Qn 1) Explain what is Levi’s brand image and what makes up its brand equity. In this regard, assess the role of its flagship 501 jeans product. (40 marks)
Brand image can be defined as perceptions about a brand as reflected by the brand associations held in consumer memory. It is basically what exists in the mind of consumers, total of all the information they have received about the brand from experience, word of mouth, advertising, packaging, services etc. And the information is modified by selective perception, previous beliefs, and social norms.
The brand image perceived by consumers of Levi’s products includes durable, comfortable, approachable, affordable, contemporary, individuality, independence, casual, fashionable and adventurous, when it became an indispensable part of miner’s uniform and gain reputation for being as tough and rugged as the people who wore them. It is also comfortable enough to fit into the workers everyday lives both in physical and social sense. Its affordability was also adored by students and miners. It has also become an essential commodity available to defense worker during WWII.
It portrays individuality, fashionable, independence when students and teenage idol wear 501 as a form of self expression and has become the essential fashion for the emerging baby boomers where it has transforms from a pair of tough pants to a symbol of freedom, adventure and independence.
Most importantly, Levi’s 501 jeans had become an icon and its brand name had become synonymous with jeans where people tend to associate jeans whenever they saw the Levi’s logo. It had successfully been made known to millions of Americans and had established its brand image in the hearts of every consumer.
Brand equity was defines as “the value of a brand based on the extent to which it has high brand loyalty, name awareness, perceived quality, strong brand associations, and other assets such as patents, trademarks, and channel relationships.”
THE GALLUP BRAND EQUITY MEASUREMENT MODEL
Based on Gallup Brand equity measurement model, the components of Brand Equity are the integration of several interrelated key brand characteristics: They are:
Brand Presence is the degree to which the brand “stands out” from its competition. Levi’s have managed to claim familiarity and hence have become synonymous with jeans. The success of Levi’s 501 jeans has become an icon and this mark the market leader position for Levi’s.
Levi’s brand established brand awareness by inventing the first patented double arcuate pattern sewn into the back hip pocket which became American’s first apparel trademark and the “Two Horse Brand” leather patch which act as the symbol & logo to enable consumers to recall and recognise & associate jeans with Levi’s Brand.
Brand Position is the degree to which the brand is uniquely positioned and perceptually differentiated from its competitors and Levi’s brand personality is driven largely by the firm’s heritage of providing clothes for miners, by the brand attributes and used contexts of western cowboy.
Levi’s brand positioning can be derived from the combination of the brand’s personality and values and its rational associations. Levi’s personality composes of several characteristics or values with emotional associations, which are defined as Original, Masculine, Sexy, Youthful, Rebellious, Rugged, Authentic, American, Individual and Freedom.
Brand Experience is the degree to which customers have had positive or negative experiences with brand purchase and use.
Customer satisfaction can be seen throughout the 1900s where sales of Levi’s 501 jeans grew and became the essential commodity available primarily to defense workers. This reflects a very high satisfaction of the product based on the extent of its usage and attention drawn which can be seen here when an individual owns about 2.5 pairs of jeans.
Brand Value is the degree to which the brand adds perceived value to a product or service, and or to a range of proposed product offerings.
Levi’s brand value is perceived when it extended to Levi’s Dockers which proved to be a success.
Brand Loyalty is the degree to which the brand is preferred and selected over its competitors.
Basically, in the initial stage of launching Levi’s jeans, there were no alternative products and competitors, which explain why the purchasing behaviour is very strong throughout the 1900s. Thus, Levi’s actually enjoyed the prestige of gaining 100% customer loyalty, with also the help of the above components of brand equity which contributed to its success.
The role of Levi’s flagship 501 jeans actually led to the line extension of more new products. And the success of 501 lead to the formation of subsidiary and globalization of Levi’s worldwide. Levi’s 501 jeans were able to sustain as the top selling jeans till 1979 which contributed to the success.
Contradictorily, due to the over whelming success of Levi’s 501 jeans, the company became over diversified and this led to a shift from the core product which eventually led to a slump in the sales of 501 jeans.
Realising their blunder, Levi’s decided to shift their focus back to 501 jeans and the success of 501 Blues jeans ad campaign had manage to reinvigorate the brand.
