Post on 14-Jul-2016
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Contents Part 1
Introduction
The Original Blue Jean
Business Distribution Structure
Customer Segmentation
Brand Analogies
Brand Timeline
Part 2
Brand Inventory
Brand Audit
Brand Equity
Brand Extention
Distribution Channels
Brand Issues
Part 3
Glastonbury Recommendation
Spotify Recommendation
Ray-Ban Recommendation
Conclusion
References
Appendix
Page 4
Page 4
Page 5
Page 6
Page 7
Page 8
Page 10
Page 13
Page 14
Page 16
Page 18
Page 22
Page 23
Page 24
Page 27
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James Albert - W12009829
Clodagh Hartley - W12005539
Callum McDonnell - W12032326
Rachael Kirk - W12005625
Li Gan - W13032496
Word Count - 3289
MK4000 - Analysing Buyer Behaviour and Brand Dynamics
The essence of Levi’s is personified in its
core values: empathy, originality, integ-
rity and courage. The quartets of values are
evidently valuable to the functionality of the
brand as they feature heavily across any in-
quisitive documentation of the company;
particularly marketing campaigns.
These are Levi’s guiding principles that al-
low them to make decisions and channel
through their products. Levi’s have demon-
strated over the years their ability to keep
aligned with the originality that they express
through their products, namely the 501 jean.
However, the path in which Levi has taken,
being complacent with originality, has al-
lowed them to ignore the obvious trends in
the apparel market thus resulting in a signif-
icant loss of percentage in the jeanswear
marketplace.
Nonetheless the empathy Levi’s value is
worth its weight in gold. For instance, in 1982
Levi’s campaigned for AIDS awareness as
well as being the first Fortune 500 Company
to extend medical benefits to employees’
domestic partners (Fairchild, 2014). External
to the company, Levi’s enforce empathy
through promoting their products to be for
everyone. The inclusiveness of this promotes
a valued relationship between consumer
and company.
The originality of the brand goes without
saying. The brand stands on the forefront of
user imagery, and those tangible attributes
to which they believe consumers buy Levi’s
for; the very nature of its iconic blue jean. The
originality seeps through all corners of the
brand, however its ability to stay relevant has
caused serious concerns for the future of the
company; the brand has remained strong
by capitalising on its heritage however the
reliance on originality has led to a compla-
cent attitude toward the brand as a whole.
Levi Strauss and Co is a global manufacturer of brand-
name clothing; designing, producing, distributing and
selling a range of clothing products but primarily denim
jeans. The American apparel company owns a range of
subsidiary clothing brands, these include: Dockers, Signa-
ture, Denzin and the iconic Levi’s.
Introduction
The Original Blue Jean
5
’The Levi’s brand epitomizes classic American style and effortless cool. Since the invention and patent of riveted
clothing by Jacob Davis and company founder Levi Strauss in 1873, Levi’s jeans have become the most recog-
nizable and imitated clothing in the world – capturing the imagination and loyalty of people for generations. And
while the patent has long since expired, the Levi’s brand portfolio continues to evolve through a relentless pioneer-
ing and innovative spirit that is unparalleled in the apparel industry’’
figure x taken from the Levi Strauss and Co website
Part 1
Levi Strauss’ apparel see’s transactions in more than 110
countries, with approximately 50,000 retail locations. It
operates manufacturing, distribution, and finishing facili-
ties in the Americas, Europe, and Asia/Pacific regions. The
company favours a multifaceted retail structure, namely
using a wealth of department stores, company operated
retailers including online retailing, as well as multi-brand
speciality stores.
The selling and distribution spans across the global plat-
form with significant success shown in established markets
in Japan and Western Europe as well as emerging mar-
kets such as India, China, South America and Russia.
In terms of business stability, Levi’s revenues had shown
significant losses and in 2003, Levi made a bold strategic
move. The company formed alliance with supermarket
giant Walmart, in a bid to secure future finances for the
company. Prior to the partnership, Levi had opposed the
initial idea of selling its apparel in supermarkets. This was
evident in 2001 when Levi sued UK supermarket chain Tes-
co for selling Levi Jeans at half the recommended retail
price for UK approved outlets (BBC News, 2001).
