Debrief of Levis Video Exercise
Part 1
What is Levis overall segmentation strategy?
Why did Levis embark on this initiative
Which segments did they identify?
How were these arrived at – ie what segmentation bases were used?
Explain the role of Market research in the process
Part 2
Apply the STP approach to the video to assess the organisation’s segmentation strategy. Where did it fail?
How does the extended model help in explaining the management decisions/segmentation strategy identified??
Example of Differentiated Strategy
Utilitarian
Customer
Trendy-
Casual
Price
shopper
Classic
Independent
Mainstream
Tradition-
alist
LEVI’s
Marketing Mix 1
Marketing
Mix 2
Marketing
Mix 3
Marketing
Mix 4
Marketing
Mix 5
Debrief of Levis Video Exercise
Part 1
What is Levis overall segmentation strategy?
Why did Levis embark on this initiative
Which segments did they identify?
How were these arrived at – ie what segmentation bases were used?
Explain the role of Market research in the process
Part 2
Apply the STP approach to the video to assess the organisation’s segmentation strategy. Where did it fail?
How does the extended model help in explaining the management decisions/segmentation strategy identified??
MARKET SEGMENTATION
1. Identify the strategy and bases for segmenting the market.
Quantitative Research (2000 interviews)
All generic criteria used (Psychographic, Demographic, Geographic &Usage)
Micro segmentation driven (Psychographic/attitude to clothing)
Macro segmentation used to aid description and targeting (where they live, marital status, age etc)
2. Develop profiles of resulting segments.
Q1 to Q5.
Note that it is there attitude to shopping which is used to describe the segments (price shopper, utilitarian jeans wearer, mainstream traditionalist, ‘John Travolta’ type).
Q2 segment identified as 21% of market but 46% of the more expensive clothing, . $$$$$$$$$$
Micro Segmentation
Those segmentation bases that exist within the company or individual consumer
Student task to identify these (ref. Ch. 7 in Jobber).
These are closest too/include the benefits sought
As opposed to macro-segments, micro segments may not be determined from secondary data sources (ie are harder to find out)
Macro-Micro Segmentation: A Nesting Approach
Aluminium
Company
Beverage
Containers
Residential
Automotive
Aluminium
Mobile
Homes
Building
Components
Semifinished
Material
Large
Consumers
Small
Consumers
Medium
Consumers
MICROSEGMENTATION
Source: Derived from ., (1991), Marketing Management, 7th ed.
End-Use
Segmentation
Application
Segmentation
Size
Segmentation
MARKET TARGETING
3. Develop measures of segment attractiveness.
Size of Market = attractive; fact that Levis is already in all the other segments = limited options in segmentation terms (other growth options via brand extensions??). (See perceptual map later)
Strength of competitor brands; Versace, Armani, Dolce and Gabbana, Jaegar etc. Check out Porter’s 5 Forces model to confirm no other competition. NB Hagaar is not a competitor in the Q2 segment!!
Capability: Levis is a strong organisation but in mass clothing skills (manufacture, distribution and retail selling). NOT capable in selling smaller, high value items to exclusive retailers. Also not experienced in bespoke tailoring at point of sale.
Only big opportunities are useful when you are such a massive global business. Hence the smaller, slacks and sports coats option would have been ‘politically’ less attractive to Haas and Goldstein: their careers needed a big hit!
4. Select the target segments.
Organisational imperatives, career aspirations and corporate arrogance made the Q2 segment the obvious choice.
Generic Criteria for ‘Good’ Segments
Good segments are:-
Measurable
Substantial
Accessible
Also Use Porter’s Five Forces
The Five Forces Driving Competition
Suppliers
Potential Entrants
Substitutes
Buyers
Industry Competitors
Michael Porter, Competitive Strategy, Free Press, 1980.
Conventional Segment Attractiveness vs Internal Compatibility
PRODUCT POSITIONING
5. Develop product positioning for each target segment.
Positioning is the extent to which the Levis offering matches the needs/requirements of the Q2 segment
See following for a perceptual map and comparative positioning table
Formal
Informal
High status/price
Low Status/Price
Q2
Q1
Q5
Q3
Q4
Action Slacks/Suits
Own Label Jeans/Clothing
Levis 501s etc.
