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Levi Strauss

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The purpose of this document is to present a marketing case and supporting evidence for the brand repositioning of Levi Strauss (Levi's) in the UK. The campaign will target 16.3 million of consumers in the age groups 15 – 34, both male and female. (ONS, 2010) The overall purpose of increasing Levi’s UK revenue by 15%, which is equal to £9,940,200 million, from £66,268,000 million in 2010 to £76,208,200 million within one-year campaign period. (FAME, 2010)

The plan identifies the potential opportunity to generate £2.1 billion a year in the denim jeans market. (Guardian, 2010) The repositioning campaign will spend £5 million on marketing communications activities such as advertising, public relations, sales promotion and direct marketing.  As the figure 1 below showed that Levi’s have struggled to maintain their revenue levels in the last 5 years.  This could be boosted with the launch of a large marketing campaign with the established budget of £5 million. Levi’s peak revenue was 71,000,000 in 2006. This was a year where they spent £1,009,000 on advertising. Since then, revenue has reduced, this may be partly due to the recent economic conditions but it may also be because the marketing of Levi’s products has reduced considerably. (Mintel, 2010)  Levi’s past indicates that they have had higher revenues when they have allocated a larger budget towards marketing and advertising. With there now being more competition than ever before, a higher allocation maybe necessary to impact the market and gain enough attention to impact Levi’s revenues Marketing costs have also likely increased over the last 6 year and as a consequence a larger budget has been allocated for this campaign.

Levi's Strauss & Co. (Levi's) brand has been pioneering since 1873 whilst continuously being committed to their quality and corporate citizenship that contributes to the reputation of the Levi brand. Through their commitment Levi’s became one of the most widely recognized authentic “American” brand in the apparel industry. The broad range of products appeals to all ages of consumers and their different lifestyles. Levi’s is a licensed trademark in many countries in the world. (Company Website, 2011)

Levi’s products range includes jeans, casual and dress pants, tops, skirts, jackets, footwear and related accessories. Across all the product range; Levi jeans (jeans, casual pants and dress pants) represent approximately 84%, 85% and 85% of Levi’s total sales in each fiscal year for the last three years (2008 to 2010). (Company annual report, 2010) In the UK, the company operates as Levi Strauss UK Limited (Levi’s) which markets only jeans wear under the trademark, Levi's. The company distributes the product range through department stores, specialty retailers, franchises and retail stores in the UK. (Mintel, 2010)

Source: FAME 2010

Levi Strauss UK saw a 10.2% decline in revenue from 2006 to 2007 where their turnover has remained until 2010 that saw a slight increase of 2.9% year on year from 2009. Levi’s faced new intense competition from high street retailer brands, which focused on re-branding their jeans, as well as value retailers’ brands and supermarkets also introducing low price jeans alongside their other products in the last 3 years. (Mintel, 2010)

Levi’s is stepping up in this strong competitive market by opening their re-crafted Levi’s flagship store on Regent Street in London during March 2010. (Datamonitor, 2010) The new storefront is unlike the old-fashion idea of putting clothes in the window, they now use the front as exhibition space for “Levi’s craft workers” a group musicians and artists to be brand ambassadors. (The Guardian, 2010)

According to Mintel’s consumer research on the topic of Consumer Attitudes to Buying and Wearing Jeans – UK (2010), the consumers’ demand of jeans is shifted from endurance to fashion and individual appearance; even though Levi’s remains a classic iconic brand in the jeans market they have lost the sense of trendsetting and cutting-edge style compared to its competitor such as Diesel that has become popular among young men and which is now perceived as a trendy street-smart brand. Calvin Klein conveys aspiration and prestige fashion ability. Therefore, to become the first choice in the consumers mind, Levi’s need to focus on developing the brand positioning by using a related communication strategy and marketing activities to promote, attract and engage with young consumers and new customers in the UK. Additionally, Levi’s UK should adopt an integrated online store operating system similar to the one used in the US market. It will encourage online purchasing from customers and simultaneously create a long-term relationship with them.

HOST ORGANISATION

COMPANY PROFILE

Levi Strauss & Co. (Levi Strauss or Levi’s) is a privately held brand apparel company; the world’s first and largest maker of pants especially blue jeans since 1873. (A&E Television Networks Website, 2009) The company designs and markets jeans and other causal wear for men, women and children under Levi's®, Dockers®, Signature by Levi Strauss & Co.™ and dENIZEN™ brand names. Levi operates in the Americas, Europe and Asia Pacific. The company is headquartered in San Francisco, California and employs about 16,200 people worldwide. (Datamonitor, 2010) According to Fame (2010), Levi Strauss (U.K.) Limited registered as incorporation in 1966 and employs 656 people in 2010.