Age: 15-30 years
This age bracket is made up of both male and fe-
male, fashion conscious consumers with ranging
household income. The medium – high income
consumers typically buy the Levi’s brand and low-
er income buyers opting for the Signature brand.
This target market holds values of self-expression,
authenticity, peer acceptance, trendsetter and ef-
fortless cool.
Age: 30-50 years
Levi Strauss and Co targets both male and female
consumers in this age bracket and have developed
a strong sense of loyalty from them. These customers
are considered to be professionals and blue collar
workers, who have been wearing Levi’s since their
youth. Their values are a sense of loyalty, American
spirit, familiarity and self-expression.
A typical Levi’s consumer may fall into two age categories with distinct characteristics:
7
Business Distribution Structure Customer Segmentation
Pinterest is visual social media site that allows users to ‘pin’ ideas and create mood boards. The highly influen-
tial social media outlet suggests that Levi is associated with the following attributes:
• Modern Cummuter: someone that owns a bike or skateboard
• Cowboys
• Motor Bike Owners
• Musicians
• Movie Stars: Jonny Depp
Brand Analogies
Ray-Ban VW Beetle
CasioGlastonbury Festival
Budweiser HMV
VansFender
Converse Diesel
9
Timeline
The purpose of this section is to establish the current positioning of
the brand. Over recent decades, Levi’s has allowed their prod-
ucts to essentially sell themselves and be carried through cultures
on the shoulders of trend-setting youths. However every brand
needs to develop in order to stay relevant. Despite Levi’s strong
brand equity, ‘the company favours maintaining its brand integri-
ty over jumping onto the latest trends’ (Lee Yohn, 2015). The pre-
vailing assets that provide value to the Levi Strauss brand will now
be explored.
Brand Audit
Part 2
Brand Inventory
Brand Audit
17
American
Levi’s has been stitched into American cul-
ture for decades, becoming the staple cloth-
ing for America’s labourers by offering comfort
and durability. Founded in California Levi’s may
have spread globally but it has never forgotten
its roots. Levi’s association with Americanism has
helped the brand flourish in its biggest market,
America, where the consumer’s patriotism at-
tracts them to brands like Levi’s.
Original
The original blue jeans were created by Levi
Strauss and his business partner Jacob Denis in
1872, 144 years later and Levi’s are still primarily
known for their jeans. Being the founder of such
a prominent piece of clothing gives the brand a
special status in the eyes of the consumer and
automatically reassures buyers that they will re-
ceive value.
Heritage
Not many brands have a history as long or event-
ful as Levi’s and this story of their heritage is used
throughout many of their marketing campaigns.
Whether it was the American soldiers wearing Le-
vi’s during WW2 or the athletes clothing of the
1980 and 1984 Olympics, Levi’s has been through
a lot. It is this experience and longevity that gives
consumers the confidence to find value with Le-
vi’s products.
Cool
The term cool has been associated with Levi’s
since the 1950’s when jeans started becoming
fashionable and a symbol for rebellion. Howev-
er the rise in competition, developing fashion
trends and Levi’s complacency to develop their
brand has meant that the term cool is no longer
linked with the brand as it used to be.
Key Drivers/ Core Associations
Brand EquityCustomers of Levi’s have forever been loy-
al to the brand because of their quality,
originality and style. During WW2 American sol-
diers wore their Levi’s overseas and when they
returned they were passed down through their
generations. Since 1996, the loyalty of recurring
customers for Levis has fallen; which is evident
in the drastically falling revenue figures. This is,
in part, due to the rise of close competitors giv-
ing consumers much more choice, but also be-
cause Levi’s have failed to recognise popular
consumer trends. Many of the marketing meth-
ods currently used by Levi’s emphasis the word
“original” in an attempt to develop loyalty from
younger customers. One study found that re-
peat purchases were more common within the
older population when compared to the youth
(Wight, 2011).
