Contents Part 1

Introduction

The Original Blue Jean

Business Distribution Structure

Customer Segmentation

Brand Analogies

Brand Timeline

Part 2

Brand Inventory

Brand Audit

Brand Equity

Brand Extention

Distribution Channels

Brand Issues

Part 3

Glastonbury Recommendation

Spotify Recommendation

Ray-Ban Recommendation

Conclusion

References

Appendix

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Rachael Kirk - W12005625

Li Gan - W13032496

Word Count - 3289

MK4000 - Analysing Buyer Behaviour and Brand Dynamics

The essence of Levi’s is personified in its

core values: empathy, originality, integ-

rity and courage. The quartets of values are

evidently valuable to the functionality of the

brand as they feature heavily across any in-

quisitive documentation of the company;

particularly marketing campaigns.

These are Levi’s guiding principles that al-

low them to make decisions and channel

through their products. Levi’s have demon-

strated over the years their ability to keep

aligned with the originality that they express

through their products, namely the 501 jean.

However, the path in which Levi has taken,

being complacent with originality, has al-

lowed them to ignore the obvious trends in

the apparel market thus resulting in a signif-

icant loss of percentage in the jeanswear

marketplace.

Nonetheless the empathy Levi’s value is

worth its weight in gold. For instance, in 1982

Levi’s campaigned for AIDS awareness as

well as being the first Fortune 500 Company

to extend medical benefits to employees’

domestic partners (Fairchild, 2014). External

to the company, Levi’s enforce empathy

through promoting their products to be for

everyone. The inclusiveness of this promotes

a valued relationship between consumer

and company.

The originality of the brand goes without

saying. The brand stands on the forefront of

user imagery, and those tangible attributes

to which they believe consumers buy Levi’s

for; the very nature of its iconic blue jean. The

originality seeps through all corners of the

brand, however its ability to stay relevant has

caused serious concerns for the future of the

company; the brand has remained strong

by capitalising on its heritage however the

reliance on originality has led to a compla-

cent attitude toward the brand as a whole.

Levi Strauss and Co is a global manufacturer of brand-

name clothing; designing, producing, distributing and

selling a range of clothing products but primarily denim

jeans. The American apparel company owns a range of

subsidiary clothing brands, these include: Dockers, Signa-

ture, Denzin and the iconic Levi’s.

Introduction

The Original Blue Jean

5

’The Levi’s brand epitomizes classic American style and effortless cool. Since the invention and patent of riveted

clothing by Jacob Davis and company founder Levi Strauss in 1873, Levi’s jeans have become the most recog-

nizable and imitated clothing in the world – capturing the imagination and loyalty of people for generations. And

while the patent has long since expired, the Levi’s brand portfolio continues to evolve through a relentless pioneer-

ing and innovative spirit that is unparalleled in the apparel industry’’

figure x taken from the Levi Strauss and Co website

Part 1

Levi Strauss’ apparel see’s transactions in more than 110

countries, with approximately 50,000 retail locations. It

operates manufacturing, distribution, and finishing facili-

ties in the Americas, Europe, and Asia/Pacific regions. The

company favours a multifaceted retail structure, namely

using a wealth of department stores, company operated

retailers including online retailing, as well as multi-brand

speciality stores.

The selling and distribution spans across the global plat-

form with significant success shown in established markets

in Japan and Western Europe as well as emerging mar-

kets such as India, China, South America and Russia.

In terms of business stability, Levi’s revenues had shown

significant losses and in 2003, Levi made a bold strategic

move. The company formed alliance with supermarket

giant Walmart, in a bid to secure future finances for the

company. Prior to the partnership, Levi had opposed the

initial idea of selling its apparel in supermarkets. This was

evident in 2001 when Levi sued UK supermarket chain Tes-

co for selling Levi Jeans at half the recommended retail

price for UK approved outlets (BBC News, 2001).

Age: 15-30 years

This age bracket is made up of both male and fe-

male, fashion conscious consumers with ranging

household income. The medium – high income

consumers typically buy the Levi’s brand and low-

er income buyers opting for the Signature brand.

