The  Great  Western  Garment  Co.  

 

   

 

History  in  the  Making    

   

   

Marketing  Management  IMGT  8571  Professor  Ronald  Schill  

Monterey  Institute  of  International  Studies    

     

 May  2,  2011  

Melissa  Summers,  Nicholas  Taylor,  Xianggan  Gao,  Yi  Lu,  Larisa  Makshanova    

 

 

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I.    Executive  Summary   Levi Strauss is debating whether they should take back their Great Western Garment (GWG) brand from the licensee and sell the brand themselves. In order to provide a definite recommendation we needed to do in-depth research in order to answer several questions that were on the minds of those involved. What value would Levi Strauss gain from revitalizing and selling the GWG brand themselves as compared to continuing to license it. What is the target market and what would be needed in order to revitalize the brand image. Lastly, who are the competitors in this market and how does this affect the GWG brand. With these questions answered, we explore several possible options that are available to Levi Strauss before coming to our final recommendation. We have decided to recommend that Levi Strauss try to license the GWG brand to another company for a trail period. Upon the completion of the trial period, should the GWG brand not have gained any market share, Levi Strauss should sell the GWG brand and all its assets.  II.    Problem  Definition   Given the poor image of Levi Strauss’ Great Western Garment brand, their low market share, the large number of competitors in the market and the trend towards more fashionable jeans, should Levi Strauss take the GWG brand from the licensee and sell the product themselves? Levi Strauss is currently considering the possibility producing and marketing GWG jeans themselves in response to the low profitability of the GWG brand. The decision to take the brand from their licensee will be determined based on two factors. First, is that the brand must have a decent value proposition with a high chance of market growth and profitability. Second, will the GWG brand be able to compete in the marketplace with so many competitors selling jeans. From here we will go into detail, exploring the various components that will lead to a recommendation to either let the licensee hold onto the brand or to take it back.

 III.    Decisions  to  be  Made  

• Define the value proposition • Define the target market • Analyze the competition • Explore the various options available • Offer our recommendation  

The GWG brand is now classified as a “dog” brand according to the Growth Share Matrix because it has relatively low market share coupled with a low growth rate.

 

 

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IV.    Value  Proposition   GWG offers traditional, quality, comfortable jeans that are built to last because there is history in their making. Consumers describe GWG jeans as “rough, rugged and durable with a good fit,” as well as “sturdy and well-made”. Another value that is inherent in GWG’s value proposition is their role in the history of jeans. GWG jeans are widely viewed as traditional and remembered as one of the original pioneers in the jeans industry. One consumer is quoted to have said that, “forty to fifty years ago the world of jeans was synonymous with GWG”. The GWG brand offers consumers quality jeans with workability – the original, traditional jeans. V. Target Market Levis: In the year 1873, when Levi Strauss first invested jeans, its target market was comprised merely of individuals who needed to wear durable, extra strong pants when seeking gold. Later, the market extended to workers who wanted to wear something comfortable and strong. As celebrities began wearing jeans in the 1950s, it became an everyday common garment for various target markets, ranging from manual labor to high fashion. Unfortunately, Levi's jeans have fallen out of favor with today's youth who regard Levis as their “parents’ jeans.”

a. Consumer segments and preferences

Consumers Preferences Fashion-conscious consumers

• Flare jeans

Younger hip-hop consumers • Ultra-baggy Workers • Casual wear

GWG: Opened in 1911, the Great Western Garment Company was the first jeans wear company in Canada. In 1972, GWG was a leading brand in Canada, controlling 30 percent of the market. GWG jeans are now worn mainly by men in construction, trucking, farming and similar occupations. The brand appeals to the comfort and durability needs of its customers, who are generally over the age of 35. GWG has never been positioned as a brand for females.  

 

 

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b. Consumer segments and preferences Consumers Preferences

15-to-24-year-old • Fit • Fashion relevancy • Cool • Brand image

25-45 years old, Male • Not terribly price sensitive • Wants value for money • Will not compromise on fit • Owns few pairs of jeans and wears them longer • Currently not brand loyal • Buy for themselves • Don’t shop for pleasure • Focus on fit & comfort • Will pay extra for quality

Older consumers • Relaxed • Fits for comfort • Good price

Women • Change style with fashion trend • Variety of style preferences

Men • Don’t care about brand • Don’t care about familiarity

   VI.    Competitor  Analysis    a.    Analysis  of  competitor  characteristics,  prices  and  products  

Competitor Characteristics

Levi’s

• Top brand awareness among consumers • Great varieties of jeans fits and finishes for both

men and women • Keep innovating and updating existing brand lines • Available in every kind of store • Prices generally range between $29.99 – $49.99 • Targeted at the age 15 to 24 men’s and women’s

market

VF Corp • “Western” and “country” style • Levi’s largest branded competitor • Price relatively low, ranging from $19.99 – $29.99

Private Label

• Targeted at customer ranging between certain ages (different age groups)

• Wide spread of retail stores • Strong promotional pricing strategy • High flow of potential customers

 

 

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Specialty Retailers

• Targeted at customers ranging between certain ages (different age groups)

