HistoryintheMaking
HistoryintheMaking
MarketingManagementIMGT8571 MarketingManagementIMGT8571 ProfessorRonaldSchill ProfessorRonaldSchill MontereyInstitMontereyInstituteofInternatuteofInternationalStudiesionalStudies
May2,2011
May2,2011
MelissaSummers,NicholasTay
I.ExecutiveSummary
I.ExecutiveSummary
Levi Strauss is debating whether they should take back their Great Western Garment Levi Strauss is debating whether they should take back their Great Western Garment (GWG) brand from the licensee and sell the brand themselves. In order to provide a (GWG) brand from the licensee and sell the brand themselves. In order to provide a definite recommendation we needed to do in-depth research in order to answer several definite recommendation we needed to do in-depth research in order to answer several questions that were on the minds of those involved. What value would Levi Strauss gain questions that were on the minds of those involved. What value would Levi Strauss gain from revitalizing and selling the GWG brand themselves as compared to continuing to from revitalizing and selling the GWG brand themselves as compared to continuing to license it. What is the target market and what would be needed in order to revitalize the license it. What is the target market and what would be needed in order to revitalize the brand image. Lastly, who are the competitors in this market and how does this affect the brand image. Lastly, who are the competitors in this market and how does this affect the GWG brand. With these questions answered, we explore several possible options that are GWG brand. With these questions answered, we explore several possible options that are available to Levi Strauss before coming to our final recommendation. We have decided to available to Levi Strauss before coming to our final recommendation. We have decided to recommend that Levi Strauss try to license the GWG brand to another company for a trail recommend that Levi Strauss try to license the GWG brand to another company for a trail period. Upon the completion of the trial period, should the GWG brand not have gained period. Upon the completion of the trial period, should the GWG brand not have gained
any market share, Levi Strauss should sell the GWG brand
any market share, Levi Strauss should sell the GWG brand and all its assets.and all its assets. II.ProblemDefinition
II.ProblemDefinition
Given the poor image of Levi Strauss’ Great Western Garment brand, their low market Given the poor image of Levi Strauss’ Great Western Garment brand, their low market share, the large number of competitors in the market and the trend towards more share, the large number of competitors in the market and the trend towards more fashionable jeans, should Levi Strauss take the GWG brand from the licensee and sell the fashionable jeans, should Levi Strauss take the GWG brand from the licensee and sell the product themselves? Levi Strauss is currently considering the possibility producing and product themselves? Levi Strauss is currently considering the possibility producing and marketing GWG jeans themselves in response to the low profitability of the GWG brand. marketing GWG jeans themselves in response to the low profitability of the GWG brand. The decision to take the brand from their licensee will be determined based on two The decision to take the brand from their licensee will be determined based on two factors. First, is that the brand must have a decent value proposition with a high chance of factors. First, is that the brand must have a decent value proposition with a high chance of market growth and profitability. Second, will the GWG brand be able to compete in the market growth and profitability. Second, will the GWG brand be able to compete in the marketplace with so many competitors selling jeans. From here we will go into detail, marketplace with so many competitors selling jeans. From here we will go into detail, exploring the various components that will lead to a recommendation to either let the exploring the various components that will lead to a recommendation to either let the licensee hold onto the brand or to take it back.
licensee hold onto the brand or to take it back.
III.DecisionstobeMade
III.DecisionstobeMade
•
• Define the value propositionDefine the value proposition •
• Define the target marketDefine the target market •
• Analyze the competitionAnalyze the competition •
• Explore the various options availablExplore the various options availablee •
• Offer our recommendationOffer our recommendation
The GWG brand is now classified The GWG brand is now classified as a “dog” brand according to the as a “dog” brand according to the Growth Share Matrix because it Growth Share Matrix because it has relatively low market share has relatively low market share coupled with a low growth rate. coupled with a low growth rate.
