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CASE ANALYSIS OF MAVI

Presented by: Team 04


Table of Contents
EXECUTIVE SUMMARY ................................................................................................................................. 2
INTRODUCTION ............................................................................................................................................ 3
JOURNEY OF MAVI FROM A LOCAL DENIM BRAND TO GLOBAL BRAND: .................................................. 3
PROBLEM IDENTIFICATION – DECISION RELATED TO GROWTH ................................................................. 5
THE THREE QUESTIONS: ............................................................................................................................... 5
Option A:....................................................................................................................................................... 5
Option B: ....................................................................................................................................................... 6
Option C: ....................................................................................................................................................... 6
MARKETING MIX OF MAVI (4Ps).................................................................................................................. 7
SWOT ANALYSIS ........................................................................................................................................... 8
ANSOFF MATRIX ......................................................................................................................................... 10
BRAND KEY ................................................................................................................................................. 10
BRAND RESONANCE MODEL ...................................................................................................................... 12
ANALYSING THE STRATEGIC GROWTH OPTIONS: ..................................................................................... 13
RECOMMENDATIONS & SUGGESTIONS: ................................................................................................... 18

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EXECUTIVE SUMMARY
The case highlights how a homegrown denim jeans brand with strong core values of quality and
innovations grew into a lifestyle brand and expanded its operations on an international scale. The
problem was to choose and adapt a growth strategy among the available strategies of expansion
so as to increase the brand value.

The potential growth of the jeans and denim industry across the globe was around 12.5% in terms
of unit sale. With favorable market conditions and the customer preference moving towards high
quality of jeans and apparels. Mavi has a unique brand proposition value with its core strength
of producing high quality perfect fit jeans at a reasonable price.

Thus the idea was to expand globally and leave the foot prints in international regions like U.S,
Canada, Russia, Australia and Europe.

The Expansion was recommended to be done within turkey through retail expansion and
branding while for regions other than turkey multi-channel is preferred with sheer marketing
efforts of global Ad-campaigns through celebrity endorsements and creating the buzz around the
social media to engage the brand with the potential customers.

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INTRODUCTION

Incorporated in 1991, the founders Sait Akarlilar, Elif, Ersin launched own retail brand of denim
name as Mavi Jeans (Mavi means blue in Turkish). Over the years Mavi has evolved into an
international apparel brand, becoming synonymous with superior quality, fabric innovations
and the perfect fit.

JOURNEY OF MAVI FROM A LOCAL DENIM BRAND TO GLOBAL BRAND:

Events
Erak Giyim a low-cost denim manufacturing company in Istanbul Producing high
1984 quality denim products for global premium denim brands.
Founded by Sait Akarlilar, Elif, Ersin, Seyhan’s father

1991 Birth of a own retail brand in Turkey with Brand name as Mavi Jeans (Mavi
means blue in Turkish) Nurtured by Sait.
1996 Market leader in turkey within a short span of 5 yrs. Marketing campaign
focussed the brand message through political and cultural issue.
Vision To establish brand as a global denim expert.
Ersin moved to US and established wholesale office channels in US, Canada,
1998 Germany
Collaboration with Jeans guru Adraiano Goldschmied
Strategy Making perfect Fit

Brand was sold in 186 stores in turkey


2000-2003 Time to shift the marketing strategy from turkey focused to fashion focused
Introduction of Mavi-terrain concept inspired by Mediterranean culture.
(Warmth, Comfort and fashion)
Positioning as glocal brand.
Time magazine recognized Mavi as first Turkish brand to become international.
Flagship stores in Newyork, Vancouver, Berlin, Frankfurt

Istanbul announced as the European cultural capital


2004 Turkish designers to create Istanbul T-shirts to be sold along Mavi jeans
globally.

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Kartus loyalty card program was launched in 2007
Positive economic indicators, Increase in disposable income and several other
2007-2009 growth factors lead to opportunity of more shops and marketing , Which in
turn raised the need for solid retail metrics.
Collaboration with Turkven in 2008
First Celebrity endorsement
2012 Andriana lima a supermodel became the face of the brand
Denim Kitchen concept was released.
2013 E commerce launch
Mavi gold premium collection

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PROBLEM IDENTIFICATION – DECISION RELATED TO GROWTH

In late December 2015, Mavi’s CEO Cuneyt Yavuz and global brand director Elif Akarliar were
finalizing the growth strategy for next 3 years.

