Levi Strauss Marketing Plan Keller Graduate School of Management ??? Online MM522 Final Draft Executive Summary Levi Strauss & Co. is a privately held clothing company founded in 1853. It is the global leader in denim jeans in more than 110 countries in which it markets its products. The company is also one of the world’s largest branded apparel companies in which it designs and markets jeans, casual wear, and related accessories for men, women, and children under the Levi’s??, Dockers?? San Francisco, and Signature by Levi Strauss & Co. ??? brands. (LS & Co. 009) The company has realized the need of women’s only jeans stores and sees the opportunity to capitalize when competitors are underperforming in this arena. The company’s mission statement is: The mission of the Company is to sustain responsible commercial success as a global marketing company of branded casual apparel. We must balance goals of superior profitability and return on investment, leadership market position, and superior products and service. We will conduct our business ethically and demonstrate leadership in satisfying our responsibilities to our communities and to society.
Our work environment will be safe and protective and characterized by fair treatment, teamwork, open communications, personal accountability and opportunities for growth and development The company will open 5 outlet stores positioned in geographic areas that are populated with the desired target market. This will be the first of its kind for Levi Strauss, although many competitors have attempted to do this on a small scale. The company believes that by understanding a woman’s needs and capturing their loyalty, the LS brand would increase its market share in denim apparel.
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Consumers have been wearing jeans of all styles for over a hundred years and each year has warranted a new, trendier style, keeping the jeans at a reasonable price. The company sees an opportunity in the geographic areas of Dallas, TX, Memphis, TN, Little Rock, AR, Seattle, WA, and Chicago, IL. The target population for the new design is approximately 1,000,000 with an estimate of $16. 3 million in profits per year in U. S. sales. With combined experience of over 115 years in manufacturing denim apparel, Wal-Mart, VF Company, and The Gap are the strongest competitors.
Each has attempted to garner the market in women’s denim apparel and not succeeded. Since the beginning, Levi Strauss has focused on value-pricing. In addition, the company has adopted the idea of promotional-pricing. LS & Co. believes that with its long history of affordable prices for its brands, the consumer’s assessment of the value of the company’s product will match the price that is charged. The company has taken into account the current economic situation and has found a way to penetrate this certain market without causing the consumer any additional economic hardship.
The pricing strategies LS & Co. uses will unquestionably acquire and maintain sales. With five (5) denim outlets, Levi Strauss has taken the approach of selective distribution. The company believes that it has chosen the most appropriate geographical areas for which their concentration will be focused. The company will be able to get the goods to the stores at the right time without incurring high costs with the acquisition of three warehouses that are located within 300 miles of each outlet. In addition, kiosks will be strategically placed at other retail stores that will carry the LS brand.
LS & Co. has invested in upgrading their current website that enables consumers to place orders online 24 hours a day. Since promoting this new venture, LS & Co. is 26% within the proposed budget. This has demonstrated a much focused plan for the company. Product Description and Situational Analysis Levi Strauss will open many stores, called Levi Strauss MJ’s, and design and market several styles of denim jeans that will cater to women only. These are consumers who want a durable pair of jeans that will expand as their waist expands.
The jeans will be made out of 100 percent cotton, including the threads. The belt loops, waistband, back panel, pockets, and leggings of the jeans will be all made of indigo-dyed denim. The zipper will be produced using the finest spandex that will allow for room and comfort. They will also be produced with a button-fly style. The fastening of the jeans will be designed using only removable designer buttons and rivets at the original opening, and additional removable designer buttons with an extended fastener that will rest in the belt loop.
Two additional removable designer buttons and rivets will be supplied and attached to the sales tag on the back panel. In an effort to reduce the concern of lost buttons and rivets after the purchase, Levi Strauss will also design and market an array of replaceable designer buttons and rivets at all retail outlets that sell the jeans. LS ; Co. currently sells women’s jeans in the same space as men and children jeans. However, there is a need for specialization in women’s sizes. With the success of the current maternity line, there has been an overwhelming order placed on those jeans.
As of today, the company has a backlog of orders which makes those jeans unavailable to those who desire them. Levi Strauss has retained high-quality information regarding the women’s jeanswear market and knows a great deal about the common features of these prized customers. Levi Strauss will use this information to better understand women’s specific needs and how the company can better communicate with them. With the popularity of their maternity wear, Levi Strauss will be steadfast in continuing to provide the most chic designs for the moms-to-be.
