Questions
As an international marketing expert you are asked to
give a report on the following tasks
/questions:
1.
What are the general key competitive advantages
of Levi Strauss in the global apparel market?
2.
Which international
markets should be the focus
of Levi Strauss's marketing resources in the
coming years (please give a ranking of three
countries)?
3.
Which global marketing strategy should Levi
Strauss use in order to increase the global market
share of jeans?
Source
: based on euromonitor.com; statista.com; and other publicy available sources.
Case study IV.2 Levi Strauss: expanding in new international markets ............ ..... Levi Strauss (www.levistrauss.com) is an iconic American company with a rich history of profitable growth, quality, innovation and corporate citizenship. LEVI STRAUSS & CO. Their story began in San Francisco, California in 1853 as a wholesale dry goods business. Levi Strauss invented the blue jean 20 years later. Today Levi Strauss design, market and sell products that include jeans, casual and dress pants, tops, shorts, skirts, jackets, footwear and related accessories for men, women and children around the world under their Levi's, Dockers, Signa- ture by Levi Strauss & Co. and Denizen brands. With US$5.6 billion in net revenues, and US$283 million in net profits in 2018, and sales in more than 110 coun- tries, Levi Strauss is one of the world's leading apparel source. Onajourney/Shutterstock. companies, with the Levi's brand having the highest brand awareness in the denim bottoms category globally. Its iconic, enduring brands are brought to life every The Levi Strauss headquarters are in San Francisco, day around the world by their talented and creative USA. By the end of 2018, Levi Strauss has a global employees and partners. The Levi's brand epitomizes workforce of 15,100 employees. classic, authentic American style and effortless cool. Levi Strauss first went public (on the stock Levi Strauss has cultivated Levi's as a lifestyle brand exchange) in 1971. After 14 years (in 1985), it was taken that is inclusive and democratic in the eyes of con- private again by the Haas family, the descendants of sumers while offering products that feel exclusive, the founder Levi Strauss, in a US$1.6 billion leveraged personalized and original. This approach has enabled buyout. the Levi's brand to evolve with the times and continu- At the second IPO on the New York Stock Exchange ally reach a new, younger audience, while its rich her- (NYSE) in March 2019, the market capitalization was itage continues to drive relevance and appeal across set at $8.7 billion demographics. With a rich history spanning over 165 years, Levi Levi Strauss's background Strauss offers products of exceptional quality at acces- Their founder, Levi Strauss, was committed to integ sible prices. Levi's is one of the most recognizable rity, philanthropy and good corporate citizenship. consumer brands in the world and the #1 brand glob- To this day, Levi Strauss continues to operate as a ally in jeanswear (measured by total retail sales). Levi's company with these values through an approach is an authentic and original lifestyle brand that has Levi Strauss call 'profits through principles'. It means expanded beyond men's jeans into women's jeans doing business in an ethical way and ensuring that and multiple product categories. Consumers around the people who make its products are treated fairly. It the world instantly recognize the distinctive traits of means sourcing in a responsible manner and invest- Levi's jeans. ing in innovative and more sustainable ways to make Levi Strauss's geographic sales its products. Finally, it means using its influence as a successful business with global reach and powerful Its business is operated through three geographic brands to advocate for social good and to give back regions that comprise its three reporting segments: to its communities. the Americas, Europe and Asia, which includes theTable 1 Competitive situation in key jeans markets (MS = market share) Germany USA China Russia Total jeans 2018 retail value 2018 retail value 2018 retail value 2018 value retail 2018 value retail market (USS millions) (US$ millions) (USS millions) (US$ millions) (USS millions) 3,190 3,380 16,680 12,492 3,593 Top 5 brands Name of company MS 36 Name of company MS % Name of company MS % Name of company MS % Name of company MS % CRA Next PLC 6.2 Levi Strauss 13.5 VF Corp. 3.7 Gloria Jeans H&M 67 Levi Strauss 5.0 VF Corp 98 Levi Strauss 2.8 Westland Levi Strauss Marks & Spencer 49 GAP 72 Bestseller 2.8 Levi Strauss 2.0 m KOK Textilien 3.2 Arcadia Group Walmart 6.7 Texwood 1.8 Zara In New Yorker New Look American Eagle 4.0 Heilan Home 1.7 Mercury 83 Others 76.2 Others 78.1 Others 58.8 Others 87.2 Others 100.0 Total 100.0 Total 100.0 Total 100.0 Total 100.0 Total Source based on euromonitor com; Statista.com; and other publicly available sources.648 Part IV Designing the global marketing programme Levi Strauss's distribution channels Levi Strauss has a diversified business model that spans its three regions and a robust presence across both its wholesale and Direct-to-Consumer, or DTC channels. Levi's In 2018 the wholesale channels (selling through big retailers like Nordstrom and Bloomingdale's and through wholesales eCommerce sites, primarily