LEVI'S GLOBAL GURU SHAKES UP CULTURE: NEW SIX MEMBER TEAM EYES PRODUCT, MARKETING IDEAS THAT TRAVEL WELL

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Levi strauss & co. may seem as all-American as the San Francisco gold rush era that spawned Levi's rugged-looking blue denims, but the company is no longer provincial.

Credit Robert Holloway, Levi's first VP-global marketing. He is transforming Levi's culture with a new six-member global marketing team that is transporting ads and product ideas across borders, building Web sites, reviewing the worldwide media mix, appointing new agencies, holding benchmarking sessions with global marketers outside the apparel business and launching a global brand equity measurement tool. International business now commands half of Levi's $6.7 billion worldwide revenue. Last year, non-U.S. sales climbed 12% to $2.5 billion, surpassing domestic growth of 8.5%. Overseas profit, however, accounted for only 18% of Levi's worldwide 1995 profit of $735 million.

Levi Strauss, the world's largest apparel company, began selling outside the U.S. in the 1950s but became ambitious overseas only in the early '70s. Today, Levi's is the market leader in the U.S., Europe and in many Far East markets, selling Levi's and Dockers casual wear at more than 1,000 Levi's retail stores worldwide. No immediate international plans have been made for Slates, the men's dress slacks brand introduced in the U.S. in September.

LOCAL UNITS GAIN PERSPECTIVE

"Global marketing not only brings very powerful benefits to the brand but it is important to the bottom line," said Mr. Holloway, 38, who transferred in January to Levi's San Francisco headquarters from Brussels, where he was European marketing director across 20 countries for one year, following a promotion from European marketing manager. "What we are doing is transferring best practices from local markets to global markets. We're bringing a different perspective to the individual and local businesses that previously didn't exist."

The global marketing post, which oversees marketing in 60 nations, is the brainchild of Peter Jacobi, the former president of Levi Strauss International who was promoted in September to chief operating officer of the parent company in a restructuring. The makeover eliminated the international division and created three divisions-the Americas, Europe and Asia-under Levi Strauss & Co. Previously, each of Levi's four regional marketing directors-for Asia, Europe, Latin America and the U.S.-developed their own advertising and marketing strategies with little thought about exporting ideas elsewhere.

BRINGING IT ALL TOGETHER

The result has been "think local, act local." Only in Europe, Levi's largest international zone, do ads run regionally. In Asia, ads are tailored to local cultures (except for China, which Levi's exited three years ago in a human rights protest). In Latin America, the brand is in early development.

But Mr. Holloway aims to think global and act local with campaigns that carry a unified look and message, ads he believes are more effective and cost-efficient than localized ones. He aims to stretch Levi's estimated $350 million ad budget-including $250 million in the U.S.

"We don't have the power or authority to change a local marketing plan, but we do have influence which I ultimately believe is more important than power," Mr. Holloway said. Regional marketing managers continue to report to regional presidents while Mr. Holloway reports to the chief operating officer of North American operations. He does, however, reign as global marketing facilitator. The role calls for diplomacy to avoid political turf battles. Marketing insiders at Levi's in San Francisco label Mr. Holloway as an "internal consultant."

"There is no way that one person sitting in San Francisco can know all local or regional areas," Mr. Holloway said. "I passionately believe in the strength of global marketing. Short-term it may be more difficult, but long-term, it's the way to work."

Mr. Holloway can already count some global marketing coups. The most prominent is the clay animation commercial that ad agency Bartle Bogle Hegarty, London, developed for European markets in 1995. This year, the campaign traveled to Asia, Latin America and the U.S.

The animated spot features a character called Nick Clayman who rescues a woman from a burning building by taking off his Levi's 501s and using his strong, durable jeans to parachute through an adjacent building's window to a bathroom where the two bump into an elderly man sitting on the toilet.

"No matter if you are in Brussels or Singapore, the reaction to the commercial is the same, great enjoyment," Mr. Holloway said.

John Hegarty, BBH's chairman and creative director, said, "We want to talk to people on a global scale with ads that are distinct, not bland. We want the ads to be relevant whether you are in Idaho or China. I think we are good at producing non-verbal global narrative that can travel around the world."

BBH's clay animation spot was voted most popular in a Singapore TV viewer poll, he said.

A LONG, HAPPY*RELATIONSHIP

In Europe, Levi's 501s outsell rivals Lee and Wrangler even though the $70-plus price tag is 10% to 15% higher than the nearest competitor, according to Mr. Hegarty.

Last year, Levi's 501s recorded double-digit sales growth in Europe, said Roy Edmondson, U.K. marketing director.

Levi's 14-year relationship with BBH spans such successes as the agency's 1950s Americana spots that defined Levi's across Europe and swept international awards.

This fall Levi's also moved Dockers' European account to BBH, from Garbergs Advertising, Stockholm. Levi's plans to launch a pan-European retail chain, Dockers & Co., and expand the brand name from men's pants to other clothing items.

Besides Levi's and Dockers assignments in Europe, BBH won Levi's Japanese account last year even though the agency's only office was then in London. In September, as part of the deal, BBH opened in Singapore.

