Market Orientation of Burberry Group Plc, UK
Burberry Group Plc is a real luxury brand fashion house in UK, operating its business for more than one and a half century. The company is widely known and acclaimed by for marketing unique fashion accessories. Following the waves of globalization and free trading the company has extended its business overseas. As reported by Jones and Hayes (2008), the company has ranked to be 73rd among the global fashion brands. The genuine growth of the brand and the necessity of the products enquired through the continents have helped the organisation to develop its grandness. The company in 2014 has generated £2,330 million revenue which is literally sophisticated.
But what is surprising that despite having so much profoundness of its products and despite having its universal acclaim, the current condition of the company is not so much provident owing to the frisk of the market and lack of taking competitive advantages. In this research study the researcher is all set to discuss about different aspects of peculiarly and underperformance factors.
Table 1: SWOT Analysis for Burberry Group
Porter’s 5 Force:
Burberry Group is getting more competitive threats from several others that companies. Therefore, application of Porter’s Five Force analysis helps the essayist to delineate the different aspects. Competitive analysis in this respect is literally important. What is more, analysis of all these aspect is very much necessary.
Figure 1: Porter’s 5 Force Attributes
(Source: Kotler et al. 2007)
Threat of Substitute Products:
Luxury and branded products are generally used and purchased by those people who are having high level of income. Therefore, people of this wage group always seek for the best branded products which are not only sophisticated at the same time fashionable as well. To quote to Matsuno and Mentzer (2009), the demand of brand value is increasing these days therefore, premium brands are getting affected. In order to capitalize this market place, other fashion houses like Zara, H&M, Gucci, Prada and others are on the row to attract the customers (Young and Javalgi, 2010). These companies despite being middle ranked pose the market with intense quality of product. When the value of the branded products are in immense high, people switches to the lower cost products. With the growth of digital marketing, these companies are getting benefitted by the switching of the cost intrinsically; therefore, the threat of the substitute products in the market place for Burberry Group is the really immense.
Bargaining Power of Buyers:
For the luxury products, Ulaga (2009) has pointed out, as the customers are having enough money in their hands, barely thinks of switching to a lower cost of product when the quality a matter of question. Therefore, the pricing strategy for the brands is needed to be quality oriented. Psychological satisfaction of the customers by wearing the branded products is very mush necessary which ensures the propagation of the company. For Burberry Group products, as the loyalty of the customers has been attained, retention of the customers has become easy. Brand identity of Burberry Group is sophistically retained which ensures its market statistics. But the fact, as the products are essentially expensive, the company has only a handful of customers. On the other hand, with switching to the other products, ultimate value of Burberry Group is losing.
Bargaining Power of Suppliers:
Suppliers are the supportive power and backbone of retaining the market of a branded product. For Burberry Group the challenge from the suppliers is quite moderate. For manufacturing of the products of Burberry Group, a high level of craftsmanship is needed. But unfortunately with the flux of the mechanical and machinery embroidery system, a gap is getting created in the supply chain. But what is more convenient in this aspect, in no way the manufacturers employ any poor or inexperienced employees which is literally goes in favour of the organisation.
Burberry Group despite being old in the fashion business and acquired immense trust of the customers of UK market place, competition of this organisation is in no way has lessened. With the luxury wardrobe manufacturing companies, competition from the low range wardrobe manufacturers and companies the situation has become cumulative. The middle range fashion groups, nowadays, have started designing sophisticated products as well. But they market those products in lower ranges which is really a strewing threat for Burberry Group (Codita, 2010). Burberry Group is trying to maintain its heritage and originality of the product, however, it is getting severely hit by the low price products of the market. Rather the online services have proved to be a biggest threat for the company as well.
Threat of New Entrance:
Threats for new competitors in the market place for Burberry Group although is low, but less distinctive companies are engulfing the UK wardrobe market. High consumer switching cost, less brand value and other aspects although seems to be very much potential for cutting down the threat of new entrance in the market place. In order to achieve an intrinsic market benefit, less market entrance proves to be a key aspect that helps in developing the market statistics for Burberry Group. As the initial investment is literally high in this business, only a little number of companies can venture to invest. The brand equity of Burberry Group is literally sophisticated that helps in intrinsic development of the organisation in the market place.
