3. 1.
The main problem we at Levi Strauss Canada (LSC) are facing is that our GWG
brand is underdeveloped. The significance of this problem is that the GWG brand
is in the declining stage of the product life cycle. Therefore, it is significant to our
investors due to the financial risk associated with the decision to revive an
existing brand.
2.
Julie Klee, Director of Marketing, along with the marketing team at LSC need to
decide whether to renew the licence agreement with Jack Spratt or go with
another alternative and try to revitalize and reposition this dying brand. This issue
is also due to the lack of any marketing strategy for the GWG brand.
3.
Our year-end falls in February which means we need to have a decision ready by
May. This problem is very urgent due to the major impact it will have on Jack
Spratt, and LSC. Making an informed and well thought out choice will be the
deciding factor of whether GWG will see a re-emergence into the jean market.
4. Brand Equity
• This concept refers to the added value endowed to goods and
services (Kotler, Keller, Sivaramakrishnan, & Cunningham,
2013).
• Brand equity takes into account how a consumer feels and
thinks about the brand, as well as its price, market share, and
profit in which the specific brand, like GWG, commands.
• GWG has low brand equity as most people do not associate
with the brand.
• LSC on the other hand holds a much higher brand equity, this
is also clear after our qualitative consumer analysis.
• High brand equity can enable companies to charge a higher
price for products and still anticipate sales to occur.
5. •The product life cycle
refers to the change in
which a company’s
positioning and
differentiation strategy
must change as the product
and competitors change
Kotler, Keller, Sivaramakrishnan, & Cunningham, 2013.
•The GWG brand has now
reached the decline stage
and is no longer considered
a viable brand through the
eyes of consumers. With
lack of support from the
licensing manager this is
not a surprise.
6. Alternative #1
End the licence with Jack Spratt, revive and reposition the GWG
brand under the full control of LSC
•
•
•
We based this decision upon many factors including the
success of our current brands, Levi’s and Dockers.
Gain access to LSC’s distribution and manufacturing
capabilities.
The GWG brand is in need of a full make-over and under
this alternative LSC would be able to utilize their current
marketing experience and distribution channels to make
GWG profitable.
7. Alternative #2
Renew the licence with Jack Spratt and hire a Licensing
Manager to solely focus on the GWG brand by creating a
strategic marketing plan
• Licensing manager would be able to produce a creative and
effective marketing strategy which in turn will increase
brand awareness and revenue.
• Control over product improvement
• Cost efficiency the only cost for LSC is the manager
salary
8. Criteria
End the licence
with Jack Spratt
and reposition
GWG product
under LSC control
Renew the licence
with Jack Spratt
and hire a
Licensing Manager
solely for the GWG
brand
Product Improvement
10
9
Management
Dedication
6
10
Distribution/
Manufacturing
Capability
10
3
Cost Efficiency
8
10
Sales Growth
Potential
7
4
Total
41
36
Scale Used: where very weak = 1 and very strong = 10
9. Problem
• The GWG brand is currently underdeveloped
End contract with Jack Spratt and revive and reposition
the GWG brand under LSC control
• Bring back to the introduction stage and re-enter market
• More has access resources including employees, materials,
technology, and equipment
• Less expensive to train existing employees on one new brand
rather than hiring new employees
10. • Distribution capability is significantly greater
• LSC employees already have a working relationship with
distributors, cutting out the cost of expanding our
distribution network
• Sales growth potential is higher
• Since the GWG brand is already increasing in sales under
Jack Spratt, LSC will continue to increase the sales by
expanding into the larger international market further
growing our market share
12. Demographic:
• Blue Collar male and female, aged between 25-50 years old
• Examples include, construction worker, outdoor workers and
more.
Psychographic:
• People who value quality, comfort and functionality over
design when purchasing jean apparel.
• Hard working, manual labour workers who are used to
working in severe conditions.
13. • Focusing on quality, durability and functionality
• Showcase the jean’s for tougher weather while also offering
competitive price
– Jean that could stand up to the severe Alberta winters
• Good for rough work sites, mountain terrain, suburban area
and forestry
• Extended product line
– Extend the cuts and fits for female consumers
14. • Set price at the levels of competition to attract consumers
based on the added value of our product
• Match Wranglers price point of 29.99
• Consumers in our target market willing to pay Wranglers price
will pay same price for higher quality product
• Providing a low price for a high quality product will attract
new customers
15. • Expand the distribution channel beyond smaller mass
merchants
– Department stores
– Jeaneries
– Large Mass merchants
– Other Retail Outlets
• Leverage LSC’s existing networks and resources
16. • LSC has limited funds to allocate towards the marketing of the
GWG brand
– In-store presence and display will be a form of marketing itself
– In-store sales associates with jeans on display to encourage consumers
to try on
• Media
– Banner advertising to create awareness
– Print Media (Flyers, posters, catalogs)
– TV and Radio spots (in the future with more marketing funds)
• Target Areas
– Neighborhoods that have construction sites
– Blue collar and manual labour sites.
17. • This strategy does not apply to LSC as we are
focused on business to consumer sales.
18.
19. • Variable Cost
– Min cost to manufacture a pair of jeans is $15/unit
– Shipping Cost: $0.35/unit
– Total Cost to manufacture the number of pair of jeans estimated:
$15.35 * 244,444 = $3,752,215.40
• Fixed Cost
– Point of sales materials (2% of Revenue) = $146,666.40
– Tax Expense = [Revenue - (Product Cost + POS Material + Cost to update fits)] * 40% =
$1,349,775.28
• Total Expense
– Total Expense = Product Cost + POS Material + Cost to update fits + Tax Expense
= $5,308,657.08
– NET PROFIT = $2,204,662.92
• Assumption
– No other expenses are incurred, and no return or discounts to customers
20. • We assume that the year-end for LSC is in February. As the case
states “In early February 2002, Julie Klee is considering
whether the GWG brand should be taken back from the
licensee” which by the end of the next quarter would be May.
• We assume that LSC is still one of the world’s largest jean
manufacturers
• We assume that Jack Spratt operates and distributes its product
just in Canada
• We assume that the sales growth rate will stay constant
Editor's Notes
Emily
Emily
Emily
DenisMaybe he could read a direct quote from the qualitative analysis at the back
DenisProduct Life CycleConsists of 4 phases that a product goes through from release to removalIntroduction – Initial entry into the marketGrowth – Steady increase in sales and popularityMaturity – Plateau of sales and popularityDecline – Decrease in sales until final removal from the market