BBH would love more Levi's business in Asia and elsewhere. But Mr. Holloway downplays the notion that Levi's ultimately wants to use fewer agencies, or perhaps even just one global agency. "For sure, BBH work has been outstandingly successful, but no, we don't want one global agency. We want the local managers to select their own ad agencies with no pressure from me," Mr. Holloway said. "How can I possibly know all local markets?"

In Asia, McCann-Erickson Worldwide handles advertising in most of Levi's markets. Latin America uses mostly point-of-purchase materials, working with local shops. Foote, Cone & Belding in San Francisco services Levi's, Dockers and Slates brands in the U.S.

As Levi's campaigns cross more borders, Mr. Holloway is reviewing ad agency compensation methods for fairness. Levi's pays agencies mostly on a fee basis, with a bonus when campaigns move to new markets. The bonus is based primarily on advertising effectiveness measured by sales results in both assigned and additional markets.

"If we are successful, we want to make sure that the agencies have an opportunity to share in our success with a bonus," Mr. Holloway said.

Using the same campaign in more markets saves production costs, because those costs can range from $100,000 to $1 million for a :30 spot.

GLOBAL DREAM TEAM

To help spread the vision companywide, Mr. Holloway has assembled his own global marketing dream team. U.K. Marketing Manager Roy Edmondson, 37, joins the lineup in San Francisco beginning Dec. 1 as Levi's first global marketing director.

"This move highlights our need to be clearer about our image worldwide and to think globally and act locally," said Mr. Edmondson, who will take charge of brand marketing, media buying and sponsorship.

In another new post, Mr. Holloway recruited Sean Dee in June 1996 from FCB in San Francisco. As digital media director, Mr. Dee oversees Levi's Web sites (http://www.levi.com) and (http://

www.dockers.com) that feature everything from the history of the brand and company to fashion tips, games and youth trends.

"Unlike other marketers that have multiple sites and a different look for each one, we want ours to present a unified look," Mr. Holloway said. Currently, Levi's Web sites are in English, although translations are being evaluated. And more Internet spending is on the way since reaction to the current sites has "surpassed our wildest expectations," he said.

Levi's huge TV budget, which accounts for 75% of spending, hasn't escaped Mr. Holloway's review. Look for fewer TV ad dollars in mature markets where TV is losing share and greater TV ad dollars in emerging markets, where he believes the medium is becoming increasingly efficient.

Additionally, Mr. Holloway has transferred three staffers from Levi's North American marketing group to the global marketing group. Alisa Weiner, 32, former marketing supervisor, moves to senior marketing manager, helping to oversee Levi's Web sites. Judi Jones, previously strategic research director, has been appointed market research director in charge of Levi's Intranet marketing communications. She also serves as a global liaison with Levi's affiliates. Linda Aletto, 46, previously corporate marketing director, becomes project director in charge of brand equity research.

Among Ms. Aletto's tasks for 1997 is developing a global measurement tool to gauge brand equity in 40 countries. The research will be done by WPP Group's U.K.-based market research firm, Millward Brown International. According to Mr. Edmondson, the research may include on-street interviews with target consumers.

The final new staff member, Julie Palley, 39, is project director for Original Levi's Stores.

As part of Mr. Holloway's mission of globalizing Levi's culture, he has begun two forums that help managers from Sri Lanka to SÌo Paulo exchange marketing and product ideas.

This year, he hosted 75 Levi's and 25 Dockers' marketing managers in separate meetings in San Francisco. Next year, Mr. Holloway plans four more brand meetings.

Already, the sessions are producing results. For example, stone-washed jeans first sold in the U.S. are now hits in Europe and the Far East. White tab Levi's sold originally in the U.K. are now making it to Australia and New Zealand. And from Italy, manually scraped jeans designed for a worn-out look are showing up on store shelves in the rest of Europe and the Far East.

"It's now easier to see what's become trendy in one place and move it around the globe," said Mr. Holloway.

Seemingly small details like the type of in-store kiosks for displays make the agenda too. "If our Levi's Japan affiliate develops an in-store kiosk to display wares, we want to make sure that there are not eight different platforms that are being developed worldwide," he said, "but one that can travel universally."

That's the concept behind the new global store logo for Original Levi's Stores. The red and blue logo that incorporates Levi's trademark stitch pattern was designed in Europe and exported worldwide.

Realizing that Levi's doesn't have a monopoly on good ideas, Mr. Holloway also has initiated benchmarking sessions with marketing counterparts, holding 40 meetings over the past two years ranging from tete-e-tete to large groups in the U.S. and overseas.

"We're not just meeting with apparel marketers but everyone from Coca-Cola to the airlines to the car companies," he said. "From the airlines, we're learning about how they develop good customer relations with such programs as frequent flier awards. From the car companies, we're learning how they develop products using technology and consumer interface for market research."

The learning process works both ways. Mr. Holloway said that his counterparts are intrigued by Levi's highly successful European ads.

"This benchmarking is different from the traditional approach," he added. "The old conventional way was to look at competitors but we're looking outside our own industry for good ideas."

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