Amazon) generated 65 per cent of the net revenues, whereas sales through DTC generated 35 per cent of the net revenues, including 4 per cent through its own company e-commerce site. Source: Papin Lab/Shutterstack Levi Strauss's market communication Over the last two years, Levi Strauss has significantly increased the level of marketing support for its brands. Middle East and Africa. Levi Strauss services con- This disciplined investment in brand-building is a key sumers through its global infrastructure, developing, driver of the inflection in its financial performance that sourcing and marketing its products around the world. occurred in fiscal year 2017. Its Americas, Europe and Asia segments contributed As part of this ongoing campaign, its 'Circles' TV and 55 per cent, 29 per cent and 16 per cent, respectively, online ad was one of the top ten most-watched ads on of its net revenues in 2018. YouTube in 2017, with over 25 million views to date. Levi Strauss has a significant opportunity to deepen Levi Strauss also maintains a leading presence at sig- its global presence in key emerging markets, such as nificant cultural events around the world such as music China, India and Brazil. For example, China represents festivals and sporting events, which have put the Levi's 20 per cent of the global apparel market, but it only brand back at the centre of culture. In 2013, Levi Strauss represented 3 per cent of Levi Strauss' net revenues secured the naming rights to the new stadium for the in 2018. San Francisco 49ers, allowing us to connect with sports and music fans across the world. In February 2016, Super Bowl 50 at Levi's Stadium was one of the most- Levi Strauss's product sales watched programmes in TV history. In April 2017, the Levi Strauss has an established market share posi- Levi's cut-off shorts, worn by Beyonce during her head- tion in jeans, non-jeans bottoms and tops for both line performance at the Coachella music festival, were men and women. In 2018, 20 per cent of its net rev- deemed the "ultimate Coachella clothing item' by Peo- enues were from tops (t-shirts etc.), 74 per cent of ple magazine, with Coachella generating approximately its net revenues were from bottoms (jeans), and 5.8 billion global impressions for the Levi's brand. 6 per cent of its net revenues were from footwear In addition, Levi Strauss generates exposure and accessories. through selective collaborations with key influencers Levi Strauss's core business is men's bottoms. This such as Justin Timberlake, with whom Levi Strauss is not only due to Dockers (accounting for approxi- launched a 20-piece capsule collection in the fall mately 10 per cent of the net revenues), which is a of 2018, and with popular brands such as Nike's Air men's-only brand, but also the fact that the Levi's Jordan. Its second collaboration with Air Jordan in the brand has traditionally appealed more to male con- summer of 2018 generated over one billion global sumers. The company has been making progress, with impressions and sold out in minutes. its women's category fueling growth over the past few years; however, Levi Strauss has still a long way to go Global market for Jeanswear: Levi in profiling itself as a key player in womenswear. Strauss and the competition The appeal of the Levi Strauss brand has enabled it The total global market for jeanswear in 2018 was to license its trademarks (primarily Levi's and Dockers) around US$110 billion, of which Levi Strauss had for a variety of product categories, including footwear, around 5 per cent market share, which has been sta- belts, wallets and bags, outerwear, sweaters, dress ble over the last five years. The world market for jean- shirts, kidswear, sleepwear and hosiery. Licensing swear is very fragmented, which is shown in Table 1. accounted for approximately 2 per cent of net reve- Levi Strauss's biggest global rival is US-based VF nues in 2018. Corp., which is an internationally operating company650 Part IV Designing the global marketing programme Table 2 Levi Strauss and VF Corp. compared Although Levi Strauss ranks no. 1 in jeans, VF Corp. outranks the company in the global apparal market, Levi Strauss VF Corp. benefitting from its more intense focus on outdoor (2018 -US$ (2017 -US$ and sportswear categories. million) million) Total net revenues 5.580 11.811 Questions Total net revenues 4.185 2.655 As an international marketing expert you are asked to in the jeanswear give a report on the following tasks/questions: Total net profits 283 120 1. What are the general key competitive advantages of Levi Strauss in the global apparel market? Source. based on euromonitor.com; Statista, com; and other publicly available sources 2. Which international markets should be the focus of Levi Strauss's marketing resources in the covering the lifestyle and footwear industry. The group coming years (please give a ranking of three owns more than 30 brands. countries)? The VF jeans brands include Lee and Wrangler. The 3. Which global marketing strategy should Levi other VF Corp. brands include Timberland and Vans. Strauss use in order to increase the global market A direct comparison of the two companies is shown share of jeans? in Table 2. Source: based on euromonitor.com; statista. com; and other publicy available sources. Search for .. D of 0 599 of 807
