...1. Suppose that a recent study has determined that the price elasticity and the income elasticity of demand for Levi’s jeans are 1.5 and 2 respectively. The supply of jeans is elastic. Are the following statements true or false? Why? a) A 5% increase in the price of jeans will reduce quantity demanded by 10%. The statement claims that a 5% increase in the price of jeans will reduce the quantity demanded by 10%. We can check if the statement is correct by using the formula; Price elasticity of demand = percentage change in quantity demandedpercentage change in price We know that the price elasticity of demand = 1.5 and the percentage in price = 5. With this information, we are now able to find x (percentage change in quantity demanded) 1.5 = x5 1.5 5 = x5 5 x = 7.5 We know from interpreting the numbers into the equation that a 5% increase in the price of jeans will reduce quantity demanded by 7.5% and not by 10%. The statement is false. a) An increase in consumers’ income will increase the price and quantity sold but total revenue will go down. We know from the introduction that the income elasticity for Levi’s jeans is 2. Since the income elasticity of demand is positive, we know that Levi’s jeans is a normal good. If the income elasticity equals 2, an increase in income will equal to a twice as big increase in demand. This will lead to a shift in demand. Both the price and quantity demanded will increase. The statements claims that...
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...company is experiencing losses and is continuing to under-perform in the denim jean market. •The firm faces the general problem of a dominant firm losing market share when more firms enter the market. Problem Background Successes Competition Solutions Responsibility Conclusion Q&A Background - History •The company was founded by Levi Strauss in 1853 primarily selling wholesale dry goods. The company was founded in San Francisco, California. •A tailor named Jacob Davis thought of an idea to use copper rivets to reinforce the points of strain on pants. •Davis and Strauss purchased the patent of the idea of using copper rivets in clothing on May 20, 1873. Problem Background Successes Competition Solutions Responsibility Conclusion Q&A Background - Company Growth •The innovation of the rivets in the jeans differentiated Levi’s jeans from others because of its increased durability. •Over the years, Levi’s jeans have become more popular, initially due to its durability. Jean products expanded, targeting different consumers. •Levi Strauss & Co. eventually captures most of the denim jean market, becomes the largest manufacturer of jeans, and profits reach $1 billion by 1974. Problem Background Successes Competition Solutions Responsibility Conclusion Q&A Background - Time Line •1853: Levi Strauss begins selling dry goods in San Francisco. •1873: Levi Strauss & Co. patent riveted jeans and begin selling them. •1912: Koveralls, denim playsuit for children, is first...
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...ase Reading – The Levi’s Personal Pair Proposal The case talks about Levi Strauss and Co, a privately held American clothing company known worldwide for its Levi’s brand of denim jeans. Levi’s was approached with a new concept called the Personal Pair. Custom Clothing Technology Corporation had offered Levi Strauss a joint venture proposal that would combine the Levi’s core products with emerging technologies of mass customization. CCTC’s plan was to make special customized jeans that would fit to meet each customer’s unique needs and taste. The problem is that Levi was not sure if they should accept the proposal or not. I analyzed the case by looking at the pros and the cons of the personal pair concept. I though one of the biggest cons of the program was the wait time. A person would first have to come in to get their sizes taken and than would have to wait an additional 3 weeks to get their product. Another con was that Levi would not carry any finished products, which meant that if someone wanted to buy a pair of jeans at the store they would not be able to purchase them and instead would have to pay a higher price to wait 3 weeks for their jeans. I would say that they should reject the proposal because the cons outweigh the pros. The new technology would increase the price of their product by adding another $15 to a pair of jeans, which would be a huge disadvantage for Levi. Levi was already struggling in the lower and upper ends of the apparel market and adding another...
