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Dockers mba case study


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Dockers MBA Case Study with Recommendations to EVP John Goodman for revitalizing the Dockers brand

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Dockers mba case study

  1. 1. Charles Laffiteau
  2. 2. 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
  3. 3. Situation Analysis Extent of Demand 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
  4. 4. Situation Analysis Extent of Demand (cont’d) Size of Market and Growth Potential 36.8 47.5 Market Population (Men age 25 to 49 - in Millions) 52.5 48.7 49.7 52.9 60 50 40 30 20 10 0 1980 1990 2000* 2010* 2020* 2030* Population in Millions Year * Projected numbers for 2000 - 2030
  5. 5. Situation Analysis 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.
  6. 6. Situation Analysis II. Extent of Demand (cont’d) Dockers Dockers 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
  7. 7. Situation Analysis Nature of Competition Competition  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
  8. 8. 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.
  9. 9. Situation Analysis Marketing Timeline & Life Cycle • Brand Awareness • Differentiation New Casuals 1986- 1993 • Market Penetration • Brand Extension Nice Pants 1994- 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
  10. 10. 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
  11. 11. Situation Analysis Cost Structure of Dockers Year Product Price 1985 Original Dockers $32 2001 Dockers Thermal Adapt Khaki $60 2004 Dockers Perspiration Guard Shirt $50 2010 Original Dockers $34 - $50
  12. 12. Situation Analysis Skills of the Firm Marketing 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.
  13. 13. 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
  14. 14. • Sales Support • Point-of-Sale • Advertising • Networking • Department stores & chains • Dockers Shops • E- Commerce Situation Analysis Marketing Mix • Moderate to upper moderate pricing • Dockers Premium • “New Casuals” • Brand elements • Advanced Innovation Team • Licensing Product Price Place Promotion
  15. 15. Case Study Questions
  16. 16. 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.
  17. 17. Case Study Questions 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
  18. 18. Case Study Questions 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”
  19. 19. Case Study Questions 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”
  20. 20. Case Study Questions 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
  21. 21. Case Study Questions 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.
  22. 22. Case Study Questions 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.
  23. 23. Case Study Questions 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.
  24. 24. Case Study Questions 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.
  25. 25. Case Study Questions 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 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.
  26. 26. Case Study Questions 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
  27. 27. References  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 8aaffeb014c13a17b6f2ca4fb5cec
  28. 28. Charles Laffiteau