José Ignacio Gafo Gómez-Zamalloa

One of the biggest temptations and pressures that one Brand can receive comes from Mass Merchansiders. On the one hand they guarantee you (at least in the short term) a huge volume; on the other hand, they demand killer prices and huge discounts.

When dealing with them you have some options:

1. Stop dealing with them
2. Dropping prices significantly
3. Launching a second brand for them
4. Producing private labelled products for them
5. Lauching a new sub-brand specially designed for them, while keeping for these products your main brand (e.g. XXX by HP).

I could write a book about the different possibilities and their outcomes, but I will focus on the last one. Which is exactly what LEVI´S did in Spain with AUCHAN in Spain: They decided to launch a line of low cost line of jeans specially designed for them under the LEVI´S brand.

The result? After some time trying to push the sales of LEVI´S at Auchan, they have decided to drop the line. Main reasons seem to be:

1. They have damaged the perceived value of the LEVI´S Brand.
2. They sales have not been as good as expected.
3. Last but not least, they have created a huge channel conflict and the rest of the channels have pushed them to stop selling their products at Auchan.

Sure it is easy to analyze things after they have happened. What LEVI¨S actually did was to emulate what was a success with Walmart in the USA. However, there are some market conditions in America (such as the acceptance of sub-brands and the weight that this retailer has) that were not present in Spain.

If I have to give a quick tip, I would suggest two things:

1. Analyze carefully the market conditions when emulating a case study from other country.
2. Branding is very closely related to perception. Take into account how those perceptions are formed and be coherent with your positioning.

Comments and other experiences are very welcome.

Best.

Ignacio Gafo

Posted on 19 June 2007 in Branding, International Marketing, Trade Marketing & Retailing

Comments

Posted by: Chirag at June 27, 2007 10:03 AM

Posted by: jose ignacio gafo at June 27, 2007 06:37 PM

Posted by: Nestor Dario Ahuad at June 6, 2008 05:08 PM

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