Company Like Levi Strauss Price example essay topic

INTRODUCTION Levi Strauss & Co. is one of the largest company in the business world, having headquarters in all of the continents and selling their most significant product, clothing. Their most popular items are the Levi's jeans and the Dockers khaki pants. Levi's Strauss & Co. has been a very successful company producing, studying people wants and needs, selling, distributing, and promoting their product. The purpose of this report is to analyze the different marketing mix, or even, probably the same marketing mix that Levi Strauss is applying to both products. Giving you an idea of how, why and the consequence of the marketing mix that Levi Strauss & Co. has applied and still is applying with some minor changes.

Although the report's frame contains a set of controllable and tactical marketing tools that Levi Strauss & Co. blends to produce the response required in the target market, it is a fact that they have been achieving their objectives by delivering value to its consumers. However, notice that these tools represent Levi's point of view of the marketing mix available to persuade its buyers. And from the customer's point of view, each marketing tool is designed to deliver the corresponding benefits. In preparing this report, the conclusion has been drawn by facts and figures provided directly by Levi Strauss & Co. European Headquarters and by public resources. The layout of this report intends to analyze each marketing tool by discussing each point and relating them from one to another, noticing the difference and / or similarities of the two products.

LEVI'S STRAUSS & C.O.'s HISTORY Levi Strauss was invented in 1850 by a Bavarian who sold canvas pants to California gold seekers, and for a long time the blue jeans have been an institution in the American's life, dominating the industry Levi's Strauss & Co. During the 50's and 70's when the baby boom caused an explosion in the number of young people, the sales of jeans was easy. That's when Levi's Strauss took the opportunity to produce enough jeans to satisfy the young target. By the early 80's, the baby boomers were getting old and also their taste in jeans was decreasing (they were buying less jeans and wore the old ones for a longer period); While the target segment of 18 through 25 years old was shrinking. Thus, the company found itself wrestling for the declining in the jeans market.

Despite of the fading market, Levi's Strauss & Co. staid on its basic jeans business. They also sought growth by increasing its advertising and through national retailers in the United States of America, like Sears and JC Penny, but this tactics didn't succeed. What Levi's Strauss did, was a diversification into the faster-growing fashion and specialty apparel business. Levi's Strauss & Co. brought up with 75 new lines, including high fashion, sportswear, and athletic wear. In 1984 Levi Strauss had succeeded its diversification, from its blue jeans to skiwear, running suits, men's hats, and even women's polyester pants and denim maternity suits. The results were very chaotic: The profit fell suddenly by 79 percent in just one year.

In 1985, in an effort to change the weakness of Levi Strauss & Co., new management was implemented with a bold new strategic plan. It sold most of the bad-caused fashion and specialty clothing businesses and took the company back to what it had always been "making and selling jeans". Starting, Levi rejuvenated its flagship product, the basic button-fly, shrink-to-fit 501 jeans, investing $38 million in the now-classic "501 blues" advertising campaign, a series of hip, documentary-style "reality ads". In the business history, any company has never spent so much on a single item of clothing and many analysts questioned this strategy. However, the 501 blues campaign spoke for the company's entire product.

It reminded consumers of Levi Strauss's strong tradition and refocused the company on its basic, blue jeans heritage. This campaign doubled the sales of 501's during the next four years. Building on this solid-blue base, Levi Strauss began to add successful products like pre-washed, stone washed and brightly color jeans to its basic line. Late 1986, Levi Strauss introduced Dockers, comfortable and casual cotton pants targeted towards the aging male baby boomers. The concerning extension of the jeans business, the new line had even larger appeal than anticipated. Not only the senior citizens bought Dockers, so did their children.

It seems that every American teen had to have a pair of casual cotton pants trendy enough to wear them when meeting his girlfriend's parents. Levi's Strauss seeing the success that Dockers has caused, continued to develop new products aging boomers, such as loose-fitting jeans for men who " ve outgrowth the company's slimmer-cut 501's. In addition to the introduction's of new products, Levi Strauss & Co. also stepped up its efforts to develop new markets. Like in 1991, they developed a jeans advertising campaign especially for women and launched an innovative 3-years of $12 millions "Jeans for Women" advertising campaign featuring the new version of the female form in blue jeans by female artists. It also aired a national Spanish-language TV Advertising campaign aiming it to the young, fast-growing, and brand-loyal Hispanic market. Levi Strauss's most tense turnaround has been in its international market.

