Levi Strauss & Co. is an American company well-known worldwide for its denim jeans. The company was founded in 1853 and headquartered in San Francisco California. The Bavarian-born Levi Strauss moved to Gold Rush era San Francisco to open a dry goods business. He sold clothes, boots and other goods to the small retail stores of the American West. In 1872, Jacod Davis, a tailor from Reno, Nevada, teamed with Levi Strauss to create and patent work wear riveted-for-strength made of brown cotton duck and true blue denim. On May 20, 1873 the U.S. Patent and Trademark Office granted a patent to Levi Strauss and Jacob Davis for their invention. This is how the blue jean, originally called “XX”. was born. The Two Horse logo demonstrates the incredible strength of Levi’s® clothing. The logo is first branded onto the leather patch of the “XX” jeans in 1886 and is still used today. In 1890, the original “XX” blue jean is given its iconic lot number 501®.
STATEMENT OF THE PROBLEM
How will Levi’s develop and execute a strategic plan that will help the company retrieve its brand identity and maintain customer loyalty towards Levi’s jeans?
To address the above problem, we will: 1. Study the market segments and identify with which Levi’s can expand its market share and increase customer loyalty. 2. Recommend actions that will increase the level of recognition and satisfaction towards Levi’s jeans.
AREAS FOR CONSIDERATION
4Ps of Marketing
Levi’s has extended its fashion design from men to women and children’s wear and apparel. It offers extensive product line from tops to bottom, jeans, t-shirts, jackets and underwear. It position its products as contemporary, sexy and high quality brands.
Here in the Philippines, Levi’s prices range from Php1,800.00 for Regular Straight Fit jeans to Php4,000.00 for its 501 Original jeans. For the Filipino standards, this pricing is quite expensive as compared to the other available brands in the market which only cost within Php1,000.
Levi Strauss & Co. is a well-established global business. They operate in 110 countries, and approximately half of their net revenues come from outside the United States. Their triumph in creating truly global distribution of our products is largely due to their track record of responsible business practices. As they continue to expand internationally, their goal is to operate in accordance with their values wherever they source their materials or manufacture and sell their clothes. They are excited about the global possibilities for LS&Co. Their presence in the United States, Canada, Western Europe and Japan is well established. In the years ahead, their goal is to expand the brands in India, China, Russia, Brazil and other emerging markets.
Levi’s continue to advertise through traditional marketing such as billboards; however, they are now shifting to non-traditional marketing by tapping social networks and others. The Project Runway episode in January 2008 focuses on the 501® Series of the Levi’s brand. It was Levi’s jeans was also featured on one of the American hit sitcom “The Office”. Levis has also teamed up with some online shopping website such as Groupon by offering coupons and coupon code discounts.
During the 1990s, Levi’s has been emphasizing its sale in wholesale merchandising. They sell millions of blue Levi’s pairs to retailers and ensure that these retailers gain a good amount of profit. This strategy has led them to ignore the consumers. Since then, the company changed its focus not only to retailers but to consumers as well. They started to respond to consumers’ feedbacks to be able to continuously improve the products depending on the fast-changing tastes of the consumers. The market in the Clothing Industry was so fragmented that a lot of companies are competing for market share. Levi’s top competitors are Gaap, Wrangler, Spykar, and Tommy Hilfiger. Since Levi’s is quite expensive for Filipinos, it’s target market is mainly the Upper class and Upper Middle Class who have an estimated household income of Php 50,000-100,000 per month.
Without a doubt, Levi’s is a well-recognized brand in the clothing industry. It has strong brand name and expertise in the jeans industry. It remains to be the world’s largest jeans company. Its extensive product line appeals to all genders of all ages and lifestyle. The company also has a good distribution channel and global footprint since it operates in America, Europe and Asia and the Pacific in more than 110 countries in roughly 50,000 retail stores. It can shadow the fast changing fashion trends through its state of the art design development in Istanbul, Turkey and three design centers in Brussels, Hong Kong and San Francisco.
In the late 1990s, Levi’s identified that they have been focusing on its role in wholesale merchandising, selling millions of pairs blue Levi’s to retailers and ensuring good sales volumes and profits for these retailers but they ignored the customer. This brought about the decline in its brand equity.
Another weakness of Levi’s is its prices compared to other brands. Its prices range from Php 1,800.00 for Regular Straight Fit jeans to Php 4,000.00 for its 501 Original jeans. This pricing is quite expensive as compared to the other available brands in the market which only cost within Php1,000. Because of this, Levi’s limits its market to Upper and Upper Middle Class only.
