The Youth Marketing of Levis Jeans - Essay Example

LEVI’S JEANS: BRANDING AND THE YOUTH MARKET Contents Contents 2 Introduction 3 Elements of the global influence on the company and their strategic responses to the concept of globalization and potential impacts on business 3 Business environment affects pricing policies and Foreign Direct Investment strategies 5 Recommendations on one best approach to the international trading for Levi`s 5 Conclusion 6 References 7 Introduction Levis Strauss, a Jewish immigrant had set up stores in San Francisco selling waists initially founded the Levi’s company. The waists manufactured were primarily for farmers, factory workers, ranchers, miners, etc. In the late 1960s the manufactured product started to be associated with teenagers. Levi’s started to be worn by celebrities in advertisement and it was regarded as genuine, authentic, original and real. The company initially launched its 501 Blue Campaign and had undertaken aggressive advertising so as to promote its new product launch. However there was major turmoil in the business operations of Levi’s by which the most favoured cool brand started to be regarded as an ‘uncool’ brand and this resulted into major losses for the company. The sales figure of the products manufactured by the company had shown a steep decline. In order to withstand such a change in the cultural trend, the company had undertaken very effective measures so as to be sustainable in a highly competitive market. Elements of the global influence on the company and their strategic responses to the concept of globalization and potential impacts on business The jeans manufactured by Levis Strauss were not so much popular in the market which resulted into a sales decline of $2 billion. The profit margin was so low that it ultimately resulted in the closing down of 30 factories out of 51. The main cause of this impact was the cultural shift in its target market consumers due to evolution of rap music. This trend gave rise to the concept of baggy trousers that were more preferred by young consumers however, the company failed to connect itself with the young generation (Cole, 2003, pp. 116-117). This gave a great opportunity to its competitors such as Diesel, Wrangler, Gap, and Pepe who had captured a big market share of Levi’s brand. The company initially had associated its jeans with a rebellious nature and something that defined the young generation however it was a misinterpretation by the company that such a look would last forever (Aaker, 2001, pp.45-46). The cultural shift made the preference of the young consumers shift to ultra-baggy and non-tapered loose brands that were being delivered by other brands and this had created a perception amongst the youth that Levi’s jeans were too tight and suited the middle aged consumer (Hajdini, 2010, pp. 76-77). In the initial stages the company had been able to create a rebellious outlook amongst the youth changing the traditional clothing behaviour but it failed to remain at par with the cultural changes in the industry in which it operates (Allen, 2006, pp.56-57). The major elements of global influence that affected its business operations the most was the changing cultural trend, growing competition in the jeans industry and failure to be aligned with the actual demand of the target market (Hitt, Duane and Hoskisson, 2012, pp. 145-146). As per PESTEL analysis, the major factors of concern for Levi’s brand were socio-cultural trends and the economic factor that kept it away from capturing the untapped market of the minority segment (Henry, 2011, pp. 56-57). In order to be sustainable in the market the company had Had decided to segment the target market into three areas and launched products for those three different segments such as regular guys and girls, urban farmers and extreme sports (Porter, 2008, pp. 70-71). In 1999, Levi’s took an effective marketing strategy by launching non-denim jeans Sta-Prest. It promoted a new ad campaign in television that contained a furry animal called Flat Eric (Sadler, 2003, pp. 103-104). In order to replace its old fashioned brand 501 it had launched engineered jeans that were designed with Five-pocket style. It further introduced a new collection of jeans that were known as Mobile Zip Off Pant. In addition, for their older consumers who had passed their teenage years Levi’s had launched Dockers Recode which could be best described as smart-Casual (Buckley, 2002, pp. 76-77). These products were launched at a premium price and even to further counter the competition, Levi’s expanded it’s started its first store that was known as Cinch. This store did not comprise of any mainstream products of Levi’s brand but consisted of Vintage Clothing, Red Collection, etc (Tielmann, 2010, pp. 93-94). The company had undertaken an effective advertisement campaign where it had started sponsoring events such as bands, concerts, and musicians so as to be associated with the youth generation. The company launched worn jeans mainly for the age group of 15 to 25 years (Pringle, 2008, pp. 155-156). This product introduced 3D appearance with a two-tone spray effect. The advertisement campaign for this product launch had a tagline of ‘rubs yourself’. The company had launched products at different price range some for supermarkets and the others, which were premium, priced. It had over the years developed very strong advertisement campaigns such as Live Unbuttoned that captured the attention or interest of the youth (Proctor, 2014, pp.90-91). The company