COMPANY VISION

Levi Strauss & Co. four core values are empathy, originality, integrity and courage. The four values are linked and become a competitive advantage in doing a business. Levi Strauss & Co. believes that people have worn their products as a symbol of freedom and self-expression in the face of adversity, challenge and social change. The relationship between the values and consumers and the brands is the basis of success and drive the core business purpose, it is the foundation of who they are and what they want to become. (Company website, 2010)

COMPANY MISSION

Levi Strauss & Co. believes that clothes can make a difference. From across the company, Levi Strauss & Co. is combining innovative designs and craftsmanship that inspires consumers to show their individual style leaving their mark on the world. (Company annual report, 2010)

COMPANY OBJECTIVES & THE COMPANY BUSINESS STRATEGIIES

The long-term objectives are to strengthen the brand globally in order to deliver sustainable profit growth and continue to generate strong cash flow and reduce the debt. (Company annual report, 2010)

1. Build upon the brands leadership in jeans and khakis.

To create trend leading products and marketing programs that appeal to existing customers and also providing a solid foundation to enhance an appeal to under-served consumer segments.

2. Diversify and transform wholesale business.

To be central to wholesale success by using their brands and the strength in their product development and marketing to drive consumer traffic and demand to their stores.  

3. Accelerate growth through dedicated retail stores.

To provide a compelling and brand-uplifting consumer experiences in dedicated retail stores around the world.

4. Capitalise upon their global footprint.

To identify global consumer trends, adapt successes from one market to another and drive growth across their brand portfolio and balancing the power of global reach with local market insight.

5. Drive productivity to enable investment in initiatives intended to deliver sustained, incremental growth.

To increase the business operations efficiency and effectiveness’s to drive growth and continue to build sustainability a social responsibility into all aspects of operations

ORGANISATION STRUCTURE

The company’s key products include jeans, casual and dress pants, tops, skirts, jackets, footwear and related accessories that provide to consumers of all ages and lifestyles. (Company annual report, 2010) Levi Strauss’s products are sold in nearly 55,000 retails in more than 110 countries. Included in this list are 2,300 dedicated retail stores which are franchised and or company-operated stores. (Datamonitor, 2010)

Levi's® Brand

The brand represents classic American style and effortless cool style. It’s positioned as the original and definitive jeans brand. Consumers are able to instantly recognise the distinctive traits of the brand from the double arc of stitching (Arcuate stitching design), red tap scheme and a fabric tab stitched into the back right pocket.  Levi's® product range includes Levi’s® Red Tab™ and Premium Products such as Levi’s Engineering Jeans, Levi’s Blue, Levi’s Redloop, Levi’s Lady Style, Levi’s Capital E Products, Levi’s Vintage Clothing Line and Levi’s Curve ID Jeans for women.

 

Source: Datamonitor 2010

The brand is positioned as the khaki authority with a range or khaki-inspired products and occasions for both men and women. They are also focused on khaki’s masculinity and swagger to remind men that the brand is indeed the world’s best and lost loved khaki brand.

Dockers® product includes a stylish casual and dress products that cover key wearing occasions for men as work, weekend, dress and golf. Products for women range from pants, to shorts, to tops skirts and sweaters and jackets.

Signature by Levi Strauss & Co.™ Brand

The brand offers value-seeking customers products such as denim jeans, casual pants, tops and jackets in variety of fits, fabric and finishes for all customers. They sell it through retails channel in United States and Canada and franchised stores in Asia Pacific.

dENIZEN™ Brand

A newly launched brand by the company in Asia Pacific to reach consumers in developing markets who seek for high quality jeans wear and fashion at affordable prices. The brand is positioned to complement active lifestyles and empowers consumers to express their aspirations, individuality and attitudes.

1.2.6 FINANCIAL PERFORMANCE

Figure 2: Levi Strauss Global Financial Performance in Million of Pound (2008 – 2010)

 Source: Annual Report/Company Website 2010

The company recorded global revenue of £2,8117 million (FY2010), an increase of 7.4% over FY2009. The net profit was £99.9 million in FY2010 an increase of 3% over FY2009. For FY2010, Americas, the company largest geographic market account for 57.8% of the total global revenues. 

Figure 3: Levi Strauss Net Revenues in Europe in Million of Pound (2008 – 2010)

Source: Annual Report/Company Website 2010

Europe geographical market accounted for 25.1% of the total revenue in FY 2010. Revenues from Europe reach £705.9 million in FY2010 an increase of 6.1% over the FY2009.  Net revenues in Europe decreased in 2009 and 2010 as a result of the currency bases and lower sales in wholesale channels reflected by ongoing poor economic conditions. This was partially offset by the impact of business acquisitions and expanding company-operated retail network throughout the region, but revenues were still low.

1.3 RESEARCH SOURCES

In order to analyse the internal and external environment analysis of Levi Strauss & Co. company, the following models will be utilised; SWOT Analysis, Marketing Mix 4Ps, Porter’s Five Forces, PEST Analysis and Porter’s Generic.

The secondary research has been exploited from academic and non-academic sources such as marketing research reports, official company published information and credible and reliable publishers and media channel to support the rational of the campaign.

PART 2

CAMPAIGN RATIONALE

MACRO (EXTERNAL) ANALYSIS

MARKET SIZE AND TREND

The purchasing of jeans in the UK in the last 12 months (between 2006 and 2010) has remained steady with half of adults (aged 15 and over) purchasing jeans in 2010. If one person purchased one pair of jeans that equates to a market volume of approximately 26 million pairs per annum. Based on the number of consumers buying jeans and their average expenditure, Mintel estimates adult consumers spending around £1 billion on jeans every year.

