior in cosmetic business; Part 2 Consumer perceptions of Burberry and other premium brands: to understand the attitude that customers have towards Burberry and other luxury brands in cosmetics world and their strength in different product categories; Part 3 Marketing impact on consumer behavior in the beauty industry: to understand the factors that influence the consumers’ attitude and purchase decision on a brand and its products Part 4 Role of digital marketing and e-commerce in buying cosmetic products. b. Content The research questions are primarily around the consumer behavior and brand perceptions to find out whether developing Burberry Beauty in cosmetic business is coherent with its digital luxury brand strategy or not.

3. THEORY AND HYPOTHESES 3.1 Brief overview of the literature

a. Overview Marketing research comprises one of the most important and fascinating facets of marketing. It is the systematic and objective identification, collection, analysis, dissemination, and use of information for the purpose of improving decision making related to the identification and solution of problems and opportunities in marketing.

Each phase of this process is important. The task of marketing research (MR) is to provide management with relevant, accurate, reliable, valid, and current information. Marketing research has evolved in the decades since Arthur Nielsen established it as a viable industry, one that would grow hand-in-hand with the B2B and B2C economies. We use SPSS system to analyze the data. SPSS is a widely used program for statistical analysis in social science. SPSS also used by market researchers, health researchers, survey companies, government, education researchers, marketing organizations, data miners, and others. b. Summary The purpose of marketing research is to develop a long-term possibility of strategic planning, it could be a stage for the development of or against a specific policy or policy issues provide references. Any decision layer or individual for example enterprises, companies, organizations and enterprises can use marketing research. Secondary data consisting of existing data sets, reports, and documents, usually compiled by other people or organizations, and often for purposes other than those of the present analysis. When properly incorporated into the process of analysis, it provides an essential complement to the primary data collected.

3.2 Hypotheses

Hypothesis 1: brand image & marketing has a strong impact in cosmetics business

Hypothesis 2: different markets have different preferences in product categories and different perception of brands Hypothesis 3: customers of different age groups have different purchase pattern Hypothesis 4: strong correlation between brand awareness and product awareness Hypothesis 5: brand’s good performance/perception in fashion is favorable for its brand extension in beauty/cosmetics Hypothesis 6: digital marketing & e-commerce is an effective channel in cosmetics business.

4. METHODOLOGY 4.1 Research design

The scope of the research is the French market. The research includes two parts: exploratory research and descriptive research. We conducted an online survey and interviews. In the online survey, we asked closed questions to respondents (Appendix 3). Based on the results of the survey we attained at an early stage, we discovered some interesting facts and designed an interview guide ( Appendix 2) to further explore the reasons behind. In the interviews, we asked open questions to find out the explanations of the survey’s results as well as to explore new findings.

4.2 Data collection procedure

We used SPSS to collect the online data. There were in total 144 responses, 108 of which are sufficient and valid. The data analysis done by SPSS and Excel includes

frequency calculations, correlation analysis and so forth. For the interview data collection, we recorded the interviews with audio recorder then transformed into text. To analysis the interview data, we identified highly used words and phrases to detect certain consumer behavior patterns.

4.3 Measures

Most of the questions in the online survey are continuous rating scales, the measurement of which is clear and precise. For drag box questions and ranking questions, the measurement is based on the frequency calculation.

5. ANALYSIS AND RESULTS 5.1 Consumer behavior

We first wanted to know the frequency of our respondents to shop for cosmetic products, in order to get a general idea of the shopping pattern of cosmetic consumers, and we found out that more than half of them shop more frequently than once a month, including 9% shop more than once a week and 51% more than once a month, which is quite frequent. Only 8 out of 108 chose once a year, and we eliminated all the non-cosmetic shoppers. (Graphic 1, Table 1) Among the 108 valid questionnaires we collected, we identified 2 significant group profiles according to their geographic origin (>30% of the total sample pool) : Asia 34 (including China 26, India 1, Japan 2, Singapore 1 and South Korea 4), representing 31.5% in total and Europe 62 (including France 53, Italy 3, Germany 2, 10