Brief about Mavi’s performance in 2015:

 No. of units sold – 7 million pair of jeans


 CAGR – 30%
 No. of retail stores in Turkey & Worldwide – 387
 POS – 5000.

The Board identified three possible strategies that can be implemented to determine the
company’s short-term growth trajectory as well as shape the longer-term value of the Mavi as a
brand.

THE THREE QUESTIONS:

Whether invest in growth domestically or internationally? Was the Mavi


equipped to move from local to global?

Considering the price position & expansion of product line?

Finding the best value proposition which offers most future promise?
FUNCTIONAL? A LIFESTYLE? OR A CELEBRITY ENDORSED BRAND?

Option A:
Whether invest in growth domestically or internationally? Was the Mavi equipped to move
from local to global?

The company was a market leader in Turkey with 22.8% of market share in denim and held a
strong brand recall among the Turkish customers. Mavi as a brand needed to establish in other

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markets other than Turkey since they already made a significant dent in the local market.
However, the brand enjoyed early success whenever it was established in non-domestic
markets. The major question that management was dealing that was Mavi as brand ready to
move from local to global?

Option B:
Considering the price position & expansion of product line?

The company was considering in expanding its price position and also its product line. Mavi as a
denim brand was between two extreme price segment - “A mass-tige position” a position
between mass segment which were cheap, fast fashioned for mass market and premium priced
segment for upscale audience. The management faced two situations if they considered
changing the prices but feared jeopardizing the current base of the segment:

Increase in Price Decrease in Price


Increase the margins Increase in Volume growth

Option C:
Finding the best value proposition which offers most future promise?

FUNCTIONAL? A LIFESTYLE? OR A CELEBRITY ENDORSED BRAND?

During the years Mavi was fluctuating between a functional a lifestyle or a celebrity endorsed
brand value proposition.

1. Functional Value Proposition – Promised “The Perfect Fit” reflecting that denim was
firmly rooted in denim
2. Lifestyle Value Proposition - Promised access to Mavi -terranean lifestyle opening up
new product category
3. Celebrity endorsed Value Proposition – The brand was endorsed by hottest stars of
Turkey which served as influencers in purchasing the product.

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MARKETING MIX OF MAVI (4Ps)

PRODUCT
Mavi Jeans: Expertise in denim jeans

Mavi: Denim centric lifestyle brand (Jeans, Tops, accessories and outwear)

PRICE

Mass-tige segment: Price points higher than other fast-fashion brands (89-129 price TL)

Premium segment: Serving high quality jeans at price points less than other upper and premium
segment brands like US polo assn., Levi’s, Gap. (129-149 price TL)

PLACE:

 Own Retail store


 Wholesale distribution through other retailers
 Merchandise
 Online

PROMOTION:

 Celebrity Endorsements
 Seasonal Campaigns through both ATL and BTL channels
 Magazines and Publications

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SWOT ANALYSIS

Strengths: Weakness:
No substantial international market
Leading denim brand in the Turkey
coverage for Mavi as brand
with 22.8% market share. No exclusive retail outlets in
Strong positioning of the brand as international markets since sales
“The Perfect Fit”. happens through wholesale
Strong retail & wholesale presence. distribution.
Strong relationship with some hottest Strong association as Turkish Brand
celebs to appeal the target segment

Opportunities: Threats:
6th largest apparel exporter in the Pressure on profitability from local
world fast fashion brands.
50% are youthful population leading Harsh competition from already
to big domestic market. brands like Zara, H&M etc.
12% CAGR for the branded jeans Heavily saturated category
market between 2011-2015
Untapped international markets

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PORTER’S FIVE FORCES ANALYSIS:

The threat of new


entrants: HIGH

The bargaining Existing rivalry: The bargaining


power of HIGH power of
suppliers: customers: HIGH

Threat of
substitution:
MEDIUM

The threat of new entrants: HIGH

It has become increasingly easy for new companies to enter the Jeans market. Manufacturing
of Jeans does not require high expertise as it’s a fairly simple product. Today, companies can
choose to sell their product exclusively online and save up on capital.

