im assignment- final report-libre

MARKETING AUDIT FOR

LEVI STRAUSS & CO. (LS&CO)

INTERNATIONAL MARKETING MANAGEMENT

GROUP ASSIGNMENT, NOVEMBER 2011

INTERNATIONAL MARKETING MANAGEMENT (BSC 14)

UCD ID NAME

10297294 Abeysinghe T P Y N

10297308 Gunarathna I A E L W

10297341 Kariyapperuma N V

10297316 Maduranga M M K S

10298002 Anderson W M

10298070 Samarawickrama H C

CONTENTS

1 – EXECUTIVE SUMMARY 1

2 – MARKETING ENVIRONMENT OF LEVIS STRAUSS 2

2.1 SOCIO-CULTURAL FACTORS 2

2.2 POLITICAL/LEGAL ENVIRONMENT 3

2.3 ECONOMIC FACTORS 4

2.4 TECHNOLOGICAL FACTORS 5

3 – INTERNATIONAL MARKETING MIX 6

4 – INTERNATIONAL MARKETING STRATEGY 9

4.1 ADVERTISING STRATEGIES 9

4.2 CULTURAL IMPACT 10

4.3 SOCIAL MARKETING 11

4.4 GLOBAL MARKETING AT A GLANCE 12

5 – RISK FACTORS OF LEVI’S 13

6 – RECOMMENDATIONS 14

International Marketing Management Levis Strauss & Co.

University College Dublin 1

Executive Summary

Levi Strauss a leading brand name in the world of jeans who designs and markets jeans,

casual wear and related accessories for men, women and children under the Levi‟s®, Dockers®,

Signature by Levi Strauss & Co. ™, and Denizen™ brands appears to be on the spectrum of

standardization versus adaptation, putting it in a position closer to the globalization polarity,

giving them advantage over their competitors. It can be seen that there is a global market for

jeans and capitalizing, their market maximizes the ability of Levi Strauss to benefit from

economies of scale, global uniformity and consistency with the mobile consumer. A global

strategic and tactical approach therefore enables Levi Strauss to maximize competitive advantage

across the world market.

However, a complete degree of standardization is impossible to achieve in the market for

apparels. For example, in Islamic countries females are unenthusiastic from wearing tight fitting

clothes. Moreover, Japanese consumers favor tighter fitting jeans than the American

counterparts. It is therefore evident that fit, design and style of jeans need to be adapted to meet

the requirements of the local buyers. While the market in concern is similar throughout the

world, market positioning and the fundamentals of the marketing mix have to be adjusted in line

with a variety of organizational and ever changing environmental factors. The aim should be to

obtain AdaptStandation; hence achieving equilibrium between maximizing the gains of

standardization, competitive advantage and maximizing market share through adequate

adaptation to local market conditions.

However despite employing adaptation and standardization, rival products introduced to

the market in similar quality at lower rates still manage to pose a threat to our well known brand

names, cutting down market share and product sales. For example, Lee, Diesel, D&G etc… are

some of the biggest competitors who go up against Levi Strauss. We can conclude that apart

from differences in environmental and cultural attributes, technological advances and social

qualities play a major role in variations of the product and advertising strategies and feel that the

involvement and control of the brand‟s sub divisions worldwide by its mother company would

result in higher market advantage…in turn protecting its original values. The following

analytical report would give you an interesting and educational insight on the world of marketing

shining some light on the vast area of Advertising, Environmental Effects and Marketing

Strategies of Levi Strauss & Co.



Marketing Environment of Levis Strauss

The marketing environment consists of all factors external to an organization that can

affect its marketing activities. Elements of the marketing environment are largely uncontrollable,

although marketers have influence over some factors. Environmental factorscan affect the size

and growth rate of markets and can influence marketing activities. Thus, changes in the

marketing environment offer opportunities and threats to marketers. Identifying and responding

effectively to these opportunities and threats is a major challenge. This includes Political,

Environment, Social, Technological, Economic and Legal factors. These factors are subjected to

detail version under PESTEL Analysis which is used to investigate the macro environment of

Levi Strauss & Co.

Socio-cultural factors

The social environment includes all factors and trends related to groups of people,

religion, characteristics, customer perceptions, behavior and attitude. Since consumer markets

have specific needs and problems, changes in the social environment can affect markets

differently. The Levis product and promotion elements of the marketing mix are heavily affected

by these factors because they are the most culture-bound aspects.