Levi Strauss has now become the only truly global US clothing maker. Its strategy is to "Think Globally, Act Locally". It operates a closely coordinated worldwide marketing, manufacturing and distributing system. Twice each year, Levi Strauss brings together managers from around the world to share products and advertising ideas and to search for those that have a global petition. Giving an example, the Dockers line was originated in Argentina, but has now become a worldwide bestseller. However, within its global strategy, Levi Strauss encourages local units to tailor products and programs to their home markets.

A good example is that in Brazil was developed the feme nina line of the curve-cut jeans that provide the ultra-tight fit that Brazilian women favor. In most markets abroad, Levi Strauss & Co., powerfully plays up its deep American roots. James Dean is a central figure in almost all Levi's advertising in Japan; Indonesian ads shows teenagers all dressed with Levi's clothing, driving around Dubuque, Iowa, in 1960's convertible; and almost all foreign ads features english language songs. However, for as much as American usually think of their Levi's as a basic wander around wear, most European and Asian consumers view them as upscale fashion statements. The prices match the snob appeal, in the United States of America a pair of Levi's 501 jeans would have a price of around $35, and in the Netherlands could cost a pair of the same 501's $60 and in Paris could cost about $80. Levi Strauss's innovative and enterprising global marketing efforts have produced remarkable results.

As the domestic market continues to decrease, foreign sales have accounted for most of the company's total sales and 46 percent of its profit before corporate expenses and interests. Perhaps more impressive, its foreign business is growing five times the growth rate of its domestic business. Levi Strauss continues to look for new international market opportunities. PRODUCT For starters, anything that can be offered to a market for attention, use, acquisition, or consumption that might satisfy a need or want; including service, place, person, organization, physical objects, and ideas; is the rounded definition of product Levi Strauss & Co. started producing denim jeans as their core product, and while the years were passing by, their core product has changed by producing different types of garments. Nowadays, Levi Strauss & Co. has three actual products and they are Levi's, Dockers, and Slates. These products are classified as shopping products in the consumer product segment.

In the Levi's area of production, they don't only produce underwaist-wear but also over waist-wear, accessories, and many more different products for men and shortly for women. You can see in Levi's range of jeans that it has different styles, colors and textures, for the different types of targets. It is good to observe some of their underwaist products, giving their name and style. Take note that they come in a variety of colors, fabric and textures; Red Tabs: 501's Original Button-Fly: Close fit below the natural waist. Comfortable fitted seat. Slim thigh.

Straight Leg. 569's Large Straight Fit: Loose at the waist to ride comfortably low. Roomy and Loose. 567's Extra Wide Leg: Loose fit at the waist to ride lower at the body.

Loose in the seat. Extra Loose in the thigh. Extra wide leg opening. 560's Loose: Close fit through the waist. Loose in the seat and thigh.

Tapered leg. 565's Loose fit Straight Leg: Loose fit at the waist to ride lower on the body. Loose in the seat. Straight leg. 550's Relaxed: Close fit below the natural waist.

Relaxed in the seat and thigh. Straight leg. 505's Regular: Close fit below the natural waist. Relaxed in the seat. Slim, yet comfortable thigh. Straight leg.

517's Regular Boot Cut: Close fit through the waist, seat and thigh. Boot cut leg opening Silvertab: SilverTab Straight Leg, Loose Fit: Close fit below the natural waist. Very loose in the seat and thigh with straight leg styling. Zipper fly. SilverTab Baggy Mega Wide Leg: Loose fit below the natural waist. Baggy in the seat and thigh.

Oversized back pockets. Mega wide leg opening. SilverTab Massive Jeans: Lower on the hips than other SilverTab fits. Bigger than baggy in the seat and thigh. Oversized back pocket.

