Jeans are very often produced in economically less developed countries (LCD s). In these countries children workforce is often widely exploited. Levi+s has been the first big jeans producer to ban children workforce in its production plants all over the world.
Saving the environment has gained great importance over the last decade and is expected to keep on gaining importance although the only mentioning in the Maastricht treaty is that business has to be conducted in a way that respects the environment (article 2). Energy scarcity can cause prices to rise drastically (oil crisis) even though there is no such thing expected in the near future.
Market and Competition
According to Prudential Securities sixty per cent of the jeans market is five-to 24-years-olds. But this market segment will grow by only 0.6 % each year for the rest of the decade. The world market for Jeans is between 6.6 and 8 billion Dollar worth and (4 to 5 hundred million pairs sold annually). The growth rate over the last few years was: 1993 – 2.6%, 1994 – 2.6%, 1995 – 2.4%.
The main competitors in the market are Levi s, Wrangler, Mossimo, Girbaus, Diesel, Bugle Boy and Jordache. However, in dollar sales, Levi remains No.1. Recent competition has come up by designers such as Versace, Armani, Moschino, Joop, DKNY, Lacrois, Dolce & Gabbana, Anna Sui and Todd Oldhamm. This development shows the new consumer trend to spend more on jeans if they are well branded. Levi s just introduced the baggy style in an attempt to regain market share in the urban youth customer segment, demonstrating the importance of the urban youth market.
The majority of sales takes place in retail chains and not in jeans outlets. Mail order has a surprisingly small market importance.
To gain a view over competitors consider the charts 1,2,3 in the appendix.
The figures originate from a market research among 157 jeans companies analysed in 1994.
Internal Marketing Audit
The internal analysis of the Virgin Group is difficult because it is far less integrated than many other concerns like Daimler or Smiths Industries. Richard Branson s SBUs are unusually small and the business culture of them is quite different. But still, certain patterns can be found through the group. The group s image is unusually young. The concept of success is always similar: value for money. Since Virgin penetrates most of the times oligopolistic markets it is understandable that the company has a competitive advantage over its rivals in terms of price. Furthermore Richard Branson incorporates a very valuable branding tool. He incorporates youth, dynamic, entrepreneurial skills, sympathy, continuity and non-scandalous behaviour. This means that less money has to be spend on advertising and branding. The range of products Virgin offers includes air travel, record production and sales, vodka, softdrinks, wedding dresses, cinemas etc.- all together over 120 different companies from all sectors.
Distribution experience comes from stationary sales on the one hand and from mail order on the other hand. This indicates that the jeans could be sold either way.
Bibliography
+ Principles and Practice of Marketing ; David Jobber
+ Like a Virgin ; Anthony B. Perkins ; The Red Herring Magazine
+ New generation in Jeans? ; Pat Corwin ; Discount Merchandiser 1994
+ China to hold first competition for jeans designers ; Xinhua news agency
+ Virgin Brand Embraces Diversity; Los Angeles Times
+ Faded Blue Jeans ; Financial World
+ Winner and still champion; five pocket jeans; Discount Merchandiser 1995
+ Fast-moving jeans and activewear; Dicount Merchandiser 1993
+ Tailoring the plus-size mix; Discount Merchandiser; Discount Merchandiser 1993
+ Another win for retro; American Marketing Association 1996
+ Levi`s Lets Loose with New Line; The Times Mirror Company1996
+ Designer invasion; The Europe Magazine
Contributors
+ London chamber of commerce and industry