launched in its anniversary of engineered jeans three mascots. All the innovative approaches were incorporated in its business operations nonetheless/however its prices were high when compared to other discounted brands such as G-Star, Diesel, Miss Sixty, and Seven (Richter, 2012, pp. 56-57). The company though was able to handle the changing consumer market demand but it is not being able to effectively manage the other factors such as price, which leads to purchasing decision by a customer and thus giving chances to other competitors in the same industry. Business environment affects pricing policies and Foreign Direct Investment strategies A common perception that consumers have is that the quality of a product is linked with its price. If the price of the product is high the perception of the quality of the product is also high. On the contrary if the price becomes lower then it is perceived by the consumers that the quality has been compromised by the company so as to sustain in the market (Hoskisson, Hitt, Duane and Harrison, 2007, pp. 56-58). In case of Levi’s the changing business environment has enforced Levi’s to adopt a lot of strategies so as to be sustainable in a competitive market (Carlopio, 2010, pp.90-91). If the industry in which the company operates is highly competitive then it puts pressure on the Levi’s to change its pricing strategy so as to adopt cost plus pricing and offer competitive prices to its consumers (Jeannet and Hennessey, 2005, pp.67-68). On the contrary if competition is low then a company can adopt skimming price strategy so as to capture the maximum market share and gain more profit margins (Mcfarlin and Sweeney, 2008, pp. 54-57). This was similar in the case of Levi’s where it offered two different categories of pricing. For example, premium pricing and a range of cheaply priced jeans sold in supermarkets (Neil, 2010, p.115). If the business environment is very appealing in a country then it rapidly encourages increased FDI investments as it offers more opportunity for foreign investors and offers attractive incentives (Porter, 2013, pp.77-78). The chance of FDI to succeed in a country increases only when the domestic players are not able to satisfy the consumer market demand. Recommendations on one best approach to the international trading for Levi`s International trade is associated with exchange of products or services by one company across the national borders. There are three major kinds of international trade that can be undertaken by a company and is based on theories such as theory of mercantile, theory of absolute cost advantage and theory of comparative cost advantage (Cheverton, 2005, p.134). The best approach that would be suitable for Levi’s in the present scenario would be to follow the concept of comparative cost advantage. This would help the company to lower down the costs of its production and export more products to the international market. The company can take advantage by efficiently utilizing cheap labour and increasing production capacity of any other country so that it can easily export its products to international markets. In which ever country it operates if the production capacity of that region is considerably high then it can merge with other regions that are offering raw material and labour at a considerably cheaper rate enabling the company to lower down its prices and hence offering its product range at a very competitive price, potentially proving to be a very tough competition for their competitors. In order to gain competitive advantage in terms of production cost and Levi’s could expand its operations through franchisees, retail stores, etc., s that it can reach out to more number of customers to the international market. Conclusion Levi’s was the first brand in the fashion industry that was able to create a rebellious look amongst its targeted youth market. The brand however was not able to analyze the change in the cultural trend that made it loose a significant amount of its market share which resulted in a huge decline in the profit margins of the company, which forced the company to adopt effective advertisement strategies so as to maintain its position in the industry. The strategies mainly composed of aggressive advertisements, launching new product lines, restructuring pricing policies, and further dividing its target market into three different parts. This allowed it to deliver more tailored products catering to specific tastes and consequently niche markets. However the pricing policies of the company still remain a matter of concern for the brand as it faces tough competition from other discounted brands. References Aaker, D.A. 2001. Developing Business Strategies. UK : Wiley. Allen, M. 2006. Analysing the Organizational Environment. UK: Select Knowledge Limited. Buckley, N. 2002. Levi Strides into Mall’s Discount Heart. UK : Financial Times Carlopio, J. 2010. Strategy by Design: A Process of Strategy Innovation. New York: Palgrave Macmillan. Cheverton, P. 2005. Key Marketing Skills: Strategies, Tools and Techniques for Marketing Success. Great Britain : Kogan Page Publishers. Cole, G.A. 2003. Strategic Management. Singapore: Cengage Learning EMEA. Hajdini, I. 2010. Innovation Management. Germany: GRIN Verlag Henry, A. 2011. Understanding Strategic Management. New York: Oxford University Press Hitt, M., Duane, R., and Hoskisson, R. 2012. Strategic Management Cases: Competitiveness and Globalization. USA : Cengage Learning. 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