Dockers mba case study

Charles Laffiteau

Nature of Consumer Demand

Who & When What Where Why & How

In 1849 Levi Strauss created first pair of “jeans” for gold miners. Today, the company tries to appeal to all customers. They make clothes for men, women, teens and children.

What started out as a jeans company, grew into a large corporation that now offers shorts, shirts, T-shirts, slacks, jackets and belts. The three main brands are Levi’s, Dockers and Signature by Levi Strauss & Co.

Levi’s stores are now located in the US, Europe, Latin America, Asia Pacific and Canada. Dockers stores are in Canada, the US, Europe and Latin America. Signature brand is sold in the US, Japan and Canada. Products are now also available online.

The world’s first pair of jeans was a great success so the company started diversifying in the 1970’s.

The 1990’s “501 Reasons” campaign was created to reach young men ages 15 to 19.

Situation Analysis

Size of Market and Growth Potential In the early 1980s, the casual pants market represented tremendous

opportunity

Overall, slacks as a percentage of bottoms sales (jeans plus slacks) grew from 33% in 1981 to 40% in 1985. Between summer of 1985 and summer of 1986 alone, slacks sales grew by 20%

In 1991, 40% (approximately 20M) of consumers in the target market (men ages 25 to 49) owned at least one pair of Dockers with the average customer owning over two pair

By 1999, 75% (approximately 40M) of American men owned a pair of Dockers with the average customer owning close to four pair

Situation Analysis

Extent of Demand

Extent of Demand (cont’d)

Size of Market and Growth Potential

Situation Analysis

1980 1990 2000* 2010* 2020* 2030*0

10

20

30

40

50

60

36.8

47.5

52.548.7 49.7

52.9

Market Population(Men age 25 to 49 - in Millions)

Year

Popu

latio

n in

Mill

ions

* Projected numbers for 2000 - 2030

II. Extent of Demand (cont’d)

Market Analysis

Baby Boomers, in general, see themselves as different from their parents. They have a driving need to be active, involved, fashionable and comfortable.

In 1999, Levi’s observed that this segment wanted their clothes to be a break from tradition; and fashion was more important for them compared to previous generations.

In the late 1990s, many companies were relaxing the office dress code allowing for more casual attire. The male Baby Boomer needed a pant that combined versatility and comfort appropriate for work and leisure.

Pants available to consumers at that time were on the main floor in department stores in “Better Sportswear” and priced at $60 to $80 per pair. Dockers were merchandised to be more accessible to the target market with a moderate price range averaging $32 per pair.

Situation Analysis

II. Extent of Demand (cont’d)

DockersDockers were designed to appeal to the fashion demands of Baby Boomers Casual and comfortable, yet stylish Positioned as more formal than jeans but less casual than dress slacks Preference for more natural fibers (impetus for move to 100% cotton) Right pant for a variety of occasions

Situation Analysis

Nature of CompetitionCompetition Haggar, Farah, Bugle Boy—target Baby Boomers Gap, Polo, Tommy Hilfiger, Abercrombie and Fitch, American Eagle—target younger

generations

Which brands are successful and why? Haggar and Farah In 1980s, introduced wrinkle-free pants that looked like Dockers but did not have to

be ironed due to a new wrinkle-eliminating treatment in the fabric The concept allowed these companies to gain a significant competitive advantage

over Levi’s. Haggar in particular held 73% of the market share Levi’s was losing customers and failing to attract new ones. They had to change

strategy and adopt the new wrinkle-free trend to stay competitive

Is competitive retaliation anticipated? Innovation and a forward looking strategy are indispensable for staying competitive

in this market As Levi’s added new products through innovation, the competition retaliated with

similar innovations of their own, which is also expected going forward

Situation Analysis

Environmental & Social Climate The business casual trend which first appeared in the 1980s has

since grown to encompass 70% or more of the workforce. The trend also evolved and changed when the Baby Boomer

generation began to give way to later generations (X and Y). Gen X and Y workers regard business casual as outdated and prefer

an even more casual dress approach such as wearing jeans to work. But ‘new’ male role models and expectations of behavior have also

emerged, thus providing Dockers an opportunity to reposition khaki pants as an essential element of the ‘new’ male’s wardrobe.

