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Levi Strauss amp Co (LSampCO) is a privately held clothing company known worldwide for its Levis brand of denim jeans It was founded in 1853 when Levi Strauss came from Buttenheim Franconia (Kingdom of Bavaria) to San Francisco California to open a west coast branch of his brothers New York dry goods business Although the company began producing denim overalls in the 1870s modern jeans were not produced until the 1920s The company briefly experimented (in the 1970s) with employee ownership and a public stock listing but remains owned and controlled by descendants and relatives of Levi Strauss four nephews
ORGANIZATION
Levi Strauss amp Co is a worldwide corporation organized into three geographic divisions Levi Strauss Americas (LSA) based in the San Francisco headquarters Levi Strauss Europe Middle East and Africa (LSEMA) based in Brussels and Asia Pacific Division (APD) based in Singapore The company employs a staff of approximately 10500 people worldwide and owns and develops a few brands Levis the main brand was founded in 1873 in San Francisco specializing in riveted denim jeans and different lines of casual and street fashion[2]
From the early 1960s through the mid 1970s Levi Strauss experienced explosive growth in its business as the more casual look of the 1960s and 1970s ushered in the blue jeans craze and served as a catalyst for the brand Levis under the leadership of Jay Walter Haas Sr Peter Haas Sr Paul Glasco and George P Simpkins Sr expanded the firms clothing line by adding new fashions and models including stone-washed jeans through the acquisition of Great Western Garment Co (GWG) a Canadian clothing manufacturer GWG was responsible for the introduction of the modern stone washing technique still in use by Levi Strauss
Mr Simpkins is credited with the companys record paced expansion of its manufacturing capacity from fewer than 16 plants to more than 63 plants in the United States from 1964 through 1974 Perhaps most impressive however was Levis expansion under Simpkins was accomplished without a single unionized employee as a result of Levis and the Haas families strong stance on human rights and Simpkins use of pay for performance manufacturing at the sewing machine operator level up As a result Levis plants were perhaps the highest performing best organized and cleanest textile facilities of their time Levis even piped in massive amounts of air conditioning for the comfort of Levis workers into its press plants which were known in the industry to be notoriously hot
2004 saw a sharp decline of GWG in the face of global outsourcing so the company was closed and the Edmonton manufacturing plant shut down[3] The Dockers brand launched in 1986[4] which is sold largely through department store chains helped the company grow through the mid-1990s as denim sales began to fade Dockers were introduced into Europe in 1993 Levi Strauss attempted to sell the Dockers division in 2004 to relieve part of the companys $2 billion outstanding debt[5]
Launched in 2003 Levi Strauss Signature features jeanswear and casualwear [6] In November 2007 Levis released a mobile phone in co-operation with ModeLabs Many of the phones cosmetic attributes are customisable at the point of purchase
HISTORY
Jacob Davis was a tailor who frequently purchased bolts of cloth made from hemp from Levi Strauss amp Cos wholesale house After one of Davis customers kept purchasing cloth to reinforce torn pants he had an idea to use copper rivets to reinforce the points of strain such as on the pocket corners and at the base of the button fly Davis did not have the required money to purchase a patent so he wrote to Strauss suggesting that they go into business together After Levi accepted Jacobs offer on May 20 1873 the two men received US Patent 139121 from the United States Patent and Trademark Office The patented rivet was later incorporated into the companys jean design and advertisements Contrary to an advertising campaign suggesting that Levi Strauss sold his first jeans to gold miners during the California Gold Rush (which peaked in 1849) the manufacturing of denim overalls only began in the 1870s
Levi Strauss started the business at the 90 Sacramento Street address in San Francisco He next moved the location to 62 Sacramento Street then 63 amp 65 Sacramento Street By changing the location of the store the company began to become more successful
Levi Strauss advertising sign
Modern jeans began to appear in the 1920s but sales were largely confined to the working people of the western United States such as cowboys lumberjacks and railroad workers Levirsquos jeans apparently were first introduced to the East during the dude ranch craze of the 1930s when vacationing Easterners returned home with tales (and usually examples) of the hard-wearing pants with rivets Another boost came in World War II when blue jeans were declared an essential commodity and were sold only to people engaged in defense work From a company with fifteen salespeople two plants and almost no business east of the Mississippi in 1946 the organization grew in thirty years to include a sales force of more than 22000 with 50 plants and offices in 35 countries[7]
In the 1950s and 1960s Levis jeans became popular among a wide range of youth subcultures including greasers mods rockers hippies and skinheads Levis popular shrink-to-fit 501s were sold in a unique sizing arrangement the indicated size referred to the size of the jeans prior to shrinking and the shrinkage was substantial The company still produces these unshrunk uniquely sized jeans and they are still Levis number one selling product Although popular lore (abetted by company marketing) holds that the original design remains unaltered this is not the case the companys president got too close to a campfire and the rivet at the bottom of the crotch conducted the fires heat too well the offending rivet which is depicted in old advertisements was removed[8]
[edit] 1990s and later
By the 1990s the brand was facing competition from other brands and cheaper products from overseas and began accelerating the pace of its US factory closures and its use of offshore subcontracting agreements In 1991 Levi Strauss faced a scandal involving six subsidiary factories on the Northern Mariana Islands a US commonwealth where some 3 of Levis jeans sold annually with the Made in the USA label were shown to have been made by Chinese laborers under what the United States Department of Labor called slavelike conditions Today Levis jeans are made overseas
Cited for sub-minimum wages seven-day work weeks with 12-hour shifts poor living conditions and other indignities Tan Holdings Corporation Levi Strauss Marianas subcontractor paid what were then the largest fines in US labor history distributing more than $9 million in restitution to some 1200 employees[9][10][11] Levi Strauss claimed no knowledge of the offenses then severed ties to the Tan family and instituted labor reforms and inspection practices in its offshore facilities
The activist group Fuerza Unida (United Force) was formed following the January 1990 closure of a plant in San Antonio Texas in which 1150 seamstresses some of whom had worked for Levi Strauss for decades saw their jobs exported to Costa Rica[12] During the mid- and late-1990s Fuerza Unida picketed the Levi Strauss headquarters in San Francisco and staged hunger strikes and sit-ins in protest of the companys labor policies[13][14][15]
The company took on multi-billion dollar debt in February 1996 to help finance a series of leveraged stock buyouts among family members Shares in Levi Strauss stock are not publicly traded the firm is today owned almost entirely by indirect descendants and relatives of Levi Strauss whose four nephews inherited the San Francisco dry goods firm after their uncles death in 1902[16] The corporations bonds are traded publicly as are shares of the companys Japanese affiliate Levi Strauss Japan KK
In June 1996 the company offered to pay its workers an unusual dividend of up to $750 million in six years time having halted an employee stock plan at the time of the internal family buyout However the company failed to make cash flow targets and no worker dividends were paid[17] In 2002 Levi Strauss began a close business collaboration with Wal-Mart producing a special line of Signature jeans and other clothes for exclusive sale in Wal-Mart stores until 2006[18] Levi Strauss Signature jeans can now be purchased at several stores in the US Canada India and Japan
According to the New York Times Levi Strauss leads the apparel industry in trademark infringement cases filing nearly 100 lawsuits against competitors since 2001 Most cases center on the alleged imitation of Levis back pocket double arc stitching pattern (US trademark 1139254) which Levi filed for trademark in 1978 [19] Levis has sued Guess Esprit Holdings Zegna Zumiez and Lucky Brand Jeans among other companies[20]
By 2007 Levi Strauss was again said to be profitable after declining sales in nine of the previous ten years[21] Its total annual sales of just over $4 billion were $3 billion less than during its peak performance in the mid 1990s[22] After more than two decades of family ownership rumors of a possible public stock offering were floated in the media in July 2007[23] In 2009 it was noted in the media for selling Jeans on interest-free credit due to the Global Recession[24][25]
[edit] Advertising
Levis marketing style has often made use of old recordings of popular music in television commercials ranging from traditional pop to punk rock Notable examples include Ben E King (Stand By Me) Percy Sledge (When a Man Loves a Woman) Eddie Cochran (Cmon Everybody) Marc Bolan (20th Century Boy) Screamin Jay Hawkins (Heart Attack amp Vine) The Clash (Should I Stay or Should I Go) as well as lesser known material such as Falling Elevators by MC 900 Ft Jesus and Flat Beat and Monday Massacre by Mr Oizo
Many of these songs were re-released by their record labels as a tie-in with the ad campaigns resulting in increased popularity and sales of the recordings and the creation of iconic visual associations with the music such as the use of a topless male model wearing jeans underwater in the 1992 adverts featuring Wonderful World and Mad about the Boy and the puppet Flat Eric in the ads featuring music by Mr Oizo
httpenwikipediaorgwikiLevi_Strauss_26_Co
TABLE OF CONTENTS
Acknowledgments Executive Summary Introduction History Market segmentation targeting and positioning Marketing mix bull-Product bull-Price bull-Place bull-Promotion SWOT analysis Conclusions
INTRODUCTION
Levi Strauss amp Co (LSampCO) is one of the worlds largest brand-name apparel marketers with sales in more than 110 countries There is no other company with a comparable global presence in the jeans and casual pants markets Today the Levisreg trademark is one of the most recognized in the world and is registered in more than 160 countries The company is privately held by descendants of the family of Levi Strauss Shares of company stock are not publicly traded
The company employs a staff of approximately 8850 people worldwide including approximately 1000 people at its San Francisco California headquarters Levi Strauss amp Co currently makes jeans in approximately 108 sizes and 20 finish fabrics With 2007 net sales of $41 billion the company is committed to building upon strong heritage and brand equity as they position the company for future growth
BRANDS The products of Levi Strauss amp Co are sold under three brands Levisreg Since their invention in 1873 Levisreg jeans have become one of the most successful and widely recognized brands in the history of the apparel industry Dockersreg Dockersreg brand which pioneered the movement toward business casual has led the US khaki category since the brands 1986 launch and is now available in numerous countries Levi Strauss Signaturetrade In 2003 the launch of the Levi Strauss Signaturetrade brand giving value consumers high- quality and fashionable clothing from a company on which the consumers trust DIVISIONS
HISTORY
Today the Levirsquosreg brand is an authentic American icon known the world over Levi Strauss started it 150 years ago amp forever earned a place in history In 1847 Levi Strauss his two sisters amp mother sailed for America where they joined half-brothers Jonas amp Louis in New York Levi joined their dry goods business In 1853 Levi sailed to San Francisco to join dry goods business and started selling clothing bedding amp linen to small stores in California
In 1902 Levi died and his two nephews inherited the business In 1910rsquos LSampCO received ldquoBlue Ribbonrdquo highest award for waist overalls in Panama One-piece garment for women was introduced to work and play In 1930rsquos the Great Depression stroke amp demand for Levirsquos jeans shirts and jackets declined
In 1991 the first original Levirsquos store was opened in United States In 1994 Dockers brand was introduced in Europe It launched its first website in 1995In 1996 it introduced its Slates reg brand a new style for men wearing In 1999 classic 5 pocket pants were reinvented
In 2000 LSampCO introduced Levirsquos reg engineered jeans TM the reinvention of jeans for the new generation It named No 2 for Americarsquos best companies for minorities In 2003 it celebrated its 150th anniversary of its founding and 130th anniversary of invention of blue jeans
Products Positioning and Market segmentation
Advertising professionals realize that the heart of any campaign is the product and the position it holds in peoples minds Products and their brand names are newsmakers themselves Understanding the complexities of a brand identity and its position is no easy task
One of the most controversial areas of product concepts is the brand extension A new product gets to share the name of an older established brand Early theorizing suggested that brand extensions would sap market clout from the established product but these fears proved groundless Today brand extensions occur not only within the company but companies are licensing their brand names to all kinds of products in the hope of increasing brand awareness
SCANNING THE MARKETING ENVIRONMENT
Like other successful companies Levirsquos also has realized that the marketing environment presents a never-ending series of opportunities and threats The major responsibility for identifying significant changes in the macro environment falls to a companyrsquos marketers More than any other group in the company the marketing managers of Levis are the trend trackers and opportunity seekers
Many opportunities are found by identifying trends (directions or sequences of events that have some momentum and durability) and mega trends (major social economic political and technological changes that have long-lasting influence)
Within the rapidly changing global picture the marketers of Levirsquos are monitoring the following six major ldquoEnvironmental Forcesrdquo
Demographic Environment Economic Environment Natural Environment Technological Environment Political-Legal Environment Social-Cultural Environment
Market Segmentation
Market segmentation is the selection of groups of people who will be most receptive to a product The most frequent methods of segmenting include demographic variables such as age sex race income occupation education household status and geographic location
psychographic variables such as life-style activities interests and opinions product use patterns and product benefits Much segmentation involves combinations of these methods No matter how segments are defined however they are characterized by considerable change over time The readings in this section exemplify areas of rapid change
BASIS OF MARKET SEGMENTATION
Demographic SegmentationGeographic Segmentation Psychographic Segmentation Behavioral Segmentation
Target Market 501reg JEANS targets its market by evaluating the wants of customers Mostly Levirsquos targets its market among the following classes bull Upper Class bull Upper Middle Class
Target Market Strategy Target market strategy adopted by Levis is basically on having long-term relations with their customers and to provide them with better product
Benefits of Segmentation Levis has got customer oriented approach by segmentation Company is promoting its products effectively within segments by print media as well as electronic media eg Newspapers Signboards Television commercials Internet etc Company is providing their customers with stylish better quality and different product keeping in view its cost Conditions for effective segmentation Conditions for effective segmentation 501reg JEANS is fulfilling the conditions for effective segmentation
Segments are strong enough to make profit Segments of company are measurable Limitation of Segmentation Limitation of Se gmentation
Because of segmentation Levirsquos faces some limitationsLack of awareness in middle classCompany has to pay extra cost for multi-advertisementIn Pakistan they have to face several Cultural Barriers
Marketing Research
Marketin g Research According to Levirsquos marketing logistic manager their company conducts a research to know bull Whatrsquos in trend bull What are the needs of customers Sources of Data Sources of Data Levirsquos gathers data from both primary and secondary sources Secondary data is already available in the company To gather primary data they organize radio shows and music concerts by sponsoring
MARKETING MIX The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market Marketing-mix decisions must be made for influencing the trade channels as well as the final consumers McCarthy classified these tools into four broad groups that he called the four Ps of marketing product price place and promotion Note that the four Ps represent the sellers view of the marketing tools available for influencing buyers
MARKETING MIX MARKETING MIX The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market Marketing-mix decisions must be made for influencing the trade channels as well as the final consumers McCarthy classified these tools into four broad groups that he called the four Ps of marketing product price place and promotion Note that the four Ps represent the se
Product Place Product variety Channels Quality Coverage
Design Assortments Features Locations Brand name Inventory Packaging Transport Sizes Prices
PromotionServicesWarranties
List price Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing
PRODUCT Product Place Product variety Channels Quality Coverage Design Assortments Features Locations Brand name Inventory Packaging Transport Sizes Prices
PromotionServicesWarranties
List price
Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing ldquoProduct means set of tangible and intangible attributes which may include packaging color price quality and brand plus the sellerrsquos services and reputation A product may be a place service good or promotionrdquo BRANDS BRANDS Brand is a name term sign symbol or design that adds value to the products LS amp CO earns remarkable revenues throughout the year coz its products are considered to be the worldrsquos largest quality products
S amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different
body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers
LS amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers LEVIS STRAUSS SIGNATUREreg
The Levi Strauss Signaturetrade brand was launched in 2003 exclusively for consumers who shop in the masschannel The brand gives value-conscious consumers access to high-quality affordable and fashionable jeanswear from a company and name they trustThe Levi Strauss Signaturetrade brand includes a collection of denim and non-denim pants shirts skirts and jacketsfor men women and children all designed with the high quality
PRODUCT ATTRIBUTES PRODUCT ATTRIBUTES
Products are usually considered to be the No1 factor contributing towards building goodwill of a firm A productshould be unique durable reliable comfortable and economical Following are some of the basic attributes ofLSampCOrsquoS products
Variety Features Design Color Size
VARIETY VARIETY
Levirsquos products today are perceived by many as a symbol of youth freedom confidence individualism independence amp comfort LS amp CO provides a wide variety of products including
JEANS JEANS Levirsquos jeans have been present at nearly every pivotal moment in history and culture for the past 150 yearsFeaturesFeatures are competitive tools that differentiate the companyrsquos products from its competitorrsquos products Following are some of the main and distinctive features of Levirsquos products Comfort Levirsquos jeans and other products are comfortable enough to be worn even at the times of protest war cultural revolution relative peace and pure fun Durability
The two figures on the patch of Levirsquos jeans withwhips in hand pulling in opposite directions yet the jeans remainintact symbolize the strength and durability of the lsquoPatent rivetedclothingrsquo
Style
Clothing means more than just fabric thread and rivets To clotheoneself means to put on something that symbolizes who you are Levirsquosjeans are available in different styles for men and women
LEVIrsquoS PORTFOLIO ANALYSIS Levirsquos corporate strategy involves a number of businesses so managers can manage this collection or portfolio of businesses by using a corporate portfolio matrix BCG Matrix BCG Matrix ldquoA strategy tool that guides resource allocation decisions on the basis of market share and growth rate of SBUrsquosrdquo
Boston Consulting Group introduced the idea of BCG matrix that an organizationrsquos businesses could be evaluatedand plotted using a 22 matrix to identify which ones offered high potential and which ones were a drain onorganizational resources
Horizontal Axis The horizontal axis represents market share which is evaluated as low or high Vertical Axis The vertical axis indicates anticipated market growth which is also evaluated as low or highCATEGORIES Based on its evaluation the LS amp COrsquos businesses are placed in the following
STARS (High Growth High Market Share) ldquoStars include the businesses which are in a fast growing market and hold a dominant share of that marketrdquo Dockersreg come under the head of stars as it is the major source of income for the company CASH COWS (Low Growth High Market Share) CASH COWS (Low Growth High Market Share) Businesses in this category generate large amounts of cash but their prospects for furure growth are limitedrdquo The women apparels has got a low growth and high market share so it comes under the Cash Cows head QUESTION MARKS(High Growth Low Market Share) QUESTION MARKS(High Growth Low Market Share) ldquoThese businesses are in an attractive industry but hold a small market share percentagerdquo Levirsquos jeans come under the head of question marks with respect to Pakistan
Price DeterminationDuring the determination of the price company not considered the competitors but the standard that is used is considered Our price is influenced by the following factors-
Cost of the product Affordable for the target market Demand of the product
Uniqueness and innovative features of the products Competitors We are much proud to say with surety that our products completely satisfy our consumers thatrsquos why we donrsquot face much competition in our business But yet there are some competitors eg
Pepe Jeans Leeds (US Apparels) GAAP Jeans
Camb r id g e bull Our prices are not influenced by the competitors S uch a stuff design and fashion which donrsquot have the enough sales are recall back to the company
Again company issues this stuff to their own outlets for sale at discount prices at 14 August
STRATEGIES LS amp CO placed its products according to following strategiesPlacing according to Class and Attributes LS amp CO Positioned its products according to different classes and genders
Placing according to Competitors LS amp CO Keep in mind the price and quality of the products and try to make its products better Placing according to Price and Quality LS amp CO introduces best quality at different prices to its clients Placing according to Technology LS amp CO has tried to build its image as an innovator by coming in Pakistan with their Jeans having new and latest style and look
Promotion objectives Promotion ob PROMOTION PROMOTION jectives o To inform persuade and remind the potential customers about its products o Increase awareness and build primary demand o To build strong brand equity o Build Companyrsquos image as innovator o To create bonds between public and Levi Strauss by helping the people o To create the importance of its products Sales Sales promotion- promotion-
For the promotion of sales Levi Strauss amp Co adopt a very effective but comprehensive strategy Levis pays attention to the publicity of its products The major source of promotion of levirsquos is done by creating public relations The sales promotion of LEVIS targets the end consumers Since the Levirsquos JEANS are in growth stage in Pakistan therefore the promotional strategy is based on persuading of prospective buyers Levirsquos uses the following promotional strategies to promote its product
Personal selling by the representative of the organization takes place face to face with final consumers Mass Selling Levis does mass selling to inform a bulk of persons by advertising Advertising- Advertisin g- The type of advertising used by LEVIS Competitive advertising The advertisement given by the LEVIS stresses on the demand of the product and enhancement of its features Institutional advertising Levis uses institutional advertising to promote companyrsquos image by saying Many Copy the Red Tab No One can copy the Origina Advertising mediums- Advertisin g mediums- The advertising media used by the company are
Television Fashion Magazines Newspapers
Internet Bill boards banners etc
Television amp Radio Advertisements of Levi Strauss amp Co are very innovative and eye-catching Buyers are attracted towards the product The advertisements are placed at the international level Fashion Magazines amp Newspapers
For fashion magazines and newspapers LSampCo is a target due to its grand brand equity it has become a benchmark for all the others to follow The newspaper gives a coverage to the social events in which LS ampCo takes part with great interest Whereas fashion magazines are always dealing with the gorgeous models working with LSamp Co and the unique outfits of the models
Internet- Levis provides up-to-date information to their customers through electronic media ie from their websit Billboards amp banners- Billboards and banners are also used for the advertisement purpose
Background history
bullbullThe company was founded by Levi Strauss in 1853 primarily selling wholesale dry goods The company was founded in San Francisco CaliforniabullbullA tailor named Jacob Davis thought of an idea to use copper rivets to reinforce the points of strain on pantsbullbullDavis and Strauss purchased the patent of the idea of using copper rivets in clothing on May 20 1873
Company growth
bullbullThe innovation of the rivets in the jeans differentiated Levidifferentiated Levirsquorsquos jeans from others because of its increased durabilitybullbullOver the years LeviOver Levirsquorsquos jeans have become more popular initially due to its durability Jean products expanded targeting different consumersbullbullLevi Strauss amp Co eventually captures most of the denim jean market becomes the largest manufacturer of jeans and profits reach $1 billion by 1974
bullbull1853 Levi Strauss begins selling dry goods in San Franciscobullbull1873 Levi Strauss amp Co patent riveted jeans and begin selling thembullbull1912 KoverallsKoveralls denim playsuit for children is first nationally sold product for the companybullbull1935 Company sells first blue jeans for womenbullbull1940s US government issues denim work clothes for employees in the defense industrybullbull1974 Company sales reach $1 billion1974 billionbullbull1986 Company introduces Dockers as a new casual line of clothesnew clothes
Successes
bull
Since the patent of the rivets in jeans in 1873 the company achieved monopoly power Monopoly power was gained through entry barriers The patent granted the firm monopoly rights to sell riveted jeans bullndashAlso by product differentiation The rivets on the jeans allowed for longer durability a form of vertical differentiation Product differentiation and barriers to entry allowed the company to gain more popularity and market share ndashbullbull
bullbullBy 1977 Levi Strauss amp Co is the worldBy worldrsquorsquos largest jean manufacturerbullbullDepartment stores and boutiques sell LeviDepartment Levirsquorsquos products and are additional channels of distribution for the companybullbullLeviLevirsquorsquos provides a wide range of products that target different market segments capturing demandsbullbullAfter the release of the 501 product line LeviAfter Levirsquorsquos enjoys worldwide market dominance in the denim jean marketbullbullLevi Strauss amp Co maintains itLevi itrsquorsquos image as an American Icon and the originator of American jeans
Positioning
bullbullOther marketing strategies like the position of the product crOther created eated increased differentiation contributing to the companies market powerbullbullIn 1930s the company survived the Great Depression due to increased interest in Western culturendashndashJeans were positioned as being worn by ldquoldquocowboyscowboysrdquordquobullbullLeviLevirsquorsquos jeans were issued to employees in the defense industry (including veterans) during World War II(IIndashndashPost World War II veterans that went to college wore LeviPost Levirsquorsquos jeans on campuses increasing popularitybullbullWWII veterans were regarded as heroesndashndashJeans were shown to be suitable for casual wear rather than worJeans workkndashndashDuring the Baby Boom era LeviDuring Levirsquorsquos targets younger consumers and positions product as ldquoldquocoolcoolrdquordquobullbullEarly movie stars wore LeviEarly Levirsquorsquos jeans An example of celebrity endorsements endorsementbullbullConsumer demand shifts from durability of jeans to fashion of jeConsumer jeansansndashndashCulturally jeans became symbol of youth and rebellionCulturally rebellionbullbullIn 1960s student protesters wore jeans as a uniformIn uniformbullbullIn 1970s company sells bellbottom jeansIn jeansbullbullThe firm positioned its products with changing times and changiThe changing ng demands keeping existing customers and capturing new markets Increases in sales ultimately increased profitsIncreases profitsSuccesses
Competetion
Effect
bullbullLevi Strauss amp Co was threatened by competition because barrieLevi barriers rs of entry were relatively low in the jean market (excluding the patent)bullbullSome of LeviSome Levirsquorsquos competitors includendashndashCalvin KleinCalvin KleinndashndashGap JeansGap JeansndashndashVF Corp (Lee
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
Jacob Davis was a tailor who frequently purchased bolts of cloth made from hemp from Levi Strauss amp Cos wholesale house After one of Davis customers kept purchasing cloth to reinforce torn pants he had an idea to use copper rivets to reinforce the points of strain such as on the pocket corners and at the base of the button fly Davis did not have the required money to purchase a patent so he wrote to Strauss suggesting that they go into business together After Levi accepted Jacobs offer on May 20 1873 the two men received US Patent 139121 from the United States Patent and Trademark Office The patented rivet was later incorporated into the companys jean design and advertisements Contrary to an advertising campaign suggesting that Levi Strauss sold his first jeans to gold miners during the California Gold Rush (which peaked in 1849) the manufacturing of denim overalls only began in the 1870s
Levi Strauss started the business at the 90 Sacramento Street address in San Francisco He next moved the location to 62 Sacramento Street then 63 amp 65 Sacramento Street By changing the location of the store the company began to become more successful
Levi Strauss advertising sign
Modern jeans began to appear in the 1920s but sales were largely confined to the working people of the western United States such as cowboys lumberjacks and railroad workers Levirsquos jeans apparently were first introduced to the East during the dude ranch craze of the 1930s when vacationing Easterners returned home with tales (and usually examples) of the hard-wearing pants with rivets Another boost came in World War II when blue jeans were declared an essential commodity and were sold only to people engaged in defense work From a company with fifteen salespeople two plants and almost no business east of the Mississippi in 1946 the organization grew in thirty years to include a sales force of more than 22000 with 50 plants and offices in 35 countries[7]
In the 1950s and 1960s Levis jeans became popular among a wide range of youth subcultures including greasers mods rockers hippies and skinheads Levis popular shrink-to-fit 501s were sold in a unique sizing arrangement the indicated size referred to the size of the jeans prior to shrinking and the shrinkage was substantial The company still produces these unshrunk uniquely sized jeans and they are still Levis number one selling product Although popular lore (abetted by company marketing) holds that the original design remains unaltered this is not the case the companys president got too close to a campfire and the rivet at the bottom of the crotch conducted the fires heat too well the offending rivet which is depicted in old advertisements was removed[8]
[edit] 1990s and later
By the 1990s the brand was facing competition from other brands and cheaper products from overseas and began accelerating the pace of its US factory closures and its use of offshore subcontracting agreements In 1991 Levi Strauss faced a scandal involving six subsidiary factories on the Northern Mariana Islands a US commonwealth where some 3 of Levis jeans sold annually with the Made in the USA label were shown to have been made by Chinese laborers under what the United States Department of Labor called slavelike conditions Today Levis jeans are made overseas
Cited for sub-minimum wages seven-day work weeks with 12-hour shifts poor living conditions and other indignities Tan Holdings Corporation Levi Strauss Marianas subcontractor paid what were then the largest fines in US labor history distributing more than $9 million in restitution to some 1200 employees[9][10][11] Levi Strauss claimed no knowledge of the offenses then severed ties to the Tan family and instituted labor reforms and inspection practices in its offshore facilities
The activist group Fuerza Unida (United Force) was formed following the January 1990 closure of a plant in San Antonio Texas in which 1150 seamstresses some of whom had worked for Levi Strauss for decades saw their jobs exported to Costa Rica[12] During the mid- and late-1990s Fuerza Unida picketed the Levi Strauss headquarters in San Francisco and staged hunger strikes and sit-ins in protest of the companys labor policies[13][14][15]
The company took on multi-billion dollar debt in February 1996 to help finance a series of leveraged stock buyouts among family members Shares in Levi Strauss stock are not publicly traded the firm is today owned almost entirely by indirect descendants and relatives of Levi Strauss whose four nephews inherited the San Francisco dry goods firm after their uncles death in 1902[16] The corporations bonds are traded publicly as are shares of the companys Japanese affiliate Levi Strauss Japan KK
In June 1996 the company offered to pay its workers an unusual dividend of up to $750 million in six years time having halted an employee stock plan at the time of the internal family buyout However the company failed to make cash flow targets and no worker dividends were paid[17] In 2002 Levi Strauss began a close business collaboration with Wal-Mart producing a special line of Signature jeans and other clothes for exclusive sale in Wal-Mart stores until 2006[18] Levi Strauss Signature jeans can now be purchased at several stores in the US Canada India and Japan
According to the New York Times Levi Strauss leads the apparel industry in trademark infringement cases filing nearly 100 lawsuits against competitors since 2001 Most cases center on the alleged imitation of Levis back pocket double arc stitching pattern (US trademark 1139254) which Levi filed for trademark in 1978 [19] Levis has sued Guess Esprit Holdings Zegna Zumiez and Lucky Brand Jeans among other companies[20]
By 2007 Levi Strauss was again said to be profitable after declining sales in nine of the previous ten years[21] Its total annual sales of just over $4 billion were $3 billion less than during its peak performance in the mid 1990s[22] After more than two decades of family ownership rumors of a possible public stock offering were floated in the media in July 2007[23] In 2009 it was noted in the media for selling Jeans on interest-free credit due to the Global Recession[24][25]
[edit] Advertising
Levis marketing style has often made use of old recordings of popular music in television commercials ranging from traditional pop to punk rock Notable examples include Ben E King (Stand By Me) Percy Sledge (When a Man Loves a Woman) Eddie Cochran (Cmon Everybody) Marc Bolan (20th Century Boy) Screamin Jay Hawkins (Heart Attack amp Vine) The Clash (Should I Stay or Should I Go) as well as lesser known material such as Falling Elevators by MC 900 Ft Jesus and Flat Beat and Monday Massacre by Mr Oizo
