Levi’sat Wal-Mart: a Case Study
Strengths, weaknesses, threats and opportunities at Levi Strauss
Oneof the strengths that Levi Strauss possesses as a company is theability to adopt marketing strategies. For Levi, marketing is anessential tool in the efforts of promoting its brands and attractmore sales. Levi Strauss Company recently launched a series of itsbrands with new appeal meant to attract more consumers, with an aimof improving its declining sales. Moreover, among its marketingstrategy Levi Strauss came up with new advertisements that wouldgenerally boost its brand image. It is important to note that LeviStrauss brand is an established global brand. For this reason, italready has a customary consumer market that can be broadened by newand effective marketing strategies.
However,Levi Strauss faces several threats in the market that are a majorcontribution to its declining sales. The high end consumer market forinstance is dominated by other new trends such as Calvin Klein, TommyHilfiger, Raph Lauren Polo as well as Diesel. All these brands arethe major competitors for Levi Strauss particularly in the high endconsumer market. In addition, it faces challenges with other brandthat are vertically integrated. Among these vertically integratedretailers are American Eagle, Gap, Abercrombie, Outfillers and Fitch.All these indicate a market where competition is at its best. Hence,there is a great need of coming up with new fierce marketing andpromotion strategies aimed at differentiating Levi Strauss brandapart from other brands.
Additionally,Levi Strauss faces some new market entrants mainly from some popularretailers. These retailers have come up with similar products andalso target the same market segment thus offering new threats. It isalso important to note that on top of offering the same products,these retailers offer similar products at reduced prices to the samemarket. Some of these retailers are Target, Wal-Mart, JCPenny as wellas Sears. All these challenges have contributed heavily to thedeclining sales at Levi Strauss even as it attempts to offer heavydiscounts to the end consumers.
The generic framework of Levi Strauss
Basedon the generic strategy framework, Levi Strauss currently utilizesthe cost leadership strategy as a way of gaining competitiveadvantage. The reason why it’s the cost leadership strategy isbecause of the reduced costs of production that was implemented bythe management. The main manufacturing plants of Levi Strauss weremoved to cheaper offshore sources with that main intention ofreducing the cost of production. This strategy was adopted after thecompany was observed making losses and declining in sales since 1997.Reducing costs while at the same time charging industry prices thatare considered average is meant to boost the productivity of anycompany is seen as the best approach. This is because the a companylike Levi Strauss could come up with new prices to the end consumers,which are considered to be friendly. Additionally, this strategycould help Levi Strauss also come up with effective discountingstrategies in its products without necessarily shrinking the profitmargin.
Furthermore,Levi Strauss came up with new pricing strategies that were aimed atincreasing the market share. It is important to note that LeviStrauss faces fierce competition from top level competitors, thevertically integrated competitors as well as the new similar brandsoffered by popular retailers at cheaper prices. Cost leadershipstrategy was therefore seen as an effective tool of handling suchchallenges as well as the new threats through implementations of apricing strategy. However, this strategy best works when a company isable to offer reduced prices to the consumers while at the same timemaking a reasonable profit margin. In Levi Strauss, the cost andpricing strategy failed since the company was still making hugeamounts of losses even after its implementation.
Relationship evaluation between Levi Strauss and Wal-Mart
LeviStrauss should definitely sell its products at Wal-Mart in its questof reviving its brand image and also sales. This is mainly becauseWal-Mart is a top recognized retail store that has a big marketshare. In addition, Levi Strauss shared a working a previous workingrelationship with Wal-Mart, making the process of integration easier.For this reason, there is a great need of coming up with new andimproved value added products that can be sold in this retail store.Levi Strauss can improve product value by developing and creatingseveral innovations especially in the jeans and apparel products. Inaddition, such product could be improved further to compete witheffectively with other similar trendy products in the market. Thereis a positive analysis for growth in particular products such asjeans and apparels that are offered in by Levi Strauss.
Wal-Martretail store is recognized as a fast growing channel for theparticular products such as jeans and apparels. This is because it isknown as a top leader style and fashion for both men and women wear.Additionally, other retail competitors such as Kmart were kicked outof the market after they filed for bankruptcy, due to intensecompetition as well as a soft holiday. Hence, Levi Strauss will haveadded advantages when previous relationship is rekindled withWal-Mart. Market consumers will have an advantage of gaining anexciting shopping experience while at the same time getting LeviStrauss’ products, which are fashionable and available at reducedprices.