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...first blue jeans. The company briefly experimented (in the 1970s) with a public stock listing, but remains owned and controlled by descendants and relatives of Levi Strauss's four nephews. 2) For convenient return processing on most orders, your packing slip will include a pre-paid, pre-addressed label for your return package. When you use the pre-paid shipping label to mail to Levi’s your return, Levi’s will deduct $7.00 from your order refund. 3) Levi Strauss had the canvas made into waist overalls. Miners liked the pants, but complained that they tended to chafe. Levi Strauss substituted a twilled cotton cloth from France called "serge de Nimes." The fabric later became known as denim and the pants were nicknamed blue jeans. The company has its corporate headquarters at Levi's Plaza in San Francisco. 4) Levi’s jeans have different colors for every model, so the Levi’s 559 Relaxed Straight is available in different styles like Rebuilt Dark Indigo and Eagle Eye. 5) To wear the Levi’s 559, you must pull the jeans up, raise the zipper, and button up the belt line. Levi Strauss & Co. has always made durable jeans that usually last more than 10 years, so the product has a long life. 6) It is recommended that the Levi’s 559 be kept away from major grass stains and attempting to break the denim in the knee area should also be avoided. 7) The Levi’s 559 Relaxed Straight Jeans are available at $44 which is cheaper and much more durable than Levi’s 501 Original...
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...Levi’s Category: Apparel and accessories Sector: Lifestyle and Retail Positioning: Outgoing and stylish quality jeans The Levi’s® brand epitomizes classic American style and effortless cool. Since the invention and patent of riveted clothing by Jacob Davis and company founder Levi Strauss in 1873, Levi’s® jeans have become the most recognizable and imitated clothing in the world — capturing the imagination and loyalty of people for generations. And while the patent has long since expired, the Levi’s® brand portfolio continues to evolve through a relentless pioneering and innovative spirit that is unparalleled in the apparel industry. Created in 1873, Levi's® jeans are the original, authentic jeans. They are the most successful, widely recognized and often imitated clothing products in the history of apparel. Over successive generations, Levi's® jeans have captured the attention, imagination and loyalty of diverse individuals. As the inventor of the category, the Levi's® brand continues to define jeanswear with the widest range of products available, from quintessential classics such as the famous Levi's® 501® Original jean, to favorite fits and styles in the Red Tab™ and premium collections. Our range of leading jeanswear and accessories are available in more than 110 countries, allowing individuals around the world to express their personal style. Mission: We will market the most appealing and widely worn casual clothing in the world. We will clothe the world...
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...plants to move production to cheaper offshore areas. Levi's really needed to revive the brand image to gain back some lost sales and was using marketing to create new advertisements and product placement to broaden their target market. Levi's had tough competition on every level of the price-point spectrum, whether it be high end retailers like Diesel or Calvin Klein, middle vertically integrated retailers like Gap or American Eagles, and on the bottom, private-label brands like Wal-Mart and Target. Levi's had sold to Wal-Mart through a value brand called Brittania in the 80's and the 90s, but that came to an end in 1994 over a dispute in Canada about Levi's Orange Tab jeans. After that, sales dwindled for Brittania, and Levi's sold Brittania to VF Corp. In 2002, however, Levi's was thinking about offering a new value brand for Wal-Mart. It was not that easy of a decision though. They had to think of a way to keep the existing customers in the other channels and not lessen the brand's perceived quality overall. Overall, the apparel market had been growing steadily since 1998 until 2001, when it dropped 5.7% in dollars from the year before. The total jeans sales accounted for approximately 7% of the total $166 billion made in 2001 with 569 million pairs sold. Experts in the apparel industry forecasted an interesting year for sales in 2002, stating that most categories of apparel were going to level out or even decrease. Jeans were just one of the different categories of pants...
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...Analysis The alternative value chain for these kiosks is significantly changed in comparison to the wholesale and retail operations, and this is due to the processes involved in producing the kiosks end product. The new process reduces the time lag between start to finish of the value chain in comparison to traditional product lines. Expanding the kiosks to other retail locations will provide Levi’s with the opportunity to better respond to current industry shifts, while also providing greater satisfaction to its customers. Since Levi’s is not going to initiate the manufacturing process until after the sale has occurred, the need for intensive budgeting and forecasting is reduced for the “Perfect Pair” kiosks. The new alternative value chain also results in a decrease in inventory holding of 219 days, and this will lead to a decrease costs (Exhibit 1). This decrease in holding costs will free capital for further investment in this or other projects. Currently, the kiosks offer one style of jeans in five possible colours. This limits the number of possible variations of jeans per customer to 5 pairs. If the kiosks were to expand, the development of more...