Many of these songs were re-released by their record labels as a tie-in with the ad campaigns resulting in increased popularity and sales of the recordings and the creation of iconic visual associations with the music such as the use of a topless male model wearing jeans underwater in the 1992 adverts featuring Wonderful World and Mad about the Boy and the puppet Flat Eric in the ads featuring music by Mr Oizo
httpenwikipediaorgwikiLevi_Strauss_26_Co
TABLE OF CONTENTS
Acknowledgments Executive Summary Introduction History Market segmentation targeting and positioning Marketing mix bull-Product bull-Price bull-Place bull-Promotion SWOT analysis Conclusions
INTRODUCTION
Levi Strauss amp Co (LSampCO) is one of the worlds largest brand-name apparel marketers with sales in more than 110 countries There is no other company with a comparable global presence in the jeans and casual pants markets Today the Levisreg trademark is one of the most recognized in the world and is registered in more than 160 countries The company is privately held by descendants of the family of Levi Strauss Shares of company stock are not publicly traded
The company employs a staff of approximately 8850 people worldwide including approximately 1000 people at its San Francisco California headquarters Levi Strauss amp Co currently makes jeans in approximately 108 sizes and 20 finish fabrics With 2007 net sales of $41 billion the company is committed to building upon strong heritage and brand equity as they position the company for future growth
BRANDS The products of Levi Strauss amp Co are sold under three brands Levisreg Since their invention in 1873 Levisreg jeans have become one of the most successful and widely recognized brands in the history of the apparel industry Dockersreg Dockersreg brand which pioneered the movement toward business casual has led the US khaki category since the brands 1986 launch and is now available in numerous countries Levi Strauss Signaturetrade In 2003 the launch of the Levi Strauss Signaturetrade brand giving value consumers high- quality and fashionable clothing from a company on which the consumers trust DIVISIONS
HISTORY
Today the Levirsquosreg brand is an authentic American icon known the world over Levi Strauss started it 150 years ago amp forever earned a place in history In 1847 Levi Strauss his two sisters amp mother sailed for America where they joined half-brothers Jonas amp Louis in New York Levi joined their dry goods business In 1853 Levi sailed to San Francisco to join dry goods business and started selling clothing bedding amp linen to small stores in California
In 1902 Levi died and his two nephews inherited the business In 1910rsquos LSampCO received ldquoBlue Ribbonrdquo highest award for waist overalls in Panama One-piece garment for women was introduced to work and play In 1930rsquos the Great Depression stroke amp demand for Levirsquos jeans shirts and jackets declined
In 1991 the first original Levirsquos store was opened in United States In 1994 Dockers brand was introduced in Europe It launched its first website in 1995In 1996 it introduced its Slates reg brand a new style for men wearing In 1999 classic 5 pocket pants were reinvented
In 2000 LSampCO introduced Levirsquos reg engineered jeans TM the reinvention of jeans for the new generation It named No 2 for Americarsquos best companies for minorities In 2003 it celebrated its 150th anniversary of its founding and 130th anniversary of invention of blue jeans
Products Positioning and Market segmentation
Advertising professionals realize that the heart of any campaign is the product and the position it holds in peoples minds Products and their brand names are newsmakers themselves Understanding the complexities of a brand identity and its position is no easy task
One of the most controversial areas of product concepts is the brand extension A new product gets to share the name of an older established brand Early theorizing suggested that brand extensions would sap market clout from the established product but these fears proved groundless Today brand extensions occur not only within the company but companies are licensing their brand names to all kinds of products in the hope of increasing brand awareness
SCANNING THE MARKETING ENVIRONMENT
Like other successful companies Levirsquos also has realized that the marketing environment presents a never-ending series of opportunities and threats The major responsibility for identifying significant changes in the macro environment falls to a companyrsquos marketers More than any other group in the company the marketing managers of Levis are the trend trackers and opportunity seekers
Many opportunities are found by identifying trends (directions or sequences of events that have some momentum and durability) and mega trends (major social economic political and technological changes that have long-lasting influence)
Within the rapidly changing global picture the marketers of Levirsquos are monitoring the following six major ldquoEnvironmental Forcesrdquo
Demographic Environment Economic Environment Natural Environment Technological Environment Political-Legal Environment Social-Cultural Environment
Market Segmentation
Market segmentation is the selection of groups of people who will be most receptive to a product The most frequent methods of segmenting include demographic variables such as age sex race income occupation education household status and geographic location
psychographic variables such as life-style activities interests and opinions product use patterns and product benefits Much segmentation involves combinations of these methods No matter how segments are defined however they are characterized by considerable change over time The readings in this section exemplify areas of rapid change
BASIS OF MARKET SEGMENTATION
Demographic SegmentationGeographic Segmentation Psychographic Segmentation Behavioral Segmentation
Target Market 501reg JEANS targets its market by evaluating the wants of customers Mostly Levirsquos targets its market among the following classes bull Upper Class bull Upper Middle Class
Target Market Strategy Target market strategy adopted by Levis is basically on having long-term relations with their customers and to provide them with better product
Benefits of Segmentation Levis has got customer oriented approach by segmentation Company is promoting its products effectively within segments by print media as well as electronic media eg Newspapers Signboards Television commercials Internet etc Company is providing their customers with stylish better quality and different product keeping in view its cost Conditions for effective segmentation Conditions for effective segmentation 501reg JEANS is fulfilling the conditions for effective segmentation
Segments are strong enough to make profit Segments of company are measurable Limitation of Segmentation Limitation of Se gmentation
Because of segmentation Levirsquos faces some limitationsLack of awareness in middle classCompany has to pay extra cost for multi-advertisementIn Pakistan they have to face several Cultural Barriers
Marketing Research
Marketin g Research According to Levirsquos marketing logistic manager their company conducts a research to know bull Whatrsquos in trend bull What are the needs of customers Sources of Data Sources of Data Levirsquos gathers data from both primary and secondary sources Secondary data is already available in the company To gather primary data they organize radio shows and music concerts by sponsoring
MARKETING MIX The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market Marketing-mix decisions must be made for influencing the trade channels as well as the final consumers McCarthy classified these tools into four broad groups that he called the four Ps of marketing product price place and promotion Note that the four Ps represent the sellers view of the marketing tools available for influencing buyers
MARKETING MIX MARKETING MIX The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market Marketing-mix decisions must be made for influencing the trade channels as well as the final consumers McCarthy classified these tools into four broad groups that he called the four Ps of marketing product price place and promotion Note that the four Ps represent the se
Product Place Product variety Channels Quality Coverage
Design Assortments Features Locations Brand name Inventory Packaging Transport Sizes Prices
PromotionServicesWarranties
List price Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing
PRODUCT Product Place Product variety Channels Quality Coverage Design Assortments Features Locations Brand name Inventory Packaging Transport Sizes Prices
PromotionServicesWarranties
List price
Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing ldquoProduct means set of tangible and intangible attributes which may include packaging color price quality and brand plus the sellerrsquos services and reputation A product may be a place service good or promotionrdquo BRANDS BRANDS Brand is a name term sign symbol or design that adds value to the products LS amp CO earns remarkable revenues throughout the year coz its products are considered to be the worldrsquos largest quality products
S amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different
body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers
LS amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers LEVIS STRAUSS SIGNATUREreg
The Levi Strauss Signaturetrade brand was launched in 2003 exclusively for consumers who shop in the masschannel The brand gives value-conscious consumers access to high-quality affordable and fashionable jeanswear from a company and name they trustThe Levi Strauss Signaturetrade brand includes a collection of denim and non-denim pants shirts skirts and jacketsfor men women and children all designed with the high quality
PRODUCT ATTRIBUTES PRODUCT ATTRIBUTES
Products are usually considered to be the No1 factor contributing towards building goodwill of a firm A productshould be unique durable reliable comfortable and economical Following are some of the basic attributes ofLSampCOrsquoS products
Variety Features Design Color Size
VARIETY VARIETY
Levirsquos products today are perceived by many as a symbol of youth freedom confidence individualism independence amp comfort LS amp CO provides a wide variety of products including
JEANS JEANS Levirsquos jeans have been present at nearly every pivotal moment in history and culture for the past 150 yearsFeaturesFeatures are competitive tools that differentiate the companyrsquos products from its competitorrsquos products Following are some of the main and distinctive features of Levirsquos products Comfort Levirsquos jeans and other products are comfortable enough to be worn even at the times of protest war cultural revolution relative peace and pure fun Durability
The two figures on the patch of Levirsquos jeans withwhips in hand pulling in opposite directions yet the jeans remainintact symbolize the strength and durability of the lsquoPatent rivetedclothingrsquo
Style
Clothing means more than just fabric thread and rivets To clotheoneself means to put on something that symbolizes who you are Levirsquosjeans are available in different styles for men and women
LEVIrsquoS PORTFOLIO ANALYSIS Levirsquos corporate strategy involves a number of businesses so managers can manage this collection or portfolio of businesses by using a corporate portfolio matrix BCG Matrix BCG Matrix ldquoA strategy tool that guides resource allocation decisions on the basis of market share and growth rate of SBUrsquosrdquo
Boston Consulting Group introduced the idea of BCG matrix that an organizationrsquos businesses could be evaluatedand plotted using a 22 matrix to identify which ones offered high potential and which ones were a drain onorganizational resources
Horizontal Axis The horizontal axis represents market share which is evaluated as low or high Vertical Axis The vertical axis indicates anticipated market growth which is also evaluated as low or highCATEGORIES Based on its evaluation the LS amp COrsquos businesses are placed in the following
STARS (High Growth High Market Share) ldquoStars include the businesses which are in a fast growing market and hold a dominant share of that marketrdquo Dockersreg come under the head of stars as it is the major source of income for the company CASH COWS (Low Growth High Market Share) CASH COWS (Low Growth High Market Share) Businesses in this category generate large amounts of cash but their prospects for furure growth are limitedrdquo The women apparels has got a low growth and high market share so it comes under the Cash Cows head QUESTION MARKS(High Growth Low Market Share) QUESTION MARKS(High Growth Low Market Share) ldquoThese businesses are in an attractive industry but hold a small market share percentagerdquo Levirsquos jeans come under the head of question marks with respect to Pakistan
Price DeterminationDuring the determination of the price company not considered the competitors but the standard that is used is considered Our price is influenced by the following factors-
Cost of the product Affordable for the target market Demand of the product
Uniqueness and innovative features of the products Competitors We are much proud to say with surety that our products completely satisfy our consumers thatrsquos why we donrsquot face much competition in our business But yet there are some competitors eg
Pepe Jeans Leeds (US Apparels) GAAP Jeans
Camb r id g e bull Our prices are not influenced by the competitors S uch a stuff design and fashion which donrsquot have the enough sales are recall back to the company
Again company issues this stuff to their own outlets for sale at discount prices at 14 August
STRATEGIES LS amp CO placed its products according to following strategiesPlacing according to Class and Attributes LS amp CO Positioned its products according to different classes and genders
Placing according to Competitors LS amp CO Keep in mind the price and quality of the products and try to make its products better Placing according to Price and Quality LS amp CO introduces best quality at different prices to its clients Placing according to Technology LS amp CO has tried to build its image as an innovator by coming in Pakistan with their Jeans having new and latest style and look
Promotion objectives Promotion ob PROMOTION PROMOTION jectives o To inform persuade and remind the potential customers about its products o Increase awareness and build primary demand o To build strong brand equity o Build Companyrsquos image as innovator o To create bonds between public and Levi Strauss by helping the people o To create the importance of its products Sales Sales promotion- promotion-
For the promotion of sales Levi Strauss amp Co adopt a very effective but comprehensive strategy Levis pays attention to the publicity of its products The major source of promotion of levirsquos is done by creating public relations The sales promotion of LEVIS targets the end consumers Since the Levirsquos JEANS are in growth stage in Pakistan therefore the promotional strategy is based on persuading of prospective buyers Levirsquos uses the following promotional strategies to promote its product
Personal selling by the representative of the organization takes place face to face with final consumers Mass Selling Levis does mass selling to inform a bulk of persons by advertising Advertising- Advertisin g- The type of advertising used by LEVIS Competitive advertising The advertisement given by the LEVIS stresses on the demand of the product and enhancement of its features Institutional advertising Levis uses institutional advertising to promote companyrsquos image by saying Many Copy the Red Tab No One can copy the Origina Advertising mediums- Advertisin g mediums- The advertising media used by the company are
Television Fashion Magazines Newspapers
Internet Bill boards banners etc
Television amp Radio Advertisements of Levi Strauss amp Co are very innovative and eye-catching Buyers are attracted towards the product The advertisements are placed at the international level Fashion Magazines amp Newspapers
For fashion magazines and newspapers LSampCo is a target due to its grand brand equity it has become a benchmark for all the others to follow The newspaper gives a coverage to the social events in which LS ampCo takes part with great interest Whereas fashion magazines are always dealing with the gorgeous models working with LSamp Co and the unique outfits of the models
Internet- Levis provides up-to-date information to their customers through electronic media ie from their websit Billboards amp banners- Billboards and banners are also used for the advertisement purpose
Background history
bullbullThe company was founded by Levi Strauss in 1853 primarily selling wholesale dry goods The company was founded in San Francisco CaliforniabullbullA tailor named Jacob Davis thought of an idea to use copper rivets to reinforce the points of strain on pantsbullbullDavis and Strauss purchased the patent of the idea of using copper rivets in clothing on May 20 1873
Company growth
bullbullThe innovation of the rivets in the jeans differentiated Levidifferentiated Levirsquorsquos jeans from others because of its increased durabilitybullbullOver the years LeviOver Levirsquorsquos jeans have become more popular initially due to its durability Jean products expanded targeting different consumersbullbullLevi Strauss amp Co eventually captures most of the denim jean market becomes the largest manufacturer of jeans and profits reach $1 billion by 1974
bullbull1853 Levi Strauss begins selling dry goods in San Franciscobullbull1873 Levi Strauss amp Co patent riveted jeans and begin selling thembullbull1912 KoverallsKoveralls denim playsuit for children is first nationally sold product for the companybullbull1935 Company sells first blue jeans for womenbullbull1940s US government issues denim work clothes for employees in the defense industrybullbull1974 Company sales reach $1 billion1974 billionbullbull1986 Company introduces Dockers as a new casual line of clothesnew clothes
Successes
bull
Since the patent of the rivets in jeans in 1873 the company achieved monopoly power Monopoly power was gained through entry barriers The patent granted the firm monopoly rights to sell riveted jeans bullndashAlso by product differentiation The rivets on the jeans allowed for longer durability a form of vertical differentiation Product differentiation and barriers to entry allowed the company to gain more popularity and market share ndashbullbull
bullbullBy 1977 Levi Strauss amp Co is the worldBy worldrsquorsquos largest jean manufacturerbullbullDepartment stores and boutiques sell LeviDepartment Levirsquorsquos products and are additional channels of distribution for the companybullbullLeviLevirsquorsquos provides a wide range of products that target different market segments capturing demandsbullbullAfter the release of the 501 product line LeviAfter Levirsquorsquos enjoys worldwide market dominance in the denim jean marketbullbullLevi Strauss amp Co maintains itLevi itrsquorsquos image as an American Icon and the originator of American jeans
Positioning
bullbullOther marketing strategies like the position of the product crOther created eated increased differentiation contributing to the companies market powerbullbullIn 1930s the company survived the Great Depression due to increased interest in Western culturendashndashJeans were positioned as being worn by ldquoldquocowboyscowboysrdquordquobullbullLeviLevirsquorsquos jeans were issued to employees in the defense industry (including veterans) during World War II(IIndashndashPost World War II veterans that went to college wore LeviPost Levirsquorsquos jeans on campuses increasing popularitybullbullWWII veterans were regarded as heroesndashndashJeans were shown to be suitable for casual wear rather than worJeans workkndashndashDuring the Baby Boom era LeviDuring Levirsquorsquos targets younger consumers and positions product as ldquoldquocoolcoolrdquordquobullbullEarly movie stars wore LeviEarly Levirsquorsquos jeans An example of celebrity endorsements endorsementbullbullConsumer demand shifts from durability of jeans to fashion of jeConsumer jeansansndashndashCulturally jeans became symbol of youth and rebellionCulturally rebellionbullbullIn 1960s student protesters wore jeans as a uniformIn uniformbullbullIn 1970s company sells bellbottom jeansIn jeansbullbullThe firm positioned its products with changing times and changiThe changing ng demands keeping existing customers and capturing new markets Increases in sales ultimately increased profitsIncreases profitsSuccesses
Competetion
Effect
bullbullLevi Strauss amp Co was threatened by competition because barrieLevi barriers rs of entry were relatively low in the jean market (excluding the patent)bullbullSome of LeviSome Levirsquorsquos competitors includendashndashCalvin KleinCalvin KleinndashndashGap JeansGap JeansndashndashVF Corp (Lee
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
By the 1990s the brand was facing competition from other brands and cheaper products from overseas and began accelerating the pace of its US factory closures and its use of offshore subcontracting agreements In 1991 Levi Strauss faced a scandal involving six subsidiary factories on the Northern Mariana Islands a US commonwealth where some 3 of Levis jeans sold annually with the Made in the USA label were shown to have been made by Chinese laborers under what the United States Department of Labor called slavelike conditions Today Levis jeans are made overseas
Cited for sub-minimum wages seven-day work weeks with 12-hour shifts poor living conditions and other indignities Tan Holdings Corporation Levi Strauss Marianas subcontractor paid what were then the largest fines in US labor history distributing more than $9 million in restitution to some 1200 employees[9][10][11] Levi Strauss claimed no knowledge of the offenses then severed ties to the Tan family and instituted labor reforms and inspection practices in its offshore facilities
The activist group Fuerza Unida (United Force) was formed following the January 1990 closure of a plant in San Antonio Texas in which 1150 seamstresses some of whom had worked for Levi Strauss for decades saw their jobs exported to Costa Rica[12] During the mid- and late-1990s Fuerza Unida picketed the Levi Strauss headquarters in San Francisco and staged hunger strikes and sit-ins in protest of the companys labor policies[13][14][15]
The company took on multi-billion dollar debt in February 1996 to help finance a series of leveraged stock buyouts among family members Shares in Levi Strauss stock are not publicly traded the firm is today owned almost entirely by indirect descendants and relatives of Levi Strauss whose four nephews inherited the San Francisco dry goods firm after their uncles death in 1902[16] The corporations bonds are traded publicly as are shares of the companys Japanese affiliate Levi Strauss Japan KK
In June 1996 the company offered to pay its workers an unusual dividend of up to $750 million in six years time having halted an employee stock plan at the time of the internal family buyout However the company failed to make cash flow targets and no worker dividends were paid[17] In 2002 Levi Strauss began a close business collaboration with Wal-Mart producing a special line of Signature jeans and other clothes for exclusive sale in Wal-Mart stores until 2006[18] Levi Strauss Signature jeans can now be purchased at several stores in the US Canada India and Japan
According to the New York Times Levi Strauss leads the apparel industry in trademark infringement cases filing nearly 100 lawsuits against competitors since 2001 Most cases center on the alleged imitation of Levis back pocket double arc stitching pattern (US trademark 1139254) which Levi filed for trademark in 1978 [19] Levis has sued Guess Esprit Holdings Zegna Zumiez and Lucky Brand Jeans among other companies[20]
By 2007 Levi Strauss was again said to be profitable after declining sales in nine of the previous ten years[21] Its total annual sales of just over $4 billion were $3 billion less than during its peak performance in the mid 1990s[22] After more than two decades of family ownership rumors of a possible public stock offering were floated in the media in July 2007[23] In 2009 it was noted in the media for selling Jeans on interest-free credit due to the Global Recession[24][25]
[edit] Advertising
Levis marketing style has often made use of old recordings of popular music in television commercials ranging from traditional pop to punk rock Notable examples include Ben E King (Stand By Me) Percy Sledge (When a Man Loves a Woman) Eddie Cochran (Cmon Everybody) Marc Bolan (20th Century Boy) Screamin Jay Hawkins (Heart Attack amp Vine) The Clash (Should I Stay or Should I Go) as well as lesser known material such as Falling Elevators by MC 900 Ft Jesus and Flat Beat and Monday Massacre by Mr Oizo
Many of these songs were re-released by their record labels as a tie-in with the ad campaigns resulting in increased popularity and sales of the recordings and the creation of iconic visual associations with the music such as the use of a topless male model wearing jeans underwater in the 1992 adverts featuring Wonderful World and Mad about the Boy and the puppet Flat Eric in the ads featuring music by Mr Oizo
httpenwikipediaorgwikiLevi_Strauss_26_Co
TABLE OF CONTENTS
Acknowledgments Executive Summary Introduction History Market segmentation targeting and positioning Marketing mix bull-Product bull-Price bull-Place bull-Promotion SWOT analysis Conclusions
INTRODUCTION
Levi Strauss amp Co (LSampCO) is one of the worlds largest brand-name apparel marketers with sales in more than 110 countries There is no other company with a comparable global presence in the jeans and casual pants markets Today the Levisreg trademark is one of the most recognized in the world and is registered in more than 160 countries The company is privately held by descendants of the family of Levi Strauss Shares of company stock are not publicly traded
The company employs a staff of approximately 8850 people worldwide including approximately 1000 people at its San Francisco California headquarters Levi Strauss amp Co currently makes jeans in approximately 108 sizes and 20 finish fabrics With 2007 net sales of $41 billion the company is committed to building upon strong heritage and brand equity as they position the company for future growth
BRANDS The products of Levi Strauss amp Co are sold under three brands Levisreg Since their invention in 1873 Levisreg jeans have become one of the most successful and widely recognized brands in the history of the apparel industry Dockersreg Dockersreg brand which pioneered the movement toward business casual has led the US khaki category since the brands 1986 launch and is now available in numerous countries Levi Strauss Signaturetrade In 2003 the launch of the Levi Strauss Signaturetrade brand giving value consumers high- quality and fashionable clothing from a company on which the consumers trust DIVISIONS
HISTORY
Today the Levirsquosreg brand is an authentic American icon known the world over Levi Strauss started it 150 years ago amp forever earned a place in history In 1847 Levi Strauss his two sisters amp mother sailed for America where they joined half-brothers Jonas amp Louis in New York Levi joined their dry goods business In 1853 Levi sailed to San Francisco to join dry goods business and started selling clothing bedding amp linen to small stores in California
In 1902 Levi died and his two nephews inherited the business In 1910rsquos LSampCO received ldquoBlue Ribbonrdquo highest award for waist overalls in Panama One-piece garment for women was introduced to work and play In 1930rsquos the Great Depression stroke amp demand for Levirsquos jeans shirts and jackets declined
In 1991 the first original Levirsquos store was opened in United States In 1994 Dockers brand was introduced in Europe It launched its first website in 1995In 1996 it introduced its Slates reg brand a new style for men wearing In 1999 classic 5 pocket pants were reinvented
In 2000 LSampCO introduced Levirsquos reg engineered jeans TM the reinvention of jeans for the new generation It named No 2 for Americarsquos best companies for minorities In 2003 it celebrated its 150th anniversary of its founding and 130th anniversary of invention of blue jeans
Products Positioning and Market segmentation
Advertising professionals realize that the heart of any campaign is the product and the position it holds in peoples minds Products and their brand names are newsmakers themselves Understanding the complexities of a brand identity and its position is no easy task
One of the most controversial areas of product concepts is the brand extension A new product gets to share the name of an older established brand Early theorizing suggested that brand extensions would sap market clout from the established product but these fears proved groundless Today brand extensions occur not only within the company but companies are licensing their brand names to all kinds of products in the hope of increasing brand awareness
SCANNING THE MARKETING ENVIRONMENT
Like other successful companies Levirsquos also has realized that the marketing environment presents a never-ending series of opportunities and threats The major responsibility for identifying significant changes in the macro environment falls to a companyrsquos marketers More than any other group in the company the marketing managers of Levis are the trend trackers and opportunity seekers
Many opportunities are found by identifying trends (directions or sequences of events that have some momentum and durability) and mega trends (major social economic political and technological changes that have long-lasting influence)
Within the rapidly changing global picture the marketers of Levirsquos are monitoring the following six major ldquoEnvironmental Forcesrdquo
Demographic Environment Economic Environment Natural Environment Technological Environment Political-Legal Environment Social-Cultural Environment
Market Segmentation
Market segmentation is the selection of groups of people who will be most receptive to a product The most frequent methods of segmenting include demographic variables such as age sex race income occupation education household status and geographic location
psychographic variables such as life-style activities interests and opinions product use patterns and product benefits Much segmentation involves combinations of these methods No matter how segments are defined however they are characterized by considerable change over time The readings in this section exemplify areas of rapid change
BASIS OF MARKET SEGMENTATION
Demographic SegmentationGeographic Segmentation Psychographic Segmentation Behavioral Segmentation
Target Market 501reg JEANS targets its market by evaluating the wants of customers Mostly Levirsquos targets its market among the following classes bull Upper Class bull Upper Middle Class
Target Market Strategy Target market strategy adopted by Levis is basically on having long-term relations with their customers and to provide them with better product
Benefits of Segmentation Levis has got customer oriented approach by segmentation Company is promoting its products effectively within segments by print media as well as electronic media eg Newspapers Signboards Television commercials Internet etc Company is providing their customers with stylish better quality and different product keeping in view its cost Conditions for effective segmentation Conditions for effective segmentation 501reg JEANS is fulfilling the conditions for effective segmentation
Segments are strong enough to make profit Segments of company are measurable Limitation of Segmentation Limitation of Se gmentation
Because of segmentation Levirsquos faces some limitationsLack of awareness in middle classCompany has to pay extra cost for multi-advertisementIn Pakistan they have to face several Cultural Barriers
Marketing Research
Marketin g Research According to Levirsquos marketing logistic manager their company conducts a research to know bull Whatrsquos in trend bull What are the needs of customers Sources of Data Sources of Data Levirsquos gathers data from both primary and secondary sources Secondary data is already available in the company To gather primary data they organize radio shows and music concerts by sponsoring
MARKETING MIX The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market Marketing-mix decisions must be made for influencing the trade channels as well as the final consumers McCarthy classified these tools into four broad groups that he called the four Ps of marketing product price place and promotion Note that the four Ps represent the sellers view of the marketing tools available for influencing buyers
MARKETING MIX MARKETING MIX The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market Marketing-mix decisions must be made for influencing the trade channels as well as the final consumers McCarthy classified these tools into four broad groups that he called the four Ps of marketing product price place and promotion Note that the four Ps represent the se
Product Place Product variety Channels Quality Coverage
Design Assortments Features Locations Brand name Inventory Packaging Transport Sizes Prices
PromotionServicesWarranties
List price Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing
PRODUCT Product Place Product variety Channels Quality Coverage Design Assortments Features Locations Brand name Inventory Packaging Transport Sizes Prices
PromotionServicesWarranties
List price
Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing ldquoProduct means set of tangible and intangible attributes which may include packaging color price quality and brand plus the sellerrsquos services and reputation A product may be a place service good or promotionrdquo BRANDS BRANDS Brand is a name term sign symbol or design that adds value to the products LS amp CO earns remarkable revenues throughout the year coz its products are considered to be the worldrsquos largest quality products
S amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different
body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers
LS amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers LEVIS STRAUSS SIGNATUREreg
The Levi Strauss Signaturetrade brand was launched in 2003 exclusively for consumers who shop in the masschannel The brand gives value-conscious consumers access to high-quality affordable and fashionable jeanswear from a company and name they trustThe Levi Strauss Signaturetrade brand includes a collection of denim and non-denim pants shirts skirts and jacketsfor men women and children all designed with the high quality
PRODUCT ATTRIBUTES PRODUCT ATTRIBUTES
Products are usually considered to be the No1 factor contributing towards building goodwill of a firm A productshould be unique durable reliable comfortable and economical Following are some of the basic attributes ofLSampCOrsquoS products
Variety Features Design Color Size
VARIETY VARIETY
Levirsquos products today are perceived by many as a symbol of youth freedom confidence individualism independence amp comfort LS amp CO provides a wide variety of products including
JEANS JEANS Levirsquos jeans have been present at nearly every pivotal moment in history and culture for the past 150 yearsFeaturesFeatures are competitive tools that differentiate the companyrsquos products from its competitorrsquos products Following are some of the main and distinctive features of Levirsquos products Comfort Levirsquos jeans and other products are comfortable enough to be worn even at the times of protest war cultural revolution relative peace and pure fun Durability
The two figures on the patch of Levirsquos jeans withwhips in hand pulling in opposite directions yet the jeans remainintact symbolize the strength and durability of the lsquoPatent rivetedclothingrsquo
Style
Clothing means more than just fabric thread and rivets To clotheoneself means to put on something that symbolizes who you are Levirsquosjeans are available in different styles for men and women
LEVIrsquoS PORTFOLIO ANALYSIS Levirsquos corporate strategy involves a number of businesses so managers can manage this collection or portfolio of businesses by using a corporate portfolio matrix BCG Matrix BCG Matrix ldquoA strategy tool that guides resource allocation decisions on the basis of market share and growth rate of SBUrsquosrdquo
Boston Consulting Group introduced the idea of BCG matrix that an organizationrsquos businesses could be evaluatedand plotted using a 22 matrix to identify which ones offered high potential and which ones were a drain onorganizational resources
Horizontal Axis The horizontal axis represents market share which is evaluated as low or high Vertical Axis The vertical axis indicates anticipated market growth which is also evaluated as low or highCATEGORIES Based on its evaluation the LS amp COrsquos businesses are placed in the following
STARS (High Growth High Market Share) ldquoStars include the businesses which are in a fast growing market and hold a dominant share of that marketrdquo Dockersreg come under the head of stars as it is the major source of income for the company CASH COWS (Low Growth High Market Share) CASH COWS (Low Growth High Market Share) Businesses in this category generate large amounts of cash but their prospects for furure growth are limitedrdquo The women apparels has got a low growth and high market share so it comes under the Cash Cows head QUESTION MARKS(High Growth Low Market Share) QUESTION MARKS(High Growth Low Market Share) ldquoThese businesses are in an attractive industry but hold a small market share percentagerdquo Levirsquos jeans come under the head of question marks with respect to Pakistan
