Abstract

As the competition in the world of business increases, it creates a need to understand the various reasons behind which affect the sales of different

products. A suitable analysis of the industry and the consumers is needed to be done in order to recognize the problems and to give the solutions. This

report aims for identifying the problems faced by the brand Levi’s resulting to decreasing sales of its product ‘jeans’ and also provide

recommendations for future growth of their sales in the market. Thus this report can be used for developing a sales strategy appropriate for the market

in order to develop its business. The report includes the study of various outlets of the Levi’s store in the concerned region along with primary and

secondary data collection, focus group discussion and a survey which collectively help in the formulation of conclusion and recommendation. This

project is carried out in national capital region of India i.e. Delhi and so is applicable to this region only.

Acknowledgement

We would like to acknowledge the help of Professor Kaushik Datta who has been very supportive throughout the study. Without his consistent mentoring, this report would not have been a success. I would also like to express my gratitude to the Levis store owners and the employees who were courteous to us and helped us in our study.

Constructive criticism and feedback would be highly appreciated.

About LeviLevi Strauss & Co is a privately held American clothing company known worldwide as Levi's. It was founded in 1853 when Levi Strauss came from Bavaria to San Francisco, California to open a west coast branch of his brothers' New York dry goods business. Gradually, due to its durability, the Levi’s jeans gained popularity. In 1873 it achieved a patent for jeans which were riveted and started to sell them. Different customers were targeted for the expansion for jeans product. In the year 1912, it sold its first nationally, Coveralls, which was a children denim playsuit. In the year 1935 the first blue jeans for women was sold. In 1940, the employees in the defense industry were issued denim work clothes by the government of U.S. By 1977, Levi Strauss & Co. was the largest jeans manufacturer. Its profits reached nearly $1 billion. Most of the denim market was captured by it. It provided a wide range of products, to target various market segments and capture more demands. Thus it enjoyed worldwide dominance in the jeans market with its product line of more than 500 products. Levi’s main competitors were Calvin Klein, VF Corp (Lee & Wrangler), Tommy Hilfiger and Gap Jeans,The company created their first pair of Levis 501 Jeans in the 1890s, a style that went on to become the world's best-selling item of clothing. From the early 1960s through the mid-1970s, Levi Strauss experienced significant growth in its business as the more casual look of the 1960s and 1970s ushered in the "blue jeans craze" and served as a catalyst for the brand. Between the 1950s and 1980s, Levi's jeans became popular among a wide range of youth subcultures, including greasers, mods, rockers, and hippies. By the 1990s, the brand was facing competition from other brands and cheaper products from overseas, and began accelerating the pace of its US factory closures and its use of offshore subcontracting agreements. Levi’s failed to predict sales and identify proper market segment thus loosing sales and market share in many countries across the globe.

Problem Formulation

Levis’ was one of the leading brands in India, which is known for its denim jeans. Levis’ was top brand for denim jeans for a very long period of time. But the problem with Levis’ started when it started to lose the market share which was due to stiff competition that it faced from the upcoming brands. Levis’ was also not able to cope up the latest fashions in the Jeans segment. It was the introduction of the Chinos or the colored jeans and in the female market more selling of leggings and all. Along with that people also moved towards the athletic wear. Levis’ stood by its old fashioned pure denim segment trying to create the nostalgia for the segment in the hope to make a comeback. They also have a series of failed brands like denizen, 501, etc. which showed the downfall of a great brand. The denim had become obsolete and was on decline but Levis’ was too stubborn to accept this fact and had to face the known but ignored results.

These were some of the reasons that we came across from various sources that were published on what were the possible reasons for the downfall of Levis’. So using these reasons and the conditions we made a hypothesis for the possible reasons for the downfall of Levis’.

The hypothesis was that, Levis’ started off in India with huge sales and became top brand in the denim Jeans segment. It ruled the market for a very long period of time. But suddenly it faced decreased in the sales, failed products, and lost the market share. So what were the possible reasons for these events? Was it because the consumer preference changed? Or the new brands that entered the market, like UCB, Mufti, etc. gave a stiff competition that was too much for Levis’ to handle? Or was it because they were unable to change with time and were stuck with the denim only and were not able to address to the changing needs of the customers?

