Products and technologies have lifecycles, but brands are supposed to possess the secret of eternal life. So when a brand starts committing ritual suicide, it’s quite a spectacle.
Never mind the legal niceties: not even the lawyers understand them. The battle between Tesco and Levi’s over grey imports is one of brand strategies versus philosophies. And on this one, Levi’s has got it terribly, terribly wrong. If it doesn’t watch out, it will soon become a case study of a company that became so mesmerised by the love of its own brand that it lost touch with reality.
It all hinges on Levi’s attempt to position itself as a premium brand. Problem number one: this is a company whose underlying economics are driven by mass production. And bolting premium brand and marketing strategies on top of mass-market economics inevitably creates conflicts, for example, between the necessity to chase volume and to maintain margins.
Problem number two: in other countries, such as Levi’s homeland the US, the brand has long been recognised as an ordinary, everyday brand. It may attempt to be sexy and fashionable. It may succeed (sometimes). But it’s still clothing for the working man – with prices to match. It was one of Levi’s great marketing successes that “everybody” had a pair.
So when, for reasons of its own, Levi’s decides to position the brand differently in Europe, particularly the UK, the inconsistency is going to show. Nowadays ordinary people travel to the US a lot. They notice stuff. Including the price differentials associated with these two strategies.
Grey imports are simply a symptom of such inconsistencies. They are a sign that stock is lying around in warehouses, unsold. Or that a company’s pricing strategy in one country is out of kilter with its strategy in another. Levi’s might like to think that it’s being sophisticated and playing each market according to its local conditions. But there are other sophisticated operators out there – such as importers backed by Tesco – which know how to play these markets in other ways. Brand inconsistency and price inconsistency go hand in hand.
Enter problem number three: Levi’s determination to position itself as a premium brand despite this history and context. So how do you become a premium brand? The answer, according to Levi’s, seems very simple. By act of will – or “marketing”. The mantra must be: “We are a premium brand because we say we are, and because we have all the trappings of premium brands such as restrictive distribution.”
The trouble is, what comes across is very different indeed: an extreme case of brand narcissism. Levi’s is a company that’s become too obsessed by its brand – its brand values, its brand’s status and positioning, the value of its brand, what it needs to do to “build the brand”. Such is its obsession, that Levi’s seems to forget that it’s the brand’s job to add value for consumers, not for consumers to add value to the brand. Levi’s has not really focused on consumers at all. It’s completely mesmerised by the needs and strategic priorities of its brand.
The attempt to enforce restrictive distribution is a good example. Levi’s tells us this is to ensure consumers get quality advice and service. Even if this isn’t a cynical smokescreen – an excuse to charge rip-off prices – it’s still not a very consumer-friendly stance. The underlying attitude is “nanny knows best”. Consumers will have (and pay for) quality advice and service whether they want it or not. And if there’s a potential conflict between protecting the value and values of its brand and giving consumers what they want – such as choice between different types of outlet – the needs of the brand come before those of consumers. After all, letting consumers have a choice might compromise the brand’s positioning.
If you had a brand with a different history, such a stance may have some credibility. But, in the case of a brand such as Levi’s, it smacks of hot air. Levi’s is not Versace.
And in conflict with a brand strategy such as that of Tesco, it’s doubly questionable. Tesco hasn’t forgotten that brands are successful when they are vehicles of value for consumers and it’s pushing the boundaries of this particular envelope as hard as it can. Increasingly, Tesco is positioning itself as the consumers’ sourcing agent, scouring the world on behalf of its customers to find the best possible value. And when faced with a choice between a brand which is on the consumers’ side, and one that is putting on airs of superiority, guess which one usually wins?
In that context, the legal battle between Tesco and Levi’s is crazy. Even if Levi’s lawyers are 100 per cent right on the legal details, they’re 100 per cent wrong marketing-wise. It’s difficult to imagine an initiative better designed to focus the public on messages which are completely “off brand” for Levi’s and completely “on brand” for Tesco. The focus is entirely on price and not at all on Levi’s brand values. It’s all about “rip-off brands” not about superior brand experiences. A perfect marketing campaign for Tesco, in other words. All free. And the irony of it all is, created by Levi’s, to completely undermine all of Levi’s other marketing activities. What a shambles!
That doesn’t necessarily mean that Tesco comes out smelling of roses. Many a marketer must be spitting blood at what they see as rank hypocrisy on the part of Tesco: pretending to be the people’s champion when in reality it is grabbing a slice of another brand’s margins.
But in a sense that’s irrelevant. Tesco has exposed the flaws in Levi’s marketing strategy, and the longer Levi’s refuses to accept this, the greater the damage. It’s time for Levi’s to stop putting on airs and to accept that you can be a mass-market brand, and still be cool, fashionable and sexy. Be true to your roots, and to the consumer. If you are, you may be surprised at the response.
Alan Mitchell’s book Right Side Up: Build Brands in the Age of the Organised Consumer is available from Harper Collins Publishers, at the special price of &£16.99 (rrp &£19.99) including postage and packaging. Telephone 0870 900 2050 and ask for department 832D