Companies conducting international business face peculiar challenges pertaining global marketing depending on the area of their operation. Levi Strauss Japan (LSJ), the subsidiary of the legendary Levi Straus jeans making company of the U.S. has since 1973 been operating in Japan and has faced unique challenges and achieved significantly in the particular market place. As a company involved in global marketing, Levi Strauss maintained a premium position through pursuing strong key success factors such as localization of its operations, provision of high quality products and aggressive advertising.
The Key Success Factors (KSF) for LSJ in the Japanese Marketplace
Levi Strauss Japan key secret to success in the Japan marketplace has been localization of its operations. The manner in which the company has localized its operations can be detected in the sensitivity the company has to the needs of the Japanese customers. The company shrewdly responded to the demand for American jeans among the Japanese and the main feature of the localization of the operations can be seen in the area of modifying the originally American wear to fit Japanese preferences. There are several ways in which this modification happened. First, the company produced jeans that could fit well to the Japanese body due to differences in the physical features of the Japanese. The company could not impose American proportions since Americans are generally bigger. Appropriate localization can also be appreciated in the area of producing jeans that satisfy the psychological disposition of the Japanese. The Japanese youth who make up a substantial part of Levis customers, for instance, have high demand for American attire as they are inclined to American lifestyle. in mid 70’s American culture was greatly admired by people from all over as the country celebrated its bicentennial and this cultural affiliation stimulated preference for jeans among Japanese (Levi Strauss Japan, 365). The entrance of the company into the Japanese environment is also remarkable as a point of localization. Introduction of the company as a fully owned subsidiary in Japan gave it chance to progressively win customers locally.
The company produced high quality products for the Japanese market in keeping with the parent company strategy. The high quality boosted the image of LSJ’s jeans as luxury goods. Therefore, the high pricing of LSJ did not interfere with sales since in Japan the jeans were seen as luxury goods hence customers were willing to spend more on them. The motivators of this trend have been the demand of the population for luxury goods not withstanding the high costs since the customers are financially able. The financial ability of the Japanese and the high demand for American goods placed the company at an advantage since it could invest in improvements to its goods and still maintain its high pricing. In the long run, this enabled the company to maintain its premium position in the Japanese marketplace.
The other strategy was marketing American made jeans as well as jeans specifically made to suit the Japanese physical features and current fashion (Levi Strauss Japan, 369). Aggressive marketing was done through collaboration with supply chain players from national chain stores to specialty shops. Another success strategy was advertising to young customers which happened through intensive use of TV commercials as well as magazines for men in order to portray the jeans as cool American wear.
How Levi Strauss’s FSA’s and CSA’s Match the KSFs
Levi Strauss has been able to use its Firm Specific Advantages (FSA’s) and Country Specific Advantages (CSA’s) to come up with key success factors in the markets it operates in.
Country Specific Advantages that boosted the performance of Levi Strauss include the demand for strong material for outdoor commercial activities in the United States. Levi Strauss U.S. products captured the needs for highly durable clothing for miners and people engaged in outdoor activities. In the U.S. the firm is historically known for its ability to tap in to the demand for quality among the population. The company also exploited the economic stability of the United States to price its goods higher than competitors. American economy is particularly stable compared to other countries hence goods priced higher are likely to be purchased if they meet the demanded quality. This was later translated to the Japan market since the Asian country is also economically well off.
The firm specific advantages Levi Strauss used include its ability to produce quality products. From the outset, the company used the slogan “quality never goes out of style” and stuck to it later on. The quality of the jeans produced made them to be later regarded as a luxury items by some customers, especially in the international market. The advertising strategies of Levi Strauss U. S. were intensive and succeeded in getting the population to like its products.
Other American jeans manufacturers could emulate the example of Levi Strauss CSA and FSA though this may not be advantageous for them in the short term. Shifting operations to fit Levi Strauss’ would not be fruitful overnight since most of the competitors have almost similar prices but enjoy lesser rating in terms of customer perception. Levi Strauss has taken quite a long time to establish itself as a market leader through quality, advertising and pricing. Nonetheless, the competitors could do better by pursuing their own established strategies. For instance Big John could do well through centralizing its activities and by introducing a new antique line collection as proposed. This could work since in 1991 a similar attempt by Wrangler Japan Inc. of introducing revival jeans Vintage Wrangler into the market had been positively received (Levi Strauss Japan, 367).
Explanation of the Apparent Success of LSJ’s Advertising Campaign Stressing American Values in Japan
The success of Levi Strauss Japan in the use of American values in advertising to the Japanese customers can be explained from a globalization perspective. Generally, Japanese and American cultures differ in terms of societal and national values. For instance, individuality, a value that is esteemed by Americans is not accepted by the Japanese who like individualism within the community instead. However, beginning in 1970’s the young generation who had a lot of influence from American lifestyle were different from the past generations. They had developed strong taste for American jeans that were advertised to them by models they wished to emulate.
