SecF_Group7_LEVIS501CT_STP_Final.pdf

7/25/2019 SecF_Group7_LEVIS501CT_STP_Final.pdf

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STP PROFILING FOR LEVIS 501CTJEANS IN INDIA

Guide: Prof. Ashis Mishra

Group 7, Section-F

Team Members:

Anjani Kumar (1511379)

Grishma Valliyod Kumar (1511395)

Sanket Kale (1511398)

Mohammad Kashif (1511410)

Shikhar Sethi (1511434)

Date: 11th

August 2015


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CONTENTS

1. INTRODUCTION .............................................................................................................................................................. 1

2. OUR PRODUCT- LEVIS 501CT JEANS.................................................................................................................... 1

3.

PLAN FOR THE PROJECT ............................................................................................................................................ 1

4. SEGMENTATION ............................................................................................................................................................ 2

4.1. GEOGRAPHIC SEGMENTATION ..................................................................................................... 2

4.2. DEMOGRAPHIC SEGMENTATION .................................................................................................. 2

4.2.1. GENDER ..................................................................................................................................... 2

4.2.2. AGE ............................................................................................................................................ 3

4.2.3. INCOME ..................................................................................................................................... 4

4.3. PSYCHOGRAPHIC SEGMENTATION ............................................................................................... 4

4.4. BEHAVIORAL SEGMENTATION ...................................................................................................... 5

4.4.1 ATTITUDE TOWARDS THE PRODUCT ......................................................................................... 5

4.4.2 LOYALTY .................................................................................................................................... 5

4.4.3 BENEFITS ................................................................................................................................... 5

4.4.4 USER STATUS ............................................................................................................................. 5

5. TARGETING ...................................................................................................................................................................... 6

5.1 Segment Characteristics................................................................................................................ 6

5.1.1 GO GETTERS .............................................................................................................................. 6

5.1.2 FOLLOWERS ............................................................................................................................... 7

5.1.3 RATIONALISTS ........................................................................................................................... 7

5.2 Porters 5 forces ............................................................................................................................ 8

5.2.1 Segment rivalry ......................................................................................................................... 8

5.2.2 New Entrants ............................................................................................................................. 8

5.2.3 Substitute product .................................................................................................................... 8

5.2.4 Buyers buying power ................................................................................................................ 9

5.2.5 Supplier buying power .............................................................................................................. 9

5.3 TARGET SEGMENTS ....................................................................................................................... 9

5.3.1 Market Growth ......................................................................................................................... 9

5.3.2 Competitive Intensity ................................................................................................................ 9

5.3.3 Market ACCESS ........................................................................................................................ 10

6. POSITIONING ................................................................................................................................................................. 10

6.1. Product differentiation for Levis .................................................................................................... 10


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6.2. Points of Parity

6.3. Perceptual mapping .................................................................................................................... 11

6.4 Communicating POPs and PODs ................................................................................................. 12

7. REFERENCES ..................................................................................................................................................................... 14


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INTRODUCTION1.

In our last report, we gave an overview of the Apparel industry, the contribution of this industry to the

overall economy of India and the company of interest- Levi Strauss India Pvt. Ltd. LS & Co are the oldest

manufacturers of denim jeans in the world and after about 150 years of inception, they continue to beone of the most popular brands of all time.

Now we would like to focus on the most popular product that LS&Co have in their product line - the

Levis 501 CT Original Button Fly Jeans. Through this document we would like to understand where the

501 jeans stand in the consumer scenario. We would also like to study how LS&Co markets its product

to make it relevant in the market. We shall take you through the various marketing procedures of

segmentation, targeting and positioning.

OUR PRODUCT- LEVIS 501CT JEANS 2.

Levi Strauss and Co originated in 1853 where Levi Strauss the founder manufactured rugged trousersthat would be durable enough for mine workers to wear in mines. Since zippers were unavailable back in

that time, he had riveted buttons in the fly of the pant. Today the 501CT jeans are the most popular

product in the Levis product line globally. The 501CT jeans is priced higher than the normal jeans. Over

the years, the fit and feel of the 501 has changed to meet the needs of the consumers, but the basic

features of the button fly and the classy rustic look of the 501CT remains the same even today. This

authenticity makes the product a vintage piece for the brand conscious consumer.