Quality
Quality is an integral part of the Levi’s brand and
has been a primary driver for their sales since the
company was founded. For decades Levi’s jeans
have been the leader in product performance,
this originally stemmed from the patented rivets
used to strengthen the seams. Although Levi’s
are still considered to be of a very high quality,
modern technology has allowed their competi-
tors to overcome the patented rivet design, and
equal Levi’s quality. A strong emphasis on quality
can be seen throughout their marketing efforts
as well as “quality clothing, every garment guar-
anteed” being stitched on the leather patch on
all Levi products.
Awareness
Levi Strauss has been a household name ubiqui-
tous with the blue jeans for over a century. One
study into brand awareness found that Levi’s
was the most recalled brand when prompted
with the word “blue jeans”, a recall rate of 40%
(Wight, 2011). The results of this test suggest that
brand awareness for Levi’s remain considerably
high. In addition to this another study by Dolbow
(2000) asked school students to name the pair
of jeans they were most likely to purchase in the
near future. While Levi’s won the majority, the
result was only marginal (see table) with many
competitors close behind.
Loyalty
Table x - Shows what jeans brand students would most likely purchase next
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• Household name,
• High brand recal response
• Globally recognised brand
• American
• Musician
• Biker
• Workmen
• Rebellious
• Cowboy
• Sustainable
•Standardised
• Heritage
• Fashion
• Durable
• Reliable
• Cool
• Lifestyle
• Following
• Community
• Excitement
• Recognised
• Trust
• Quality
Behavioural loyalty
Strong online community
Resonance
Judgements
Performance
Salience
Feelings
Imagery
Keller CBBE Pyramid
• Casual
• Authentic
• Effortless
• American Individualism
• Way of life
• Trendsetter
• Rebellious
• Independent
• Red tab
• Iconic blue jeans
• Two horses
• Affordable
• Inclusive
• Empathy
• Trendsetting
• Multi generations
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Kapferer Brand Identity Prism
In order to grow and expand, Levi’s has leveraged
its brand and attempted to introduce many new
products in accordance with a brand extension strat-
egy (Kotler, Keller, Manceau, & Hémonnet-Goujot,
2016). Although Levi’s blue jeans account for roughly
85% of their revenue (Fairchild, 2014) they have many
examples of successful brand extension products i.e.
belts, t-shirts and wallets.
Inner Core
501 Original
511 Slimfit
569 Loose
517 Bootcut
Extention Areas
No go areas
Belts
Suits Mobile Phones
Caps
T-Shirts Shoes
JacketsWallets
Brand Extention
Distribution ChannelsOnline
Levi’s sell all of their products directly from their own
website, this has obvious cost saving advantages
but it also allows the brand to be displayed and mar-
keted in the exact way that Levi’s see fit for their cus-
tomers. Levi’s also sell their products via other online
retailers such as asos, this however limits the image
exhibited of the brand but does help maximise brand
awareness and sales.
Department stores
Like many apparel companies, Levi’s sell most of their
products through retailers like JCPenny or John Lew-
is. Within these department stores Levi’s have their
own areas that are designed in accordance with the
brand, although beneficial, they have no more con-
trol over their customer’s experience of the brand.
Levi’s stores
Levi’s own a number of stores to sell only their prod-
ucts in throughout various cities. Although these stores
do not bring in a substantial amount of revenue com-
pared with the third party retailers, they do allow Le-
vi’s complete control of their customers experience
with their brand.
Second hand market
The second hand market does not contribute to any
of Levi’s revenue however it does contribute massive-
ly to the brand itself. Retro clothing is a massive trend
among young people (Guffey, 2006) and old Levi’s
clothing fits perfectly into this classification. The result
of many people wearing old Levi’s clothing is that its
reputation for quality increases, as the clothing has
lasted so long, and also the awareness of the brand
increases.
23
Products that were associated with the brand
but have had a negative impact are:
Levi’s Tailored Classics - Formal, pretentious, ex-
pensive compared to Levi’s casual, unpreten-
tious and affordably iconic jeans.
Levis Mobile - Drastically different industry which
confused the identity and positioning of the
brand.