Price DeterminationDuring the determination of the price company not considered the competitors but the standard that is used is considered Our price is influenced by the following factors-
Cost of the product Affordable for the target market Demand of the product
Uniqueness and innovative features of the products Competitors We are much proud to say with surety that our products completely satisfy our consumers thatrsquos why we donrsquot face much competition in our business But yet there are some competitors eg
Pepe Jeans Leeds (US Apparels) GAAP Jeans
Camb r id g e bull Our prices are not influenced by the competitors S uch a stuff design and fashion which donrsquot have the enough sales are recall back to the company
Again company issues this stuff to their own outlets for sale at discount prices at 14 August
STRATEGIES LS amp CO placed its products according to following strategiesPlacing according to Class and Attributes LS amp CO Positioned its products according to different classes and genders
Placing according to Competitors LS amp CO Keep in mind the price and quality of the products and try to make its products better Placing according to Price and Quality LS amp CO introduces best quality at different prices to its clients Placing according to Technology LS amp CO has tried to build its image as an innovator by coming in Pakistan with their Jeans having new and latest style and look
Promotion objectives Promotion ob PROMOTION PROMOTION jectives o To inform persuade and remind the potential customers about its products o Increase awareness and build primary demand o To build strong brand equity o Build Companyrsquos image as innovator o To create bonds between public and Levi Strauss by helping the people o To create the importance of its products Sales Sales promotion- promotion-
For the promotion of sales Levi Strauss amp Co adopt a very effective but comprehensive strategy Levis pays attention to the publicity of its products The major source of promotion of levirsquos is done by creating public relations The sales promotion of LEVIS targets the end consumers Since the Levirsquos JEANS are in growth stage in Pakistan therefore the promotional strategy is based on persuading of prospective buyers Levirsquos uses the following promotional strategies to promote its product
Personal selling by the representative of the organization takes place face to face with final consumers Mass Selling Levis does mass selling to inform a bulk of persons by advertising Advertising- Advertisin g- The type of advertising used by LEVIS Competitive advertising The advertisement given by the LEVIS stresses on the demand of the product and enhancement of its features Institutional advertising Levis uses institutional advertising to promote companyrsquos image by saying Many Copy the Red Tab No One can copy the Origina Advertising mediums- Advertisin g mediums- The advertising media used by the company are
Television Fashion Magazines Newspapers
Internet Bill boards banners etc
Television amp Radio Advertisements of Levi Strauss amp Co are very innovative and eye-catching Buyers are attracted towards the product The advertisements are placed at the international level Fashion Magazines amp Newspapers
For fashion magazines and newspapers LSampCo is a target due to its grand brand equity it has become a benchmark for all the others to follow The newspaper gives a coverage to the social events in which LS ampCo takes part with great interest Whereas fashion magazines are always dealing with the gorgeous models working with LSamp Co and the unique outfits of the models
Internet- Levis provides up-to-date information to their customers through electronic media ie from their websit Billboards amp banners- Billboards and banners are also used for the advertisement purpose
Background history
bullbullThe company was founded by Levi Strauss in 1853 primarily selling wholesale dry goods The company was founded in San Francisco CaliforniabullbullA tailor named Jacob Davis thought of an idea to use copper rivets to reinforce the points of strain on pantsbullbullDavis and Strauss purchased the patent of the idea of using copper rivets in clothing on May 20 1873
Company growth
bullbullThe innovation of the rivets in the jeans differentiated Levidifferentiated Levirsquorsquos jeans from others because of its increased durabilitybullbullOver the years LeviOver Levirsquorsquos jeans have become more popular initially due to its durability Jean products expanded targeting different consumersbullbullLevi Strauss amp Co eventually captures most of the denim jean market becomes the largest manufacturer of jeans and profits reach $1 billion by 1974
bullbull1853 Levi Strauss begins selling dry goods in San Franciscobullbull1873 Levi Strauss amp Co patent riveted jeans and begin selling thembullbull1912 KoverallsKoveralls denim playsuit for children is first nationally sold product for the companybullbull1935 Company sells first blue jeans for womenbullbull1940s US government issues denim work clothes for employees in the defense industrybullbull1974 Company sales reach $1 billion1974 billionbullbull1986 Company introduces Dockers as a new casual line of clothesnew clothes
Successes
bull
Since the patent of the rivets in jeans in 1873 the company achieved monopoly power Monopoly power was gained through entry barriers The patent granted the firm monopoly rights to sell riveted jeans bullndashAlso by product differentiation The rivets on the jeans allowed for longer durability a form of vertical differentiation Product differentiation and barriers to entry allowed the company to gain more popularity and market share ndashbullbull
bullbullBy 1977 Levi Strauss amp Co is the worldBy worldrsquorsquos largest jean manufacturerbullbullDepartment stores and boutiques sell LeviDepartment Levirsquorsquos products and are additional channels of distribution for the companybullbullLeviLevirsquorsquos provides a wide range of products that target different market segments capturing demandsbullbullAfter the release of the 501 product line LeviAfter Levirsquorsquos enjoys worldwide market dominance in the denim jean marketbullbullLevi Strauss amp Co maintains itLevi itrsquorsquos image as an American Icon and the originator of American jeans
Positioning
bullbullOther marketing strategies like the position of the product crOther created eated increased differentiation contributing to the companies market powerbullbullIn 1930s the company survived the Great Depression due to increased interest in Western culturendashndashJeans were positioned as being worn by ldquoldquocowboyscowboysrdquordquobullbullLeviLevirsquorsquos jeans were issued to employees in the defense industry (including veterans) during World War II(IIndashndashPost World War II veterans that went to college wore LeviPost Levirsquorsquos jeans on campuses increasing popularitybullbullWWII veterans were regarded as heroesndashndashJeans were shown to be suitable for casual wear rather than worJeans workkndashndashDuring the Baby Boom era LeviDuring Levirsquorsquos targets younger consumers and positions product as ldquoldquocoolcoolrdquordquobullbullEarly movie stars wore LeviEarly Levirsquorsquos jeans An example of celebrity endorsements endorsementbullbullConsumer demand shifts from durability of jeans to fashion of jeConsumer jeansansndashndashCulturally jeans became symbol of youth and rebellionCulturally rebellionbullbullIn 1960s student protesters wore jeans as a uniformIn uniformbullbullIn 1970s company sells bellbottom jeansIn jeansbullbullThe firm positioned its products with changing times and changiThe changing ng demands keeping existing customers and capturing new markets Increases in sales ultimately increased profitsIncreases profitsSuccesses
Competetion
Effect
bullbullLevi Strauss amp Co was threatened by competition because barrieLevi barriers rs of entry were relatively low in the jean market (excluding the patent)bullbullSome of LeviSome Levirsquorsquos competitors includendashndashCalvin KleinCalvin KleinndashndashGap JeansGap JeansndashndashVF Corp (Lee
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
Levis marketing style has often made use of old recordings of popular music in television commercials ranging from traditional pop to punk rock Notable examples include Ben E King (Stand By Me) Percy Sledge (When a Man Loves a Woman) Eddie Cochran (Cmon Everybody) Marc Bolan (20th Century Boy) Screamin Jay Hawkins (Heart Attack amp Vine) The Clash (Should I Stay or Should I Go) as well as lesser known material such as Falling Elevators by MC 900 Ft Jesus and Flat Beat and Monday Massacre by Mr Oizo
Many of these songs were re-released by their record labels as a tie-in with the ad campaigns resulting in increased popularity and sales of the recordings and the creation of iconic visual associations with the music such as the use of a topless male model wearing jeans underwater in the 1992 adverts featuring Wonderful World and Mad about the Boy and the puppet Flat Eric in the ads featuring music by Mr Oizo
httpenwikipediaorgwikiLevi_Strauss_26_Co
TABLE OF CONTENTS
Acknowledgments Executive Summary Introduction History Market segmentation targeting and positioning Marketing mix bull-Product bull-Price bull-Place bull-Promotion SWOT analysis Conclusions
INTRODUCTION
Levi Strauss amp Co (LSampCO) is one of the worlds largest brand-name apparel marketers with sales in more than 110 countries There is no other company with a comparable global presence in the jeans and casual pants markets Today the Levisreg trademark is one of the most recognized in the world and is registered in more than 160 countries The company is privately held by descendants of the family of Levi Strauss Shares of company stock are not publicly traded
The company employs a staff of approximately 8850 people worldwide including approximately 1000 people at its San Francisco California headquarters Levi Strauss amp Co currently makes jeans in approximately 108 sizes and 20 finish fabrics With 2007 net sales of $41 billion the company is committed to building upon strong heritage and brand equity as they position the company for future growth
BRANDS The products of Levi Strauss amp Co are sold under three brands Levisreg Since their invention in 1873 Levisreg jeans have become one of the most successful and widely recognized brands in the history of the apparel industry Dockersreg Dockersreg brand which pioneered the movement toward business casual has led the US khaki category since the brands 1986 launch and is now available in numerous countries Levi Strauss Signaturetrade In 2003 the launch of the Levi Strauss Signaturetrade brand giving value consumers high- quality and fashionable clothing from a company on which the consumers trust DIVISIONS
HISTORY
Today the Levirsquosreg brand is an authentic American icon known the world over Levi Strauss started it 150 years ago amp forever earned a place in history In 1847 Levi Strauss his two sisters amp mother sailed for America where they joined half-brothers Jonas amp Louis in New York Levi joined their dry goods business In 1853 Levi sailed to San Francisco to join dry goods business and started selling clothing bedding amp linen to small stores in California
In 1902 Levi died and his two nephews inherited the business In 1910rsquos LSampCO received ldquoBlue Ribbonrdquo highest award for waist overalls in Panama One-piece garment for women was introduced to work and play In 1930rsquos the Great Depression stroke amp demand for Levirsquos jeans shirts and jackets declined
In 1991 the first original Levirsquos store was opened in United States In 1994 Dockers brand was introduced in Europe It launched its first website in 1995In 1996 it introduced its Slates reg brand a new style for men wearing In 1999 classic 5 pocket pants were reinvented
In 2000 LSampCO introduced Levirsquos reg engineered jeans TM the reinvention of jeans for the new generation It named No 2 for Americarsquos best companies for minorities In 2003 it celebrated its 150th anniversary of its founding and 130th anniversary of invention of blue jeans
Products Positioning and Market segmentation
Advertising professionals realize that the heart of any campaign is the product and the position it holds in peoples minds Products and their brand names are newsmakers themselves Understanding the complexities of a brand identity and its position is no easy task
One of the most controversial areas of product concepts is the brand extension A new product gets to share the name of an older established brand Early theorizing suggested that brand extensions would sap market clout from the established product but these fears proved groundless Today brand extensions occur not only within the company but companies are licensing their brand names to all kinds of products in the hope of increasing brand awareness
SCANNING THE MARKETING ENVIRONMENT
Like other successful companies Levirsquos also has realized that the marketing environment presents a never-ending series of opportunities and threats The major responsibility for identifying significant changes in the macro environment falls to a companyrsquos marketers More than any other group in the company the marketing managers of Levis are the trend trackers and opportunity seekers
Many opportunities are found by identifying trends (directions or sequences of events that have some momentum and durability) and mega trends (major social economic political and technological changes that have long-lasting influence)
Within the rapidly changing global picture the marketers of Levirsquos are monitoring the following six major ldquoEnvironmental Forcesrdquo
Demographic Environment Economic Environment Natural Environment Technological Environment Political-Legal Environment Social-Cultural Environment
Market Segmentation
Market segmentation is the selection of groups of people who will be most receptive to a product The most frequent methods of segmenting include demographic variables such as age sex race income occupation education household status and geographic location
psychographic variables such as life-style activities interests and opinions product use patterns and product benefits Much segmentation involves combinations of these methods No matter how segments are defined however they are characterized by considerable change over time The readings in this section exemplify areas of rapid change
BASIS OF MARKET SEGMENTATION
Demographic SegmentationGeographic Segmentation Psychographic Segmentation Behavioral Segmentation
Target Market 501reg JEANS targets its market by evaluating the wants of customers Mostly Levirsquos targets its market among the following classes bull Upper Class bull Upper Middle Class
Target Market Strategy Target market strategy adopted by Levis is basically on having long-term relations with their customers and to provide them with better product
Benefits of Segmentation Levis has got customer oriented approach by segmentation Company is promoting its products effectively within segments by print media as well as electronic media eg Newspapers Signboards Television commercials Internet etc Company is providing their customers with stylish better quality and different product keeping in view its cost Conditions for effective segmentation Conditions for effective segmentation 501reg JEANS is fulfilling the conditions for effective segmentation
Segments are strong enough to make profit Segments of company are measurable Limitation of Segmentation Limitation of Se gmentation
Because of segmentation Levirsquos faces some limitationsLack of awareness in middle classCompany has to pay extra cost for multi-advertisementIn Pakistan they have to face several Cultural Barriers
Marketing Research
Marketin g Research According to Levirsquos marketing logistic manager their company conducts a research to know bull Whatrsquos in trend bull What are the needs of customers Sources of Data Sources of Data Levirsquos gathers data from both primary and secondary sources Secondary data is already available in the company To gather primary data they organize radio shows and music concerts by sponsoring
MARKETING MIX The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market Marketing-mix decisions must be made for influencing the trade channels as well as the final consumers McCarthy classified these tools into four broad groups that he called the four Ps of marketing product price place and promotion Note that the four Ps represent the sellers view of the marketing tools available for influencing buyers
MARKETING MIX MARKETING MIX The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market Marketing-mix decisions must be made for influencing the trade channels as well as the final consumers McCarthy classified these tools into four broad groups that he called the four Ps of marketing product price place and promotion Note that the four Ps represent the se
Product Place Product variety Channels Quality Coverage
Design Assortments Features Locations Brand name Inventory Packaging Transport Sizes Prices
PromotionServicesWarranties
List price Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing
PRODUCT Product Place Product variety Channels Quality Coverage Design Assortments Features Locations Brand name Inventory Packaging Transport Sizes Prices
PromotionServicesWarranties
List price
Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing ldquoProduct means set of tangible and intangible attributes which may include packaging color price quality and brand plus the sellerrsquos services and reputation A product may be a place service good or promotionrdquo BRANDS BRANDS Brand is a name term sign symbol or design that adds value to the products LS amp CO earns remarkable revenues throughout the year coz its products are considered to be the worldrsquos largest quality products
S amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different
body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers
LS amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers LEVIS STRAUSS SIGNATUREreg
The Levi Strauss Signaturetrade brand was launched in 2003 exclusively for consumers who shop in the masschannel The brand gives value-conscious consumers access to high-quality affordable and fashionable jeanswear from a company and name they trustThe Levi Strauss Signaturetrade brand includes a collection of denim and non-denim pants shirts skirts and jacketsfor men women and children all designed with the high quality
PRODUCT ATTRIBUTES PRODUCT ATTRIBUTES
Products are usually considered to be the No1 factor contributing towards building goodwill of a firm A productshould be unique durable reliable comfortable and economical Following are some of the basic attributes ofLSampCOrsquoS products
Variety Features Design Color Size
VARIETY VARIETY
Levirsquos products today are perceived by many as a symbol of youth freedom confidence individualism independence amp comfort LS amp CO provides a wide variety of products including
JEANS JEANS Levirsquos jeans have been present at nearly every pivotal moment in history and culture for the past 150 yearsFeaturesFeatures are competitive tools that differentiate the companyrsquos products from its competitorrsquos products Following are some of the main and distinctive features of Levirsquos products Comfort Levirsquos jeans and other products are comfortable enough to be worn even at the times of protest war cultural revolution relative peace and pure fun Durability
The two figures on the patch of Levirsquos jeans withwhips in hand pulling in opposite directions yet the jeans remainintact symbolize the strength and durability of the lsquoPatent rivetedclothingrsquo
Style
Clothing means more than just fabric thread and rivets To clotheoneself means to put on something that symbolizes who you are Levirsquosjeans are available in different styles for men and women
LEVIrsquoS PORTFOLIO ANALYSIS Levirsquos corporate strategy involves a number of businesses so managers can manage this collection or portfolio of businesses by using a corporate portfolio matrix BCG Matrix BCG Matrix ldquoA strategy tool that guides resource allocation decisions on the basis of market share and growth rate of SBUrsquosrdquo
Boston Consulting Group introduced the idea of BCG matrix that an organizationrsquos businesses could be evaluatedand plotted using a 22 matrix to identify which ones offered high potential and which ones were a drain onorganizational resources
Horizontal Axis The horizontal axis represents market share which is evaluated as low or high Vertical Axis The vertical axis indicates anticipated market growth which is also evaluated as low or highCATEGORIES Based on its evaluation the LS amp COrsquos businesses are placed in the following
STARS (High Growth High Market Share) ldquoStars include the businesses which are in a fast growing market and hold a dominant share of that marketrdquo Dockersreg come under the head of stars as it is the major source of income for the company CASH COWS (Low Growth High Market Share) CASH COWS (Low Growth High Market Share) Businesses in this category generate large amounts of cash but their prospects for furure growth are limitedrdquo The women apparels has got a low growth and high market share so it comes under the Cash Cows head QUESTION MARKS(High Growth Low Market Share) QUESTION MARKS(High Growth Low Market Share) ldquoThese businesses are in an attractive industry but hold a small market share percentagerdquo Levirsquos jeans come under the head of question marks with respect to Pakistan
Price DeterminationDuring the determination of the price company not considered the competitors but the standard that is used is considered Our price is influenced by the following factors-
Cost of the product Affordable for the target market Demand of the product
Uniqueness and innovative features of the products Competitors We are much proud to say with surety that our products completely satisfy our consumers thatrsquos why we donrsquot face much competition in our business But yet there are some competitors eg
Pepe Jeans Leeds (US Apparels) GAAP Jeans
Camb r id g e bull Our prices are not influenced by the competitors S uch a stuff design and fashion which donrsquot have the enough sales are recall back to the company
Again company issues this stuff to their own outlets for sale at discount prices at 14 August
STRATEGIES LS amp CO placed its products according to following strategiesPlacing according to Class and Attributes LS amp CO Positioned its products according to different classes and genders
Placing according to Competitors LS amp CO Keep in mind the price and quality of the products and try to make its products better Placing according to Price and Quality LS amp CO introduces best quality at different prices to its clients Placing according to Technology LS amp CO has tried to build its image as an innovator by coming in Pakistan with their Jeans having new and latest style and look
Promotion objectives Promotion ob PROMOTION PROMOTION jectives o To inform persuade and remind the potential customers about its products o Increase awareness and build primary demand o To build strong brand equity o Build Companyrsquos image as innovator o To create bonds between public and Levi Strauss by helping the people o To create the importance of its products Sales Sales promotion- promotion-
For the promotion of sales Levi Strauss amp Co adopt a very effective but comprehensive strategy Levis pays attention to the publicity of its products The major source of promotion of levirsquos is done by creating public relations The sales promotion of LEVIS targets the end consumers Since the Levirsquos JEANS are in growth stage in Pakistan therefore the promotional strategy is based on persuading of prospective buyers Levirsquos uses the following promotional strategies to promote its product
Personal selling by the representative of the organization takes place face to face with final consumers Mass Selling Levis does mass selling to inform a bulk of persons by advertising Advertising- Advertisin g- The type of advertising used by LEVIS Competitive advertising The advertisement given by the LEVIS stresses on the demand of the product and enhancement of its features Institutional advertising Levis uses institutional advertising to promote companyrsquos image by saying Many Copy the Red Tab No One can copy the Origina Advertising mediums- Advertisin g mediums- The advertising media used by the company are
Television Fashion Magazines Newspapers
Internet Bill boards banners etc
Television amp Radio Advertisements of Levi Strauss amp Co are very innovative and eye-catching Buyers are attracted towards the product The advertisements are placed at the international level Fashion Magazines amp Newspapers
For fashion magazines and newspapers LSampCo is a target due to its grand brand equity it has become a benchmark for all the others to follow The newspaper gives a coverage to the social events in which LS ampCo takes part with great interest Whereas fashion magazines are always dealing with the gorgeous models working with LSamp Co and the unique outfits of the models
Internet- Levis provides up-to-date information to their customers through electronic media ie from their websit Billboards amp banners- Billboards and banners are also used for the advertisement purpose
Background history
bullbullThe company was founded by Levi Strauss in 1853 primarily selling wholesale dry goods The company was founded in San Francisco CaliforniabullbullA tailor named Jacob Davis thought of an idea to use copper rivets to reinforce the points of strain on pantsbullbullDavis and Strauss purchased the patent of the idea of using copper rivets in clothing on May 20 1873
Company growth
bullbullThe innovation of the rivets in the jeans differentiated Levidifferentiated Levirsquorsquos jeans from others because of its increased durabilitybullbullOver the years LeviOver Levirsquorsquos jeans have become more popular initially due to its durability Jean products expanded targeting different consumersbullbullLevi Strauss amp Co eventually captures most of the denim jean market becomes the largest manufacturer of jeans and profits reach $1 billion by 1974
bullbull1853 Levi Strauss begins selling dry goods in San Franciscobullbull1873 Levi Strauss amp Co patent riveted jeans and begin selling thembullbull1912 KoverallsKoveralls denim playsuit for children is first nationally sold product for the companybullbull1935 Company sells first blue jeans for womenbullbull1940s US government issues denim work clothes for employees in the defense industrybullbull1974 Company sales reach $1 billion1974 billionbullbull1986 Company introduces Dockers as a new casual line of clothesnew clothes
Successes
bull
Since the patent of the rivets in jeans in 1873 the company achieved monopoly power Monopoly power was gained through entry barriers The patent granted the firm monopoly rights to sell riveted jeans bullndashAlso by product differentiation The rivets on the jeans allowed for longer durability a form of vertical differentiation Product differentiation and barriers to entry allowed the company to gain more popularity and market share ndashbullbull
bullbullBy 1977 Levi Strauss amp Co is the worldBy worldrsquorsquos largest jean manufacturerbullbullDepartment stores and boutiques sell LeviDepartment Levirsquorsquos products and are additional channels of distribution for the companybullbullLeviLevirsquorsquos provides a wide range of products that target different market segments capturing demandsbullbullAfter the release of the 501 product line LeviAfter Levirsquorsquos enjoys worldwide market dominance in the denim jean marketbullbullLevi Strauss amp Co maintains itLevi itrsquorsquos image as an American Icon and the originator of American jeans
Positioning
bullbullOther marketing strategies like the position of the product crOther created eated increased differentiation contributing to the companies market powerbullbullIn 1930s the company survived the Great Depression due to increased interest in Western culturendashndashJeans were positioned as being worn by ldquoldquocowboyscowboysrdquordquobullbullLeviLevirsquorsquos jeans were issued to employees in the defense industry (including veterans) during World War II(IIndashndashPost World War II veterans that went to college wore LeviPost Levirsquorsquos jeans on campuses increasing popularitybullbullWWII veterans were regarded as heroesndashndashJeans were shown to be suitable for casual wear rather than worJeans workkndashndashDuring the Baby Boom era LeviDuring Levirsquorsquos targets younger consumers and positions product as ldquoldquocoolcoolrdquordquobullbullEarly movie stars wore LeviEarly Levirsquorsquos jeans An example of celebrity endorsements endorsementbullbullConsumer demand shifts from durability of jeans to fashion of jeConsumer jeansansndashndashCulturally jeans became symbol of youth and rebellionCulturally rebellionbullbullIn 1960s student protesters wore jeans as a uniformIn uniformbullbullIn 1970s company sells bellbottom jeansIn jeansbullbullThe firm positioned its products with changing times and changiThe changing ng demands keeping existing customers and capturing new markets Increases in sales ultimately increased profitsIncreases profitsSuccesses
Competetion
Effect
bullbullLevi Strauss amp Co was threatened by competition because barrieLevi barriers rs of entry were relatively low in the jean market (excluding the patent)bullbullSome of LeviSome Levirsquorsquos competitors includendashndashCalvin KleinCalvin KleinndashndashGap JeansGap JeansndashndashVF Corp (Lee
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
INTRODUCTION
Levi Strauss amp Co (LSampCO) is one of the worlds largest brand-name apparel marketers with sales in more than 110 countries There is no other company with a comparable global presence in the jeans and casual pants markets Today the Levisreg trademark is one of the most recognized in the world and is registered in more than 160 countries The company is privately held by descendants of the family of Levi Strauss Shares of company stock are not publicly traded
The company employs a staff of approximately 8850 people worldwide including approximately 1000 people at its San Francisco California headquarters Levi Strauss amp Co currently makes jeans in approximately 108 sizes and 20 finish fabrics With 2007 net sales of $41 billion the company is committed to building upon strong heritage and brand equity as they position the company for future growth
BRANDS The products of Levi Strauss amp Co are sold under three brands Levisreg Since their invention in 1873 Levisreg jeans have become one of the most successful and widely recognized brands in the history of the apparel industry Dockersreg Dockersreg brand which pioneered the movement toward business casual has led the US khaki category since the brands 1986 launch and is now available in numerous countries Levi Strauss Signaturetrade In 2003 the launch of the Levi Strauss Signaturetrade brand giving value consumers high- quality and fashionable clothing from a company on which the consumers trust DIVISIONS
HISTORY
Today the Levirsquosreg brand is an authentic American icon known the world over Levi Strauss started it 150 years ago amp forever earned a place in history In 1847 Levi Strauss his two sisters amp mother sailed for America where they joined half-brothers Jonas amp Louis in New York Levi joined their dry goods business In 1853 Levi sailed to San Francisco to join dry goods business and started selling clothing bedding amp linen to small stores in California
In 1902 Levi died and his two nephews inherited the business In 1910rsquos LSampCO received ldquoBlue Ribbonrdquo highest award for waist overalls in Panama One-piece garment for women was introduced to work and play In 1930rsquos the Great Depression stroke amp demand for Levirsquos jeans shirts and jackets declined
In 1991 the first original Levirsquos store was opened in United States In 1994 Dockers brand was introduced in Europe It launched its first website in 1995In 1996 it introduced its Slates reg brand a new style for men wearing In 1999 classic 5 pocket pants were reinvented
In 2000 LSampCO introduced Levirsquos reg engineered jeans TM the reinvention of jeans for the new generation It named No 2 for Americarsquos best companies for minorities In 2003 it celebrated its 150th anniversary of its founding and 130th anniversary of invention of blue jeans
Products Positioning and Market segmentation
Advertising professionals realize that the heart of any campaign is the product and the position it holds in peoples minds Products and their brand names are newsmakers themselves Understanding the complexities of a brand identity and its position is no easy task
One of the most controversial areas of product concepts is the brand extension A new product gets to share the name of an older established brand Early theorizing suggested that brand extensions would sap market clout from the established product but these fears proved groundless Today brand extensions occur not only within the company but companies are licensing their brand names to all kinds of products in the hope of increasing brand awareness
SCANNING THE MARKETING ENVIRONMENT
Like other successful companies Levirsquos also has realized that the marketing environment presents a never-ending series of opportunities and threats The major responsibility for identifying significant changes in the macro environment falls to a companyrsquos marketers More than any other group in the company the marketing managers of Levis are the trend trackers and opportunity seekers
Many opportunities are found by identifying trends (directions or sequences of events that have some momentum and durability) and mega trends (major social economic political and technological changes that have long-lasting influence)
Within the rapidly changing global picture the marketers of Levirsquos are monitoring the following six major ldquoEnvironmental Forcesrdquo
Demographic Environment Economic Environment Natural Environment Technological Environment Political-Legal Environment Social-Cultural Environment
Market Segmentation
Market segmentation is the selection of groups of people who will be most receptive to a product The most frequent methods of segmenting include demographic variables such as age sex race income occupation education household status and geographic location
psychographic variables such as life-style activities interests and opinions product use patterns and product benefits Much segmentation involves combinations of these methods No matter how segments are defined however they are characterized by considerable change over time The readings in this section exemplify areas of rapid change
BASIS OF MARKET SEGMENTATION
Demographic SegmentationGeographic Segmentation Psychographic Segmentation Behavioral Segmentation
Target Market 501reg JEANS targets its market by evaluating the wants of customers Mostly Levirsquos targets its market among the following classes bull Upper Class bull Upper Middle Class
Target Market Strategy Target market strategy adopted by Levis is basically on having long-term relations with their customers and to provide them with better product
Benefits of Segmentation Levis has got customer oriented approach by segmentation Company is promoting its products effectively within segments by print media as well as electronic media eg Newspapers Signboards Television commercials Internet etc Company is providing their customers with stylish better quality and different product keeping in view its cost Conditions for effective segmentation Conditions for effective segmentation 501reg JEANS is fulfilling the conditions for effective segmentation
Segments are strong enough to make profit Segments of company are measurable Limitation of Segmentation Limitation of Se gmentation
Because of segmentation Levirsquos faces some limitationsLack of awareness in middle classCompany has to pay extra cost for multi-advertisementIn Pakistan they have to face several Cultural Barriers
Marketing Research
Marketin g Research According to Levirsquos marketing logistic manager their company conducts a research to know bull Whatrsquos in trend bull What are the needs of customers Sources of Data Sources of Data Levirsquos gathers data from both primary and secondary sources Secondary data is already available in the company To gather primary data they organize radio shows and music concerts by sponsoring
MARKETING MIX The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market Marketing-mix decisions must be made for influencing the trade channels as well as the final consumers McCarthy classified these tools into four broad groups that he called the four Ps of marketing product price place and promotion Note that the four Ps represent the sellers view of the marketing tools available for influencing buyers
MARKETING MIX MARKETING MIX The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market Marketing-mix decisions must be made for influencing the trade channels as well as the final consumers McCarthy classified these tools into four broad groups that he called the four Ps of marketing product price place and promotion Note that the four Ps represent the se
Product Place Product variety Channels Quality Coverage
Design Assortments Features Locations Brand name Inventory Packaging Transport Sizes Prices
PromotionServicesWarranties
List price Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing
PRODUCT Product Place Product variety Channels Quality Coverage Design Assortments Features Locations Brand name Inventory Packaging Transport Sizes Prices
PromotionServicesWarranties
List price
Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing ldquoProduct means set of tangible and intangible attributes which may include packaging color price quality and brand plus the sellerrsquos services and reputation A product may be a place service good or promotionrdquo BRANDS BRANDS Brand is a name term sign symbol or design that adds value to the products LS amp CO earns remarkable revenues throughout the year coz its products are considered to be the worldrsquos largest quality products
S amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different
body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers
LS amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers LEVIS STRAUSS SIGNATUREreg
The Levi Strauss Signaturetrade brand was launched in 2003 exclusively for consumers who shop in the masschannel The brand gives value-conscious consumers access to high-quality affordable and fashionable jeanswear from a company and name they trustThe Levi Strauss Signaturetrade brand includes a collection of denim and non-denim pants shirts skirts and jacketsfor men women and children all designed with the high quality
PRODUCT ATTRIBUTES PRODUCT ATTRIBUTES
Products are usually considered to be the No1 factor contributing towards building goodwill of a firm A productshould be unique durable reliable comfortable and economical Following are some of the basic attributes ofLSampCOrsquoS products
Variety Features Design Color Size
VARIETY VARIETY
Levirsquos products today are perceived by many as a symbol of youth freedom confidence individualism independence amp comfort LS amp CO provides a wide variety of products including
JEANS JEANS Levirsquos jeans have been present at nearly every pivotal moment in history and culture for the past 150 yearsFeaturesFeatures are competitive tools that differentiate the companyrsquos products from its competitorrsquos products Following are some of the main and distinctive features of Levirsquos products Comfort Levirsquos jeans and other products are comfortable enough to be worn even at the times of protest war cultural revolution relative peace and pure fun Durability
The two figures on the patch of Levirsquos jeans withwhips in hand pulling in opposite directions yet the jeans remainintact symbolize the strength and durability of the lsquoPatent rivetedclothingrsquo
Style
Clothing means more than just fabric thread and rivets To clotheoneself means to put on something that symbolizes who you are Levirsquosjeans are available in different styles for men and women
LEVIrsquoS PORTFOLIO ANALYSIS Levirsquos corporate strategy involves a number of businesses so managers can manage this collection or portfolio of businesses by using a corporate portfolio matrix BCG Matrix BCG Matrix ldquoA strategy tool that guides resource allocation decisions on the basis of market share and growth rate of SBUrsquosrdquo
Boston Consulting Group introduced the idea of BCG matrix that an organizationrsquos businesses could be evaluatedand plotted using a 22 matrix to identify which ones offered high potential and which ones were a drain onorganizational resources
Horizontal Axis The horizontal axis represents market share which is evaluated as low or high Vertical Axis The vertical axis indicates anticipated market growth which is also evaluated as low or highCATEGORIES Based on its evaluation the LS amp COrsquos businesses are placed in the following
STARS (High Growth High Market Share) ldquoStars include the businesses which are in a fast growing market and hold a dominant share of that marketrdquo Dockersreg come under the head of stars as it is the major source of income for the company CASH COWS (Low Growth High Market Share) CASH COWS (Low Growth High Market Share) Businesses in this category generate large amounts of cash but their prospects for furure growth are limitedrdquo The women apparels has got a low growth and high market share so it comes under the Cash Cows head QUESTION MARKS(High Growth Low Market Share) QUESTION MARKS(High Growth Low Market Share) ldquoThese businesses are in an attractive industry but hold a small market share percentagerdquo Levirsquos jeans come under the head of question marks with respect to Pakistan
Price DeterminationDuring the determination of the price company not considered the competitors but the standard that is used is considered Our price is influenced by the following factors-
Cost of the product Affordable for the target market Demand of the product
Uniqueness and innovative features of the products Competitors We are much proud to say with surety that our products completely satisfy our consumers thatrsquos why we donrsquot face much competition in our business But yet there are some competitors eg
Pepe Jeans Leeds (US Apparels) GAAP Jeans
Camb r id g e bull Our prices are not influenced by the competitors S uch a stuff design and fashion which donrsquot have the enough sales are recall back to the company
Again company issues this stuff to their own outlets for sale at discount prices at 14 August
STRATEGIES LS amp CO placed its products according to following strategiesPlacing according to Class and Attributes LS amp CO Positioned its products according to different classes and genders
Placing according to Competitors LS amp CO Keep in mind the price and quality of the products and try to make its products better Placing according to Price and Quality LS amp CO introduces best quality at different prices to its clients Placing according to Technology LS amp CO has tried to build its image as an innovator by coming in Pakistan with their Jeans having new and latest style and look
Promotion objectives Promotion ob PROMOTION PROMOTION jectives o To inform persuade and remind the potential customers about its products o Increase awareness and build primary demand o To build strong brand equity o Build Companyrsquos image as innovator o To create bonds between public and Levi Strauss by helping the people o To create the importance of its products Sales Sales promotion- promotion-
For the promotion of sales Levi Strauss amp Co adopt a very effective but comprehensive strategy Levis pays attention to the publicity of its products The major source of promotion of levirsquos is done by creating public relations The sales promotion of LEVIS targets the end consumers Since the Levirsquos JEANS are in growth stage in Pakistan therefore the promotional strategy is based on persuading of prospective buyers Levirsquos uses the following promotional strategies to promote its product
Personal selling by the representative of the organization takes place face to face with final consumers Mass Selling Levis does mass selling to inform a bulk of persons by advertising Advertising- Advertisin g- The type of advertising used by LEVIS Competitive advertising The advertisement given by the LEVIS stresses on the demand of the product and enhancement of its features Institutional advertising Levis uses institutional advertising to promote companyrsquos image by saying Many Copy the Red Tab No One can copy the Origina Advertising mediums- Advertisin g mediums- The advertising media used by the company are
Television Fashion Magazines Newspapers
Internet Bill boards banners etc
Television amp Radio Advertisements of Levi Strauss amp Co are very innovative and eye-catching Buyers are attracted towards the product The advertisements are placed at the international level Fashion Magazines amp Newspapers
For fashion magazines and newspapers LSampCo is a target due to its grand brand equity it has become a benchmark for all the others to follow The newspaper gives a coverage to the social events in which LS ampCo takes part with great interest Whereas fashion magazines are always dealing with the gorgeous models working with LSamp Co and the unique outfits of the models
Internet- Levis provides up-to-date information to their customers through electronic media ie from their websit Billboards amp banners- Billboards and banners are also used for the advertisement purpose
Background history
bullbullThe company was founded by Levi Strauss in 1853 primarily selling wholesale dry goods The company was founded in San Francisco CaliforniabullbullA tailor named Jacob Davis thought of an idea to use copper rivets to reinforce the points of strain on pantsbullbullDavis and Strauss purchased the patent of the idea of using copper rivets in clothing on May 20 1873
Company growth
bullbullThe innovation of the rivets in the jeans differentiated Levidifferentiated Levirsquorsquos jeans from others because of its increased durabilitybullbullOver the years LeviOver Levirsquorsquos jeans have become more popular initially due to its durability Jean products expanded targeting different consumersbullbullLevi Strauss amp Co eventually captures most of the denim jean market becomes the largest manufacturer of jeans and profits reach $1 billion by 1974
bullbull1853 Levi Strauss begins selling dry goods in San Franciscobullbull1873 Levi Strauss amp Co patent riveted jeans and begin selling thembullbull1912 KoverallsKoveralls denim playsuit for children is first nationally sold product for the companybullbull1935 Company sells first blue jeans for womenbullbull1940s US government issues denim work clothes for employees in the defense industrybullbull1974 Company sales reach $1 billion1974 billionbullbull1986 Company introduces Dockers as a new casual line of clothesnew clothes
Successes
bull
Since the patent of the rivets in jeans in 1873 the company achieved monopoly power Monopoly power was gained through entry barriers The patent granted the firm monopoly rights to sell riveted jeans bullndashAlso by product differentiation The rivets on the jeans allowed for longer durability a form of vertical differentiation Product differentiation and barriers to entry allowed the company to gain more popularity and market share ndashbullbull
bullbullBy 1977 Levi Strauss amp Co is the worldBy worldrsquorsquos largest jean manufacturerbullbullDepartment stores and boutiques sell LeviDepartment Levirsquorsquos products and are additional channels of distribution for the companybullbullLeviLevirsquorsquos provides a wide range of products that target different market segments capturing demandsbullbullAfter the release of the 501 product line LeviAfter Levirsquorsquos enjoys worldwide market dominance in the denim jean marketbullbullLevi Strauss amp Co maintains itLevi itrsquorsquos image as an American Icon and the originator of American jeans
Positioning
bullbullOther marketing strategies like the position of the product crOther created eated increased differentiation contributing to the companies market powerbullbullIn 1930s the company survived the Great Depression due to increased interest in Western culturendashndashJeans were positioned as being worn by ldquoldquocowboyscowboysrdquordquobullbullLeviLevirsquorsquos jeans were issued to employees in the defense industry (including veterans) during World War II(IIndashndashPost World War II veterans that went to college wore LeviPost Levirsquorsquos jeans on campuses increasing popularitybullbullWWII veterans were regarded as heroesndashndashJeans were shown to be suitable for casual wear rather than worJeans workkndashndashDuring the Baby Boom era LeviDuring Levirsquorsquos targets younger consumers and positions product as ldquoldquocoolcoolrdquordquobullbullEarly movie stars wore LeviEarly Levirsquorsquos jeans An example of celebrity endorsements endorsementbullbullConsumer demand shifts from durability of jeans to fashion of jeConsumer jeansansndashndashCulturally jeans became symbol of youth and rebellionCulturally rebellionbullbullIn 1960s student protesters wore jeans as a uniformIn uniformbullbullIn 1970s company sells bellbottom jeansIn jeansbullbullThe firm positioned its products with changing times and changiThe changing ng demands keeping existing customers and capturing new markets Increases in sales ultimately increased profitsIncreases profitsSuccesses
Competetion
Effect
bullbullLevi Strauss amp Co was threatened by competition because barrieLevi barriers rs of entry were relatively low in the jean market (excluding the patent)bullbullSome of LeviSome Levirsquorsquos competitors includendashndashCalvin KleinCalvin KleinndashndashGap JeansGap JeansndashndashVF Corp (Lee
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
BRANDS The products of Levi Strauss amp Co are sold under three brands Levisreg Since their invention in 1873 Levisreg jeans have become one of the most successful and widely recognized brands in the history of the apparel industry Dockersreg Dockersreg brand which pioneered the movement toward business casual has led the US khaki category since the brands 1986 launch and is now available in numerous countries Levi Strauss Signaturetrade In 2003 the launch of the Levi Strauss Signaturetrade brand giving value consumers high- quality and fashionable clothing from a company on which the consumers trust DIVISIONS
HISTORY
Today the Levirsquosreg brand is an authentic American icon known the world over Levi Strauss started it 150 years ago amp forever earned a place in history In 1847 Levi Strauss his two sisters amp mother sailed for America where they joined half-brothers Jonas amp Louis in New York Levi joined their dry goods business In 1853 Levi sailed to San Francisco to join dry goods business and started selling clothing bedding amp linen to small stores in California
In 1902 Levi died and his two nephews inherited the business In 1910rsquos LSampCO received ldquoBlue Ribbonrdquo highest award for waist overalls in Panama One-piece garment for women was introduced to work and play In 1930rsquos the Great Depression stroke amp demand for Levirsquos jeans shirts and jackets declined
In 1991 the first original Levirsquos store was opened in United States In 1994 Dockers brand was introduced in Europe It launched its first website in 1995In 1996 it introduced its Slates reg brand a new style for men wearing In 1999 classic 5 pocket pants were reinvented
In 2000 LSampCO introduced Levirsquos reg engineered jeans TM the reinvention of jeans for the new generation It named No 2 for Americarsquos best companies for minorities In 2003 it celebrated its 150th anniversary of its founding and 130th anniversary of invention of blue jeans
Products Positioning and Market segmentation
Advertising professionals realize that the heart of any campaign is the product and the position it holds in peoples minds Products and their brand names are newsmakers themselves Understanding the complexities of a brand identity and its position is no easy task
One of the most controversial areas of product concepts is the brand extension A new product gets to share the name of an older established brand Early theorizing suggested that brand extensions would sap market clout from the established product but these fears proved groundless Today brand extensions occur not only within the company but companies are licensing their brand names to all kinds of products in the hope of increasing brand awareness
SCANNING THE MARKETING ENVIRONMENT
Like other successful companies Levirsquos also has realized that the marketing environment presents a never-ending series of opportunities and threats The major responsibility for identifying significant changes in the macro environment falls to a companyrsquos marketers More than any other group in the company the marketing managers of Levis are the trend trackers and opportunity seekers
Many opportunities are found by identifying trends (directions or sequences of events that have some momentum and durability) and mega trends (major social economic political and technological changes that have long-lasting influence)
Within the rapidly changing global picture the marketers of Levirsquos are monitoring the following six major ldquoEnvironmental Forcesrdquo
Demographic Environment Economic Environment Natural Environment Technological Environment Political-Legal Environment Social-Cultural Environment
Market Segmentation
Market segmentation is the selection of groups of people who will be most receptive to a product The most frequent methods of segmenting include demographic variables such as age sex race income occupation education household status and geographic location
psychographic variables such as life-style activities interests and opinions product use patterns and product benefits Much segmentation involves combinations of these methods No matter how segments are defined however they are characterized by considerable change over time The readings in this section exemplify areas of rapid change
BASIS OF MARKET SEGMENTATION
Demographic SegmentationGeographic Segmentation Psychographic Segmentation Behavioral Segmentation
Target Market 501reg JEANS targets its market by evaluating the wants of customers Mostly Levirsquos targets its market among the following classes bull Upper Class bull Upper Middle Class
Target Market Strategy Target market strategy adopted by Levis is basically on having long-term relations with their customers and to provide them with better product
Benefits of Segmentation Levis has got customer oriented approach by segmentation Company is promoting its products effectively within segments by print media as well as electronic media eg Newspapers Signboards Television commercials Internet etc Company is providing their customers with stylish better quality and different product keeping in view its cost Conditions for effective segmentation Conditions for effective segmentation 501reg JEANS is fulfilling the conditions for effective segmentation
Segments are strong enough to make profit Segments of company are measurable Limitation of Segmentation Limitation of Se gmentation
Because of segmentation Levirsquos faces some limitationsLack of awareness in middle classCompany has to pay extra cost for multi-advertisementIn Pakistan they have to face several Cultural Barriers
Marketing Research
Marketin g Research According to Levirsquos marketing logistic manager their company conducts a research to know bull Whatrsquos in trend bull What are the needs of customers Sources of Data Sources of Data Levirsquos gathers data from both primary and secondary sources Secondary data is already available in the company To gather primary data they organize radio shows and music concerts by sponsoring
MARKETING MIX The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market Marketing-mix decisions must be made for influencing the trade channels as well as the final consumers McCarthy classified these tools into four broad groups that he called the four Ps of marketing product price place and promotion Note that the four Ps represent the sellers view of the marketing tools available for influencing buyers
MARKETING MIX MARKETING MIX The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market Marketing-mix decisions must be made for influencing the trade channels as well as the final consumers McCarthy classified these tools into four broad groups that he called the four Ps of marketing product price place and promotion Note that the four Ps represent the se
Product Place Product variety Channels Quality Coverage
Design Assortments Features Locations Brand name Inventory Packaging Transport Sizes Prices
PromotionServicesWarranties
List price Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing
PRODUCT Product Place Product variety Channels Quality Coverage Design Assortments Features Locations Brand name Inventory Packaging Transport Sizes Prices
PromotionServicesWarranties
List price
Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing ldquoProduct means set of tangible and intangible attributes which may include packaging color price quality and brand plus the sellerrsquos services and reputation A product may be a place service good or promotionrdquo BRANDS BRANDS Brand is a name term sign symbol or design that adds value to the products LS amp CO earns remarkable revenues throughout the year coz its products are considered to be the worldrsquos largest quality products
S amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different
body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers
LS amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers LEVIS STRAUSS SIGNATUREreg
The Levi Strauss Signaturetrade brand was launched in 2003 exclusively for consumers who shop in the masschannel The brand gives value-conscious consumers access to high-quality affordable and fashionable jeanswear from a company and name they trustThe Levi Strauss Signaturetrade brand includes a collection of denim and non-denim pants shirts skirts and jacketsfor men women and children all designed with the high quality
PRODUCT ATTRIBUTES PRODUCT ATTRIBUTES
Products are usually considered to be the No1 factor contributing towards building goodwill of a firm A productshould be unique durable reliable comfortable and economical Following are some of the basic attributes ofLSampCOrsquoS products
Variety Features Design Color Size
VARIETY VARIETY
Levirsquos products today are perceived by many as a symbol of youth freedom confidence individualism independence amp comfort LS amp CO provides a wide variety of products including
JEANS JEANS Levirsquos jeans have been present at nearly every pivotal moment in history and culture for the past 150 yearsFeaturesFeatures are competitive tools that differentiate the companyrsquos products from its competitorrsquos products Following are some of the main and distinctive features of Levirsquos products Comfort Levirsquos jeans and other products are comfortable enough to be worn even at the times of protest war cultural revolution relative peace and pure fun Durability
The two figures on the patch of Levirsquos jeans withwhips in hand pulling in opposite directions yet the jeans remainintact symbolize the strength and durability of the lsquoPatent rivetedclothingrsquo
Style
Clothing means more than just fabric thread and rivets To clotheoneself means to put on something that symbolizes who you are Levirsquosjeans are available in different styles for men and women
LEVIrsquoS PORTFOLIO ANALYSIS Levirsquos corporate strategy involves a number of businesses so managers can manage this collection or portfolio of businesses by using a corporate portfolio matrix BCG Matrix BCG Matrix ldquoA strategy tool that guides resource allocation decisions on the basis of market share and growth rate of SBUrsquosrdquo
Boston Consulting Group introduced the idea of BCG matrix that an organizationrsquos businesses could be evaluatedand plotted using a 22 matrix to identify which ones offered high potential and which ones were a drain onorganizational resources
Horizontal Axis The horizontal axis represents market share which is evaluated as low or high Vertical Axis The vertical axis indicates anticipated market growth which is also evaluated as low or highCATEGORIES Based on its evaluation the LS amp COrsquos businesses are placed in the following
STARS (High Growth High Market Share) ldquoStars include the businesses which are in a fast growing market and hold a dominant share of that marketrdquo Dockersreg come under the head of stars as it is the major source of income for the company CASH COWS (Low Growth High Market Share) CASH COWS (Low Growth High Market Share) Businesses in this category generate large amounts of cash but their prospects for furure growth are limitedrdquo The women apparels has got a low growth and high market share so it comes under the Cash Cows head QUESTION MARKS(High Growth Low Market Share) QUESTION MARKS(High Growth Low Market Share) ldquoThese businesses are in an attractive industry but hold a small market share percentagerdquo Levirsquos jeans come under the head of question marks with respect to Pakistan
Price DeterminationDuring the determination of the price company not considered the competitors but the standard that is used is considered Our price is influenced by the following factors-
Cost of the product Affordable for the target market Demand of the product
Uniqueness and innovative features of the products Competitors We are much proud to say with surety that our products completely satisfy our consumers thatrsquos why we donrsquot face much competition in our business But yet there are some competitors eg
Pepe Jeans Leeds (US Apparels) GAAP Jeans
Camb r id g e bull Our prices are not influenced by the competitors S uch a stuff design and fashion which donrsquot have the enough sales are recall back to the company
Again company issues this stuff to their own outlets for sale at discount prices at 14 August
STRATEGIES LS amp CO placed its products according to following strategiesPlacing according to Class and Attributes LS amp CO Positioned its products according to different classes and genders
Placing according to Competitors LS amp CO Keep in mind the price and quality of the products and try to make its products better Placing according to Price and Quality LS amp CO introduces best quality at different prices to its clients Placing according to Technology LS amp CO has tried to build its image as an innovator by coming in Pakistan with their Jeans having new and latest style and look
Promotion objectives Promotion ob PROMOTION PROMOTION jectives o To inform persuade and remind the potential customers about its products o Increase awareness and build primary demand o To build strong brand equity o Build Companyrsquos image as innovator o To create bonds between public and Levi Strauss by helping the people o To create the importance of its products Sales Sales promotion- promotion-
For the promotion of sales Levi Strauss amp Co adopt a very effective but comprehensive strategy Levis pays attention to the publicity of its products The major source of promotion of levirsquos is done by creating public relations The sales promotion of LEVIS targets the end consumers Since the Levirsquos JEANS are in growth stage in Pakistan therefore the promotional strategy is based on persuading of prospective buyers Levirsquos uses the following promotional strategies to promote its product
Personal selling by the representative of the organization takes place face to face with final consumers Mass Selling Levis does mass selling to inform a bulk of persons by advertising Advertising- Advertisin g- The type of advertising used by LEVIS Competitive advertising The advertisement given by the LEVIS stresses on the demand of the product and enhancement of its features Institutional advertising Levis uses institutional advertising to promote companyrsquos image by saying Many Copy the Red Tab No One can copy the Origina Advertising mediums- Advertisin g mediums- The advertising media used by the company are
Television Fashion Magazines Newspapers
Internet Bill boards banners etc
Television amp Radio Advertisements of Levi Strauss amp Co are very innovative and eye-catching Buyers are attracted towards the product The advertisements are placed at the international level Fashion Magazines amp Newspapers
For fashion magazines and newspapers LSampCo is a target due to its grand brand equity it has become a benchmark for all the others to follow The newspaper gives a coverage to the social events in which LS ampCo takes part with great interest Whereas fashion magazines are always dealing with the gorgeous models working with LSamp Co and the unique outfits of the models
Internet- Levis provides up-to-date information to their customers through electronic media ie from their websit Billboards amp banners- Billboards and banners are also used for the advertisement purpose
Background history
bullbullThe company was founded by Levi Strauss in 1853 primarily selling wholesale dry goods The company was founded in San Francisco CaliforniabullbullA tailor named Jacob Davis thought of an idea to use copper rivets to reinforce the points of strain on pantsbullbullDavis and Strauss purchased the patent of the idea of using copper rivets in clothing on May 20 1873
Company growth
bullbullThe innovation of the rivets in the jeans differentiated Levidifferentiated Levirsquorsquos jeans from others because of its increased durabilitybullbullOver the years LeviOver Levirsquorsquos jeans have become more popular initially due to its durability Jean products expanded targeting different consumersbullbullLevi Strauss amp Co eventually captures most of the denim jean market becomes the largest manufacturer of jeans and profits reach $1 billion by 1974
bullbull1853 Levi Strauss begins selling dry goods in San Franciscobullbull1873 Levi Strauss amp Co patent riveted jeans and begin selling thembullbull1912 KoverallsKoveralls denim playsuit for children is first nationally sold product for the companybullbull1935 Company sells first blue jeans for womenbullbull1940s US government issues denim work clothes for employees in the defense industrybullbull1974 Company sales reach $1 billion1974 billionbullbull1986 Company introduces Dockers as a new casual line of clothesnew clothes
Successes
bull
Since the patent of the rivets in jeans in 1873 the company achieved monopoly power Monopoly power was gained through entry barriers The patent granted the firm monopoly rights to sell riveted jeans bullndashAlso by product differentiation The rivets on the jeans allowed for longer durability a form of vertical differentiation Product differentiation and barriers to entry allowed the company to gain more popularity and market share ndashbullbull
bullbullBy 1977 Levi Strauss amp Co is the worldBy worldrsquorsquos largest jean manufacturerbullbullDepartment stores and boutiques sell LeviDepartment Levirsquorsquos products and are additional channels of distribution for the companybullbullLeviLevirsquorsquos provides a wide range of products that target different market segments capturing demandsbullbullAfter the release of the 501 product line LeviAfter Levirsquorsquos enjoys worldwide market dominance in the denim jean marketbullbullLevi Strauss amp Co maintains itLevi itrsquorsquos image as an American Icon and the originator of American jeans
Positioning
bullbullOther marketing strategies like the position of the product crOther created eated increased differentiation contributing to the companies market powerbullbullIn 1930s the company survived the Great Depression due to increased interest in Western culturendashndashJeans were positioned as being worn by ldquoldquocowboyscowboysrdquordquobullbullLeviLevirsquorsquos jeans were issued to employees in the defense industry (including veterans) during World War II(IIndashndashPost World War II veterans that went to college wore LeviPost Levirsquorsquos jeans on campuses increasing popularitybullbullWWII veterans were regarded as heroesndashndashJeans were shown to be suitable for casual wear rather than worJeans workkndashndashDuring the Baby Boom era LeviDuring Levirsquorsquos targets younger consumers and positions product as ldquoldquocoolcoolrdquordquobullbullEarly movie stars wore LeviEarly Levirsquorsquos jeans An example of celebrity endorsements endorsementbullbullConsumer demand shifts from durability of jeans to fashion of jeConsumer jeansansndashndashCulturally jeans became symbol of youth and rebellionCulturally rebellionbullbullIn 1960s student protesters wore jeans as a uniformIn uniformbullbullIn 1970s company sells bellbottom jeansIn jeansbullbullThe firm positioned its products with changing times and changiThe changing ng demands keeping existing customers and capturing new markets Increases in sales ultimately increased profitsIncreases profitsSuccesses
Competetion
Effect
bullbullLevi Strauss amp Co was threatened by competition because barrieLevi barriers rs of entry were relatively low in the jean market (excluding the patent)bullbullSome of LeviSome Levirsquorsquos competitors includendashndashCalvin KleinCalvin KleinndashndashGap JeansGap JeansndashndashVF Corp (Lee
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
In 2000 LSampCO introduced Levirsquos reg engineered jeans TM the reinvention of jeans for the new generation It named No 2 for Americarsquos best companies for minorities In 2003 it celebrated its 150th anniversary of its founding and 130th anniversary of invention of blue jeans
Products Positioning and Market segmentation
Advertising professionals realize that the heart of any campaign is the product and the position it holds in peoples minds Products and their brand names are newsmakers themselves Understanding the complexities of a brand identity and its position is no easy task
One of the most controversial areas of product concepts is the brand extension A new product gets to share the name of an older established brand Early theorizing suggested that brand extensions would sap market clout from the established product but these fears proved groundless Today brand extensions occur not only within the company but companies are licensing their brand names to all kinds of products in the hope of increasing brand awareness
SCANNING THE MARKETING ENVIRONMENT
Like other successful companies Levirsquos also has realized that the marketing environment presents a never-ending series of opportunities and threats The major responsibility for identifying significant changes in the macro environment falls to a companyrsquos marketers More than any other group in the company the marketing managers of Levis are the trend trackers and opportunity seekers
Many opportunities are found by identifying trends (directions or sequences of events that have some momentum and durability) and mega trends (major social economic political and technological changes that have long-lasting influence)
Within the rapidly changing global picture the marketers of Levirsquos are monitoring the following six major ldquoEnvironmental Forcesrdquo
Demographic Environment Economic Environment Natural Environment Technological Environment Political-Legal Environment Social-Cultural Environment
Market Segmentation
Market segmentation is the selection of groups of people who will be most receptive to a product The most frequent methods of segmenting include demographic variables such as age sex race income occupation education household status and geographic location
psychographic variables such as life-style activities interests and opinions product use patterns and product benefits Much segmentation involves combinations of these methods No matter how segments are defined however they are characterized by considerable change over time The readings in this section exemplify areas of rapid change
BASIS OF MARKET SEGMENTATION
Demographic SegmentationGeographic Segmentation Psychographic Segmentation Behavioral Segmentation
Target Market 501reg JEANS targets its market by evaluating the wants of customers Mostly Levirsquos targets its market among the following classes bull Upper Class bull Upper Middle Class
Target Market Strategy Target market strategy adopted by Levis is basically on having long-term relations with their customers and to provide them with better product
Benefits of Segmentation Levis has got customer oriented approach by segmentation Company is promoting its products effectively within segments by print media as well as electronic media eg Newspapers Signboards Television commercials Internet etc Company is providing their customers with stylish better quality and different product keeping in view its cost Conditions for effective segmentation Conditions for effective segmentation 501reg JEANS is fulfilling the conditions for effective segmentation
Segments are strong enough to make profit Segments of company are measurable Limitation of Segmentation Limitation of Se gmentation
Because of segmentation Levirsquos faces some limitationsLack of awareness in middle classCompany has to pay extra cost for multi-advertisementIn Pakistan they have to face several Cultural Barriers
Marketing Research
Marketin g Research According to Levirsquos marketing logistic manager their company conducts a research to know bull Whatrsquos in trend bull What are the needs of customers Sources of Data Sources of Data Levirsquos gathers data from both primary and secondary sources Secondary data is already available in the company To gather primary data they organize radio shows and music concerts by sponsoring
MARKETING MIX The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market Marketing-mix decisions must be made for influencing the trade channels as well as the final consumers McCarthy classified these tools into four broad groups that he called the four Ps of marketing product price place and promotion Note that the four Ps represent the sellers view of the marketing tools available for influencing buyers
MARKETING MIX MARKETING MIX The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market Marketing-mix decisions must be made for influencing the trade channels as well as the final consumers McCarthy classified these tools into four broad groups that he called the four Ps of marketing product price place and promotion Note that the four Ps represent the se
Product Place Product variety Channels Quality Coverage
Design Assortments Features Locations Brand name Inventory Packaging Transport Sizes Prices
PromotionServicesWarranties
List price Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing
PRODUCT Product Place Product variety Channels Quality Coverage Design Assortments Features Locations Brand name Inventory Packaging Transport Sizes Prices
PromotionServicesWarranties
List price
Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing ldquoProduct means set of tangible and intangible attributes which may include packaging color price quality and brand plus the sellerrsquos services and reputation A product may be a place service good or promotionrdquo BRANDS BRANDS Brand is a name term sign symbol or design that adds value to the products LS amp CO earns remarkable revenues throughout the year coz its products are considered to be the worldrsquos largest quality products
S amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different
body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers
LS amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers LEVIS STRAUSS SIGNATUREreg
The Levi Strauss Signaturetrade brand was launched in 2003 exclusively for consumers who shop in the masschannel The brand gives value-conscious consumers access to high-quality affordable and fashionable jeanswear from a company and name they trustThe Levi Strauss Signaturetrade brand includes a collection of denim and non-denim pants shirts skirts and jacketsfor men women and children all designed with the high quality
PRODUCT ATTRIBUTES PRODUCT ATTRIBUTES
Products are usually considered to be the No1 factor contributing towards building goodwill of a firm A productshould be unique durable reliable comfortable and economical Following are some of the basic attributes ofLSampCOrsquoS products
Variety Features Design Color Size
VARIETY VARIETY
Levirsquos products today are perceived by many as a symbol of youth freedom confidence individualism independence amp comfort LS amp CO provides a wide variety of products including
JEANS JEANS Levirsquos jeans have been present at nearly every pivotal moment in history and culture for the past 150 yearsFeaturesFeatures are competitive tools that differentiate the companyrsquos products from its competitorrsquos products Following are some of the main and distinctive features of Levirsquos products Comfort Levirsquos jeans and other products are comfortable enough to be worn even at the times of protest war cultural revolution relative peace and pure fun Durability
The two figures on the patch of Levirsquos jeans withwhips in hand pulling in opposite directions yet the jeans remainintact symbolize the strength and durability of the lsquoPatent rivetedclothingrsquo
Style
Clothing means more than just fabric thread and rivets To clotheoneself means to put on something that symbolizes who you are Levirsquosjeans are available in different styles for men and women
LEVIrsquoS PORTFOLIO ANALYSIS Levirsquos corporate strategy involves a number of businesses so managers can manage this collection or portfolio of businesses by using a corporate portfolio matrix BCG Matrix BCG Matrix ldquoA strategy tool that guides resource allocation decisions on the basis of market share and growth rate of SBUrsquosrdquo
Boston Consulting Group introduced the idea of BCG matrix that an organizationrsquos businesses could be evaluatedand plotted using a 22 matrix to identify which ones offered high potential and which ones were a drain onorganizational resources
Horizontal Axis The horizontal axis represents market share which is evaluated as low or high Vertical Axis The vertical axis indicates anticipated market growth which is also evaluated as low or highCATEGORIES Based on its evaluation the LS amp COrsquos businesses are placed in the following
STARS (High Growth High Market Share) ldquoStars include the businesses which are in a fast growing market and hold a dominant share of that marketrdquo Dockersreg come under the head of stars as it is the major source of income for the company CASH COWS (Low Growth High Market Share) CASH COWS (Low Growth High Market Share) Businesses in this category generate large amounts of cash but their prospects for furure growth are limitedrdquo The women apparels has got a low growth and high market share so it comes under the Cash Cows head QUESTION MARKS(High Growth Low Market Share) QUESTION MARKS(High Growth Low Market Share) ldquoThese businesses are in an attractive industry but hold a small market share percentagerdquo Levirsquos jeans come under the head of question marks with respect to Pakistan
Price DeterminationDuring the determination of the price company not considered the competitors but the standard that is used is considered Our price is influenced by the following factors-
Cost of the product Affordable for the target market Demand of the product
Uniqueness and innovative features of the products Competitors We are much proud to say with surety that our products completely satisfy our consumers thatrsquos why we donrsquot face much competition in our business But yet there are some competitors eg
Pepe Jeans Leeds (US Apparels) GAAP Jeans
Camb r id g e bull Our prices are not influenced by the competitors S uch a stuff design and fashion which donrsquot have the enough sales are recall back to the company
Again company issues this stuff to their own outlets for sale at discount prices at 14 August
STRATEGIES LS amp CO placed its products according to following strategiesPlacing according to Class and Attributes LS amp CO Positioned its products according to different classes and genders
Placing according to Competitors LS amp CO Keep in mind the price and quality of the products and try to make its products better Placing according to Price and Quality LS amp CO introduces best quality at different prices to its clients Placing according to Technology LS amp CO has tried to build its image as an innovator by coming in Pakistan with their Jeans having new and latest style and look
Promotion objectives Promotion ob PROMOTION PROMOTION jectives o To inform persuade and remind the potential customers about its products o Increase awareness and build primary demand o To build strong brand equity o Build Companyrsquos image as innovator o To create bonds between public and Levi Strauss by helping the people o To create the importance of its products Sales Sales promotion- promotion-
For the promotion of sales Levi Strauss amp Co adopt a very effective but comprehensive strategy Levis pays attention to the publicity of its products The major source of promotion of levirsquos is done by creating public relations The sales promotion of LEVIS targets the end consumers Since the Levirsquos JEANS are in growth stage in Pakistan therefore the promotional strategy is based on persuading of prospective buyers Levirsquos uses the following promotional strategies to promote its product
Personal selling by the representative of the organization takes place face to face with final consumers Mass Selling Levis does mass selling to inform a bulk of persons by advertising Advertising- Advertisin g- The type of advertising used by LEVIS Competitive advertising The advertisement given by the LEVIS stresses on the demand of the product and enhancement of its features Institutional advertising Levis uses institutional advertising to promote companyrsquos image by saying Many Copy the Red Tab No One can copy the Origina Advertising mediums- Advertisin g mediums- The advertising media used by the company are
Television Fashion Magazines Newspapers
Internet Bill boards banners etc
Television amp Radio Advertisements of Levi Strauss amp Co are very innovative and eye-catching Buyers are attracted towards the product The advertisements are placed at the international level Fashion Magazines amp Newspapers
For fashion magazines and newspapers LSampCo is a target due to its grand brand equity it has become a benchmark for all the others to follow The newspaper gives a coverage to the social events in which LS ampCo takes part with great interest Whereas fashion magazines are always dealing with the gorgeous models working with LSamp Co and the unique outfits of the models
Internet- Levis provides up-to-date information to their customers through electronic media ie from their websit Billboards amp banners- Billboards and banners are also used for the advertisement purpose
Background history
bullbullThe company was founded by Levi Strauss in 1853 primarily selling wholesale dry goods The company was founded in San Francisco CaliforniabullbullA tailor named Jacob Davis thought of an idea to use copper rivets to reinforce the points of strain on pantsbullbullDavis and Strauss purchased the patent of the idea of using copper rivets in clothing on May 20 1873
Company growth
bullbullThe innovation of the rivets in the jeans differentiated Levidifferentiated Levirsquorsquos jeans from others because of its increased durabilitybullbullOver the years LeviOver Levirsquorsquos jeans have become more popular initially due to its durability Jean products expanded targeting different consumersbullbullLevi Strauss amp Co eventually captures most of the denim jean market becomes the largest manufacturer of jeans and profits reach $1 billion by 1974
bullbull1853 Levi Strauss begins selling dry goods in San Franciscobullbull1873 Levi Strauss amp Co patent riveted jeans and begin selling thembullbull1912 KoverallsKoveralls denim playsuit for children is first nationally sold product for the companybullbull1935 Company sells first blue jeans for womenbullbull1940s US government issues denim work clothes for employees in the defense industrybullbull1974 Company sales reach $1 billion1974 billionbullbull1986 Company introduces Dockers as a new casual line of clothesnew clothes
Successes
bull
Since the patent of the rivets in jeans in 1873 the company achieved monopoly power Monopoly power was gained through entry barriers The patent granted the firm monopoly rights to sell riveted jeans bullndashAlso by product differentiation The rivets on the jeans allowed for longer durability a form of vertical differentiation Product differentiation and barriers to entry allowed the company to gain more popularity and market share ndashbullbull
bullbullBy 1977 Levi Strauss amp Co is the worldBy worldrsquorsquos largest jean manufacturerbullbullDepartment stores and boutiques sell LeviDepartment Levirsquorsquos products and are additional channels of distribution for the companybullbullLeviLevirsquorsquos provides a wide range of products that target different market segments capturing demandsbullbullAfter the release of the 501 product line LeviAfter Levirsquorsquos enjoys worldwide market dominance in the denim jean marketbullbullLevi Strauss amp Co maintains itLevi itrsquorsquos image as an American Icon and the originator of American jeans
Positioning
bullbullOther marketing strategies like the position of the product crOther created eated increased differentiation contributing to the companies market powerbullbullIn 1930s the company survived the Great Depression due to increased interest in Western culturendashndashJeans were positioned as being worn by ldquoldquocowboyscowboysrdquordquobullbullLeviLevirsquorsquos jeans were issued to employees in the defense industry (including veterans) during World War II(IIndashndashPost World War II veterans that went to college wore LeviPost Levirsquorsquos jeans on campuses increasing popularitybullbullWWII veterans were regarded as heroesndashndashJeans were shown to be suitable for casual wear rather than worJeans workkndashndashDuring the Baby Boom era LeviDuring Levirsquorsquos targets younger consumers and positions product as ldquoldquocoolcoolrdquordquobullbullEarly movie stars wore LeviEarly Levirsquorsquos jeans An example of celebrity endorsements endorsementbullbullConsumer demand shifts from durability of jeans to fashion of jeConsumer jeansansndashndashCulturally jeans became symbol of youth and rebellionCulturally rebellionbullbullIn 1960s student protesters wore jeans as a uniformIn uniformbullbullIn 1970s company sells bellbottom jeansIn jeansbullbullThe firm positioned its products with changing times and changiThe changing ng demands keeping existing customers and capturing new markets Increases in sales ultimately increased profitsIncreases profitsSuccesses
Competetion
Effect
bullbullLevi Strauss amp Co was threatened by competition because barrieLevi barriers rs of entry were relatively low in the jean market (excluding the patent)bullbullSome of LeviSome Levirsquorsquos competitors includendashndashCalvin KleinCalvin KleinndashndashGap JeansGap JeansndashndashVF Corp (Lee
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
psychographic variables such as life-style activities interests and opinions product use patterns and product benefits Much segmentation involves combinations of these methods No matter how segments are defined however they are characterized by considerable change over time The readings in this section exemplify areas of rapid change
BASIS OF MARKET SEGMENTATION
Demographic SegmentationGeographic Segmentation Psychographic Segmentation Behavioral Segmentation
Target Market 501reg JEANS targets its market by evaluating the wants of customers Mostly Levirsquos targets its market among the following classes bull Upper Class bull Upper Middle Class
Target Market Strategy Target market strategy adopted by Levis is basically on having long-term relations with their customers and to provide them with better product
Benefits of Segmentation Levis has got customer oriented approach by segmentation Company is promoting its products effectively within segments by print media as well as electronic media eg Newspapers Signboards Television commercials Internet etc Company is providing their customers with stylish better quality and different product keeping in view its cost Conditions for effective segmentation Conditions for effective segmentation 501reg JEANS is fulfilling the conditions for effective segmentation
Segments are strong enough to make profit Segments of company are measurable Limitation of Segmentation Limitation of Se gmentation
Because of segmentation Levirsquos faces some limitationsLack of awareness in middle classCompany has to pay extra cost for multi-advertisementIn Pakistan they have to face several Cultural Barriers
Marketing Research
Marketin g Research According to Levirsquos marketing logistic manager their company conducts a research to know bull Whatrsquos in trend bull What are the needs of customers Sources of Data Sources of Data Levirsquos gathers data from both primary and secondary sources Secondary data is already available in the company To gather primary data they organize radio shows and music concerts by sponsoring
MARKETING MIX The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market Marketing-mix decisions must be made for influencing the trade channels as well as the final consumers McCarthy classified these tools into four broad groups that he called the four Ps of marketing product price place and promotion Note that the four Ps represent the sellers view of the marketing tools available for influencing buyers
MARKETING MIX MARKETING MIX The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market Marketing-mix decisions must be made for influencing the trade channels as well as the final consumers McCarthy classified these tools into four broad groups that he called the four Ps of marketing product price place and promotion Note that the four Ps represent the se
Product Place Product variety Channels Quality Coverage
Design Assortments Features Locations Brand name Inventory Packaging Transport Sizes Prices
PromotionServicesWarranties
List price Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing
PRODUCT Product Place Product variety Channels Quality Coverage Design Assortments Features Locations Brand name Inventory Packaging Transport Sizes Prices
PromotionServicesWarranties
List price
Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing ldquoProduct means set of tangible and intangible attributes which may include packaging color price quality and brand plus the sellerrsquos services and reputation A product may be a place service good or promotionrdquo BRANDS BRANDS Brand is a name term sign symbol or design that adds value to the products LS amp CO earns remarkable revenues throughout the year coz its products are considered to be the worldrsquos largest quality products
S amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different
body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers
LS amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers LEVIS STRAUSS SIGNATUREreg
The Levi Strauss Signaturetrade brand was launched in 2003 exclusively for consumers who shop in the masschannel The brand gives value-conscious consumers access to high-quality affordable and fashionable jeanswear from a company and name they trustThe Levi Strauss Signaturetrade brand includes a collection of denim and non-denim pants shirts skirts and jacketsfor men women and children all designed with the high quality
PRODUCT ATTRIBUTES PRODUCT ATTRIBUTES
Products are usually considered to be the No1 factor contributing towards building goodwill of a firm A productshould be unique durable reliable comfortable and economical Following are some of the basic attributes ofLSampCOrsquoS products
Variety Features Design Color Size
VARIETY VARIETY
Levirsquos products today are perceived by many as a symbol of youth freedom confidence individualism independence amp comfort LS amp CO provides a wide variety of products including
JEANS JEANS Levirsquos jeans have been present at nearly every pivotal moment in history and culture for the past 150 yearsFeaturesFeatures are competitive tools that differentiate the companyrsquos products from its competitorrsquos products Following are some of the main and distinctive features of Levirsquos products Comfort Levirsquos jeans and other products are comfortable enough to be worn even at the times of protest war cultural revolution relative peace and pure fun Durability
The two figures on the patch of Levirsquos jeans withwhips in hand pulling in opposite directions yet the jeans remainintact symbolize the strength and durability of the lsquoPatent rivetedclothingrsquo
Style
Clothing means more than just fabric thread and rivets To clotheoneself means to put on something that symbolizes who you are Levirsquosjeans are available in different styles for men and women
LEVIrsquoS PORTFOLIO ANALYSIS Levirsquos corporate strategy involves a number of businesses so managers can manage this collection or portfolio of businesses by using a corporate portfolio matrix BCG Matrix BCG Matrix ldquoA strategy tool that guides resource allocation decisions on the basis of market share and growth rate of SBUrsquosrdquo
Boston Consulting Group introduced the idea of BCG matrix that an organizationrsquos businesses could be evaluatedand plotted using a 22 matrix to identify which ones offered high potential and which ones were a drain onorganizational resources
Horizontal Axis The horizontal axis represents market share which is evaluated as low or high Vertical Axis The vertical axis indicates anticipated market growth which is also evaluated as low or highCATEGORIES Based on its evaluation the LS amp COrsquos businesses are placed in the following
STARS (High Growth High Market Share) ldquoStars include the businesses which are in a fast growing market and hold a dominant share of that marketrdquo Dockersreg come under the head of stars as it is the major source of income for the company CASH COWS (Low Growth High Market Share) CASH COWS (Low Growth High Market Share) Businesses in this category generate large amounts of cash but their prospects for furure growth are limitedrdquo The women apparels has got a low growth and high market share so it comes under the Cash Cows head QUESTION MARKS(High Growth Low Market Share) QUESTION MARKS(High Growth Low Market Share) ldquoThese businesses are in an attractive industry but hold a small market share percentagerdquo Levirsquos jeans come under the head of question marks with respect to Pakistan
Price DeterminationDuring the determination of the price company not considered the competitors but the standard that is used is considered Our price is influenced by the following factors-
Cost of the product Affordable for the target market Demand of the product
Uniqueness and innovative features of the products Competitors We are much proud to say with surety that our products completely satisfy our consumers thatrsquos why we donrsquot face much competition in our business But yet there are some competitors eg
Pepe Jeans Leeds (US Apparels) GAAP Jeans
Camb r id g e bull Our prices are not influenced by the competitors S uch a stuff design and fashion which donrsquot have the enough sales are recall back to the company
Again company issues this stuff to their own outlets for sale at discount prices at 14 August
STRATEGIES LS amp CO placed its products according to following strategiesPlacing according to Class and Attributes LS amp CO Positioned its products according to different classes and genders
Placing according to Competitors LS amp CO Keep in mind the price and quality of the products and try to make its products better Placing according to Price and Quality LS amp CO introduces best quality at different prices to its clients Placing according to Technology LS amp CO has tried to build its image as an innovator by coming in Pakistan with their Jeans having new and latest style and look
Promotion objectives Promotion ob PROMOTION PROMOTION jectives o To inform persuade and remind the potential customers about its products o Increase awareness and build primary demand o To build strong brand equity o Build Companyrsquos image as innovator o To create bonds between public and Levi Strauss by helping the people o To create the importance of its products Sales Sales promotion- promotion-
For the promotion of sales Levi Strauss amp Co adopt a very effective but comprehensive strategy Levis pays attention to the publicity of its products The major source of promotion of levirsquos is done by creating public relations The sales promotion of LEVIS targets the end consumers Since the Levirsquos JEANS are in growth stage in Pakistan therefore the promotional strategy is based on persuading of prospective buyers Levirsquos uses the following promotional strategies to promote its product
Personal selling by the representative of the organization takes place face to face with final consumers Mass Selling Levis does mass selling to inform a bulk of persons by advertising Advertising- Advertisin g- The type of advertising used by LEVIS Competitive advertising The advertisement given by the LEVIS stresses on the demand of the product and enhancement of its features Institutional advertising Levis uses institutional advertising to promote companyrsquos image by saying Many Copy the Red Tab No One can copy the Origina Advertising mediums- Advertisin g mediums- The advertising media used by the company are
Television Fashion Magazines Newspapers
Internet Bill boards banners etc
Television amp Radio Advertisements of Levi Strauss amp Co are very innovative and eye-catching Buyers are attracted towards the product The advertisements are placed at the international level Fashion Magazines amp Newspapers
For fashion magazines and newspapers LSampCo is a target due to its grand brand equity it has become a benchmark for all the others to follow The newspaper gives a coverage to the social events in which LS ampCo takes part with great interest Whereas fashion magazines are always dealing with the gorgeous models working with LSamp Co and the unique outfits of the models
Internet- Levis provides up-to-date information to their customers through electronic media ie from their websit Billboards amp banners- Billboards and banners are also used for the advertisement purpose
Background history
bullbullThe company was founded by Levi Strauss in 1853 primarily selling wholesale dry goods The company was founded in San Francisco CaliforniabullbullA tailor named Jacob Davis thought of an idea to use copper rivets to reinforce the points of strain on pantsbullbullDavis and Strauss purchased the patent of the idea of using copper rivets in clothing on May 20 1873
Company growth
bullbullThe innovation of the rivets in the jeans differentiated Levidifferentiated Levirsquorsquos jeans from others because of its increased durabilitybullbullOver the years LeviOver Levirsquorsquos jeans have become more popular initially due to its durability Jean products expanded targeting different consumersbullbullLevi Strauss amp Co eventually captures most of the denim jean market becomes the largest manufacturer of jeans and profits reach $1 billion by 1974
bullbull1853 Levi Strauss begins selling dry goods in San Franciscobullbull1873 Levi Strauss amp Co patent riveted jeans and begin selling thembullbull1912 KoverallsKoveralls denim playsuit for children is first nationally sold product for the companybullbull1935 Company sells first blue jeans for womenbullbull1940s US government issues denim work clothes for employees in the defense industrybullbull1974 Company sales reach $1 billion1974 billionbullbull1986 Company introduces Dockers as a new casual line of clothesnew clothes
Successes
bull
Since the patent of the rivets in jeans in 1873 the company achieved monopoly power Monopoly power was gained through entry barriers The patent granted the firm monopoly rights to sell riveted jeans bullndashAlso by product differentiation The rivets on the jeans allowed for longer durability a form of vertical differentiation Product differentiation and barriers to entry allowed the company to gain more popularity and market share ndashbullbull
bullbullBy 1977 Levi Strauss amp Co is the worldBy worldrsquorsquos largest jean manufacturerbullbullDepartment stores and boutiques sell LeviDepartment Levirsquorsquos products and are additional channels of distribution for the companybullbullLeviLevirsquorsquos provides a wide range of products that target different market segments capturing demandsbullbullAfter the release of the 501 product line LeviAfter Levirsquorsquos enjoys worldwide market dominance in the denim jean marketbullbullLevi Strauss amp Co maintains itLevi itrsquorsquos image as an American Icon and the originator of American jeans
Positioning
bullbullOther marketing strategies like the position of the product crOther created eated increased differentiation contributing to the companies market powerbullbullIn 1930s the company survived the Great Depression due to increased interest in Western culturendashndashJeans were positioned as being worn by ldquoldquocowboyscowboysrdquordquobullbullLeviLevirsquorsquos jeans were issued to employees in the defense industry (including veterans) during World War II(IIndashndashPost World War II veterans that went to college wore LeviPost Levirsquorsquos jeans on campuses increasing popularitybullbullWWII veterans were regarded as heroesndashndashJeans were shown to be suitable for casual wear rather than worJeans workkndashndashDuring the Baby Boom era LeviDuring Levirsquorsquos targets younger consumers and positions product as ldquoldquocoolcoolrdquordquobullbullEarly movie stars wore LeviEarly Levirsquorsquos jeans An example of celebrity endorsements endorsementbullbullConsumer demand shifts from durability of jeans to fashion of jeConsumer jeansansndashndashCulturally jeans became symbol of youth and rebellionCulturally rebellionbullbullIn 1960s student protesters wore jeans as a uniformIn uniformbullbullIn 1970s company sells bellbottom jeansIn jeansbullbullThe firm positioned its products with changing times and changiThe changing ng demands keeping existing customers and capturing new markets Increases in sales ultimately increased profitsIncreases profitsSuccesses
Competetion
Effect
bullbullLevi Strauss amp Co was threatened by competition because barrieLevi barriers rs of entry were relatively low in the jean market (excluding the patent)bullbullSome of LeviSome Levirsquorsquos competitors includendashndashCalvin KleinCalvin KleinndashndashGap JeansGap JeansndashndashVF Corp (Lee
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
Marketin g Research According to Levirsquos marketing logistic manager their company conducts a research to know bull Whatrsquos in trend bull What are the needs of customers Sources of Data Sources of Data Levirsquos gathers data from both primary and secondary sources Secondary data is already available in the company To gather primary data they organize radio shows and music concerts by sponsoring
MARKETING MIX The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market Marketing-mix decisions must be made for influencing the trade channels as well as the final consumers McCarthy classified these tools into four broad groups that he called the four Ps of marketing product price place and promotion Note that the four Ps represent the sellers view of the marketing tools available for influencing buyers
MARKETING MIX MARKETING MIX The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market Marketing-mix decisions must be made for influencing the trade channels as well as the final consumers McCarthy classified these tools into four broad groups that he called the four Ps of marketing product price place and promotion Note that the four Ps represent the se
Product Place Product variety Channels Quality Coverage
Design Assortments Features Locations Brand name Inventory Packaging Transport Sizes Prices
PromotionServicesWarranties
List price Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing
PRODUCT Product Place Product variety Channels Quality Coverage Design Assortments Features Locations Brand name Inventory Packaging Transport Sizes Prices
PromotionServicesWarranties
List price
Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing ldquoProduct means set of tangible and intangible attributes which may include packaging color price quality and brand plus the sellerrsquos services and reputation A product may be a place service good or promotionrdquo BRANDS BRANDS Brand is a name term sign symbol or design that adds value to the products LS amp CO earns remarkable revenues throughout the year coz its products are considered to be the worldrsquos largest quality products
S amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different
body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers
LS amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers LEVIS STRAUSS SIGNATUREreg
The Levi Strauss Signaturetrade brand was launched in 2003 exclusively for consumers who shop in the masschannel The brand gives value-conscious consumers access to high-quality affordable and fashionable jeanswear from a company and name they trustThe Levi Strauss Signaturetrade brand includes a collection of denim and non-denim pants shirts skirts and jacketsfor men women and children all designed with the high quality
PRODUCT ATTRIBUTES PRODUCT ATTRIBUTES
Products are usually considered to be the No1 factor contributing towards building goodwill of a firm A productshould be unique durable reliable comfortable and economical Following are some of the basic attributes ofLSampCOrsquoS products
Variety Features Design Color Size
VARIETY VARIETY
Levirsquos products today are perceived by many as a symbol of youth freedom confidence individualism independence amp comfort LS amp CO provides a wide variety of products including
JEANS JEANS Levirsquos jeans have been present at nearly every pivotal moment in history and culture for the past 150 yearsFeaturesFeatures are competitive tools that differentiate the companyrsquos products from its competitorrsquos products Following are some of the main and distinctive features of Levirsquos products Comfort Levirsquos jeans and other products are comfortable enough to be worn even at the times of protest war cultural revolution relative peace and pure fun Durability
The two figures on the patch of Levirsquos jeans withwhips in hand pulling in opposite directions yet the jeans remainintact symbolize the strength and durability of the lsquoPatent rivetedclothingrsquo
Style
Clothing means more than just fabric thread and rivets To clotheoneself means to put on something that symbolizes who you are Levirsquosjeans are available in different styles for men and women
LEVIrsquoS PORTFOLIO ANALYSIS Levirsquos corporate strategy involves a number of businesses so managers can manage this collection or portfolio of businesses by using a corporate portfolio matrix BCG Matrix BCG Matrix ldquoA strategy tool that guides resource allocation decisions on the basis of market share and growth rate of SBUrsquosrdquo
Boston Consulting Group introduced the idea of BCG matrix that an organizationrsquos businesses could be evaluatedand plotted using a 22 matrix to identify which ones offered high potential and which ones were a drain onorganizational resources
Horizontal Axis The horizontal axis represents market share which is evaluated as low or high Vertical Axis The vertical axis indicates anticipated market growth which is also evaluated as low or highCATEGORIES Based on its evaluation the LS amp COrsquos businesses are placed in the following
STARS (High Growth High Market Share) ldquoStars include the businesses which are in a fast growing market and hold a dominant share of that marketrdquo Dockersreg come under the head of stars as it is the major source of income for the company CASH COWS (Low Growth High Market Share) CASH COWS (Low Growth High Market Share) Businesses in this category generate large amounts of cash but their prospects for furure growth are limitedrdquo The women apparels has got a low growth and high market share so it comes under the Cash Cows head QUESTION MARKS(High Growth Low Market Share) QUESTION MARKS(High Growth Low Market Share) ldquoThese businesses are in an attractive industry but hold a small market share percentagerdquo Levirsquos jeans come under the head of question marks with respect to Pakistan
Price DeterminationDuring the determination of the price company not considered the competitors but the standard that is used is considered Our price is influenced by the following factors-
Cost of the product Affordable for the target market Demand of the product
Uniqueness and innovative features of the products Competitors We are much proud to say with surety that our products completely satisfy our consumers thatrsquos why we donrsquot face much competition in our business But yet there are some competitors eg
Pepe Jeans Leeds (US Apparels) GAAP Jeans
Camb r id g e bull Our prices are not influenced by the competitors S uch a stuff design and fashion which donrsquot have the enough sales are recall back to the company
Again company issues this stuff to their own outlets for sale at discount prices at 14 August
STRATEGIES LS amp CO placed its products according to following strategiesPlacing according to Class and Attributes LS amp CO Positioned its products according to different classes and genders
Placing according to Competitors LS amp CO Keep in mind the price and quality of the products and try to make its products better Placing according to Price and Quality LS amp CO introduces best quality at different prices to its clients Placing according to Technology LS amp CO has tried to build its image as an innovator by coming in Pakistan with their Jeans having new and latest style and look
Promotion objectives Promotion ob PROMOTION PROMOTION jectives o To inform persuade and remind the potential customers about its products o Increase awareness and build primary demand o To build strong brand equity o Build Companyrsquos image as innovator o To create bonds between public and Levi Strauss by helping the people o To create the importance of its products Sales Sales promotion- promotion-
For the promotion of sales Levi Strauss amp Co adopt a very effective but comprehensive strategy Levis pays attention to the publicity of its products The major source of promotion of levirsquos is done by creating public relations The sales promotion of LEVIS targets the end consumers Since the Levirsquos JEANS are in growth stage in Pakistan therefore the promotional strategy is based on persuading of prospective buyers Levirsquos uses the following promotional strategies to promote its product
Personal selling by the representative of the organization takes place face to face with final consumers Mass Selling Levis does mass selling to inform a bulk of persons by advertising Advertising- Advertisin g- The type of advertising used by LEVIS Competitive advertising The advertisement given by the LEVIS stresses on the demand of the product and enhancement of its features Institutional advertising Levis uses institutional advertising to promote companyrsquos image by saying Many Copy the Red Tab No One can copy the Origina Advertising mediums- Advertisin g mediums- The advertising media used by the company are
Television Fashion Magazines Newspapers
Internet Bill boards banners etc
Television amp Radio Advertisements of Levi Strauss amp Co are very innovative and eye-catching Buyers are attracted towards the product The advertisements are placed at the international level Fashion Magazines amp Newspapers
For fashion magazines and newspapers LSampCo is a target due to its grand brand equity it has become a benchmark for all the others to follow The newspaper gives a coverage to the social events in which LS ampCo takes part with great interest Whereas fashion magazines are always dealing with the gorgeous models working with LSamp Co and the unique outfits of the models
Internet- Levis provides up-to-date information to their customers through electronic media ie from their websit Billboards amp banners- Billboards and banners are also used for the advertisement purpose
Background history
bullbullThe company was founded by Levi Strauss in 1853 primarily selling wholesale dry goods The company was founded in San Francisco CaliforniabullbullA tailor named Jacob Davis thought of an idea to use copper rivets to reinforce the points of strain on pantsbullbullDavis and Strauss purchased the patent of the idea of using copper rivets in clothing on May 20 1873
