2. B U R B E R R Y H I S T O R Y – TH E B E G I N N I N G . . .
• In 1856, Burberry was opened in a small outfitter’s shop in Basingstoke Hampshire,
England by Thomas Burberry, a 21-year-old draper’s apprentice. Burberry’s
customer base grew throughout the 1800s.
• Burberry offered an extensive line of outerwear for both men and women. The
company designed hats, jackets, pants and gaiters especially for hunting, fishing,
golf, tennis, skiing, archery and mountaineering.
• In 1901, Burberry was commissioned by the War Office — a department of the
British Government — to design a new uniform for the British Officers.
• The invention of Gabardine in 1880 — a breathable, waterproof and tear-proof
fabric, proved to be a key development for Burberry, putting the company on the
world map within the apparel industry.
• Over the years, the brand grew and maintained their quality design and gained public
fame and celebrity status.

5. The Luxury Industry
• A new part of the luxury industry – “Experience-Based Luxury”, was a growing segment of
the luxury market..People were enjoying much more material comfort in comparison with
previous generations, resulting in a trend of a cultural shift for personal fulfillment and
aspiration through experience
• There was sudden cultural shift also came a growing demand for a luxury experience as an
aspect of shopping in-store for personal luxury goods.
• In line with the increase in household purchasing power over the last few decades, prices of
top-of-the-line luxury goods experienced an upward trend.
Customer Segmentation
ABSOLUTES ASPIRATIONAL ACCESSIBLE
Industrial Conglomerates Celebs, Professionals &
Business Men and Women
Upper Middle Class Segment
Money isn’t an issue,
Demand is stable
Demand fluctuates with market
conditions
Owning luxury makes them feel
like members of an exclusive
club, hence like loud labelling on
products.
Appreciate brand history,
heritage, understated
opulence, high esthetic
content, extreme quality,
Privacy.
Appreciate emotional &
creative value that have
references that justify the
price. They also value quality.
They want to be associated
with affluence, nut may not
have the finances to back it
up, so they often turn to
counterfeit.

6. The Chinese Emerging Market
• After 2006, The established markets (Europe & US ) were overpowered in size by
the Asia-Pacific region, which accounted for 35.3 per cent of the global market’s
value during this same period.
• By 2005, the China region, was the largest and the fastest growing market for the
personal luxury industry. Chinese consumers alone were expected to account for 29
per cent of all global luxury goods purchases.

7. The Chinese Emerging Market
• The stereotypical Chinese luxury shopper was a middle-aged official who could
afford to buy many luxury goods.
• The growing Chinese economy gave rise to the Young Chinese Professional. These
educated white-collar workers saved to splurge. They understood trends focused on
key luxury purchases and mixed and matched their luxury pieces with local goods as
well as with fake, counterfeit pieces.
• The Chinese market experienced steep growth.
• However, the luxury sales to this market were not necessarily taking place within
China, because:
• A) Taxes: Due to taxes of 20 to 30 per cent on luxury goods, many wealthy Chinese
customers used domestic stores as showrooms to view the items and try them on
before they made their ultimate purchases during trips abroad.
• B) Perception - Luxury goods purchased in China were perceived differently,
compared to the goods purchased abroad, particularly in Europe.

8. Burberry Status
• Though the company was enjoying financial growth, the luxury status and quality
image associated with Burberry was changing as Burberry — particularly
Burberry’s iconic check — gained popularity among a new customer market in
Britain. Burberry’s “distinctive beige check, once associated with A-listers, became
the uniform of a rather different social group: the so-called Chav.”
• In Britain a few years ago, a working-class subculture emerged called Chavs, a term
derived from the Romany travellers’ word chavi, meaning “child.” Young and
usually with only a high school education, Chavs hang out at small-town shopping
centres, smoke cigarettes, and intimidate passersby. Their uniform is a baggy
tracksuit, clunky gold jewelry, and anything and everything with the Burberry
check, much to the chagrin of Burberry executives.
• In addition to the strong negative impact of the Chavs on Burberry’s image in
Britain, the brand’s global strategy was also not aligned with Burberry’s desired
image.

9. Burberry’s Business
• A customer’s experience in a Burberry store in Tokyo might be very different from
that in a store in Chicago.
• Furthermore, with 23 licensees around the world, it was hard for Burberry to control
the image portrayed by the licensees. Licensing was a big part of Burberry’s
business; 11 per cent and 10 per cent of total revenues came from licensing in 2005
and 2006, respectively.
• In addition, though the head office was based in London, the design team members
were based all over the world.
• Burberry operated with positive revenue growth over the last four years. Apart from
the Atlas project costs in 2006 (a program for the full redesign of Burberry's
sourcing, supply chain and business processes and systems), the company enjoyed
steady growth in revenue and profitability over this time period.

10. Burberry – Product Line
• Prorsum line was the Burberry’s fashion forward runway line. The line carried both
haute couture and ready-to-wear pieces.
• The women's wear and menswear lines were the core collections for Burberry. They
offered a range of products in modern but classic style.
• Burberry accessories included scarves, handbags, shoes, silks and umbrellas.
Burberry teamed up with licensing partners on its glasses, fragrances and children’s
clothing lines.

