2010 Acharya School of Management Bangalore Submitted BySayeed Ahmed PGDM 09, ASM 0901006 [PCM REPORT ON LEVIS

JEANS] Submitted to :- Prof. Arun Bhattacharya ( Asst. Prof. Marketing , Acharya School of Management

Acknowledgement No man is indispensable but there are certain mortal without whom the quality wor k suffers their guidance becomes important in acquiring quality results. I am thankful to my faculty Mr Arun Bhattacharya (Prof. Marketing) who provides me all the theoretical knowledge related to financial products. Without theoreti cal knowledge it was impossible to use concept in this project report.

Executive Summary Levi Strauss and Co. is a privately held company owned by the family of its foun der, Levi Strauss. The company was created about 130 years ago and currently is one of the leading apparel companies in the world. The company produces and sell s a range of mens, womens and childrens jeans and casual wear including cotto n and cotton blend casual and dress casual pants, tops and seasonal pants and sh irts, denim jackets, accessories, and footwear. The company has three major bran ds Levis, Dockers, and Levi Strauss Signature. Even though Levis brand image is ve ry strong, it cannot maintain its brand image anymore as a result of missed fash ion trends. Levi has to come up with new strategies to overcome its competitors that have brought new fashion trends and low price products to the apparel indus try. Its competitors including Lee, Wrangler, Pepe Jeans, Spykar have also gaine d strong brand images by producing their products at low cost and continue to ga in perceived value in the industry. The apparel industry is considered a mature industry with numerous competitors. The competitors offer similar products and s ervices that Levi can produce. Therefore, product differentiation will be the ke y issue in order to increase the perceived value of the new product.

Company Overview Levi Strauss & Co. (LS&CO) is a privately held clothing company known worldwide for its Levis brand of denim jeans. It was founded in 1853 when Levi Strauss ca me from Bettelheim, Franconia, (Kingdom of Bavaria) to San Francisco, California to open a west coast branch of his brothers New York dry goods business. Altho ugh the company began producing denim overalls in the 1870s, modern jeans were n ot produced until the 1920s. The company briefly experimented (in the 1970s) wit h employee ownership and a public stock listing, but remains owned and controlle d by descendants and relatives of Levi Strauss four nephews. Organization Levi Strauss & Co. is a worldwide corporation organized into three geographic di visions: Levi Strauss Americas (LSA), based in the San Francisco headquarters; L evi Strauss Europe, Middle East and Africa (LSEMA), based in Brussels and Asia P acific Division (APD), based in Singapore. The company employs a staff of approx imately 10,500 people worldwide, and owns and develops a few brands. Levis, the main brand, 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 explosive g rowth 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. Levis, under the leadership of Jay Walter Haas Sr., Peter Haas Sr., Paul Glasco and George P. Si mpkins Sr., expanded the firms clothing line by adding new fashions and models, including stone-washed jeans through the acquisition of Great Western Garment C o. (GWG), a Canadian clothing manufacturer. GWG was responsible for the introduc tion of the modern "stone washing" technique, still in use by Levi Strauss. 2004 saw a sharp decline of GWG in the face of global outsourcing, so the company wa s closed and the Edmonton manufacturing plant shut down. The Dockers brand, laun ched in 1986 which is sold largely through department store chains, helped the c ompany grow through the mid-1990s, as denim sales began to fade. Dockers were in troduced into Europe in