Company growth
bullbullThe innovation of the rivets in the jeans differentiated Levidifferentiated Levirsquorsquos jeans from others because of its increased durabilitybullbullOver the years LeviOver Levirsquorsquos jeans have become more popular initially due to its durability Jean products expanded targeting different consumersbullbullLevi Strauss amp Co eventually captures most of the denim jean market becomes the largest manufacturer of jeans and profits reach $1 billion by 1974
bullbull1853 Levi Strauss begins selling dry goods in San Franciscobullbull1873 Levi Strauss amp Co patent riveted jeans and begin selling thembullbull1912 KoverallsKoveralls denim playsuit for children is first nationally sold product for the companybullbull1935 Company sells first blue jeans for womenbullbull1940s US government issues denim work clothes for employees in the defense industrybullbull1974 Company sales reach $1 billion1974 billionbullbull1986 Company introduces Dockers as a new casual line of clothesnew clothes
Successes
bull
Since the patent of the rivets in jeans in 1873 the company achieved monopoly power Monopoly power was gained through entry barriers The patent granted the firm monopoly rights to sell riveted jeans bullndashAlso by product differentiation The rivets on the jeans allowed for longer durability a form of vertical differentiation Product differentiation and barriers to entry allowed the company to gain more popularity and market share ndashbullbull
bullbullBy 1977 Levi Strauss amp Co is the worldBy worldrsquorsquos largest jean manufacturerbullbullDepartment stores and boutiques sell LeviDepartment Levirsquorsquos products and are additional channels of distribution for the companybullbullLeviLevirsquorsquos provides a wide range of products that target different market segments capturing demandsbullbullAfter the release of the 501 product line LeviAfter Levirsquorsquos enjoys worldwide market dominance in the denim jean marketbullbullLevi Strauss amp Co maintains itLevi itrsquorsquos image as an American Icon and the originator of American jeans
Positioning
bullbullOther marketing strategies like the position of the product crOther created eated increased differentiation contributing to the companies market powerbullbullIn 1930s the company survived the Great Depression due to increased interest in Western culturendashndashJeans were positioned as being worn by ldquoldquocowboyscowboysrdquordquobullbullLeviLevirsquorsquos jeans were issued to employees in the defense industry (including veterans) during World War II(IIndashndashPost World War II veterans that went to college wore LeviPost Levirsquorsquos jeans on campuses increasing popularitybullbullWWII veterans were regarded as heroesndashndashJeans were shown to be suitable for casual wear rather than worJeans workkndashndashDuring the Baby Boom era LeviDuring Levirsquorsquos targets younger consumers and positions product as ldquoldquocoolcoolrdquordquobullbullEarly movie stars wore LeviEarly Levirsquorsquos jeans An example of celebrity endorsements endorsementbullbullConsumer demand shifts from durability of jeans to fashion of jeConsumer jeansansndashndashCulturally jeans became symbol of youth and rebellionCulturally rebellionbullbullIn 1960s student protesters wore jeans as a uniformIn uniformbullbullIn 1970s company sells bellbottom jeansIn jeansbullbullThe firm positioned its products with changing times and changiThe changing ng demands keeping existing customers and capturing new markets Increases in sales ultimately increased profitsIncreases profitsSuccesses
Competetion
Effect
bullbullLevi Strauss amp Co was threatened by competition because barrieLevi barriers rs of entry were relatively low in the jean market (excluding the patent)bullbullSome of LeviSome Levirsquorsquos competitors includendashndashCalvin KleinCalvin KleinndashndashGap JeansGap JeansndashndashVF Corp (Lee
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
Design Assortments Features Locations Brand name Inventory Packaging Transport Sizes Prices
PromotionServicesWarranties
List price Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing
PRODUCT Product Place Product variety Channels Quality Coverage Design Assortments Features Locations Brand name Inventory Packaging Transport Sizes Prices
PromotionServicesWarranties
List price
Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing ldquoProduct means set of tangible and intangible attributes which may include packaging color price quality and brand plus the sellerrsquos services and reputation A product may be a place service good or promotionrdquo BRANDS BRANDS Brand is a name term sign symbol or design that adds value to the products LS amp CO earns remarkable revenues throughout the year coz its products are considered to be the worldrsquos largest quality products
S amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different
body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers
LS amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers LEVIS STRAUSS SIGNATUREreg
The Levi Strauss Signaturetrade brand was launched in 2003 exclusively for consumers who shop in the masschannel The brand gives value-conscious consumers access to high-quality affordable and fashionable jeanswear from a company and name they trustThe Levi Strauss Signaturetrade brand includes a collection of denim and non-denim pants shirts skirts and jacketsfor men women and children all designed with the high quality
PRODUCT ATTRIBUTES PRODUCT ATTRIBUTES
Products are usually considered to be the No1 factor contributing towards building goodwill of a firm A productshould be unique durable reliable comfortable and economical Following are some of the basic attributes ofLSampCOrsquoS products
Variety Features Design Color Size
VARIETY VARIETY
Levirsquos products today are perceived by many as a symbol of youth freedom confidence individualism independence amp comfort LS amp CO provides a wide variety of products including
JEANS JEANS Levirsquos jeans have been present at nearly every pivotal moment in history and culture for the past 150 yearsFeaturesFeatures are competitive tools that differentiate the companyrsquos products from its competitorrsquos products Following are some of the main and distinctive features of Levirsquos products Comfort Levirsquos jeans and other products are comfortable enough to be worn even at the times of protest war cultural revolution relative peace and pure fun Durability
The two figures on the patch of Levirsquos jeans withwhips in hand pulling in opposite directions yet the jeans remainintact symbolize the strength and durability of the lsquoPatent rivetedclothingrsquo
Style
Clothing means more than just fabric thread and rivets To clotheoneself means to put on something that symbolizes who you are Levirsquosjeans are available in different styles for men and women
LEVIrsquoS PORTFOLIO ANALYSIS Levirsquos corporate strategy involves a number of businesses so managers can manage this collection or portfolio of businesses by using a corporate portfolio matrix BCG Matrix BCG Matrix ldquoA strategy tool that guides resource allocation decisions on the basis of market share and growth rate of SBUrsquosrdquo
Boston Consulting Group introduced the idea of BCG matrix that an organizationrsquos businesses could be evaluatedand plotted using a 22 matrix to identify which ones offered high potential and which ones were a drain onorganizational resources
Horizontal Axis The horizontal axis represents market share which is evaluated as low or high Vertical Axis The vertical axis indicates anticipated market growth which is also evaluated as low or highCATEGORIES Based on its evaluation the LS amp COrsquos businesses are placed in the following
STARS (High Growth High Market Share) ldquoStars include the businesses which are in a fast growing market and hold a dominant share of that marketrdquo Dockersreg come under the head of stars as it is the major source of income for the company CASH COWS (Low Growth High Market Share) CASH COWS (Low Growth High Market Share) Businesses in this category generate large amounts of cash but their prospects for furure growth are limitedrdquo The women apparels has got a low growth and high market share so it comes under the Cash Cows head QUESTION MARKS(High Growth Low Market Share) QUESTION MARKS(High Growth Low Market Share) ldquoThese businesses are in an attractive industry but hold a small market share percentagerdquo Levirsquos jeans come under the head of question marks with respect to Pakistan
Price DeterminationDuring the determination of the price company not considered the competitors but the standard that is used is considered Our price is influenced by the following factors-
Cost of the product Affordable for the target market Demand of the product
Uniqueness and innovative features of the products Competitors We are much proud to say with surety that our products completely satisfy our consumers thatrsquos why we donrsquot face much competition in our business But yet there are some competitors eg
Pepe Jeans Leeds (US Apparels) GAAP Jeans
Camb r id g e bull Our prices are not influenced by the competitors S uch a stuff design and fashion which donrsquot have the enough sales are recall back to the company
Again company issues this stuff to their own outlets for sale at discount prices at 14 August
STRATEGIES LS amp CO placed its products according to following strategiesPlacing according to Class and Attributes LS amp CO Positioned its products according to different classes and genders
Placing according to Competitors LS amp CO Keep in mind the price and quality of the products and try to make its products better Placing according to Price and Quality LS amp CO introduces best quality at different prices to its clients Placing according to Technology LS amp CO has tried to build its image as an innovator by coming in Pakistan with their Jeans having new and latest style and look
Promotion objectives Promotion ob PROMOTION PROMOTION jectives o To inform persuade and remind the potential customers about its products o Increase awareness and build primary demand o To build strong brand equity o Build Companyrsquos image as innovator o To create bonds between public and Levi Strauss by helping the people o To create the importance of its products Sales Sales promotion- promotion-
For the promotion of sales Levi Strauss amp Co adopt a very effective but comprehensive strategy Levis pays attention to the publicity of its products The major source of promotion of levirsquos is done by creating public relations The sales promotion of LEVIS targets the end consumers Since the Levirsquos JEANS are in growth stage in Pakistan therefore the promotional strategy is based on persuading of prospective buyers Levirsquos uses the following promotional strategies to promote its product
Personal selling by the representative of the organization takes place face to face with final consumers Mass Selling Levis does mass selling to inform a bulk of persons by advertising Advertising- Advertisin g- The type of advertising used by LEVIS Competitive advertising The advertisement given by the LEVIS stresses on the demand of the product and enhancement of its features Institutional advertising Levis uses institutional advertising to promote companyrsquos image by saying Many Copy the Red Tab No One can copy the Origina Advertising mediums- Advertisin g mediums- The advertising media used by the company are
Television Fashion Magazines Newspapers
Internet Bill boards banners etc
Television amp Radio Advertisements of Levi Strauss amp Co are very innovative and eye-catching Buyers are attracted towards the product The advertisements are placed at the international level Fashion Magazines amp Newspapers
For fashion magazines and newspapers LSampCo is a target due to its grand brand equity it has become a benchmark for all the others to follow The newspaper gives a coverage to the social events in which LS ampCo takes part with great interest Whereas fashion magazines are always dealing with the gorgeous models working with LSamp Co and the unique outfits of the models
Internet- Levis provides up-to-date information to their customers through electronic media ie from their websit Billboards amp banners- Billboards and banners are also used for the advertisement purpose
Background history
bullbullThe company was founded by Levi Strauss in 1853 primarily selling wholesale dry goods The company was founded in San Francisco CaliforniabullbullA tailor named Jacob Davis thought of an idea to use copper rivets to reinforce the points of strain on pantsbullbullDavis and Strauss purchased the patent of the idea of using copper rivets in clothing on May 20 1873
Company growth
bullbullThe innovation of the rivets in the jeans differentiated Levidifferentiated Levirsquorsquos jeans from others because of its increased durabilitybullbullOver the years LeviOver Levirsquorsquos jeans have become more popular initially due to its durability Jean products expanded targeting different consumersbullbullLevi Strauss amp Co eventually captures most of the denim jean market becomes the largest manufacturer of jeans and profits reach $1 billion by 1974
bullbull1853 Levi Strauss begins selling dry goods in San Franciscobullbull1873 Levi Strauss amp Co patent riveted jeans and begin selling thembullbull1912 KoverallsKoveralls denim playsuit for children is first nationally sold product for the companybullbull1935 Company sells first blue jeans for womenbullbull1940s US government issues denim work clothes for employees in the defense industrybullbull1974 Company sales reach $1 billion1974 billionbullbull1986 Company introduces Dockers as a new casual line of clothesnew clothes
Successes
bull
Since the patent of the rivets in jeans in 1873 the company achieved monopoly power Monopoly power was gained through entry barriers The patent granted the firm monopoly rights to sell riveted jeans bullndashAlso by product differentiation The rivets on the jeans allowed for longer durability a form of vertical differentiation Product differentiation and barriers to entry allowed the company to gain more popularity and market share ndashbullbull
bullbullBy 1977 Levi Strauss amp Co is the worldBy worldrsquorsquos largest jean manufacturerbullbullDepartment stores and boutiques sell LeviDepartment Levirsquorsquos products and are additional channels of distribution for the companybullbullLeviLevirsquorsquos provides a wide range of products that target different market segments capturing demandsbullbullAfter the release of the 501 product line LeviAfter Levirsquorsquos enjoys worldwide market dominance in the denim jean marketbullbullLevi Strauss amp Co maintains itLevi itrsquorsquos image as an American Icon and the originator of American jeans
Positioning
bullbullOther marketing strategies like the position of the product crOther created eated increased differentiation contributing to the companies market powerbullbullIn 1930s the company survived the Great Depression due to increased interest in Western culturendashndashJeans were positioned as being worn by ldquoldquocowboyscowboysrdquordquobullbullLeviLevirsquorsquos jeans were issued to employees in the defense industry (including veterans) during World War II(IIndashndashPost World War II veterans that went to college wore LeviPost Levirsquorsquos jeans on campuses increasing popularitybullbullWWII veterans were regarded as heroesndashndashJeans were shown to be suitable for casual wear rather than worJeans workkndashndashDuring the Baby Boom era LeviDuring Levirsquorsquos targets younger consumers and positions product as ldquoldquocoolcoolrdquordquobullbullEarly movie stars wore LeviEarly Levirsquorsquos jeans An example of celebrity endorsements endorsementbullbullConsumer demand shifts from durability of jeans to fashion of jeConsumer jeansansndashndashCulturally jeans became symbol of youth and rebellionCulturally rebellionbullbullIn 1960s student protesters wore jeans as a uniformIn uniformbullbullIn 1970s company sells bellbottom jeansIn jeansbullbullThe firm positioned its products with changing times and changiThe changing ng demands keeping existing customers and capturing new markets Increases in sales ultimately increased profitsIncreases profitsSuccesses
Competetion
Effect
bullbullLevi Strauss amp Co was threatened by competition because barrieLevi barriers rs of entry were relatively low in the jean market (excluding the patent)bullbullSome of LeviSome Levirsquorsquos competitors includendashndashCalvin KleinCalvin KleinndashndashGap JeansGap JeansndashndashVF Corp (Lee
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
Sales promotion Returns Discounts Advertising Allowances Sales force Payment period Public relations Credit terms Direct marketing ldquoProduct means set of tangible and intangible attributes which may include packaging color price quality and brand plus the sellerrsquos services and reputation A product may be a place service good or promotionrdquo BRANDS BRANDS Brand is a name term sign symbol or design that adds value to the products LS amp CO earns remarkable revenues throughout the year coz its products are considered to be the worldrsquos largest quality products
S amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different
body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers
LS amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers LEVIS STRAUSS SIGNATUREreg
The Levi Strauss Signaturetrade brand was launched in 2003 exclusively for consumers who shop in the masschannel The brand gives value-conscious consumers access to high-quality affordable and fashionable jeanswear from a company and name they trustThe Levi Strauss Signaturetrade brand includes a collection of denim and non-denim pants shirts skirts and jacketsfor men women and children all designed with the high quality
PRODUCT ATTRIBUTES PRODUCT ATTRIBUTES
Products are usually considered to be the No1 factor contributing towards building goodwill of a firm A productshould be unique durable reliable comfortable and economical Following are some of the basic attributes ofLSampCOrsquoS products
Variety Features Design Color Size
VARIETY VARIETY
Levirsquos products today are perceived by many as a symbol of youth freedom confidence individualism independence amp comfort LS amp CO provides a wide variety of products including
JEANS JEANS Levirsquos jeans have been present at nearly every pivotal moment in history and culture for the past 150 yearsFeaturesFeatures are competitive tools that differentiate the companyrsquos products from its competitorrsquos products Following are some of the main and distinctive features of Levirsquos products Comfort Levirsquos jeans and other products are comfortable enough to be worn even at the times of protest war cultural revolution relative peace and pure fun Durability
The two figures on the patch of Levirsquos jeans withwhips in hand pulling in opposite directions yet the jeans remainintact symbolize the strength and durability of the lsquoPatent rivetedclothingrsquo
Style
Clothing means more than just fabric thread and rivets To clotheoneself means to put on something that symbolizes who you are Levirsquosjeans are available in different styles for men and women
LEVIrsquoS PORTFOLIO ANALYSIS Levirsquos corporate strategy involves a number of businesses so managers can manage this collection or portfolio of businesses by using a corporate portfolio matrix BCG Matrix BCG Matrix ldquoA strategy tool that guides resource allocation decisions on the basis of market share and growth rate of SBUrsquosrdquo
Boston Consulting Group introduced the idea of BCG matrix that an organizationrsquos businesses could be evaluatedand plotted using a 22 matrix to identify which ones offered high potential and which ones were a drain onorganizational resources
Horizontal Axis The horizontal axis represents market share which is evaluated as low or high Vertical Axis The vertical axis indicates anticipated market growth which is also evaluated as low or highCATEGORIES Based on its evaluation the LS amp COrsquos businesses are placed in the following
STARS (High Growth High Market Share) ldquoStars include the businesses which are in a fast growing market and hold a dominant share of that marketrdquo Dockersreg come under the head of stars as it is the major source of income for the company CASH COWS (Low Growth High Market Share) CASH COWS (Low Growth High Market Share) Businesses in this category generate large amounts of cash but their prospects for furure growth are limitedrdquo The women apparels has got a low growth and high market share so it comes under the Cash Cows head QUESTION MARKS(High Growth Low Market Share) QUESTION MARKS(High Growth Low Market Share) ldquoThese businesses are in an attractive industry but hold a small market share percentagerdquo Levirsquos jeans come under the head of question marks with respect to Pakistan
Price DeterminationDuring the determination of the price company not considered the competitors but the standard that is used is considered Our price is influenced by the following factors-
Cost of the product Affordable for the target market Demand of the product
Uniqueness and innovative features of the products Competitors We are much proud to say with surety that our products completely satisfy our consumers thatrsquos why we donrsquot face much competition in our business But yet there are some competitors eg
Pepe Jeans Leeds (US Apparels) GAAP Jeans
Camb r id g e bull Our prices are not influenced by the competitors S uch a stuff design and fashion which donrsquot have the enough sales are recall back to the company
Again company issues this stuff to their own outlets for sale at discount prices at 14 August
STRATEGIES LS amp CO placed its products according to following strategiesPlacing according to Class and Attributes LS amp CO Positioned its products according to different classes and genders
Placing according to Competitors LS amp CO Keep in mind the price and quality of the products and try to make its products better Placing according to Price and Quality LS amp CO introduces best quality at different prices to its clients Placing according to Technology LS amp CO has tried to build its image as an innovator by coming in Pakistan with their Jeans having new and latest style and look
Promotion objectives Promotion ob PROMOTION PROMOTION jectives o To inform persuade and remind the potential customers about its products o Increase awareness and build primary demand o To build strong brand equity o Build Companyrsquos image as innovator o To create bonds between public and Levi Strauss by helping the people o To create the importance of its products Sales Sales promotion- promotion-
For the promotion of sales Levi Strauss amp Co adopt a very effective but comprehensive strategy Levis pays attention to the publicity of its products The major source of promotion of levirsquos is done by creating public relations The sales promotion of LEVIS targets the end consumers Since the Levirsquos JEANS are in growth stage in Pakistan therefore the promotional strategy is based on persuading of prospective buyers Levirsquos uses the following promotional strategies to promote its product
Personal selling by the representative of the organization takes place face to face with final consumers Mass Selling Levis does mass selling to inform a bulk of persons by advertising Advertising- Advertisin g- The type of advertising used by LEVIS Competitive advertising The advertisement given by the LEVIS stresses on the demand of the product and enhancement of its features Institutional advertising Levis uses institutional advertising to promote companyrsquos image by saying Many Copy the Red Tab No One can copy the Origina Advertising mediums- Advertisin g mediums- The advertising media used by the company are
Television Fashion Magazines Newspapers
Internet Bill boards banners etc
Television amp Radio Advertisements of Levi Strauss amp Co are very innovative and eye-catching Buyers are attracted towards the product The advertisements are placed at the international level Fashion Magazines amp Newspapers
For fashion magazines and newspapers LSampCo is a target due to its grand brand equity it has become a benchmark for all the others to follow The newspaper gives a coverage to the social events in which LS ampCo takes part with great interest Whereas fashion magazines are always dealing with the gorgeous models working with LSamp Co and the unique outfits of the models
Internet- Levis provides up-to-date information to their customers through electronic media ie from their websit Billboards amp banners- Billboards and banners are also used for the advertisement purpose
Background history
bullbullThe company was founded by Levi Strauss in 1853 primarily selling wholesale dry goods The company was founded in San Francisco CaliforniabullbullA tailor named Jacob Davis thought of an idea to use copper rivets to reinforce the points of strain on pantsbullbullDavis and Strauss purchased the patent of the idea of using copper rivets in clothing on May 20 1873
Company growth
bullbullThe innovation of the rivets in the jeans differentiated Levidifferentiated Levirsquorsquos jeans from others because of its increased durabilitybullbullOver the years LeviOver Levirsquorsquos jeans have become more popular initially due to its durability Jean products expanded targeting different consumersbullbullLevi Strauss amp Co eventually captures most of the denim jean market becomes the largest manufacturer of jeans and profits reach $1 billion by 1974
bullbull1853 Levi Strauss begins selling dry goods in San Franciscobullbull1873 Levi Strauss amp Co patent riveted jeans and begin selling thembullbull1912 KoverallsKoveralls denim playsuit for children is first nationally sold product for the companybullbull1935 Company sells first blue jeans for womenbullbull1940s US government issues denim work clothes for employees in the defense industrybullbull1974 Company sales reach $1 billion1974 billionbullbull1986 Company introduces Dockers as a new casual line of clothesnew clothes
Successes
bull
Since the patent of the rivets in jeans in 1873 the company achieved monopoly power Monopoly power was gained through entry barriers The patent granted the firm monopoly rights to sell riveted jeans bullndashAlso by product differentiation The rivets on the jeans allowed for longer durability a form of vertical differentiation Product differentiation and barriers to entry allowed the company to gain more popularity and market share ndashbullbull
bullbullBy 1977 Levi Strauss amp Co is the worldBy worldrsquorsquos largest jean manufacturerbullbullDepartment stores and boutiques sell LeviDepartment Levirsquorsquos products and are additional channels of distribution for the companybullbullLeviLevirsquorsquos provides a wide range of products that target different market segments capturing demandsbullbullAfter the release of the 501 product line LeviAfter Levirsquorsquos enjoys worldwide market dominance in the denim jean marketbullbullLevi Strauss amp Co maintains itLevi itrsquorsquos image as an American Icon and the originator of American jeans
Positioning
bullbullOther marketing strategies like the position of the product crOther created eated increased differentiation contributing to the companies market powerbullbullIn 1930s the company survived the Great Depression due to increased interest in Western culturendashndashJeans were positioned as being worn by ldquoldquocowboyscowboysrdquordquobullbullLeviLevirsquorsquos jeans were issued to employees in the defense industry (including veterans) during World War II(IIndashndashPost World War II veterans that went to college wore LeviPost Levirsquorsquos jeans on campuses increasing popularitybullbullWWII veterans were regarded as heroesndashndashJeans were shown to be suitable for casual wear rather than worJeans workkndashndashDuring the Baby Boom era LeviDuring Levirsquorsquos targets younger consumers and positions product as ldquoldquocoolcoolrdquordquobullbullEarly movie stars wore LeviEarly Levirsquorsquos jeans An example of celebrity endorsements endorsementbullbullConsumer demand shifts from durability of jeans to fashion of jeConsumer jeansansndashndashCulturally jeans became symbol of youth and rebellionCulturally rebellionbullbullIn 1960s student protesters wore jeans as a uniformIn uniformbullbullIn 1970s company sells bellbottom jeansIn jeansbullbullThe firm positioned its products with changing times and changiThe changing ng demands keeping existing customers and capturing new markets Increases in sales ultimately increased profitsIncreases profitsSuccesses
Competetion
Effect
bullbullLevi Strauss amp Co was threatened by competition because barrieLevi barriers rs of entry were relatively low in the jean market (excluding the patent)bullbullSome of LeviSome Levirsquorsquos competitors includendashndashCalvin KleinCalvin KleinndashndashGap JeansGap JeansndashndashVF Corp (Lee
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers
LS amp CO is basically divided into 3 sub brands ie Levirsquos Dockers and Levis Strauss Signature All the three brands are providing different quality products LEVIrsquoSreg LEVIrsquoSreg
Invented in 1873 Levisreg jeans are the original authentic jeans They are the most successful widely recognized and often imitated clothing products in the history of apparel Levisreg jeans have captured the attention imagination and loyalty of generations of diverse individuals
As the inventor of the category the Levirsquos brand continues to define jeans wear with widest range of products available from quintessential classics such as the famous Levisreg501reg Original jean to favorite fits and styles in our Red Tabtrade and Levisreg Premium collections
DOCKERSreg DOCKERSreg
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers LEVIS STRAUSS SIGNATUREreg
The Levi Strauss Signaturetrade brand was launched in 2003 exclusively for consumers who shop in the masschannel The brand gives value-conscious consumers access to high-quality affordable and fashionable jeanswear from a company and name they trustThe Levi Strauss Signaturetrade brand includes a collection of denim and non-denim pants shirts skirts and jacketsfor men women and children all designed with the high quality
PRODUCT ATTRIBUTES PRODUCT ATTRIBUTES
Products are usually considered to be the No1 factor contributing towards building goodwill of a firm A productshould be unique durable reliable comfortable and economical Following are some of the basic attributes ofLSampCOrsquoS products
Variety Features Design Color Size
VARIETY VARIETY
Levirsquos products today are perceived by many as a symbol of youth freedom confidence individualism independence amp comfort LS amp CO provides a wide variety of products including
JEANS JEANS Levirsquos jeans have been present at nearly every pivotal moment in history and culture for the past 150 yearsFeaturesFeatures are competitive tools that differentiate the companyrsquos products from its competitorrsquos products Following are some of the main and distinctive features of Levirsquos products Comfort Levirsquos jeans and other products are comfortable enough to be worn even at the times of protest war cultural revolution relative peace and pure fun Durability
The two figures on the patch of Levirsquos jeans withwhips in hand pulling in opposite directions yet the jeans remainintact symbolize the strength and durability of the lsquoPatent rivetedclothingrsquo
Style
Clothing means more than just fabric thread and rivets To clotheoneself means to put on something that symbolizes who you are Levirsquosjeans are available in different styles for men and women
LEVIrsquoS PORTFOLIO ANALYSIS Levirsquos corporate strategy involves a number of businesses so managers can manage this collection or portfolio of businesses by using a corporate portfolio matrix BCG Matrix BCG Matrix ldquoA strategy tool that guides resource allocation decisions on the basis of market share and growth rate of SBUrsquosrdquo
Boston Consulting Group introduced the idea of BCG matrix that an organizationrsquos businesses could be evaluatedand plotted using a 22 matrix to identify which ones offered high potential and which ones were a drain onorganizational resources
Horizontal Axis The horizontal axis represents market share which is evaluated as low or high Vertical Axis The vertical axis indicates anticipated market growth which is also evaluated as low or highCATEGORIES Based on its evaluation the LS amp COrsquos businesses are placed in the following
STARS (High Growth High Market Share) ldquoStars include the businesses which are in a fast growing market and hold a dominant share of that marketrdquo Dockersreg come under the head of stars as it is the major source of income for the company CASH COWS (Low Growth High Market Share) CASH COWS (Low Growth High Market Share) Businesses in this category generate large amounts of cash but their prospects for furure growth are limitedrdquo The women apparels has got a low growth and high market share so it comes under the Cash Cows head QUESTION MARKS(High Growth Low Market Share) QUESTION MARKS(High Growth Low Market Share) ldquoThese businesses are in an attractive industry but hold a small market share percentagerdquo Levirsquos jeans come under the head of question marks with respect to Pakistan
Price DeterminationDuring the determination of the price company not considered the competitors but the standard that is used is considered Our price is influenced by the following factors-
Cost of the product Affordable for the target market Demand of the product
Uniqueness and innovative features of the products Competitors We are much proud to say with surety that our products completely satisfy our consumers thatrsquos why we donrsquot face much competition in our business But yet there are some competitors eg
Pepe Jeans Leeds (US Apparels) GAAP Jeans
Camb r id g e bull Our prices are not influenced by the competitors S uch a stuff design and fashion which donrsquot have the enough sales are recall back to the company
Again company issues this stuff to their own outlets for sale at discount prices at 14 August
STRATEGIES LS amp CO placed its products according to following strategiesPlacing according to Class and Attributes LS amp CO Positioned its products according to different classes and genders
Placing according to Competitors LS amp CO Keep in mind the price and quality of the products and try to make its products better Placing according to Price and Quality LS amp CO introduces best quality at different prices to its clients Placing according to Technology LS amp CO has tried to build its image as an innovator by coming in Pakistan with their Jeans having new and latest style and look
Promotion objectives Promotion ob PROMOTION PROMOTION jectives o To inform persuade and remind the potential customers about its products o Increase awareness and build primary demand o To build strong brand equity o Build Companyrsquos image as innovator o To create bonds between public and Levi Strauss by helping the people o To create the importance of its products Sales Sales promotion- promotion-
For the promotion of sales Levi Strauss amp Co adopt a very effective but comprehensive strategy Levis pays attention to the publicity of its products The major source of promotion of levirsquos is done by creating public relations The sales promotion of LEVIS targets the end consumers Since the Levirsquos JEANS are in growth stage in Pakistan therefore the promotional strategy is based on persuading of prospective buyers Levirsquos uses the following promotional strategies to promote its product
Personal selling by the representative of the organization takes place face to face with final consumers Mass Selling Levis does mass selling to inform a bulk of persons by advertising Advertising- Advertisin g- The type of advertising used by LEVIS Competitive advertising The advertisement given by the LEVIS stresses on the demand of the product and enhancement of its features Institutional advertising Levis uses institutional advertising to promote companyrsquos image by saying Many Copy the Red Tab No One can copy the Origina Advertising mediums- Advertisin g mediums- The advertising media used by the company are
Television Fashion Magazines Newspapers
Internet Bill boards banners etc
Television amp Radio Advertisements of Levi Strauss amp Co are very innovative and eye-catching Buyers are attracted towards the product The advertisements are placed at the international level Fashion Magazines amp Newspapers
For fashion magazines and newspapers LSampCo is a target due to its grand brand equity it has become a benchmark for all the others to follow The newspaper gives a coverage to the social events in which LS ampCo takes part with great interest Whereas fashion magazines are always dealing with the gorgeous models working with LSamp Co and the unique outfits of the models
Internet- Levis provides up-to-date information to their customers through electronic media ie from their websit Billboards amp banners- Billboards and banners are also used for the advertisement purpose
Background history
bullbullThe company was founded by Levi Strauss in 1853 primarily selling wholesale dry goods The company was founded in San Francisco CaliforniabullbullA tailor named Jacob Davis thought of an idea to use copper rivets to reinforce the points of strain on pantsbullbullDavis and Strauss purchased the patent of the idea of using copper rivets in clothing on May 20 1873
Company growth
