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Jun
2015

Caught in the China positioning trap

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British luxury brand Mulberry has been struggling recently, The CEO has defended two recent profit warnings by blaming a lack of Chinese customers in its UK and European stores. Since his arrival, he has put in place plans to reposition the brand from its affordable luxury status to a position of true luxury, principally by increasing product prices in late 2012.

To put the situation for Mulberry in China and with Chinese consumers into perspective, it is caught in a positioning trap that many businesses find themselves in here. Instead of establishing its position before it started to sell in China, the brand assumed that consumers knew it and would see its value and buy the product. What they failed to see was how great the competition is in the sector, and how much time effort and money the successful brands have put into their own positioning.

The brand currently has invested in very limited promotion and advertising in China, the little that has been done is still concentrated on the mass and fashion media and not the luxury consumer. The feedback from consumers on Weibo and other social media platforms is that Mulberry is very low-key in China; brand recognition is poor, which is why they suffer from low store footfall and sales.

In the eyes of luxury insiders and experts in China, Mulberry has never been regarded as a luxury brand, and now the brand intends to climb to the top luxury level by way of higher prices. Nobody here understands this, which is why it hasn’t worked as they expected simply because consumers in China don’t regard Mulberry as the same level of Hermes or any other top bag brand, or even close to it.

The key to solving this problem is to enhance brand awareness and image with targeted positioning. When brands enter China, there is a proven process they need to follow, that has independently been adopted by others.

The process is made up of:

  • Brand positioning
  • Developing localised messages and communication
  • Building trust amongst consumers via the media
  • Using social media to spread the messages and build an enthusiastic following
  • Delivering personalised product experiences

Mulberry really needs to understand the basics because if China is to be its saviour, it needs to do things the China way, and do it quickly. Price used to have a direct relationship with the perception of luxury in China, and this is changing, but a high price is not a replacement for correct positioning before selling begins.


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