Situation Analysis

Marketing Timeline & Life Cycle

• Brand Awareness

• Differentiation

New Casuals 1986-1993

• Market Penetration

• Brand Extension

Nice Pants1994-2003

• Repositioning

• Dockers 4 Wearing Occasions

Dress to Live

2005+

Growth•Highly differentiated product•Expanding market

Market Leadership

•Increased competition & imitation•Market saturation•Product development

Maturity•Declining sales•Dockers San Francisco•Less brand relevance for Non-Baby Boomers

Situation Analysis

Stage of Product Life Cycle (cont’d)

Casual Pants market Mature and declining life cycle Maturity of market and poor growth led Levi Straus to explore a sale

of Dockers in 2004 Product category has many strong competitors such as Banana

Republic, Gap, Abercrombie & Fitch as well as many private brands Popularity of jeans among younger workers pushed casual pants'

sales down 20% in 2009 In 2010, Dockers launched a national advertising campaign to

reconnect & encourage male consumers to wear khaki pants

Situation Analysis

Cost Structure of Dockers Situation Analysis

Year Product Price1985 Original Dockers $322001 Dockers Thermal Adapt Khaki $602004 Dockers Perspiration Guard Shirt $502010 Original Dockers $34 - $50

Skills of the FirmMarketing Skills “Hip” image in the 1970s to reflect new focus on diversification and

acquisition

Initial Dockers TV campaign was “reality-based advertising” using emotional appeal

Spot TV ads in target markets aired during prime time, sports, and late night programs supplemented by subway signs and mobile billboards in NYC

Dockers moved into European markets and launched the brand with pan-European advertising

Continuously modified marketing approach by adding new brands and slogans in attempting to expand, compete, and meet changing consumer demands.

Situation Analysis

Skills of the Firm (cont’d)

Additional Marketing Activities Co-op advertising; Dockers Shops; point-of-sale displays; planned sales promotions NYC Kick-off party for buying groups, trade press, and key retail executives Publicity campaign targeting “influencers” through talk show fashion presentations

and press kits Designers, merchandisers, marketing personnel, and senior management visits to

key retail accounts “Urban networking” program

R&D Skills Menswear research department studies led to development of the successful

“new casuals” Dockers Mobil Pant was named a “Best Invention of 2001” The Advanced Innovation Team researched materials and developed ways to

improve them

Situation Analysis

• “New Casuals” • Brand elements• Advanced

Innovation Team

• Licensing

• Moderate to upper moderate pricing

• Dockers Premium

• Sales Support• Point-of-Sale• Advertising• Networking

• Department stores & chains

• Dockers Shops• E- Commerce

Product Price

PromotionPlace

Marketing MixSituation Analysis

Case Study Questions

Characterize Levi’s branding strategy?

General Brand Strategy: Throughout all of Levi’s products, the main idea expressed is that the products are casual, comfortable and good for any occasion, while at the same time still very stylish.

Positive Aspect: A major positive aspect of Levi’s branding strategy is that they open themselves up to a very large target audience.

Negative Aspect: The negative aspect to Levi’s branding strategy is that with such a large target audience, it is easy to lose sight of your core strategy and products. Sometimes you just need to stick to what you know best.


Analyze Dockers’ communication strategy

At the time of the 1980s launch of Dockers, the company employed new creative methods to promote the product Dockers shops were installed in the middle of the men’s department in major

department stores Fixtures and tables were set up displaying Dockers pants similar to the way

only jeans had been displayed in past

Goal of advertising was to educate the audience and create an image for the new product reflecting the high quality of the established Levi’s jeans while also having its own autonomy

Target audience was professional men ages 24 to 49 Focus groups were used to test creative for TV ads, which used an

emotional appeal


How did the communication strategy fit with past advertising efforts and contribute to brand equity?

The communication strategy fit with the previous advertising efforts in a sense that it emphasized high quality and comfort

The launch of Dockers immediately created a strong brand. It showed consumers that LS&Co was investing money in innovation and created a new product that appealed to the target market. The creative ways that were used to launch the product allowed the company to capture over $1Billion in sales

Consumers had high levels of brand awareness and image. The brand awareness in the target market for males between ages 25 and 44 was 90%. About 40% of these males bought at least one pair of Dockers annually

Branding is about creating differences, and LS&Co was able to do that with the “New Casuals”


Characterize the Dockers brand image

Overall, the Levi’s brand was known for quality. Although moving into the pants market was different, it was a natural move for the company to meet changing consumer trends and needs

Baby Boomers had grown up with Levi’s brand and had tremendous loyalty towards it but now sought a different kind of pant

To the target market of male Baby Boomers, Dockers were known to be the alternative to jeans. They were unpretentious with a moderate price point when compared to Men’s “Better Sportswear” slacks

Younger consumers had less interest in Dockers, with many saying they were something “their fathers wore”


What makes up Dockers’ brand equity?

