ILO1: Demonstrate an understanding of the nature of the global environment, major trends, affecting the global decision, and the different social and cultural conventions which affect buying behaviour, strategic marketing policy and marketing mix approaches.
LEVI STRAUSS
By the mid-2010s, with a turnover of £6 billion, there was no doubt that the USA-based organisation Levi Strauss UK was a European leader in manufacturing and marketing jeans. The product originally started life as a unique, riveted waste overall. In fact, the idea of rivets on the pockets was patented, but it was only blue denim that had this feature up to the early 1900s. In the 1930s, the product became standard wear for the American cowboy, but it was not until the late 1950s that jeans exploded as a cult phenomenon – worn by matinee idols such as Marlon Brando and James Dean.
However, in the early 1980s a new clothes line became fashionable – the polyester suit – which contributed to a sales decline in denim. All this changed with the arrival at Levis Strauss of Robert Haas, the Chairman and CEO. He took over when the company was at a low point in 1984. He gathered a lot of talented people around him and decided to refocus the company on its core product – the Levi 501 brand. He took a big gamble on a single product strategy that worked, due in some considerable way to the clever positioning strategy of its advertising campaign. The advertising portrayed the gritty and urban image of 501s, with the backing of some very appropriate blues music. In fact, the astute use of music has played a big part in the 501 strategy ever since. The adverts showed real people doing real things and sales began to increase. With this success, Robert Haas decided on a leveraged buyout of the company and targeted international and European markets. The brief in London fell to the advertising agency BBH. The product was to move from a ‘mainstream’ to a premium product, with a focus on the Levi 501 brand as the original American blue jean. A string of successful advertisements, which were based mainly on sex appeal, including the famous Nick Kamen ‘man in the laundrette’ advert, accompanied by great music, made the brand a runaway success. Levi’s sales rocketed by 800%, but strangely so did other brand manufacturers, most of whom did not spend a penny on advertising.
As a result of its successful advertising campaign, Levi’s attained a premium position and was successfully able to charge a retail premium. The 501 brand sold for £85 equivalent in London, £50 in New York and £30 in a discount store in San Francisco. Levi’s were making a healthy profit on a product that was in many ways no different, nor more expensive to make, than its competitors’ products. Like Pepe or Wrangler, the product was based on good quality control and good yarn. In fact, in a 2008 consumer test report, the Levi 501 was outperformed in many test categories by its competitors.
The challenge in the early 2007s was to maintain the number one global position in the world. How could a leading market producer stay in such a dominant position? Rivals, like the Diesel brand, had shown what could be done by being a niche player – being very successful in a narrow market. Levi’s branched out into the ‘Dockers’ brand, a diversification built on the trend to smart office wear clothes, which proved a good move to avoid the ‘saturation’ point that might be rapidly approaching for the mainstream brand. Levi’s pioneered the concept of ‘casual Friday,’ a new idea which allowed workers to attend their place of work dressed casually for one day each week. If it failed, Dockers would not harm the 501 main line, as it was promoted differently. Levi’s also created their own stores to sell exclusive Levi lines.
Robert Haas believed in a company culture based not on private jets and limousines, but on a code of ethics which made employees see themselves as stakeholders in the business, even if they were not actually a stockholder. However, this philosophy was put to the test with the closure in 2007 of one of the San Antonio sewing factories, and very importantly the realities of a global business were brought home, such as a need to stay cost-competitive. What a difference two years can make! In late 2009, it was reported that four European factories and two US plants were to close. A total of 1,500 staff in Belgium and France and 991 staff in the US were made redundant. Revenue fell to £3 billion and it just was not ‘cool’ to slip into Levi’s. Competition took its toll, with fashion item multinationals such as the Calvin Klein and Lee Jeans brands doing well, and upmarket jeans like Armani and Yves St Laurent becoming the ‘coolest’ jeans.
The company’s strategy in developing the Dockers brand, new, rigid and hard-wearing denim, plus their emphasis on product-focused advertising seemed to be out of touch with current consumer tastes. For a historically successful international company faced with such a reversal of fortune, the major concern now is how to re-establish themselves to their former leading position.
Tasks required (all tasks are equally weighted at 25%)
Note: Brief case provided is a starting point to initiate your thought; you are required to research for additional contemporary information on order to address the following tasks.
Q1. Based on your analysis of the given case study, discuss, how Levi Strauss can use Marketing Information System (MkIS) to achieve its current market position in relation to its competitors in the European Market.
Q2.In order to forecast future trends and make strategic marketing decisions in the European business environment, Levi Strauss has to carry out internal, external and customer analysis. Apply appropriate tools of internal, external including socio-cultural factors related to customer behaviour in order to identify challenges and opportunities along with corresponding core capabilities of the Levi Strauss.
Q3. Based on your critical analysis of Levi Strauss’s given Case study and taking into consideration of your answers to questions 1 and 2, devise and write in 400 words a summary of Levi Strauss’s five year(2014-2019) strategic international Marketing Plan for the European market.
Your “Global Marketing” assignment 1 should follow the following aspects:
- The front sheet should be fully completed with detailed information required as on the front page of this assignment
- Academic References and Bibliography
For references make sure to use the Harvard reference method. In your bibliography, list all web sites, articles and any other sources you consulted. - Note that references that are 10 years old are out of date and do not use them unless it’s absolutely necessary. Better marks will be given for the use of variety of credible scientifically evidence based sources other than single source and non credible ones
- Please note that if you use references, you should attempt to list all the references you have used in the text [simply references in the text should match those in the reference list]
- You will need to submit the assignment in electronic file via turnitin on Moodle.
