Strategic Brand Marketing Case Study of Joe's Jeans in the Global Denim Market

Strategic Brand Marketing
In The Über Competitive
Global Denim Market

Case Study: “Joe’s Jeans”

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Global Brand Marketing Analysis:

I. Luxury Category & Consumer
II. Denim Market
III. Case Study: Joe’s Jeans
IV. Presentation Summary
V. Q&A + Joe’s Jeans Pictorial

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I. GLOBAL LUXURY MARKET
“21st Century Realities”

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Market Statistics
Luxury market is stronger than ever;
expected to grow to $2TN USD by 2010
Luxury fashion market represents about 5%
of total luxury market by 2010, estimated
to be $100BN USD
At current growth rate (10-15% annually),
luxury market will reach $2.4TN USD by
2012 and $3.22TN USD by 2017

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Projected Market Growths
3.5

3

2.5

2 Luxury Category
(in $ USD trillions)
1.5 Luxury Fashion
(in $ USD trillions)
1

0.5

0
2010 2012 2017

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Market Statistics - continued
Western markets (US & Europe) are less brand
loyal vs. Eastern countries; seek the “best”
US & European consumer demand a luxury
“experience” at all touch points that resonates
Eastern consumers desire “status symbols”;
flashier, ostentatious, & more iconic the better
Consumers are willing to pay any price for
“quality, service, design, & cachet”

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Luxury goods are very selectively distributed
by geography in limited quantities to control
brand image
The unattainable & exclusivity is what
consumers want, and will allocate income for
it fantasy and dream fulfillment
Consumers want an “ego-boost”; women
especially are compliment-seeking when
deciding luxury purchases

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Less than 1% of global luxury market goods
are the extremely rich
In fact, 20% of shoppers account for 80% of
revenues in upscale market; in some cities,
the ration is 10:90
Consumers want an “all things luxury haute
lifestyle” and will budget to attain and be
connected with it

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Consumers look to luxury for differentiation,
innovation, & customization to satisfy their
desire to be perceived as inventive & unique
Luxe purchases justified as “investments”
Luxury consumer is found across all ethnic,
age, cultural, socio-economic, and class
groups for both genders around the globe
The luxe life is no longer reserved just for
celebrities & the über-wealthy

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Luxury consumers are increasingly more savvy,
smarter, fickle, decisive, & product educated
90% of them come from middle class, not trust fund
families; common denominator is psychographics
In the usual “serious” luxury categories, the rare
quotients of “pleasure” embedded in branding &
marketing can lure and retain consumers greater
sales & profitability
Don’t confuse “fun” with “fads”; luxury consumer
expects consistent, consummate execution in all
areas (product quality, service, overall value,
customer relationships)
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Market Statistics - continued:
Today’s luxury is tomorrow’s necessity;
markets are always in motion &
becoming more luxurious
Vital to remain fresh, current in luxe
category; amplify & inflate qualities
Remain stagnant & constant, you will
become obsolete, left behind, forgotten

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Number of global millionaires & wealthy elite
continue to increase, with an expected rate of
7% in the next 3-5 years
According to the 2005 U.S. census, 15.1
million HH earned $100K+ USD; analysts
estimate 24.6 million HH for 2007
Increasing number empty nest, baby
boomers households w/ discretionary monies
Prevalence of aging singles; postponement
of marriage & children

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Market Statistics – continued
Emerging markets (Asia, India, Russia,
Australia, & Middle East) are expected to have
the fastest gains in demand for luxury goods,
with China dominating the lead with estimates
of a 10-fold rise over the next 5 years
Demand for luxury grows despite economic
concerns (downturns) & political uncertainties
on a global scale

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II. DENIM MARKET
“The Facts”

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Denim Facts
$49 billion USD industry worldwide
according to 2004 figures, estimated to
increase by 8.9% over the next 7 years

Projected retail market value by 2014?
$52.2 billion USD

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Denim Facts – continued
Worldwide phenomenon worn by both
sexes of all ages across all cultures and
socio-economic demographics

Redefined as a wardrobe staple &
fashion statement; readily acceptable at
the workplace, evening functions, special
events, & assorted “dressy” occasions

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High profit, low-overhead, easy-entry
industry with literally hundreds of brands
in the global marketplace
Youth-driven business, largely tweens,
teens, and 20-year olds
Professional & middle-age audiences
are responding rapidly to new lifestyle