1993. Levi Strauss attempted to sell the Dockers division in 2004 to relieve par t of the companys $2 billion outstanding debt. Launched in 2003, Levi Strauss S ignature features Jeanswear and casualwear. In November 2007, Levis released a mobile phone in co-operation with ModeLabs. Many of the phones cosmetic attribu tes are customisable at the point of purchase. Product Positioning and Market Segment Advertising professionals realize that the heart of any campaign is the product and the position it holds in peoples minds. Products and their brand names are ne wsmakers themselves. Understanding the complexities of a brand identity and its position is no easy task. One of the most controversial areas of product concept is the brand extension. A new product gets to share the name of an older, estab lished brand. Early suggested that brand extension would sap market clout from t he established product, but these fears proved groundless. Today brand extension occurs not only within the company, but companies are licensing their brand nam es to all kinds of products in the hope of increasing brand awareness. Market se gmentation Market segmentation is the selection of groups of people who will be most receptive to a product. The most frequent methods of segmenting include dem ographic variables such as age, sex, race, income, occupation, education, househ old status, and geographic location; psychographic variables such as life-style, activities, interests, and opinions; product use patterns; and product benefits . Much segmentation involves combinations of these methods. No matter how segmen ts are defined, however, they are characterized by considerable change over time . The readings in this section exemplify areas of rapid change. Basis of Market Segmentation Demographic segmentation Geographical segmentation Psychographic se gmentation Behavioural segmentation

Target Market 501 JEANS targets its market by evaluating the wants of customers. Mostly Levis targets its market among the following classes Upper Class Upper Mid dle Class Target Marketing Strategy Target market strategy adopted by Levis is basically o n having long-term relations with their customers and to provide them with bette r product. Benefits of Segmentation Levis has got customer oriented approach by segmentatio n. Company is promoting its products effectively within segments by print media as well as electronic media, e.g. Newspapers, Signboards, Television commercials , Internet, etc. Company is providing their customers with stylish better qualit y and different product keeping in view its cost Marketing Mix Product Product means set of tangible and intangible attributes which may includ e packaging, colour, price, quality and brand plus the sellers services and reput ation. A product may be a place, service, good or promotion. Brands Brand is a n ame, term, sign, symbol or design that adds value to the products. LS & CO. earn s remarkable revenues throughout the year coz its products are considered to be the worlds largest quality products. LS & CO. is basically divided into 3 sub bra nds i.e. Levis, Dockers and Levis Strauss Signature. All the three brands are pro viding different quality products.

LEVIS The Levis brand epitomizes classic American style and effortless cool and is positioned as the original and definitive jeans brand. Since their inception in 1873, Levis jeans have become one of the most recognizable garments in the world reflecting the aspirations and earning the loyalty of people for generations. C onsumers around the world instantly recognize the distinctive traits of Levis jea ns the double arc of stitching, known as the Arcuate Stitching Design, and the r ed Tab Device, a fabric tab stitched into the back right pocket. Today, the Levis brand continues to evolve, driven by its distinctive pioneering and innovative spirit. Our range of leading Jeanswear and accessories for men, women and childr en is available in more than 110 countries, allowing individuals around the worl d to express their personal style. The current Levis product range includes: Levis Red Tab Products These products are the foundation of the brand. They encompass a wide range of jeans and Jeanswear offered in a variety of fits, fabrics, fini shes, styles and price points intended to appeal to a broad spectrum of consumer s. The line is anchored by the flagship 501 jean, the original and bestselling fi ve-pocket jean in history The Red Tab line also incorporates a full range of Jea nswear fits and styles designed specifically for women. Sales of Red Tab product s represented the majority of our Levis brand net sales in all three of our regio ns in fiscal years 2009, 2008 and 2007. Premium Products In addition to Levis Red Tab premium products available around the world, Levis offer an expanded range of high-end products. In 2009, we consolidated the management of our most premiu m Levis Jeanswear product lines under a new division based in Amsterdam. This div ision will oversee the marketing and development of two global product lines: ou r existing Levis Vintage Clothing line, which showcases our most premium products by offering detailed replicas of our historical products, and Levis Made & Craft ed, a recently-launched line of premium apparel. Levis brand products accounted f or approximately 79%, 76% and 73% of our total net sales in fiscal 2009, 2008 an d 2007, respectively, approximately half of which were generated in our Americas region. DOCKERS First introduced in 1986 as an alternative between jeans and dress pants, the Do ckers brand is positioned as the khaki authority and aspires to be the worlds bes t and most-loved khakis.