These are the problem that Levis’ face currently in every market.

MethodologyThe problem that Levis’ is facing is quite clear and unambiguous, but the reasons to the problem or the root causes are quite not clear and every mouth has its own argument to make. Is the problem due to flaw in the decision making process at the top level or market just moved on from Levis’ and there was nothing that they could have possibly done to save themselves.

So in order to find out the causes, we followed some basic techniques of problem identification and results were found out.

What we did first was the collection of secondary data about the problem faced by Levis’ and what are the possible reasons that were given. This data made the base of our study as almost every study had many common points saying that they were not able to cope with the changing market and were stuck with their old fashioned denim only. And also they were too reluctant to accept this fact and move on from denim. This was what the article shows, but was it true. Had Levis’ turned to an old man’s brand?

To find this out we had conducted a focus group discussion with the participants aging from 23-26 years. The age segment was chosen because these are the experimenters and are prone to switch if given what they actually expect from the product. From the questions and the answers received from the discussion some key points were taken out. And a questionnaire was designed from the point of discussion and relevance from the discussion. The questionnaire was floated and then the analysis of the responses was taken to find something conclusive.

Along with the discussions, questionnaire and the secondary data collection, we visited the Levis’ stores. From there we took the data like: appearance, how the jeans were stacked, lighting of the store, staff quality, staff behaviour, the in store advertisement of the new product like Commuter and new jeans for female Live in Levis’ and how these were positioned in the store. This was then compared with the competitors like UCB, Zara, Mufti, Van Heusan, etc. And the difference was noted.

This is the methodology that we followed to find out the possible cause out of all the given reasons that could be the major factor for the decline of such a great brand which started something revolutionary and now may be become victim of its own creation.

Literature Review

According to the recent studies, Benetton has surfaced as the India’s top international fashion brand overtaking Levi’s in the financial year-13. The competition in the fashion industry in the country is getting hot. In the financial year-13 Levi’s has shown a decline of around 35% in the revenues after it cut down its brands like Signature, Sykes, Denizen and Dockers also closing dozens of stores across the country. While Levi’s slowed their operations, other brands started to work more aggressively on growth, style and innovation and following global trends so as to position themselves as “Young Brands”. Clearly their strategy to limit the operations backfired.

In the financial year-12, Levi’s reported sales of INR 741 crores which were almost double than their nearest rival. And not just Benetton, but other brands like Zara and Tommy Hilfiger has also shown 20% and 56% jump in their revenues from the previous year. Past study of apparel brands in India suggest that the market has gone up tremendously but Levi’s the big player has lost its loyal customers to various brands.

www.fortune.levi.strauss.chip.bergh.com

This article explores the various strategies which Levis is trying to use to make up its loss in the market share. It does criticize the company for not keeping up to the times in terms of modern wear. It failed to capitalize on the rise of colored denim for women and tailored jeans for women. It is doing all it can to capitalize on the nostalgia by emphasizing its glorious past in advertisements and promotions. Even though it is trying to look to the past, it is trying to look to the future as well. It has introduced new brands such as “7 for all mankind” and true religion to reinvigorate itself in the market. Lower end rivals such as Lee and wrangler are nibbling around its market for a long time. If the policies undertaken by the company do not bear fruit, then it might be a disastrous end for Levis.

www.Sanfrancisco.cbslocal.com

The age of denim is long gone according to this article. Consumers are now experimenting and moving towards much newer trends such as leggings and athletic wear. Also if the company still wishes to stay in the same segment. It has to face a stiff competition as the number of players in denim has increased exponentially. Also there is a lot of variety in the denim segment. The only viable option for denim is to diversify as much as possible. They should accept the denim is on the decline and tackle the problem by investing into athletic wear and leggings. Instead of investing in trends which are popular now it should try and invest in trends which are on the way up.

www.Ninamunk.com

(How Levi trashed a great American brand)