The bargaining power of customers: HIGH

Jeans being a standardised product with little or no differentiation between brands, customers
have innumerable number of options.

The bargaining power of suppliers: MEDIUM

The suppliers do not have control over the price of the raw materials, therefore, fluctuations in
the cost of cotton will have an impact on their production cost. Due to the simplicity of the
product there is an increasing number of suppliers who are willing to provide the same service.

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Threat of substitution: MEDIUM

Though denim jeans still enjoy an important position in clothing; the growth of yoga pants,
jeggings, and treggings definitely threatens this position.

Industry rivalry: HIGH

The existing market is already saturated with a huge number of players. The customers do not
have strong loyalty towards the brands, considering that product differentiation is very weak.

ANSOFF MATRIX

Market Penetration: Product Development:

[current market, current product] [current market, new product]

Expanding their product line by adding


complimentary products to shift from a
jeans brand to a lifestyle brand.

Market Development: Diversification:

[new market, current product] [new market, new product]

Introducing their designs with the new Expanded into the US with their product
Mavi-terranean ad campaign, which Molly, which was sexy and fashionable.
emphasizes the glocal aspect of the brand.

BRAND KEY
Root Strengths:

Competitive Environment:

 Fast Moving Jeans with low quality & price serving mass market
 Premium category brands like GAP, Guess, Levis which are well established and provide quality
apparels at high price

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Target:

Insights:

No exclusive retail outlets in international market.

Discriminators / USP:

Mavi Jeans caters to the need of the consumers by providing the perfect fit to the body structure
considering the market and also helps to provide affordable premium quality jeans, calling themselves
as “Mass-tige Segment”

Reasons to believe:

 Homegrown brand
 Introduced the Mavi-terreian concept
 Jeans that provide perfect fit.
 Emphasis on high quality & comfort
 Trendy & Fashionable

Values & Personality:

 Energetic
 Self-confident
 Socially Engaged
 Trendy & Stylish
 Sporty

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 Classic

Benefits:

 Perfect Fit
 Value for money

Essence:

“Jean for every body”

“An apparel brand with strong denim roots”

BRAND RESONANCE MODEL

Imagery
Salience  Target 20-35 age group
 Turkish Brand  Men and Women
 Top of the mind – Brand Awareness  Emotional, Home-grown
55%  Authentic Brand.
 22.8% market share

Performance Feelings
 Premium Jeans at Middle Range Price  Affordable

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 Strong Denim products  Confident, socially engaged
 Superior quality with Perfect fit.  Strong peer connection

Judgement Resonance
 Perfect fit  Kartus loyalty program- 4.9 m
 Mavi-terranean lifestyle- Comfort, subscribed individuals for this program
warmth and passion.  85% sales through this channel.
 Medium level loyal
 Denim Community

ANALYSING THE STRATEGIC GROWTH OPTIONS:


OPTION A – WHETHER TO GROW DOMESTICALLY OR INTERNATIONALLY?

Jeans Sales ($ Billion)


60 25.00%

21.80%
50
20.00%
18.20%
40
15.00%

30 11.80%
11%
10.00% 10.00%
9.10%
20
7.80%
6.40% 8.30%
5% 5.00%
10
3.70%
2.10%
0 0.00%
Global North America Europe Asia South America ROW

2007 2014 Growth Forecast

 The Asian market shows most promising growth rate by 2020 – 21.80% from 2014-2020.
 This shows that there is a large untapped market for the MAVI as a retail brand to
expand.