The Dockers brand offers a full range of products rooted in the brands khaki heri tage and appropriate for a wide-range of wearing occasions. We seek to renew the appeal of the casual pant category by dealing up khakis masculinity and swagger and reminding men what they love about the essential khaki pant. This positionin g is reflected in the Wear the Pants campaign launched globally in December 2009. The brand also offers a complete range of khaki-inspired styles for women with p roducts designed to flatter her figure and provide versatility for a wide range of wearing occasions. Our Dockers brand products accounted for approximately 16%, 18% and 21% of our total net sales in fiscal 2009, 2008 and 2007, respectively. Although the substantial majority of these net sales were in the Americas regio n, Dockers brand products are sold in more than 50 countries. Levis Strauss Sign ature Levis seek to extend the style, authenticity and quality for which our com pany is recognized to more value conscious consumers through our Signature by Le vi Strauss & Co.TM brand. Levis offer products under this brand name through the mass retail channel in the United States and Canada and value-oriented retailer s and franchised stores in Asia Pacific. Levis use these distribution channels t o reach consumers who seek access to high-quality, affordable and fashionable Je answear from a company they trust. The product portfolio includes denim jeans, c asual pants, tops and jackets in a variety of fits, fabrics and finishes for men , women and kids. Signature by Levi Strauss&Co.TM brand products accounted for a pproximately 5%, 6% and 6% of our total net sales in fiscal years 2009, 2008 and 2007, respectively. Although a substantial majority of these sales were in the United States, Signature by Levi Strauss & Co.TM brand products are sold in seve n additional countries in our Americas and Asia Pacific regions. Price It can be simply defined as: The currency value charged to a Client by the company for a product or service. Is one of the most important elements of the marketing mix, as it is the only mix, which generates a turnover for the organiz ation, the remaining 3ps are the variable cost for the organization. It costs t o produce and design a product it costs to distribute a product and costs to pro mote it.

List Price: Levis all products are sold at listed price, which are settled by th e Company (Singapore). There is no discount to offer. Credit Sales: Company also deal with credit sales, but dont overcharges to the customers, company pay it ou r self to the bank (3%). Products are only sold for cash or on credit cards Disc ount: Levis dont give the discount to customers, even to the employees of the Lev is. Company prices are fixed. Payment Period & Credit Terms are settled by the c ompany Price Determination During the determination of the price company not considered the competitors, but the standard that is used is considered .Companys price is influenced by the following factors:Cost of the product Affordable for the targe t market Demand of the product Uniqueness and innovative features of the product s Competitors Levis products completely satisfy consumers, thats why company dont fa ce much competition in business. But yet there is some competitors e.g. Pepe Lee Wrangler Spykar Levis prices are not influenced by the competitors. Such a stuff , design and fashion which dont have the enough sales are recall back to the comp any. Again company issues this stuff to their own outlets for sale at discount p rices. Place Placement objectives:To equalize the demand and supply of products at all places.

To provide desired products at proper place. To fulfil the requirements of every locality according to the taste of the people To increase the brand equity by r eaching every corner of the world Promotion For the promotion of sales Levi Stra uss & Co. adopt a very effective but comprehensive strategy. Levis pays attentio n to the publicity of its products. The major source of promotion of Levis is don e by creating public relations. The sales promotion of LEVIS targets the end con sumers. Since the Levis JEANS are in growth stage in India, therefore, the promot ional Strategy is based on persuading of prospective buyer Levis uses the followi ng promotional strategies to promote its product Personal selling- Personal sell ing by the representative of the organization takes place face to face with fina l consumers. Mass selling- Levis does mass selling to inform a bulk of persons b y advertising Advertising Medium The advertising media used by the company are T elevision Fashion Magazines, Newspapers Internet Bill boards, banners etc. 1. Ad vertisements of Levi Strauss & Co. are very innovative and eye-catching. Buyers are attracted towards the product. The advertisements are placed at the internat ional level 2. For fashion magazines and newspapers LS&Co. is a target due to it s grand brand equity, it has become a benchmark for all the others to follow. Th e newspaper gives coverage to the social events in which LS &Co takes part with great interest. Whereas fashion magazines are always dealing with the gorgeous m odels working with LS& Co and the unique outfits of the model 3. Levis provides up-to-date information to their customers through electronic media i.e. from the ir website 4. Billboards and banners are also used for the advertisement purpose