This article blames internal factors instead of external factors for the downfall of Levi. She basically blames Robert Haas. He basically placed the future of the company in the hands of four people, himself, his uncle and two cousins. This concentration of power has not been good for Levis. He is also accused of wrong decisions. He placed extra value on ethics rather than on profits. He believed that if companies follow ethical practices then the

company will be profitable in the long run. When companies were jumping into China for higher profitability, he did not let his company enter China blaming the poor human rights record of China.

www.guardian_howlevishasfallen.com

This article basically accuses Levi’s of engaging in practices which are beneficial in the short run. It has been involved in complaining about many trade infringements. There are too many companies which Levis says is copying its style. Though there is nothing wrong in pursuing such infringements but on the whole it is a waste of time and money. In one such case Levis was awarded a mere 5000 dollars. This sum was nothing in comparison to the money they had spent on the legal process. Some even say that it is a dying gasps of a flailing company. Instead of wasting time the company should focus on the product. There was a time when jeans were looked as a work garment but not anymore, it is more of a style statement today.

www.nbcnews.com (Denim is in real danger of going out of business)

This article claims that casual wear is going towards more comfort and denim is finding it hard to find its place. It also claims that teens are moving towards legging and athletic wear and Levis is failing to capitalize on this. Denim refuses to enter into yoga wear which will hurt its revenue in the long run. Right now the focus is also on the innovation of fabric technology which Levis is not getting into. To explain the loss in market Levis believes that the demand of denim is cyclical. But this is not true. Denim is on the downfall for the long run. Athiesure might have a lasting effect and might replace denim in the long run.

www.forbes.com –sites-2014/04/22”iconic US jeans brands are not resonating with millennia’s”

This article claims that the people who are now purchasing denims are in a certain age group only. This article claims that the age group is between 35 to 49 years of age. Levis has taken a long time to accept this reality. It no longer resonates with millennial and it is now trying to do some damage control. It has recently let go of its marketing agency of five years “Wieden &Kennedy”. It has now launched a global social media campaign with the handle “Make our mark”

Research Problem

After seeing glory for all these years, why could Levi’s not sustain its popularity? The entry of competitors in its market segment turned a classic to a lost case. How could a brand so appealing and well defined lose its luster? The sloppy approach of the brand to combat its competitors shows how tired the brand had been. For instance, the advertising done by Levi’s for its Silver-tab range was one of the most hated advertisement. It was considered to be ‘insulting’ and critics claimed that it ‘lacked branding’. Similarly, the advertisement to promote Levi’s low-rise jeans which was released in 2002 had also received a negative response from the audience.

The company failed to make it into the top 75 most valued brands in the Inter-brand 2000 Brand Valuation Survey while its rivals were there in the list. These being few of the many reasons for the decline and fall of the American classic brand Levi’s. Now the question is,

WHY LEVI’S JEANS IS LOSING TO COMPETITORS?

Research DesignDESCRIPTIVE RESEARCH DESIGN

In this research design, the objective of the study is clearly defined and has accurate method of measurement with a clear cut definition of population which is to be studied.A descriptive research design has been used in this project, because consumer’s feedback was necessary for obtaining the data and understanding the changing behavior of consumers towards denim and specifically Levi’s.

SAMPLING DESIGN

A sample design is a definite plan for obtaining a sample from a given population. It refers to the technique adopted in selecting items for the sample. The main constitution of the sampling design is as below -

1. Sampling Unit2. Sample Size3. Sampling Procedure

SAMPLING UNIT

A sampling framework is developed for the target population that will be sampled i.e. who is to be surveyed. For our study the sample unit consists of males and females of the 20 to 45 age group, irrespective of their education level.

SAMPLE SIZE

It is the substantial portion of the target population that is sampled to achieve reliable results. Here, it is 35 respondents.

SAMPLING PROCEDURE

The procedure to choose the respondents to obtain a representative sample, a non-probability sampling technique is applied for the target market.

DATA COLLECTION

PRIMARY DATA

The primary data are those data, which are collected afresh and for the first time and happen to be original in character. The primary data to be collected for the study are -

QUESTIONNAIRE

A set of questionnaire is prepared so as to collect information related to the pre-determined objectives.