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 The company can consider moving to the Gulf area since the consumer behavioral
pattern will be similar to that of domestic market.
 The company can also leverage the MAVI denim brand for its expanded retail focus in
the “Jeans established market”.
 The company still continue to maintain its position as premium segment as it did for its
denim when it ventured internationally.
 However, if the company which mostly operates in the domestic market with the MAVI
Retail brand has to compete with the fast fashion brands like LC Waikiki, Defacto etc.
which enjoys a considerable higher market share in the Turkish Market.
 The company still enjoys a considerable position in the market and since 50% of
population represents youth which shows the potential untapped customers within the
domestic market.
 The company already engages in the celebrity endorsement that features some hottest
stars of Turkey to communicate the product and this also appeals the target segment. The
company can continue to increase the sales using the same.

OPTION B: CONSIDERING THE PRICE POSITION & EXPANSION OF PRODUCT LINE?

1. Focus on Premium market or the Fast Fashion market.

This would require a Significant shift and investment from Mavi. Mainly because they are
shifting from their regular market and catering to a whole focused target group.

If Premium market is their focus, it would be a relatively more relevant market for Mavi, as
they generally operate in the Mid-Upper-Premium bracket (as per the Jeans Price index in
Turkey). This market would provide significant margins, and hence more profitability to their
products, the only downside being the lesser sales volumes. Mavi would be relatively more
comfortable in this bracket. They would face strong competition from Jack & Jones, USPA,
Levi’s and GAP as these generally operate in the premium segments. Mavi’s products have a
strong presence in the Upper market, making the shift to premium market much more easy
and relatable to the brand. There is less chance of customers shifting to other brands, as they
generally tend to re-purchase from the same brands.

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On the other hand, if they shift focus to the Fast Fashion, they would be greeted by a mass
market thereby translating to larger sales volumes. Their profitability might not be affected
much, as the margins would be much lesser than what they already enjoy in the Upper-
Premium markets. This market has larger appeal and even larger competition, making the
switching costs less – hence there are chances of customers not being loyal and shifting to
other brands in the same bracket. There are high chances of Mavi losing its brand image in
the name of market expansion.

The better suggestion among the two would be for Mavi to take the premium market and
work towards building a premium image.

2. Use Sub-Branding as a strategy

If Mavi chooses to create sub brands within the Mavi name, they can use differential prices
and target different markets too. With regards to this, Mavi has two options – either to create
a fast fashion sub brand or to go for a premium sub brand.

There are attributes that are common to choosing both – advertising, marketing, distribution
and sales channels would need to be put in place, which would require significant
expenditure. As far as sales is concerned, Mavi would have to decide if these brands need to
be sold in separate stores to clearly demarcate themselves or if they need can be sold within
Mavi stores in different sections.

They also needed to decide if the sub-brand would choose only jeans or a host of other
products.

Mainly, the below factors would drive up the cost of creating a sub-brand:

 A new brand needs significant marketing and advertising efforts.


 Mavi is generally associated with the premium segment, so creating a brand separate for
premium apparels would weaken the Mavi brand.
 On the other hand, a sub-brand for the mass market would be more appealing, as there
would be a lot of buyers who would be ready to buy a Mavi at a significantly lower rate –

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but these need to be sold separately, either through separate stores or through
designated floor areas within the existing shop floors.
 If the mass market sub-brand gained popularity, it might kill the parent brand, and people
would associate Mavi to the lower price segment. They could eventually lose the premium
segment buyers due to issues in brand image.
 However, Mavi was trying to penetrate into the international markets – They could use
the sub-branding practices in these new markets and clearly distinguish their products as
they are new in this territory. Since the sub-brands would be catering to different
categories of consumers, there would be clear demarcation and hence no brand name
loss on Mavi.
 A bad show by either of these two brands could mean trouble for the parent brand –
Mavi. Negative associations/experiences with the sub-brands could directly affect the
Mavi brand and create hindrances to their expansions.

Hence the suggestion for Mavi would be to take up the sub-branding practices to the new
markets they are trying to penetrate to. Fast fashion brands would attract greater sales with
their price points, and premium brands would stay true to Mavi’s actual target market.