The image that the Levi’s brand earned from the jeans business was contributed to its slacks image. They were considered to be more contemporary, less conservative and more casual than other slacks

To start, Dockers was slower moving into natural fabrics but then became the leader in fabric trends

By 1991, Dockers was a $500 Million business and enjoyed 90% awareness in the target market


Evaluate the move to expand into other markets

Levi’s is a brand that has been associated with clothing for over one hundred years. The Dockers brand was developed to respond to changing consumer trends and needs.

It makes sense that in order to grow, Levi’s wanted to expand into other segments. However, bedding, bath and luggage are not logical extensions for the Dockers brand. After building the brand to be associated with pants, these new extensions do not resonate the same needs for the Dockers consumer.

Exploring various fabric technology and expanding into women’s and kid’s clothing is a more logical and understandable move for Dockers. These extensions relate better to the already established brand identity attached to Dockers for Ready-to-Wear apparel.


Changes in strategy

In the first decade of Dockers, the marketing strategy centered on achieving brand awareness, establishing PODs, and obtaining retailer buy-in for the “New Casuals” category.

The mid 1990s to early 2000s found Dockers using more youthful and “sexier” ad messaging, licensing outside of menswear, and research to enhance product features in order to cope with declining sales in the wake of new competition in the “Business Casual” segment.

With the election of John Goodman as brand president in 2005, Dockers rebranded itself as Dockers San Francisco and re-segmented their offerings according to Dockers’ four usage occasions: work, weekend, dress and golf.


Changes in strategy (cont’d)

After 20 years on the market, the marketing objectives changed from educating consumers about the product to updating its image and stabilizing flagging sales.

With the casual pant market in a state of maturity and decline, Dockers is not in a strong position to recapture market leadership. The brand is strategically encircled by competitors such as The Gap, Express, Banana Republic, retailer private labels, and producers like Haggar and Polo.

Furthermore, the “New Casuals” concept and Dockers product are not sufficiently differentiated or exciting to the next generation of urban male professionals ages 25 to 44.

The Dockers brand must find a way to carve out a new identity through its revised “occasion of use” segmentation strategy or relegate itself to the discount market.


Adoption of new technologies

After initially missing out on the “wrinkle-free” trend, embracing new technologies in its products, such as the Thermal Adapt Khaki and Perspiration Guard Shirt, years later was the right move for Dockers.

The success of “wrinkle-free” pants proved that consumers cared about the added benefits from new technologies.

The new technologies added to products were relevant to consumers’ needs.

Dockers was able to use its new technologically advanced products to garner publicity.


Analyze decision to stop selling Dockers directly

Levis and Dockers abandoned online retailing because the profits from e-commerce didn’t cover their costs of operating their websites.

In September 2005, Levis partnered with GSI Commerce, to launch www.levisstore.com for the Levi’s® brand and in June 2006 for Dockers.

By contracting with an experienced e-commerce firm with more than 50 other partners, Dockers online retailing business stopped losing money.


Recommendations for EVP John Goodman

Brand extensions—revitalize the brand by making it multidimensional: Transform Dockers into a lifestyle brand Focus on Dockers Four Wearing Occasions campaign Benefit from success in women’s brands

Focus on continued quality and maintaining the Dockers brand - fashionable, stylish and relevant

Build on brand identity and speed to market

Continue to lower product sourcing costs and inventory markdowns Capitalize on the momentum from the Asia Pacific success, and

develop this market Open Dockers stores to better display Dockers products,

improvements to the brand, and changes adopted by the company


Day, Jennifer Cheeseman, Population Projections of the United States by Age, Sex, Race, and Hispanic Origin: 1995 to 2050, U.S. Bureau of the Census, Current Population Reports, P25-1130, U.S. Government Printing Office, Washington, DC, 1996

Hobbs, Frank and Nicole Stoops, U.S. Census Bureau, Census 2000 Special Reports, Series CENSR-4, Demographic Trends in the 20th Century, U.S. Government Printing Office, Washington, DC, 2002

Wong, Elaine.“Dockers Brings Back Khakis” Brand Week (December 9, 2009) retrieved at http://www.adweek.com/aw/content_display/news/agency/e3i6328aaffeb014c13a17b6f2ca4fb5cec

References

Charles Laffiteau