Cultural differences are important in both international and domestic markets. A cultural

group‟s characteristics affect the types of products it desires and how it purchases and uses those

products. The task of adjusting to a new cultural environment is probably one of the biggest

challenges Levis faced in export marketing because business practices which are successful in

one group of countries may be entirely inappropriate in another group of countries.

However Levis has being able to success turns on its ability to create a global strategy

that does not strangle in local initiative. It is a delicate balancing act, one that often means giving

foreign managers the freedom needed to adjust their tactics to meet the changing tastes of their

home markets. Levi always tries to minimize the degree to which culture prevents them from

producing standardized promotional campaigns. This is because of the benefits of economies of

scale and the higher quality that can be obtained for a single advert than for a multiplicity of

local adverts.



Culture can also be a barrier in relation to the suitability of the product in particular local

markets. Countries differ in their tastes and fashions may create the need for adaptation. For

example, in Islamic countries females are discouraged from wearing tight fitting dress. Likewise,

Japanese consumers prefer tighter fitting jeans than the American counterparts. It is therefore

evident that fit, design and style of jeans need to be adapted to meet the requirements of the local

buyers.

The appropriate colors to use both in the product and the promotional materials also have

cultural dimensions. For example, the white color is associated with death in China but black is

the color of death in Europe. Levi Strauss when setting up its own direct sales force found that

the debt collection period was a six month period in Japan compared with a one month period in

the home country. Adaptation to such local trading customs was necessary in order to penetrate

the Japanese market. Additionally it is therefore important for pricing to take into account of

cultural habits before setting the final price in different individual markets.

Political/Legal Environment

The political/legal environment, encompassing factors related to governmental activities

and laws and regulations, directly affects marketing activities. Laws and regulations normally

present constraints within which marketers must operate. Different categories of law can be

identified as follows.

• Consumer laws: Designed to protect customers against unfair practices such as

misleading descriptions of the product.

• Competition laws: Aimed at protecting small firms form the harassment of larger firms

and ensuring customers from the exploitation of monopoly power.

• Employment laws: Covers the areas such as redundancy, dismissal, working hours and

minimum wages. Aims to protect the employees from the abuse power of the top level managers.

• Health and Safety Legislation: Aimed at ensuring the workplace as a safety place for the

employees. This covers issues such as training, reporting accidents and the appropriate provision

of safety equipment.



The above rules and regulations can be also applied to the appeal industry as general

rules and regulations which operate within the business world. Furthermore Levis do a variety of

adaptations to their product based on personal tax rate and the corporate tax rate and flawed

judiciary system and excessive regulations. This helped them to keep monopoly in jeans market.

Promotional activities are regulated in all countries by legislation. In some cases Levis

had to re-shoot original commercial in Australia and Brazil because the local regulations insisted

on domestic produced commercials.

Economic factors

The economic environment includes factors and trends related to the production of goods

and services and the relationships between this production and income levels. The economic

environment affects the purchasing power of consumers, which is an important determinant of

the size of a market.

Different levels of income and changes in income levels will affect both the price that can

be charged and the product quality that is appropriate for each local market. Levis do vary prices

for jeans substantially between markets because of income level, severity of competition and the

inaccessibility of the territory. For example, standard Levi jeans in the UK sell for around £46

whilst in certain US states £20 is the norm.

The nature of the promotional campaign will also be affected by the stage of the

economic development of the individual country. Advertisements for jeans in affluent societies

are quite sophisticated and rely on the communication of ideas about lifestyle and imagery. By

contrast, advertisements in poor countries are more rudimentarily based upon factors such as

function and value for money.

Distribution channels may require adaptation in relation to the stage of development of

each local market. They possess a multiplicity of different retail outlets in advanced countries

while choices are likely to be much more constrained in less developed countries. Therefore the

full range of selling patterns employed for advanced markets cannot be deployed in poorer ones.

For example in China, department stores only cover 20 per cent of the total market. Therefore,

distributing via the traditional market is essential to ensure success. It is illustrated that global

standardization and international adaptation do take place, and can bring benefits.