This target market holds values of self-expression,

authenticity, peer acceptance, trendsetter and ef-

fortless cool.

Age: 30-50 years

Levi Strauss and Co targets both male and female

consumers in this age bracket and have developed

a strong sense of loyalty from them. These customers

are considered to be professionals and blue collar

workers, who have been wearing Levi’s since their

youth. Their values are a sense of loyalty, American

spirit, familiarity and self-expression.

A typical Levi’s consumer may fall into two age categories with distinct characteristics:

7

Business Distribution Structure Customer Segmentation

Pinterest is visual social media site that allows users to ‘pin’ ideas and create mood boards. The highly influen-

tial social media outlet suggests that Levi is associated with the following attributes:

• Modern Cummuter: someone that owns a bike or skateboard

• Cowboys

• Motor Bike Owners

• Musicians

• Movie Stars: Jonny Depp

Brand Analogies

Ray-Ban VW Beetle

CasioGlastonbury Festival

Budweiser HMV

VansFender

Converse Diesel

9

Timeline

The purpose of this section is to establish the current positioning of

the brand. Over recent decades, Levi’s has allowed their prod-

ucts to essentially sell themselves and be carried through cultures

on the shoulders of trend-setting youths. However every brand

needs to develop in order to stay relevant. Despite Levi’s strong

brand equity, ‘the company favours maintaining its brand integri-

ty over jumping onto the latest trends’ (Lee Yohn, 2015). The pre-

vailing assets that provide value to the Levi Strauss brand will now

be explored.

Brand Audit

Part 2

Brand Inventory

Brand Audit

17

American

Levi’s has been stitched into American cul-

ture for decades, becoming the staple cloth-

ing for America’s labourers by offering comfort

and durability. Founded in California Levi’s may

have spread globally but it has never forgotten

its roots. Levi’s association with Americanism has

helped the brand flourish in its biggest market,

America, where the consumer’s patriotism at-

tracts them to brands like Levi’s.

Original

The original blue jeans were created by Levi

Strauss and his business partner Jacob Denis in

1872, 144 years later and Levi’s are still primarily

known for their jeans. Being the founder of such

a prominent piece of clothing gives the brand a

special status in the eyes of the consumer and

automatically reassures buyers that they will re-

ceive value.

Heritage

Not many brands have a history as long or event-

ful as Levi’s and this story of their heritage is used

throughout many of their marketing campaigns.

Whether it was the American soldiers wearing Le-

vi’s during WW2 or the athletes clothing of the

1980 and 1984 Olympics, Levi’s has been through

a lot. It is this experience and longevity that gives

consumers the confidence to find value with Le-

vi’s products.

Cool

The term cool has been associated with Levi’s

since the 1950’s when jeans started becoming

fashionable and a symbol for rebellion. Howev-

er the rise in competition, developing fashion

trends and Levi’s complacency to develop their

brand has meant that the term cool is no longer

linked with the brand as it used to be.

Key Drivers/ Core Associations

Brand EquityCustomers of Levi’s have forever been loy-

al to the brand because of their quality,

originality and style. During WW2 American sol-

diers wore their Levi’s overseas and when they

returned they were passed down through their

generations. Since 1996, the loyalty of recurring

customers for Levis has fallen; which is evident

in the drastically falling revenue figures. This is,

in part, due to the rise of close competitors giv-

ing consumers much more choice, but also be-

cause Levi’s have failed to recognise popular

consumer trends. Many of the marketing meth-

ods currently used by Levi’s emphasis the word

“original” in an attempt to develop loyalty from

younger customers. One study found that re-

peat purchases were more common within the

older population when compared to the youth

(Wight, 2011).