We have identified various aspects of the Levis 501CT jeans that resonates with a well-informed

customer. These aspects are brand, comfort, style, fit, durability and value for money. The results of a

short survey that we conducted show how brand-value is the USP of Levi Strauss & Co. And hence all

further study goes in the lines of LS&Co marketing and selling brand-value.

PLAN FOR THE PROJECT3.

In this document, we have analysed the marketing trends of the 501 and have attempted to fit the basic

marketing principles into this product to understand the companys approach to being a market success.

We throw light on segmentation, targeting and positioning principles in detail and focus on how various

factors influence consumers to buy or move away from a product.


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SEGMENTATION4.

Through segmentation, we have divided the market into groups of customers with similar needs and

wants. Segments have been arrived by looking at descriptive characteristics like geographic,

demographic and psychographic segments and behavioural characteristics like occasions, benefits, etc.

4.1. GEOGRAPHIC SEGMENTATION

Rural and Urban

Through geographic segmentation we differentiate the rural and urban regions of the Indian Market.

Urban region constitutes to 31% and this is where our target market lies. Urban market is brand

conscious and with retail outlets and a huge market space with numerous competitors, the balance tips

towards the urban population.

Advantages and shortcomings:

Advantages are that the urban population is well exposed to style changes and brands. Additionally,Levis India has a wide network of franchisee stores and retail outlets across urban India.

Shortcomings would be the small percentage of strivers in rural India who would be willing to purchase

a Levis jean. The company would lose these customers.

Shortcomings are also largely influenced by the large number of competitors and a tightly packed

market place. With the numerous choices at hand, the customers have a very short attention span.

4.2. DEMOGRAPHIC SEGMENTATION

4.2.1. GENDER

Men constitute to 52% of the population of India and women 48%. But the mens segment

contribute to about 85% of the total revenue for the denim apparel industry while

womens segment contributes to about 9% [2].

Rural, 83.3

Urban, 37.7


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Levis 501CT has variants for both men and women with a visibly huge market for men than

women. It is also seen from the survey that Men who purchase a 501 jeans, do so for the

brand value and the history associated with it. They do not view the 501 as a fad product

and hence they will be more loyal towards the brand making theirs a reliable segment.

Women on the other hand, generally tend to stay up with fashion which is constantly

changing and hence the chances of switching brands is high making this a volatile segment..

. The Mens segment thus appears less volatile than the womens segment.

Limitations: Given the changing status of women in the society, this segment offers a large

opportunity for Levi Strauss & Co to tap into. More focus on marketing strategies for

womens 501CT can induce gains for LS&Co.

4.2.2. AGE

Segmentation based on the various age brackets is done to identify which segment of the

population finds maximum utility of this product. 41% of the population belong to the age

group of 25-54 years and 18.1% of the population belong to the age group of 15-25. From a

data analysis of the survey it shows that these two age buckets include the segment of the

consumers that are willing to buy this product. So combining the two buckets, it forms a

whopping 58.1% of the urban population.

Levis has made alterations to the existing 501CT product to introduce Levis 501 CT to

adapt to changing trends and attract the younger generation.

Male, 9.43

Female,

8.86

0-14years, 9

15-24

years, 6

25-54

years, 13

55-64

years, 2

65 years

and over,

2

Male population age group distribution in Urban India (in crores) [3]


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4.2.3. INCOMEWe have chosen a slab of 5 lakhs for income segmentation. 5% of the urban population

belong to the group with >5 LPA income group. From our survey it is seem that the

consumers who spend over Rs.1000 per shopping trip, are the ones likely to purchase a

Levis 501 jean. And since this product is a luxury product and carries a brand image, it can

be ascertained that our target consumers belong to this group of 5% urban population with

the purchasing capability.

Limitations include the huge population size of 95% that we exclude from focus as

belonging to the 5

Lac, 0.57

Income < 5

Lac, 10.92

Income distribution of people belonging to 15-54 age group in Urban India (in crores)[4]


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4.4. BEHAVIORAL SEGMENTATIONBehavioural segmentation divides consumers into groups based on their knowledge of the product

and experience which influences them to buy.

