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An analysis of Burberry Builds Success With Chinas Luxury Consumers

According to the news provided, the iconic British luxury brand – Burberry achieved a great success in China. Burberry made a performance record with $2. 1 billion sales for the six months through March (Clode, J, 2012). However, Burberry’s marketing strategies played a vital role in their success, for example Global marketing, STP, CRM and digital marketing. Furthermore, the news also mentioned some marketing issues such as consumer behavior, advertising and promotion, and some skills or technologies needed for marketers in the future.

It believes that global marketing is necessary for Burberry’s survival. As the economic booming, China has become the second biggest economy in the world. Their huge populations, potential and increasing demand, offering boundless opportunities to foreign companies. Thus, many luxury brands rushed China’s rapidly growing consumer markets in order to obtain advantage due to its favorable economic environment. On the contrary, The UK’s domestic markets for fashion industry are no longer as rich in opportunity, even shows a declining trend.

Moreover, the main purchasing power for Burberry is come from high-net-worth consumers, ‘if China has only 0. 2 millionaires per thousand people, it trails only the UK, US and Germany in the total number of millionaires. (Kotler et al,

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2008, pp. 946-947)’. According to the annual report of Burberry (Our Strategy, 2012), in order to meet China’s demand, in 2012, 18 flagship stores have been added in emerging markets by Burberry, while ten stores were in China. In terms of existed stores number in emerging markets, China enjoyed 63 stores out of total 154 stores until 2012.

As a result, sales were increased by 20 percent in China compare to other markets. The news provided describes China’ markets as ‘luxury-buying behaviors and loyalties are not legacies but created by impressions formed while shopping. (Clode, J, 2012)’. In order to build the optimized relationships with Chinese consumers, STP (segmentation, targeting and positioning) is crucial for Burberry creates value for targeted customers. The diagram below explains the main steps in market segmentation, targeting and positioning (Kotler et al, 2008, p.410).

(Steps in STP, Kotler et al, 2008) Those four elements have been effectively applied on Chinese markets by Burberry, for example, Burberry is positioning as an up-market and exclusive British luxury brand, psychographic segmenting their consumers into different groups such as different social class and lifestyle, also segmenting them based on income. The most attractive consumer group for Burberry in China is the one with high income, especially young people, which is also the targeting strategy of Burberry.

Thus, based on the understanding of STP, Burberry’s design for Chinese young customers has been mixed with a warmer and playful character in order to matches China’s optimism and experimentation (Clode, J, 2012). The author of the news believes that offering customized design for specific segment’s consumers is a significant differentiation strategy of Burberry, which differentiates Burberry from other luxury brands. Burberry is benefited from its engagement with luxury consumers in China is a key point of the news, while the engagement cannot live without an important marketing issue, CRM (customer relationship management).

CRM is defined as ‘a process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction (Kotler et al, 2008, p. 24),’ In order to maintain customers’ loyalty, Burberry conducted several activities for Chinese markets in 2012, for example, as news reported (Clode, J, 2012), Burberry invited many Chinese celebrities to their Prorsum Winter Show, such as Jolin Tsai and Vivian Hsu.

According to Burberry’s annual report (Our Strategy, 2012), ‘Customer centricity’ is a significant strategy which demonstrated how Burberry focus on their customer service in order to optimize their customer’s satisfaction. Besides, to satisfy or even exceed Chinese customers’ expectations, Burberry introduced their ‘digital retail model’ in China. Fabulous decoration of stores, innovative shopping experience and digitizing events help Burberry manage their customer relationship perfectly.

As the development of technology, digital marketing plays a crucial role in promotion nowadays. It is believes that new technologies are not only contribute to a marketers performance dramatically also bring numerous benefits to consumers. For example, E-commerce is increasingly popular in modern life due to its convenience; it also increased seller’s efficiency. Burberry followed the trend, has become a ‘Clicks-and-mortar company’ which is adding online marketing to their operation (Kotler et al, 2008, p.849).

Besides retail websites, Burberry also partnered many social media such as Facebook, Twitter and YouTube, the news (Clode, J, 2012) revealed that Burberry broadcast their new store opening party on Sina Weibo (Chinese Twitter), enjoyed 3 million viewers. People exchange their information and promoting Burberry’s image for free in these social-media platforms. Burberry Company admitted that investment in digital technology played a significant role in their success (V3, 2012).

Currently, Burberry has become a digital marketing leader in fashion industry, because they are not just only a Clicks-and-mortar company, also combined with another digital marketing strategy ‘Digital retail model’. It is a combination of digital media with real retail stores, as the news introduced (Clode, J, 2012); ‘the stores equipped with interactive touch screens also mirrors, sales staff armed with iPads,’ offering ultimate shopping experience for customers. As a result, Burberry enjoyed 21 percent growth in fourth quarter sales in 2012(V3, 2012).

Furthermore, Burberry also added innovation elements on their standout runway presentation. ‘Runway models projected as holograms that clashed and exploded’ (Clode, J, 2012), creating unusual visual expression instead of traditional catwalk, which is also an incomparable advertising in luxury industry. In the final analysis, the news demonstrated two main reasons of Burberry’s delightful performance in 2012; one of them is their investment in digital technologies, another reason is the growth in emerging markets especially China.

Nevertheless, international markets and digital marketing is offering countless opportunities for luxury companies, whilst hiding unpredictable risks. In order to achieve success, company’s segmentation, targeting and positioning strategy is needed. Besides, customer relationship management is always vital for maintain or increase customers’ loyalty and satisfaction. After the success of Burberry’s marketing innovation, it believes that the potential of digital marketing will be explored further in the future.

References:

Clode, J. 2012, ‘Burberry Builds Success With China’s Luxury Consumers’, Ad Age, Available from: http://adage. com/article/global-news/burberry-builds-success-china-s-luxury-consumers/234679/ Date accessed 6/12/2012 Kotler, P. Armstrong, G. Wong, V and Saunders, J. 2008, PRINCIPLES OF MARKETING, 5TH EDTION, Harlow: Pearson Education Limited, pp. 24-947.

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