Figure 4: Bought Jeans in the Last 12 Months, 2006 - 2010

Source: GB TGI, Kantar Media UK Ltd Q3 2006-2010 (April-March)/Mintel (2010)

Figure 5: Trends in Amount Spent in Total on Jeans (2008 – 2010)

Source: GB TGI, Kantar Media UK Ltd Q3 2006-10 (April-March)/Mintel (2010)

According to secondary research, the only area of growth in the jeans market from 2008 has been in the lowest price range with most of consumers spending under £50 for a pair of jeans. As a result of the European and UK economic uncertainty, more customers are now looking for better value for money. In 2009, there was a slightly decrease in buying premium-end jeans but recently consumers have started to buy more expensive jeans again in 2010, as the economy improved slightly towards the beginning of 2011.

PEST FACTOR

Table 2: PEST Factors

PEST FACTORS

Political

(Including legislation and regulations)

  • § Laws and regulations for the apparel industry in the UK need to be considered such as tariffs and taxes for imports & exports, environment & consumers’ health and safety, social concerns and foreign laws relating to intellectual property. (CBI Market Information Database, 2009)

Economic

  • § Foreign currency fluctuations affect the result of operations and the value of company’s foreign assets and liabilities including debt for imported jeans brands. This also affects the sales process where local companies and foreign competitors sell products in the same market. (Company annual report, 2010)

 

  • § The costs of commodities are now higher and food inflation has also had an effect on reducing consumer spending for non-grocery items such as jeans. (Euromonitor, 2011) According to Mintel’s consumer research, consumers are now looking for lowest possible prices when they go shopping with nearly half of all adult consumers among the under 35s in 2010, and over one third of consumers over 35 being persuaded to buy jeans by sale or on or a discount offer. 

 

  • § Fluctuations in the costs and availability of raw materials       such as cotton has contributed to pricing pressure throughout the supply chain and has had several effects on Levi’s such as requiring them to introduce lower-priced products, provide enhanced product at the same prices and raise wholesale prices on existing products resulting in a decreased sales volume. This further increasing the pressure on reducing production costs and operating expenses. (Company annual report, 2010)

Social

  • § Obesity is increasing in Western markets as a result there being a large number of customers that feel excluded from fashion and usually pushed into online shopping where getting the right size and fit is much more difficult. (Euromonitor, 2011) According to NHS, 61% of adults in England are described as overweight or obese in 2008.  (Mintel, 2010) Therefore, manufacturers need increase the range of more fashionable products with large size ranges and offer a greater availability of choice and size. (Mintel, 2010)

Technology

  • The improvement of broadband access in UK and embracement by high street retailers into the online fashion market during 2010 has driven the growth of online fashion market. (Mintel, 2010) According to Mintel consumer research, the online fashion sector is expected to increase by 12% in 2011.

 

  • § The continuous growth of social networking sites like Facebook with more than 800 million active user’s worldwide (Facebook website 2011) is beneficial for the apparel business to engage with customers and drive sales. 

 

Political barriers and the issue towards taxation of imported goods should be taken into strong consideration of from which factory Levi’s chooses to send the goods to the UK market. Surely there are factories in Europe that Levi’s could make use of, however they may not be able to produce all product lines at one given time. Therefore a careful selection and examining of the importing region importing is key to sustaining a profitable margin of sales. As laws are always changing, Levi’s must stay up-to-date of any changes in the UK’s legal system.

Levi’s must use similar observation of economic changes and prepare the contingency plans for the worst-case scenarios. Since the economic downturn in 2009 was globally a devastating impact, Levi’s should be aware that consumers are now more careful with their spending and prefer to spend less on brand name products. If Levi’s were to offer a slightly cheaper line of jeans than is already on offer and that has a justifiable return on investment this may fight some of the current economic issues whilst still maintaining the brand and consumer based. Raw material prices are rising, however looking at emerging markets for materials and negotiations with them will help to ensure Levi’s can remain profitable at these tough economic times.

Social consideration of the UK market has to be stressed much more than current efforts. Shop floor space may be limited, however offering a wider choice and sizes will be preferred by consumers who want to find what they need when they visit a store rather than having to go online and waiting for an order. Catering to a wider audience and their needs is crucial when taking into consideration the social aspects of consumers shopping preferences.

Technological considerations must be implemented by Levi’s and must be continuously updated to meet current trends in the UK market. Social media can enhance and spread the message of upcoming events, promotions and involvement with consumers. Online store could be upgraded and also make its simple and  easy to use so those consumers who has low technology awareness can find it easy to purchase Levi’s products online.