Technological factors

The technological environment includes factors and trends related to innovations that

affect the development of new products or improving marketing practice. Technological

advances are happening so rapidly that marketers must constantly monitor the technological

environment to keep abreast of latest developments.

When stealing a quick glance at world‟s current apparel industry, we can see the global

market for apparel industry is rapidly expanding. Each day new technologies are added to the

industry or improvements are done on the prevailing items, enhancing the worldwide customers

experience far beyond their expectations, sometimes even beyond the imagination. Levis

recently launched online store using Andromeda Inc.'s Like Minds personalization technology to

make purchase suggestions to customers. Like Minds uses predictive modeling technology that

analyzes past customer behavior and preferences, identifies like-minded individuals, and makes

personalized product recommendations for them in real time.

They give similar considerations to the distribution of the product. For example

consumers can utilize online home shopping facilities. In less developed countries, for example

in Africa, where such technologies are in a rather immature stage therefore adaptation is required

such that a greater extent of use is made of more traditional methods. On the other hand, in

developed countries Levi make use of the electronic data interchange system to order and

monitor stock levels with their customers such as major department stores in order to avoid

costly stock-outs. This is not used in developing or third world countries.

However, a complete degree of standardization is impossible to achieve in the market for

jeans. While the target market is similar throughout the world, market positioning and the

elements of the marketing mix have to be adjusted in line with a variety of organizational and

macro and micro environmental factors.



The International Marketing Mix

Levi‟s is a well reputed costume brand in the world. In clothing industry Levi‟s

benchmarked its brand name and it has build set of loyal customers throughout the world. Since

their initiation in 1873, more than 110 countries sheltered under Levi‟s umbrella. Most importantly

Levi‟s cater their customers under 3 major brands which have different quality products for different

markets. Additionally when they enter to Asian market they moved in with fresh brand called

Denizen. With that latest introduction they covered the Europe, Asia, Middle East as well as

Africa.

Levi‟s has selected several entry options.

Exporting – Levi‟s export their products using direct exporting and cooperative

exporting.

Franchising – In Asian market franchising of Levi‟s is very noticeable.

Contract manufacturing – Even though Levi‟s origin in USA, some portion of the product

coming from several countries too. For an example Mass apparel industry is one of the

Levi‟s suppliers in Sri Lanka.

Levi‟s is an internationally operating firm. So as long as the company needs to survive in their

markets, Levi‟s needs to have wide product portfolio with market matching features. In order to

accomplish this factor there are three sub brands in the market. They are

Levi‟s

Dockers

Levi‟s Strauss Signature

Basically company expectation is to dividing these brands are catering international market

more and more uniquely. These three brand also have wide range of product portfolio including

Shirts, Cotton pants, Accessories, Belts, Sunglasses, Wallets, lady's bags, Jackets,

Shoes etc,

Unlike other products, the firm operates in rapidly changing market environment. So they

believe the product should be unique, reliable, comfortable, durable and economical. Scrutinize

analysis of these products will show some of the basic attributes such as Variety, features,

design, color and size.



Based on these key attributes the firm will modify their product line to suit international

market. Levi‟s has big variety of products for the market, plus they customize these product line

using colors which may attached to those markets and designs.

Several features have been identified in Levi‟s products. They change the comfort of the

costumes from market to market. For an example comfort of European or US product is totally

different from product introduced to Asian market. Not even the design, the colors, materials

also may vary. Durability and style are two other features which will vary from market to

market. The best example is brand Denizen, latest introduction of Levi‟s for targeting Asian

market. Based on various reasons Levi‟s has to change their product line from market to market.

The culture, regional believes or factors, weather condition, political environment are few areas

that should be addressed in this matter. For an example costumes made foe European market are

not suitable for Middle East market.

Levi‟s is well reputed brand in the world. The firm can use it as plus point when it comes

to the promotion. Most of the countries in the world are well aware about this brand and their

products. So Levi‟s can capitalize several options regarding promote their brands. Initially they

can do personnel selling and mass selling by company representative not only customers but also

businesses.

The advertising is a key promotional tool for Levi‟s. They already using competitive

advertising to enhance its product features and Institutional advertising for build brand‟s image.

Furthermore Levi‟s can use several advertising media. Levi‟s television and radio advertisements

are very innovative and eye catching. They place the advertisements in international level.