IV.ValueProposition
IV.ValueProposition
GWG offers traditional, quality, comfortable jeans that are built to last because there is GWG offers traditional, quality, comfortable jeans that are built to last because there is history in their making. Consumers describe GWG jeans as “rough, rugged and durable history in their making. Consumers describe GWG jeans as “rough, rugged and durable with a good fit,” as
with a good fit,” as well as “sturwell as “sturdy and well-made”. dy and well-made”. Another value that is iAnother value that is inherent innherent in GWG’s value proposition i
GWG’s value proposition is their role in s their role in the history of jeans. the history of jeans. GWG jeans are widelyGWG jeans are widely viewed as traditional and remembered as one of the original pioneers in the jeans viewed as traditional and remembered as one of the original pioneers in the jeans industry.
industry. One consumer is quoted to have said that, “fOne consumer is quoted to have said that, “forty to fifty orty to fifty years ago the world of years ago the world of jeans was synonymous
jeans was synonymous with GWG”. with GWG”. The GWG brand offers The GWG brand offers consumers quality jeansconsumers quality jeans with workability – the original, traditional jeans.
with workability – the original, traditional jeans. V.
V. Target Target MarketMarket
Levis Levis::
In the year 1873, when Levi Strauss first invested jeans, its target market was comprised In the year 1873, when Levi Strauss first invested jeans, its target market was comprised merely of individuals who needed to wear durable, extra strong pants when seeking gold. merely of individuals who needed to wear durable, extra strong pants when seeking gold. Later, the market extended to workers who wanted to wear something comfortable and Later, the market extended to workers who wanted to wear something comfortable and strong. As celebrities began wearing jeans in the 1950s, it became an everyday common strong. As celebrities began wearing jeans in the 1950s, it became an everyday common garment for various target markets, ranging from manual labor to high fashion. garment for various target markets, ranging from manual labor to high fashion. Unfortunately, Levi's jeans have fallen out of favor with today's youth who regard Levis Unfortunately, Levi's jeans have fallen out of favor with today's youth who regard Levis as their “parents’ jeans.”
as their “parents’ jeans.”
a.
a. Consumer segments Consumer segments and and preferencespreferences
Consumers Preferences Consumers Preferences Fashion-conscious Fashion-conscious consumers consumers •
• Flare jeansFlare jeans
Younger hip-hop consumers
Younger hip-hop consumers •• Ultra-baggyUltra-baggy
Workers
Workers •• Casual wear Casual wear
GWG GWG::
Opened in 1911, the Great Western Garment Opened in 1911, the Great Western Garment Company was the first jeans wear company Company was the first jeans wear company in Canada. In 1972, GWG was a leading in Canada. In 1972, GWG was a leading brand in Canada, controlling 30 percent of brand in Canada, controlling 30 percent of
the market. GWG jeans are now worn mainly the market. GWG jeans are now worn mainly by men in construction, trucking, farming by men in construction, trucking, farming and similar occupations. The brand appeals and similar occupations. The brand appeals to the comfort and durability needs of its to the comfort and durability needs of its customers, who are generally over the age of customers, who are generally over the age of 35. GWG has never been positioned as a 35. GWG has never been positioned as a brand for females.
b.
