Compare and contrast the international marketing activities of Burberry and Diageo.
Compare and contrast the international marketing activities of Burberry and Diageo.
Burberry is a distinctive luxury brand with international recognition and broad appeal. The company designs, sources, manufactures and distributes high-quality apparel and accessories. Founded in Basingstoke, England, in 1856, Burberry has a unique heritage associated with Great Britain and positions itself as the authentic British lifestyle brand.
Since the arrival of a new management team commencing in 1997, it has been repositioning the Burberry brand in line with its luxury heritage. The brand was positioned to broaden its appeal to new customers whilst aiming to retain its traditional clientele, building on widely recognised icons, such as the signature trench coat, trademark check and Prorsum Equestrian Knight.
Central to the repositioning of Burberry was the need for this new management team to better control where and how the brand was distributed within the UK and internationally. Furthermore, it was vital that the repositioning of Burberry meant it still kept its title as a prestige and exclusive brand. Consequently, all retailer stores which were not making a profit were shut down and driven by the desire to maximise control over foreign markets, the company bought back the distribution rights within the Hong Kong, Singapore and Australian markets in December 01 and within the Korean market in 02.
To help succeed at this time, Burberry introduced a business model compromising of four inter related dimensions. The four dimensions included products, manufacturing and sourcing, distribution channels and marketing communications.
Products:
With a clear positioning as an authentic British lifestyle brand, the company is to extend the current range of men's, women's and children's clothing and introduce 'soft' and 'hard' accessories. 'Soft' accessories include items such as scarves, shawls and ties where as 'hard' accessories include items such as hand bags, small leather goods, eye wear and time pieces.
Burberry also introduced a multi level brand strategy that is comprised of six key brand levels. Burberry Prorsum is the high fashion range that serves as the focus for fashion shows and editorial coverage.
The Burberry London range is the company's core, ready - wear clothing which is presented in two collections for spring/summer and autumn/winter, for both men and women.
As well as clothing, one level of the six key brands consists of accessories such as sunn glasses and wallets.
From the Burberry Prorsum range down to the accessories, Burberry has ensured three important dimensions in its product model.
Manufacturing and Sourcing:
Integral to the repositioning of Burberry in the late 1990's was the company's determination to ensure that is maintained full control over the development, sourcing and manufacturing of the various collections.
Product manufacturing is secured by a mix of internal and external manufacturing facilities based in the England, Wales and the USA, producing clothing fot the Burberry London range such as rain jackets and polo shits. Products made for the Burberry Prorsum range are supplied principally by Moroccan manufactures. Burberry has outsourced the quality control management of the Thomas Burberry collection to a third party specialist.
Distribution Channels:
The Burberry retail chain is comprised of four distinct formats. Located within the primary shopping locations in Burberry's most important national markets, flagship stores located in London, Barcelona, New York and Tokyo. These stores sell the whole Burberry range serving as a showcase to the fashion media. Other smaller stores (approx 300) based in smaller cities sale primarily the Burberry London range for the average customer.
Marketing Communications:
There are three core stands to the Burberry communication model; Advertising, Fashion shows and Editorial placement, Advertising is launched twice yearly when the new ...
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Distribution Channels:
The Burberry retail chain is comprised of four distinct formats. Located within the primary shopping locations in Burberry's most important national markets, flagship stores located in London, Barcelona, New York and Tokyo. These stores sell the whole Burberry range serving as a showcase to the fashion media. Other smaller stores (approx 300) based in smaller cities sale primarily the Burberry London range for the average customer.
Marketing Communications:
There are three core stands to the Burberry communication model; Advertising, Fashion shows and Editorial placement, Advertising is launched twice yearly when the new ranges are released to the stores. Burberry uses fashion shows to promote its prestige collections and to establish and reinforce the fashion credibility of the brand and generate international press coverage.
