Levi Strauss is a world renowned brand in the apparel industry. Its core product lines for men, women and youth are the LSJ brands of jeans and jean-related products.
Facing a period of economic crisis in the Japanese market, Levi Strauss risks to lose its market shares. How can LSJ manage to overcome this situation, especially in a tough competitive environment?
In order to answer this question, one will have to analyse the current jeans market in Japan and LSJ's position in the market.
In order to make evidence of rates, tables and a map of Japan will be used. Moreover, a magazine advertisement has been drawn for the next promotion.
Looking at the marketing strategy, 1993 can be seen as a turning point: leading firms raise the bar for excellence by trying to improve marketing efficiency and effectiveness. Levi Strauss Japan must understand the strategic value that marketing brings to the rest of the company, leverage technology as well as process automation, in order to grow.
[...] Indeed, there was a 109% growth for women's blue jeans sales between 1985 and 1989 (from 8.5 million to 17.5 million a year) and the market does not seem to be ready to stabilise, so women are going to represent a greater proportion of the segment in the jeans' industry in Japan. On the other hand, the young men's market has started to decline. Moreover, the average frequency of jeans purchased per person per year is only 0.5 in Japan, which is three times less than in the American market. [...]
[...] The selection of shops (Appendice Most of the sales occur in jeans shops so LSJ should keep traditional jeans shops in its distribution channel; otherwise, it will lose huge market shares (about 70%). Then, as they are developing and are successful (opening of 580 new shops in 1992 and 1993), LSJ should also be present in department stores. Indeed, for the moment, the percentage of sales is not really significant but in the short to medium term, these shops will gain importance. [...]
[...] Financial Results Jeans represented 73% of sales revenues and 16% shares of the market in Japan in 1991. The Japanese company achieved satisfactory performances, its results were much better than its competitors in 3 categories: in return on sales, with an impressive (nearly three times the industry average), in sales-to-employee ratio with ¥180 million (three times better than the average of rivals) Finally in Price to Earnings ratio of 50. LSJ reached such proportions, thanks to a centralized organisation and to many improvements made in its distribution channels and its sales force. [...]
[...] Premium prices: LSJ jeans provides high quality Price leader Have to pay for a direct sales force Imported products are perceived as superior to those manufactured locally: US brands are sold at an inflated price. The brand is promoting country-of- origin effect. The company sets the prices of its products to meet both short-term and long-term objectives. To set prices, information about the ability of customers to pay, about dealer reaction and about the effect of price on demand is necessary. [...]
[...] Levi Strauss Japan has to do its best to add value to the chain of services it is providing for its customers. However, it has to make crucial strategic changes in the segmentation. LSJ should show a bigger interest in magazines, as it has to promote its brand and it want to remain competitive. In a word, it has to reinforce its pull strategy. In its advertisement, LSJ has to show a different image that differs from rivals so that prospective customers remember it. [...]
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