Quality

Quality is an integral part of the Levi’s brand and

has been a primary driver for their sales since the

company was founded. For decades Levi’s jeans

have been the leader in product performance,

this originally stemmed from the patented rivets

used to strengthen the seams. Although Levi’s

are still considered to be of a very high quality,

modern technology has allowed their competi-

tors to overcome the patented rivet design, and

equal Levi’s quality. A strong emphasis on quality

can be seen throughout their marketing efforts

as well as “quality clothing, every garment guar-

anteed” being stitched on the leather patch on

all Levi products.

Awareness

Levi Strauss has been a household name ubiqui-

tous with the blue jeans for over a century. One

study into brand awareness found that Levi’s

was the most recalled brand when prompted

with the word “blue jeans”, a recall rate of 40%

(Wight, 2011). The results of this test suggest that

brand awareness for Levi’s remain considerably

high. In addition to this another study by Dolbow

(2000) asked school students to name the pair

of jeans they were most likely to purchase in the

near future. While Levi’s won the majority, the

result was only marginal (see table) with many

competitors close behind.

Loyalty

Table x - Shows what jeans brand students would most likely purchase next

19

• Household name,

• High brand recal response

• Globally recognised brand

• American

• Musician

• Biker

• Workmen

• Rebellious

• Cowboy

• Sustainable

•Standardised

• Heritage

• Fashion

• Durable

• Reliable

• Cool

• Lifestyle

• Following

• Community

• Excitement

• Recognised

• Trust

• Quality

Behavioural loyalty

Strong online community

Resonance

Judgements

Performance

Salience

Feelings

Imagery

Keller CBBE Pyramid

• Casual

• Authentic

• Effortless

• American Individualism

• Way of life

• Trendsetter

• Rebellious

• Independent

• Red tab

• Iconic blue jeans

• Two horses

• Affordable

• Inclusive

• Empathy

• Trendsetting

• Multi generations

21

Kapferer Brand Identity Prism

In order to grow and expand, Levi’s has leveraged

its brand and attempted to introduce many new

products in accordance with a brand extension strat-

egy (Kotler, Keller, Manceau, & Hémonnet-Goujot,

2016). Although Levi’s blue jeans account for roughly

85% of their revenue (Fairchild, 2014) they have many

examples of successful brand extension products i.e.

belts, t-shirts and wallets.

Inner Core

501 Original

511 Slimfit

569 Loose

517 Bootcut

Extention Areas

No go areas

Belts

Suits Mobile Phones

Caps

T-Shirts Shoes

JacketsWallets

Brand Extention

Distribution ChannelsOnline

Levi’s sell all of their products directly from their own

website, this has obvious cost saving advantages

but it also allows the brand to be displayed and mar-

keted in the exact way that Levi’s see fit for their cus-

tomers. Levi’s also sell their products via other online

retailers such as asos, this however limits the image

exhibited of the brand but does help maximise brand

awareness and sales.

Department stores

Like many apparel companies, Levi’s sell most of their

products through retailers like JCPenny or John Lew-

is. Within these department stores Levi’s have their

own areas that are designed in accordance with the

brand, although beneficial, they have no more con-

trol over their customer’s experience of the brand.

Levi’s stores

Levi’s own a number of stores to sell only their prod-

ucts in throughout various cities. Although these stores

do not bring in a substantial amount of revenue com-

pared with the third party retailers, they do allow Le-

vi’s complete control of their customers experience

with their brand.

Second hand market

The second hand market does not contribute to any

of Levi’s revenue however it does contribute massive-

ly to the brand itself. Retro clothing is a massive trend

among young people (Guffey, 2006) and old Levi’s

clothing fits perfectly into this classification. The result

of many people wearing old Levi’s clothing is that its

reputation for quality increases, as the clothing has

lasted so long, and also the awareness of the brand

increases.

23

Products that were associated with the brand

but have had a negative impact are:

Levi’s Tailored Classics - Formal, pretentious, ex-

pensive compared to Levi’s casual, unpreten-

tious and affordably iconic jeans.

Levis Mobile - Drastically different industry which

confused the identity and positioning of the

brand.