11. Perfume Segment
Prorsum Clothing Line
Footwear Segment Children Clothing Segment

12. • The retail channel not only gave Burberry full control of the brand presentation and
direct access to the customers, it was also a source of marketing for the brand. Large
flagship stores in key shopping destinations around the world.
43%
11%
46%
Retail
Licence
wholesale
BURBERRY Distribution Channel - 2005/06
• The wholesale channel, Burberry products were distributed through a network of
leading department stores, duty-free retailers and specialty stores, Franchise store run
by wholesale partners.
• The licensing channel made 70 per cent of its revenue in Japan. This licensing
channel included a broad range of licensing on apparel, accessories and home
products through licensing partners. By using licensing, Burberry minimized its input
in the production process while, simultaneously, it took a cut of the profits from the
sale of the licensed goods.
Burberry - Distribution

14. • French Based, owned by Pinault Printemps Redoute (PPR), now named Kering.
• Kering also owns other labels such as Alexander McQueen, Stella McCartney, Yves
Saint Laurent, Balenciaga, Sergio Rossi, Bottega Veneta.
• They competed with Burberry in the area of personal luxury goods – RTW,
handbags, luggage, small leather goods, shoes, timepieces, jewellery, ties and
scarves, eyewear, fragrances, cosmetics and skincare products.
• Having so many brands under one group enabled the company to penetrate all three
customer segments of the luxury market by catering to everyone’s tastes.
• 2006 year end, the Gucci Group made EUR 3.568 billion out of the total 17.931
billion sales that PPR made.
• Rumours spread that Gucci was considering moving production to China, despite the
‘Made in Italy’ and production being linked to Tuscany was the Crown Jewel aspect
of their products.
• Out of all these, Burberry’s closest competitor was the Gucci label itself.

15. • Also a French Fashion House, it is part of the Louis Vuitton Moet Hennessey Group.
• They operate in five sections:
 Wines and Spirits
Moët & Chandon, Hennessey, Dom Perignon, Ruinart, Mercier, Wenjun, Krug, Veuve
Clicquot, Hennessy, Belvedere and Château d’Yquem
 Fashion and Leather Goods – manufactured in France, Italy, Spain and The U.S.
(Louis Vuitton, Celine, Loewe, Kenzo, Givenchy, Thomas Pink, Fendi, Emilio Pucci, Donna
Karan, Marc Jacobs, Berluti ,Stefano Bi and eLUXURY, the online luxury shopping portal).
 Perfumes and Cosmetics
Guerlain, Parfums (Christian Dior, Givenchy, Loewe, Kenzo), Benefit, Fresh Acqua Di Parma
and Nude.
 Watches (excl Switzerland) / Jewellery manufactured in Switzerland, Fenace, Italy.
Tag Heuer, Hublot, Zenith, DeBeers and Bvlgari
 Selective Retailing
(Sephora, Cruise & Airport Shops, Department Stores, etc).
• 2006 year end, LV made nearly EUR 4 billion which was more than half the revenue that the
LVMH fashion and leather goods division made that year.
• Out of all these, Burberry’s closest competitor was the LV label itself, because of the logo and
the product categories it offered.

16. • Milan, Italy Based, Armani was privately owned by Giorgio Armani.
• Following brands comprise the Armani Group:
 Armani Prive
 Giorgio Armani
 Emporio Armani
 Armani Collezioni
 Armani Exchange
 Armani Jeans
• They are engaged in designing, manufacturing, distributing and retailing fashion and
lifestyle products – apparel, accessories, timepieces, jewellery, home interiors,
eyewear, fragrances, cosmetics and children’s clothing.
• This diversification enabled the group to cater to the various levels of the fashion
pyramid, thereby penetrating all three customer segments.
• 2005 year end, the Armani Group generated sales wroth EUR 1.428 billion, an
increase of 9.9% as compared to the previous year.
• Giorgio Armani openly said that if the quality was controlled, there wasn’t any
reason to not move production to China. BUT, ‘Made in Italy’ was important to the
top line, as it shows specialization.

17. • Milan, Italy Based, Prada Group is privately owned by CEO Patrizio Bertelli, his
wife, designer, Miuccia Prada, and their family members.
• Prada is known for their luxury leather goods and bags.
• 2006 year end, the Prada generated sales wroth EUR 811.5 million, an increase of
23% as compared to the previous year.
• Even with these changes, they are evaluating moving production of the less exclusive
products to China.
• The global fashion brands – Prada and Miu Miu comprise the group.
• They had floated an IPO in the past, but were unsuccessful. Recently (2008), they
have considered getting listed on the Milan Stock Exchange.
• They had adopted a multi brand strategy, too. But recently, they’ve decided to
refocus on the Prada and Miu Miu labels only. They sold off some of their labels like
Jil Sander and Helmut Lang.

18. • France Based, Chanel SA is now privately owned by Alain and Gerald Wertheimer
(100% ownership), grandsons of Pierre Wertheimer who ran the brand in partnership
with Gabrielle Bonheur Chanel.
• They also ran Paraffection – their artisans’ division. Paraffection managed seven
ateliers.
• There isn’t much financial data available since the group is privately owned.
• Chanel began as a milliner. She later revolutionised the sportswear industry through
the use of Jersey fabric on simple designs.
• The brand introduced the concept of the LBD. They are also known for their tailored
suits and their perfumes – especially Chanel No. 5.
• Chanel operates in the fashion, cosmetics, watches and jewellery business. Only the
license for sunglasses was with Luxottica – they produce eyewear for 80% brands.
• Karl Lagerfeld took over as Head of Design at Chanel in 1983. He revived the label
by tapping a younger market.

19. THANK YOU !