 

 

 

 

 

 

2.1.3 FIVE FORCES ANALYSIS

Table 3:Five Forces Analysis

FIVE FORCES ANALYSIS

Threat of new entrants

(High)

 

The threat of new entrants into this market is high as it has low entry cost barriers. Brands targeted at specific customers with a broad range of competitors at a local, regional and global level from diverse retails channel are at the most risk. To reduce this risk, key competitive factors such as developing products with relevant fits, finishes, fabrics, style and features, delivery of product value for the price and providing sufficient retail distribution to support a visibility & availability of product at retails channel with minimize the level of competition. (Company annual report, 2010)

Threat of substitute products

(High)

The threat of substitute products is high as it is an intensive and fragmented market sector, especially within the jeans market where the style does not change frequently therefore the development of fashion is often small niche details such as fashion forward seams and the use of techniques such as washing or finishing. The competitors in the UK market come from a regional and global level such as vertically integrated specialty stores such as Gap Inc. (Gap jeans) and Inditex (TRFC by Zara); multiple channels & product lines such as VF Corporation (Wrangler, Lee and Seven for All Mankind brands); athletic wears companies as Adidas Group and Nike Inc.; European brands such as G-Star, Diesel, Pepe and Brax; Asian brands such as UNIQLO and Edwin. (Company annual report, 2010)

 

In the last few years there has been a surge in the popularity of leggings amongst female consumers that has replaced jeans as their everyday clothing.  Many retailers responded by launching denim jeggings (the jeans equivalent of leggings) to offset a fall in numbers of pairs of jeans bought by women. (Mintel, 2010)

Bargaining power

of suppliers

(Moderate)

The bargain power of suppliers is moderate with jeans manufacturers needing to always keep price competitive.  (Euromonitor, 2011) Most Jean manufactures have now moved their production out of Europe to countries where there’s cheaper and more available labour. This has been managed whilst maintaining the quality of production. A few competitors that require a quick response in changing fashion demands still manufacture a small percentage of their range in Europe. (CBI Market Information Database, 2009)

 

The distribution of products in the jeans market are vary retail formatted with distribution being separated between department stores, franchise stores, company-operated retailed networks, multi-brand specialty stores, mass channel retailers and both company-operated & retailers websites. (Company annual report, 2010)

Bargaining power

of buyers

(Moderate)

The bargain power of buyers in the jeans market is moderate, with there being a vast number of brand choices and variety of prices in the jeans market. However, a report from Mintel’s consumer research indicated that around 43% of adult consumers prefer to buy brands of jeans that they know will suit and fit them. Young consumers under 35 years old are willing to spend over £100 on a great fitting pair of designer branded jeans.

Competitive Rivalry

(High)

It is a highly competitive industry because of the fragmentation of product types on offer that can be distinguished by fashion and price from local and global competitors such as premium-end or designer markets, medium-end market and low-end markets segmentation. Moreover, the availability of low price denim jeans from supermarkets and high street retailers that offers private label jeans undercut the medium and high-end brands offering more choice. (CBI Market Information Database, 2009)

 

The Threat of new entrants will have a great impact on the sales of Levi’s jeans in the UK market. Although this is unavoidable so Levi’s must stress its superior quality through it finished products and maintain quality like it has done for many years. Those new entrant into the market will tend to be of lower quality from mass retailers in which Levi’s can stand out and offer consumers with superior fitment and more availability in the UK market.

Substitute products will always be available to the consumer, Levi’s must take note of what substitutes in terms of both jeans and non-jeans products are being offered by other companies and competitors and implement this into their product lines if possible. Levi’s will have to maintain their sense of quality and finish, learning from others is crucial to establish their own marketing strategies and keeping ahead of the game.

 

The bargaining power of suppliers and buyers is of moderate concern to Levi’s, nevertheless it still has to maintain relationships with suppliers in foreign markets to get the best possible prices for materials and manufacturing. These relationships will allow Levi’s to remain competitive in terms of price. Buyers know what they want most of the time when buying jeans therefore Levi’s must stimulate the buyers with attractive new designs and product offerings at the competitively priced and easily accessible for them to purchase.

 

Competitor’s rivalry is very high in this market sector; there are a vast amount of direct and indirect competitors all-trying to take more market share. Levi’s has maintained its image and global footprint over the years so therefore it must continue the method of operations with a support of more competitive and rigorous advertising and promotional campaign that will further strengthen it’s presence in the market and continuously remind the consumer of it’s presence, nature and new product offerings. 

 

2.1.4 COMPETITORS ANALYSIS

Table 4: Competitors Analysis

COMPETITORS

1. Diesel (London)

     Limited

Diesel (London) Limited is a subsidiary of Italian company Only. The Brave SRL, owns and operates specialty clothing stores under 33 stores location across the UK. Diesel is a leader in pioneering new styles, fabrics, manufacturing methods and quality control to guarantee an outstanding product. The company offers a wide-ranging collection of jeans, clothing and accessories. Diesel’s brand essence is passion and creativity that targets cool, stylish and trendy target consumers.

2. Wrangler

    (VF Corporation)

Wrangler is a global jeans brand and footwear company called VF Corporation (a US based company). Wrangler provides premium quality in their jeans, shirts, shorts and pants which are made available through mass-market specialist retailers, department stores, national chains and online store in the UK. Wrangler jeans target consumers is traditionalists male age between 25 – 54 years old.

3. Calvin Klein

    (PVH Limited)

Calvin Klein Jeans has been positioned as the authentic designer jeans brand known for innovative fit and unique details with a denim treatment and ground breaking advertising campaign. The jeans range is the most heavily promoted product line within the brand’s fashion portfolio. The company focuses on loyal customers and fashion styles, which goes towards their individuality.  The company owned by Phillip Van Heusen, which acquired in 2003 to expand international growth potential.