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Denim can be divided into 3 buyer
categories from POV of today’s savvy
consumer:
Utilitarian (eg. workmen's uniform)
Wardrobe staple (eg. khakis, cargo, camo)
Luxury statement (eg. haute couture,
designer RTW, haute lifestyle)

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Denim Facts - continued
Graphically, the denim market is
divided as follows:

Mass
Midrange
Premium

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Premium denim (defined as jeans with prices of
at least $70 USD wholesale) is fueling the
denim & cotton categories; quality, fit, styling
keeps improving drives the market

With exponential growth in popularity (hence,
sales) each year, denim is the new “blue chip”
stock of the 21st century with no signs of market
slow down or decline

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Premium denim sub-category has
ballooned from $14 billion USD in 2004
to $15.8 billion USD in 2006
Since the launch of the modern premium
jean category in 2000, worldwide denim
sales has steadily climbed to 3.5% in
2004, and is predicted to reflect double
that ratio by year’s end 2007

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Though only accountable for a tiny
fraction of denim sales worldwide,
premium denim has ushered in the most
significant fashion movement in history
Economic forecasters predict longevity
of this specialty market, entrenched in
today’s lifestyle-oriented consumer

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So what of the “Denim Bubble” theory??
Competitive shake-up already evidenced
Continuous stream of new brands vying for
market share, status, influence, retail space
Lifespan of a premium denim brand is short
lived for the vast majority due to over-
whelming market saturation
Increasingly challenging to “sell” to the
modern, intelligent consumer

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Revolution to Evolution: No longer
regarded simply as a textile, denim
manufacturers continue to push the
envelope on technological innovations,
usages, & applications
Premium jeans have defiantly conquered
the khaki, cargo, black pant, & legging →
quintessential wardrobe extension of
today’s style conscious global society

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The capsule history of the premium
denim market has aggressively evolved
from “product & category defining” to
“brand & lifestyle positioning”
Establishment of a new apparel genre
Defining usage (the “5 W’s”)
Convergence on differentiation & niche
strategies

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Decide & commit:
Mass market (high volume @ discount)
Midrange (mid-volume @ select price points)
Premium (low volume @ luxury price points)
Resources & competitive advantages
Honest analysis of capital, distribution, talent,
technology, market savvy, forecasting, exec
management, timeliness, & commitment

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So, you think you’re ready for the major
leagues??
Let’s take a step-step study of how one
aspiring designer defied the odds to
launch a successful premium denim
brand – its humble beginnings as a LA
cult favorite to international acclaim

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III. Case Study:
“Joe’s Jeans”

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Joe’s Jeans: Brief History
L.A. denim brand founded in 2000 by
Joe Dahan
Launched first collection of women’s
premium denim in S/S 2001 @ Magic
Original inspiration: edgy, rocker chick
Market strategy: “push effort” via
independent sales showrooms

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Early competition: 7, Citizens, Blue Cult,
Habitual, & Paper Denim & Cloth
Distribution focus: specialty retailers and
key influential department stores
Pricing: competitive
Sales points: sexy, edgy alternative

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Early challenges:
Brand identity
Niche market
Differentiation
Capital
Exposure

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Early efforts to meet challenges:
Creative
Press
Advertising
Promotion
Sales “push-thru” strategy

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Early stumbling blocks:
Rapid market saturation
Slow or incapable of responding to fast
changing dynamics of industry
Entrenched media darlings
Distribution limitations
Slumping sales; poor sell-thru results
Inconsistencies
Lack of marketing or branding direction

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Inept corporate structure & culture:
Lack of strong management & leadership
Understaffed, underdeveloped departments
Vague areas of responsibility, duty &
accountability; poor communications
Lack of team & departmental cooperation
Overall dysfunction & unpreparedness

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Solution …
Reinvent
Relaunch & Revitalize
Restructure
Redefine
Regroup
Reallocate resources

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Close inspection of competition
Highly identifiable product
Quality construction & details
Consistencies
Performance
Brand & consumer focused
Emphasis on “pull strategy”

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“Man in the mirror”
Retail & buyer feedback
Consumer thoughts
Media POV
Product review
Company organization

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“Do or die”
Retract outsourcing of creative & press efforts
Focus on consumer needs & wants
Product redesign
Develop market strategy
Branding seminars & handbook guidelines

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Sound marketing directive:
Initiate “pull strategy”
Create awareness
Consumer orientation
Hone inconsistencies
Media outreach
Think outside the box