bullbullThe innovation of the rivets in the jeans differentiated Levidifferentiated Levirsquorsquos jeans from others because of its increased durabilitybullbullOver the years LeviOver Levirsquorsquos jeans have become more popular initially due to its durability Jean products expanded targeting different consumersbullbullLevi Strauss amp Co eventually captures most of the denim jean market becomes the largest manufacturer of jeans and profits reach $1 billion by 1974
bullbull1853 Levi Strauss begins selling dry goods in San Franciscobullbull1873 Levi Strauss amp Co patent riveted jeans and begin selling thembullbull1912 KoverallsKoveralls denim playsuit for children is first nationally sold product for the companybullbull1935 Company sells first blue jeans for womenbullbull1940s US government issues denim work clothes for employees in the defense industrybullbull1974 Company sales reach $1 billion1974 billionbullbull1986 Company introduces Dockers as a new casual line of clothesnew clothes
Successes
bull
Since the patent of the rivets in jeans in 1873 the company achieved monopoly power Monopoly power was gained through entry barriers The patent granted the firm monopoly rights to sell riveted jeans bullndashAlso by product differentiation The rivets on the jeans allowed for longer durability a form of vertical differentiation Product differentiation and barriers to entry allowed the company to gain more popularity and market share ndashbullbull
bullbullBy 1977 Levi Strauss amp Co is the worldBy worldrsquorsquos largest jean manufacturerbullbullDepartment stores and boutiques sell LeviDepartment Levirsquorsquos products and are additional channels of distribution for the companybullbullLeviLevirsquorsquos provides a wide range of products that target different market segments capturing demandsbullbullAfter the release of the 501 product line LeviAfter Levirsquorsquos enjoys worldwide market dominance in the denim jean marketbullbullLevi Strauss amp Co maintains itLevi itrsquorsquos image as an American Icon and the originator of American jeans
Positioning
bullbullOther marketing strategies like the position of the product crOther created eated increased differentiation contributing to the companies market powerbullbullIn 1930s the company survived the Great Depression due to increased interest in Western culturendashndashJeans were positioned as being worn by ldquoldquocowboyscowboysrdquordquobullbullLeviLevirsquorsquos jeans were issued to employees in the defense industry (including veterans) during World War II(IIndashndashPost World War II veterans that went to college wore LeviPost Levirsquorsquos jeans on campuses increasing popularitybullbullWWII veterans were regarded as heroesndashndashJeans were shown to be suitable for casual wear rather than worJeans workkndashndashDuring the Baby Boom era LeviDuring Levirsquorsquos targets younger consumers and positions product as ldquoldquocoolcoolrdquordquobullbullEarly movie stars wore LeviEarly Levirsquorsquos jeans An example of celebrity endorsements endorsementbullbullConsumer demand shifts from durability of jeans to fashion of jeConsumer jeansansndashndashCulturally jeans became symbol of youth and rebellionCulturally rebellionbullbullIn 1960s student protesters wore jeans as a uniformIn uniformbullbullIn 1970s company sells bellbottom jeansIn jeansbullbullThe firm positioned its products with changing times and changiThe changing ng demands keeping existing customers and capturing new markets Increases in sales ultimately increased profitsIncreases profitsSuccesses
Competetion
Effect
bullbullLevi Strauss amp Co was threatened by competition because barrieLevi barriers rs of entry were relatively low in the jean market (excluding the patent)bullbullSome of LeviSome Levirsquorsquos competitors includendashndashCalvin KleinCalvin KleinndashndashGap JeansGap JeansndashndashVF Corp (Lee
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
Launched in 1986 in the United States Dockersreg brand products and marketing played a major role in the creation of a new apparel category for mens pants and the shift to casual clothing in the workplace Dockersreg Khakisquickly became the No 1 khaki pant brand in the United States
In 1988 the brand launched Dockersreg for Women a feminine interpretation of Dockersreg brand apparel The line offers fashionable tops dress and casual pants and a full range of accessories mdash designed to fit a variety of different body types and sizes Today the Dockersreg brand has expanded to more than 50 countries in every region of the
world with a complete assortment of stylish and innovative products mdash including a full line of tops footwear outerwear and accessories mdash for a broad
range of consumers LEVIS STRAUSS SIGNATUREreg
The Levi Strauss Signaturetrade brand was launched in 2003 exclusively for consumers who shop in the masschannel The brand gives value-conscious consumers access to high-quality affordable and fashionable jeanswear from a company and name they trustThe Levi Strauss Signaturetrade brand includes a collection of denim and non-denim pants shirts skirts and jacketsfor men women and children all designed with the high quality
PRODUCT ATTRIBUTES PRODUCT ATTRIBUTES
Products are usually considered to be the No1 factor contributing towards building goodwill of a firm A productshould be unique durable reliable comfortable and economical Following are some of the basic attributes ofLSampCOrsquoS products
Variety Features Design Color Size
VARIETY VARIETY
Levirsquos products today are perceived by many as a symbol of youth freedom confidence individualism independence amp comfort LS amp CO provides a wide variety of products including
JEANS JEANS Levirsquos jeans have been present at nearly every pivotal moment in history and culture for the past 150 yearsFeaturesFeatures are competitive tools that differentiate the companyrsquos products from its competitorrsquos products Following are some of the main and distinctive features of Levirsquos products Comfort Levirsquos jeans and other products are comfortable enough to be worn even at the times of protest war cultural revolution relative peace and pure fun Durability
The two figures on the patch of Levirsquos jeans withwhips in hand pulling in opposite directions yet the jeans remainintact symbolize the strength and durability of the lsquoPatent rivetedclothingrsquo
Style
Clothing means more than just fabric thread and rivets To clotheoneself means to put on something that symbolizes who you are Levirsquosjeans are available in different styles for men and women
LEVIrsquoS PORTFOLIO ANALYSIS Levirsquos corporate strategy involves a number of businesses so managers can manage this collection or portfolio of businesses by using a corporate portfolio matrix BCG Matrix BCG Matrix ldquoA strategy tool that guides resource allocation decisions on the basis of market share and growth rate of SBUrsquosrdquo
Boston Consulting Group introduced the idea of BCG matrix that an organizationrsquos businesses could be evaluatedand plotted using a 22 matrix to identify which ones offered high potential and which ones were a drain onorganizational resources
Horizontal Axis The horizontal axis represents market share which is evaluated as low or high Vertical Axis The vertical axis indicates anticipated market growth which is also evaluated as low or highCATEGORIES Based on its evaluation the LS amp COrsquos businesses are placed in the following
STARS (High Growth High Market Share) ldquoStars include the businesses which are in a fast growing market and hold a dominant share of that marketrdquo Dockersreg come under the head of stars as it is the major source of income for the company CASH COWS (Low Growth High Market Share) CASH COWS (Low Growth High Market Share) Businesses in this category generate large amounts of cash but their prospects for furure growth are limitedrdquo The women apparels has got a low growth and high market share so it comes under the Cash Cows head QUESTION MARKS(High Growth Low Market Share) QUESTION MARKS(High Growth Low Market Share) ldquoThese businesses are in an attractive industry but hold a small market share percentagerdquo Levirsquos jeans come under the head of question marks with respect to Pakistan
Price DeterminationDuring the determination of the price company not considered the competitors but the standard that is used is considered Our price is influenced by the following factors-
Cost of the product Affordable for the target market Demand of the product
Uniqueness and innovative features of the products Competitors We are much proud to say with surety that our products completely satisfy our consumers thatrsquos why we donrsquot face much competition in our business But yet there are some competitors eg
Pepe Jeans Leeds (US Apparels) GAAP Jeans
Camb r id g e bull Our prices are not influenced by the competitors S uch a stuff design and fashion which donrsquot have the enough sales are recall back to the company
Again company issues this stuff to their own outlets for sale at discount prices at 14 August
STRATEGIES LS amp CO placed its products according to following strategiesPlacing according to Class and Attributes LS amp CO Positioned its products according to different classes and genders
Placing according to Competitors LS amp CO Keep in mind the price and quality of the products and try to make its products better Placing according to Price and Quality LS amp CO introduces best quality at different prices to its clients Placing according to Technology LS amp CO has tried to build its image as an innovator by coming in Pakistan with their Jeans having new and latest style and look
Promotion objectives Promotion ob PROMOTION PROMOTION jectives o To inform persuade and remind the potential customers about its products o Increase awareness and build primary demand o To build strong brand equity o Build Companyrsquos image as innovator o To create bonds between public and Levi Strauss by helping the people o To create the importance of its products Sales Sales promotion- promotion-
For the promotion of sales Levi Strauss amp Co adopt a very effective but comprehensive strategy Levis pays attention to the publicity of its products The major source of promotion of levirsquos is done by creating public relations The sales promotion of LEVIS targets the end consumers Since the Levirsquos JEANS are in growth stage in Pakistan therefore the promotional strategy is based on persuading of prospective buyers Levirsquos uses the following promotional strategies to promote its product
Personal selling by the representative of the organization takes place face to face with final consumers Mass Selling Levis does mass selling to inform a bulk of persons by advertising Advertising- Advertisin g- The type of advertising used by LEVIS Competitive advertising The advertisement given by the LEVIS stresses on the demand of the product and enhancement of its features Institutional advertising Levis uses institutional advertising to promote companyrsquos image by saying Many Copy the Red Tab No One can copy the Origina Advertising mediums- Advertisin g mediums- The advertising media used by the company are
Television Fashion Magazines Newspapers
Internet Bill boards banners etc
Television amp Radio Advertisements of Levi Strauss amp Co are very innovative and eye-catching Buyers are attracted towards the product The advertisements are placed at the international level Fashion Magazines amp Newspapers
For fashion magazines and newspapers LSampCo is a target due to its grand brand equity it has become a benchmark for all the others to follow The newspaper gives a coverage to the social events in which LS ampCo takes part with great interest Whereas fashion magazines are always dealing with the gorgeous models working with LSamp Co and the unique outfits of the models
Internet- Levis provides up-to-date information to their customers through electronic media ie from their websit Billboards amp banners- Billboards and banners are also used for the advertisement purpose
Background history
bullbullThe company was founded by Levi Strauss in 1853 primarily selling wholesale dry goods The company was founded in San Francisco CaliforniabullbullA tailor named Jacob Davis thought of an idea to use copper rivets to reinforce the points of strain on pantsbullbullDavis and Strauss purchased the patent of the idea of using copper rivets in clothing on May 20 1873
Company growth
bullbullThe innovation of the rivets in the jeans differentiated Levidifferentiated Levirsquorsquos jeans from others because of its increased durabilitybullbullOver the years LeviOver Levirsquorsquos jeans have become more popular initially due to its durability Jean products expanded targeting different consumersbullbullLevi Strauss amp Co eventually captures most of the denim jean market becomes the largest manufacturer of jeans and profits reach $1 billion by 1974
bullbull1853 Levi Strauss begins selling dry goods in San Franciscobullbull1873 Levi Strauss amp Co patent riveted jeans and begin selling thembullbull1912 KoverallsKoveralls denim playsuit for children is first nationally sold product for the companybullbull1935 Company sells first blue jeans for womenbullbull1940s US government issues denim work clothes for employees in the defense industrybullbull1974 Company sales reach $1 billion1974 billionbullbull1986 Company introduces Dockers as a new casual line of clothesnew clothes
Successes
bull
Since the patent of the rivets in jeans in 1873 the company achieved monopoly power Monopoly power was gained through entry barriers The patent granted the firm monopoly rights to sell riveted jeans bullndashAlso by product differentiation The rivets on the jeans allowed for longer durability a form of vertical differentiation Product differentiation and barriers to entry allowed the company to gain more popularity and market share ndashbullbull
bullbullBy 1977 Levi Strauss amp Co is the worldBy worldrsquorsquos largest jean manufacturerbullbullDepartment stores and boutiques sell LeviDepartment Levirsquorsquos products and are additional channels of distribution for the companybullbullLeviLevirsquorsquos provides a wide range of products that target different market segments capturing demandsbullbullAfter the release of the 501 product line LeviAfter Levirsquorsquos enjoys worldwide market dominance in the denim jean marketbullbullLevi Strauss amp Co maintains itLevi itrsquorsquos image as an American Icon and the originator of American jeans
Positioning
bullbullOther marketing strategies like the position of the product crOther created eated increased differentiation contributing to the companies market powerbullbullIn 1930s the company survived the Great Depression due to increased interest in Western culturendashndashJeans were positioned as being worn by ldquoldquocowboyscowboysrdquordquobullbullLeviLevirsquorsquos jeans were issued to employees in the defense industry (including veterans) during World War II(IIndashndashPost World War II veterans that went to college wore LeviPost Levirsquorsquos jeans on campuses increasing popularitybullbullWWII veterans were regarded as heroesndashndashJeans were shown to be suitable for casual wear rather than worJeans workkndashndashDuring the Baby Boom era LeviDuring Levirsquorsquos targets younger consumers and positions product as ldquoldquocoolcoolrdquordquobullbullEarly movie stars wore LeviEarly Levirsquorsquos jeans An example of celebrity endorsements endorsementbullbullConsumer demand shifts from durability of jeans to fashion of jeConsumer jeansansndashndashCulturally jeans became symbol of youth and rebellionCulturally rebellionbullbullIn 1960s student protesters wore jeans as a uniformIn uniformbullbullIn 1970s company sells bellbottom jeansIn jeansbullbullThe firm positioned its products with changing times and changiThe changing ng demands keeping existing customers and capturing new markets Increases in sales ultimately increased profitsIncreases profitsSuccesses
Competetion
Effect
bullbullLevi Strauss amp Co was threatened by competition because barrieLevi barriers rs of entry were relatively low in the jean market (excluding the patent)bullbullSome of LeviSome Levirsquorsquos competitors includendashndashCalvin KleinCalvin KleinndashndashGap JeansGap JeansndashndashVF Corp (Lee
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
Levirsquos products today are perceived by many as a symbol of youth freedom confidence individualism independence amp comfort LS amp CO provides a wide variety of products including
JEANS JEANS Levirsquos jeans have been present at nearly every pivotal moment in history and culture for the past 150 yearsFeaturesFeatures are competitive tools that differentiate the companyrsquos products from its competitorrsquos products Following are some of the main and distinctive features of Levirsquos products Comfort Levirsquos jeans and other products are comfortable enough to be worn even at the times of protest war cultural revolution relative peace and pure fun Durability
The two figures on the patch of Levirsquos jeans withwhips in hand pulling in opposite directions yet the jeans remainintact symbolize the strength and durability of the lsquoPatent rivetedclothingrsquo
Style
Clothing means more than just fabric thread and rivets To clotheoneself means to put on something that symbolizes who you are Levirsquosjeans are available in different styles for men and women
LEVIrsquoS PORTFOLIO ANALYSIS Levirsquos corporate strategy involves a number of businesses so managers can manage this collection or portfolio of businesses by using a corporate portfolio matrix BCG Matrix BCG Matrix ldquoA strategy tool that guides resource allocation decisions on the basis of market share and growth rate of SBUrsquosrdquo
Boston Consulting Group introduced the idea of BCG matrix that an organizationrsquos businesses could be evaluatedand plotted using a 22 matrix to identify which ones offered high potential and which ones were a drain onorganizational resources
Horizontal Axis The horizontal axis represents market share which is evaluated as low or high Vertical Axis The vertical axis indicates anticipated market growth which is also evaluated as low or highCATEGORIES Based on its evaluation the LS amp COrsquos businesses are placed in the following
STARS (High Growth High Market Share) ldquoStars include the businesses which are in a fast growing market and hold a dominant share of that marketrdquo Dockersreg come under the head of stars as it is the major source of income for the company CASH COWS (Low Growth High Market Share) CASH COWS (Low Growth High Market Share) Businesses in this category generate large amounts of cash but their prospects for furure growth are limitedrdquo The women apparels has got a low growth and high market share so it comes under the Cash Cows head QUESTION MARKS(High Growth Low Market Share) QUESTION MARKS(High Growth Low Market Share) ldquoThese businesses are in an attractive industry but hold a small market share percentagerdquo Levirsquos jeans come under the head of question marks with respect to Pakistan
Price DeterminationDuring the determination of the price company not considered the competitors but the standard that is used is considered Our price is influenced by the following factors-
Cost of the product Affordable for the target market Demand of the product
Uniqueness and innovative features of the products Competitors We are much proud to say with surety that our products completely satisfy our consumers thatrsquos why we donrsquot face much competition in our business But yet there are some competitors eg
Pepe Jeans Leeds (US Apparels) GAAP Jeans
Camb r id g e bull Our prices are not influenced by the competitors S uch a stuff design and fashion which donrsquot have the enough sales are recall back to the company
Again company issues this stuff to their own outlets for sale at discount prices at 14 August
STRATEGIES LS amp CO placed its products according to following strategiesPlacing according to Class and Attributes LS amp CO Positioned its products according to different classes and genders
Placing according to Competitors LS amp CO Keep in mind the price and quality of the products and try to make its products better Placing according to Price and Quality LS amp CO introduces best quality at different prices to its clients Placing according to Technology LS amp CO has tried to build its image as an innovator by coming in Pakistan with their Jeans having new and latest style and look
Promotion objectives Promotion ob PROMOTION PROMOTION jectives o To inform persuade and remind the potential customers about its products o Increase awareness and build primary demand o To build strong brand equity o Build Companyrsquos image as innovator o To create bonds between public and Levi Strauss by helping the people o To create the importance of its products Sales Sales promotion- promotion-
For the promotion of sales Levi Strauss amp Co adopt a very effective but comprehensive strategy Levis pays attention to the publicity of its products The major source of promotion of levirsquos is done by creating public relations The sales promotion of LEVIS targets the end consumers Since the Levirsquos JEANS are in growth stage in Pakistan therefore the promotional strategy is based on persuading of prospective buyers Levirsquos uses the following promotional strategies to promote its product
Personal selling by the representative of the organization takes place face to face with final consumers Mass Selling Levis does mass selling to inform a bulk of persons by advertising Advertising- Advertisin g- The type of advertising used by LEVIS Competitive advertising The advertisement given by the LEVIS stresses on the demand of the product and enhancement of its features Institutional advertising Levis uses institutional advertising to promote companyrsquos image by saying Many Copy the Red Tab No One can copy the Origina Advertising mediums- Advertisin g mediums- The advertising media used by the company are
Television Fashion Magazines Newspapers
Internet Bill boards banners etc
Television amp Radio Advertisements of Levi Strauss amp Co are very innovative and eye-catching Buyers are attracted towards the product The advertisements are placed at the international level Fashion Magazines amp Newspapers
For fashion magazines and newspapers LSampCo is a target due to its grand brand equity it has become a benchmark for all the others to follow The newspaper gives a coverage to the social events in which LS ampCo takes part with great interest Whereas fashion magazines are always dealing with the gorgeous models working with LSamp Co and the unique outfits of the models
Internet- Levis provides up-to-date information to their customers through electronic media ie from their websit Billboards amp banners- Billboards and banners are also used for the advertisement purpose
Background history
bullbullThe company was founded by Levi Strauss in 1853 primarily selling wholesale dry goods The company was founded in San Francisco CaliforniabullbullA tailor named Jacob Davis thought of an idea to use copper rivets to reinforce the points of strain on pantsbullbullDavis and Strauss purchased the patent of the idea of using copper rivets in clothing on May 20 1873
Company growth
bullbullThe innovation of the rivets in the jeans differentiated Levidifferentiated Levirsquorsquos jeans from others because of its increased durabilitybullbullOver the years LeviOver Levirsquorsquos jeans have become more popular initially due to its durability Jean products expanded targeting different consumersbullbullLevi Strauss amp Co eventually captures most of the denim jean market becomes the largest manufacturer of jeans and profits reach $1 billion by 1974
bullbull1853 Levi Strauss begins selling dry goods in San Franciscobullbull1873 Levi Strauss amp Co patent riveted jeans and begin selling thembullbull1912 KoverallsKoveralls denim playsuit for children is first nationally sold product for the companybullbull1935 Company sells first blue jeans for womenbullbull1940s US government issues denim work clothes for employees in the defense industrybullbull1974 Company sales reach $1 billion1974 billionbullbull1986 Company introduces Dockers as a new casual line of clothesnew clothes
Successes
bull
Since the patent of the rivets in jeans in 1873 the company achieved monopoly power Monopoly power was gained through entry barriers The patent granted the firm monopoly rights to sell riveted jeans bullndashAlso by product differentiation The rivets on the jeans allowed for longer durability a form of vertical differentiation Product differentiation and barriers to entry allowed the company to gain more popularity and market share ndashbullbull
bullbullBy 1977 Levi Strauss amp Co is the worldBy worldrsquorsquos largest jean manufacturerbullbullDepartment stores and boutiques sell LeviDepartment Levirsquorsquos products and are additional channels of distribution for the companybullbullLeviLevirsquorsquos provides a wide range of products that target different market segments capturing demandsbullbullAfter the release of the 501 product line LeviAfter Levirsquorsquos enjoys worldwide market dominance in the denim jean marketbullbullLevi Strauss amp Co maintains itLevi itrsquorsquos image as an American Icon and the originator of American jeans
Positioning
bullbullOther marketing strategies like the position of the product crOther created eated increased differentiation contributing to the companies market powerbullbullIn 1930s the company survived the Great Depression due to increased interest in Western culturendashndashJeans were positioned as being worn by ldquoldquocowboyscowboysrdquordquobullbullLeviLevirsquorsquos jeans were issued to employees in the defense industry (including veterans) during World War II(IIndashndashPost World War II veterans that went to college wore LeviPost Levirsquorsquos jeans on campuses increasing popularitybullbullWWII veterans were regarded as heroesndashndashJeans were shown to be suitable for casual wear rather than worJeans workkndashndashDuring the Baby Boom era LeviDuring Levirsquorsquos targets younger consumers and positions product as ldquoldquocoolcoolrdquordquobullbullEarly movie stars wore LeviEarly Levirsquorsquos jeans An example of celebrity endorsements endorsementbullbullConsumer demand shifts from durability of jeans to fashion of jeConsumer jeansansndashndashCulturally jeans became symbol of youth and rebellionCulturally rebellionbullbullIn 1960s student protesters wore jeans as a uniformIn uniformbullbullIn 1970s company sells bellbottom jeansIn jeansbullbullThe firm positioned its products with changing times and changiThe changing ng demands keeping existing customers and capturing new markets Increases in sales ultimately increased profitsIncreases profitsSuccesses
Competetion
Effect
bullbullLevi Strauss amp Co was threatened by competition because barrieLevi barriers rs of entry were relatively low in the jean market (excluding the patent)bullbullSome of LeviSome Levirsquorsquos competitors includendashndashCalvin KleinCalvin KleinndashndashGap JeansGap JeansndashndashVF Corp (Lee
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
STARS (High Growth High Market Share) ldquoStars include the businesses which are in a fast growing market and hold a dominant share of that marketrdquo Dockersreg come under the head of stars as it is the major source of income for the company CASH COWS (Low Growth High Market Share) CASH COWS (Low Growth High Market Share) Businesses in this category generate large amounts of cash but their prospects for furure growth are limitedrdquo The women apparels has got a low growth and high market share so it comes under the Cash Cows head QUESTION MARKS(High Growth Low Market Share) QUESTION MARKS(High Growth Low Market Share) ldquoThese businesses are in an attractive industry but hold a small market share percentagerdquo Levirsquos jeans come under the head of question marks with respect to Pakistan
Price DeterminationDuring the determination of the price company not considered the competitors but the standard that is used is considered Our price is influenced by the following factors-
Cost of the product Affordable for the target market Demand of the product
Uniqueness and innovative features of the products Competitors We are much proud to say with surety that our products completely satisfy our consumers thatrsquos why we donrsquot face much competition in our business But yet there are some competitors eg
Pepe Jeans Leeds (US Apparels) GAAP Jeans
Camb r id g e bull Our prices are not influenced by the competitors S uch a stuff design and fashion which donrsquot have the enough sales are recall back to the company
Again company issues this stuff to their own outlets for sale at discount prices at 14 August
STRATEGIES LS amp CO placed its products according to following strategiesPlacing according to Class and Attributes LS amp CO Positioned its products according to different classes and genders
Placing according to Competitors LS amp CO Keep in mind the price and quality of the products and try to make its products better Placing according to Price and Quality LS amp CO introduces best quality at different prices to its clients Placing according to Technology LS amp CO has tried to build its image as an innovator by coming in Pakistan with their Jeans having new and latest style and look
Promotion objectives Promotion ob PROMOTION PROMOTION jectives o To inform persuade and remind the potential customers about its products o Increase awareness and build primary demand o To build strong brand equity o Build Companyrsquos image as innovator o To create bonds between public and Levi Strauss by helping the people o To create the importance of its products Sales Sales promotion- promotion-
For the promotion of sales Levi Strauss amp Co adopt a very effective but comprehensive strategy Levis pays attention to the publicity of its products The major source of promotion of levirsquos is done by creating public relations The sales promotion of LEVIS targets the end consumers Since the Levirsquos JEANS are in growth stage in Pakistan therefore the promotional strategy is based on persuading of prospective buyers Levirsquos uses the following promotional strategies to promote its product
Personal selling by the representative of the organization takes place face to face with final consumers Mass Selling Levis does mass selling to inform a bulk of persons by advertising Advertising- Advertisin g- The type of advertising used by LEVIS Competitive advertising The advertisement given by the LEVIS stresses on the demand of the product and enhancement of its features Institutional advertising Levis uses institutional advertising to promote companyrsquos image by saying Many Copy the Red Tab No One can copy the Origina Advertising mediums- Advertisin g mediums- The advertising media used by the company are
Television Fashion Magazines Newspapers
Internet Bill boards banners etc
Television amp Radio Advertisements of Levi Strauss amp Co are very innovative and eye-catching Buyers are attracted towards the product The advertisements are placed at the international level Fashion Magazines amp Newspapers
For fashion magazines and newspapers LSampCo is a target due to its grand brand equity it has become a benchmark for all the others to follow The newspaper gives a coverage to the social events in which LS ampCo takes part with great interest Whereas fashion magazines are always dealing with the gorgeous models working with LSamp Co and the unique outfits of the models
Internet- Levis provides up-to-date information to their customers through electronic media ie from their websit Billboards amp banners- Billboards and banners are also used for the advertisement purpose
Background history
bullbullThe company was founded by Levi Strauss in 1853 primarily selling wholesale dry goods The company was founded in San Francisco CaliforniabullbullA tailor named Jacob Davis thought of an idea to use copper rivets to reinforce the points of strain on pantsbullbullDavis and Strauss purchased the patent of the idea of using copper rivets in clothing on May 20 1873
Company growth
bullbullThe innovation of the rivets in the jeans differentiated Levidifferentiated Levirsquorsquos jeans from others because of its increased durabilitybullbullOver the years LeviOver Levirsquorsquos jeans have become more popular initially due to its durability Jean products expanded targeting different consumersbullbullLevi Strauss amp Co eventually captures most of the denim jean market becomes the largest manufacturer of jeans and profits reach $1 billion by 1974
bullbull1853 Levi Strauss begins selling dry goods in San Franciscobullbull1873 Levi Strauss amp Co patent riveted jeans and begin selling thembullbull1912 KoverallsKoveralls denim playsuit for children is first nationally sold product for the companybullbull1935 Company sells first blue jeans for womenbullbull1940s US government issues denim work clothes for employees in the defense industrybullbull1974 Company sales reach $1 billion1974 billionbullbull1986 Company introduces Dockers as a new casual line of clothesnew clothes
Successes
bull
Since the patent of the rivets in jeans in 1873 the company achieved monopoly power Monopoly power was gained through entry barriers The patent granted the firm monopoly rights to sell riveted jeans bullndashAlso by product differentiation The rivets on the jeans allowed for longer durability a form of vertical differentiation Product differentiation and barriers to entry allowed the company to gain more popularity and market share ndashbullbull
bullbullBy 1977 Levi Strauss amp Co is the worldBy worldrsquorsquos largest jean manufacturerbullbullDepartment stores and boutiques sell LeviDepartment Levirsquorsquos products and are additional channels of distribution for the companybullbullLeviLevirsquorsquos provides a wide range of products that target different market segments capturing demandsbullbullAfter the release of the 501 product line LeviAfter Levirsquorsquos enjoys worldwide market dominance in the denim jean marketbullbullLevi Strauss amp Co maintains itLevi itrsquorsquos image as an American Icon and the originator of American jeans
Positioning
bullbullOther marketing strategies like the position of the product crOther created eated increased differentiation contributing to the companies market powerbullbullIn 1930s the company survived the Great Depression due to increased interest in Western culturendashndashJeans were positioned as being worn by ldquoldquocowboyscowboysrdquordquobullbullLeviLevirsquorsquos jeans were issued to employees in the defense industry (including veterans) during World War II(IIndashndashPost World War II veterans that went to college wore LeviPost Levirsquorsquos jeans on campuses increasing popularitybullbullWWII veterans were regarded as heroesndashndashJeans were shown to be suitable for casual wear rather than worJeans workkndashndashDuring the Baby Boom era LeviDuring Levirsquorsquos targets younger consumers and positions product as ldquoldquocoolcoolrdquordquobullbullEarly movie stars wore LeviEarly Levirsquorsquos jeans An example of celebrity endorsements endorsementbullbullConsumer demand shifts from durability of jeans to fashion of jeConsumer jeansansndashndashCulturally jeans became symbol of youth and rebellionCulturally rebellionbullbullIn 1960s student protesters wore jeans as a uniformIn uniformbullbullIn 1970s company sells bellbottom jeansIn jeansbullbullThe firm positioned its products with changing times and changiThe changing ng demands keeping existing customers and capturing new markets Increases in sales ultimately increased profitsIncreases profitsSuccesses
Competetion
Effect
bullbullLevi Strauss amp Co was threatened by competition because barrieLevi barriers rs of entry were relatively low in the jean market (excluding the patent)bullbullSome of LeviSome Levirsquorsquos competitors includendashndashCalvin KleinCalvin KleinndashndashGap JeansGap JeansndashndashVF Corp (Lee
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
Placing according to Competitors LS amp CO Keep in mind the price and quality of the products and try to make its products better Placing according to Price and Quality LS amp CO introduces best quality at different prices to its clients Placing according to Technology LS amp CO has tried to build its image as an innovator by coming in Pakistan with their Jeans having new and latest style and look
Promotion objectives Promotion ob PROMOTION PROMOTION jectives o To inform persuade and remind the potential customers about its products o Increase awareness and build primary demand o To build strong brand equity o Build Companyrsquos image as innovator o To create bonds between public and Levi Strauss by helping the people o To create the importance of its products Sales Sales promotion- promotion-
For the promotion of sales Levi Strauss amp Co adopt a very effective but comprehensive strategy Levis pays attention to the publicity of its products The major source of promotion of levirsquos is done by creating public relations The sales promotion of LEVIS targets the end consumers Since the Levirsquos JEANS are in growth stage in Pakistan therefore the promotional strategy is based on persuading of prospective buyers Levirsquos uses the following promotional strategies to promote its product
