levi strauss - rejupenation

Levi Strauss CanadaHolding An Ember : The GWG® Brand

S y n d i c a t e Re j u p e n a t i o nBawono Adhi Mutia Safrina Husna Kesumawati Dian Gita Utami M. Satiadharma Gumbira

Safrinanda

• Levi Strauss & Co. is one of the world's

leading branded apparel companies

with sales in more than 100 countries

worldwide.

• Over the years, Levi’s jeans have

become more popular, initially due to

its durability. Jean products expanded,

targeting different consumers.

• The primary lines are Levi's jeans

and Dockers casual pants, and now

added Levi’s Strauss Signature®

Company History : Levi Strauss

1853• Levi Strauss & Co was

founded

1873• Levi Strauss & Co.

patent riveted jeans and begin selling them.

1974• Company sales reach

$1 billion

1998 - 2002

• Downturn in sales as high-end and also private-label brand attract market

2002

• Employed more than 23,000 people

• Operated in more than 150 countries

1911 - 1927• GWG started producing shirts,

overall, heavy outdoor coat, and first denim

1930 - 1961

•Expanded in womens wear workforce•It has dynamic growth and Levi’s Strauss purchase GWG 75% ownership

1972-1980

• Levi’s bought remainder of the company

• GWG sold in most clothing outlets

1992 - 2001• Company by GWG introduced• GWG licensed to Jack Spratt

GWG® offers limited line of products that focuses to the segment of men by offering 4 fits, 4 finishes: stonewash, stone bleach, rinse and black, and 16 sizes from 28 waist to 42 waist with two different lengths.

Regarding the licensee agreement of the company to Levi Strauss Canada, in 1998, 8% of its net wholesale goes to Levi.

Company History : GWG®

• Levi Strauss & Co. purchased 75% of Edmonton's Great Western Garment

Company (GWG) in 1961. Levi Strauss Canada decided to license GWG to Jack

Spratt Manufacturing Inc. in 1998.

• Jack Spratt was not giving a good performance and Levi’s company thinking of

taking the license and revive GWG brand.

• Both Levi's and GWG brands have been affected by the popularity of designer

label jeans, private label jeans, specialty retailers and new trendier brands.

• With competitors like Wrangler, Wal-Mart, Zellers and premium brands that

popular among younger age groups like The Gap, Calvin Klein, Tommy Hilfiger,

Diesel, and Guess.

Case Background

Why do consumers buy jeans? What is the buying decision based on? How do you segment these consumers?

Buying Reason

• Utilitarian reason• Fashion• Showing owner character• Reflecting own personal independence and style• Comfort, ease and compatibility• Practical and strength

#1

Buying Decision:

• Brand name• Design• Price• Fabric quality/fit• Distribution Channel• Advertising

Why do consumers buy jeans? What is the buying decision based on? How do you segment these consumers?#1

Geography

Demography

Sex : female and maleAge : teens, adultEconomic state : low, middle and high

Psychographic &

Behavior

National International

Fashion ConsciousQuality ConsciousFit & comfort Reflecting personal independence & styleFollower / Peer pressure

TYPE OF JEANS

Flare jeans for Fashion-Conscious consumers

Relaxed Fits for older consumer

Ultra Baggy for Younger consumer

Brand Price Dist. Channel Attributes Segment

GWG and Levi’s Jeans

Orange Tab

$42.99 - $69.99

Bay, Sears, Zellers, Original Levi’s Store

Classic, Quality, Originality, Fit, and Independent, Five main fits with three finishes, frequently differentiate the finishes

15 -24 male & female market

Red Tab $49.99 Bay, Sears, Zellers, Original Levi’s Store

Classic, Quality, Originality, Fit, and Independent, 12 fits, constantly updated new fits, frequently differentiate the finishes

15 -24 male & female market

GWG $18-$22 Small mass merchants, selected Mark’s

Quality, Comfort, and Price, four fits, four finishes

Male

VF Corp

Wrangler $29.99 Wal-Mart, Zellers Western and Country, five main fits with three finishes

Male customer

Rustler $19.99 Wal-Mart, Zellers, Saan, Giant Tiger

Similar level of ruggedness with Wrangler, Western Style, five main fits with three finishes

Male customer

What are the leading

attributes of the competitors?

How does this match or not match

the consumer buying decision?

# 2


Specialty Retailers

Denver Hayes $34.99 Marks Work Warehouse

Medium to high quality fabrics, five main fits with three main finishes, offered other products in the store

25-50 years old males, suburban strip

Bluenotes $39.99 Thrifty’s Medium to high quality fabrics, five main fits with three main finishes, seasonal specialty offer based on innovations in higher segment

15 – 24 years old male and female

GAP $49.99 The Gap store Medium to high quality fabrics, five main fits with three main finishes, seasonal specialty offer based on innovations in higher segment

18 – 35 years old

Private Label

Nevada $24.99 Sears Simulating branded style, 30-40% price cut Male & Female

Rockland $16.99 Costco Aggressive pricing Male & Female

Originals $19.99 Wal-Mart Placing side by side with branded promotion Male & Female

Cherokee and Truly

$19.99 Zellers Simulating branded style, Placing side by side with branded promotion, weekly sales flyer

Male & Female

Reitman’s $25-$30 Simulating branded style Female

Cotton Ginny’s $25-$30 Simulating branded style Female


Premium Brands

Silver $69.99 Dedicated store, Apparel store

Unique lifestyle image, catwalk fashion collection

Male & Female, Premium consumer

Guess $79.99 Dedicated store, Apparel store



Tommy Hilfiger $89.99 Own line store, Apparel store



Polo Ralph Lauren $89.99 Dedicated store, Apparel store



Calvin Klein $79.99 Dedicated store, Apparel store



Diesel +$100 Own line store, Apparel store



Market Share Comparison on Men segment

Men's Jeans 15+ (2000)

