Strategic Management:

Use the following video transcript to answer the questions:

Video Transcript:

[ Background Sounds ]

>> Blurberry. Blurberry is like you know a fine wine. You know its refinement you know in a British way.

>> A statement of wealth.

>> Very traditional.

>>Elite.

>> Women that love clothes.

>> But also...

>> Chav, Chavi I guess.

>> So Chavi, I'm sorry.

>> Slightly Chav.

>> A bit Chavi.

>> Chavi.

>> Chav.

>> That's where the Chav name come from, Blurberry you know.

>> So Blurberry means status and good taste for one set of people, and completely the opposite for another. How did this happen? Blurberry started life as a gentlemen's outfitter. They invented the trench coat during World War I, and it later became a must have for the posh wardrobe bringing Blurberry huge international success. But in the 1980s, their trademark check once reserved for the lining of the coat began popping up all over their collections. Now you could buy a piece of old world class cheaply, the check became really popular, especially with football hooligans. When these pictures started to come out they changed the way people saw Blurberry.

>> Certain [inaudible] and [inaudible] would probably not want to see that kind of check, because it sort of had a low rent kind of feel about it which was not obviously what Blurberry wanted to send out as a message that any old person could wear this label.

>> Blurberry had lost control of its own image, and it was starting to effect sales further up the pyramid.

>> The trench coat lost its sense of being a kind of luxury product to own.

>> Now Blurberry is a global company and Chav is a British, so this only affected British sales. But these days loosing the confidence of style makers in one country can spread and infect worldwide opinion. To stop the rot, Blurberry brought in a new head designer, Christopher Bailey who put the check back on the inside of the clothes, and wooed back the fashion press with high-end catwalk shows.

>> Once the kind of check thing died down and the brand and the catwalk collection became kind of really popular with the fashion press, they then developed things like their relationship with their customers through Facebook, YouTube, Twitter, all those kinds of like very modern ways of kind of communicating with your customer.

>> So it seems Blurberry have made themselves cool again, and no one is remotely embarrassed to be seen in it.

>> Behind me they just signed up for the Blurberry show which is the biggest show of London Fashion Week. Of course Blurberry is the epitome of understated English style, and this is the ticket that everyone wants to get a hold of.

[ Background Sounds ]

>> This three million pound extravaganza is all about keeping everybody's eyes firmly fixed on the top of the pyramid.

>> I've seen Sarah Jessica Parker. Even I know who she is. I've just got a brilliant feature in the back of our add-on we found.

>> I'm seeing firsthand how a big brand gets his message out.

>> The Blurberry folks are very kind to invite me, and they have been very generous in the past.

>> I've never been to one before, but I like Blurberry so it should be fun.

>> I can't believe I'm here. I'm so excited.

>> ...operates in me dear on lots of different levels, so yes those clothes will be shot in "Vogue," but yes, that picture of Sarah Jessica Parker will be in the daily "Mirror."

Questions:

For a time in its history and among its British customers, the company's differentiation strategy suffered a setback. What happened?

a.The company's products were overpriced and out of reach of average Britons.

b.The company improved its efficiency and was able to lower prices, which led to an increase in customers and profitability.

c.The company lowered prices to make it more accessible and lost value in customers' perceptions of its differentiation.

d.The company pushed out the efficiency frontier through greater differentiation value and lower cost, making it more successful than its rivals.

Blurberry took several steps to address its image problem and improve the value of its differentiation. The decision to hire a new designer represents which functional-level strategy?

a.Customer responsiveness: hiring employees to support a well-developed customer care function

b.Efficiency: achieving economies of scale and learning effects

c.Innovation: adopting lean production and flexible manufacturing technologies

d.Superior quality: designing product offerings with a high perceived quality

In addition to the new designer, Blurberry also stepped up its involvement in social media, relationships with style magazines and connecting with high-profile trendsetters. This is an example of which concept?

a.Streamlining processes to take out unnecessary steps

b.Customization of the product offering to reach different market segments

c.Reaching efforts focused on building relationships and adding customers

d.Increasing customer retention and reducing customer churn