4.4.1 ATTITUDE TOWARDS THE PRODUCT

From our survey we analysed the major reason that draws a buyer towards a Levis JeanandBrand image is the aspect that emerged a clear winner. Buyer attitude towards the

product is Inclined towards owning the product for brand image.

4.4.2 LOYALTYAnalysis from our survey shows that 66.66% of those owning a Levis Jean is willing to buy a

Levis 501. Since Levis marketing strategy focuses on selling its brand image, the

behavioural segmentation on the basis of brand loyalty is considered here.

4.4.3 BENEFITSNeeds and wants of consumers vary from individual to individual. An apparel like a denim

trouser can offer to its customer style, comfort, ruggedness, durability and brand appeal.

Levis 501, with its marketing strategy focuses on customers that would prefer brand image

with additional benefits of ruggedness, comfort, style and durability. Levi Strauss & Co

modified the original fit and style of the 501 jeans to 501CT jeans to suit the Indian buyers

buyers who wanted to own a 501 jean with custom made fit for the Indian region.

4.4.4 USER STATUSUser status talks about the various groups of consumers who fall under ex-users, potential

users, non-users, first time users, etc. Segmentation by focusing on potential customers is

most beneficial to a company as they have the most to gain from here. 23% of those

surveyed did not own a Levis jean. Close to 71% of these people were willing to buy a Levis

501CT. This shows a significant market for potential buyers. Analysing the characteristics of

these surveyed, we can establish who we can target.


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TARGETING5.

High diversity in the Indian sub-continent consumers results in a complex segmentation problem. And

the challenge continues when the firm has to target certain specific segments and deliver value to each

segment. In this section, we will discuss one of the ways Levis Strauss India Ltd. chooses the target

market for itself.

Levis 501CT as a product is specifically targeted towards the urban population, i.e. Tier I, Tier II and Tier

III cities and towns. The reason for this is two-fold. Firstly, the product is a premium denim product.

Considering the disposable income capabilities of consumers in rural areas, it does not make sense to

target the rural population segment. Secondly, the supply-chain cost incurred in reaching out to the

innermost corners, do not justify reaching out to the rural areas. And in urban India, among different

age groups, 15-54 years is the segment where people are more concerned about their looks and are

likely to go out more often than not. With this in mind, we shall discuss the different Levis targeting

strategy for reaching out to these segments.

Through the survey conducted among the segmented market, three categories in the market become

prominent for consideration - Go getters, Followers and Rationalists. The key differentiating parameters

for these segments are affinity to Levis brand over others, brand, durability or value for money as

factors to make the buying decision.

SEGMENT CHARACTERISTICS5.1

GO GETTERS5.1.1Customers belonging to this segment have a high disposable income and are always looking for the

next thing in fashion. The customers are highly brand driven and find value in products that are

exclusive. As per our survey, 21% of all respondents belong to this category. Respondents from this

category spend more than 2,000 per month on apparel shopping and would buy denim worth more

than 2,000.

Segment % Pop

LowL 53%

MediumM 36%

HighH 11%

Source: Survey

Brand value is the most important factor for customers belonging to this category. On our survey,

target respondents from the Go Getters category, rated Brand as the primary value proposition

criteria, rated 10-15% higher than respondents from other segments. Value for money for the Go

Getters segment is 15-20% higher than the followers segment. Also, a price hike of 10% would deter

only 20% of this segment population from buying the Levis product as against 35% for other

segments, which is 75% higher than the go getters segment. Amongst various competitors of Levis

80% of respondents picked Levis as their most preferred brand.

In conclusion, the survey results suggest the segment consists of people who are experiencers, and

are brand conscious for which they would spend more.


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FOLLOWERS5.1.2Customers from followers segment are set of people who either have a high disposable income

(More than 2,000 per month on apparel, as per survey) but spend economically (less than 2,000 per

purchase) on denim products, or customers who have lower disposable income for apparel but are

aspirational of buying a brand product, making them spend more than usual. The Followers

category consists of 36% of overall target population, as per the survey.

The Followerssegment customers are not very brand loyal, and would prefer switching to another

brand, as and when the prices are hiked. 35% of the respondents would not buy their most

preferred denim brand, if the price was hiked by 10%. About 50% respondents from this segment

prefer Levis as against 30% preferring Lee and ~20% preferring Wrangler.