4. Gap Jeans

    (Europe)

Gap jeans  (a US based company) promote themselves as an iconic American style for customers of all age. Gap is a mid market brand and operates 138 Gap stores in the UK. The company offers denim jeans, khakis, fashion apparel, accessories and personal care products for men, women and children. Gap is seen as the basic jean and is less associated with cutting edge fashion as it lacks the nostalgia of the denim specialist but more the value for money brand.

6. Pepe Jeans

Pepe Jeans London Limited is a distributor of jeans wears and casualwear under the Pepe brand for men, women and children in 80 countries worldwide. Pepe jeans offers fashion characteristics as young, cool, extrovert and casual and Pepe jeans primary target customers is age between 16 – 25 years old.  The company sells its product through exclusive branded stores, large format stores and multi-brand premium outlets in the UK.

 

 

2.2 MICRO (INTERNAL) ANALYSIS

2.2.1 SWOT ANALYSIS

Table 5: SWOT Analysis

SWOT ANALYSIS

Strengths

  • Levi Strauss has capitalised on the global demand to drive growth and strengthen its presence in mature market and exploiting on opportunities in the emerging market.
  • Levi Strauss’s brands is one of the most widely recognised brands in the world. The company leverages its established brand portfolio to build customer recall and encourage repeat purchases.
  • Levi Strauss set up there art design development location in Istanbul and three design centres in Hong Kong, Brussels and San Francisco. The designers from each of the markets provide updates in the changing fashion trends each season. Therefore, the company is able to introduce the latest designs that help them sustain the brand image in the market.
  • Levi Strauss sells its products in 55,000 retails locations and in more than 110 countries. They have a presence across multiple channels of distribution, increasing their market penetration opportunities and revenue generating capability.

Weakness

  • A fragmented and competitive market with a broad range of competitors at local, regional and global level. Furthermore, a wide availability of low price jeans from supermarkets and high street retailers’ own-branded jeans has a strong impact on the jeans market.
  • Levi’s has been trying to regain the role as a trend leader of the UK jeans market but they’re still facing a challenge attracting the young consumers under 25 years old. These age group consumers are likely to be the most fashion conscious and be influenced the most by the latest fashion trends especially purchase jeans. (Mintel, 2010)

Opportunities

  • A substantial increase in the number of persons between the   age group of 25 – 34 in the UK offer a good opportunity for the UK jeans market. Consumers under the age of 45 are the most likely people to purchased jeans in the last 12 months. Research has shown that they prefer to purchase specialist jeans from retailer brands and are willing to spend over £100 on jeans that fit them.
  • Increasing online retail sales with consumers feeling more comfortable with shopping online and retailers investing more in online operations - A strong presence in online retail sector could help Levi Strauss maximise sales and market presence.
  • Levi Strauss is looking to attract more young consumers by incorporate with Facebook to introduce a tool to shop for jeans through Facebook by using “Like” tools onto its website (www.levi.com) to make a way of buying more fun and sociable whilst also provided the opportunity to reach potential new customers. (Datamonitor, 2010)
  • Jeans are considered as a wardrobe essential for the majority people. According to Mintel’s consumer research, jeans have become acceptable for several sociable occasions for instance, going for a drink or a meal at the pub, visiting friends, eating out at a casual restaurant and going to parties.
  • In September 2010, Levi Strauss launched the Levi’s Digital Fitting Experience, an online destination for women to purchase jeans on the website for women with content and personalise tools to buy jeans based on their shape not size. (Datamonitor, 2010) It will be a good opportunity for Levi Strauss in the UK. According to Mintel’s consumer research, 64% of women find it difficult to get jeans to fit them properly.

Threats

  • The Western economic downturn and instability that began in 2008 continued to impact consumer confidence and diminish consumer spending. (Euromonitor, 2011)
  • Increasing competition in the apparel industry may affect the company and brand equity and as a consequence, the brand maybe not be able to maintain or grow demand for its brands and could lead to reduced sales and overall financial problems. (Datamonitor, 2010)
  • Rising cost and availability of raw materials primarily cotton, depend on many external factors such as acreage devoted to cotton crops and crop yields, weather, supply conditions, transportation costs and other unpredictable factors. It forces most retailers to pass price increases onto consumers.

 

The strength of the Levi’s global dominance, heritage brand being well established over many years is an unquestionable strength that can be exploited in any future or current marketing plans and objectives. The brand strengths can be used to further remind consumers and more closely associate the brand name with the product itself (Jeans). Because they have a presence across multiple channels of distribution on a global scale networking between regions can surly help aid more focused and intuitive domestic sales growth.

 

Competitors pose the greatest risk and weakness since the market is highly competitive and fragmented. The challenge is targeting the youth and encourages buying decision to Levi’s instead of the supermarkets and high street owned denim labels. Price can be reduced during seasonal holidays and sales promotions can be implemented. The younger consumers will welcome new and innovative designs and wider product choices. Maintaining a fresh image will keep Levi’s in a strong position to attract the new target consumers.

 

Opportunities are in a great abundance in the domestic market regards to the anticipated target age’s group of 15 – 34. Social networking site can be used to create an involvement for consumers with promotions and new products. The Internet is an opportunity for Levi’s to make their online store more accessible and improve upon what is currently offered, jeans are an essential part of a consumer’s wardrobe; this opportunity can be exploited by successful marketing to make people want to have a pair of Levi’s or more in their closet as a fashion trend.