The line will consist of LS flexible tab jeans, My MJ waistband flare jeans, and LS 5 pocket all around panel jeans. These jeans will be designed to flatter the shape of the pregnant consumer and boost the consumer’s post-pregnancy shape. Through advertising and promotion, Levi Strauss will appeal to teens, professionals, and housewives, which includes those pre-and post-pregnancy consumers, women who have a history of fluctuating weight, and those who think that dieting is the only way fit back into those favorite pair of jeans.
By designing and marketing a pair of affordable, expandable designer jeans, Levi Strauss will attempt to eliminate the closet space used to house those jeans that a consumer needs to lost five to ten pounds to fit back into. Through their launch of their fall 2009 line in an upcoming catalog and the 2009 Fashion Avenue Market Expo, Levi Strauss will introduce the jeans. The company will also offer these jeans at a discount price if purchased online. Avenues for advertising will also include: online partner websites, partner catalogs, and coupons distributed as inserts in ewspapers. SWOT Analysis: Strengths: * Levi Strauss has a long reign in the denim industry of over a hundred and fifty years leaving them without a doubt a strong market shareholder in the clothing industry. * Levi Strauss is the most successful and highly recognizable clothing manufacturer in the history of apparel. * Levi Strauss & Co. has over 5,000 trademark registrations and applications all over the world. * The company has created a Global Product Development Center to enhance jeanswear innovation capabilities. * The company has offices located in 31 countries. Levi Strauss has continued to implement a SAP enterprise planning system throughout Europe, Asia, and North America in order to better manage their inventory, resources, and business processes. * The Levi’s?? brand ranked No. 1 in the apparel, footwear and accessories category ahead of other top brands such as Hanes, Nike and The North Face. ( LS ; Co. 2009) * The company has a highly reputable and strong relationship with customers and suppliers. Weaknesses: * Management consists of a team of four who makes all of the decisions for the company.
This leaves the company very vulnerable in their management strategies compared to other manufacturers with a team of management that includes middle managers. * In the past, Levi Strauss has demonstrated inadequate Research and Development. With newer, trendier, more aggressive brands and designer labels, the company has begun to lose market share. * The Levi’s brand has yet to appeal to the younger generation since it was the original jean and is considered “old”. Generation “X” has not at all been interested in wearing their “parent’s” jeans. The company has experienced poor sales performance over the last three years, resulting in a loss in net revenue. * The expansion of the new outlet stores will require the company to secure additional rental space and to develop astute retail strategies. * Levi Strauss will need to upgrade their information system in order to have online ordering and customer services available 24-7. Opportunities: * The company has the ability to grow existing markets and new markets. * To expand their presentations at wholesale accounts such as Wal-Mart, Target, and Macy’s. Along with capturing the market share of men’s jeanswear, to compete with women only fashion outlets such as Cato’s and Holliday’s. * To create a catalog of the brands under Levi Strauss. Threats: * The changing tastes of the denim market allows for many competitors to enter the market. * The trends of the economy. Target Market Jeans of all styles are a very popular form of casual wear among children, teenagers, young adults, and even baby boomers. They have several fits ranging from baggy, low-rise, and loose-fitting, bell-bottomed, relaxed, and skinny.
With a need to reconnect and a sensed opportunity in women’s jeanswear, our target market will consist of students, professionals, and housewives. The market profile for each of our customers will consist of several geographic, demographic, and behavior factors. Geographics -The geographic target cities are: Memphis, Tennessee, with a female population of 342,457; Little Rock/North Little Rock, Arkansas, with a combined female population of 129,004; Chicago, Illinois, with a female population of 1, 490,909; Dallas, Texas, with a female population of 589,589; Seattle, Washington with a female population of 282,401. Hello 2009) -The target population is estimated to be 1,000,000. Demographics -The target market has an age range of 16 ??? 45. -Memphis: Females 16 and older make up 50% of the labor force with a median income of $25,183. (Hello 2009) -Little Rock/North Little Rock: Females 16 and older make up 50. 2% of the labor force with a median income of $29,494. (Hello 2009) -Chicago: Females 16 and older make up 47. 9% of the labor force with a median income of $30,536. (Hello 2009) -Dallas: Females 16 and older make up 44. 2% of the labor force with a median income of $28,235. Hello 2009) -Seattle: Females 16 and older make up 46. 9% of the labor force with a median income of $35,134. (Hello 2009) Behavior factors: -Target group tends to be more fashion conscious. -The target group keeps up with the latest fashion trends. -Generation X and Y tend to use computers to shop online than any other group. -The target group either subscribes to or reads women’s magazines that are geared towards fashion and its industry. Competitors and Substitutes Levi Strauss has several competitors and manufacturers of substitutes all over the world.