Segment

Replace on

hike

Do not replace on

hike

Rationalists 36% 64%

Followers 36% 64%

GoGetters 18% 82%Source: Survey

As per Cotton Incorporateds Lifestyle Monitor survey, with increasing discretionary income, 80%

customers rate Comfort highest while making a purchasing decision for clothes and 81% would

pay more for better quality clothes[7].

And this is evident from the survey conducted by us, where

amongst brand, durability and value for money, brand is the highest rated value proposition

attributed to comfort and quality assurances associated with the brands.

Therefore, customers under the Followers category are ones that make an informed price

sensitive decision, but are influenced by brand proposition, making them belong to the Achievers or

Strivers category as per psychographic segmentation.

Segment

Brand

Rating

Durability

Rating

Value for Money

Rating

LowL 3.85 4.02 3.34

MediumM 3.81 3.67 3.28

HighH 4.27 4.27 3.91

Source: Survey

RATIONALISTS5.1.3Customers from the Rationalists segment are in search of value for money and durable products.

They spend low (less than 2,000 per month on apparel, as per survey) and are not particularly

looking for economical denim products (less than 2,000 per purchase). The Rationalists category

comprises nearly half of the overall target portfolio, as per the survey.


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Segment Rationalists Followers GoGetters

Flying

Machine 8% 0% 0%

Killer 11% 6% 0%

Lee 19% 28% 0%

Levis 43% 47% 82%Wrangler 19% 19% 18%

Source: Survey

As Levis is a relatively higher price segment denim product, it scores relatively lower on the Value

for Money proposition for this segment (3.3/5 as per survey). For such customers, brand is not the

primary reason for buying a Levis product, but durability. 40% customers prefer Levis over Lee

(~20%), Wrangler (~20%), Killer (~10%) and Flying Machine (~10%). Also, with more than 35% of

Rationalists segment customers ready to shift to another brand, as the prices are hiked by 10%,

suggest that the segment is not very loyal to brand but is price sensitive. Hence customers of this

segment need to be targeted in a very different manner.

PORTERS 5 FORCES 5.2

SEGMENT RIVALRY5.2.1Levis is the market leader in the denim industry in India. The industry is filled with international

players, such as Ralph Lauren, GAS & Diesel amongst other brands such as Levis, Lee, Wrangler,

Flying Machine, Pepe Jeans etc. [8]

The unbranded denim market contributes 60% to the overall industry. Levis being a premium brand

competes in the 40% of this overall denim market. Within branded segment, several new brands

have entered with a lower priced products to lure the Rationalist segment. Here again, the

respective lower priced branded jeans are not direct rivals for Levis. [9]

Levis has the strongest competition from the likes of Lee and Wrangler. From the survey, it is

evident that amongst every 100 individuals, 50 prefer Levis followed by 20% each of Lee and

Wrangler. With a similar pricing, Levis faces the competition with innovative products and brand

value.

NEW ENTRANTS5.2.2Entry into the denim market is not restricted, but the value proposition that Levis provides, i.e.

brand, makes it challenging for a new player to fight against it. Therefore, for Levis this is not a

concern area.

SUBSTITUTE PRODUCT5.2.3As a market leader, Levis products can have several substitutes. Within the Levis product range, a

customer may substitute a Levis 501CT for a lower range Levis product. Considering the market for

pants, one may substitute a denim wear with cargos, chinos, formal pants etc. As per the survey

conducted, majority (40%) of the target population would not substitute a denim jeans, but 50% of

customers would replace the denim with cargos, chinos or formal wear. The remaining 10%

preferred Khakhi or Courduroy over denim jeans.


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BUYERS BUYING POWER5.2.460% of all consumers purchase clothes from large megastores, e.g. Lifestyle, Shoppers Stop etc. 25%

buy from branded outlets and ~15% purchase clothes online. With such a high proportion of

business routed through the large megastores, puts a lot of power in the hands of the megastores.

But, the power balance may be balanced off by the fact that Levis is a market leader in denim

products.

SUPPLIER BUYING POWER5.2.5With the lack of information on this front, we are unable to provide any concrete results. But, with

more than 150 suppliers of cotton for Levis jeans, suppliers may not have a strong power imbalance

favouring them.