In order to create brand awareness, as well as reinforce and establish a luxury positioning, Burberry likes to have a strong relationship with the media. This strategy aims to maximise world-wide editorial coverage and comment in support of the Burberry brand.
Burberry currently holds many strengths and attributes within their industry to help promote themselves. It is already a distinctive luxury brand with international recognition and broad appeal. Its unique history and positioning as the authentic British lifestyle brand also adds to its appeal. One of Burberrys strengths is also its highly successful merchandising and marketing strategy across both apparel and accessories. It also maintains diversified distribution channels and geographic profile as well as a proven international management team and strong momentum with multiple growth opportunities by product, channel and region.
Burberry also already has a plan for the future and a strategy for continued growth, This includes nurturing and evolving the Burberry brand, promoting the brand and image, continuing to develop and expand its product portfolio, expand its directly operated store network, selectively build wholesale distribution, support growth in Japan and enhance operational capabilities.
I will know look at the international marketing activities of Diageo.
Diageo is currently the world's leading premium drinks business with the most recognised collection of premium spirits, wine and beer brands. It is a global and multinational company trading in 200 markets around the world generating around $19 billion in revenue and employing 26,000 people worldwide. With a turnover of €1 billion and profits in the region of €215 million Diageo Ireland is a major contributor to the Irish economy.
Surprisingly, however, Diageo is a relatively new company. It was formed in December 1997 following the merger between two of the world's leading food and drinks companies, Guinness and Grand Metropolitan.
There are many different growth strategies that a company may adopt and implement. Managers can grow the business organically or through diversifying into new businesses or alternatively through mergers and acquisitions of other companies.
An Organic growth strategy simply means that the business achieves growth through expanding the market share of its current products or services. This may be achieved by:
• Encouraging new users to try a product
• Encouraging existing customers to consume more of the product
• Winning over competitors' customers
Diageo Ireland is focused on investment in marketing and innovation as a key to driving its business.
Growth can also be achieved through a diversification strategy whereby the company moves into new markets. This is a more risky strategy as the company may enter unfamiliar markets. In the past Guinness diversified into fish farming, electronics and tourism. However, fish farming is completely different from brewing and Guinness subsequently exited from this industry, although its support of fisheries has resulted in a major research facility in County Mayo.
Another strategy for growth is through mergers and acquisitions. A merger usually takes place when two companies decide that they each have some complimentary skill or resource to offer the other. By joining forces they can create a synergistic effect i.e. together they become a much stronger force than operating as separate businesses.
Guinness has been the market leader in the stout and beer markets for many years with its flagship brand, Guinness, in production since 1759. Grand Metropolitan was also a key player in the spirits market with its UDV division, which owned Gilbeys and Baileys in Ireland.
The spirits portfolio of Grand Metropolitan was complimentary to the Guinness beer brands and there were major synergies and cost savings to accrue from integrating the companies.
The merger of these two leading companies led to the establishment of a leading player in the global drinks market. The newly integrated organisation had wider geographic breadth than either company on its own. They also possessed the broadest and most recognised collection of premium drinks brands across the world.
As part of the integration, an incredible amount of change had to be undertaken and managed. Some of the critical activities of the merger involved:
• Creating a new Corporate brand Identity for the newly merged company - namely Diageo
• Managing the repertoire of brands through the merger
• Establishing and defining the new organisational culture
• Defining Diageo's role as a responsible corporate citizen
The newly merged company needed a single corporate identity that would embody the culture and the ethos of all parts of the business. The name Diageo was chosen to fulfil this objective. The word Diageo comes from the Latin word for 'day' and the Greek word for 'world'. This truly international word is taken to mean 'every day, everywhere', i.e. every day, everywhere around the world Diageo brands offer consumers a way to celebrate occasions responsibly.
At the time of the merger Diageo was a broad-based consumer goods company, with food and drink at its core. By 2000 it had sold off its food divisions, the Pillsbury food-company and the Burger King Corporation, to focus on its drinks business. Diageo is now one business, with one name and one focused corporate strategy.
