Assignment 5: Global Marketing, Production and Logistics (Chapters 15-16)
1) A. Until the 2000’s, Levi Strauss has used as a marketing strategy the selling of products everywhere in the world, without localization or customization. For this, the company has sold their products by economics of scale, by mass producing. By that time, the people enjoyed wearing jeans without taking into account a certain fashion style; therefore Levi Strauss has achieved high sale rates. Due to the fact that by the 2000’s, there were more competitors in the field, customers started to be aware of jean’s fashion and style, their marketing strategy has not been working anymore.
B. Levi Strauss’s current marketing strategy is entirely different from the one described before the 2000’s. Levi’s have learned much about their failures in the past, therefore hey started to pay more attention on the trend changes in fashion, as well as in adapting their products to the local culture and the norms of the countries they are selling their products in. In order to fit the customer’s preferences, Levi’s have also renewed their branding in accordance with the latest fashion trends. They have launched the denizen brand to target the new and younger generation and the Dockers brand that is more market-relevant, innovative and appealing to consumers. In addition, the company also has restructured its promotion to reflect regional differences. Price and distribution have also been adapted. Pricing is now done on a market-by-market basis according to the competition in each of the markets they are activating in.
D. From this story we may learn that the best global retailers, such as Levi’s, may spend substantial time and resources in learning about the local markets they activate in. Understanding a different culture is not easy even with the best circumstances given, therefore, using a mix of expatriate and local managers may help get the business right and reach the perfect „compromise”. Another important factor is to always be prepared to operate in a niche; it could represent a great competitive advantage in the market you are activating in.
2. Maybe the firm should set up plants in several regions of the world, not in every country, this meaning that it could pursue a limited manufacturing strategy. The main reasons for choosing to adopt this strategy would be because of the moderated tariffs in the industry, the cost of building a facility is relatively modest and there is the need for only a moderately skilled work force that may be available in many low-cost locations in the world. The firm should select the location of the plants based on country factors, product factors and technology factors. The firm should find locations where moderately-skilled labor is inexpensive. In terms of technological factors, the firm is not constrained in any way by high fixed costs materials for its products; therefore it should not represent a problem. Last, but not least, the factors related to products is favoring it to locate in several locations throughout the world. As the company’s product has a low value-weight ratio, this is making it unattractive to produce its products in a specific central location and afterwards export it across the world, but rather have several locations in different regions in different parts of the world.