Fashion magazines and Newspapers are really effective way Levi‟s to reach its valuable

customers. Most significantly youth always are aware about latest designs and new arrivals to the

market. In this highly globalized context Levi‟s has better advantage of using internet as

promoting tool. Using the internet they can provide up to date information to their customers.

Sales force, level of distribution intensity, sales offices and branches also contribute to this

mission of promotion. Sales force and offices are highly dedicated for brand awareness of the

company.

Levi‟s involved to prevent major issues of the world such as spread of HIV/AIDS.

Additionally they are enrolled with increase economic development and education opportunities.

These social events will rte the companies goodwill and the benefits can be capitalized by

brands.



Levi‟s entered to Asian market with brand called Denizen and they decided to open more

than 50 outlets throughout the Asia. Asians prefer to visit the outlets and select the costumes

rather than buy goods online. Levi‟s can further expand their awareness programs by using social

networks like facebook or twitter. Not even Europe, I Asia also social networks are widely using

and it‟s a very effective way to get customers attention.

“Pricing”, the charge back mechanism of Levi‟s has to be differing from country to

country. Basically they have different prices for different markets. In Asian region all the

products are sold at listed prices. Occasionally, they offer discounts to the customers especially

in seasonal time. Operating in global context has heavy affect of the prices of these brands. In

Asia Levi‟s has niche market. Actually it is bit high end market. Therefore the prices are seemed

to be high when comparatively rivals. Levi‟s are benchmark brand for jeans and denims. This

reputation is also a reason for pricing.

Levi‟s products are available for credit purchases but they are not overcharge to the

customers. Payment period and terms will determine by the company and it will vary from

market to market. Company determines their prices based on three key factors. They are, Cost of

the product, affordable for target market, uniqueness and innovation and demand of the product.

When customer expects high quality, unique product from Levi‟s, then the price will be

comparatively high and similarly price will be low for medium quality common use product.

That‟s how internationalization affects the pricing. But, Levi‟s doesn‟t put much weight to the

competitors while their pricing process.

Levi‟s choose its distribution channels according to the products. They always prefer

wholesalers, to distribute products throughout the region. Basically there are more than 110

countries under Levi‟s wings. For example Australia, USA, China, Singapore, Hong Kong,

Oman, UAE etc.

Due to heavy internationalization Levi‟s operate their distribution channels under several

strategies. They are placing according to class and attributes which may position its products

according to different classes and genders. Placing according to the competitors, according to the

price and quality and placing according to the technology are another few strategies Levi‟s use

for their distribution.



International Marketing Strategy:

Levi Strauss is well known for their successful producing, studying people wants and

needs, selling & distributing strategies, and promoting their products in a very competitive textile

sector, mainly in the Jeans market. As an international company the Levis has faced both ups and

downs on international marketing. It was the marketing leader in jean apparel market for many

years but with the continual increase in the competition they have faced a very competent

market.

Levis has different marketing strategies for many years and because it‟s a global

company it adopt various strategies across the globe in many occasions, but they maintain their

core values.

Advertising Strategies

Advertising campaigns on local or regional basis with the headquarters inputs and

control. In this method the company allows locals to carry out the campaign which take into

account the cultural and regional differences among the specific markets. But the central staff of

the Levis conducts and controls the inputs of the campaigns. This strategy is not the best for the

Levis for many occasions. But for some countries it works. Disadvantage with this method is that

the company ends up with vastly different marketing campaign in different countries. Another

risky matter about this strategy is that sometimes the inputs from the mother company may lack

due to various reasons.

One good example for these matters was the failure to create consistency in Levis Latin

American division, the reason behind this is that their advertising campaign was handled by four

different agencies. Latin American division consists with Mexico, Argentina, Uruguay,

Paraguay, Peru, Colombia and Central America. Since this division serves many countries too

many advertising agencies were involved.

There is also an advantage with the current method, which is that in different countries

they have different influences in Medias in used. Understanding of the media can enhance the

creativity of the campaign and the effective advertising strategy could be developed.

For the most parts the involvement of headquarters has gone smoothly within localized

campaigns. A good example is Australia.



Another alternative strategy is to centralize all the marketing / advertising campaign at

headquarters. This maintains consistence of worldwide advertising. Levi wishes to minimize the

degree to which culture prevents them from producing standardized promotional campaigns.

