The luxury fashion brand Mulberry was founded by Roger Saul in 1971 from his Somerset (South West England) home. Inspired by the country pursuits of shooting, hunting, and fishing, Saul established a luxury leather fashion brand with distinct English craftsmanship and heritage.

The brand is renowned for its extensive collection of fashion handbags, including the Trout satchel, the Alexa, and the Bayswater (seeFigure 1). The latter of these is the most iconic and bestselling piece in the Mulberry collection. (Thebagsare also known ashandbagsorpurses; in this case, bothhandbagsandbagsare used.) Mulberry products are sold globally through their 122 retail stores, department stores, direct wholesale customers, and omni-channel (Mulberry, 2016). In July 2011, this Somerset-based company hit the headlines with news that it was now worth one billion pounds (Betts, 2014). Mulberry ensures 50% of its leather items are manufactured throughout England, ensuring standards of craftsmanship and quality, two critical traits the brand prides itself on (Mulberry, 2016). Recognised as being typically English, the Mulberry mission is to betheEnglish lifestyle brand and the company aims to convey a recognisable brand identity with an exclusive take on British values (Mulberry, 2016). Embodying a multicultural perspective and staying true to its English roots is what sets the company apart from its competitors.Getting Closer to Luxury Brands

In June 2013, Mulberry saw the departure of Emma Hill, the creator of the cult Bayswater handbag. Ms. Hill was credited with transforming the national, Somerset-based firm Mulberry into an international fashion brand. In March 2012, Bruno Guillon, the managing director of Herms France, had joined Mulberry as the CEO. The years 2013-2014 saw the company thriving with excellent profits (GBP 36 million in 2012, up 54% from 2011) (Mulberry, 2012) and the reason for its success was partly due to a string of celebrities showing off their handbags, including Alexa Chung, Kate Moss, the Duchess of Cambridge, and Claudia Schiffer (Anderson, 2014). Mulberry was also expanding in the Asia-Pacific region, with the opening of five new stores in that part of the world, as well as a new store in New York.

In an attempt to target wealthy Chinese, Russian, and Middle Eastern shoppers, Bruno Guillon decided to increase the price of Mulberry products in order to change people's perception and align the brand with other leading luxury brands. For example, the price of the company bestseller, the Bayswater handbag, was increased from GBP 695 to GBP 895 (Anderson, 2014). The company originally priced its products, specifically the well-renowned Alexa satchels and Bayswater handbags, at the relatively affordable GBP 150-700 mark, but was now charging prices that ranged from GBP 800-1,400 for products that were previously half the price. This pricing strategy was driven by the idea that consumers create perceptions about brands in part based on the price of the products. Generally, there is a strong relationship between price and perceived quality as well as exclusivity: the more expensive the price, the greater will be the perceived quality and exclusivity of a branded product. 'High prices may even make certain products or services more desirable' (Vigneron & Johnson, 2004, p. 10), because consumers perceive higher prices as an indication of greater quality (Rao & Monroe, 1989). Consumers of luxury brands often appreciate the fact that the goods they consume are only affordable by a small part of the population (i.e., it renders them exclusive). In some ways, higher prices themselves make consumers feel superior as one of the few who can afford to buy the product (Garfein, 1989).

Luxury products are 'high quality, expensive and non-essential products and services that appear to be rare, exclusive, prestigious, and authentic and offer high levels of symbolic and emotional/hedonic values through customer experiences' (Tynan, McKechnie, & Chhuon, 2010, p. 1158). According to Kapferer and Bastien (2012), luxury can be identified by six dimensions: (1) a very qualitative hedonistic experience or product made to last; (2) at a price that exceeds what functional values command; (3) tied to heritage, know-how, and culture; 4) available in restricted and controlled distribution; (5) offered with highly personalised services; and (6) acting as a social stratifier, giving a sense of privilege.

Vigneron and Johnson (2004) explain that the luxury brand can be described as the prestigious brand; therefore, the customers gain prestige by purchasing the luxury product. And a prestigious brand must be priced highly to enable its owner to gain prestige. In summary, high price, perceived quality, and brand exclusivity and prestige are strictly connected in consumers' minds and are important ingredients for successfully marketing luxury brands.

However, consumers compare the price of products to reference points, which dramatically affect people's purchasing decisions (Briesch, Krishnamurthi, Mazumdar, & Raj, 1997). Possible consumer reference prices are the luxury brands of competitor handbags, what they paid for their last purchase, and what they deem to be the right price. By increasing its price point Mulberry isolated its core British customers, the market in which Mulberry generates a significant amount of its sales (Mulberry, 2012), positioning the brand out of their reach. Consumers sometimes make inferences about a firm's motive for a price change and these inferences influence perceptions of price fairness (Campbell, 1999). Whether consumers infer that the firm had a good motive or a bad motive for the price increase affects the perceived fairness of the price (Campbell, 1999). Mulberry customers could not comprehend paying significantly higher prices for handbags that would have cost them substantially less in previous years (Wilson, 2014). Mulberry increased its prices without raising quality, apparently in an attempt to become the next global fashion powerhouse. Academic literature suggests that when companies provide little information about price increases, consumers may infer a negative motive for a price or price change and they perceive the price to be unfair, which negatively influences consumer purchase intention (Campbell, 1999).