For Burberry Group the main threat is the teething competition of the market place. Being a luxury brand the company is having only a limited section of customers in the market place. But the emergence of the middle ranged fashion houses with their intrinsic products in the market place is acquiring the market place voraciously. Fashion brands like Gucci, Louis Vuitton, Prada, Zara, H&M are rendering a huge challenge for the company (Glynn, 2012). Although the loyalty of the customers is trying to be maintained severely through the application of different marketing strategies, however, it appears in no use. The underpinning affect to the customers are really quintessence for the development of Burberry Group market. Even as the company fails to provide sophisticated customer service, it also appears to be a severe problem for the brand not to cherish the competitive advantages of the market place.
Accessibility of the stakeholders of the market place in a large aspect is dependent on the company stakeholders. In accordance with Payne and Holt (2008) for Burberry Group managing their stakeholders of the market nowadays is becoming a problem. Among the stakeholders, the most important group of people are customers, employees, management, suppliers, financiers, shareholders and the government.
Figure 2: Stakeholder Analysis for Burberry Group
(Source: Aaker, 2010)
The approach of the organisation towards the different stakeholders is literally sophisticated which ensures the proximity of the company in the market place. Managing the stakeholders for the organisation is literally important.
Customers: To make the product marketed, organisations are needed to be very much sophisticated in their approaches. Schulze et al. (2012) has mentioned that retention of the customers for this approach is very much intricate which engages more sophistication. Business in a large aspect depends on customers’ satisfaction. For Burberry Group engagement with the customers is not so much sophisticated. As it has already been mentioned that the company is having only a handful of aristocratic and moneyed customers in their account, however, there is no proper conditionality of the market place. In comparison with the other fashion brands, Burberry Group is lagging behind in attracting the customers of the market place.
Employees: The employees, as Mouncey and Baker (2009) has mentioned, plays a significant role in the management. Burberry Group lets the employees feel more fascinated by providing a huge range of felicitations and opportunities. But in comparison with other fashion industries, the felicitation of the employees for Burberry Group is not so much convenient. On the other hand, the hierarchy of the employees are not maintained properly which also creates problems for attaining the employee satisfaction.
Management: Management controls the internal and external marketing strategies which is literally important for a brand or an organisation to be developed and to gain control over the market place. The management stands to be responsible for identifying the necessities of the customers of the market place and befitting products are produced to capitalize the market. For Burberry Group, although management appears to be very much strong and sophisticated in their approaches, to control the market place, but no internal rigidity is maintained. Therefore, the situation has become a fallacy.
Suppliers: Mouncey and Baker (2009) seem to have mentioned that suppliers play a dual ended role. The suppliers are responsible of delivering the raw materials to the manufacturing cell of the company and the final products to the market place. Therefore, the organisations are needed to keep cordiality with the suppliers. For Burberry Group, keeping cordiality with the suppliers is an intrinsic approach. But as Yucel et al. (2009) has pointed out, the relationship with the retailers in the past few years has gone deteriorated.
Investors: Investors play an important game in maintaining the flow of finance. Burberry Group used to work as franchise which seems to have let the fashion brand to be developed intrinsically. Being an authenticated and renowned firm the investors keep their faith on the Burberry Group products. In order to capitalize the market place, Burberry Group keeps the investors always informed and updated about their approaches and the annual financial strategy. The faith of the investors on the development of the organisation is quite prudent which helps in capitalizing the market orientation.
Shareholders: To capitalize the market place, shareholders play one of the most intrinsic roles. Burberry Group once used to control a large amount of shareholders of the market place. But with the time, there is a slick of business. Mouncey and Baker (2009) have mentioned that Burberry Group provides proper dividend to the shareholders each and every year. What is more, shareholders are tried to be kept benefitted whole through the year. But despite of following all these approaches the shareholders of the market place are barely satisfied with the marketing growth of the organisation.