Levi's Total

Sears PL

Wrangler

Costco

Mark's

Zellers

Wal-Mart

Rustler

Thrifty's

GWG

Men's Jeans 15+ (1996)

Levi's Total

Sears PL

Wrangler

Costco

Mark's

Zellers

Wal-Mart

Rustler

Thrifty's

GWG

What is happening in the overall market place? What is happening with channels?# 3

Women's Jeans 15+ (2000)

Sears PL

Levi's Total

Zellers

Wal-Mart

Reitmans

Silver

Thrifty's

Gap

Women's Jeans 15+ (1996)

Sears PL

Levi's Total

Zellers

Wal-Mart

Reitmans

Silver

Thrifty's

Gap

Market Share Comparison on Women segment

What is happening in the overall market place? What is happening with channels?# 3

Market Place was Change

Since 1996 to 2000, competition in jeans fashion category has change. • Levi’s with its product line was a market leader in 1996 and had significant

gap with its competitor. • In 2000, their market share was drop up to 12.3% while in other hand some

of the competitor had rise their market share. • New competitors brand in men and women has pop up and get a significant

market share. Promotional pricing by department stores increase and entrant were pushing down the average paid for jeans. This cause the fallen of price paid for jeans.

Industry observers believed the market place had moved from jeans to casual with the popularity of the ‘khaki’ pant from 1998-200.In 2001 the denim cycle was believed to be beginning again.

What is happening in the overall market place?

What is happening with channels?

# 3

Department Store

• Eaton’s was absorb by the Bay and Sears

Specialty Store

• Aggressive expansion plan by The Gap• Continued presence by chains such as Thrifty’s and Mark’s Work Warehouse• New entrants such as American Eagle Outfitters and Old Navy

Mass Merchant

• Woolco acquisition by Wal-Mart (1994)• Kmart closed half of its stores and the other half was purchase by Zellers (1998)• Wal-Mart rapid expansion

Other Channel

• New entrants such as Winners and Costco

# 3Changes in Distribution Channel

• Overcrowded Marketplace Some distribution channel create their own private-label brands more

competitive products in the market. Changes to the retail landscape the average price paid for jeans had fallen.

• Significantly sales drop of GWG brand (Exhibit 3)• Priorities of the parents company with Levi’s and Dockers brands no guarantee

that GWG would be any growth beyond Jack Spratt.

He is doing absolutely nothing with the licensee hasn’t invested any money into it, hasn’t updated any of the fits, hasn’t tried to build it.

What is the context in which Klee needs to make a decision?

# 4

GWG® BrandImage and Attributes Quotes

Strong Brand Awareness “50 years ago jeans synonymous with GWG”“Popular brand, well known company”

Functional Image “More functional than stylish”“GWG are rough, rugged and durable”

Poor Distribution Channel “I don’t know which stores I could find them”“Haven’t seen them around here for years”

Body Fit “I just don’t like GWG fit”“The pockets make my butt look big”

“Uncool” Brand “Wayne Gretzky looked bad in them”“George W Groovey with bad haircuts and ridiculous

fashions”

Price “GWG were’s always a great price”

# 5Is there enough of an “ember” to bring back the brand?Does the brand have strong enough cache?

What are the channel considerations?What are the financial considerations?

From limited consumer research, the GWG brand has strong brand image in quality, comfort, and price, but for now there is not enough of an “ember” to

bring back the brand.

They were a hit with baby boomers decades agowhen they were in their teenager years.

Unfortunately, GWG have fallen out of favors with today's youth, it’s perceived to be their “parent's jeans.” market share has dropped

considerably.

Note: Now, consumers were seeking good-value jeans (fit, fashion relevancy, cool factor of the brand name) and 15-to-24 years old category purchased twice as many jeans as the 25+ age group.

# 5Is there enough of an “ember” to bring back the brand?Does the brand have strong enough cache?

What are the channel considerations?What are the financial considerations?

More channels of distribution for jeans in Canada more competition more kind of products supply in the market more buying power

Must Do!!The company has its own sales force to call on department stores and specialty clothing stores. It is anticipated that the GWG line will be available in discount department stores such as Wal-Mart and Zellers, along with a host of smaller, regional chains stores and independent retailers. Sales promotion incentives will be needed to secure distribution.

# 5Channel Consideration

• Must have a person responsible for the updating of all the fits and general management of the brand’s product for a cost of $60,000 a year.

• $50,000 for other existing staff to create some refreshed point-of-sale materials, sell the brand to retailers, and support it from the existing infrastructure.

• The jeans could be made for:– a minimum cost of $15.00, shipped at $0.35 a unit, with an estimate

90 days of inventory needed to expect 15 days in both A/P and A/R.– used a tax rate 40% and WACC 12% to evaluate internal decisions

Consistency with the Levi’s and Dockers brands in offering an additional 2% as a discount on top of the early payment discount.

# 5Financial Consideration

CONCLUSION

GWG® Brand• Develop a positioning strategy

statement for the product line.• Determine the unique selling

proposition.• All marketing communications

strategies must be directly linked to the positioning strategy.

• Make some form of marketing communications support to reacquaint and reconnect baby boomers with the brand.

- Thank You -

S y n d i c a t e Re j u p e n a t i o nBawono Adhi Mutia Safrina Husna Kesumawati Dian Gita Utami M. Satiadharma Gumbira

Safrinanda

levi strauss - rejupenation

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