Cal Stripling

MGT 409-001
Levi’s Case Analysis
In 1873, Levi Strauss and Jacob David received a patent for riveted denim pants,
thus starting the Levi Strauss & Co. business. Since then, the Levi Strauss & Co. business
has survived the Great Depression and have been widely associated with western culture
when John Wayne wore their jeans in Stagecoach, which led to other stars, such as
Marilyn Monroe, Bruce Springsteen and Marlon Brando, featuring their brand for large
occasions. Despite the century of success from the Levi brand, from 1997 until 2001,
they faced a decline in company sales from $7.1 billion in 1996 to $5.1 billion 1999. The
case study states that their sales by the end of their 2001 fiscal year had dropped even
further to $4.3 billion. Their brand market share in jeans noticed a significant drop as it
went from 18.7% in 1997 to 12.1% in 2002. Since then, there have been copious amounts
of competitors enter the market and have been significant threats to Levi’s, which left
Levi caught in the middle between the premium high-end jeans competitors and the
affordable lower-end jeans competitors. The problem that Levi’s is currently facing is
whether or not they should start producing jeans to fit the lower-end market segment and
mass market, Wal-Mart, and if their brand premium will be affected by it.
After reviewing the Levi’s case, I’ve performed a SWOT analysis of the
company. Levi’s business has a good amount of strengths that start with their very
recognizable brand name that was rated the “number one apparel brand for brand
awareness and brand retention” (51). Levi’s investments in their advertisements have
been very successful as well, which has allowed them to create a large consumer base.
Despite their various strengths, there were some weaknesses of Levi’s that could lead to
be problematic. As said above, Levi’s is trapped in the middle of two distinct jean
markets that sell either premium high-end jeans or affordable low-end jeans. Levi’s jeans,
however, don’t “offer the same image or design as the high-end brands or the complete
wardrobe selection of the vertically integrated retailers.” They also don’t have any
presence in the mass market, which plenty of their competitors do. Since they don’t have
that presence, however, it could also be construed as an opportunity for Levi’s. The main
threat that Levi’s faces is the fact that the buyer power in the jean industry is extremely
high with multiple competitors along the price and quality spectrum.
The strategy that Levi’s has incorporated would definitely be considered
differentiation, which means they’re “creating differences in the firm’s product or service
offering by creating something that is perceived industry-wide as unique and valued by
customers” (Miceli, ppt 2017). I believe this because they have several different products
that all have different price levels. This strategy helps create a larger consumer base as
low and high-income homes can afford some type of Levi jeans. This gives them a
competitive advantage, which the case study says is “worldwide recognition of the Levi’s
brand name, its commitment to ethical conduct and social responsibility, and its focus on
product innovation, quality and value” (57).
I believe that Levi’s should not sell at Wal-Mart. I think this because selling their
brand at Wal-Mart could hurt their world-class brand reputation. This move will be seen
as a desperation attempt to improve sales, which could hurt them. Making a deal with
Wal-Mart could upset other retail companies that Levi’s currently has deals with, which
could lead to a shortage in orders from other major retailers. Lastly, there are already
competitors at Wal-Mart that would be hard to beat as they’ve already made their mark
on the Wal-Mart consumers. I think it’s too risky for Levi’s to pull off.