 

Threats will always remain in the market, but Levi’s must be cautious even in these uncertain economically periods. However, the threat of an intensive competition should be studied to see how they could be implemented and turned into an opportunity. For example if Levis learns from competitors mistakes and successes they can establish parameters for future launches, pricing and other strategic moves to fight against the competitors and their product offerings.

 

2.2.2 MARKETING MIX (4P’s)

Table 6: Marketing Mix (4P’s)

MARKETING MIX (4P’s)

Product

The company design and markets jeans and other casual wear for men, women and children. The company’s key products include the following:

  • Jeans
  • Casual and dress pants
  • Tops
  • Skirts
  • Jackets
  • Footwear and related accessories

Levi Strauss market clothes around the world under four brand names as the following:

v  Levi's® represents the original and definitive jeans brand.

v  Dockers® represents world’s best and most loved khaki brand.

v  Signature by Levi Strauss & Co.™ represents quality craftsmanship and exceptional value.

v  dENIZEN™ represents high quality jeans wear and fashion essentials at affordable prices.

Price

Levi Strauss offers the products under four brand names that distinguish by consumer fashion acceptance and price segmentation as the following:

  • Levi’s and Dockers products price ranges are perceived as mid market prices.
  • Signatures by Levi Strauss & Co. products price ranges are perceived as premium or high market prices.
  • The Denizen products price ranges are perceived as low to mid market prices.

Place

Levi Strauss’s products are sold in approximately 55,000 retail locations in more than 110 countries, the company also licenses the trademarks to third parties for manufacturing, marketing and distribution of various products.

  • Levi’s and Dockers products primarily distribute through chain retailers and department stores in the US and through department stores, specialty retailers and franchised stores outside the US. Additionally, online stores and 470 company-operated stores located in 27 countries included the US.
  • Signature by Levi Strauss & Co. products primarily distribute through mass channel retailers in the US and mass channel retailers and other retailers and franchised stores outside the US.
  • The Denizen products are distributed in Asia Pacific through franchised stores.

Promotion

  • Levi Strauss advertises around the world through a broad mix of media including of television, national publications, the internet, cinema, billboard and other outdoor vehicles.
  • The company also use other marketing vehicles including of event and music sponsorships, product placement in major motion pictures, television shows, music videos and leading fashion magazines and marketing techniques such as street level events and viral marketing activities.
  • www.levi.com, www.dockers.com, www.levistrausssignature.com and www.denizen.com websites use as marketing vehicles in relevant marketing to enhance consumer understanding of the brands and help them find and buy products.

 

 

 

 

 

 

 

 

 

2.2.3 PORTER’S GENERIC STRATEGIC (COMPETITIVE ADVANTAGES)

Table 7: Porter’s Generic Strategic (Competitive Advantages)

 

COST STRUCTURE

MARKET SCOPE

 

LOW COST

HIGHER COST

 

BROAD

 

 

Overall Cost Leadership

Differentiation

NARROW

Focus Cost Leadership

 

Focus Differentiation

 

 

Levi Strauss continues to focus on differentiating itself from competitors in the denim jeans market by integrated the four principle values; empathy, originality, integrity and courage that has become a competitive advantage and one of the keys of success. The company pays close attention to what customers needs by investing in research and development in order to provide up to date products for the changing fashion trends in each season. The products are selling under 4 brands in more than 550 countries which helps them reach different target segments and sustain the brand image and products portfolio in the global perspective scale.

2.3 MARKETING OBJECTIVES/STRATEGIC CONTEXT

Levi Strauss & Co. is currently not appealing in the jeans market in the UK but they have an opportunity to improve their brand positioning towards the young target consumers by developing a related communication strategy to attract and engage with youth target audiences. Levis can use marketing activities to promote and adjust the brand and product perception to maximise their market share.

Additionally, Levi’s should offer an integrated online store experience in order to engage and create an interaction between the brand and customers, which will also encourage more online purchasing and simultaneously maintain a long-term relationship with their customers. In order to adjust the brand and product perception, Levi’s needs to develop an inspired marketing campaign with a creative and consistent message around the brand to current and prospect customers.

2.3.1 MARKETING COMMUNICATION OBJECTIVES

To adjust the Levi’s brand and product perception towards the UK jeans market and become the first jean’s brand in the consumers mind by using marketing communication tools.

  • Reestablish Levi’s brand positioning from classic and endurance to iconic, fashion-focused and dynamic jeans brand that suit everyone in any occasion.
  • Lessen of women or outweighed person belief that it is difficult to buy jeans that fit and look good on them by promote Levi’s new product ranges that fit all type of body.
  • Promote Levi’s product qualities  & values compares to substitute products at the lower price range provides by high street retailers or value retailers.

