Levi at Wal-Mart Case Study


SWOT Analysis of Levi at Wal-Mart

Levi Company has its own strengths. First, the company had createdits name and brand in the market and the world allover having been inoperation since 1873 (Levi’s Case). The company also had made dealswith specific suppliers like cone mills who provided them with thedesired demin products. This meant that they could continue with massproduction with no particular challenges. The company also enjoyedexcellent and strategic product promotion avenues and mechanisms(Levi’s Case). Over the years the company had partnered withmusicians like Mariah Carey, movie stars and models to promote itsproducts. The company also utilized major mass media and print mediain its promotional activities.

Despite these strengths the company had a number of weaknesses. Theleadership helm was not futuristic and did not keep abreast with thechanging tastes and preferences in designs as well as shop-to-shoppromotion strategies like its competitors. It was also absent in allmass stores thus reducing its market share (Levi’s Case). Thecompany also was mired in debts having accumulated total of US$2billion by 1999 (Levi’s Case). The company also maintainednon-favorable pricing options maintaining a minimum of $20 per pairof jeans as compared to the much cheaper options offered by Wal-Martand other mass merchant stores.

The company’s opportunities were the rejuvenated jeans market withan estimated growth of 2-3 percent and a wise customer base made upof men and women from all walks of life including musicians, models,casual laborers, working class and political class (Levi’s Case).The threats facing the company were stiff competition from otherapparel and jeans companies such as Wal-Mart, Target, Calvin Klein,Fubu, Ralph Laurent, Wrangler and lee jeans (VF Corporation) andTommy Hilfiger (Levi’s Case).


Levi’s generic strategy was based on product differentiation at aconsiderable cost. The cost, however, was a bit higher that thatprovided by its competitors like Wal-Mart who charged their jeansless than US$20 (Levi’s Case). Product differentiation was the maingeneric strategy that gave the company a competitive advantage. Theproducts offered were Levi’s vintage, silver tab, red tab,engineered jeans, premium red tab and other products such as jackets,hats and bags. Vintage clothes retailed at $100, engineered jeans at$50-80 and red/silver tabs at $25-50. Product differentiation wasfurther enhanced by letting retailers specialize on a specific lineof product. For instance, retail shops selling red tabs could notsell vintage clothes (Levi’s Case).

Selling at Wal-Mart

Based on the market share taken by the chief competitor, VFCorporation’s Wrangler and Lee, in the mass merchant stores, Levineeded to take the option of selling its products at Wal-Mart. Thecompany would boost its sales from the 2001 net sales of US$4,258,670billion to a higher margin based on the expected favorable priceschedules of around $25 per pair from the $250 initial price level.