SECONDARY DATA

Secondary data was obtained from journals, magazines newspapers, books and the internet.

FOCUS GROUP STUDY

An FGD was conducted prior to forming the questionnaire to understand the factors which people emphasize on while buying denim.

RESEARCH INSTRUMENT

Based on the FGD, for the survey research, a structured questionnaire consisting of open-ended as well as close-ended questions was used.

PLACE OF STUDY

The study and survey is done in national capital region only.

DATA ANALYSIS

FGD

There was a brainstorming session conducted within the group in which we selected a few important attributes of the needs of the customers regarding the brand and its product. These attributes were appearance of the outlet, sales person behavior, complimentary clothes, p rice, fit, design, fabric, color, brand, advertisements, Social status, durability and ease of washing. A list of questions and probes was prepared for the focus group discussion which is as follows.

1) What are the qualities that you look for in jeans?a) Out of these qualities, which qualities are more important to you?

2) What do you think about the jeans of Levi’s?a) What qualities do you like in Levi’s jeans?b) What qualities do you not like in Levi’s jeans?

3) What do you think about the brand Levi’s?4) Would you prefer buying Levi’s jeans over other brands jeans?

a) What would make you buy the jeans of Levi’s?5) Does brand name really matters you in a jeans? 6) Do you feel that the brand has lately lost its value?

Three focus group discussions were conducted consisting of 7 students of the Institute of Management Technology, Ghaziabad in each group. The participants were both male and female with the age range of 23 to 28 years. Each of the discussion went on for around 30 to 45 minutes.

These discussions helped us narrow our list of attributes to the more important ones from the above list. The selected attributes are p rice, fit, design, fabric, color and brand. Also we were able to map the perception of the brand Levi’s to the customers. Some results were derived on the basis of this focus group discussion. Consumer doesn’t mind moving towards other cheaper brands in clothing. There is lack of differentiating factor in the branded jeans of Levi’s as compared to other lower brands. The Levi’s brand for jeans does not belong to the premium club of jeans brand anymore. The value of the brand is gradually declining in the mind of the customers. This result of the focus group discussion is the basis for preparing our survey questionnaire for market survey.

DESCRIPTIVE DATA ANALYSIS

Given below is the data from the survey which we conducted:

Number of respondents

Male 20Female 15

From the number of respondents of the questionnaire, it is observed that 57% are males and 43% are females and all of them are a part of jeans-wearing population.

How often do you buy jeans?

Monthly 1Quarterly 13Half-yearly 8Yearly 13

In terms of buying frequency, 37% respondents buy a pair of jeans yearly as well as another 37% respondent’s buy a pair of jeans quarterly. While 23% respondents buy a pair half-yearly, only 3% buy a pair of jeans every month. From this it is clear that the frequency of wearing Denim is higher than the frequency of buying denim and people spend less on jeans as compared to spending on other clothing items.

How much do you intend to spend on a pair of jeans?

0-999 41000-1999 52000-2999 20

3000 or above 6

In terms of money spent while buying a pair of jeans by a customer, results show that 57% of the respondents prefer buying jeans at a range of 2000 to 2999 rupees. 17% would be willing to spend more than rupees 3000 on one pair. 14% of respondents would go on to buy a jeans of 1000-1999 rupees while only 12% would prefer to buy a jeans priced below 1000 rupees.

From this data, it can be observed that majority of people would prefer buying jeans in the range of 2000 to 2999 rupees. Levi’s jeans are priced slightly above this margin. That can be one of the major reasons towards the loss of sales of Levi’s jeans.

Most preferable brand of jeans   

Pepe Jeans 3Levi's 3Killer 5Mufti 6

Spykar 6Zara 1Lee 4

Wrangler 6Forever 21 0

Flying Machine

1

   

In terms of brand prefernce, respondents’ opinions are very diversified and it shows that competition is too high in this segment. Most prefered brands currently are Mufti, Spykar and Wrangler with 17% each followed by Killer Jeans at 14% and then we have Lee at 11%. Pepe Jeans and Levi’s both have a 9% preference share. So, these are the competitors of Levi’s. From this data it is clear that consumers don’t have much brand loyalty in denim market and try the latest fashion design and colours irrespective of the brand. The competition is high and variations in the product leading to POD will decide the market leader.