Levis.com Levis.com was launched by fashion retailer Levi Strauss & Co. in 1996 as an informative company Web site that included pages on the firms history and current operations, culture, and fashion. Two years later, the Web site became a sales outlet for more than 120 clothing items in 3,000 different styles. Howev er, in 1999 Levi Strauss pulled the plug on its online sales efforts, using the Levis.com site instead to promote the firms brand image. While Levi Strauss con tinued to utilize the Levis.com Web site for marketing purposes, company managem ent eventually set plans in motion to turn the popular site into a shopping dest ination. The firms market share had slipped from 30% in 1990 to 17% in 1998, an d Levi Strauss planned to use its online efforts to regain a hold on the apparel market. The company also was prompted to begin e-tailing when customers began c omplaining about not begin able to order Levis brand products online or by tele phone. As a result, an e-commerce plan was developed and in November of 1998 Lev is.com began selling 120 items from the Levis branded apparel line. Levis.com f aced many problems and did not fare well in its first year as an online shopping destination. The transition from selling large quantities to retail outlets ver sus shipping to individual consumers proved to be costly. The site did not sell the famous Levis 501 Blues line until March 1999, worried that Asian and Europe an customers, who could not buy the jeans online and were paying more than U.S.based customers, would boycott the firm. Many customers continued to shop at ret ail outlets to avoid online shipping charges. In addition, the online return pol icy also was discouraging to customers because merchandise bought onLevis.com co uld not be returned at retail stores. Sales Force: - Levis holds a very big sales department as it is working in many countries. Levis is using selective but inte nsive distribution level for the distribution of its products. For example in In dia Levis has opened its outlets, sales offices and sales branches in major citi es like Delhi, Mumbai, Bangalore, Kolkata and Chennai. Sales Offices and Sales B ranches Sales offices for Levis act as a display center for their Products from where the customers can get information about latest designs and up to date fash ion introduced. While the actual sale of the products take place at the sales ou tlet of the company Porter Five Force Analysis

Barriers to Entry The threat of entry is some of those outlined by the S-C-P mod el (Barney, 41). These barriers are economies of scale and product differentiati on. The economy of scale is present in this market because of the volume of jean s produced in the market. Entry into a market where the production volume is so high already is not really a threat because the cost of production goes down. Th is means Levis can produce more at a lower price and possibly sell for more. This would improve the profitability of the company. Product differentiation is high because everybody buys different jeans and each brand has different values to di fferent people. This threat would be brand loyalty. Levis created the first denim jeans which poses a threat to new entrants because of their customers brand loya lty. If Levis were to enter into the high quality and high priced market they wou ld need to have change their style or become more fashionable in the United Stat es. If this were to be the case for Levis, then start-up costs would be high. Thr eat of Rivalry In the apparel industry, rivalry is moderate to high. The apparel industry is comprised of several main rivals of equal size. When consumers esta blish brand loyalty, it is typically the designer (specific brand or line of app arel) rather than the retailer. This shows that the small number of large appare l firms that compete on a grand scale show signs of rivalry. When rival firms th reaten existing firms it reduces their economic profits. Examples of rivalry amo ng existing apparel firms are frequent price cutting, intense advertising campai gns, and frequent introductions of new products. Often times in the apparel indu stry, celebrities and models are used to influence customers to purchase product s. The apparel industry is highly competitive and has large-scaled competitors t hat are global and publicly traded. When the firms are large they have a high pr oduction capacity. According to Barney and Hesterly, rivalry tends to be high wh en production capacity is added in large increments therefore the ability for an apparel firm to be of high production capacity creates economies of scale. Threat of Substitutes