• Price ranges from $34.99 – $49.99 • Offer a wider range of apparel products

Premium Brands

• Small market share • Substantial advertising budget • High price ranging from $69.99 to more than $100 • Highly fashionable and stylish • Limited to upscale stores

Summary: Given the fact that GWG is sold with an average price of $19.50 and with limited fits, its main competitors will be those private labels. Since GWG has little to offer in order to differentiate itself from its current competitors, it would be extremely hard for it to survive in the highly competitive retail industry. Moreover, if Levi’s decided to revive the GWG brand, it may run the risk of cannibalizing its own business which seems pretty promising at the current stage. However, there is potential in allowing GWG to grow in a specific market segment in which Levi’s does not have a large share, such as the work-clothing segment currently dominated by brands like Carhartt, and Dickies. b. Brand maps of the jeans market The brand maps below illustrate the target markets of GWG and its primary competitors. Specialty retailers are not depicted in either chart due to their tendency to cover large and diverse segments of the market.

VII.    Options  Available   a. Option 1: Keep the same license agreement with Jack Spratt Manufacturing Inc.

Advantages Disadvantages • No additional money spent from the

marketing budget of the company • Allows to concentrate on the more

• Continuing decline of the market share means that no changes in marketing will eventually lead the

   

 

 

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vital problems, i.e., the decline of the two market-leading brands (Dockers and Levi’s)

• Steady, predicted income for the next year. According to the license agreement Levi’s gets 8% on the net wholesale dollars. 2001: 220,000 units at average price $19.50 – $343,200

brand to the ground • Low profit margin and low chance

of increasing the profit margin

Summary: Low potential – given the low brand awareness and declining market share (1% in 2001) with no changes in marketing plan of GWG, the brand will eventually cease to exist. b. Option 2: Take the GWG brand back to the company

Advantages Disadvantages • Possible revitalization of the brand • Opportunities of the bigger market

share

• No guarantee of growth • High marketing expenses, which

Levi’s does not have a budget for • Necessity to find their own retailers • Threat of cannibalizing the existing

brands of the company Summary: Low potential – given the low brand awareness and declining market share (1% in 2001) with no changes in marketing plan of GWG the brand will eventually cease to exist. c. Option 3: Find a new licensee, who would be willing to improve the brand image/portfolio (Carhartt, Dickies…)

Advantages Disadvantages • Exploring all the brand’s

possibilities before giving up on finding new market opportunities for the declining, yet historic brand

• Could be potentially hard to find a licensee who would be able to take the declining brand

• No guarantee of growth • High marketing budget will be

required to revitalize the brand, licensee must have the budget

Summary: Medium potential – Finding a new licensee under agreement that they will revamp the marketing and portfolio of the brand will ensure that Levi’s explored all the options available before discarding a brand that has such a strong historic image in the mind of consumers.

 

 

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VIII.    Recommendations  GWG has a limited market share, and a fairly simplistic and traditional value proposition that leave the brand unable to match competitors in the industry who offer more modern styles, washes and fits. If GWG were to try to compete with the biggest names in the industry, it would have to undergo an overhaul, invest substantially in brand marketing and seriously vamp up its operations. An investment of this level would not be justifiable considering the minimal expected return that would result, but it would be unwise to discard the brand’s reputation out of hand. GWG jeans are remembered as an iconic symbol of the quintessential everyman’s working jeans and as a pioneer in the jeans industry. GWG brand jeans have specific qualities that are valued by consumers and the brand enjoys a long-standing reputation as one of the very first to enter the industry. While GWG currently holds a limited market share, it would be unwise to end such a traditional brand without first trying to re-invigorate sales by leveraging the current qualities enjoyed by consumers. GWG jeans are valued for their strength and durability. We would suggest re-licensing for a trial period of three years to a producer who focuses on one particular segment of the industry: work clothes. We would recommend licensing the brand to a company that would leverage its existing strengths and qualities – sturdiness and durability. We recommend re-licensing to an organization such as Carhartt’s Super Casuals or Dickies that cater to a very specific market segment that seeks out clothing with the desired characteristics of strength and durability. These garments are not designed to be stylish or modern, they are designed to be worked in and to last. Carhartt’s jeans boast features such as: 11.75-ounce denim, triple-stitched seams, bar tacks at stress points, tool pockets, a hammer loop, a ruler pocket and leg opening that fits over work boots. Dickies jeans come in styles such as “relaxed,” “carpenter,” “double knee,” and “workhorse.” Re-licensing to a company that serves this work clothing market would mean that GWG jeans would require minimal updates and changes to the styles, and would turn the qualities that make them undesirable as a fashion jean into the most highly desirable qualities sought in a work jean. However, as part of this recommendation, we insist upon the trail period of two to three years in which the brand must demonstrate substantial growth. The brand’s steady decline in recent years, and its failure to produce revenue makes further investment unjustifiable unless the brand can demonstrate potential for immediate growth. If the re-licensing of the brand within the re-focused market segment fails to generate growth within this time frame, then we will let the giant lay where it has fallen and discontinue our efforts to revive it.