Levi – Strauss condition studie
Inquiry 1) What environmen tal variables contributed to the 1998 position of Levi ?
Levi Strauss is the world’s best-known jeans brand, however it’s rigid to see much chance of the association regaining its former glory without a substantial overhaul. Iconic or not, what kind of outlook lies in store for a association which derives encircling 85% of its annual revenues from selling pants? And only really two sorts of pants at that, which are also sold by just about every other clothing manufacturer on the planet. Either Levi Strauss needs to diversify substantially, and bolt on other brands or – more likely – needs to sacrifice its lenghty cherished however out-of-date independence and become part of someone else’s larger multi-brand portfolio. These years of struggle against a vast array of competitors have merely added to the gradual erosion of the brand. The development of value path Signature has helped, nevertheless despite doubling in amount during 2004, its contribution has steadily decreased ever since.
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In the late 1990s, Levi’s became a victim of their own success. As well involved in corporate restructuring, the corporation effectively ignore a seismic shift in the youth market. In the 1980s and early 1990s, Levi’s 501 jeans had managed to dominate the market for everyday clothing as a result of high quality manufacturing and smart marketing. There were many kinds of jeans, went the accepted perception, however Levi’s was the brand to which all others aspired. A brilliant marketing campaign, chiefly in Europe, reinforced the brand’s hip status. However in the late 1990s, Levi’s jeans suddenly became a victim of its own success. They were seen by the advanced generation of teenagers as “the jeans my Dad wears”, and that lay them completely gone of fashion. Fashions in divide came and went nevertheless Levi’s failed to respond, leaving the market wide open for competitors
The company’s biggest mistake, arguably, was to ignore the baggy divide, which rode in on the back of the mid-1990s grunge movement, and remained the leading fashion style for the rest of that decade. While Levi’s stuck rigidly with the 16-inch straight-leg divide that appealed to the instantly ageing market who had rediscovered the brand in the 1980s, still the least hip of US retailers began selling extreme-cut. Millers Outpost, Tommy Jeans, JNCO and much JC Penney and Sears were selling jeans with legs as wide as 23 or 40-inches. The fashion-conscious teenage market began buying their jeans from other manufacturers, while a advanced breed of retailers, led by The Gap, captured the middle ground. Protecting their premium status, Levi’s refused to chase the market and strictly adhered to their long-established policy of only selling through specialist outlets and avoiding discount stores including Wal-Mart. Although this held the brand’s perceived value it also restricted sales to only encircling half of the US retail market. Worse still, later that decade the market as a whole began moving away from denim altogether as combat and cargo pants became the advanced fashion Charles Boisson Leaf 3
Interrogation 2) How could a sensitive and informative Marketing Facts System (MIS) have helped Levis to identify these environmental variable and form outlook strategies ?
THE Demand FOR MARKETING SUPPORT
In 1986, Levi’s relaunched the 501 with the ‘Launderette’ and ‘Bath’ commercials. The tremendous success of these executions and the campaign that developed from them has been well documented. All of the commercials featured the 501 jean and most stated 501 specifically in the end frame.
The advertising success was not restricted to the 501 alone. There was a halo effect on the whole Levi’s range. However naturally the 501 took on a dominant share of Levi’s business.
This dominance was intended. The 501 was positioned as definitive. It is an anti-fit jean which is fair for most mankind, and, in a sense, 501 for most human beings took fit outside of the purchasing equation.
Despite this, there were (and still are) a significant number of mankind who, for reasons of personal physique or style, did not consider the 501 as the correctly fit for them.
Moreover, a brief for range advertising can often lead to creative cul-de-sacs: a row of products and an invitation to the consumer to create his or her own choice etc.
Consequently, although the objective of the advertising was not to establish individual fit identities, we did specify that each execution should feature one fit only and would talk about the benefits of that fit. Across a range of executions we aimed to establish a sense of the multiplicity of the fits, thereby addressing the key objective.
Fit adverting Fit messages also pose a strategic and creative challenge. Human beings choose different jeans fits for reasons both of personal physique and contemporary fashion. If advertising addresses one motivation, it struggles to communicate the other. And the more obvious creative solutions tend not to be challenging or motivating. Charles Boisson Sheet 5 For example, a tight fit can be communicated by showing a thin person and a loose fit by showing a fatter person. Nevertheless the latter expression clearly does miniature for loose fit. And what of the mankind who wear loose fit for style rather than physical reasons?
Alternatively, a fit message can be conveyed by showing the overall style or fashion of the wearers of different fits. For example, a punk in tight jeans and a hip-hop fan in loose jeans. However youth fashion cannot easily be compartmentalised into discrete tribes with conveniently different jeans fits. Moreover, young mankind quite naturally recoil from any cynical attempt by advertisers to mirror their own street-level cultures. And, as with the above, what of the human beings who do not choose fits for fashion reasons?