Essentially there is no substitute for apparel or clothing. However, there are s ubstitutes for garments. Examples of substitutes for garments would be a short i nstead of a pant given the relativity of the situation, similar price point, and comfort. The short would meet approximately the same customer needs, but do so in different ways. In some cases the short would not satisfy the pants character istics if the climate was cold, but if the customers needs were to have pockets, it would satisfy them. Another form of a substitute of apparel is consumer prefe rence. Not every customer is the same some might prefer pants in the summer over shorts. Customers also might substitute brand for their preference such as fit, colour, design, and price point. As long as the approximate needs of the custom er are met, substitutes play an increasingly important role in reducing profit p otential in a variety of industries. Threat of Suppliers Two raw materials that are crucial to the success of the app arel industry is the dependence on cotton and labour. The apparel industrys deman d for cotton is unlikely to keep pace with consumption and the price of cotton i n highly likely to rise in the future, which would increase the raw material cos t for the apparel industry. Since the apparel industry is a global process, obtai ning the highest quality labour at the lowest price possible is difficult. It is difficult because of technological advances such as the internet. Customers and potential customers are able to blog and research the company to find out compa ny practices. One topic customers desire to know is by whom it was made by, such as a child worker in a sweat shop. Consumers are able to find out this informat ion and pictures on the internet. These intimate views on the supplier can threat en the performance of the firm. Threat of Buyers The apparel industry buyers are as limitless as the population. Every reasonable consumer is a buyer of the apparel industry. Primarily the buy er dictates the type of product sold, often times fashion trends in the apparel industry. Given the industry, apparel products have little differentiation. Beca use there is little differentiation, the threat of buyers can be greater. Buyers have small to none switching costs between brands or retailers. This also poses a threat to the apparel industry and increases buyer power. The large firms in the apparel industry shouldnt concern themselves with vertical integration, as bu yers dont pose a successful or equal threat to a large apparel firm, given the ba rriers of entry.

Competitor Analysis There are a several large firms competing against Levi Strau ss Co. in the apparel industry. The closest competitor to Levi Strauss is the Pe pe, Lee, Spykar, and Wrangler. Competitive Advantage In the short-run, the competitive advantage could be hard to find because the re turns of a mass marketing campaign will take time to show through. Good times to introduce a new line and advertise for it on a vast scale would be before Augus t or around the time school starts. August also shows to be a low shopping month so it would be important to advertise the back to school AND the younger look o f Levis together. In the long-run the competitive advantage would be huge! If the marketing campaign is successful, Levis would be one of the only clothing compan ies to have captured every demographic in the United States as well as internati onally. Currently, the younger generations are missing from Levis target demograp hic so once they capture those ages, the growth potential is endless. Levis alrea dy makes tough, reliable clothing that are also comfortable. They have a line th at is hand made for increased quality as well as casual business wear so they ar e diverse while being consistently top of the line at an affordable price. This combination is hard to beat. Once they capture their missing age groups they wil l fully dominate the casual clothing sector in the market. If the marketing plan works the growth will prove to be sustainable because Levis will be gaining a wh ole new market base They will gain loyal customers at the younger age, those of who will grow up wearing Levis. Brand recognition is the key once this marketing plan is put into action because while the name of Levis is already highly recogni zed, it needs to send a positive message to the 20 year-old that hears it. Once that happens, they will continue shopping for Levis products for years to come. I t will be fairly easy to measure one Levis produces a new more exclusive line the y will see sales or they will lose money. They will be able to track that invent ory very easily between their wholesale contracts, online orders, and the Levis S tore. With the technology in every major company these days, tracking inventory is not typically a problem because items are scanned when received and sold so Levis will be able to watch the exact movem ent of their products. Ideally, the new line will only be in a few higher end stores, but would still be afforda ble so they will stick out to the shopper as a new brand at an inexpensive rate.

