Levi's Case Analysis

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Video Case Study Analysis

Levi’s Not by Jeans Alone

With other companies starting to encroach upon the Jeans market share, Levi’s decided to introduce a new product. With the goal to gain profits, Levi’s pursued diversification with the new product. This product was formal clothing for men.

Levi’s divided the consumers into five segments based on demographics, attitudes and beliefs. Q2 and Q1 appeared to be desirable target segments, however, Levi’s decided to focus on the Q2 consumers, the classic independent males. These consumers were well-dressed, cared about their appearance, shopped alone and mostly at specialty stores. They weren’t price sensitive and preferred wool/wool blends in conservative colors.

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Levi’s decided to place their product in department stores as they had good relations with the retailers due to their volume sales of jeans. They did not have any real relationship with the specialty stores where the independent male shopped. Rather than placing their new products which would be considered as high-end in these specialty stores and where they would be among the lower price range, they chose to place their products in the department stores where their products showed a deviation from the regular Levi formula and were considered very pricy as compared to other high-end department store brands such as Haggar’s. This price raised some concerns among the retailers as they were unsure if Levi’s formal wear would move out of the stores at a required pace. Also, due to price-quality inference, if Levi’s was placed in a specialty store, the Q2 customer might prefer to buy a more expensive product. Levi tried to sell these formal clothes in the same stores as their casual clothes for the same segment of customers. Customers saw these formal clothes at the same place priced higher than the casuals, and therefore found them to be expensive.

Due to the above reasons and lack of promotion, Levi’s achieved only 65% of their sales target. They promoted the wrong product under their brand, for the wrong price at the wrong place. They failed to understand the needs of their customers.

Levi’s would have been able to avoid these mishaps if they changed their target

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