This is because of the benefits of the economies of scale and the higher quality that can be

obtained for a single advert than for a multiplicity of local adverts. Consequently Levi Strauss

paid $550,000 for one series of TV commercials to use around the globe.

Cultural Impact

The culture is a main factor that affects international marketing cultural consists of

language, religion, ethnics, values and customer perceptions. Differences in culture attitudes lead

to enormous variations in product and advertising standards and expectations

The nature of Promotional campaign partly comprise of the actions of competitors, where

decisions on the cost of advertising and sources used is derived from. TV is now one of the

prevailing sources of advertising….Ie; Lee Cooper and Warngler being two of the leading brands

in the market use TV as their main source of advertising, leaving Levi Strauss no option but to

follow suit. This being the promotional strategy and tactical approach used by most recognized

marketers‟ worldwide.

Marketing Strategies in some countries

In this audit report some of the marketing strategies used in different nations are

mentioned below. In India they are seeking to popularize its image in the Premium and Super

Premium segment by introducing a variety of products. And also India expected to strengthen

Levi‟s other brand „Signature‟. Other action taken by Levis India was partnered with the HDFC

Bank Axis Bank to offer the customers to pay the bill in installment by using credit cards.

Currently this EMI scheme is only available in exclusive stores. The objectives of this strategy

are to increase the sales of premium jeans wear category, to ensure sales throughout the year and

to pressurize other brands.



„We rule the night’ a digital campaign in China and Hong Kong which identified

Progressives as the key strategic target. It is a video experience which put the viewer in control

of the story line. This groundbreaking initiative generated business results that compare

favorably to traditional advertising campaigns. The total number of Levi‟s jeans sold during the

campaign period increased despite a rise in the average price per jean sold, indicating a

strengthening of brand demand and the premium it commands. Every dollar invested in the

campaign paid back many multiples in sales revenue. However, the most recent advertising

campaign was postponed in UK due to recent events, features a young man squaring up to a row

of riot police.

Social Marketing

They introduced Mobile applications for iPhone and for Android; this strategy could take

the apparel market into an all new era. Application on Android gave those benefits such as low

barrier to entry, most suitable mobile platform for companies new to mobile marketing and it is

open and free. Another strategy they came up with was re-introducing Levi‟s 501 brand to

potential customers. Currently the Levis brand image overshadowed by alternative choices

among target market. Levi‟s also released many old hit songs along with their ads to get more

customer attraction and also used famous tunes in their ads. Levi‟s also into the latest trend

which is Social-media marketing such as Facebook. The goal behind its facebook is to encourage

consumers to connect to Facebook page and also they encourage users to watch their new

Braddock film.

From their social page in Facebook Levis gain many returns, facebook is a place to tell

their stories in an authentic way where consumers easily engage and interact with the brand.

Levi‟s is also advertising Internet-only sales on its Facebook Page.



Global Involvement

Levis ® brand of products are sold in 49 countries, Dockers® Brand sold in 31 countries

and Levis Strauss Signature™ In 4 countries.

Australia, Bangladesh, Brunei, China, Guam, Hong Kong, India, Indonesia, Japan, Korea,

Malaysia, New Zealand, Pakistan, the Philippines, Singapore, Sri Lanka, Taiwan , Thailand.

Bahrain, Israel, Jordan, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates Angola,

Botswana, Mozambique, Namibia, South Africa. Argentina, Belize, Bolivia, Brazil, Chile,

Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, Panama,

Paraguay, Peru, Uruguay and Venezuela are the countries that Levi‟s operates in.

Global marketing strategy at a glance

It is difficult to accomplish a global standardization marketing approach. This was proved by

various theoretical models that used by marketers. We saw that the life cycle of a product can

only be conceptualized within a specific market. Jeans are to be said that it is in a mature stage in

USA but in a stage of growth in other countries. This leads to a position where adaptation of

different marketing strategies for different countries. It is also a crucial that company must

consider about the stage of development in various countries. The product which market in a less

developed country may treat as superior category and same product may reflect on as cash cow

in more developed country.



Risk factors of Levi’s

Wholesale customer‟s negative reaction toward economic conditions

Consumer spending is the key factor that apparel industry depends. Because of poor

economic conditions, wholesale customer of Levi‟s response negatively by reducing

inventories and cancelling orders.