b. Consumer Consumer segments and segments and preferencespreferences
Consumers Preferences
Consumers Preferences
15-to-24-year-old
15-to-24-year-old •• FitFit •
• Fashion relevancyFashion relevancy •
• CoolCool •
• Brand imageBrand image
25-45 years old, Male
25-45 years old, Male •• Not terribly price sensitive Not terribly price sensitive •
• Wants value for moneyWants value for money •
• Will not compromise on fitWill not compromise on fit •
• Owns few pairs of jeans and wears them longer Owns few pairs of jeans and wears them longer •
• Currently not brand loyalCurrently not brand loyal •
• Buy for themselvesBuy for themselves •
• Don’t shop for pleasureDon’t shop for pleasure •
• Focus on fit & comfortFocus on fit & comfort •
• Will pay extra for qualityWill pay extra for quality
Older consumers
Older consumers •• RelaxedRelaxed •
• Fits for comfortFits for comfort •
• Good priceGood price
Women
Women •• Change style with fashion trendChange style with fashion trend •
• Variety of style preferencesVariety of style preferences
Men
Men •• Don’t care about brandDon’t care about brand •
• Don’t care about familiarityDon’t care about familiarity
VI.CompetitorAnalysis
VI.CompetitorAnalysis
a.Analysiso
a.Analysisofcompetitorcfcompetitorcharacteristicsharacteristics,pricesandpro,pricesandproductsducts
Competitor Characteristics
Competitor Characteristics
Levi’s Levi’s
•
• Top brand awareness among consumersTop brand awareness among consumers •
• Great varieties of jeans fits and finishes for bothGreat varieties of jeans fits and finishes for both
men and women men and women
•
• Keep innovating and updating existing brand linesKeep innovating and updating existing brand lines •
• Available in every kind of storeAvailable in every kind of store •
• Prices generally range between $29.99 – $49.99Prices generally range between $29.99 – $49.99 •
• Targeted at the age 15 to 24 men’s and women’sTargeted at the age 15 to 24 men’s and women’s
market market VF Corp
VF Corp
•
• “Western” and “country” style“Western” and “country” style •
• Levi’s largest branded competitor Levi’s largest branded competitor •
• Price relatively low, ranging from $19.99 – $29.99Price relatively low, ranging from $19.99 – $29.99
Private Label Private Label
•
• Targeted at customer ranging between certain agesTargeted at customer ranging between certain ages
(different age groups) (different age groups)
•
• Wide spread of retail storesWide spread of retail stores •
• Strong promotional pricing strategyStrong promotional pricing strategy •
Specialty Retailers Specialty Retailers
•
• Targeted at customers ranging between ceTargeted at customers ranging between certainrtain
ages (different age groups) ages (different age groups)
•
• Price ranges from $34.99 – $49.99Price ranges from $34.99 – $49.99 •
• Offer a wider range of apparel productsOffer a wider range of apparel products
Premium Brands Premium Brands
•
• Small market shareSmall market share •
• Substantial advertising budgetSubstantial advertising budget •
• High price ranging from $69.99 to more than $100High price ranging from $69.99 to more than $100 •
• Highly fashionable and Highly fashionable and stylishstylish •
• Limited to upscale storesLimited to upscale stores
Summary:
Summary: Given the fact that GWG is sold with an average price of $19.50 and withGiven the fact that GWG is sold with an average price of $19.50 and with limited fits, its main competitors will be those private labels. Since GWG has little to limited fits, its main competitors will be those private labels. Since GWG has little to offer in order to differentiate itself from its current competitors, it would be extremely offer in order to differentiate itself from its current competitors, it would be extremely hard for it to survive in the highly competitive retail industry. Moreover, if Levi’s hard for it to survive in the highly competitive retail industry. Moreover, if Levi’s decided to revive the GWG brand, it may run the risk of cannibalizing its own business decided to revive the GWG brand, it may run the risk of cannibalizing its own business which seems pretty promising at the current stage.
which seems pretty promising at the current stage. However, there is potential in allowingHowever, there is potential in allowing GWG to grow in a specific market segment in which Levi’s does not have a large share, GWG to grow in a specific market segment in which Levi’s does not have a large share, such as the work-clothing segment currently dominated by brands like
such as the work-clothing segment currently dominated by brands like CarharttCarhartt, and, and Dickies
Dickies.. b.
b. Brand maps Brand maps of the of the jeans marketjeans market
The brand maps below illustrate the target markets of GWG and its primary competitors. The brand maps below illustrate the target markets of GWG and its primary competitors. Specialty retailers are not depicted in either chart due to their tendency to cover large and Specialty retailers are not depicted in either chart due to their tendency to cover large and diverse segments of the market.
diverse segments of the market.
VII.OptionsAvailable
VII.OptionsAvailable
a.
a. Option 1:Option 1: Keep the same license agreement with Jack Spratt Manufacturing Inc.Keep the same license agreement with Jack Spratt Manufacturing Inc.
