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Monday, April 30, 2007

Tired Brands: Levi’s

Below the comfort zone

Levi’s is, without doubt, a classic brand. Originally produced by a Bavarian immigrant in the dying years of the battle for the American West, Levi’s jeans now have an iconic significance across the globe.

Indeed, in many ways Levi’s have come to define the very essence of the word ‘brand’ better than any other product. As advertising journalist Bob Garfield has written ‘in literal terms, it’s damn near the only true brand out there, burned into a thong of leather and stitched to the waistband.’

In its September 2002 edition, the UK version of Esquire magazine heralded Levi’s as the ultimate clothing brand and a staple to the worldwide wardrobe:

The secret behind the enduring magic and success of Levi’s has been its ability to symbolise both ubiquity and uniqueness simultaneously. No other brand has managed to become part of the system (part of the President’s wardrobe, even) while retaining a defining element of rebellion, revolution and counter-culture. Levi’s are both fashion and anti-fashion. Just try to name someone you know who doesn’t own at least one pair.

However, despite its continued ubiquity the Levi’s brand has had a rocky ride in recent times, having watched sales slip from US $7.9 billion in 1996 to US $4.3 billion in 2001.

As with most brand crises, the problems for Levi’s have been numerous. To understand them fully, it is necessary to appreciate the company’s branding strategy. Levi’s CEO Robert Haas told The Financial Times in 1998 (ironically one of the most uncomfortable of years for the brand):

We are in the comfort business. I don’t just mean physical comfort. I mean we are providing psychological comfort – the feeling of security that, when you enter a room of strangers or even work colleagues, you are attired within the brand of acceptability. Although what a consumer defines as psychological comfort may vary from sub-segment to subsegment. The key phrase here is that last one, ‘from sub-segment to sub-segment’. In its attempts to be sensitive to the various fluctuations of taste among the denim-wearing public, Levi’s has diversified its brand by creating a wide range of jean styles. Most significantly, it has branched out beyond its traditional ‘red label’ jeans and introduced a new sub-brand called ‘Silvertab’. The company has also produced a cheaper range of jeans with orange tags.

Furthermore, the advertising campaign used to promote the Silvertab range in 2001 was among the most hated in recent history. Ad Age called the campaign ‘insulting’ and claimed it ‘lacked branding’. Similarly, in 2002 the ads to promote Levi’s low-rise jeans achieved an equally negative reception among certain critics.

However, not all the problems have been of Levi’s making. For instance, it could do little to curb the rise of designer jeans such as those produced by Calvin Klein, Diesel and Tommy Hilfiger. All Levi’s could do in the face of such a competition was to try and preserve the integrity of its brand. Even here, the brand ran into difficulty.

In the UK, the start of the new millennium saw Levi’s become engaged in a very public battle with Tesco’s supermarket. Tesco’s claimed that consumers were paying too much for their Levi’s and the supermarket wanted to sell Levi’s in its own stores with a narrower profit margin. Levi’s refused to sell its premium jeans, such as 501s, via the supermarket, and went to court to stop imports from outside Europe.

‘Our brand is our most important asset,’ explained Joe Middleton, Levi’s European president. ‘It’s more valuable than all the other assets on our balance sheet. It’s more valuable than our factories, our buildings, our warehouses and our inventory. We must have the right to control the destiny of that brand.’

Even the UK government joined in, attempting to persuade the European Union to allow supermarkets like Tesco’s to import goods from anywhere in the world. However, Levi’s insisted that Tesco’s was missing the point, confusing the cost of making the jeans with the cost of marketing them. ‘The important point,’ said Middleton, ‘is that all these costs are an investment in the brand. The true cost of making this jean is not just the factory element.

It’s much more than that.’ The UK government, keen to eradicate the image of ‘Rip-off Britain’ has remained on the supermarket’s side, and it looks like Levi’s will eventually lose the battle. Despite all these unfortunate external factors, there is no escaping the fact that the real threat to the Levi’s brand is generated from Levi’s itself. Now that it is locked in an endless quest to appear ‘innovative’ and ‘youthful’, by launching a growing number of new styles, Levi’s is now proving the law of diminishing returns. The marketing expense continues to grow, while the true brand value diminishes.

The view within the business world has been articulated by Kurt Barnard, publisher of Barnard’s Retail Trend Report, in The Financial Times in 2001.

‘Levi’s is basically a troubled company,’ he said. ‘Although their name is hallowed in American history, few people these days wear Levi’s jeans.’

In 2000, the company failed to make the top 75 global brands by value according to the Interbrand 2000 Brand Valuation Survey. The inclusion of rival brands such as Gap and Benetton only served to rub more salt in Levi’s wounds.

So what is the solution? Most branding experts now agree that if Levi’s is going to regain the market position it held in the 1980s and early 1990s it will need to slim down and narrow its focus. Consumers are no longer sure what the Levi’s brand stands for. Denim, yes. But what type? Straight-cut, loose fit, low rise, twisted, classic, contemporary. You name it, Levi’s covers it.

It therefore needs to cure itself of what could reasonably be called ‘Miller syndrome’. Just as Miller decided to be all beers to all people, Levi’s is doing the same with jeans. But this does not mean that Levi’s should stop launching new styles, just that it shouldn’t do so under the Levi’s name. Indeed, one of the company’s biggest successes in recent times came when it created an entirely new identity in the form of the Dockers brand, launched in 1986.

For the Levi’s brand itself, the solution, as with so many other troubled brands, may involve a recovery of its original values. Indeed, there are signs that this is already happening. In 2001, the company paid out US $46,532 for the oldest pair of the Levi’s blue jeans in existence, named the Nevada Jeans, when they were advertised on eBay. A few months later the company launched a limited edition of 500 replicas, which were sold almost as soon as they appeared in special Levi’s concept stores.

Only time will tell if this Vintage collection turns out to be a symbolic gesture of the brand’s new direction.

Lessons from Levi’s

  • Intensify, don’t multiply. Instead of accentuating its core brand values, Levi’s has confused jeans buyers with an apparently limitless array of different styles. As brand expert Al Ries has put it: ‘In the long term, expanding your brand will diminish your power and weaken your image.’
  • Focus on your strengths. If Levi’s stands for anything it stands for ‘the original jean’. In order to fully recover it will need to consolidate and strengthen this identity.
  • Don’t look down on your original brand. When Levi’s launched the Silvertab range it fell into the same trap as Coca-Cola when they launched New Coke. As branding expert and journalist Ian Cocoran has pointed out, ‘Levi’s now seems to have a real problem in convincing the consumer that ownership of the previously indomitable red label still represents sufficient kudos to command exclusivity.’

3 comments:

LovisaB said...

Great article, i'll be quoting you in a university essay if that's okay by you!

siddharth said...

Article is really nice. By the way why havent you mentioned that you have taken this from the book Brand failures by Matt Haig.

Jhon Staphen said...

there have remarkable Tired Brands Levi’s post. thanks for share with us.

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