Women tend to shop for clothing despite the economic tides. With a complete analysis of the key to superior performance and what affects long-term profitability, the company has a commitment to understanding and monitoring competitors and to grasp a competitive advantage. Some of LS & Co. competitors include: VF Company, The Gap, and Wal-Mart. VF has brands such as Lee, Riders, Wrangler, and Rustler. The company has a 20 % plus market share in the U. S. In 2003, VF introduced Lee Jeans “One True Fit” that was designed to flatter, lengthen and shape a woman’s body.
The jeans feature a low-rise, contoured waistband and stretch denim eliminates that embarrassing gap in the back when a woman sits. (Lee 2005) According to their website at www. vfc. com, VF boasted sales of $7,642. 6 million in 2008, of which it is not certain how much came from women’s jeanswear. GAP has chains such as Banana Republic and Old Navy. That company has brand extensions that include GapBody and GapKids. The company launched a new venture, Forth & Towne, in 2005 with a target market of women ages 35-45.
With an initial investment of $40 million, Gap abandoned the project in 2007 due to low long-term returns on the investments, and according to the company, “a more immediate need to focus on revitalizing its Gap and Old Navy brands. ” GAP has about 8% of the market share for female shoppers under 35 and less than 3% of over-35 customers. Sales of $15,763. 0 million were reported in 2008. (Gap 2005) In 2007 the world’s largest retailer, Wal-Mart, offered a trendier, pricier pair of skinny jeans. The company had begun to lose market share due to failure to capture large customer appeal.
Wal-Mart, which carries the brand names of L. E. I. , Lee Riders, Norma Kamali, Jordache, Faded Glory, and Signature by Levi Strauss, specializes in discount pricing of those jeans. Today, however, Wal-Mart still maintains a market share of 10% in denim apparel. (Kania 2005) Pricing “The quest for the perfect pair is always what justifies going out and buying another pair. ” (www. articles. moneycentral. msn. com) The adage “there is a high cost to looking good” was the foundation for the creation of LS MJ’s outlets, proving that there is affordable fashion without having to break the bank.
Levi Strauss will gain a competitive advantage through an already established brand name, the differentiation of their product, and superior customer value by offering the lowest deliverable cost. Through extensive research and experience in marketing denim apparel to today’s woman, Levi Strauss will be offering the jeans at a price that is sure to please the consumer’s purse strings, while also garnering a huge market share in order to enhance the company’s profit margin. The regular jeans with zippers will be priced from $29. 99 ??? $34. 99. These prices are based on sizes 0 ??? 16.
Jeans in sizes 18W-28W that will also be delivered in the same casual but classic style have a price range from $37. 99 ??? $47. 99. A discount of 30% will be given to those consumers who purchase two pairs of the denim jeans. The cost of maternity jeans will have a slightly larger range. LS & Co. takes pride in the research and development that went into designing the most comfortable and flattering fit for the consumer with the natural, bulging middle section. The price will have a range of $44. 00 – $48. 00. Online prices will be the same as outlet prices with the addition of shipping and handling.
For order of $150 or more, the company will provide free shipping. Order of less will be assessed regular ground shipping of $7. Each online customer will set up a personal account and will receive a special discount of 5%, 10%, and a ceiling of 15% for each first, second, third, and so forth order, respectively. Replaceable designer buttons will have a broad range of prices. They will be sold personalized with names, starting at $10. 99 for a set of two. Initials will start at $4. 99 for a set of two. Different designs consisting of pets, hearts, stars, sports, and hobbies will have costs starting at $6. 9 for a set of two. The cost of advertising and promoting this new adventure has been incorporated in the prices on a per unit basis. Agreements with partner websites have minimized a lot of the costs because of joint listings. Each pair of jeans has a manufacturer cost (which includes labor and overhead) of $4. 00, transportation and distribution costs of $2. 00, and marketing costs of $3. 00. The prices of the jeans have been set with a markup of 233%. The will allow the company to have a profit margin of $20. 99 ??? $39. 99 per unit and a gross margin of 70% ??? 81%.
