Improving Sales Strategy: Levis Case Study
Problem
Faced with 5 years of declining sales, should Levi’s sell a brand to mass discount retailer, Wal-Mart?
Executive Summary
Quick! Name the first company that comes to mind for the following products: facial tissue, photocopiers, and jeans. Did you answer Kleenex, Xerox, and Levi’s? I bet you did. The #1 apparel brand for brand awareness and recognition, “Levi’s” is virtually synonymous with “jeans.” In the past several years however this strong brand recognition has failed to translate into sales growth and in fact the company has seen a progressive decline over the last 5 years.
Faced with the declining sales, Levi Strauss & Co.’s CEO, Phil Marineau, has been considering selling a Levi’s brand to mass discount retailer, Wal-Mart. Bad idea. Clearly this would be brand suicide or, brandicide if you will, sacrificing long-term survival for short-term growth. Levi’s should instead put an end to its brand’s dilution and concentrate its target on trend-setting members of Generation Y by positioning itself as an ultra cool brand with a social conscience. In addition to working closely with its current retail outlets to re-invigorate the brand image, Levi’s should work on growing the number of Original Levi’s Stores worldwide in order to retain as much control as possible over the positioning of the brand.
The forecasted financial results show that choosing to revitalize and refocus the brand rather than diluting and devaluing it further by selling a value brand to Wal-Mart will cost the company 50 million dollars in the first year. However, within 3 years the efforts are expected to payoff with a 330 million dollar revenue increase over 2002 vs. a 270 million dollar projected revenue loss for the Wal-Mart choice. Plus, Levi’s will be able to hit the triple bottom line by remaining socially and environmentally responsible while increasing shareholder earnings.
Situation Analysis
Strengths
• Worldwide recognition of its brand name - #1 for
Faced with 5 years of declining sales, should Levi’s sell a brand to mass discount retailer, Wal-Mart?
Executive Summary
Quick! Name the first company that comes to mind for the following products: facial tissue, photocopiers, and jeans. Did you answer Kleenex, Xerox, and Levi’s? I bet you did. The #1 apparel brand for brand awareness and recognition, “Levi’s” is virtually synonymous with “jeans.” In the past several years however this strong brand recognition has failed to translate into sales growth and in fact the company has seen a progressive decline over the last 5 years.
Faced with the declining sales, Levi Strauss & Co.’s CEO, Phil Marineau, has been considering selling a Levi’s brand to mass discount retailer, Wal-Mart. Bad idea. Clearly this would be brand suicide or, brandicide if you will, sacrificing long-term survival for short-term growth. Levi’s should instead put an end to its brand’s dilution and concentrate its target on trend-setting members of Generation Y by positioning itself as an ultra cool brand with a social conscience. In addition to working closely with its current retail outlets to re-invigorate the brand image, Levi’s should work on growing the number of Original Levi’s Stores worldwide in order to retain as much control as possible over the positioning of the brand.
The forecasted financial results show that choosing to revitalize and refocus the brand rather than diluting and devaluing it further by selling a value brand to Wal-Mart will cost the company 50 million dollars in the first year. However, within 3 years the efforts are expected to payoff with a 330 million dollar revenue increase over 2002 vs. a 270 million dollar projected revenue loss for the Wal-Mart choice. Plus, Levi’s will be able to hit the triple bottom line by remaining socially and environmentally responsible while increasing shareholder earnings.
Situation Analysis
Strengths
• Worldwide recognition of its brand name - #1 for