SUNIL RAO MMS-MARKTING: 36

DOCKERS: CREATING A SUB-BRAND

In 1849, a poor German immigrant named Levi Strauss landed in San Francisco, California at the invitation of his brother-in-law, the owner of a dry goods business This dry goods business would later become known as Levi Strauss & Co. Strauss quickly learned that the gold miners were seeking a durable pair of pants that can withstand their rugged lifestyle. To meet their needs, Strauss designed a pair of pants from a heavy brown canvas-like materialthe world's first pair of jeans. Through the 1950s and 1960s, the company doubled sales every three to four years. By the end of the 1960s, the company's operations included jeans, cords, slacks, and sportswear for men, as well as a range of apparel for women and children. By 1975, sales had reached $1 billion, and rose to $2 billion in 1979. In the early 1980s, LS&Co. adopted a strategy to expand beyond the core jeans lines to utilize the Levi's name on non-jeans. The company introduced new product lines, covering a broad range of family clothing needs. Product lines included denim and corduroy jeans for men, women, and children; Action Suits and Tailored Classic blazers and slacks for professional men; and Active wear for sports participantsskiers, tennis players, and the general outdoors person. Counting colors, styles, and sizes, the company offered thousands of different pants, skirts, vests, shirts, blazers, shorts, and blouses even maternity jeans and jumpers. Starring in 1980, however, LS&Co. began a three-year earnings decline. Between 1980 and 1982, sales fell 10 percent and profit dropped 76 percent. Although sales and earnings rebounded in 1983 as a result of expanding retail distribution to include Sears and JCPenney, they slipped again in 1984. Many of the company's non-jeans lines struggled in the face of more established competition. Concern arose that the failure of a number of non-jeans products could adversely impact the image associated with its jeans. To meet the needs of its customers and to establish LS&Co. as the market leader, the Menswear team believed a bold strike was necessary. They decided to create a new product category"new casuals"-that would position the new pants to men as more formal than jeans and less casual than dress slacks. To LS&Co."New casuals" satisfied an unfilled need in the men's pants market. The team liked the Dockers name because although it did have some nautical connotations, for the most part it was considered a neutral empty basket that the company could fill with imagery that was relevant to its broad target audience. In an effort to establish its Dockers new casuals line, LS&Co. concentrated distribution in department stores and chains where the majority of 25-49 year old men did their shopping and where one-third of all slacks were sold. The company worked closely with retailers, from JCPenney to Bloomingdale's, to generate excitement and support for its new pants. In order to establish Levi's Dockers as a major brand in men's casual sportswear, a focused and comprehensive consumer marketing effort beyond the available resources of the Menswear Division would be required. By 1991, Dockers was a $500 million business and enjoyed 90 percent awareness in the target market of men between 25 and 44 years of age. From this group, 40 percent owned at least one pair of Dockers. The average Dockers customer owned 2.5 pairs of the pants LS&Co. also encountered a challenge to its market dominance in 1993. Companies like Haggar and Farah developed "wrinkle-free" cotton pants that looked like the standard Dockers khaki pant but contained a special fabric treatment that eliminated the need for ironing. A first step in the domestic revival of Dockers was to catch up to the wrinkle-free trend, which LS&Co. did by launching wrinkle-free Dockers in November 1994. The launch was supported by a $40 million advertising campaign that began in April. In addition to a new tagline"Don't just get dressed. Get Dockers"the campaign included four humorous television spots and a retail promotion linked with the U.S. Open golf tournament. Office workers in the late 1980s witnessed the widespread acceptance of

"casual Friday" by the corporate world. In the latter half of the decade, many companies relaxed their dress codes even further by instituting a "business casual" standard for the whole week. Just as Levi's Dockers capitalized on the surge in popularity of informal casual wear for Fridays and weekends, the company positioned its new Slates brand to capture what it predicted would be an expanding office casual market. As khakis climbed in popularity, so too did Dockers competitors. Khakis had been attracting a following in the youth market, and more youth-oriented brands such as the Gap, Polo, and Tommy Hilfiger appealed to teens and twenty some things in a way Dockers, with its history of targeting aging baby boomers, could not. Research revealed that the young generation of khaki buyers was inclined to think of Dockers as pants that belonged in their fathers' closets. Companies like the Gap, with its $20 million ad campaign for its Gap Khakis, began massive marketing efforts to attract these younger buyers. After achieving record sales in 1996 of $7.1 billion, the company experienced a sales slide and a market share drop for each of the next four years, a period in which the overall jeans market grew four percent annually. In September 1999 when Robert Haas announced that he would leave his role as CEO. LS&Co hired Phillip Marineau from PepsiCo to revive the company; Haas stayed on as Chairman of the Board. One month later, the company suffered another blow when Moody's Investors Service cut its rating on the company's $2.3 billion debt to junk status (this large amount of debt was incurred in 1996 when the company bought back close to one-third of its stock from family and employees). Contributing to the company's woes was the fact that LS&Co. did not enjoy the same success with e-commerce that many other firms did. The company operated the commercial site for 15 months, but it never turned a profit. Customers at the site typically spent between $56 and $120, but these revenues could not offset the costs of operating the site and delivering the products. The e-commerce features of the company's websites were ultimately removed in January 2000. In 2001, Levi Strauss introduced the Dockers Mobile Pant, a pair of fashion-forward Dockers that featured additional pockets for technological gadgets. The Mobile Pant was a high-volume seller for Dockers in 2001 and named a "Best Invention of 2001" by Time magazine. Though still a billion-dollar brand, Dockers sales in 2001 were hovering near the mark set in 1993. The company reached a low point in May of 2004 when it announced that it was looking to sell off the Dockers brand. Some analysts estimated that LS&Co. could get close to $1.5 billion by selling Dockers. The company spent five months reviewing offers, and in October decided not to sell the brand. Following these disappointing results for Dockers, LS&Co. made a number of moves to try and revive the flagging brand. In May 2005, the company installed John Goodman, who was Kmart's chief apparel officer, as the new president of the Dockers brand. Soon after, Dockers introduced a new tagline, "Dress to Live" that replaced the long-standing "Nice Pants." The new tagline was designed to expand the brand's positioning beyond casual slacks to a "head-to-toe lifestyle brand." Whereas "Nice Pants" only reinforced the brand's traditional product set, the new slogan encompassed Dockers recently expanded range of product lines, which research had indicated consumers were not aware of. In the years since the introduction of Dockers, the brand had experienced varying degrees of success. While the Levi's and Levi Strauss Signature brands helped the company back to profitability in 2004, the Dockers brand had experienced a significant drop in sales that year. Even with all the material and product innovation that Dockers contributed in the early 2000s, sales had been well off their peak, and analysts wondered if new styles would be enough to reinvigorate the brand in the coming years. In spite of these difficulties, Dockers continued to innovate.