In March 2014, Bruno Guillon resigned after two years as CEO of Mulberry, which saw the company lose 75% of its stock market value (Ruddick, 2014As the interim chief executive Godfrey Davis explained, Mulberry had wrongly targeted wealthy Russian, Chinese, and Middle Eastern shoppers while pricing out British customers, from whom Mulberry made more than 60% of its sales before the price increase (Farrell, 2014). Moreover, the new higher pricing strategy occurred at a time where British consumers, especially millennials, were increasingly demanding affordable luxury products. Due to the economic recession of 2008-2009, young British consumers were not willing to pay exorbitant prices for designer brands and were instead rewarding themselves with affordable luxury brands perceived as innovative and capable of communicating through social media. The economic recession favoured the rise of affordable luxury brands such as Michael Kors, Longchamp, and Coach, while brands such as Prada, Herms, Louis Vuitton, and Mulberry, with their inflated prices, have become increasingly unaffordable. With the number of middle-class consumers increasing in numbers, shoppers are now looking to acquire a hint of exclusivity whilst trying to avoid paying excessive prices (Baumann, 2014).

Additionally, the company was prioritising handbags with sales prices of GBP 1,000 or more and paid little attention to handbags in the GBP 500-800 price range, previously its best-selling range (Felsted, 2014). As stated by Godfrey Davis, provisional executive chairman, who stepped back into an executive role following Mr. Guillon's departure: 'We did not introduce new product, and an increasingly smaller part of the collection was in that price point. The sales we have lost at that price point exceeded the gains we made at the top' (Felsted, 2014).

Another issue was that the Mulberry brand did not possess enough brand awareness in the international markets and segments where they wanted to enter as compared with brands like Gucci, Prada, Louis Vuitton, and Chanel. Middle-class and wealthy Asian consumers have preferences for brands with a high brand awareness as luxury brands, which are purchased to communicate to others the status and prestige of the owner. If nobody knows a luxury brand name, its symbolic function fails. The Mulberry brand was almost unknown in the Chinese market, resulting in consumers' preference for prestigious luxury brands with higher brand awareness that were in the same price range. As stated by retail analyst Maureen Hinton, Mulberry did not possess an adequate array of ambitious products to support this excessive price increase: 'there is such strong competition and if you are spending 1000 on a bag then there are other brands that are more iconic or fashionable' (Rankin, 2014).

By alienating its core consumers, in 2014 Mulberry shares plummeted by 27% after it issued its third profit warning in 18 months in the wake of poor, heavily discounted Christmas trading (Betts, 2014). As British sales account for 60% of all Mulberry sales, this was a major loss. There were also cancellations of large orders and store openings in South Korea (Betts, 2014).

Return to Its Roots

Through the subsequent departure of Guillon, followed by the appointment of Thierry Andretta as CEO and Godfrey Davis as Mulberry's provisional executive chairman, the organisation adopted a 'democratic' pricing strategy: 70% of company handbags are now priced between GBP 500 and GBP 995, compared with less than 50% in 2014. For instance, in an effort to restore its position in the affordable luxury market, Mulberry has introduced the Tessie range, with handbags priced from GBP 495 (small satchel) to GBP 695 (Hobo bag) (seeFigure 3). When news of the Tessie collection was advertised, brand followers excitedly tweeted and shared the announcement; the prospect of getting a Mulberry bag for GBP 500 had not been possible for some time. Also, in the spring and summer of 2014, Mulberry launched a collection of youthful, idiosyncratic handbags with Cara Delevingne, a popular British model and actress, featuring brightly coloured camouflage-print rucksacks and quirky lion rivets (Marriott, 2014)Aside from handbags, Mulberry has readjusted the pricing of its footwear and accessory collections to align with the new strategy, without altering the quality of its products (Mintel, 2016). Thus, by readjusting its pricing strategy Mulberry has the ability to appeal again to its core upper-middle-class female consumer base, especially Millennials, a highly thought-through approach at a time when other players within the luxury market are failing to cope with a decrease in demand for luxury brands internationally, particularly in China (Xinhua, 2017).