Massive leg opening. Dockers started producing cotton pants for men and during the mid-80's, Dockers didn't only produce the cotton pants for men, but also for women; and their production of clothing has been extending. Presently, Dockers has three different designs of pants, with different colors, fabric and texture; as well as Levi's Jeans. They are the followings: Classical Fit, Relaxed Fit and the Dressed-up Fit.

Each of these fits is a different person and a different occasion at a low price. Casual people, who like to dress up semi-formally on a daily basis, often use the Relaxed Fit. The Classical Fit is more for casual people with a special occasion. And the Dressed-up Fit is more a business wear.

The difference between these two actual product is influenced by a number of variables, like the age, fit, image, occasion, status background and product accessibility (an example is Dockers for Women, it's not yet reachable in the whole world). Now, considering price, the price is not such a variable, in fact, the difference between a Levi's Jean and a Dockers Pant could be around $5 to $20 maximum. PRICE All profit organizations and many non-profit organizations must set prices on their products or services. As we all know, price is the amount of money charged for a product or a service. Price is also the only element in the marketing mix that produces revenue, unlike product features and channel commitments; price can be changed quickly. But in the case of the Levi's products especially for jeans it is the non-price competition, a seller focus not on price but instead emphasizes distinctive product features, service, product quality, promotion, packaging or other factors to distinguish the product from competing brands.

Before setting price, the company must decide on its strategy for the product. If the company has selected its target market and positioning carefully, then its marketing-mix strategy, including price, will be fairly straightforward. For example, if Levi's decides to target the "business look" with its Dockers pants or even more dressed-up with its Slates pants, this will suggest charging a higher price then with the mighty 501 jeans, which focus more an the casual look of teenagers, in the other hand requires charging a lower price. Thus, pricing strategy is largely determined by past decisions on market positioning. Price is only one of the marketing-mix tools that a company uses to achieve its marketing objectives. Price decisions must be coordinated with product design, distribution and promotion decisions to form a consistent and effective marketing program.

Decisions made for other marketing-mix variables may affect pricing decisions. For example Levi's who uses many resellers who are expected to support and promote their products have to build larger reseller margins into their prices. Thus, distribution as much as promotion affects the price of the product (the expensive advertising that the company will have to face will immediately change the price). For example Levi's spends huge dollars amount when marketing the 501's jeans even if it is the cheapest pant Levi's has but the important amount spent on television ads or bus ads will be compensated with a high level of sales. Thus, the marketer must consider the total marketing-mix when setting prices. If the product is positioned on non price factors, then decisions about quality, promotion and distribution will strongly affect price.

If price is a crucial positioning factor, then price will strongly affect decisions made about the other marketing-mix elements. In most cases the company will consider all the marketing-mix decisions together when developing the marketing program. Costs are the elements that set the price that the company can charge for its product. Of course the company wants to charge a price that both covers all its costs for producing, distributing and selling the product and delivers a fair rate of return for its efforts and risk. To price wisely, management needs to know how its cost varies with different levels of production.

For example; the Dockers pants that cost more money to produce have a target which has a higher income than for the Levi's jeans, other aspect is the difference in the level of sales (jeans are sold at least twice more than the Dockers pants). Thus, management must decide who within the organization must set the prices. In a company like Levi Strauss price is handled by divisional or product line managers. The price the company charges will be somewhere between one that is too low to produce a profit and one that is too high to produce any demand. For the same product aimed at different market segments, marketers sometimes choose different pricing objectives. Although, price is generally assumed as a significant issue for the customer, the type of product, the target, the needs and the desire but also the value that the buyer assign to the product meaning how much money is he or she willing to spend in order to possess the product.

Thus, the marketers evaluate all the information available in order to determine how far above the competition his firm can set its prices. Each price the company might charge will lead to a different level of demand, in the normal case demand and price are inversely related: that is the higher the price is the lower the demand will be, that is where the target change everything. Levi's for example will set two different prices for its jeans whose target is more likely to be teenagers, men, women, or we should say everybody. Thus, the price will be slickly different from the one given to the Dockers pants which are targeted to an other type of people or an other type of occasions, so the company will be more likely to charge a higher price for the Dockers pants because of the target which they know will spend the extra amount of money in order to be in possession of the desired pant. As known, prices differ from place to place.