Due to a loss of focus and lack of innovation,

Levi’s typical consumer has been getting

older and Levi’s has become less associated with

youth connotations, for which their blue jeans

have been a generational symbol. Although Le-

vi’s have attempted to target the 15-25 year old

market, their typical customers are actually 20-45

years old (Vrontis & Vronti, 2004).

Since their peak in 1996 Levi’s has used their

market dominance and household name

to drive business. This lazy and one dimensional

strategy has meant that innovative companies

like Calvin Klein and Wranglers have chipped

away at Levi’s market share. The premium jeans

market has been growing rapidly since 2000 and

Levi’s have been complacent in reacting, this

left the door open for Calvin Klein to capture the

market. Similarly Wranglers has taken control of

the discount jeans which leaves Levi’s awkward-

ly the middle.

Brand Issues

Ageing consumer market

Trends and CompetitionBrand extension failures

Figure x - Levi’s Tailored Classics Figure x - Levi’s Mobile

Figure x - Global market share, jeans companiesChart Source: Euromonitor

A fast growing movement in the apparel in-

dustry is the athleisure trend among the

millennials generation. It is this age bracket that

Levi’s are targeting and yet this segment are be-

coming more health conscious and turning to

the more comfortable athletic clothing; breath-

able and stretchy fabrics. Euromonitor predict

that the denim jeans market growth will slow to

just 1.4% by 2017 whereas Barclays forecast that

the athletic apparel market will grow by $30 bil-

lion (Hanlon, 2015) further diminishing the want

for denim jeans.

Athleisure Trend

“There is no question, we got complacent” – Chip Berg, Levi’s CEO

25

Part 3

The Recommendation

To increase Levi Strauss’ brand awareness amongst younger consumers through

official event sponsorship of the Glastonbury Festival of Contemporary Per-

forming Arts.

1 Glastonbury is a performing arts festival that at-

tracts thousands of festival goers every year

to its famous green fields. The festival entices vibrant

crowds and fashion forward trendsetters; quintessen-

tially the festival was voted the third trendiest brand

in 2015 (Brown, 2015); the ideal target audience that

Levi require in order to enhance their brand image.

Benefits

The sponsorship will aim to increase initial brand

awareness and loyalty as well as generating cus-

tomer preference through means of high brand re-

call. Levi’s has precedent associativon with music;

therefore the company will understand the famil-

iar connotation with music ventures. Sponsoring an

event as vast as Glastonbury will provide Levi with an

opportunity to build its brand position through its as-

sociation, especially in the UK, as well as expose the

brand to the media platforms that cover the event.

Research of event sponsorship ventures indicate

that it alters brand image positively and while initially

used in a rather cavalier manner by many sponsoring

companies, is regarded today as a highly cost-effec-

tive method of marketing communication’. (Meen-

aghan, 1991). Essentially, event sponsorship buys two

things; exposure with the audience and the image

association.

Predominantly, sponsorship works so long as the part-

nership of the brands aligns with, or ‘fits’ one anoth-

er’s brand attitudes, values and beliefs. Both Levi and

Glastonbury strive for sharing sustainable change in

the world (Levi Strauss, 2016), as well as attracting

compatible, like-minded target audiences (Jagre,

Watson & Watson, 2001).

Sponsorship Strategy

In search for a new, edgy and effortless cool, it is rec-

ommended that Levi’s should be the official sponsor

for the world renowned Glastonbury festival held in

the UK. To enhance positive brand equity, Levi’s need

to encourage brand preference and recognition of

what it offers in comparison to other apparel brands.

Through event sponsorship of Glastonbury, Levi’s will

to trial their brand through pop-up stores across the

festival, offering exclusive custom Levi apparel in a

bid to win new consumers as well as attempting the

retention of past and present consumers. A stage

within the festival will be named as the ‘Levi Stage’ as

a form of brand marketing. Levi currently uses guer-

rilla marketing in the ‘Live in Levi’s’ campaign that is

both striking and imaginative; the quirky advertising

will be featured heavily across Glastonbury platforms,

namely posters, flyers and small billboards.

What is Glastonbury?