Due to a loss of focus and lack of innovation,
Levi’s typical consumer has been getting
older and Levi’s has become less associated with
youth connotations, for which their blue jeans
have been a generational symbol. Although Le-
vi’s have attempted to target the 15-25 year old
market, their typical customers are actually 20-45
years old (Vrontis & Vronti, 2004).
Since their peak in 1996 Levi’s has used their
market dominance and household name
to drive business. This lazy and one dimensional
strategy has meant that innovative companies
like Calvin Klein and Wranglers have chipped
away at Levi’s market share. The premium jeans
market has been growing rapidly since 2000 and
Levi’s have been complacent in reacting, this
left the door open for Calvin Klein to capture the
market. Similarly Wranglers has taken control of
the discount jeans which leaves Levi’s awkward-
ly the middle.
Brand Issues
Ageing consumer market
Trends and CompetitionBrand extension failures
Figure x - Levi’s Tailored Classics Figure x - Levi’s Mobile
Figure x - Global market share, jeans companiesChart Source: Euromonitor
A fast growing movement in the apparel in-
dustry is the athleisure trend among the
millennials generation. It is this age bracket that
Levi’s are targeting and yet this segment are be-
coming more health conscious and turning to
the more comfortable athletic clothing; breath-
able and stretchy fabrics. Euromonitor predict
that the denim jeans market growth will slow to
just 1.4% by 2017 whereas Barclays forecast that
the athletic apparel market will grow by $30 bil-
lion (Hanlon, 2015) further diminishing the want
for denim jeans.
Athleisure Trend
“There is no question, we got complacent” – Chip Berg, Levi’s CEO
25
Part 3
The Recommendation
To increase Levi Strauss’ brand awareness amongst younger consumers through
official event sponsorship of the Glastonbury Festival of Contemporary Per-
forming Arts.
1 Glastonbury is a performing arts festival that at-
tracts thousands of festival goers every year
to its famous green fields. The festival entices vibrant
crowds and fashion forward trendsetters; quintessen-
tially the festival was voted the third trendiest brand
in 2015 (Brown, 2015); the ideal target audience that
Levi require in order to enhance their brand image.
Benefits
The sponsorship will aim to increase initial brand
awareness and loyalty as well as generating cus-
tomer preference through means of high brand re-
call. Levi’s has precedent associativon with music;
therefore the company will understand the famil-
iar connotation with music ventures. Sponsoring an
event as vast as Glastonbury will provide Levi with an
opportunity to build its brand position through its as-
sociation, especially in the UK, as well as expose the
brand to the media platforms that cover the event.
Research of event sponsorship ventures indicate
that it alters brand image positively and while initially
used in a rather cavalier manner by many sponsoring
companies, is regarded today as a highly cost-effec-
tive method of marketing communication’. (Meen-
aghan, 1991). Essentially, event sponsorship buys two
things; exposure with the audience and the image
association.
Predominantly, sponsorship works so long as the part-
nership of the brands aligns with, or ‘fits’ one anoth-
er’s brand attitudes, values and beliefs. Both Levi and
Glastonbury strive for sharing sustainable change in
the world (Levi Strauss, 2016), as well as attracting
compatible, like-minded target audiences (Jagre,
Watson & Watson, 2001).
Sponsorship Strategy
In search for a new, edgy and effortless cool, it is rec-
ommended that Levi’s should be the official sponsor
for the world renowned Glastonbury festival held in
the UK. To enhance positive brand equity, Levi’s need
to encourage brand preference and recognition of
what it offers in comparison to other apparel brands.
Through event sponsorship of Glastonbury, Levi’s will
to trial their brand through pop-up stores across the
festival, offering exclusive custom Levi apparel in a
bid to win new consumers as well as attempting the
retention of past and present consumers. A stage
within the festival will be named as the ‘Levi Stage’ as
a form of brand marketing. Levi currently uses guer-
rilla marketing in the ‘Live in Levi’s’ campaign that is
both striking and imaginative; the quirky advertising
will be featured heavily across Glastonbury platforms,
namely posters, flyers and small billboards.