Thus, it makes that the company has to price its products to customers located in different parts of the country or the world. The price that the company should charge in a specific country depends on many factors, including economic conditions, competitive situations, laws and regulations and development of the wholesaling and retailing system. Consumer perceptions and preferences may also vary from country to country, calling for different prices. Cost plays an important role in setting international prices. Travelers are often surprised to find that goods, which are relatively inexpensive at home, may carry out higher price tags in other countries. A pair of Levi's jeans selling for $30 in the United States goes for about $63 in Tokyo and $88 in Paris.

In some cases, such price escalation may result from differences in selling strategies or market conditions. In most instances, however, it is simply a result of the higher costs of selling in foreign markets: the additional costs of modifying the product, higher shipping and insurance costs, import tariffs and taxes, costs associated with exchange-rate fluctuations and higher channel and physical distribution costs. PEOPLE Together with product, distribution and promotion, people is one of the principal elements of the marketing mix. The people variable reflects the level of customer service, advice, sales support and after market back-up required, involving recruitment policies, training, retention and motivation of key personnel. The role of personal selling is especially important in many business markets, particularly those in which the purchase is deemed risky because of its size, value or complexity. Levi Strauss & Co. puts high importance on the people variable.

Because Levi's has set up Levi's outlets all over the world, they are able to give highly specialized and helpful advice to customers. Also, customer service will generally be a lot better than in department stores, because the customer will always be able to get what he is looking for, as Levi's outlets tend to have all the different Levi articles in stock, which you will never find in a normal department store. Levi Strauss recruitment tactics are usually very motivating and quite unorthodox. As taken from an Internet career database: "Ask any Levi Strauss & Co. employee and they " ll tell you: working at Levi's is a truly unique experience...

If selected you " ll join a global team of 30,000 people involved in, or supporting, the design, creation and marketing of products, carrying one of the world's most recognizable brand names". This kind of recruitment is not very common in the business world and it reflects the connection that Levi's builds up with its employees. Levi's is also one of the very few companies where employees are actually encouraged not to wear suits and ties, but instead only casual wear (in most countries, not all). This will have a positive effect on the work atmosphere, or so Levi's believes. Furthermore, Levi's tries to motivate their personnel in various ways: First of all, they create a group feeling and allow workers to dress casual, which is a quite successful method in itself. Secondly, in 1996, Robert Haas, chairman and CEO of Levi Strauss, announced the Global Success Sharing Plan, which called for a "one time cash payment of approximately a year's salary to all employees around the world, if in the next six years the company achieves its cash flow target of $7, 6 billion".

This of course greatly motivates all employees all over the world and will incite them to do their utmost for the company. It also has the positive side effect of making the employees more likely to stay with the company (as nobody wants to miss a year's salary). Over the years, Levi Strauss has offered various incentives to its employees, including generous stock ownership and redemption plans, as well as innovative benefit packages: in 1992, the company became the first Fortune 500 company to offer full medical benefits to all unmarried partners of its employees. Dockers has similar marketing strategies to Levi's, partly because they are owned by Levi Strauss & Co... They too have specialized Dockers outlets in which you can buy any Dockers article that you can possibly desire, as well as get the right kind of assistance. Although they are not as widely spread as in Levi's, but Dockers as well encourages casual wear for their employees.

A reason for Dockers being a little less excited about this approach is that the age group they aim at, is slightly older than the one for Levi's and also because their image is rather classy. PROMOTION Modern marketing is not only about the product, pricing it and making it available to target customers. Companies must also communicate with their customers, and understand them. A company total marketing communications program is called the promotion-mix -Advertising: any paid form of nonperson al presentation and promotion of ideas, goods or services by an identified sponsor. -Personal selling: oral presentation and conversation with one or more prospective purchasers for the purpose of making sales. -Sales promotion: short-term incentives to encourage the purchase or sale of a product or service.

