What's driving Levi's 11% quarterly sales increase?

The U.S. jeans category has been declining for years as consumers are increasingly opting for yoga pants over denim.  Sales in 2017 were $16.2 billion, down from $18.8 billion in 2013.  And VF Corp., owner of Lee and Wrangler jeans is eyeing a sale or spin-off.  But there was one notable exception to the trend - Levi's - who saw an 8% revenue increase in its most recent fiscal year. (Mattioli & Kapner, 2018)

This week Levi's released their third quarter results and they were eye popping.  An 11% jump in sales, marking the fourth quarter in a row that the company has achieved double-digit revenue gains;  and net income soared 45% to $130 million.   (Mahoney, 2018)

So the obvious question is why?

One possibility is their  limited-edition customization studio in Los Angeles.  And then there's the Made & Crafted collection with Lily Aldridge and the Levi's X Air Jordan collaboration - both sold out within minutes.

But Levi's is crediting their activism.  Last month they made a commitment to ending gun violence with a $1 million Safer Tomorrow Fund which will provide support to a variety of nonprofits and youth activists.

The company has also joined forces with Rock the Vote for the "Voting Looks Good On Everyone" campaign.  You can look at the video here...

https://www.youtube.com/watch?v=UwbeVwZjjjE

And this week Levi's Australian division is kicking off a partnership with Support Act publicizing a 24-hour mental-health helpline for artists and music workers.  You can check out a wellness tips video here...

 

https://www.youtube.com/watch?v=xMaITVCG8iQ

Lots of good stuff.  No wonder the results have been impressive. 

So, which persuasion techniques are they making use of with each of these tactics?  Do you think different generations are responding to different ones?  Which appeals most to each?  Why?  Levi's sales appear to have been up even before these efforts began.  Any thoughts about why that might be?

Mattioli, D. & Kapner, S. (2018, August 10)  Wrangler Owner Looks to Exit Jeans Business.  wsj.com.  Retrieved October 10, 2018, from

https://www.wsj.com/articles/wrangler-owner-looks-to-exit-jeans-business-1533928407

Mahoney, S. (2018, October 10)  Levi's Credits Activism With Surging Sales.  mediapost.com.  Retrieved October 17, 2018, from

https://www.mediapost.com/publications/article/326343/levis-credits-activism-with-surging-sales.html?utm_source=newsletter&utm_medium=email&utm_content=headline&utm_campaign=111326&hashid=ybq2buULrntyGS6NfbELk0afrrI

Will Target's new Smartly brand persuade people to switch from Dollar Stores?

Target has announced that they are introducing a new in-store brand called Smartly.  The line will feature a variety of products in smaller sizes.  Think single roll of toilet paper.  And most items will sell for under $2.00. 

Their target for the line is cost-conscious Gen Z/Millennials who are either college students or starting their first job.  And they are opening smaller-format locations near college campuses. (Forbes, 2018)

Dollar stores are booming so it makes sense for Target to try to cash in.  Interestingly research shows that dollar store customers fall into two different age groups - under 24, which are the Gen Z's and Millennials and 55 - 64, which are the Baby Boomers.  So their target selection makes sense.

But, the thing about dollar stores is that they are a rip-off because they charge more on a per unit basis.  So while one roll of toilet paper does indeed cost less than the usual package of four, if you do the math you are paying more for that one roll than you would for each of the four. (Stone, 2017)

So, what's going on here?  What have we learned about consumer behavior that can explain going to the dollar store?  Do consumers realize that they are actually paying more?  If so, why would they keep going?  Do you think that Gen Z's/Millennials will switch to Target?  What about Boomers?  Do you shop at the dollar store?  Will you continue to do so?  How about Target?  Will you shop Smartly?

Forbes, T. (2018, October 8)  Target Zeros In On Budget-Conscious Millennials With Smartly.  mediapost.com.  Retrieved October 9, 2018, from https://www.mediapost.com/publications/article/326175/target-zeros-in-on-budget-conscious-millennials-wi.html

Will targeting consumers using emotions work?

Research has established that all decisions are emotional.  But the way that we select targets mostly isn't.  We look at demographics because they are easily accessible and we favor information that is easy to find.  But research suggests that demographics are only 6% predictive of purchase.  Makes sense since demographics do not capture emotions.  (Mandese, 2018)

Knowing this, marketers have added psychographics and behavioral data to their target market descriptions, but have lacked a good way to truly integrate this data into their decision-making with regard to marketing strategy and tactics.

So, I was thrilled to see a new company has been launched that focuses on these criteria, or as Emoto calls it - character.

Unfortunately the case studies on their website do not appear to be working. (Ah hum)  But they shared two examples with mediapost.  One for Hearts on Fire , a diamond jewelry maker, partnered with Experian's Simmons division to optimize an existing online campaign resulting in a 4x improvement in click-through rates.

The other example, which is perhaps more intriguing, was the identification for American Express of C-suite execs as having three key personality traits - "perspective, curiosity and love of learning."  This led them away from a traditional approach toward media selection - which would have involved golf, leisure or travel media, toward distribution of an article about the next big thing.  While results are confidential the fact that the companies are continuing to work together says everything we need to know.

On their website Emoto offers a sample test.  All you need to do is plug in a URL or text from an ad and they will give you an analysis. 

https://www.emoto.ai/

I'd like you to check it out with the ad of your choice and share your results.  Then let us know what you think.  Is this useful information?  How might the company use it to either adapt their current effort or strike out in a new direction?

Mandese, J. (2018, October 1)  Character Finds Role On Madison Avenue: Why 'Traits' Are The Next New Thing.  mediapost.com.  Retrieved September 30, 2018, from https://www.mediapost.com/publications/article/324094/character-finds-role-on-madison-avenue-why-trait.html?utm_source=newsletter&utm_medium=email&utm_content=headline&utm_campaign=111160&hashid=uqqx0UvOI-Dz9SmOVzBACoNyK8k