What is Glastonbury?
29
The digital music service has created an online
platform that has given listeners access to a vast
music catalogue. Spotify is a global success, reach-
ing more than 100 million active users including 15 mil-
lion premium subscribers.
Well-known brands such as Coca-Cola and Face-
book have successfully partnered with Spotify, high-
lighting the integrity of the company and the benefits
that Spotify can contribute to brand equity.
The Benefits
The benefits Levi would obtain from a partnership
with Spotify is unfathomable; the music streaming
service is so current and in high demand. It’s readily
global platform would essentially be Levi’s for the tak-
ing; in essence, Levi would have unrestricted access
to a pool of worldwide users who no doubt use Spot-
ify on a daily basis.
Using the collaboration with Coca- Cola as an exam-
ple Spotify provides the technology and music need-
ed for Coca-Cola marketing. This would be similar
for Levi’s; Spotify can help boost the online market-
ing for Levi’s and help draw in more customers (Dai
& Pietrobon, 2012). Spotify has gained a tremendous
brand equity from their current co-branding partner-
ships, and having another collaboration will only help
strengthen this.
The Recommendation
To enhance the Levi Strauss brand image and attract a younger customer base through a partnership with
Spotify.
What is Spotify?
2 The Partnership Strategy
Using the associative network memory model
(Keller, 1993), Levi, using brand knowledge, can
build Levi’s customer based brand equity through the
association with Spotify. In 2014, the team behind Le-
vi’s store soundtrack stated that ‘music is an extension
of the brand’, and music is a marketing tool which
can affect the consumer brand experience (Busnyuk,
2014). The ultimate goal is to reinforce positive brand
awareness in association with Spotify, as it Is evident
through past ventures that Levi’s high regard music
as a part of their brand.
The Proposition
The store soundtrack and the marketing cam-
paign soundtracks will be available as a feature
on the Spotify ‘genre’ feed. A Levi content section
will be available alongside the pop, rock jazz gen-
res, to name a few, to entice the curiosity of Spotify
users. Spotify was a new entry in the top 20 trendiest
brands of 2015; so the association of Levi with Spotify
will have impact on the brand equity. Furthermore,
Spotify’s platform allows content to be easily spread
by word-of-mouth through Facebook and Spotify’s
social feed. If Levi was to be advertised via Spotify’s
Facebook, this would equate to millions of viewers
through social media marketing strategies (Busnyuk,
2014).
31
The Recommendation
To rejuvenate the ‘cool’ image of the Levi Strauss brand,
this report proposes the acquisition of the brand Ray-
Ban.
What are Mergers and Acquisitions (M&A)?
M&A in general is a term used for the amalgamation of
two or more companies. The duration of this report will
focus on one specific type of acquisition being (A + B =
A1 + B).
This type of M&A depicts the controlling parent compa-
ny represented by A (which is able to make strategic
controlling action) and the purchased brand being B
(Ray, 2010). For this report A will represent Levi Strauss
and B representing Ray-Ban.
Type of Acquisition
According to Ray (2010) there are three primary motives
for pursuing a brand acquisition.
• Growth strategy
• Defensive strategy
• Financial opportunity
This recommendation will be based on pursuing the
growth strategy theory as Levi Strauss and Co is currently
experiencing controlled organisational growth.
Evidence of Successful M&A
• The purchase of jaguar cars Limited and Land Rover
in 2008 by Tata motors Limited (Lee et al., 2011).
• Louis Vuitton Moet Hennessy using the ‘house of
brands’ strategy to develop a successful brand port-
folio and maintaining the brands core values (Kumar
& Hansted Blomqvist, 2004).
3 Why Ray-Ban?
Ray-Ban is being recommended as it is strongly
associated with being a cool brand, so much
so that it was voted the 2nd “coolest” brand in 2015
(CoolBrands, 2015). This recommendation looks to re-
juvenate Levi’s lost ‘cool’ image and therefore must
identify a brand that is deemed ‘cool’ but also holds
similar values.