Factors influencing the decision to buy a pair of jeans

PriceNot important 5

41210

Important 4

11% respondents feel that price is the most important factor.

FitNot important 2

43

10Important 16

46% of the respondents consider fit as the most important factor.

DesignNot important 1

41115

Important 4

11% of the respondents consider Design as the most important factor

Fabric Not important 2

68

13Important 6

17% of the respondents consider Fabric as the most important factor

ColorNot important 3

45

17Important 6

17% of the respondents consider color as the most important factor

What feature of Levi’s attracts the most?

Brand name 3Price 4

Fit 10Design 6Fabric 8Color 4

29% of the respondents feel that the most attractive feature in Levi’s Jeans is its fit while 23% feel it’s the fabric. The design of the jeans seems attractive to 17% respondents while the price and color is attractive for 11% each. Only 9% feel that Levi’s is an attractive brand name. This shows that Levi’s has to work a lot make its brand name worthwhile. This can be because Levi is being considered as a brand of the past. The youngsters do not connect with the brand as much as their parents do.

What feature of Levi’s should be improved?

Brand name 6Price 4Fit 4Design 7Fabric 5Color 9

26% of the respondents say the color of the jeans should be improved, which clearly means new and trendy revamp of the brand is a must at this stage. 20% think that design is outdated. 17% suggest that the brand name is not up to the mark. This shows that the overall look of the jeans should be enhanced (which comes out after each new variety of jeans) and brand loyalty should be focused on.

Have you seen Levi’s ad?Yes 21No 14

Among the respondents, 60% said to have watched the latest Levi’s advertisement while 40% did not. This clearly shows the lack of effort that the brand is putting on its marketing especially in the Indian subcontinent.

Can you recall Levi’s ad?Yes 11No 24

Among the respondents who have watched the advertisement, only 31% could recall the contents of the advertisement which again shows the poor marketing campaign by the company.

Most prominent source of adsTV 9Print media 11Social Media 15

43% of the respondents said that the source of advertisements was Social media and 31% said that they had seen the print ad of Levi’s while only 26% said that they had seen the ad on Television.

The last step in the research process was to visit Levi’s outlet and various multi brand outlets to notice the layout of denim and the footfall that the Levi stands had. We noticed that on a weekday on an average Levi stored gathered 3-4 people every hour and on a busy day this count raised up-to 12 people. The converts were even less than 40%. This was very less when compared to other brands. Also in multi brand outlets more people gathered around Wrangler, Pepe jeans and Flying machine. The layout of these stalls was also different when compared to Levi. As clear from the pictures below Levi only had different shades of blue as choices in their denim segment, and these were available only in plain and monotonous design. There were no options of ripped or wash jeans available as with other brands.

Even with their store display, all mannequins at the front of the shop had different shades of blue being displayed and no other color. Also Levi did not have denim shorts collection available and even in August they had winter collection available.

Another point to note was that in all the stores for promotions Levi used foreign models for its advertisement. This has been their trend across all media channels.

One thing to notice was that youth were attracted towards other trendy denim brands while people in the age group of 35+ were more inclined towards Levi.

The primary data collection along with secondary data proved the hypothesis that Levi as a brand was failing and they were losing out on the huge Brand name that they have built over the years.

Result and Conclusion

Levi’s is without a doubt a classic brand of jeans. Levi’s jeans now have an iconic significance across the globe. But staying with their own concept about the market and not staying at pace has what has led to their downfall in the recent times. Levi’s once considered to be the god of denim is not even a mere mortal among the youth of today.

It is being classified as the brand of yesteryears and the tag of “classic” is not helping its cause.