3. Create brands separate from the Mavi brand.

This is similar to the previous approach, just that the brands would no longer be associated
with the Mavi brand. There are two sides to this approach:

 The new brand would have to create a market of its own, with no ‘Mavi’ brand backing.
Since the sub-brand is out of the Mavi brand, they would have to clearly segment and
target and position their products to attract the right consumers. Significant investment
in marketing and distribution is inevitable.
 Since they are created ‘out’ of the Mavi brand, any damage to their reputation would not
create an issue for Mavi, unlike the previous ‘sub-branding’ approach. The sub-branding
approach has the potential to create issues for the parent brand as they are directly
positioned under the Mavi brand. If the brand does not come under Mavi, and is

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marketing separate, there are no issues of brand image loss for Mavi, even if these brands
do not do well.

Mavi can always withdraw these sub-brands in case they are not doing well and create strategies
to improve the market appeal.

OPTION C: MAVI’S VALUE PROPOSITION

Mavi’s brand positioning had varied over years.

A.) Functional: Perfect fit- promised customers a functional advantage over competitors.

B.) Lifestyle: Mavi-terranean, which conveyed a Mediterranean feeling warmth, comfort and
passion.
- Mavi built an emotional connection with its customers by emphasizing its roots, the
commonalities and by embracing a wide audience. This allowed Mavi to reach young and old,
mass and premium alike as well as the sporty, the classic, and the trendy.
C.) Celebrity Endorsement: Identity based differentiation through celebrity.

Value proposition strategies to be used while deciding if the company decide to focus on:

• Going international

• Staying domestic

• Upmarket

• Down-market

A. International

Identity based differentiation + functional point of difference

Celebrity endorsement, probably an international celebrity would give them an identity through
which they can depict an image of being a Global brand. Also with identity based differentiation
they would require strong support of functional advantages over competitive products.

B. Domestic

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Emotional/symbolic point of difference

Mavi built an emotional connection with its customers by emphasizing its roots, the
commonalities and by embracing a wide audience. This allowed Mavi to reach young and old,
mass and premium alike as well as the sporty, the classic, and the trendy. The brand has still
room for it to build on it.
C. Upmarket

Identity based differentiation

To move into premium space to see if they could gain traction with higher end consumers, they
would require such identity which gives out a message of being high class. The premium market
would focus much on their image and identity rather the price.

D. Down-market

Functional point of difference + Lifestyle (Emotional/symbolic point of difference)

Extending Mavi down market into the fast fashion space would require functional advantage
like as Perfect fit with Emotional bonding.

RECOMMENDATIONS & SUGGESTIONS:

 On analyzing the above three strategic options for expansion of the company and the
brand further, Mavi should expand its territory on a global phase keeping an eye on the
upmarket. The brand essence of perfect fit and superior quality jeans should be carried
through out. The brand reputation as leader in denim market will give them an extra
edge to evolve as a lifestyle brand which delivers high quality apparels with fabric
innovations.
 For the homeland consumers(Turkey) : The company should continue its position as a
brand for upper-core and premium section of jeans market. A market survey on brand
perception says that Mavi is the number one jeans brand with top of the mind awareness

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of 53%, which shows the presence and connect of the brand in the local market. The retail
expansion can be done in turkey and regions with similar demographic and psychographic
appeal.
 For International expansion the company should focus more on online business through
its own and various other E-commerce sites. Global ad-campaigns through celebrity
endorsement who have similar brand identity will help to increase the brand awareness
globally should be done. Once the brand gains popularity then it should go for retail
expansion using Brick and mortar stores. The presence over multi channels will help to
target the customers in an efficient way.
 The strategy to rely on data of customer preference and purchase patterns can be
emphasized with the presence of online stores which in turn will help to understand and
serve the customers in a better way.
 The brand can use the different nomenclature like Mavi along with a suffix to segment
different categories in a precise way and still hold the primary brand tag.

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