Personal selling by the representative of the organization takes place face to face with final consumers Mass Selling Levis does mass selling to inform a bulk of persons by advertising Advertising- Advertisin g- The type of advertising used by LEVIS Competitive advertising The advertisement given by the LEVIS stresses on the demand of the product and enhancement of its features Institutional advertising Levis uses institutional advertising to promote companyrsquos image by saying Many Copy the Red Tab No One can copy the Origina Advertising mediums- Advertisin g mediums- The advertising media used by the company are
Television Fashion Magazines Newspapers
Internet Bill boards banners etc
Television amp Radio Advertisements of Levi Strauss amp Co are very innovative and eye-catching Buyers are attracted towards the product The advertisements are placed at the international level Fashion Magazines amp Newspapers
For fashion magazines and newspapers LSampCo is a target due to its grand brand equity it has become a benchmark for all the others to follow The newspaper gives a coverage to the social events in which LS ampCo takes part with great interest Whereas fashion magazines are always dealing with the gorgeous models working with LSamp Co and the unique outfits of the models
Internet- Levis provides up-to-date information to their customers through electronic media ie from their websit Billboards amp banners- Billboards and banners are also used for the advertisement purpose
Background history
bullbullThe company was founded by Levi Strauss in 1853 primarily selling wholesale dry goods The company was founded in San Francisco CaliforniabullbullA tailor named Jacob Davis thought of an idea to use copper rivets to reinforce the points of strain on pantsbullbullDavis and Strauss purchased the patent of the idea of using copper rivets in clothing on May 20 1873
Company growth
bullbullThe innovation of the rivets in the jeans differentiated Levidifferentiated Levirsquorsquos jeans from others because of its increased durabilitybullbullOver the years LeviOver Levirsquorsquos jeans have become more popular initially due to its durability Jean products expanded targeting different consumersbullbullLevi Strauss amp Co eventually captures most of the denim jean market becomes the largest manufacturer of jeans and profits reach $1 billion by 1974
bullbull1853 Levi Strauss begins selling dry goods in San Franciscobullbull1873 Levi Strauss amp Co patent riveted jeans and begin selling thembullbull1912 KoverallsKoveralls denim playsuit for children is first nationally sold product for the companybullbull1935 Company sells first blue jeans for womenbullbull1940s US government issues denim work clothes for employees in the defense industrybullbull1974 Company sales reach $1 billion1974 billionbullbull1986 Company introduces Dockers as a new casual line of clothesnew clothes
Successes
bull
Since the patent of the rivets in jeans in 1873 the company achieved monopoly power Monopoly power was gained through entry barriers The patent granted the firm monopoly rights to sell riveted jeans bullndashAlso by product differentiation The rivets on the jeans allowed for longer durability a form of vertical differentiation Product differentiation and barriers to entry allowed the company to gain more popularity and market share ndashbullbull
bullbullBy 1977 Levi Strauss amp Co is the worldBy worldrsquorsquos largest jean manufacturerbullbullDepartment stores and boutiques sell LeviDepartment Levirsquorsquos products and are additional channels of distribution for the companybullbullLeviLevirsquorsquos provides a wide range of products that target different market segments capturing demandsbullbullAfter the release of the 501 product line LeviAfter Levirsquorsquos enjoys worldwide market dominance in the denim jean marketbullbullLevi Strauss amp Co maintains itLevi itrsquorsquos image as an American Icon and the originator of American jeans
Positioning
bullbullOther marketing strategies like the position of the product crOther created eated increased differentiation contributing to the companies market powerbullbullIn 1930s the company survived the Great Depression due to increased interest in Western culturendashndashJeans were positioned as being worn by ldquoldquocowboyscowboysrdquordquobullbullLeviLevirsquorsquos jeans were issued to employees in the defense industry (including veterans) during World War II(IIndashndashPost World War II veterans that went to college wore LeviPost Levirsquorsquos jeans on campuses increasing popularitybullbullWWII veterans were regarded as heroesndashndashJeans were shown to be suitable for casual wear rather than worJeans workkndashndashDuring the Baby Boom era LeviDuring Levirsquorsquos targets younger consumers and positions product as ldquoldquocoolcoolrdquordquobullbullEarly movie stars wore LeviEarly Levirsquorsquos jeans An example of celebrity endorsements endorsementbullbullConsumer demand shifts from durability of jeans to fashion of jeConsumer jeansansndashndashCulturally jeans became symbol of youth and rebellionCulturally rebellionbullbullIn 1960s student protesters wore jeans as a uniformIn uniformbullbullIn 1970s company sells bellbottom jeansIn jeansbullbullThe firm positioned its products with changing times and changiThe changing ng demands keeping existing customers and capturing new markets Increases in sales ultimately increased profitsIncreases profitsSuccesses
Competetion
Effect
bullbullLevi Strauss amp Co was threatened by competition because barrieLevi barriers rs of entry were relatively low in the jean market (excluding the patent)bullbullSome of LeviSome Levirsquorsquos competitors includendashndashCalvin KleinCalvin KleinndashndashGap JeansGap JeansndashndashVF Corp (Lee
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
Promotion objectives Promotion ob PROMOTION PROMOTION jectives o To inform persuade and remind the potential customers about its products o Increase awareness and build primary demand o To build strong brand equity o Build Companyrsquos image as innovator o To create bonds between public and Levi Strauss by helping the people o To create the importance of its products Sales Sales promotion- promotion-
For the promotion of sales Levi Strauss amp Co adopt a very effective but comprehensive strategy Levis pays attention to the publicity of its products The major source of promotion of levirsquos is done by creating public relations The sales promotion of LEVIS targets the end consumers Since the Levirsquos JEANS are in growth stage in Pakistan therefore the promotional strategy is based on persuading of prospective buyers Levirsquos uses the following promotional strategies to promote its product
Personal selling by the representative of the organization takes place face to face with final consumers Mass Selling Levis does mass selling to inform a bulk of persons by advertising Advertising- Advertisin g- The type of advertising used by LEVIS Competitive advertising The advertisement given by the LEVIS stresses on the demand of the product and enhancement of its features Institutional advertising Levis uses institutional advertising to promote companyrsquos image by saying Many Copy the Red Tab No One can copy the Origina Advertising mediums- Advertisin g mediums- The advertising media used by the company are
Television Fashion Magazines Newspapers
Internet Bill boards banners etc
Television amp Radio Advertisements of Levi Strauss amp Co are very innovative and eye-catching Buyers are attracted towards the product The advertisements are placed at the international level Fashion Magazines amp Newspapers
For fashion magazines and newspapers LSampCo is a target due to its grand brand equity it has become a benchmark for all the others to follow The newspaper gives a coverage to the social events in which LS ampCo takes part with great interest Whereas fashion magazines are always dealing with the gorgeous models working with LSamp Co and the unique outfits of the models
Internet- Levis provides up-to-date information to their customers through electronic media ie from their websit Billboards amp banners- Billboards and banners are also used for the advertisement purpose
Background history
bullbullThe company was founded by Levi Strauss in 1853 primarily selling wholesale dry goods The company was founded in San Francisco CaliforniabullbullA tailor named Jacob Davis thought of an idea to use copper rivets to reinforce the points of strain on pantsbullbullDavis and Strauss purchased the patent of the idea of using copper rivets in clothing on May 20 1873
Company growth
bullbullThe innovation of the rivets in the jeans differentiated Levidifferentiated Levirsquorsquos jeans from others because of its increased durabilitybullbullOver the years LeviOver Levirsquorsquos jeans have become more popular initially due to its durability Jean products expanded targeting different consumersbullbullLevi Strauss amp Co eventually captures most of the denim jean market becomes the largest manufacturer of jeans and profits reach $1 billion by 1974
bullbull1853 Levi Strauss begins selling dry goods in San Franciscobullbull1873 Levi Strauss amp Co patent riveted jeans and begin selling thembullbull1912 KoverallsKoveralls denim playsuit for children is first nationally sold product for the companybullbull1935 Company sells first blue jeans for womenbullbull1940s US government issues denim work clothes for employees in the defense industrybullbull1974 Company sales reach $1 billion1974 billionbullbull1986 Company introduces Dockers as a new casual line of clothesnew clothes
Successes
bull
Since the patent of the rivets in jeans in 1873 the company achieved monopoly power Monopoly power was gained through entry barriers The patent granted the firm monopoly rights to sell riveted jeans bullndashAlso by product differentiation The rivets on the jeans allowed for longer durability a form of vertical differentiation Product differentiation and barriers to entry allowed the company to gain more popularity and market share ndashbullbull
bullbullBy 1977 Levi Strauss amp Co is the worldBy worldrsquorsquos largest jean manufacturerbullbullDepartment stores and boutiques sell LeviDepartment Levirsquorsquos products and are additional channels of distribution for the companybullbullLeviLevirsquorsquos provides a wide range of products that target different market segments capturing demandsbullbullAfter the release of the 501 product line LeviAfter Levirsquorsquos enjoys worldwide market dominance in the denim jean marketbullbullLevi Strauss amp Co maintains itLevi itrsquorsquos image as an American Icon and the originator of American jeans
Positioning
bullbullOther marketing strategies like the position of the product crOther created eated increased differentiation contributing to the companies market powerbullbullIn 1930s the company survived the Great Depression due to increased interest in Western culturendashndashJeans were positioned as being worn by ldquoldquocowboyscowboysrdquordquobullbullLeviLevirsquorsquos jeans were issued to employees in the defense industry (including veterans) during World War II(IIndashndashPost World War II veterans that went to college wore LeviPost Levirsquorsquos jeans on campuses increasing popularitybullbullWWII veterans were regarded as heroesndashndashJeans were shown to be suitable for casual wear rather than worJeans workkndashndashDuring the Baby Boom era LeviDuring Levirsquorsquos targets younger consumers and positions product as ldquoldquocoolcoolrdquordquobullbullEarly movie stars wore LeviEarly Levirsquorsquos jeans An example of celebrity endorsements endorsementbullbullConsumer demand shifts from durability of jeans to fashion of jeConsumer jeansansndashndashCulturally jeans became symbol of youth and rebellionCulturally rebellionbullbullIn 1960s student protesters wore jeans as a uniformIn uniformbullbullIn 1970s company sells bellbottom jeansIn jeansbullbullThe firm positioned its products with changing times and changiThe changing ng demands keeping existing customers and capturing new markets Increases in sales ultimately increased profitsIncreases profitsSuccesses
Competetion
Effect
bullbullLevi Strauss amp Co was threatened by competition because barrieLevi barriers rs of entry were relatively low in the jean market (excluding the patent)bullbullSome of LeviSome Levirsquorsquos competitors includendashndashCalvin KleinCalvin KleinndashndashGap JeansGap JeansndashndashVF Corp (Lee
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
For the promotion of sales Levi Strauss amp Co adopt a very effective but comprehensive strategy Levis pays attention to the publicity of its products The major source of promotion of levirsquos is done by creating public relations The sales promotion of LEVIS targets the end consumers Since the Levirsquos JEANS are in growth stage in Pakistan therefore the promotional strategy is based on persuading of prospective buyers Levirsquos uses the following promotional strategies to promote its product
Personal selling by the representative of the organization takes place face to face with final consumers Mass Selling Levis does mass selling to inform a bulk of persons by advertising Advertising- Advertisin g- The type of advertising used by LEVIS Competitive advertising The advertisement given by the LEVIS stresses on the demand of the product and enhancement of its features Institutional advertising Levis uses institutional advertising to promote companyrsquos image by saying Many Copy the Red Tab No One can copy the Origina Advertising mediums- Advertisin g mediums- The advertising media used by the company are
Television Fashion Magazines Newspapers
Internet Bill boards banners etc
Television amp Radio Advertisements of Levi Strauss amp Co are very innovative and eye-catching Buyers are attracted towards the product The advertisements are placed at the international level Fashion Magazines amp Newspapers
For fashion magazines and newspapers LSampCo is a target due to its grand brand equity it has become a benchmark for all the others to follow The newspaper gives a coverage to the social events in which LS ampCo takes part with great interest Whereas fashion magazines are always dealing with the gorgeous models working with LSamp Co and the unique outfits of the models
Internet- Levis provides up-to-date information to their customers through electronic media ie from their websit Billboards amp banners- Billboards and banners are also used for the advertisement purpose
Background history
bullbullThe company was founded by Levi Strauss in 1853 primarily selling wholesale dry goods The company was founded in San Francisco CaliforniabullbullA tailor named Jacob Davis thought of an idea to use copper rivets to reinforce the points of strain on pantsbullbullDavis and Strauss purchased the patent of the idea of using copper rivets in clothing on May 20 1873
Company growth
bullbullThe innovation of the rivets in the jeans differentiated Levidifferentiated Levirsquorsquos jeans from others because of its increased durabilitybullbullOver the years LeviOver Levirsquorsquos jeans have become more popular initially due to its durability Jean products expanded targeting different consumersbullbullLevi Strauss amp Co eventually captures most of the denim jean market becomes the largest manufacturer of jeans and profits reach $1 billion by 1974
bullbull1853 Levi Strauss begins selling dry goods in San Franciscobullbull1873 Levi Strauss amp Co patent riveted jeans and begin selling thembullbull1912 KoverallsKoveralls denim playsuit for children is first nationally sold product for the companybullbull1935 Company sells first blue jeans for womenbullbull1940s US government issues denim work clothes for employees in the defense industrybullbull1974 Company sales reach $1 billion1974 billionbullbull1986 Company introduces Dockers as a new casual line of clothesnew clothes
Successes
bull
Since the patent of the rivets in jeans in 1873 the company achieved monopoly power Monopoly power was gained through entry barriers The patent granted the firm monopoly rights to sell riveted jeans bullndashAlso by product differentiation The rivets on the jeans allowed for longer durability a form of vertical differentiation Product differentiation and barriers to entry allowed the company to gain more popularity and market share ndashbullbull
bullbullBy 1977 Levi Strauss amp Co is the worldBy worldrsquorsquos largest jean manufacturerbullbullDepartment stores and boutiques sell LeviDepartment Levirsquorsquos products and are additional channels of distribution for the companybullbullLeviLevirsquorsquos provides a wide range of products that target different market segments capturing demandsbullbullAfter the release of the 501 product line LeviAfter Levirsquorsquos enjoys worldwide market dominance in the denim jean marketbullbullLevi Strauss amp Co maintains itLevi itrsquorsquos image as an American Icon and the originator of American jeans
Positioning
bullbullOther marketing strategies like the position of the product crOther created eated increased differentiation contributing to the companies market powerbullbullIn 1930s the company survived the Great Depression due to increased interest in Western culturendashndashJeans were positioned as being worn by ldquoldquocowboyscowboysrdquordquobullbullLeviLevirsquorsquos jeans were issued to employees in the defense industry (including veterans) during World War II(IIndashndashPost World War II veterans that went to college wore LeviPost Levirsquorsquos jeans on campuses increasing popularitybullbullWWII veterans were regarded as heroesndashndashJeans were shown to be suitable for casual wear rather than worJeans workkndashndashDuring the Baby Boom era LeviDuring Levirsquorsquos targets younger consumers and positions product as ldquoldquocoolcoolrdquordquobullbullEarly movie stars wore LeviEarly Levirsquorsquos jeans An example of celebrity endorsements endorsementbullbullConsumer demand shifts from durability of jeans to fashion of jeConsumer jeansansndashndashCulturally jeans became symbol of youth and rebellionCulturally rebellionbullbullIn 1960s student protesters wore jeans as a uniformIn uniformbullbullIn 1970s company sells bellbottom jeansIn jeansbullbullThe firm positioned its products with changing times and changiThe changing ng demands keeping existing customers and capturing new markets Increases in sales ultimately increased profitsIncreases profitsSuccesses
Competetion
Effect
bullbullLevi Strauss amp Co was threatened by competition because barrieLevi barriers rs of entry were relatively low in the jean market (excluding the patent)bullbullSome of LeviSome Levirsquorsquos competitors includendashndashCalvin KleinCalvin KleinndashndashGap JeansGap JeansndashndashVF Corp (Lee
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
Internet Bill boards banners etc
Television amp Radio Advertisements of Levi Strauss amp Co are very innovative and eye-catching Buyers are attracted towards the product The advertisements are placed at the international level Fashion Magazines amp Newspapers
For fashion magazines and newspapers LSampCo is a target due to its grand brand equity it has become a benchmark for all the others to follow The newspaper gives a coverage to the social events in which LS ampCo takes part with great interest Whereas fashion magazines are always dealing with the gorgeous models working with LSamp Co and the unique outfits of the models
Internet- Levis provides up-to-date information to their customers through electronic media ie from their websit Billboards amp banners- Billboards and banners are also used for the advertisement purpose
Background history
bullbullThe company was founded by Levi Strauss in 1853 primarily selling wholesale dry goods The company was founded in San Francisco CaliforniabullbullA tailor named Jacob Davis thought of an idea to use copper rivets to reinforce the points of strain on pantsbullbullDavis and Strauss purchased the patent of the idea of using copper rivets in clothing on May 20 1873
Company growth
bullbullThe innovation of the rivets in the jeans differentiated Levidifferentiated Levirsquorsquos jeans from others because of its increased durabilitybullbullOver the years LeviOver Levirsquorsquos jeans have become more popular initially due to its durability Jean products expanded targeting different consumersbullbullLevi Strauss amp Co eventually captures most of the denim jean market becomes the largest manufacturer of jeans and profits reach $1 billion by 1974
bullbull1853 Levi Strauss begins selling dry goods in San Franciscobullbull1873 Levi Strauss amp Co patent riveted jeans and begin selling thembullbull1912 KoverallsKoveralls denim playsuit for children is first nationally sold product for the companybullbull1935 Company sells first blue jeans for womenbullbull1940s US government issues denim work clothes for employees in the defense industrybullbull1974 Company sales reach $1 billion1974 billionbullbull1986 Company introduces Dockers as a new casual line of clothesnew clothes
Successes
bull
Since the patent of the rivets in jeans in 1873 the company achieved monopoly power Monopoly power was gained through entry barriers The patent granted the firm monopoly rights to sell riveted jeans bullndashAlso by product differentiation The rivets on the jeans allowed for longer durability a form of vertical differentiation Product differentiation and barriers to entry allowed the company to gain more popularity and market share ndashbullbull
bullbullBy 1977 Levi Strauss amp Co is the worldBy worldrsquorsquos largest jean manufacturerbullbullDepartment stores and boutiques sell LeviDepartment Levirsquorsquos products and are additional channels of distribution for the companybullbullLeviLevirsquorsquos provides a wide range of products that target different market segments capturing demandsbullbullAfter the release of the 501 product line LeviAfter Levirsquorsquos enjoys worldwide market dominance in the denim jean marketbullbullLevi Strauss amp Co maintains itLevi itrsquorsquos image as an American Icon and the originator of American jeans
Positioning
bullbullOther marketing strategies like the position of the product crOther created eated increased differentiation contributing to the companies market powerbullbullIn 1930s the company survived the Great Depression due to increased interest in Western culturendashndashJeans were positioned as being worn by ldquoldquocowboyscowboysrdquordquobullbullLeviLevirsquorsquos jeans were issued to employees in the defense industry (including veterans) during World War II(IIndashndashPost World War II veterans that went to college wore LeviPost Levirsquorsquos jeans on campuses increasing popularitybullbullWWII veterans were regarded as heroesndashndashJeans were shown to be suitable for casual wear rather than worJeans workkndashndashDuring the Baby Boom era LeviDuring Levirsquorsquos targets younger consumers and positions product as ldquoldquocoolcoolrdquordquobullbullEarly movie stars wore LeviEarly Levirsquorsquos jeans An example of celebrity endorsements endorsementbullbullConsumer demand shifts from durability of jeans to fashion of jeConsumer jeansansndashndashCulturally jeans became symbol of youth and rebellionCulturally rebellionbullbullIn 1960s student protesters wore jeans as a uniformIn uniformbullbullIn 1970s company sells bellbottom jeansIn jeansbullbullThe firm positioned its products with changing times and changiThe changing ng demands keeping existing customers and capturing new markets Increases in sales ultimately increased profitsIncreases profitsSuccesses
Competetion
Effect
bullbullLevi Strauss amp Co was threatened by competition because barrieLevi barriers rs of entry were relatively low in the jean market (excluding the patent)bullbullSome of LeviSome Levirsquorsquos competitors includendashndashCalvin KleinCalvin KleinndashndashGap JeansGap JeansndashndashVF Corp (Lee
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
bull
Since the patent of the rivets in jeans in 1873 the company achieved monopoly power Monopoly power was gained through entry barriers The patent granted the firm monopoly rights to sell riveted jeans bullndashAlso by product differentiation The rivets on the jeans allowed for longer durability a form of vertical differentiation Product differentiation and barriers to entry allowed the company to gain more popularity and market share ndashbullbull
bullbullBy 1977 Levi Strauss amp Co is the worldBy worldrsquorsquos largest jean manufacturerbullbullDepartment stores and boutiques sell LeviDepartment Levirsquorsquos products and are additional channels of distribution for the companybullbullLeviLevirsquorsquos provides a wide range of products that target different market segments capturing demandsbullbullAfter the release of the 501 product line LeviAfter Levirsquorsquos enjoys worldwide market dominance in the denim jean marketbullbullLevi Strauss amp Co maintains itLevi itrsquorsquos image as an American Icon and the originator of American jeans
Positioning
bullbullOther marketing strategies like the position of the product crOther created eated increased differentiation contributing to the companies market powerbullbullIn 1930s the company survived the Great Depression due to increased interest in Western culturendashndashJeans were positioned as being worn by ldquoldquocowboyscowboysrdquordquobullbullLeviLevirsquorsquos jeans were issued to employees in the defense industry (including veterans) during World War II(IIndashndashPost World War II veterans that went to college wore LeviPost Levirsquorsquos jeans on campuses increasing popularitybullbullWWII veterans were regarded as heroesndashndashJeans were shown to be suitable for casual wear rather than worJeans workkndashndashDuring the Baby Boom era LeviDuring Levirsquorsquos targets younger consumers and positions product as ldquoldquocoolcoolrdquordquobullbullEarly movie stars wore LeviEarly Levirsquorsquos jeans An example of celebrity endorsements endorsementbullbullConsumer demand shifts from durability of jeans to fashion of jeConsumer jeansansndashndashCulturally jeans became symbol of youth and rebellionCulturally rebellionbullbullIn 1960s student protesters wore jeans as a uniformIn uniformbullbullIn 1970s company sells bellbottom jeansIn jeansbullbullThe firm positioned its products with changing times and changiThe changing ng demands keeping existing customers and capturing new markets Increases in sales ultimately increased profitsIncreases profitsSuccesses
Competetion
Effect
bullbullLevi Strauss amp Co was threatened by competition because barrieLevi barriers rs of entry were relatively low in the jean market (excluding the patent)bullbullSome of LeviSome Levirsquorsquos competitors includendashndashCalvin KleinCalvin KleinndashndashGap JeansGap JeansndashndashVF Corp (Lee
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
Wrangler)ndashndashTommy HilfigerTommy HilfigerbullbullThe entrance of new competitors had many effects on LeviThe LevirsquorsquosndashndashLeviLevirsquorsquos no longer has monopoly power 1048774more competitive prices 1048774lower profitslower profitsndashndashAvailability of substitutes 1048774firm faces increase in elasticity of demandfirm demandndashndashConsumers prefer other brands LeviConsumers Levirsquorsquos customers buy from competition lowering Levilowering Levirsquorsquos market sharebullbullThese newer upstarts are able to ldquoldquochip awaychip awayrdquordquoat Leviat Levirsquorsquos market dominance because they are able to capture segmentsndashndashVF Corp captures lowVF low--end jean consumers Calvin Klein captures highend high--end consumers
Competetion
Strategy
bullbullCompetitors successfully were able to take from LeviCompetitors Levirsquorsquos market due to heavy advertising and branding Branding was especially effecto effective tive for companies like Calvin Klein that targeted highfor high--end consumersbullbullSome of the marketing strategies that competitors like Calvin KlSome Klein ein used to differentiate their product and brand includedndashndashCelebrity endorsements (Calvin Klein and Brooke Shields)ndashndashUpUp--toto--date European product designs (lowdate low--rise tighter)ndashndashAdvertise jeans as ldquoldquodesignerdesignerrdquordquobullbullThese advertisements were used as a barrier to entry because ofThese ofspurious product differentiation Although Levispurious Levirsquorsquos jeans may be physically the same as its competitorphysically competitorrsquorsquos consumer preferences are affected by brand namebullbullIn addition to the idea of branding LeviIn Levirsquorsquos largest consumer market were Baby Boomers and by the time competitors increased in the 1980s the Levi1980s Levirsquorsquos brand was perceived to be ldquoldquomommy jeansjeansrdquordquoThis reinforced the more youthful perception of other brands
Competetion
Premium Jeans
bullbullLeviLevirsquorsquos failed to recognize and enter a new and booming premium jeans market originating in 2000 and led by brands such as Seven For All Mankind True Religion and Rock amp Republic bullbullLevi executives themselves admitted failing to see the premium jeans trend and the company was forced into radical costradical cost--cutting closing dozens of factories and laying off thousands of workersbullbullThe premium jeans market has over the last five years largely driven the growth of an otherwise stable jeans market as premium jeans sales grew at a 40market 40--45 rate for multiple years Levifor Levirsquorsquos failure to adequately respond to this trend was a large part of its posting declining sales in nine out of ten years prior to 2007
Solution
Advertising
bullbullWith the rise of competitors and decrease in brand image Levi Strauss amp Co makes use of edgy advertisementsbullbullBrand LoyaltyBrand LoyaltyndashndashMany of LeviMany Levirsquorsquos ads stress
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
brand loyalty to maintain existing customers The word ldquoldquooriginaloriginalrdquordquois used many timesndashndashSome tvtvads are set in the late 1800s stressing the historic value of ads the companybullbullBrand ImageBrand ImagendashndashAt the same time LeviAt Levirsquorsquos ads stress the ldquoldquoyouthfulnessyouthfulnessrdquordquoof their brand jeansndashndashThe 501 product line and the Red Tab collections offer jeans thaThe that appeal t to younger consumers competing with the highto high--end jean competitorsndashndashTelevision advertisements are more innovative and target youngerTelevision youngercrowdscrowdsndashndashhttpwwwyoutubecomwatchv=CSG807d3PhttpCSG807d3P--UUndashndashhttpwwwyoutubecomwatchv=skWFyop_pxUampfeature=relatedhttprelatedndashndashhttpwwwyoutubecomwatchvwwwv=W=W--SZN1VRIl4ampfeature=relatedSZN1VRIl4amprelatedbullbullThese marketing strategies however did not help with the worldwiThese worldwide de decrease demand for jeans This implies that other clothing is becoming a substitutable good for jeans
Solutions
Alternative
bullbullAlthough Levi Strauss amp Co had worldwide market dominance in the 1980s after the release of 501 product line profits continue to plummet due to (1) decrease of demand for jean products and (2) more competitionbullbullIn 1996 revenues were reported at $76 billion and a US market share of 187 By 2001 revenues drop to $425 billion and US market share of 121bullbullIn order to maintain revenues the company releases the LeviLevirsquorsquos signature jeansndashndashThis product line appeals to the lowThis low--end consumersndashndashDecrease in demand for jeans causes market price to drop so consumers want cheaper jeans
bullbullIn 2002 Levi Strauss amp Co makes an agreement with largest retailer Wallargest Wal--Mart as a supplyMart supply--chain strategy to masschain mass--market consumersndashndashLeviLevirsquorsquos Signature brand to be sold in Wals Wal--Mart stores exclusivelyexclusivelybullbullThis was an excellent strategic move because WalThis Wal--Mart was making large sales while Leviwas Levirsquorsquos could not keep up in sales This had potential to benefit both partiesndashndashBy 2002 WalBy Wal--Mart was 1 in the Fortune 500 ratingndashndashLevi Strauss amp Co was ranked 383 in 2002bullbullAlthough this partnership was a success Levi Strauss could not offset the slowdown in the aggregate denim jean market continuing to loss profitsndashndash2008 Rating for Levi2008 Levirsquorsquos 522 from previous 510s 510ndashndashProfits continue to fall
bullForced to re re-evaluate itself by years of declining sales Levi Levirsquos has been able to find some degree of success withs primarily the introduction of the Signature line and a large large-scale streamlining of costs and it itrsquos business Levi s Levirsquos is alsos being helped by its international presence and is currentlybeing benefited by impacts from the global currencyexchange market as the company benefited from the weak dollarbullThe company is still trying to find a way into the lucrativepremium jeans market introducing a new premium line andhiring famous artists to liven up the brand Competitor VF Corp decided to purchase Seven For All Mankind as their market entry
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
Responsibility
Background
bull
Levi Strauss amp Co is a family owned worldwide corporation with headquarters in North America Europe and Asia The company is vertically integrated meaning it ownshas owned factories for every level of production for the jeans The company employs about 10000 people worldwide Historically Levi Strauss amp Co is recognized as a caring and corporately responsible company After the 1906 San Francisco earthquake the company continued to pay workers as it was rebuilding factories and buildings During the Great Depression the company kept workers busy installing new floors in factories rather than fire them ndashndashbullndashndash
bullLevi Strauss amp Co has also taken the lead on social issuesndashDuring the 1940s the company desegregated its factoriesbringing white and black workers togetherndashIn 1980s the company was very involved in educating peopleabout AIDS providing $37 million to HIVAIDS servicesndashOne of the first companies to extend healthcare to their workers workersrsquorsquospousesbullLevi Strauss amp Company approach to business ldquoprofitsthrough principles principlesrdquondashAs business leaders we have the obligation both individuallyand collectively to make our enterprise not only a source foreconomic wealth but also a force for positive social change inthe conduct of our business This principle of responsiblecommercial success is embedded in our more than 150 150-yearexperience and continues to anchor how we operate today
Responsibility
Sweatshops
bullWith increased competition from other jean producers in the 1980s and 90s like any profit profit-maximizing corporation Levi Strauss amp Company closed many factories andsubcontracted productionndashSubcontracted production is cost cost-minimizing because labor isrelatively abundant and wages cheaperndashIn order to compete with prices subcontracting work makessense
bullbullThe company had 6 subsidiary factories in SaipanSaipan capital of the US Commonwealth of the Northern Mariana IslandsndashndashThe US Department of Labor cited that workers were paid subsub--minimal wages 7 day work weeks with 12minimal 12--hour shifts in ldquoldquoslaveslave--likelikerdquordquoconditionsbullbullThe subcontractor Tan Holdings Corporation had to pay a fine oThe of f $9 million as restitution to 1200 employees$employeesbullbullLevi
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
Strauss amp Co claimed no knowledge of the offense cutLevi cut--off ties to Tan Holdings and issued labor reformsbullbull1999 Sweatshop Watch Global Exchange Asian Law Caucus Unite and workers filed a classCaucus class--action lawsuit 3 times to 27 US retailers including Levi Strauss amp Co Levi Strauss was the only defendant to win the case
EnvironmentalbullbullContinuing on the approach of ldquoldquoprofits by principlesprinciplesrdquordquoin 2006 Levi Strauss amp Co launches the Eco clothing linendashndashJeans are certified to be made from 100 organic cotton and fully sustainable production processes This includes cotton untreated by chemicals pesticides and manufactured at sustainable carbon emissionsndashndashThe jeans are also packed in 100 recyclable and reusable materialsbullbullEconomic implicationsEconomic implicationsndashndashOrganic jeans are more expensive due to the added costs to certify these genes to organic standardsndashndashHowever discouraging the use of chemicals for cotton is a step toward the right direction Pesticides have externality costs to the environment and workers because they are mostly improperly used in poor countries A reduction in externalities improves social welfarendashndashIn the longIn long--run sustainable production has the possibility to being profitablendashndashCorporate responsibility also has longCorporate long--run profits
ConclusionbullLevi Strauss amp Company had most of its early successbecause the firm was behaving monopolistically Thecompany patented the riveted jeans increasing durabilityand gaining popularitybullOver the years the company maintained profits by providing a wide range of products capturing new marketsand increasing its market shares The company created barriers to entry by patents and trademarks and by differentiating its product from generic jeansbullHowever as more firms entered the market the company started losing customers and incurring losses The upstart companies captured niche market shares from Levi Levirsquos simmense market dominationbullDespite these reduction of sales Levi Strauss amp Comaintained its corporate responsible image and progressive stance on social labor and environmental issues which may have long long-run profit opportunities
httparewebberkeleyedu~sbertoLevispdf