29

The digital music service has created an online

platform that has given listeners access to a vast

music catalogue. Spotify is a global success, reach-

ing more than 100 million active users including 15 mil-

lion premium subscribers.

Well-known brands such as Coca-Cola and Face-

book have successfully partnered with Spotify, high-

lighting the integrity of the company and the benefits

that Spotify can contribute to brand equity.

The Benefits

The benefits Levi would obtain from a partnership

with Spotify is unfathomable; the music streaming

service is so current and in high demand. It’s readily

global platform would essentially be Levi’s for the tak-

ing; in essence, Levi would have unrestricted access

to a pool of worldwide users who no doubt use Spot-

ify on a daily basis.

Using the collaboration with Coca- Cola as an exam-

ple Spotify provides the technology and music need-

ed for Coca-Cola marketing. This would be similar

for Levi’s; Spotify can help boost the online market-

ing for Levi’s and help draw in more customers (Dai

& Pietrobon, 2012). Spotify has gained a tremendous

brand equity from their current co-branding partner-

ships, and having another collaboration will only help

strengthen this.

The Recommendation

To enhance the Levi Strauss brand image and attract a younger customer base through a partnership with

Spotify.

What is Spotify?

2 The Partnership Strategy

Using the associative network memory model

(Keller, 1993), Levi, using brand knowledge, can

build Levi’s customer based brand equity through the

association with Spotify. In 2014, the team behind Le-

vi’s store soundtrack stated that ‘music is an extension

of the brand’, and music is a marketing tool which

can affect the consumer brand experience (Busnyuk,

2014). The ultimate goal is to reinforce positive brand

awareness in association with Spotify, as it Is evident

through past ventures that Levi’s high regard music

as a part of their brand.

The Proposition

The store soundtrack and the marketing cam-

paign soundtracks will be available as a feature

on the Spotify ‘genre’ feed. A Levi content section

will be available alongside the pop, rock jazz gen-

res, to name a few, to entice the curiosity of Spotify

users. Spotify was a new entry in the top 20 trendiest

brands of 2015; so the association of Levi with Spotify

will have impact on the brand equity. Furthermore,

Spotify’s platform allows content to be easily spread

by word-of-mouth through Facebook and Spotify’s

social feed. If Levi was to be advertised via Spotify’s

Facebook, this would equate to millions of viewers

through social media marketing strategies (Busnyuk,

2014).

31

The Recommendation

To rejuvenate the ‘cool’ image of the Levi Strauss brand,

this report proposes the acquisition of the brand Ray-

Ban.

What are Mergers and Acquisitions (M&A)?

M&A in general is a term used for the amalgamation of

two or more companies. The duration of this report will

focus on one specific type of acquisition being (A + B =

A1 + B).

This type of M&A depicts the controlling parent compa-

ny represented by A (which is able to make strategic

controlling action) and the purchased brand being B

(Ray, 2010). For this report A will represent Levi Strauss

and B representing Ray-Ban.

Type of Acquisition

According to Ray (2010) there are three primary motives

for pursuing a brand acquisition.

• Growth strategy

• Defensive strategy

• Financial opportunity

This recommendation will be based on pursuing the

growth strategy theory as Levi Strauss and Co is currently

experiencing controlled organisational growth.

Evidence of Successful M&A

• The purchase of jaguar cars Limited and Land Rover

in 2008 by Tata motors Limited (Lee et al., 2011).

• Louis Vuitton Moet Hennessy using the ‘house of

brands’ strategy to develop a successful brand port-

folio and maintaining the brands core values (Kumar

& Hansted Blomqvist, 2004).

3 Why Ray-Ban?

Ray-Ban is being recommended as it is strongly

associated with being a cool brand, so much

so that it was voted the 2nd “coolest” brand in 2015

(CoolBrands, 2015). This recommendation looks to re-

juvenate Levi’s lost ‘cool’ image and therefore must

identify a brand that is deemed ‘cool’ but also holds

similar values.