TARGET SEGMENTS5. 3

From our understanding above, we will now step into assessing the attractiveness of each of these

segments and hence help in deciding which of these should be targeted by Levis.

The segmentation analysis, suggests the rural and female population is not amongst the target

market for Levis 501CT product. With these cuts in mind, we will analyse the 3 segments identified

on the basis of total apparel spend (proxy to disposable income) and spends on purchase of a pair of

jeans.

Market Growth Competitive Intensity Market Access

Go getters High Low High

Followers High Medium High

Rationalists Medium High Medium

MARKET GROWTH5.3.1With a growing middle income, the followers category consumers are likely to have higher

disposable income and hence must be targeted vigorously. On the other hand, Rationalist segment,

with a large set of population, but are highly price sensitive and disloyal to a specific brand. Such

customers should not be the focus group for Levis brand.

COMPETITIVE INTENSITY5.3.2Rationalists segment has a high degree of competition due to price sensitivity and presence of local

unbranded players. Hence, it does not make sense for Levis to break into Rationalists segment with

the 501CT product.


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MARKET ACCESS5.3.3Since all the 3 segments are urban based male population with more than average disposable

income, market access, through branded outlets, megastores or online is not a challenge. Although

creating a value proposition for each segment maybe a challenge.

POSITIONING6.

Levis in selected segments of Go getters and Followers, has to face stiff competition from players

like Wrangler, Lee, Killer, Spykar, United Colors of Benetton. Levis positions itself such that it

creates a unique position in the minds of consumers regarding its brand image, durability, comfort

through its advertisements, promotional campaigns etc.

6.1. PRODUCT DIFFERENTIATION FOR LEVIS

Levis differentiates 501 from its competitors by highlighting the

Anti Fit property of jeans Due to the straight cut nature of 501 it

gives it a top block. Since it is not cut to match body shape it

has some added benefits such as Greater comfort, less wear on

the seat and the ability to look good when worn two sizes too big[10]

.

Another differentiating factor for Levis is durability of its jeans,

which was amply captured by their original logo. A jeans being

pulled by two horses and jeans not getting torn apart. The

message was clear, Levis is durable and this message has been

there USP from the inception of the company. Customers equate

Levis with durability.
http://supertalk.superfuture.com/index.php/topic/18387-explanation-of-anti-fit-jeansdenim/


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Levis keeps on reinventing itself and is customer centric

in its approach as such it paid attention to what its

customer were doing after buying the jeans and

introduced 501 CT to appeal to them. In words of

Jonathan Cheung, SVP of Global Design After Hemming,

Tapering the leg of 501 is the most requested alterationin Levis stores and tailor shops around the world, so we

decided to do it for you, creating the 501 CT and the

perfect customer taper. [11]

6.2. POINTS OF PARITYComfort, Value for money and Style statement are the points of parity for Levis with respect to other

brands since most of the brands like Wrangler, Killer, UCB offer the similar features for their customers.

6.3. PERCEPTUAL MAPPINGLevis positions itself as a high end, very durable jeans.Competitors like UCB position themselves in the

similar segment while Killer positions itself as a low end and durable jeans. As can be seen from the

mapping, Levis is in a position to reach out to segments of Go getters and Followers by using

promotional campaigns which would appeal to the specific needs of these consumers.


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Brand Positioning

6. 4 COMMUNICATING POPS AND PODSAkshay Kumar was hired as the brand ambassador for the 501 jeans in India. He was the face of

Unbutton campaign in India. Billboards showcasing Akshay Kumar endorsing the jeans were spread all

over the cities. Same were printed in fashion magazines also. Levis as part of promoting 501 brand, had

sponsored one fashion show with Akshay Kumar as the Show Stopper.


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Current campaignLive in Levis This campaign was launched by Levi & Co. all across the world, withprimary aim of engaging youth with the brand through social media. Big celebrities shared the story of

their association with Levis on social media which started a trend of #LiveinLevis across all social media.

This campaign helped Levis place themselves among young generation, as youth centric and

differentiated itself from competitors based on rich cultural history.