-Public relations: building good relations with the company various publics by obtaining favorable publicity, building up a good "corporate image", and handling or heading off unfavorable rumors, stories and events. The Levi Strauss company starts like others company with a clear target market in mind, which is the person who is gone buy the product because what ever is gone happen it is the company who decide her target especially by setting price. Determining the response sought: Once the target audience is defined, the marketing communicator must decide what response is sought. It may be in any of six buyer-readiness-states. When developing the promotion-mix the company must choose a strategy depending on the buyer-readiness, Levi Strauss which is a consumer-good company will put more of their funds into advertising, follow by sales and promotion, personal selling and then public relations.

Consumer goods The promotion done for Levi's jeans in the stores, is mainly done by point of sales materials. In this way of promotion, presents are given with the item purchased. On the other hand, Dockers promotion doesn't consists on free gifts, but more on the service rended. Remember, next time you go to a Levi's store that as soon as you enter the store, you will immediately have somebody asking to help you finding what you are looking for. They will even tell you what suit you better which size will fit best, because they want you to have this image of Levi's as a company that not only sales clothes but also gives you this feeling of being important, which is true because you are the one who is going to buy their product.

Jeans are no longer the cheap casual wear for the average people it became the uniform of the street Levi's is not the only one to have understand the power of this strong material, designers such as Versace, Gaultier, Armani, thus the company must regenerate herself that is also one of the reasons why Levi's decide to change a bit their product simply because people want more of this material, which created the Dockers pants. To work for Levi's you have to love Levi's as you can imagine all employees come every day to work wearing Levi's jeans or Dockers pants. Today Levi's is represented all over the world. The Levi's collection contains jeans, Dockers pants, jackets, sweaters, shirts, belts and others for both men and women. Levi's advertising is as we can imagine focused on the target market, for example when the company advertise his 501 jeans it try to reach the largest amount of young buyers.

Thus, after some research they discovered that an important number of teenagers watch MTV, TMF and all kind of entertainment programs. Ads can also be seen all over the bus stops where most of the time they only show the product or just the red Levi's tab. You have different television ads of Levi's and all of them show the importance of the Levi's jeans and how life would be without it. Let's remember for example the ad of last year, where this perfect guy falls from his boot and start to drawn but luckily for him his was wearing the 501 jeans, which attracted the sirens who after touching him everywhere, they give him the kiss of life and of course they want something in exchange, so they started to unbutton his jeans but of course he prefer to keep his jeans, so he escape from them. Another ad which also shows a young guy taking the padlock from his bike to attach his jeans so that it doesn't get stolen. Thus the ads want to express the feeling that life doesn't worth it with out a Levi's jeans.

PLACE Distribution decisions and processes are among the most important elements of the marketing mix. In fact retailers often say that the critical factors in retailing success is location. A retailer location is the key to attract customers. That is why most Levi's stores are located in downtown. The atmosphere of the store, the little thing that you get by going to this store and not another, also makes the customer choose this particular shop. Levi's as a renova tive company, has found a new trick: imagine for a moment a woman looking for a pair of jeans, of course it must be the perfect shape, the jeans must make her look as much as possible like the most desirable human being.

That is where Levi's decide to use the technology of some software programmer this end up in a way of making custom-fitting jeans by computer. In 1994 the new idea was launched in four US stores. A month later seven other stores where equipped with the software, even though the jeans cost $10 above the normal price most women still agree to pay the extra amount. Thus this little software could change by a significant amount the level of sales and the image of the store. The atmosphere of the store is also an important element which influences consumers' judgment about the store but also about the brand that why all Levi's stores look approximately the same. Bibliography

Bibliography

Levi's Strauss & Co. webpage web Levi's Jeans webpage web Dockers khaki pants webpage web Armstrong G and Kotler P, Principles of Marketing, seventh international edition, 1996.
Dib b S, Siskin L, Pride W and Ferre l O. C, Marketing: Concepts and Principles, third European edition, 1997.