Advantages Disadvantages
Advantages Disadvantages
•
• No additional money spent from the No additional money spent from the
marketing budget of the company marketing budget of the company
•
• Allows to concentrate on the moreAllows to concentrate on the more
•
• Continuing decline of the marketContinuing decline of the market
share means that no changes in share means that no changes in marketing will eventually lead the marketing will eventually lead the
vital problems, i.e., the decline of the vital problems, i.e., the decline of the two market-leading brands (Dockers two market-leading brands (Dockers and Levi’s)
and Levi’s)
•
• Steady, predicted income for theSteady, predicted income for the
next year. According to the license next year. According to the license agreement Levi’s gets 8% on the net agreement Levi’s gets 8% on the net wholesale dollars. 2001: 220,000 wholesale dollars. 2001: 220,000 units at average price $19.50 – units at average price $19.50 – $343,200
$343,200
brand to the ground brand to the ground
•
• Low profit margin and low chanceLow profit margin and low chance
of increasing the profit margin of increasing the profit margin
Summary:
Summary: Low potential Low potential – given the low brand awareness and declining market share– given the low brand awareness and declining market share (1% in 2001) with no changes in marketing plan of GWG, the brand will eventually cease (1% in 2001) with no changes in marketing plan of GWG, the brand will eventually cease to exist.
to exist. b.
b. Option 2: Option 2: Take the Take the GWG brand GWG brand back to back to the companythe company
Advantages Disadvantages
Advantages Disadvantages
•
• Possible revitalization of the brandPossible revitalization of the brand •
• Opportunities of the bigger marketOpportunities of the bigger market
share share
•
• No guarantee of growth No guarantee of growth •
• High marketing expenses, whichHigh marketing expenses, which
Levi’s does not have a budget for Levi’s does not have a budget for
•
• Necessity to find their own retailers Necessity to find their own retailers •
• Threat of cannibalizing the existingThreat of cannibalizing the existing
brands of the company brands of the company Summary:
Summary: Low potential Low potential – given the low brand awareness and declining market share– given the low brand awareness and declining market share (1% in 2001) with no changes in marketing plan of GWG the brand will eventually cease (1% in 2001) with no changes in marketing plan of GWG the brand will eventually cease to exist.
to exist. c.
c. Option Option 3:3: Find a new licensee, who would be willing to improve the brandFind a new licensee, who would be willing to improve the brand image/portfolio (Carhartt, Dickies…)
image/portfolio (Carhartt, Dickies…)
Advantages Disadvantages
Advantages Disadvantages
•
• Exploring all the brand’sExploring all the brand’s
possibilities before giving up on possibilities before giving up on
finding new market opportunities for finding new market opportunities for the declining, yet historic brand
the declining, yet historic brand
•
• Could be potentially hard to find aCould be potentially hard to find a
licensee who would be able to take licensee who would be able to take the declining brand
the declining brand
•
• No guarantee of growth No guarantee of growth •
• High marketing budget will beHigh marketing budget will be
required to revitalize the brand, required to revitalize the brand, licensee must have the budget licensee must have the budget Summary:
Summary: Medium potential Medium potential – Finding a new licensee under agreement that they will– Finding a new licensee under agreement that they will revamp the marketing and portfolio of the brand will ensure that Levi’s explored all the revamp the marketing and portfolio of the brand will ensure that Levi’s explored all the options available before discarding a brand that has such a strong historic image in the options available before discarding a brand that has such a strong historic image in the mind of consumers.
VIII.Recommendations
VIII.Recommendations
GWG has a limited market share, and a fairly simplistic and traditional value proposition GWG has a limited market share, and a fairly simplistic and traditional value proposition that leave the brand unable to match competitors in the industry who offer more modern that leave the brand unable to match competitors in the industry who offer more modern styles, washes and fit
styles, washes and fits. s. If GWG were to try If GWG were to try to compete with the biggest names in to compete with the biggest names in thethe industry, it would have to undergo an overhaul, invest substantially in brand marketing industry, it would have to undergo an overhaul, invest substantially in brand marketing and seriously vamp up its operati
and seriously vamp up its operations. ons. An investment of this level would An investment of this level would not be justifiablenot be justifiable considering the minimal expected return that would result, but it would be unwise to considering the minimal expected return that would result, but it would be unwise to discard the brand’s reputation out of hand.
discard the brand’s reputation out of hand.