Following the success of 501 Blues jeans, Levi’s was able to penetrate into another market segment and this led to the birth of Levi’s Dockers.
2) Critically assess Levi’s branding strategy in general. (30 marks)
The branding strategy for a firm reflects the number and nature of common & distinctive brand elements applied to the different products sold by the firm. Brand strategy involves deciding which brand elements will be applied to which products and the nature of new and existing brand elements to be applied to new products.
The branding strategy adopted by Levi’s include line extension strategy, brand extension strategy, diversification and marketing strategy.
In 1873, the first jeans was sold and by 1890s, Levi’s adopted a new inventory system and the name Levi’s 501 jeans were born. From the late 1940s through the early 1960s, Levi’s Strauss had virtually no competition. Gradually, the Levi’s brand was recognized as the post-war standard jeans. In the mid 1960s, Levi’s Strauss expanded its distribution internationally and by end of 1960s, LS & Co. launched their first growth beyond their core category of blue denim and ventured into a wide variety of new apparels which included cords, slacks and sportswear for men, as well as a range of apparel for woman and children.
To necessitate its rapid expansion, an initial public offering was launched in 1971. And in the early 1980s, LS & Co. adopted diversification in its brand stretching strategy where it expand beyond the core jeans lines to utilize the Levi’s name on non-jeans where new product lines was introduced. These covered a wide range of family clothing needs, denim and corduroy jeans for men, women and children. Action suits and tailored classic blazers, slacks and activewear.
At first, the new accessions gave Levi’s momentum, but the business climate quickly change and Levi’s was not structured to compete in the fast-paced and unforgiving fashion apparel business. Eventually, this new product line proved to be a flop resulting in a serious slump in the sales which caused a negative impact on Levi’s.
The shift in focus on image rather than keeping the product contemporary was the key reason for Levi’s decline. And the various reasons contributing to the failure of the line extension could be due to the various non-jeans products being launched to the market which could have act as a competitive threat to the 501 jeans and at the same time diluted the sales of the core products.
Secondly, the various product bearing the Levi’s brand could have also led to confusion to the consumer which led to the lost of focus of Levi’s core product as multiple product lines were often promoted in one commercial which add on to more confusion.
Thirdly, the establishment of numerous licensing agreements which led to Levi’s restricted distribution policy further eliminated market share opportunities thus leading to decline in sales.
As a result of vigorous diversification and acquisition strategy, LS & Co. own apparel business that offered products to suit almost any style. Thus, with too much products on hand, Levi’s begin to lose their concentration on its flagship product.
Another reason could be due to the non performance of the non-jeans lines, the failure to recognize the shift in the marketplace dynamics, Levi’s management was completely unprepared for competitive threats when competition attacked their market share from every direction. The slump in sales was also due to failure to keep pace with changes on the jeans market.
In late 1984, Levi’s shifted focus back to core product business, reinvigorate the company’s core product, discontinue distribution expansion of non-jeans products and licensing agreement, rebuild retail relations and reemphasize its basic jeans and corduroy lines.
To revitalise its flagship product, Levi’s launch new designs target at specific customer segments with the support of aggressive promotion and advertising, upgrade its retail presentation and enhance partnership with retail customer. They also improve operations by implementing a demand
driven supply chain to better manage inventory and retail relationships.
The success of the 501 jeans campaign was critical as it was the centrepiece of “back to basics” strategy which manage to reinvigorated jeans sales and brought back the brand’s core value.
With the success of 501 Blues, Levi’s adopted brand extension strategy and branched out to introduce Levi’s Dockers in 1986 where diversification was built on the trend to smart office wear. It was a good move to avoid the saturation point which might be rapidly approaching for the mainstream brand. In addition to that, Levi’s also pioneered on the concept of “casual Friday” and had since managed to establish a leadership position in casual fashion.
3) Evaluate the Levi’s Dockers communications strategy. (30 marks)
Marketing communications being the final and most flexible element of the marketing mix are the means by which firms attempt to inform, persuade and remind consumers directly or indirectly about the brands that they sell. In a sense, marketing communications represent the “voice” of the brand and are a means by which it can establish a dialogue and build relationships with consumers.