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“Judgment day”
Spring 2004 marked the re-launch of the
women’s premium collection @ Magic
Introduction of new & differentiated product
based on fits (first in industry to hedge on
this strategy)
Cohesive message established
New moniker “JOE’S”

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“Forest from the trees”
Brand emphasis
New category possibilities
Lessons from RTW & luxury empires
Designer lifestyle vs. apparel garment focus
Redefining; avoid commodization
Engage target consumers

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“Back to the basics”
Acquire media placement
Forge alliances with the trade
Create awareness
Connect with the consumer
Build celebrity & VIP following

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“Clean up your act”
Damage control
Restore relations & acquire new ones
New & positive attitude
Accommodation & availability (“service!!”)
Explore grass roots efforts in conjunction with
big ticket expenditures (“mix & match”)

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Joe’s Jeans: Milestones
“Dawn of a new era”
Media blitz
L.A. Fashion Week runway show
Publicity!!
Strategic collaborations
Strong, edited core designs
Promotions
Charitable causes

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Strong product foundation for growth
Calculated line expansion
• From 6 Fits in 2004 to 8 Fits in 2005
• Introduction of capsule sportswear group
Exploration of product expansion
• Men’s collection
• “Gold Label” limited edition
• International distribution (Japan & Europe)

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Revisit the competition
Top brands: True Religion, AG, Chip &
Pepper, Earnest Sewn, Rock & Republic,
Hudson, Paige Premium, Rogan
Embrace the trends
Distressed to clean; plain to
embellished; bootcut to skinny;
exploration of proportions

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Qualify & quantify success of the newly
installed “pull strategy:”
Increased sales volume?
Expanded distribution?
Customer loyalty?
Celebrity following?
Brand & product recognition?
Interests from foreign markets?
Merchandising effect?
Consistent across all customer touch points?

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Strong brand foundation for growth
Women’s RTW
Kids expansion
Handbags & other accessories
Flagship stores & retail outlets
In-store vendor boutique R/E
Licensing opportunities
Lifestyle orientation build customer base

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Reaffirm brand image against newcomers:
J Brand, Siwwy, Kasil, Rich & Skinny, …
Innovate: colored jeans, new denim shapes,
luxe hardware, custom handwork, classic
bejeweled, coated denim, multihued dyes
Low-rise to mid and high; skinny to flared
and wide; 5-pocket basics to trouser styles

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Recap: Luxurious Future
Premium (or luxury) products and
services require more sophisticated
marketing & branding approaches vs.
mass or midrange categories
“Push strategy” cannot be the long-
term focus of a business; the most
successful companies create a “need”
that the customer finds it “wants”

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Entry into the luxury industry or category
requires exhaustive planning and
cohesive marketing & branding plans
Company + designer + brand + products
must all align as a parallel entity though
distinctively separate
Customer is king in the luxury kingdom

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Fostering of trade relations is vital to success &
longevity of any business
No amount of advertising can compete with
third party validations & word of mouth
Realize proactivity in thought & action vs.
reactivity to market changes
Innovate, anticipate trends, set the pace,
become an industry leader
Be a stylemaker vs. uninspired follower

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Quality is in the details
Modern consumer is brand “emotion” oriented
vs. product “category” focus
Strive for perfection to maintain advantage in
today’s overly competitive global marketplace
Renew, refresh, revitalize, reinvent your
“company” continuously evolve or become
extinct, unnecessary, irrelevant

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Strategy must be well planned &
executed to take advantage of
quintessential momentum & synergies
Attune to cultural & socio-political
movements (eg. eco-friendly,
philanthropy, global harmony)

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Apply similar methodology to internal corporate
functioning; departmental collaborations, foster
team involvement, establish strong & effective
management
Empower employees to view their jobs as
careers & vital roles in the success of the
company; build team with premium salaries,
benefits, & incentives; employees & outside
agents must be regarded as strategic partners

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Strong, well-defined brand messages;
emotionally stimulate & engage consumer
Flexibility and quick responsiveness;
adapt, evolve, embrace market change
Stay true to brand’s POV - an incisive
vision, world, lifestyle consumers can
aspire and relate to

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Resources:
Trades (WWD, DNR, Sportswear Int’l)

Market Researchers (Boston Consulting, Brand
Keys, Donegar Group, Luxury Institute)

Newspapers (Fortune, Entrepreneur, Business
Week, WSJ, The New York Times)

Government Agencies (U.S. Census Bureau)

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Strategic Brand Marketing Case Study of Joe's Jeans in the Global Denim Market

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