In a similar way to Levi’s, Ray-Ban holds a close as-

sociation the phrase ‘Original American’, this arose

because Ray-Ban founders, Bauch & Lomb, invented

the first aviator sunglasses for the US Airforce in 1929

to help combat glare. Furthermore Ray-Ban also cap-

italise on their heritage in a similar way to Levi’s to

drive sales and develop as a brand.

Although there is no overlap in product offerings be-

tween Levi’s and Ray-Ban, Ray-Ban have recently

launched a new line of sunglasses made from real

denim. This link could be capitalised on too assert a

connection while keeping their strong brand individ-

uality. Furthermore Ray-Ban, like Levi’s, is a large ad-

vocate for guerrilla marketing as mentioned by Levin-

son, Meyerson, and Scarborough (2008), evidence of

this can be seen in their Never Hide campaign.

Benefits

The Levi’s brand would benefit from this acquisition

by adopting the cool associations with Ray-Ban

while keeping the ‘Original American’ image. This

would allow Levi Strauss to develop a brand portfolio

which strongly reinforces the company’s values while

branching out into a new but similar market. This ac-

quisition would go on to rejuvenate the diminished

sense of ‘cool’ previously associated with Levi’s. Le-

vi’s would therefore be able to leverage secondary

brand associations gained form Ray-Ban in order to

increase its own brand equity (Campbell, 2002).

Acquisition strategy

Firstly, once the target brand (Ray-Ban) has been

identified a brand team will be created in order to

conduct marketing due diligence. The primary goal

of this team will be to observe the transaction through

the customers ‘eyes’. This is done in order to sustain

loyal customers once the acquisition is completed,

making sure that the various customer touchpoints

remain constant (Kumar & Hansted Blomqvist, 2004).

The next step would be determining the method at

which brand equity would be transferred from the

acquired brand to the parent company, in essence

33

the goodwill. This report then proposes as mentioned

by Uggla (2004) the use of ingredient branding. This

theory would then be applied to the new denim line

of sunglasses produced by Ray-Ban. By associating

the original denim produced by Levi’s with the Ray-

Ban denim range. The outcome would have the ef-

fect of connecting two customer bases as well as

rejuvenating the brand equity and ‘cool’ brand as-

sociation of Levi’s.

Conclusion

This report has identified the need for the Levi’s

brand to become re-associated with the term

cool and to attract a younger demographic. By be-

coming affiliated with branches of the music sector

and strategic partnerships with “cool” brands such

as Glastonbury and Spotify, Levi’s will become a cool

brand once again. To further establish themselves as

a quintessentially cool brand, this report has recom-

mended to Levi’s the acquisition of Ray-Ban, who’s

brand identity aligns flawlessly with Levi’s and who

was also voted the 2nd coolest brand in the UK.

35

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39

AppendixSwitching Costs Low

Strength of Distribution Channel Low

Supplier Competition Low

Differentiation of Inputs Low

Buyer Dependence Low

Capital Availability High

Access to Technology High

Economies of Scale High

Access to Distribution High

Barriers to Entry High

Government Policy High

Industry Profitability High

Product Substitution High

Brand Substitution High

Buyer Price Sensitivity High

Differentiation Within the Market High

Buyer Dependency Low

Product Features Low

Product Importance Low

Buyer Information Availability Low

Buying Power Low

Market Growth Rate Low

Total Number of Rivals High

Exit Barriers High

Sustainable Competitive Advantage Low

Advertising Expense High

Product Capacity High

Power of Suppliers - Low

Threat of Potential Entrants - High

Threat of Substitute - High

Power of Buyers - Low

Industry Rivalry - High

Porters 5 Forces Analysis

Strengths • Established brand portfolio encourages repeat purchases• Global footprint• Multiple distribution channels increase market penetration oppor-

tunities.

Weaknesses • Dependence on few customers for substantial portion of revenues • Reliance on contract manufacturers for product procurement,

manufacturing and finishing.

Opportunities • Increasing online retail spending• Growing US apparel market

Threats • Increasing competition• Laws and regulations• Increasing labour costs

SWOT Analysis