In the advent of new technology, shopping has become an ease. People can buy almost anything online. Levi’s can use this opportunity to their advantage. They can set-up an online shop where customers can buy Levi’s products and can even request for customized styles and designs.
Another opportunity for Levi’s is the growing apparel industry. People nowadays are fashion-conscious and they tend follow the trends for each season. Because of this, they buy more and more clothes than they actually need. This mindset among customers is brought about by the strong advertising campaigns of clothing businesses and the incorporation of fashion in mainstream media.
There are various threats which we considered for Levi’s. First, the intense competition in the Apparel and Fashion Market. Its market is already congested with numerous competitors. Because of the intense competition, increased marketing efforts are vital which may require a significant amount of resources. Second, the increasing costs during the entire production (operating, materials, and labor). With this, the company might need to adjust the prices of its products too but since being expensive is one of the company’s major weaknesses, adding of certain amount to its retail price may not be possible. Third, because of its pricey products, the threat of substitution is relatively high. Levi’s will have to compete with other brands with much lower price in the market. This is also prone to counterfeiting. Fourth, Levi’s should deal with the fast changing taste of consumers when it comes to fashion.
To be able to respond to the company’s objectives, we recommend that the Levi’s use a step-by-step ways to reclaim its identity. These steps include (1) Know your Target Market, (2) Increase the consumers’ brand awareness, (3) Make your consumers remember your brand, (4) Build a solid brand image, and (5) Engagement of the consumers to Levi’s jeans.
We propose the following plans / projects in order to implement the recommended course of action, as follows: 1. Know your Target Market – Since Levi’s target market is the Upper and Upper Middle Class, its stores / products should be seen in places where these kind of individuals are usually found such as Shangri-la Mall, Greenbelt, Powerplant Mall, etc. – Levi’s should also know the things that affect their consumers in terms of decision making. Discover why they bought the product. A regular interview of the sales agents to the buyers may help the company know what needs to be improved. 2. Increase the consumers brand awareness
Here’s where different advertising strategy comes into play. Our goal is to create public awareness and then build on that brand. Companies do this by getting consumers to notice that their product stands out from the rest. One of the most commonly used Advertising Strategy is through Traditional media. Traditional Media became a trusted source of information and gain a lot of audience over the years. It have spent years cultivating readers, listeners, and viewers, and they are masters at reaching target audience segments – from Baby Boomers who tune into oldies radio to sports enthusiasts and savvy business executives who monitor commentary on newspaper op-ed pages.
Television is the easiest way to communicate with target market because many people, especially Filipinos at all ages, are still hooked to watching television even at their past time. Commercials and advertisements of televisions are indirect ways of informing the consumers about their products because for them, they are just watching the television. However, people nowadays become dependent in using their tablets and smartphones to research about everything which makes them miss the importance of the traditional media. 3. Make your consumers remember your brand
– To make customers remember the brand and make the product more relevant in pop culture, Levi’s can follow the strategy of Victoria Secret in the international scene or Bench in the Philippine set-up. Levi’s can organize an event showcasing the brand’s new designs and collections. They can use fashion shows to parade stylish ways to wear their products. Through this event, people can relate that the clothes Levi’s is selling is for everyday use but at the same time fashionable. This can be an annual event which people will look forward to.
Levi’s can also sponsor an episode in a reality show related to fashion like America’s Next Top Model or Project Runway wherein their products will be used by the contestants. Considering the wide audience of these shows, people will become more familiar with the products of the company. This will also influence the people to buy the product because they will associate the it with the shows.
3. Build a solid brand image
Every product has its special features. Add to that the character Levi’s wants to portray to its market. In Levi’s case, it is fashion and quality. Combine those to be able to reinforce an image of the product that reflects the company. These characteristics must be emphasized to every advertisements. The company have its tagline which is “ Quality never goes out of style” but not all are aware of this. Probably, Levi’s may re-design its logo and include their tagline. In that way, there is higher possibility that they would catch the eyes of the consumers and there will be an increase in brand awareness since every time people sees their tagline, they automatically think of Levi’s. Consumers must fully understand your brand and believe in it in order for it to build equity.
5. Engagement of the consumers to Levi’s jeans
Provide the consumers with the best quality where they won’t have second thoughts of spending their money with. Once consumers started to be satisfied with what Levi’s offers them, those brands reach levels of success as cult brands and ultimately as true relationship brands. Then they become loyal not only to the product but to the brand itself. It is also when consumers are satisfied that when they think of the category, they think of Levi’s. And when consumers think of the company, they automatically think of a reason to buy you vs. the competitors.
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Topic: Levi Strauss & Co.
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