GWG jeans are remembered as an iconic symbol of the quintessential everyman’s GWG jeans are remembered as an iconic symbol of the quintessential everyman’s working jeans and as a
working jeans and as a pioneer in the jeans pioneer in the jeans industry. industry. GWG brand jeans have specifiGWG brand jeans have specificc qualities that are valued by consumers and the brand enjoys a long-standing reputation as qualities that are valued by consumers and the brand enjoys a long-standing reputation as one of the very first to enter the industry. While GWG currently holds a limited market one of the very first to enter the industry. While GWG currently holds a limited market share, it would be unwise to end such a traditional brand without first trying to share, it would be unwise to end such a traditional brand without first trying to re-invigorate sales by
invigorate sales by leveraging the current qualities leveraging the current qualities enjoyed by consumers. enjoyed by consumers. GWG jeansGWG jeans are valued for their strength and durabilit
are valued for their strength and durability. y. We would suggest re-licensing for We would suggest re-licensing for a triala trial period of three years to a producer who focuses on one particular segment of the period of three years to a producer who focuses on one particular segment of the
industry:
industry: work clothes. work clothes. We would We would recommend licensing recommend licensing the brand the brand to a to a company thatcompany that would leverage its existing strengths and qualities – sturdiness and durability. would leverage its existing strengths and qualities – sturdiness and durability. We recommend re-licensing to an organization such as
We recommend re-licensing to an organization such as Carhartt’sCarhartt’s Super Casuals or Super Casuals or Dickies
Dickies that cater to a very specific market segment that seeks out clothing with thethat cater to a very specific market segment that seeks out clothing with the desired characteristics of
desired characteristics of strength and durability. strength and durability. These garments are not designed to These garments are not designed to bebe stylish or modern, t
stylish or modern, they are designed to be worked in and to lashey are designed to be worked in and to last. t. Carhartt’s jeans boastCarhartt’s jeans boast features such as:
features such as: 11.75-ounce denim, triple-stitched seams, bar 11.75-ounce denim, triple-stitched seams, bar tacks at stress tacks at stress points, toolpoints, tool pockets, a hammer loop, a ruler pocket and leg opening that fits over work pockets, a hammer loop, a ruler pocket and leg opening that fits over work boots.
boots. Dickies jeans come in sDickies jeans come in styles such as “tyles such as “relaxed,” “carpenter,” “double knee,” andrelaxed,” “carpenter,” “double knee,” and “workhorse.”
“workhorse.” Re-licensing to a Re-licensing to a company that serves company that serves this work clothing this work clothing market wouldmarket would mean that GWG jeans would require minimal updates and changes to the styles, and mean that GWG jeans would require minimal updates and changes to the styles, and would turn the qualities that make them undesirable as a fashion jean into the most highly would turn the qualities that make them undesirable as a fashion jean into the most highly desirable qualities sought in a work jean.
desirable qualities sought in a work jean.
However, as part of this recommendation, we insist upon the trail period of two to three However, as part of this recommendation, we insist upon the trail period of two to three years in which the brand m
years in which the brand must demonstrate substantial ust demonstrate substantial growth. growth. The brand’s steadyThe brand’s steady decline in recent years, and its failure to produce revenue makes further investment decline in recent years, and its failure to produce revenue makes further investment unjustifiable unless t
unjustifiable unless the brand can demonstrate potential fhe brand can demonstrate potential for immediate growth. or immediate growth. If the re-If the re-licensing of the brand within the re-focused market segment fails to generate growth licensing of the brand within the re-focused market segment fails to generate growth within this time frame, then we will let the giant lay where it has fallen and discontinue within this time frame, then we will let the giant lay where it has fallen and discontinue our efforts to revive it.
