LEVI’S SIGNATURE STRETCHLevi’s US sales in 1996 were $7.1 billion. In 2001, sales had declined dramatically to $4.25 billion. Many teenagers and tweens view Levi’s jeans as being for middleaged consumers. And while the major slide appears to have halted, with annual sales in the $4 billion range, Levi’s is still vulnerable. The most recent quarterly data show Levi’s sales down by 6 percent. How did this happen? Super success in the 1980s led to complacency and a lack of focus on evolving customer needs. Levi’s created women’s jeans from men’s patterns, resulting in a poor fi t. It treated teenage girls and women as one segment, producing jeans too tight for many moms and too high-waisted for the teens. It also ignored emerging style competitors such as Calvin Klein, Seven, and Blue Asphalt. Trendy and stylish competitors continue to emerge in increasing numbers at various price points, and this has not helped. As one 19-year-old consumer noted of Levi’s, “They’re too plain. There’s just not enough style to them.” Various efforts have been made by Levi’s to stave off the decline and launch a comeback, including new advertising and new product designs to bolster its image and relevance, particularly among younger buyers. Their “Dangerously Low” campaign is one example. Levi’s has worked on distribution. For example, it tried to get into specialty chains, which are more popular with younger consumers, but met with resistance. Some chain buyers don’t think the brand passes the “cool test.” The VP of marketing for Wet Seal, Inc., said the chain will not carry Levi’s because “it’s not on the radar screen of young women now.” One bright spot has been their push into upscale chains such as Bloomingdales and Barneys, with their premium lines. However, their success there has been spotty as well, with retailers like Neiman Marcus and SAKS Fifth Avenue no longer carrying the brand. Levi’s most recent attempt to revitalize its U.S. presence has been to restructure the product line into the following collections:Levi’s Capital E. This is their premium offering, selling for $138 to $195 in their Levi’s Stores and higher-end retailers, such as Barneys.• Levi’s 501 Original. This is their core brand offering and anchors their entire product line. It sells for $46 to $78 at retailers such as Macy’s, Kohls, and JCPenney.• Levi’s Eco. The Eco is their newest offering, launched in 2006. It is made of all organic cotton and sells for $30 to $68.• Levi’s Vintage Clothing. LVC is custom-made, one-of-a-kind replicas of Levi’s bestselling and most popular jean styles from the past. They can be ordered at www.levi.com and sell for $150 to $500.• LeviStrauss Signature. This entry, launched in 2003, is their low-priced jean designed to tap the mass market. It has styles for the whole family and is sold through mass merchandisers such as Wal-Mart and Kmart in the $20 range. PDF created with pdfFactory Pro trial version www.pdffactory.com The Signature line has been particularly important for Levi’s over the past several years. It leverages the fact that 30 percent of all jeans are sold through discounter retailers. While overall, Levi’s sales have been fl at or slightly declining, the Signature line has seen double-digit growth and accounts for about 9 percent of Levi’s sales. In what Levi’s calls a “mass-tige” strategy of bringing its fashion and the unique authentic Levi’s cachet to more people, this latest move takes its jeans “down market.” Levi’s Signature line has partnered with NASCAR, has its own Web site, and benefi ts from the distinct massmerchandiser channel of distribution. Critics argue that the Signature line will cannibalize sales of the core lines. They also argue that going discount means an even bigger hit on Levi’s image. For example, the reaction of the Wet Seal marketing VP was, “The brand’s not cool when you’re at Target for detergent and you see a rack of Levi’s.” Levi’s remains positive. As one executive noted, “People are predisposed to the brand. So, if we get the product right, they’ll buy.” Consider another comment by a Levi’s executive when asked if the Signature line hurts Levi’s credibility in the premium market: That’s [the premium market] such a different customer. Very few brands have the elasticity that we have, but we have it, so we should use it. It is the heritage of our company. That’s what makes it so strong and why people of all socioeconomic levels want a pair of Levi’s. We have the original patent on fi ve-pocket jeans. The other brands are just copying us. One looming problem for Levi’s is that Wal-Mart recently launched its own private-label brand, which will compete directly with LeviStrauss Signature. One expert in the area suggests that while LeviStrauss Signature was a good idea, it has done little to differentiate itself. He states, “The real issue is that if the product [LeviStrauss Signature] is generic enough, the store [Wal-Mart] will do a better turn for itself by developing its own private label product.”
Discussion Questions
1. Do you think that Levi’s was correct to keep the Levi Strauss name on its Signature line? Or would it have been better off creating a completely new brand name? Present both sides of the case. Take and justify a position.
2. What do you think Levi’s image is among the following? What are the marketing implications of your response?
a. Tween girls (aged 10 to 12)
b. Tween boys (aged 10 to 12)
c. Teenage girls
d. Teenage boys
e. Women aged 21 to 35
f. Men aged 21 to 35
g. Women aged 36 to 55
h. Men aged 36 to 55
3. Do you believe that the Levi’s brand is as “elastic” as Levi’s executives believe it is? Or, have they “overstretched” the name with the Signature line?
4. How can Levi’s use each of the following to enhance its brand image?
a. Emotion
b. Humor
c. Maslow’s needs
d. McGuire’s needs
e. Brand personality
f. Self-concept
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