Diageo's products are strong Premium Brands and enjoy extremely high levels of brand equity. Brands possessing this command enormous power and value in the marketplace. They enjoy high levels of brand recognition and brand loyalty among their users. The Guinness brand itself has been around since 1759 and is one of the world's best recognised brands. The amount of brand equity tied up in such a brand is
invaluable. The challenge facing Diageo was to establish the new Corporate Brand Identity while protecting the enormous equity of its individual Product Brands. Diageo needed to decide on the most appropriate brand strategy for achieving this.
Adopting a corporate brand strategy would mean that the corporate brand name Diageo would become the strong brand identity across its product portfolio. Many companies have chosen to pursue such a strategy e.g. Mercedes Benz. However, Diageo believed that a multi-brand strategy was more appropriate for its business. By adopting such a strategy, each of its individual brands continues to be the most widely recognised product in the marketplace. For example, the Guinness brand name, and the many activities with which it is associated, remains the flagship brand in Ireland. The Guinness name remains synonymous with the Guinness Storehouse, the Guinness All-Ireland Hurling Championship, etc. At the same time, Diageo is now understood in the marketplace as the organisation that houses this range of drinks brands. Awareness of the Diageo corporate brand name is increasing through various marketing and sponsorship initiatives, e.g. the Diageo Print Room at the National Gallery. It is also a principal sponsor of Wexford Festival Opera.
Organisational Culture Organisations, like people, have their own unique personalities and value systems. This is often referred to as the culture of the organisation. Culture is an intangible aspect of an organisation. While it is not possible to touch, culture is present in the work environment, in the attitudes of the people within the organisation and usually underpins the rules by which the organisation operates.
The merger of Guinness and Grand Metropolitan and more recently the acquisition of part of another major international drinks company Seagrams, brought together different cultures from separate organisations. It was thus necessary to define and establish the culture that was to underpin the new Diageo plc. From the outset, this was very much people-driven. Diageo's goal was to foster an organisational culture that would attract and develop the most talented people to drive its business.
To fulfil this goal, management decided to create an inspiring working environment by promoting new ways of working. Trust, openness and teams underpin the ethos and culture that has become the Diageo environment. Management decided to encourage values of diversity in the workplace and foster an entrepreneurial spirit releasing the potential of each employee and giving them the freedom to succeed. This culture permeates every Diageo office throughout its world-wide operations. Introducing this entrepreneurial people focused culture brought with it changes in work practices. For instance, open plan offices became the norm to facilitate such an entrepreneurial climate.
Marketing brands in today's environment requires that companies pay attention to the responsibilities to their various stakeholders and to society in general. Societal marketing is about delivering customer satisfaction at a profit while at the same time respecting and protecting society.
The marketing, sale and consumption of alcohol raise some important public issues and for this reason there are strict legal and regulatory rules into place. Diageo believes that these rules are in the interest of the industry, the consumer and society, as they promote the need to understand sensible drinking. Voluntarily, Diageo has recently strengthened the Diageo Marketing Code laying down very strict principles on the marketing, packaging, naming and promotion of its brands.
Today, Diageo is the world's leading drinks business made up of premium brands, a dynamic workforce, and strong sense of corporate citizenship. Diageo's vision and goal is to ensure its customers enjoy its products everyday, everywhere responsibly. Diageo continues to be famous for its portfolio of consumer driven brands which it takes great care in marketing responsibly.
Comparing the two companies, it is clear both have been successful with their international marketing plans. However, I would conclude Diageo's marketing strategy to be superior due to its accomplishment in such a short time. It's competing in over 200 markets around the world generating around $19 billion in revenue and employing 26,000 people worldwide with a turnover of €1 billion and profits in the region of €215 million. This highlights the success Diageo is enjoying because of a strong international marketing plan which continues to seek more success.
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