2.3.2 MARKETING OBJECTIVES

To enhance Levi’s sales growth and market share in the jeans market in UK through traditional retailers and the online distribution channel in the UK. The overall purpose of increasing Levi’s UK revenue by 15%, which is equal to £9,940,200 million, from £66,268,000 million in 2010 to £76,208,200 million within one-year campaign period. (FAME, 2010)

SHORT-TERM (WITHIN 1 YEAR PERIOD OF IMC CAMPAIGN)

  • Increase 15% of revenue that is equal to £9,940,200 million (From £66,268,000 million in 2010 to £76,208,200 million) in the jeans market in the UK within 1 year of the campaign period.
  • Becomes the first jeans brand choice among the target group 15 – 34 years old both male and female in the UK within 1 year (It can be measured by the conducting a survey during and post of the campaign and monitoring the sales growth after the campaign compares to the period before the campaign starts).

By targeting the age group of 15-34, Levis are guaranteeing repeat buyers and not just individual purchases. According to Mintel’s consumer research on the topic of Consumer Attitudes to Buying and Wearing Jeans – UK (2010), the average adult in the UK owns four pairs of jeans. More than one in five consumers own 5-7 pairs of jeans, particularly women and under-35s who are more interested in keeping up with the latest fashion and tend to shop more frequently. Older people aged over 45 are more likely to own only 1-2 pairs of jeans and are biased towards those that wear a favorite pair of jeans until they wear out. Young people are the most likely to own more than eight pairs of jeans, as are those who buy jeans from Levi’s, other specialist jeans retail brands and designer brands. Even 1%  (163,000) of the total of 16.3 million of target customers’ ages group 15 – 34 years old, are becoming a customers and all buying 2-3 pairs of jeans. This equates to 26,080,000 - 39,120,000 in revenue alone  (the average cost of  a pair of Levi’s jeans is £80)

 LONG-TERM (WITHIN 5 YEARS)

  • Increase and main the sale growth of 20 – 30% in the jeans market in the UK within the next 5 years.
  • Build database and create long-term relationship with customers.
  • Encourage a repeat purchasing and maintain the brand equity.

PART 3

THE IMC CAMPAIGN

RECOMMENDATIONS & PROPOSALS

IMC IMPLEMENTATION

IMC is an ongoing strategic process rather than a tactical integration of various communication activities which involves the management and organisation of all agents in the analysis, planning, implementation and control of all marketing communications contacts, media, messages and promotional tools focused at selected audiences. (Pickton & Broderick, 2005) The promotional tools which includes advertising, sales promotion, public relations, personal selling, direct marketing and interactive marketing are the methods used to accomplish an organisation’s communication objectives and each of the promotional tools or promotional mix, play a distinctive role in an IMC programmes.(Belch, G.E & M.A, 2009) According to Kliatchko (2008), as a business process, IMC implementation comprises both the corporate and operational level of organisation with each level focusing on different key strategic and managerial issues.     

The corporate level

Senior management take a holistic view of business, as what business it is in determines its mission, advocates strong customer orientation, drives brand-building strategies and takes full responsibility for the task of integrating all the function units within the organisation to deliver and satisfy consumer needs. It’s concretised in systems and organisational structures that put customers, prospects and all stakeholders at the centre of business operations. Moreover, senior management views marketing communications as a strategic management tool and an investment that generates business results in the long term. (Schultz & Kitchen 2000)

The operational level

IMC managers at this level focus on the planning, management, implementation and measurement of the IMC planning process that begins with a deep understand of the needs, desires and behavioural patterns of both internal and external audiences that the company interacts with in the marketplace. IMC managers have to define, analyse and develop IMC programmes that will allow the company to compete successfully in its chosen business and also responsible for coordinating with various communication agencies for the effective implementation of IMC programmes. The key is the ability to manage long-term profitable customer relationship. By coordinating the marketing communications efforts, the company can avoid duplication, take an advantage of synergy among promotional tools and develop more efficient and effective marketing communications programmes. (Belch, G.E. & M.A., 2009) Advocates of IMC argue that it is the one of the easiest ways for a company to maximise the return on investment in marketing and promotion. (Anthony J. Tortirici, 1991)

3.1.3 BARRIER TO IMC

According to Pickton & Broderick(2005), there are several factors that could affect or discourage integrated marketing communications (IMC), the degree of impact or control are diverse for each organisation and industry:

Mind-set

Robbs & Taubler (1996) underlined agency creative’ aversion to integration and lack of willingness to work across the media and promotional mix tools.          Schultz (1993) has commented on the cult of specialisation, history, tradition          and experience of companies as limiting factors to fulfill the integration.            Consequently, the members’ attitudes and feeling in an organisation of the marketing communications industry are unfavourable or against the concept of integration 

Structure of organisations

The structures of organisations vary greatly and this could make it difficult to manage and coordinate. They are usually divided into sub-units to make it easier for dealing with operations. However, cross-functional assignments and teamwork can benefit to break down organisational barriers that are a problem when structuring an organisations hierarchy, vertical communications, turf battles, power struggles and functional silos (Gonring 1994; Schultz 1993) in which individuals and groups are protecting their own specialties and interests. 

Magnitude of task

According to OmniTech Consulting Group (1993) for the journal Advertising Ages indicated that the main obstacles to integrated marketing communications are to have a too broad perspective and an insufficient budget. Although this was an old research, there is still no or little evidence to show that the level of task has diminished in most organisations.