Less


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7. REFERENCES

[1] http://censusindia.gov.in/2011-prov-results/paper2/data_files/india/Rural_Urban_2011.pdf

[2]http://www.indiaretailing.com/7/1/83/12640/Denim-Market-in-India-

[3]http://www.indexmundi.com/india/demographics_profile.html

[4] http://scroll.in/article/740011/everyone-in-india-thinks-they-are-middle-class-and-almost-no-one-

actually-is

[5]http://www.thewire.com/business/2011/11/booming-business-selling-steve-jobss-

wardrobe/44809/

[6]http://www.denimblog.com/2009/07/celebs-in-denim-president-obama-in-levi-501s/

[7]http://www.cottoninc.com/corporate/Market-Data/SupplyChainInsights/Global-Lifestyle-Monitor-

India/Global%202012%20India.pdf

[8]http://archive.financialexpress.com/news/indian-denim-industry-it-s-all-in-the-jeans/1249449/2

[9]http://www.indiaretailing.com/7/1/83/12640/Denim-Market-in-India-

[10]http://supertalk.superfuture.com/index.php/topic/18387-explanation-of-anti-fit-jeansdenim/

[11]http://levi.in/501CT/

[12]http://www.businessinsider.in/Levis-CEO-Explains-Why-Jeans-Should-Never-Go-In-The-Washing-

Machine/articleshow/38435785.cms
http://www.indiaretailing.com/7/1/83/12640/Denim-Market-in-India-http://www.indexmundi.com/india/demographics_profile.htmlhttp://www.thewire.com/business/2011/11/booming-business-selling-steve-jobss-wardrobe/44809/http://www.thewire.com/business/2011/11/booming-business-selling-steve-jobss-wardrobe/44809/http://www.denimblog.com/2009/07/celebs-in-denim-president-obama-in-levi-501s/http://www.cottoninc.com/corporate/Market-Data/SupplyChainInsights/Global-Lifestyle-Monitor-India/Global%202012%20India.pdfhttp://www.cottoninc.com/corporate/Market-Data/SupplyChainInsights/Global-Lifestyle-Monitor-India/Global%202012%20India.pdfhttp://archive.financialexpress.com/news/indian-denim-industry-it-s-all-in-the-jeans/1249449/2http://www.indiaretailing.com/7/1/83/12640/Denim-Market-in-India-http://supertalk.superfuture.com/index.php/topic/18387-explanation-of-anti-fit-jeansdenim/http://levi.in/501CT/http://levi.in/501CT/http://www.businessinsider.in/Levis-CEO-Explains-Why-Jeans-Should-Never-Go-In-The-Washing-Machine/articleshow/38435785.cmshttp://www.businessinsider.in/Levis-CEO-Explains-Why-Jeans-Should-Never-Go-In-The-Washing-Machine/articleshow/38435785.cmshttp://www.businessinsider.in/Levis-CEO-Explains-Why-Jeans-Should-Never-Go-In-The-Washing-Machine/articleshow/38435785.cmshttp://www.businessinsider.in/Levis-CEO-Explains-Why-Jeans-Should-Never-Go-In-The-Washing-Machine/articleshow/38435785.cmshttp://www.businessinsider.in/Levis-CEO-Explains-Why-Jeans-Should-Never-Go-In-The-Washing-Machine/articleshow/38435785.cmshttp://levi.in/501CT/http://supertalk.superfuture.com/index.php/topic/18387-explanation-of-anti-fit-jeansdenim/http://www.indiaretailing.com/7/1/83/12640/Denim-Market-in-India-http://archive.financialexpress.com/news/indian-denim-industry-it-s-all-in-the-jeans/1249449/2http://www.cottoninc.com/corporate/Market-Data/SupplyChainInsights/Global-Lifestyle-Monitor-India/Global%202012%20India.pdfhttp://www.cottoninc.com/corporate/Market-Data/SupplyChainInsights/Global-Lifestyle-Monitor-India/Global%202012%20India.pdfhttp://www.denimblog.com/2009/07/celebs-in-denim-president-obama-in-levi-501s/http://www.thewire.com/business/2011/11/booming-business-selling-steve-jobss-wardrobe/44809/http://www.thewire.com/business/2011/11/booming-business-selling-steve-jobss-wardrobe/44809/http://www.indexmundi.com/india/demographics_profile.htmlhttp://www.indiaretailing.com/7/1/83/12640/Denim-Market-in-India-

Documents

SecF_Group7_LEVIS501CT_STP_Final.pdf