Levis Silver Label, Engineered Jeans
Tailored Classics
(Desired)
(Actual)
Hagaar
Designer Labels; Versace etc.
Positioning table
Formal
Work (Office)
Indoors
Urban
European
Sophisticated
Exclusive
Expensive
Informal
Leisure
Outdoors
Country
USA
Rugged
Mass
Cheap
Q2 Wants
Levis Means & Provides
POSITIONING ALTERNATIVES
SKODA
INTEL (Inside)
PRODUCT CLASS
Levis Suits (failed)
AUDI
TANGO/
POT NOODLES
OMEGA (Bond movies??)
VIRGIN
USER
Ford Escort
APPLICATION
L’boro
University
RAIL V CAR
BA
COMPETITION
EASYJET
EASYJET
M&S
PRICE/ QUALITY
Barclaycard
RADION
VOLVO, L’boro
University
ATRIBUTES
MEMBERSHIP
DEPOSITION
LATENT POSITION
CONSOLIDAT-ION
G. Hooley & J. Saunders,(1993), Competitive Positioning, Prentice Hall
STRATEGY
GENERIC POSITION
Four Criteria for Successful Positioning
Clear and thus Memorable
BMW : The Ultimate driving Machine
Consistency
Positioning is Strategic; It Evolves Slowly. If not it confuses consumers. Examples????
Credibility
Do consumers believe the brand is like this; Can oil companies be ‘friendly’?
Competitiveness
Is the position valued by consumers. Does another company ‘own’ this position already
Being Number 1 is a major positioning aim (ref. Ries and Trout., Positioning: The Battle for Your Mind)
PRODUCT POSITIONING
6. Develop marketing mix for each target segment
Product: Functional object = OK
Product as Brand with emotional benefits (status, self esteem etc) = weak match (ref. Perceptual map & positioning table)
Price: For Q2’s probably a bit on the cheap side
Price: For the retailers expensive for their target customers
Place: For Levis it’s perfect. They know the mass outlets/departmrent stores; their buyers, DMU’s etc., their salesforce skills/ability.
Place: Mis-match for the Q2’s who don’t tend to shop in these outlets. Moreover, the mass market nature of the department store brands also mismatch with the Q2’s needs for exclusivity and status.
Promotion: Always struggling to overcome customer resistance to the concept. It’s hard and expensive typically to change people’s attitudes, especially when well established. Consider anti-smoking campaigns. The juxtaposition of the horse and the elegant man is just a small, and relatively weak attempt at this
Video Exercise
Part 1
What is Levis overall segmentation strategy?
Why did Levis embark on this initiative
Which segments did they identify?
How were these arrived at – . what segmentation bases were used?
Explain the role of Market research in the process
Part 2
Apply the STP approach to the video to assess the organisation’s segmentation strategy. Where did it fail?
How does the extended model help in explaining the management decisions/segmentation strategy identified??,
An Extended Model of Market Segmentation
STRATEGIC SEGMENTATION
MANAGERIAL SEGMENTATION
Customer Benefits
Conventional Segmentation Bases
Marketing Mix .
Sales
Organisational Structure and Culture
Organisational Decision Making Level
Managerial
Strategic
Explicitness and Focus
Explicit External
Implicit Internal
Piercy, N. (1997), Market-Led Strategic Change, pp. 159-165
What Could Levis Have Done??
Not used the Levis Brand Name
Without a brand what value are you to the Q2 segment. Why would they pay a premium price for your product over other well established brands?
Introduced Tailored Classics with a brand name the is closer to the Q2’s position
Strauss?? But who’s heard of it
If it costs a fortune to build the new brand is the Q2 segment still attractive??
Buy Hagaar; or a designer label.
Position the Levis suits towards the Q3’s (utilitarian jeans ) and compete head to head with Hagaar
Go with slacks & sports jackets aimed at the Q2’s need for casual clothing and slowly evolve the Levi brand image
Would this still be attractive for Levis given the previous discussion
Would the attempt at ‘softening’ Levis image result in dilution of the brand in its core, jeans market??
Product Differentiation
Using the listing of ways to differentiate via the product, brainstorm ideas (5 per item) for the aluminium tray manufacturer:-
Range
Features
Performance
Conformance
Durability
Reliability
Repairability
Style
Notes