Adequacy of budgets

Commonly, organisations are unable to fully appreciate the more strategic approach and longer-term values of marketing communications, as the expenditure is not considered as an investment although the growth in the recognition of brands value is changing. Therefore the budget is set only for short term and it is not enough for a full integration of marketing communications.

Agency remuneration systems

In the traditional way, the advertising agencies income has come from acommission. There has been a strong incentive for advertising agencies to support advertising activities more than other forms of marketing             communications. However, the systems of payment are changing and they         are now more encouraged to integrate with other marketing communications.

Dimensions of integration

There are many dimensions of integration. Therefore, in order to be able to achieve the problems of each dimension, they must be addressed at the beginning. The dimensions of integration include the integration of creative elements, intra and inter organisational factors, the integration of promotional mix with         other marketing factors, information and database systems, the integration of communications towards multiple target audiences (internal, external and corporate) and unitized communications.

IMC ROLE

The role of integrated marketing communications (IMC) is to ensure that all forms of marketing communications tools and the messages are carefully connected. IMC is synergising and integrated in all the promotional mix along with all communication tools and resources within the company. They can work well together in order to provide a unified consistent message that maximises the impact on the consumers mind and therefore results in maximum profit at the minimum cost.

IMC communicates around the customers and assists the movement through the various stages of buying process. At the same time, the organisation consolidates its image and cultivates the relationship with customers. Therefore, IMC could save money for many reasons such as; it eliminates duplication in an area of artworks as its can be used in every part of IMC programme; It reduces agency fees by using a single agency for all communications and reduces workload and subsequently stress levels.

IMC PERFORMANCE OBJECTIVES          

The purpose of an integrated marketing communications campaign is to achieve the IMC objectives that are:

1. To adjust the Levi’s brand and product perception towards the UK jeans market and become the first jean’s brand in the consumers mind by using marketing communication tools.

  • Re-establish Levi’s brand positioning from classic and endurance to an iconic, fashion-focused and dynamic jeans brand that suits every occasion.
  • Lessen the amount of women who believe that it is difficult to buy jeans that fit and look good on them by promoting Levi’s new product range that fit all shapes and sizes.
  • Promote Levi’s product quality & value compared to substitute products in the lower price range that’s provides by high street retailers or value retailers.

The campaign accomplishment of the brand repositioning will be measured by using quantitative and qualitative marketing research that the method and technique choices depend on the media characteristics that will be further discuss in the evaluation section.

To enhance sales growth by 15% within 1 year (increase and maintain 20 – 30% within 5 years) in the jeans market in UK through traditional retailers and the online distribution channel in the UK.

  • Create a better in-store shopping experience by providing personalised denim experts who can helps customers choose a perfect pair of jeans unlike competitors and support more creative and appealing activities (currently being held in the flagship store on Regent Street, London) to increase engagement & involvement with current customers and prospects. The staff training programs will be provided for non-companies own retail stores in order that all Levi’s stores can serve customers with a greater experience.
  • Increase online sales by adopting a social online shopping experience from the US market (integrated with Facebook’s social plugins on the Levi’s website). This provides shoppers with a more personalised shopping experience on the website.
  • Encourage repeat purchasing and establish a long-term relationship with customers and brand awareness among young customers by introduce a customer loyalty program to existing customers and prospects (fashion conscious consumers who tend to keep up with the latest fashion and buy new clothes every season).

The integration of media and marketing activities will help Levi’s deliver a strong and consistent message to their target audiences. The accomplishment will create a strong presence of the brand and products in the jeans market in the UK and lead to an increase in sales and market share.

 

3.2.1 SMART OBJECTIVES

Table 8: Smart Objectives

Specific

- Increase revenue by 15% in the jeans market in the UK within 1 year.

- Become the first jeans brand choice among the target group 15 – 34 years

  old both male and female in the UK within 1 year.

Measurable

- Acquire 70,000 members of a customer loyalty program within 4 months   

  which is part of acquisition program.

  (Subscribe to newsletters, product information and or online shopping).

- Create Levi’s UK fan page with a target to gain 100,000 fans of the page

  within 4 months.

- Increase store traffic by 30% in the UK within 6 months.

- Increase and maintain sale growth by 20 – 30% in the UK within 1 year.

Achievable

- Use advertising & public relations to promote and attract customers and

prospect customers.

- Use direct marketing and sales promotion techniques to get attention, engage with customers and create a long-term relationship with them.

Realistic

- Use Levi’s retail stores around the UK and online stores as a main source of

Information and area to interact and connect with customers and prospect customers. 

- Use the allocated budget of £5 million for all marketing and communication activities.

Timely

- Expect to achieve the objectives within 1 year

(March 2012 to February 2013).

 

3.2.2 BRIEF TIMEFRAME AND CAMPAIGN PLAN

Table 9: brief Timeframe and Campaign Plan

TOOLS

03/12

04/12

05/12

06/12

07/12

08/12

09/12

10/12

11/12

12/12

01/12

02/12

Phrase 1: Re-establish brand positioning, Changing beliefs and Promote the product and brand value leading to increased sales

Phrase 2: Sustain brand equity, Increase sales and Create a long-term relationship

ADS

 

 

 

 

 

 

 

 

 

 

 

 

PR

 

 

 

 

 

 

 

 

 

 

 

 

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