and Norway 2), representing 57.4% in total. This is used in all the following geographic correlation analysis if not explained specifically. Also, we identified 2 major age groups, 75 belong to age group of 15 to 24 years old and 33 are over 25, representing respectively 69.5% and 30.5% of the total sample.(Graphic 2, Table 2) In order to draw out the consumer purchase pattern of cosmetic products, we wanted to know the preference of product category among cosmetic products so we asked our respondents to rank the products according to what they own the most and what they use the most, and we found out that the pattern of two answers are quite consistent, among which face products (foundation, powder, blush, concealer…) rank the highest in both questions (2,35 out of 3 and 4,05 out of 5 respectively), followed by eye products (2,16/3 and 3,86/5) and lip products (1,88/3 and 3,53/5). (Graphic 3, Table 3) We wanted to know further if the consumer preference of cosmetic products vary significantly in different zones so we ran a correlation analysis of product preference and countries of origin, and found out that the importance of different product categories varies slightly from country to country. The difference was not striking though, may be due to the fact that our sample pool is too small and that since most of our respondents are ESSEC students, no matter where they come from, our two geographic groups may not be representative enough. From our sample, the most significant difference is observed in the preference of lip products, which 33% (18 out of 55) of European ranked as the most important and

40% (22 out of 55) ranked to be the least important, while the figure of the Asian group was 40% (13 out of 33) and 30% (10 out of 33), almost the reversal result. This finding was consistent with our perception and could be studied further to do an accurate product preference mapping for different geographic market, in order to tailor our marketing focus to each zone. (Graphic 3.1&3.2, Table 3.1&3.2) When asked about the main motives for buying a cosmetic product, nearly 70% of our respondents chose repurchase, while around 40% chose curiosity and 20% chose follow trends/recommendations, which showed that the consumers are quite rational in their purchases. (Graphic 4, Table 4) We ran a correlation study between the motives and the age group and found out an interesting fact that only among those who chose curiosity to be the main reason of purchase, the decision is positively linked with their age, with a Pearson Sig of 0.77. Giving view that the respondents in our elder age group are mainly from 24 to 35 years old, it is reasonable to deduct that they may be more likely to purchase to try out new products because they are more economically independent and confident. (Graphic 4.1, Table 4.1&4.2) Further looking at the drawing factors for buying decision, product functionality was ranked the highest at 4,25 out of 5, followed by brand awareness and product awareness, which were almost the same: 3,78 and 3,76. The price and word of mouth were ranked after at around 3.6, which remained consistent with the previous question, that most of our respondents tend to make independent shopping decision

when buying cosmetic products instead of following others’ advice. Aesthetic design and packaging are ranked as the least important factors at 2,98 and 2,89, which means our consumers tend to be more rational rather than impulsive shoppers. (Graphic 5, Table 5) Since brand awareness and product awareness were the second strongest factor of shopping for cosmetic products, we researched further by asking separately the likelihood of one buying a non-star product from his/her favorite brand and that of one buying a hit-product from an un-known brand. The average likelihood were 3,7 and 3,33, for which more than half of the respondents chose 4 out of 5 for the previous question and 39,8% chose the same answer for the later. (Graphic 6, Table 6) This result is also correspondent with our previous finding that brand impact effect is slightly stronger than product impact. Further comparing the result with the previous preference scale of brand and product awareness, we confirmed our hypothesis that brand-sensitive consumers may be more likely to purchase unknown-product from the brand, with an effective correlation sig of 0,63, while consumer’s buying star product from un-known brand is not related to his/her product sensitiveness, with an insufficient correlation sig of 0,23. (Table 6.1)

5.2 Brand image

5.2.1 Mindshare of different beauty brands As brand image is ranked as the second important criteria during the decision making process, we studied the mindshare of different beauty brands. Respondents

are asked to grade the following brands according to four attributes:

luxury,

aesthetic, emotional and professional (Table 7). Brand index is the sum of the grades of each attribute. We label brands that have a brand index greater than 16 as “super brand”, and that between 12 and 16 as “premium brand”...