After internationalizing its operations, Levi Strauss moved into the sphere of global world whereby cultural exchange of values is the norm. In the case of Japan, there was great appreciation of American values such as creativity and success especially among the youth. One advert based on these American values was “Heroes Wear LEVI’S” (Levi Strauss Japan, 371). The jeans manufacturer was also quick to introduce advertising figures who best represented the American values in the Japanese context. The celebrities chosen to market the brand included: James Dean, Marylyn Monroe, and Mr. Haruo Mizuno These celebrities represented youth and later the jeans, which were associated with fashion and youth. Further, the manufacturer emphasized on slogans that impressed on originality of its jeans. Some of these slogans are “The Original Levis” and Re Origin” (Levi Strauss Japan, 371). These slogans were emphatic of the American roots and reflected Japanese liking of the same.
This development was in conformity with the general trends in globalization whereby the culture of the countries with greater might exercise influence over lesser dominant ones. This is evident in the influence of Levis Strauss International in the greater Asian region and other parts of the world. Increased acceptance of American values did not, however, mean end to the cultural identity of the Japanese as they still held on to core values that hold them together as a community.
The Pros and Cons of the Different Distribution Alternatives Facing LSJ
Levi Strauss Japan has two open distribution channels with each having its own pros and cons. The distribution alternatives are direct sales personnel and wholesale by sales agencies.
The pros of direct sales personnel are: their ability to help to increase sales to already existing buyers, establishing loyalty of customers through building long term relations, bringing in new business and winning back customers who might have been lost. They also offer the company a chance to control on how its merchandise is sold. On the flip side direct sales personnel present a disadvantage in that they are expensive for the business as they require incentives to perform their duties. Moreover, the process is not cost effective given the vast customer base as they can only deal with a single customer at a time.
Sales agencies, on the other hand, present an advantage in that they have an extensive network and they may offer compatible products which may stimulate sales. It also helps to reduce administrative overheads, helps avoid training costs, offers immediate market access, and offers highly experienced personnel. The disadvantages of sales agencies are that the manufacturer ends up remedying mistakes of other people in the supply chain, the manufacturer has no control over the affairs of agents, and the agent might not devote enough time to the company since they may be dealing with other company’s products. The agents also add the cost of the product as they act as middle men (Encyclopedia of Business, 2010).
For Levi Strauss direct sales representatives are better. Direct sales personnel have the advantage of being highly productive given the average revenue they generated in a year, for instance, in 1991 each sales personnel generated an average of $ 3.7 million (Levi Strauss Japan, 370). But on the other side they cost the company a lot in terms of salaries and other related costs. Nonetheless, direct sales are beneficial to the company since it ensured that the company gathered information relevant for improvement of its products. Japanese sales departments needed manufacturers to supply sales staff and this enabled LSJ to learn of customer preferences through its sales clerks (Levi Strauss Japan, 371).
Retaining the Premium Positioning of Levi Strauss in Japan
The prevailing market condition in Japan could be used as the basis of maintaining the premium position the company has enjoyed over the decades. In spite of the down turn of profitability, the company would be able to retain the position if it stuck to its principal slogan of quality, advertised rigorously and stepped up its localization efforts. The challenges faced by the company would nevertheless be a set back. The change from choice retail outlets that could be controlled would mean the image of the company lost some ground in its premium position through introduction of discounts and loss of control of retail prices (Levi Strauss Japan, 373). These setbacks could also be perceived as a chance to diversify operations.
To maintain the premium position some alteration would be made. For example, decrease in demand for jeans for young people due to lesser population would present a chance for specialization in clothes for adults. The market for jeans would be great among the older population who had just passed age 25. There is no indication that the inclination of people aged over 25 had changed their approach towards Levi Strauss jeans products. Moreover, in 1993, customers remained loyal to the company though on average its products were priced between 5 and 10 percent higher that those offered by competitors (Levi Strauss Japan, 371). The alternative action of reducing prices and compromising on its quality would be against the preferences of its loyal customers. There is evidence that in spite of the general outcry in the jeans business in Japan, the company was still making good progress as it was profitable and scored better than all its competitors.
Levi Strauss’s premium position in the Japanese market has been a result of adoption of strong success factors like high quality products, aggressive advertising, and establishing distribution channels among other factors. This resulted in profitability and maintenance of the company as a market leader in Japan. Competition within the Japanese market was stiff and the pricing was almost similar hence the most fit jeans manufacturer could out-compete the others. The premium position of Levi Strauss in Japan must be maintained through taking measures to boost the current high ranking position.