SWOT Analysis Levis global presence provides the organization with widespread brand recognition . Currently, the company is extremely strong, and has numerous opportunities. Ho wever, just as there are constant new opportunities that Levis can observe, asses s, and experiment with, there are frequent threats as well. Each of these threat s has to be taken seriously. Levis must continue to recognize that our world is i n a cycle of continual change. The company has to understand its strengths and w eaknesses in order to evolve with their changing desires of the market. Levis nee ds to analyse their internal issues, recognize strengths and weaknesses, build u pon strengths, and work on weaknesses. Furthermore, in the apparel industry, Lev i Strauss must focus externally and concentrate on current market trends. The co mpany must take advantage of all available opportunities and protect themselves from potential threats. Strengths With all of the competition in the apparel industry, Levis differentiat es itself from all other competitors through the ability to brand products throu gh strong brand image. According to Levis website, the company markets its produc ts under leading brand names that are among the most successful apparel brands i n the world and it is one of the most widely recognized brands in the history of the apparel industry. Additionally, Levis currently has numerous retail location s including 67 company operated stores in 10 countries. The company distributes its products in a wide variety of retail formats around world including franchis e stores, company owned stores, specialty stores, chain and mass channel retaile r. Weakness One critical weakness that Levi Strauss faces is relying too heavily on few customers. The company actually depends on a group of key customers for a g reat portion of sales. Net sales to its ten largest customers totalled about 43 % of total sales. Therefore, the company needs to change in customer relationshi p. Opportunities With Levis continuous growth, many opportunities have surfaced for the company. The company needs to transform management strategies so that it can generate and sustain competitive advantage. It has been executing a number of b usiness turnaround strategies that

have resulted in significant improvements in performance. The company has been e xpanding licensing programs to offer more products that complement its core bran d product ranges Therefore, Levis will be able to generate more profit through li censing relationships. Secondly, the company plans to increase dedicated retail stores for value-conscious consumers in Asia. The dedicated stores are an increa singly important part of Levis strategy for expanding distribution of its product in all regions of operations. The company currently plans to open approximately 150 new stores in Asia, 65 in Europe, and 20 stores in North America. This woul d help maximize profit for the company. Threats Although Levis has experienced many opportunities and much growth through out its history, the company must be aware of potential threats. One critical th reat that the company faces is the decline of global cotton production. Cotton p rices have increased since global cotton production decreased in 2009. Denim is made entirely out of cotton. Therefore, increased cotton prices affect higher ra w material cost and lower company margins. Managerial Implication A valuable lesson that can be taken from this case is how imperative it is to keep up with your brand image. Being content with one niche in a market such as clothing is never acceptable. Styles, times, and preference s are changing so rapidly, that a clothing line must be able to meet the needs o f their customers. While Levis still had a market in the older generations, they were missing out on a huge market that likes to shop. The second thing learned w as how difficult it can be to be a privately owned company. While researching th e financials, it became apparent that Levis has more debt than assets. Levis could consider going public to help with their amount of debt as well as their brand. Yes, they would lose a certain amount of control, but they could gain a lot in additional resources. Many of their international stores are publicly held as we ll. The third implication that can be applied to other companies would be their option for strategic alliance. Levis really needs some help in the area of brand image and by collaborating with Steve Madden they have a whole new consumer mark et. Levis has learned that they cannot be comfortable in one market for too long because that alienates another market such as the younger generations.

Conclusion So from all of our above discussion and explanation, we conclude that: If a comp any wants to reach the heights of glory, it must have to focus strongly and effi ciently on its customers needs to create greater customer value, loyalty and sati sfaction &Carefully analyse the strategies of its competitors in order to develo p and use more Efficient marketing strategies than its competitors for greater g rowth and market share. And keep pace with modern trends.

Bibliography http://www.levistrauss.com/sites/default/files/librarydocument/2010/6/lvisf2009a rc.pdf http://www.levistrauss.com http://en.wikipedia.org/wiki/Levi_Strauss_%26_ Co.