However, despite its continued ubiquity the Levi’s brand has had a rocky ride in recent times, having watched a heavy sales slip. As with most brand crisis, the problem for Levi’s have been numerous

In the attempt to adhere to the various fluctuations of taste among the denim wearing public, Levi’s has diversified the brand by creating a wide range of jeans product portfolio. Most significantly, it has branched out beyond its traditional “red label” jeans and introduced a new sub brand called ‘Silver tab’. The company has also produced a cheaper range of jeans with orange tags

Furthermore, the advertising campaign used to promote the Silver tab range in 2001 was among the most hated in recent history. Ad Age called the campaign “insulting “and claimed it lacked “branding“. Similarly, in 2002 the ads to promote Levi’s low-rise jeans achieved an equally negative reception among certain critics.

Despite all these unfortunate external factors, there is no escaping the fact that the real threat to Levi’s brand is generated from Levi’s itself. Now that it locked in an endless quest to appear ‘innovative’ and ‘youthful’, by launching a growing number of new styles. Levi’s is now proving the law of diminishing returns. The marketing expense continues to grow, while the true brand value diminishes

Most branding experts now agree that if Levi’s is going to regain the market position it held in the 1980’s and early 1990’s it will need to slim down and narrow its focus. Consumers are no longer sure what the Levi’s brand stands for.

One of the company’s biggest successes in recent times came when it created an entirely new identity in the form of Dockers brand, launched in 1986.

The company launched a limited edition of 500 replicas, which were sold almost as soon as they appeared in Levi’s special concept stores.

Only time will tell if this Vintage collection turns out to be a symbolic gesture of the brands new direction.

Levi's is without doubt an exemplary brand of Jeans. Levi's pants now have a notable worth all over the world

On the other hand, Levi’s did not proceed with the legacy it had once upon a time. Levi's image has had a rough ride as of late, having undergone an overwhelming sales slip. There has been a brand crisis at Levi’s and there are numerous issues behind it.

In the attempt to adhere to the various fluctuations of taste among the denim wearing public, Levi’s has diversified the brand by creating a wide range of jeans product portfolio. Most essentially, it has fanned out past its conventional "red label" pants and it presented another sub brand called ‘Silver tab'. Also, the organization has similarly created a less expensive variety of Jeans with orange labels

Besides, the publicizing crusade used to advance the Silver tab range in 2001 was among the most hated ad campaign in history. It was considered "insulting" and it needed "branding". Correspondingly, in 2002 the advertisements to advance Levi's low-ascent pants accomplished a similarly negative vibe among specific critics. These ads did not really help to enhance or at least maintain a brand image and loyalty.

Unable to withstand pressure from various brands and unable to grow along with the latest trends has been the biggest loss of Levi.

In spite of all these appalling external factors – competitors and changing societies, there is no getting away from the fact that the real danger to Levi's image is produced by Levi's itself. It has locked itself in an endless quest to appear ‘innovative’ and ‘youthful’, by launching a growing number of new styles. Levi’s is now proving the law of diminishing returns. The advertising cost keeps on growing, while the genuine brand esteem reduces.

Most branding specialists now agree that if Levi's is going to recover the market position it held in the 1980's and mid 1990's it should thin down and slender its focus. Consumers are no longer sure of what the Levi’s brand stands for and its main purpose of creating original best quality jeans is not being promoted rightly.

As per the results of our research, it has been clearly seen that the brand has made tired, dull and namesake developments in its branding and marketing arena.

Recommendation Crowd Sourcing for new ideas- The relationship of brand with the newer generation can be given a push by taking help from the people to

develop new designs and color. This would in turn help the consumers in better connecting with the brand. Spend more on marketing include Indian models for ads. Levi’s has restricted its advertising reach in the Indian market. Also people cannot

connect with Levi’s ads because of use of foreign models. The same ad is used across the globe. This practice should be changed. Reduce perceived risk by better building brand image- As clear from the survey, on an average people purchase jeans twice an year. Without

connecting to the brand people perceive buying a Levi’s denim as a risky purchase, specially social and psychological risk. To reduce this, brand has to indulge in better marketing and connect better with the youth.

Levi’s on its way to success again has to change its strategies and also widen its product range by manufacturing Chinos and Leggings. They can use their 100+ years of legacy to attract customers.