Government: Approach of following the rules of the government and the legal terms for Burberry Group is literally intrinsic. As the company holds the royal status it provides more fascination to the company to follow the governmental rules and regulations.
After going through the stakeholder analysis, the essayist has discovered that the strategical approaches Burberry Group should have to apply for different stakeholders of the market place, both internal and external, is barely followed which makes the stakeholders of the market place to feel uncertainty to invest or to work under this brand (Mouncey and Baker, 2009). What is more, as the organisational integrity is barely maintained, the shareholders and the investors scarcely feel interested to invest for the company. Rather, having no motivation of the employees, the skilled employees prefers for better opportunities in the market place. At the same time the management of the organisation is not at all convenient to understand the necessities of the market place. Therefore, losing the customers is inevitable. What is more, the management is also unable to attain the competitive structure of the market place which delimits all these factors.
7P’s Marketing Mix Strategy:
Analysing 7P’s marketing mix strategy is called to be an effective tool that helps in ascertaining the current market situation for a brand or a company. For Burberry Group Inc. application and analysis of this strategy is really essential. Ulaga (2009) has mentioned that 7P’s marketing tool is an effective approach which not only podcasts the marketing aspects at the same time analyzes the current marketing strategy as well. In the following section of the essay the essayist is going to focus on the different attributes of this tool. Along with focusing on the current difficulties of Burberry Group, the essayist will also try to suggest a strategy applying which the company can rejuvenate its place in the market place.
Product: The products of Burberry Group is undoubtedly luxurious and cohesive which maintains its renowned in the market place. Woodruff (2010) is of this view that Burberry Group operates their business under three genuine brands: Burberry London, Burberry Brit and Burberry Prorsum. The wardrobe and the accessories that Burberry Group launches and markets in UK are targeting all kinds of people of the society. But it is to be mentioned that the bags for women, men and kids for Burberry is really luxurious and aesthetic. For acquiring the market place, Burberry in these days has reduced the price of the products which helps the organisation to gain more competitive advantages in the market place. To cope up with the current market situation, the products that Burberry Group launches in the market place are luxurious and trendy. Therefore, the intensity of the products may said to help the organisation to restore its lost pride and renowned in the market place.
Price: Burberry Group has settled up the price of the product to a level so that it stands to be accessible by all the customers of the market. Woodruff (2010) is of this view that as the company manufactures good quality products, charging highly helps the company to retain its dignity and position. It is the price of the product of Burberry Group that distinguishes it from other brands of the market place. With high price security of the quality is assured by the company. But as there are several competitors in the market place, equity of the brand is maintained. But in these days Burberry to attract the middle income rangers is also producing some low price products. This is really a good sign to attain the market intensity.
Figure 3: 7P’s Marketing Mix Strategy
(Source: Woodruff, 2010)
Promotion: Although in the earlier days the promotion of the Burberry products was not so much exquisite. But to attract a large number of customers of the market place, Burberry had to apply different promotional strategies. In the social media, magazines the promotion of the products of Burberry Group is intrinsic. In these days the company for promoting the products generally depends on the celebrity endorsement which also helps in the enhancing the brand equity of the products as well. The website of the Burberry Group also plays an inevitable role for promoting the products. At the same time, arrangements for the unique and conceptual fashion shows are also fetching attention of the common people towards the fashion products.
Physical Facilities: The showrooms and outlets for Burberry Group are armed with modern and sophisticated products. The logo of the brand seems to be visible on all of the products, packages and billings of Burberry Group which ensures more brand equity. The layouts and hoardings also possess the logo of the company which are enough to attract more customers of the market place.
Place: There are several showrooms of Burberry Group in UK and all of them are located in a convenient place which provides more intensity to the customers. Mouncey and Baker (2009) being situated in the exclusive locations, especially in the posh areas of UK, is helpings Burberry Group in rejuvenating the business. With this concession attracting the customers is essential. The targeted customers of the market place are very much genuine which attract more people. At the same time, being situated in sophisticated areas, selling of the products for Burberry Group has also increased essentially.