Marketing communications can contribute to brand equity by creating awareness of the brand and or linking strong, favourable and unique associations to the brand in consumer’s memory.
Foreseeing that the existing product lines did not sufficiently satisfy the needs of the 25-49 year old male customers, LS & Co. decided to address the opportunities in the casual slacks market by identifying its challenges to increase Levi’s slacks brand share.
Levi’s slacks were considered to be more contemporary, less conservative and more casual than other leading slacks. However, it’s Action Slacks line fail to address the customer needs and fail to reflect the core values which the recent 501 jeans campaign had established successfully. This give rise to the idea of having a different market segment with a new product that will motivate and retain customers within the Levi’s brand franchise which promise to be different from anything it had sold before.
To establish a leadership position in casual fashion, Levi’s Dockers® was introduced where it was positioned as the new pants to men as more formal than jeans and less casual than dress slacks. It was also designed to satisfy an unfulfilled need in the men’s pants market and to appeal to the baby boomers’ fashion demands.
In order to achieve brand association and to create brand awareness, Dockers was eventually package with a unique logo & a colourful pocket flasher which consisted of interlocked wings and anchors to integrate the brands’ name with its symbols.
To enhance the brand, the pocket flasher was attached to the back of all pants and the Levi’s moniker was incorporated in the Dockers’ winged logo to establish an understated association with the Levi’s name.
Part of Levi’s communication strategy involved marketing Dockers pants to the retail trade as a major fashion statement – an alternative to jeans – and the driving force in the “new casuals” category.
In an effort to establish Levi’s Dockers new casuals line, LS & Co. identify their key target distribution channel by concentrating distribution in department stores and chains where its majority target consumers of 25 to 49 year-old men did their shopping and where one-third of all slacks were sold.
Levi’s work closely with retailers in order to generate excitement and support for its new pants and had resorted to “woo” retailers nationwide, including those department and speciality stores that had previously curtailed business with LS & Co – with aggressive marketing strategy with extensive presentations, sell-in brochures and swatch books. Trade promotions such as sales support, sales kits for retail-based marketing, cooperative advertising and sales promotion programs were provided. In additionally, supplemental financial support was also offered for advertising and promotional activities to important high-image department stores.
A critical component of the company’s marketing effort was the establishment of Docker’s shops within main floor men’s area of major department stores. With such vigorous marketing promotion techniques, retailers were getting more confidence in Levi’s products and were showing greater interest in innovative merchandise techniques.
Being sensitive to the market trend, the first in-store concept shop was introduced for the men’s main floor area and key trade show was set up introduce Dockers casual pants to retailers.
The Dockers in-store shop sought to create a friendly, accessible environment, prominently displaying the sporty Dockers logo and linking consumer advertising with point-of sale signage and posters.
Levi’s also adopted point-of purchase advertising through shelf talkers to give consumers an entirely different kind of shopping experience which the concept proved to be very successful. Point-of sale displays were established in stores where shops were experiencing space or financial constraints.
All the above product positioning and marketing strategy was able to overcome the initial reluctance of retailers and ultimately generated an exceptionally high level of prepromotion excitement in which Levi’s Dockers was also seen as the leader in the new casuals category and moved the pants ahead of its competitors.
Following that, LS & Co. shifted its attention to the development of an effective communications program focused on the consumer. They recognized that a focused comprehensive consumer marketing effort would be required in order to establish Levi’s Dockers as a major brand.
Given the market opportunity for casual pants, Levi’s believe that a high impact consumer marketing program would accelerate the growth of the Docker’s line and generate consumer support.
Part of the advertising strategy was defining target audience accordingly by demographically, attitudinally, clothing needs and purchasing behaviour and a focus group was selected for determination on the type of ads that appeal to the target group.
To advertise Dockers, consumer advertising was adopted, commercials were aired during selective prime time slots and spot TV was used in all 11 major regional markets. Also Levi’s brilliantly chose the notorious fashion garment district – the New York City for their advertising executions in a bid to reach out to more consumers where TV spots were supplemented with subway signs and mobile billboards located primarily around the city’s garment district.
In addition to TV, co-op advertising with retailers, point-of-sale displays, sales promotion during advertising kick-off party, publicity campaign and follow up visits to key retail accounts also contributed to Levi’s successful communications strategy.