With the innovation and advancement of technology, Levi Strauss has taken advantage of the low costs of production, while still being able to maintain the low costs that the market has always supported. The price charged is the price the consumer has valued the jeans to be worth. Channels of Distribution Levi Strauss is a manufacturing company who uses 500 contractors to produce its apparel in 50 countries. (Levi 2008) Although there are no manufacturing plants currently in the United States, the company has three headquarters located in San Francisco, CA, Brussels, Belgium, and Singapore and offices located in 31 other countries. Levi 2009) With the openings of the new stores in Little Rock, AR, Memphis, TN, Seattle, WA, Chicago, IL, and Dallas, TX, the products will be shipped to the United States, stored in Levi Strauss warehouses, and distributed to LS MJ’s outlets and other retail outlets. The warehouses and each LS MJ’s location will be equipped with RFID (radio frequency identification technology) in order to control inventory tracking and help to ensure that the right stock is available at the right time to meet your customers’ needs. Swedberg) Consumers can visit our website for a location and browse the inventory. The consumer can then have an opportunity to place an order on reserve at that location with a small deposit. With only 5 outlet stores, the company realizes how important that not only the target market have access to the product but those who were not even considered amongst the target market. The company is in contract with Meridian Kiosk to produce 1000 kiosks to be placed randomly at three major retailers: Wal-Mart, JCPenney, and Target, with the majority of the kiosks to be placed at Wal-Mart stores.
A consumer will be able to see all available apparel in that particular store, new items that are to be delivered to that store, and when the item will arrive. The kiosk will also display information of other retailers who carry the LS brand name. The use of this operation will prevent infuriating situations where a consumer makes their way to an outlet store only to find out that the jeans are sold out. Through the company’s newly improved website, www. us. levistrausssignature. com, consumers can also keep up with new products that will be released on a seasonal basis.
Moreover, the consumer will be able to place orders, submit inquiries, give feedback on the items that were purchased, and offer suggestions for improvements. With the help of partner retailers and their websites, the company will be able to serve those consumers in rural areas. Levi Strauss will create a catalog that’s to be distributed quarterly to a large sample population surrounding each of the 5 outlet stores. The consumer will be able to place an order from an outlet store over the phone using the customer number related to the address or take advantage of order via mail.
The orders will be shipped directly to the consumer with a standard charge of $3. 99 for orders under $100, and shipped free of charge for orders over $100. Promotion Levi Strauss seeks to increase its market share through promotional innovation. The promotional plan and approach will be communicated through the company’s mission statement to its target market by incorporating the societal marketing concept. Mission Statement: The mission of the Company is to sustain responsible commercial success as a global marketing company of branded casual apparel.
We must balance goals of superior profitability and return on investment, leadership market position, and superior products and service. We will conduct our business ethically and demonstrate leadership in satisfying our responsibilities to our communities and to society. Our work environment will be safe and protective and characterized by fair treatment, teamwork, open communications, personal accountability and opportunities for growth and development. (Abrahams 1999) Of the 31 countries that currently house an LS office, 22 have brochures of the denim apparel sold in that country.
Our latest design will be featured in each of those brochures, with the addition of creating brochures in the remaining nine countries. Our website also serves as a gateway to enter each country’s website. The home page will feature the latest, trendiest designs. LS & Co. has contracted with Above All Advertising, Inc. based out of San Diego, CA, to create billboards that will be strategically placed on the major highway of each of the five geographical locations. A billboard has also been created for display in New York City for the upcoming fashion expo. The company has arranged to have several booths at the 2009 F.
A. M. E. (Fashion Avenue Market Expo) in Manhattan, New York on August 2th ??? 4th. With the support of mega-retailers like Wal-Mart and Target, LS & Co. will be able to take advantage of its avenues of advertising upcoming the company’s seasonal apparel. The company seeks to maintain its competitive advantage at the expense of the competition. Levi Strauss will also promote discount coupons of “two for one price” in Sunday papers around the United States. Levi Strauss has division managers at each geographical location that will be responsible for marketing the product.