We concluded that these more literal expressions of fit were not worth exploring and we directed the team to seek outside more lateral solutions.
THE CREATIVE SOLUTION
The creative team, conscious of the objectives of the advertising and the strategic and executional minefields to be avoided, came up with an innovative solution to the brief.
They developed a range of executions each employing a black and white still from the respected photographer Bill Brandt to deal with one Red Tab fit message.
They did not talk about fit in a literal path. Rather they implied the various fit messages.
Moreover the images employed were not completely unrelated to fit. (They were not vegetables or fruit!) Rather all the executions focused on the human form, which is after all the basis of any fit choice.
The poster campaign ran nationally for four weeks only in April 1993.
Millward Brown tracking showed very high advertising recognition: over 40% of a sample of 17 to 29-year-olds recognised the posters.
More importantly, spontaneous and prompted awareness of Red Tab rose from 35% to 45% and from 57% to 75% respectively. The
percentage of respondents able to quote any non-501 fit number rose from 50% to 60%.
We are unable to divulge actual sales data.
The planner’s role does not only entail pointing the creative team in one particular direction; it can also involve illustrating to them the strategically unsound and creatively fruitless routes.
In advertising non-501 Red Tab fits for the first date, Levi Strauss were entering a minefield. By identifying the best role for advertising and mapping gone the geography of that minefield, the planner was able to play a part in the development of advertising which maintained Levi’s best standards of creativity and effectiveness.
Why are we advertising?
To raise awareness of the range of Levi’s Red Tab jeans by demonstrating that Levi’s produce different fits to compliment different body shapes and personal styles.
Who are we talking to?
Boys and girls, 15 to 19 years ancient. They are aware of Levi’s advertising and recognise that 501s are the original, definitive jeans. In circumstance, they may already own a pair of 501s, nevertheless find certain aspects of 501s either inconvenient (ie button fly) or uncomfortable. They are at the Charles Boisson Sheet 6 middle end of the market (early/late adopters) and are often insecure and lack confidence. They therefore demand to be reassured that they can acquire into the imagery associated with 501s, while having a pair of jeans that fits comfortably and flatters their individual shape.
The campaign must employment as both posters and press. The campaign should avoid analysis of, or comparison with, 501s. This is not an ‘opinion leader’ campaign, and is aimed at a younger, more mass-market consumer. Charles Boisson Leaf 7
Interrogation 3) Analyse the importance of the various marketing mix elements in the success :failure of Levi, how essential is design?
Levi’s share of the denim market plummeted. In 1990, according to Tactical Retail Monitor, more than 48% of men chose Levi’s as their preferred choice of jeans. By 1998, this had tumbled to 25%, while Lee and Wrangler had risen from 22% to 32%, and private label brands including Gap from 3% to more than 20%. In sales terms the brand slipped from a 30% US market share to 14%. (Upmarket designer labels such as Tommy Hilfiger and Calvin Klein got a great deal of publicity however never achieved more than enclosing 7% of the market). The percentage of teenage boys who thought Levi’s was a “really cool” brand had dropped from 21% in 1994 to just 7% by 1998. Levi’s position has, for the most part stabilised since then, nevertheless competition remains intense
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The Levi’s brand instantly houses distinct sub-brands. Chief amongst these is Levi’s Red Tab, which includes the legendary 501 button-fly design. (The number 501 was originally the product’s stock number, first adopted in 1890; the red fabric tab was first used in the back pocket from 1936). Levi’s Vintage features a broader range of “classic” retro designs. In pursuit of the youth market, the association has tried to turn back the tide with more extreme cuts, such as Levi’s Engineered Jeans, introduced in 2000 and supposedly designed ergonomically to fit the body’s contours. Some cuts are much pre-stained with oil. Another stylised fresh design launched in early 2003 as Levi’s Type One. These offered exaggerated versions of traditional features such as rivets, stitching and the tab, blown up in extent. However sales were slow to capture off, chiefly in the US, despite high profile marketing, including a Super Bowl ad (which the association later claimed admitted was unsatisfactory). They, along with another stylised border known as Silvertab, were replaced by the Levi’s Capital E path. Levi’s ICD, a partnership with Philips to market workwear with “integrated” electronic devices such as mobile phones, MP3 players etc, was withdrawn in 2002. The crowd also licenses gone the Levi’s brand to other manufacturers for branded T-shirts and accessories. Combined sales of the core brand improved in 2007, reaching almost $3.2bn. Levi’s is primarily a menswear brand, with just under three quarters of all pairs sold bought by men.