Increasing Competition

Even though Levi‟s is one of the market leaders in apparel industry still there is sharp

competition between rivals. Some of these competitors have greater marketing and

financial resources. Furthermore these rivals may adopt market changes more quickly

than Levi‟s do and have more aggressive pricing policies. As a result Levi‟s couldn‟t

compete as effectively and this may lead to reduce sales and price.

Innovative and updated products

In this rapidly changing environment consumer preference and fashion trends are about to

change quickly. So company success totally depend on ability to design and market

innovative, stylish product at competitive price. If Levi‟s failed to fill these check boxes

in their market they may not be able to maintain their growth.

Pricing Pressure

In apparel industry, trade liberalization, low barriers to entry for suppliers, emergence of

new competitors, continuing movement of product sourcing to lower cost countries and

increasing price of raw materials are key factors that contribute to build pricing pressure

throughout the supply chain. In addition increased price and reduced availability of raw

materials can increase cost of goods and mad adversely impact Levi‟s financial figures.

Issues of manufacturing overseas and import

Levi‟s import their products as well as raw materials form outer countries to their

operating centre. This process of import is timely and cost effective manner that can be

irritate due to ports issues, work stoppages, political unrest, severe weather etc. So Levi‟s

has to find other alternative way to smoothen the situation but it will be result for higher

transportation costs which may unbalance the financial conditions.



Change of Information Technology

Levi‟s currently operating number of information systems. So time to time they need to

update those systems and change their legacy systems to successor systems. These types

of activities may cause to inherent costs and risk involved. If any case any of this system

conversion crash, then there will be pitfalls like inability of fulfil customer order,

disruption of internal control etc.

Licensees may disrupt the agreements

Levi‟s license their trademark to third parties. The agreement between these two parties

will cover product design, quality, sourcing etc. Licensee may not fully comply with

these constrains in this agreement. So if products which may not close to Levi‟s standards

will harm brand equity and company reputation too.

Protection of trademark

Levi‟s has to secure their trademark and other intellectual properties in order to maintain

their success and competitive position.

Natural causes

Headquarters of Levi‟s is located in California which is situated near geographic fault

area. An earthquake may cause to damage their facility and disrupt the flow of the

business. As long as Levi‟s sourced from outsiders, this risk will further extend.

Day by day obesity getting burning problem for most of the countries in the world. So

this situation is making a new market for people who suffer in this condition. In future

the range of sizes could be further extended not even XXL, 3XL, 4XL also has to

produce.

Postretirement benefits and pension will generate substantial cash requirements for Levi‟s

and it may cause to excess the expectation of them based on future market conditions.



Recommendations

Levi‟s needs to think back with their production planning process. Nowadays economic

factors indicating that they need to shift their products from premium priced brands to

lower priced fast fashion products. The reason behind this is current market fashion

trends are about to rapidly change.

Innovative casual wears and formal wears are highly demanded in future markets. So the

company has to be innovative and produce what market exactly expects in order to

compete successfully in this competition.

Launch new brand awareness programs in Asian market due to Asians have a lack of

awareness of this brand. Especially, developing countries feel that this brand is not for

them.

Levi‟s needs to search for low cost labour to diminish their production cost. Countries

like Bangladesh, India, Thailand and Philippine are ideal for the low cost markets.

Technologically Levi‟s used information systems to process their data and to run

operations smoothly. There is no single system although it implemented a SAP

environment in the company still find difficulties in integrating some of the sub systems

and they required pupation from time to time. Parts of the system updating and SAP

implementations were failed due to poor system requirements and poor management

decisions. It is appropriate to evaluate the current SAP and sub systems since it is a

global firm.

Levi‟s has experienced a drop in market for the last several years as a result of changing

consumer fondness toward alternative high-end fashioned denim and differentiated

products. This lead to a need of new product which is differentiated from rival products.

Levi‟s can predict more sales in metropolitan cities in USA and Western Europe

Levi‟s has greater opportunity of launching of an innovative organic sustainable clothing

line this will give a chance to differentiate from its completion and its own mainline.

When conducting marketing campaigns it is vital that headquarters inputs are significant

although it carry out in different regions, core values should maintained while adopting

regional values/ resources.

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