In a similar way to Levi’s, Ray-Ban holds a close as-
sociation the phrase ‘Original American’, this arose
because Ray-Ban founders, Bauch & Lomb, invented
the first aviator sunglasses for the US Airforce in 1929
to help combat glare. Furthermore Ray-Ban also cap-
italise on their heritage in a similar way to Levi’s to
drive sales and develop as a brand.
Although there is no overlap in product offerings be-
tween Levi’s and Ray-Ban, Ray-Ban have recently
launched a new line of sunglasses made from real
denim. This link could be capitalised on too assert a
connection while keeping their strong brand individ-
uality. Furthermore Ray-Ban, like Levi’s, is a large ad-
vocate for guerrilla marketing as mentioned by Levin-
son, Meyerson, and Scarborough (2008), evidence of
this can be seen in their Never Hide campaign.
Benefits
The Levi’s brand would benefit from this acquisition
by adopting the cool associations with Ray-Ban
while keeping the ‘Original American’ image. This
would allow Levi Strauss to develop a brand portfolio
which strongly reinforces the company’s values while
branching out into a new but similar market. This ac-
quisition would go on to rejuvenate the diminished
sense of ‘cool’ previously associated with Levi’s. Le-
vi’s would therefore be able to leverage secondary
brand associations gained form Ray-Ban in order to
increase its own brand equity (Campbell, 2002).
Acquisition strategy
Firstly, once the target brand (Ray-Ban) has been
identified a brand team will be created in order to
conduct marketing due diligence. The primary goal
of this team will be to observe the transaction through
the customers ‘eyes’. This is done in order to sustain
loyal customers once the acquisition is completed,
making sure that the various customer touchpoints
remain constant (Kumar & Hansted Blomqvist, 2004).
The next step would be determining the method at
which brand equity would be transferred from the
acquired brand to the parent company, in essence
33
the goodwill. This report then proposes as mentioned
by Uggla (2004) the use of ingredient branding. This
theory would then be applied to the new denim line
of sunglasses produced by Ray-Ban. By associating
the original denim produced by Levi’s with the Ray-
Ban denim range. The outcome would have the ef-
fect of connecting two customer bases as well as
rejuvenating the brand equity and ‘cool’ brand as-
sociation of Levi’s.
Conclusion
This report has identified the need for the Levi’s
brand to become re-associated with the term
cool and to attract a younger demographic. By be-
coming affiliated with branches of the music sector
and strategic partnerships with “cool” brands such
as Glastonbury and Spotify, Levi’s will become a cool
brand once again. To further establish themselves as
a quintessentially cool brand, this report has recom-
mended to Levi’s the acquisition of Ray-Ban, who’s
brand identity aligns flawlessly with Levi’s and who
was also voted the 2nd coolest brand in the UK.
35
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AppendixSwitching Costs Low
Strength of Distribution Channel Low
Supplier Competition Low
Differentiation of Inputs Low
Buyer Dependence Low
Capital Availability High
Access to Technology High
Economies of Scale High
Access to Distribution High
Barriers to Entry High
Government Policy High
Industry Profitability High
Product Substitution High
Brand Substitution High
Buyer Price Sensitivity High
Differentiation Within the Market High
Buyer Dependency Low
Product Features Low
Product Importance Low
Buyer Information Availability Low
Buying Power Low
Market Growth Rate Low
Total Number of Rivals High
Exit Barriers High
Sustainable Competitive Advantage Low
Advertising Expense High
Product Capacity High
Power of Suppliers - Low
Threat of Potential Entrants - High
Threat of Substitute - High
Power of Buyers - Low
Industry Rivalry - High
Porters 5 Forces Analysis
Strengths • Established brand portfolio encourages repeat purchases• Global footprint• Multiple distribution channels increase market penetration oppor-
tunities.
Weaknesses • Dependence on few customers for substantial portion of revenues • Reliance on contract manufacturers for product procurement,
manufacturing and finishing.
Opportunities • Increasing online retail spending• Growing US apparel market
Threats • Increasing competition• Laws and regulations• Increasing labour costs
SWOT Analysis