Burberry Group Plc is a British luxury fashion house that distributes clothing, fashion accessories and licensing fragrances. Its distinctive tartan pattern has become one of its most widely copied trademarks. Burberry is most famous for its iconic trench coat, which was invented by founder Thomas Burberry. The company has branded stores and franchises around the world, and also sells through concessions in third-party stores. HM Queen Elizabeth II and HRH the Prince of Wales granted the company Royal Warrants. The Chief Creative Officer is Christopher Bailey. The company is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.
Burberry’s entrance into China
In September 2010, Burberry bought out its first Chinese franchise partner in a £70 million deal, giving it greater control over its presence in the country. Burberry took over 57 stores and spread them across 30 cities in the mainland, including nine in Beijing and four in Shanghai. This number is expected to grow to 100 in less than five years. In addition, research on Chinese consumers’ spending habits suggest that there are 36 large and 140 up-and-coming cities that luxury brands should target, giving Burberry plenty of market potential to grow.
Having successfully achieved impressive reach through their retail stores, Burberry has bolstered this presence with a well-planned, aggressive marketing campaign that delves into the culture of China’s new luxury consumers. Brand recognition is important for Chinese customers and most consumers’ purchasing decision is based on prestige, face, and a way to flaunt your social status. According to McKinsey, 70% of buyers of luxury goods in China are under 45 years old. Communication budgets of Burberry are smaller than those of leading luxury brands, but Burberry has a very strong and positive reputation. Burberry has also benefited from the expertise of Ogilvy, the PR and communication leader in China.
Burberry is hardly present in Chinese magazines and displays. Communications efforts are mainly focused on areas of strategic locations, such as airports, shops in famous shopping malls and especially on Internet shopping websites. In order to create new communities of interest, the brand has established a leading presence across different social media platforms. For instance on Facebook, Burberry is the leading luxury brand with over one million fans. In China, the Group has pages on four Chinese social media platforms; Kaixin, Douban, Youku and Sina Weibo. It uses these social media platforms to promote the flagship-store opening of the brand. The outlook in the future for the Group is to increase investment in areas such as digital commerce where the focus is to build a global platform for online sales and enhance digital marketing and content capabilities.
Apart from its promotion strategy, Burberry also adapts a unique pricing strategy. The product hierarchy of Burberry’s product lines indicates a somewhat different pricing strategy. The most exclusive luxury line is Burberry Prorsum. Considering the growing middle class in China that still receive a limited monthly income, Burberry Brit is a more affordable option for Chinese consumers. Then Chinese consumers can trade up to buy London Prorsum when they are at the top of their career. Burberry’s hierarchy of product lines fit China’s economy as social success and accomplishment are the two most important dimensions of luxury for the Chinese consumers. Another factor affecting the pricing strategy of luxury brands in China is the value-added taxes that add up to 35% to the prices of luxury products in mainland China compared to duty-free Hong Kong.
Since luxury products are less expensive overseas, many Chinese consumers purchase luxury goods when traveling abroad and thus contribute to a significant proportion of Burberry’s sales outside of mainland China.
Picture Source: Burberry Beijing