Mulberry is returning to its roots by focusing on what has historically made the company thrive: affordable luxury fashion. With Johnny Coca joining Mulberry as the new creative director in 2015, the company has attracted back what it would describe as its fashion-conscious and loyal customers (Armstrong & Ficenec, 2015). The creative designer's mission is to give a more modern feel to the brand, while keeping the brand identity and authenticity and avoiding alienating existing customers (Cook, 2016). Johnny Coca is aware of the issues with pricing, as stated in an interview to theFinancial Times:

Sometimes people say "you know what, I'm going to redesign", and the price is double. It's not right. If you're a good designer and you know what you're doing, you don't have to. It is important for Mulberry to be honest about what we create, the quality and the price. We are not a brand that says we want to make masses of money. (Cook, 2016)

Mulberry has introduced a variety of new designs, expanding on its range of products to include an increased selection of items priced in the GBP 150-500 range, whilst also revolutionising its original best-selling collections. Offering smaller and stylish handbags that require less leather rather than poorer quality leather has proved effective for Mulberry.

The Mulberry decision to reposition itself back into the prosperous Millennial market segment has not been straightforward. Brand-repositioning strategy consists of repositioning the brand into a new market segment. Ellickson, Misra, and Nair (2012) describe repositioning as 'complex' due to the substantial investments needed to inform and advertise to consumers about the new positioning, and these costs have fundamental consequences for competitors and the market structure.

Mulberry, under the creative direction of Coca, has transformed its logo to regain some of its fashion integrity as a much-loved iconic British brand (Armstrong, 2016). The new logo is shown inFigure 5. Having retired the original Mulberry logo, Coca stated: 'modernity always needs roots in the past' (Spedding, 2016). In 2016, Coca redesigned and relaunched Mulberry's iconic Bayswater bagWith functionality and British heritage representing an essential component within the design process, Mulberry is able to attract both fashion-conscious consumers and those who are concerned with investment luxury items. The brand's strategy is visible on its social media platforms, where the company now live streams its runway shows, allowing customers exclusive access into the Mulberry world and its campaign photo shoots (Mintel, 2016). Mulberry recently announced that it would follow its larger luxury rival, Burberry, in adopting a 'see now, buy now' approach to catwalk collections, which means that shoppers can instantly purchase the shoes, handbags, and clothes they see on the runway. CEO Thierry Andretta revealed that the fashion house had already tested the new approach with a capsule collection, which is a wardrobe that features the most essential or influential items from a collection (Armstrong, 2017).

By developing a more affordable pricing strategy that coincides with its target British upper-middle-class female consumer, Mulberry has the ability to further engage its core audience on social media. Although a drastic move away from the previously targeted upmarket segment, the implementation of this long-term strategy should increase the company's reputation as an affordable luxury brand whilst also upholding its image of superiority and returning the company to higher levels of profitability.

Mulberry, which makes 50% of its handbags in Somerset, is targeting Asia as a source of growth after recently launching a separate company with Challice Limited, which will run its business in China, Hong Kong, and Taiwan. Mulberry now has three shops in China, one in Taiwan, and one in Hong Kong (Armstrong, 2017).

Results

After a turbulent few years, the new strategic direction of Mulberry is paying off. With a move towards more affordable luxury, company revenue has risen by 5% from GBP 148.7 million in 2015 to GBP 155.9 million in 2016 (Mulberry, 2016) and pre-tax profits, accounting for GBP 6.2 million, are up from GBP 1.9 million in the previous year (Conlon, 2016). The same positive results were obtained in 2017 with sales increasing by 8% to GBP 168.1 million and pre-tax profits also jumping by 21% to GBP 7.5 million (Armstrong, 2017). The increase in sales in the UK was also determined by the weak pound, following the Brexit referendum.

The UK remains Mulberry's largest market, reporting sales of GBP 97.4 million, in comparison with the international market, which produced a lower GBP 21.3 million (Armstrong, 2016). Aside from retail sales the brand is also thriving digitally, with sales up by 19%. Thierry Andretta emphasised Mulberry's aim to concentrate on its online business: 'We're launching a Mandarin and Korean website, and we're trading in local currencies. We've had lots of digital growth and our goal is to be the best in class' (McClean, 2016).

'After a tough couple of years, British heritage brand Mulberry is firmly back on track with Johnny Coca's reinvention of the brand coming to fruition', said Sofie Willmott at Global Data (Armstrong, 2017).

Discussion Questions

• 1.
• Why did Mulberry increase the price of its products?
• 2.
• Why is pricing strategy important in luxury branding?
• 3.
• Did Mulberry's pricing strategy work? Explain.
• 4.
• What are the changes Mulberry implemented to reposition its brand back into the affordable luxury market segment?
• 5.
• Why were the changes implemented by Mulberry successful?
• 6.
• What would be the best strategy for a company that intends its luxury brands to appeal to both wealthy consumers and middle-class consumers looking for affordable luxury?