The message to the fashion-conscious trendsetter will be: We have designed the perfect pair of jeans that specifically outlines your body. LS MJ’s are YOUR jeans for life. They are high-quality, highly fashionable and worth every dime of your investment. No more second guessing your size or worrying about a few pounds of weight gain. The message for those who do not want to wear their parent’s jeans: You are curious by nature, so why not experiment with the latest styles of LS MJ’s? Experiment to find your own style. Express your personality. Promotion Budget Logo Development$ 32,500. 0 Global Website Development 150,000. 00 Advertisement Development with ad Agency Logo and Ad Design Work 120,000. 00 Billboards 350,000. 00 Advertising/Market Communications Levi Strauss quarterly catalog 1,700,000. 00 Miscellaneous advertising 300,000. 00 Public Relations 475,000. 00 Sales Promotion Fashion Avenue Market Expo F. A. M. E. 2009 ??? Manhattan 625,000. 00 Direct Marketing Direct mailings to 100,000 U. S. residents 55,000. 00 Total Promotional Budget$3,807,500. 00 Operational Plan * Levi Strauss & Co. ill lease five store locations in the downtown area of each geographical city. The company will employee a minimum of four employees in the first year with consideration of adding more depending on sales from Year 1. * Inventory will be held at the three strategically placed warehouses. Each warehouse will employ six full-time certified drivers, a distribution manager, and three clerical staff. Each employee will be required to undergo 40 hours of RFID (radio frequency identification) training. The use of this technology will improve the speed of distribution speed, flexibility, and accuracy of orders. Levi Strauss has met their organizational commitment in order to improve customer service by utilizing their Gluckstadt, Mississippi, one million square-foot facility as its customer call center to be operated 24-hours a day, six days a week. This center will also be responsible for answering all e-mail inquiries, taking order, and handling customer complaints. The center currently employs 320. * Levi Strauss & Co. collects information from its website, toll-free numbers, retail locations, and various registration cards at special events voluntarily from their consumers.
This information will be collected and stored to allow the company to analyze and improve its websites and to provide customers with a fulfilling online experience. (Levi 2009) * With the use of a third party advertising company, Avenue A, LS & Co. will be able to have ads served on their behalf across the Internet. The advertising company will collect anonymous information about consumer’s visits to LS websites and other websites that the customer visits in order to provide ads about products that’s of interest to them. References Abrahams, Jeffrey. 1999). The Mission Statement Book: 301 Corporate Mission Statements From America’s Top Companies. California: Ten Speed Press. Fashion Avenue Trade Show. (2009). Retrieved May 30, 2009. http://www. fameshows. com. Gap’s Store for Baby Boomers Opens Today. (August 24, 2005). Los Angeles Times. Retrieved May 11, 2009, from http://articles. latimes. com/2005/aug/24/business/fi-gap24. Hello Metro. (2000). Retrieved May 16, 2009, from http://www. hellolittlerock. com/Census. Cfm. Hello Metro. (2000). Retrieved May 16, 2009, from http://www. hellochicago. com/Census.
Cfm. Hello Metro. (2000). Retrieved May 16, 2009, from http://www. hellodallas. com/Census. Cfm. Hello Metro. (2000). Retrieved May 16, 2009, from http://www. helloseattle. com/Census. Cfm. Kania, John and Slywotzky, Adrian J. (August 28, 2007). Anticipating Brand Opportunities: What Ever Happened to Burma-Shave? Pattern Thinkers Can Outsmart Brand Rivals in a Changing Marketplace. Lippincott Publications. Retrieved May 11, 2009, from http://www. lippincott-margulies. com/pdfs/a_kania01. pdf. Lee Jeans Touts Its One True Fit Jean The Choice of Hot Moms. 2005). Retrieved May 11, 2009, from http://www. vfc. com/index. php/news/press-releases? nws_id=48E9C0EE-B5F4-2ECF-E040-0A0A580069C5. Levi Strauss. (2008). Retrieved May 26, 2009, from http://www. sourcewatch. org/index. php? title=Levi_Strauss Levi Strauss & Co. (2009). Retrieved May 10, 2009, from http://www. levistrauss. com/Company. Swedberg, Claire. (August 31, 2007). Two Singapore Fashion Retailers Use RFID to Track Inventory. RFiD Journal. Retrieved May 28, 2009, from http://www. rfidjournal. com/article/articleview/3721/1/1.