People: Burberry Group is having the trained and knowledgeable employees who help in sustaining more potentiality. The aim of the company is to serve all the customers of the market intrinsically so that they that they feel satisfied and brand retention is maintained. Along with the trained people, Burberry Group also recruits fresher and train them intrinsically for enabling them to perform their task. The combinatorial approach of experienced people, Burberry Group expects to attain more intensity in their business.
Process: Application of the process for providing proper customer service and sales process, it forces the customers of the market place to shop proficiently (Mouncey and Baker, 2009). Though it is often heard that the process of communicating with the customers is not so much intrinsic for Burberry Group, the company is trying to bring repelling approaches to make it more furnished. At the same time, it is expected that with the introduction of online marketing process for Burberry Group is really proved to be intrinsic to enhance the sales. It also helps the company to enhance the revenue as well. Therefore, the process is literally important for developing the organisational structure.
Evaluating Burberry Business in Chinese Market:
China being the second largest economic country in the world is in highly demand of the branded clothing. Burberry in the past few years has received a huge boost in its business. A report shows that in 2013, the company acquired £1.2 billion from the Chinese market. In 2014 the demand of Burberry products in China has increased by 20%. Most of the buyers of China are under the age group of 45 years. With the sensitive growth of the internet world, Burberry Group has developed its market orientation in China as well. But with the global slowdown, business of Burberry Group has not grown up so much as it was expected while opening the franchise in China in 2010.
Throughout this essay, the researcher has narrated the process how the deterioration in the business of Burberry Group has come up and what are the possible solution to restore its previous glory and renown. It is evident that the poor application of the business statistics and strategies are really essential for Burberry Group to get denounced in its business. At the same time rejuvenation in this aspect is also necessary.
To retain the market orientation for Burberry Group, the researcher likes to preach some recommendations here:
Aaker, D. (2010) Strategic Market Management: Global Perspectives. 6th ed. Oxford: Blackwell Publishing.
Codita, R. (2010) Contingency Factors of Marketing-Mix Standardization, 2nd ed. USA: South-Western Cengage Learning.
Glynn, M. S. (2012) Business-to-business Marketing Management: Strategies, Cases and Solutions - Page 21, 4th ed. Bingley, UK: Emerald Group Publishing
Jones, R. M. and Hayes, S. G. (2008) The UK clothing industry: Extinction or evolution? Journal of Fashion Marketing and Management, 8 (3), 262-278.
Kotler, P. Gregor, W. and Rodgers, W. (2007) The marketing audit comes of age. Sloan Manage Review, 18(2):25 –43.
Matsuno, K. and Mentzer, J. T. (2009) “The Effects of Strategy Type on the Market Orientation-Performance Relationship,” Journal of Marketing, 64 (4), 1-17.
Mouncey, P. and Baker, S. (2009) The market researcher's manifesto. International Journal of Market Research, 45 (4), 415–433.
Payne, A., and Holt, S., (2008) Diagnosing Customer Value: Integrating the Value Process and Relationship Marketing. British Journal of Management, 12 (2), pp 159 - 182.
Schulze, C., Skiera, B. and Wiesel, T. (2012) Linking Customer and Financial Metrics to Shareholder Value: The Leverage Effect in Customer-Based Valuation. Journal of Marketing, 76:2, 17-32
Ulaga, W. (2009) Capturing value creation in business relationships: A customer perspective, Industrila Marketing Management 32 pp 677 – 693
Young, R. B. and Javalgi, R. G. (2010) International marketing research: A global project management perspective, Business Horizons, 50, 113–122
Yucel, R., Elibol, H. and Dagdelen, O. (2009) Globalization and International Marketing Ethics Problems, International Research Journal of Finance and Economics, 26, 93-105
Woodruff, R.B. (2010) Customer Value: The Next Source for Competitive Advantage. Journal of the Academy of Marketing Sciences, 25(2), pp.139-154
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