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...Table of Contents |Topic |Page No. | |Executive Summary |3 | |Introduction |4 | |History |5 | |Brands |11 | |Values |14 | |Vision Statement |15 | |Mission Statement |16 | |Aspiration Statement |18 | |Situation Analysis |19 | |Competitive Analysis |20 ...
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...This case describes Levi's attempt at mass customization. Caught in the middle between low-price competitors and premium priced designer jeans, Levi's considers a proposal for customized jeans that they hope will help them regain a differentiation edge. This is a short case and can be used as a short (30 minutes) discussion in tandem with a lecture, or, because students will usually be very familiar with the industry and it presents some quantitative tasks, the case can also work in an 80 minute block. Objectives 1. Students gain experience in analyzing a company's differentiation advantage. 2. Students will assess the potential threats to differentiation, particularly those that come from low-price competitors and those from more differentiated competitors. 3. Students gain experience in quantifying the costs and benefits of differentiation. Study Questions 1. Assess Levi's situation at the time of the case. What is at the root of their problems in the denim market? 2. How does Levi Strauss create value for its customers? 3. Assess the Personal Pair Proposal. What is your evaluation of it from a quantitative perspective? What is your evaluation of it using the VRIO framework? 4. What is your recommendation concerning the Personal Pair proposal? How does Levi Strauss create value for its customers? There are multiple answers to this question. Certainly, people buy Levi's for different and multiple reasons. Some...
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...competitive salaries and benefits to employees. Additionally, they manufacture all products in the United Sates and market the “Made in the Unites States” label as a value-added incentive for consumers. The fact that Levi’s garments are manufactured locally has also supported their brand image of being “authentic”, “original” and “genuine”. The Levi’s brand made their debut in the mainstream market in the 1950’s when Hollywood celebrities proudly adopted Levi’s denim. The attributes of celebrities like Bob Dylan and Marilyn Munroe helped curated the Levi’s brand image of being original, unique and proudly American. Levi Strauss flourished during this period and set the new industry norm. Competitors were quick to catch-up by mimicking the standard attained by Levi Strauss. In order to compete most new entrants set-up manufacturing plants overseas to exploit cheap labor thus minimizing operating costs. Levi Strauss products were now selling at a premium in comparison, but market researchers were confident there was still a market willing to pay for premium denim. According to their research only 25% of women were truly satisfied with the fit of their jeans. This is what sparked the idea for the “perfect pair”. The concept would provide customer with a tailored pair of jeans measured...
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...Brand Management Case No. 4 DOCKERS: CREATING A SUB-BRAND INTRODUCTION In the spring of 1985, Levi Strauss & Co. (LS&Co.) was flush with its success in the blue jeans market. The company’s star campaign, called “501 Blues,” had recently brought new vitality to the company after several failed expansions into other apparel market segments in the earlier part of the decade. Confident in the wake of 501’s success, the company was contemplating its next steps when research revealed a decline in jeans purchases by LS&Co.’s core customer base of baby boomers. In short, the company’s “bread and butter” customer for the last 30 years - the American male teenager - was now 25-40 and was moving out of the jeans market at an alarming rate. To retain these customers even as their jeans purchases slowed or stopped, the company introduced Levi’s Dockers casual pants. Dockers, as the name was later shortened to, was one of the most successful new product introductions of the 1980s in the clothing industry. Consumers responded to the product design, which utilized the comfort and casual feel of cotton, and likeable advertising by purchasing enough Dockers to make a billion-dollar brand by 1993. Over the course of the 1990s, LS&Co. enjoyed phenomenal success from its Dockers sub-brand. The Dockers brand achieved record sales growth in 1998 and Fortune magazine estimated in 1999 that 75 percent of American men owned a pair of Dockers and that the average customer owned...
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...marketing synergy. "The term 'co-branding' is relatively new to the business vocabulary and is used to encompass a wide range of marketing activity involving the use of two brands”. | | Levi’s & Naturals: We are doing co-branding for Levis and naturals only in the southern part of India. About Levi’s Levi Strauss & Co is an American clothing company. It was started in the year 1853. Levi Strauss & 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 10,500 people worldwide. The core Levi's was founded in 1873 in San Francisco, specializing in riveted denim jeans and different lines of casual and street fashion. From the early 1960s through the mid-1970s, Levi Strauss experienced significant 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. Levi's, under the leadership of Walter Haas Jr., Peter Haas, Ed Combs, and Mel Bacharach, expanded the firm's clothing line by adding new fashions and models, including stone-washed jeans through the acquisition of Great Western Garment Co. a Canadian clothing manufacturer, and introducing Permanent Press trousers under the Sta-prest name. The company experienced rapid expansion...
