was attitude written all over the décor of Leghorn's India headquarters.
Spunky, brash, cool-all very denim. Leghorn, after all, was the
Original brand of jeans, the stuff of American legend, second skin
to the horsebacked hardheads out West who'd come to father a nation
of frontier-pushing individualists. The very first. The link that
couldn't be torn asunder, the great equaliser-in the sack, or outside,
as seen in that all-knowing smile of daredevil infamy.
The brand's approach in India had been appropriately
collegiate, as reflected in the office environment. The brand DNA
was the same, just expressed in the local idiom. So there were Indian
hellraisers with Michael Jordan hairdos, college slangs like 'fucchas'
(freshers) screaming for attention, even guitar-shaped commodes
to strum out just one thing. All very indigo.
But somewhere deep in the inner recesses of
Leghorn's cavernous youthdom, was located the 'Fix'. This is where
the Indian unit's three top men, all in their mid-thirties, huddled
together every Thursday afternoon to split hair and ideas over black
coffee and nuts. In an annual market of 15 million pairs of branded
ready-to-wear jeans, Leghorn was doing just half a million. Simply
put, Santosh Gupta, T.K. Bose and Vikas Prabhu needed to yank up
domestic sales volumes, without losing the premium edge of Leghorn's
cult appeal amongst the brand-savvy. The mass moves had barely begun,
and loyalists had started protesting. It was a thinner knife-edge
than they'd thought. This wasn't going to be an early Thursday.
"When we launched Leghorn in India in 1996,"
began brand general manager 'Ticks' Bose, "we had this clear-cut
agenda to penetrate the market top-down-international advertising,
high-end four-digit pricing, exclusive showrooms..."
"Too bad we stayed
on 'top' for way too long, Ticks," interjected Gupta, the managing
director, in his inimitably deep baritone. "By 1999, denim
was out, at least for the post-college crowd, and had it not been
for our Rs 1,200-2,000 Drapper range of semi-formal work trousers,
we'd have had it. Check out the research, and you'll find that premium
jeans were a no-hoper."
The aim now was to stretch margins thin,
but spread them across many more legs. It was, of course,
Denim had made a mild comeback with officegoers,
but the market was largely teens, still. Gupta was proud of his
'value re-engineering' efforts of the past three years. Indigenisation
was a key part of it. The set of domestic suppliers had been widened,
with denim and accessories now sourced from several vendors. Part
of the attraction in working with Leghorn as a vendor was the promise
of 'global supplier' status, which meant huge export orders. Even
otherwise, Leghorn's domestic operations were coming along nicely.
The supply circuit had been clipped short, nodes of 'wastage' had
been ripped out, and the actual manufacturing made more efficient.
A year or more, and India could become an export base for other
markets. The more relevant upshot: cheaper made jeans.
"Unmatchable value for the young guy who's
scrounging for his prized pair," exulted Gupta, "that's
the way to go." Prabhu, the marketing general manager, nodded.
Research had indicated that the brand's core target buyer (aged
15-19) had bought his last pair of jeans for less than Rs 1,000,
and given Leghorn's rank atop the aspiration curve, might easily
be tempted by a three-digit price bait. This study had been the
reason that Bose had pushed for a switch to 'reasonable pricing'
as the main element of Leghorn's marketing strategy (which was meant
to go top-down, originally, in any case).
The aim now was to stretch margins thin, but
spread them across many more legs. It was, of course, a gambit.
Grabbing volumes quickly is always something of a sweat run. But
they knew that they could heave a nice long sigh of relief once
they got Leghorn past the 1-million-unit mark. That was 'critical
mass' in the jeans business.
The original range of jeans, however, had to
stay premium (above Rs 1,200). A few discount sales would do, but
it was best to entrust the price-baiting task to another sub-brand.
So in early 2002, Leghorn had launched its new Feever collection,
positioned as 'street-wear' for the college youth, to rope in the
sub-Rs 1,000 jeans buyer. Feever's prices ranged from Rs 800 to
Rs 999. Meanwhile, distribution was expanded to multi-brand stores,
even in mofussil towns and localities.
Yet, Prabhu had a strange feeling in his bones
about all this. Lasso, an early-entrant brand of American jeans
with even heavier cowboy imagery, had gone all out for volumes to
the dustiest of cornershops with 'irresistable' prices-and lived
to regret it, sweating in the late 1990s to get the brand's gleam
back. As Bose put it, "If the wrong guys are getting into your
brand, you get out-it's that simple."
More worryingly, several of India's domestic
jeans labels were actually ascending the value curve-moving prices
higher and higher, on the strength of brands they'd managed to give
distinctive characters to within just a few years. There was No
One, with its Calvin Klein-ish feminine sensuality ('Nothing comes
between me and...'). For the male, there was ShrinkWrap, with its
clear wear-em-forever proposition. And also Brute, with its bare-chested
machismo. Indian brands, all-moving up, and prospering.
Prabhu mumbled their names, and then cleared
his throat to articulate his qualms: "My problem is... their
prices are converging with ours. And they still have good volumes.
Maybe we need to re-examine the assumption that this is a relatively
brand-insensitive market where volumes can only be built through
There was a moment's silence, before Gupta
spoke. "These local brands can't be stronger than Leghorn,
if that's what you're suggesting..."
"No, but they do have strong target-specific
appeals-I mean, that should be our game. Are we getting too caught
up in all these simple price-value equations?" posed Prabhu.
"Value is what we have to deliver,"
replied Gupta, firmly.
"I'm worrying about brand value, actually.
The touchy-feely stuff. I fear Leghorn is failing its loyalists.
The guys who rave about the brand-as a brand. The guys who don't
pack their hearts and minds into their wallets. The guys who'll
absolutely not wear any other jeans under any circumstances."
Gupta thought for a while, and turned to Bose,
"What d'you say, Ticks?"
"Brand integrity first-no question there.
My gut's with him."
Gupta pursed his lips. He had also heard a
few ex-IIM batchmates grumble about Leghorn losing some of its 'statement
value', but had decided to treat the feedback lightly, unless other
team members were to report the same. Well-now they had.
"What should we do?" asked Gupta.