After its many attempts to introduce more stylized or fashion-oriented designs had failed, the association agreed to abandon its premium positioning and chase the mass-market as well. A advanced design, Levi Strauss Signature, launched in July 2003, initially available exclusively through Wal-Mart. By the end of the year it had become apparent that the advanced border was the much-needed hit for which the association had been searching. The crowd rebranded the range as Signature by Levi Strauss, extended distribution to Target Stores and Kmart in 2004, and also introduced the range into selected mass-marketers in Australia (including Coles Myer’s Target and Kmart), Japan and other Asian markets. It was also launched in the UK (through Asda), France (through Carrefour), Germany (through Wal-Mart) and Switzerland (through Migros), nevertheless performed poorly and was withdrawn in 2007. Yet after a strong set off, sales of the Signature path have fallen steadily since 2005, declining from a peak of enclosing $410m that year to $260m in 2007.
Dockers, first launched in the US in 1986, is the company’s khaki-based casualwear path. It was launched as something of a reaction to inroads into the market by Gap and others, serving as a halfway mark between jeans and smarter dress pants. Dockers Slates, a sub-brand of dressier and more expensive trousers, was discontinued in 2004. Although it has been generally successful, Charles Boisson Sheet 8
Dockers remains very much the second string in the group’s portfolio behind its jeans border. In 2004, Levi Strauss lay the Dockers brand up for sale in order to concentrate on its still struggling core business, however failed to attract a suitable buyer. Sales of the brand were reported at $1bn for 2003, however had fallen to enclosing $775m by 2005, with sales concentrated in the US. Since then it has repositioned itself as a wider casualwear brand, diversifying into shirts, sweaters and blazers, as well as a border of women’s clothing. The unit was rewarded with an increase in revenues for 2006, its first for diverse years. For 2007, it generated sales were enclosing $915m. The collection also generates significant income from royalties on Dockers belts, footwear and other accessories manufactured by other companies under license.
Levi Strauss has production facilities and customer assistance centres throughout the earth. Until comparatively recently the corporation maintained a policy of manufacturing its goods in the regions in which they are sold, however rising labour costs and declining sales made this increasingly unfeasible. Production in the US and Europe began to be farmed gone to cheaper regions in the late 1990s. Having already closed six of its US factories by 2003, the collection announced that the remaining four in North America would also be shuttered by early 2004. The collection supplies its products to encircling 60,000 retail outlets worldwide. It owns and operates encircling 200 of its own Levi’s or Dockers branded stores, and franchises encircling another 1,300. More than half of these stores are located in the Asia Pacific region. Otherwise sales are through department stores and national chains.
There are three regional business units: Levi Strauss North America operates district subsidiaries in the US, Canada and Mexico, and accounts for almost 60% of revenues, or $2.5bn in 2007 (compared to a peak of $4.8bn in 1996). Levi Strauss EMEA is the second biggest market, however performance there took longer to recover than in other markets. Sales rose in 2007 for the first date in distinct years, finally returning above the $1.0bn barrier. Asia Pacific remains the smallest market for immediately, nevertheless has been the company’s strongest performing region for distinct years. Sales rose by a further 6% in 2007 to $805m, with Japan contributing a small under half of all sales. Charles Boisson Sheet 9
Inquiry 4) As a strategic marketing consultant, advise Levi about what instantly it should immediately do ?
It is every business’s objective to maximize their profits and lessen their expenses. Levi’s has invested on one of the most essential resource that a association could have – its employees. Their corporate strategy has immediately been aligned with their human resource management which is valuing their employees due to high costs of recruiting and training fresh staff. It must be noted that losing an employee can be very expensive and high staff turnover can eventually ruin a business. The at the end object that businesses call for is for its competitors to benefit from the training, knowledge and training that it has built within its workforce.
It is suggested that employers give their mankind the opportunity to create their own benefits decisions. This method, employees will capture a keener interest in their benefits. The traditional corporation benefits package often has a rigid “one extent fits all” approach; it fails to consider the varying needs of individual employees. In addition, the traditional corporation benefits package may sometimes be complicated and difficult to manage. Thus, it is greatly recommended that companies like Levi Strauss and Co. implement a flexible benefits package to assist reduce costs and provide a greater choice for their workforce. Furthermore, flexible benefits provide additional lifestyle choices along with traditional association benefits such as private healthcare and the corporation pension scheme which will allow employees to choose the benefits that they require which in turn will motivate them and create them more productive.
It is also valuable that companies like Levi Strauss and Co. consider some of the following pointers: (1)
ullet the main goals of the company’s employee benefits programme,
ullet the endure age that the association at the end reviewed their benefits scheme,
ullet steps or initiatives undertaken to ensure that the company’s benefits programme underpins their business strategy,
ullet knowledge of employees regarding the benefits that the association offers and how they benefits from it,
ullet issues like sickness and absence, healthcare and dental affliction, and (6) the extent of the relevance and significance of the recruitment and key staff in employer’s business and their industry.
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