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...SUMMARY Levis was originated in 1849 by a poor Bavarian immigrant in San Francisco, named Levi Strauss. It was initially originated to sell the durable pair of paints to Gold miners that could withstand their rugged lifestyles. By the 1890s, the popularity of their jeans and other dry goods had spread, and to keep better track of the expanding product line, LS. &Co. adopted a new inventory system. Levi’s jeans were assigned the lot number “501” and given that number as their name. And hence, in 1890 “501 Jeans” and by 1969 it evolved into an American icon. What had originally been a tough pair of pants had become a symbol of freedom, adventure, and independence. The Levi’s brand name was given because it became synonymous with jeans. Initial diversification efforts produced promising results. Starting in 1980 however, LS. &Co. began a three-year earnings decline. Bob Haas was the former chairman of Levi Strauss. Between 1980 and 1982, sales fell 10 % and the net income dropped 76%. Decline in jeans purchases because of the baby boomers were aging. Slacks sales increased and companies were relaxing their dress codes. In 1986, it Combined style, Versatility and Comfort. A brand for both professional and leisure activities. More contemporary, less conservative, and more casual than other leading slacks. By 1993, Dockers was a $1 billion brand. Wrinkle-free look-a-like brand led to Dockers’ first drop in sales. Dockers’ was losing existing customers and failing to...
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...DOCKERS: CREATING A SUB-BRAND INTRODUCTION In the spring of 1985, Levi Strauss & Co. (LS&Co.) was flush with its success in the blue jeans market. The company’s star campaign, called “501 Blues,” had recently brought new vitality to the company after several failed expansions into other apparel market segments in the earlier part of the decade. Confident in the wake of 501’s success, the company was contemplating its next steps when research revealed a decline in jeans purchases by LS&Co.’s core customer base of baby boomers. In short, the company’s “bread and butter” customer for the last 30 years - the American male teenager - was now 25-40 and was moving out of the jeans market at an alarming rate. To retain these customers even as their jeans purchases slowed or stopped, the company introduced Levi’s Dockers casual pants. Dockers, as the name was later shortened to, was one of the most successful new product introductions of the 1980s in the clothing industry. Consumers responded to the product design, which utilized the comfort and casual feel of cotton, and likeable advertising by purchasing enough Dockers to make a billion-dollar brand by 1993. Over the course of the 1990s, LS&Co. enjoyed phenomenal success from its Dockers sub-brand. The Dockers brand achieved record sales growth in 1998 and Fortune magazine estimated in 1999 that 75 percent of American men owned a pair of Dockers and that the average customer owned 3.8 pairs. That year, the total...
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...Levis’ Jean SWOT Analysis Strengths. Levis' are the original, authentic jean. They were a hit with baby boomers decades ago when they were in their teenager years. Another is that they stood for something beyond profit. The family took pride in providing quality products, personal service, and fair treatment. The family name and tradition was associated with respect for people—customers, employees, and the community. Weaknesses. The company began to rapidly lose market share to newer, trendier, more aggressive brands and designer labels. The Levi brand lost luster and relevance to the younger generation. Levi's jeans are perceived to be their “parent's jeans.” For that reason they will wear anything else but a pair of Levi's. This perception is an ongoing marketing problem and the company is struggling to find a way to reverse the brand's fortunes. Their tradition of promoting within may have started their dark side. Long-term managers became used to doing things a certain way, and kept new ideas and new blood at a distance. Since the company was so committed to its employees, it kept the younger recruits with new ideas from finding a place. They were so inwardly focused, that they missed the great changes occurring in the fashion world. Their main flaw was that they did not have a clear developmental strategic plan, did not pay attention and learn new technologies, and did not keep track of the competition, market and consumer tastes. Opportunities. In today’s society...
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