Levi should go forward with the proposal to do mass customization. With denim sales growing at 10%, 75% of women dissatisfied with their jean fit and the advancement in information communication technology, the market is very favorable for Levi’s Personal Pair proposal. Also Levi is stuck in a limbo between high-volume low-cost market and premium products market. The proposal would reduce inventory and distribution cost while providing customers with a differentiated product. Also being the first in the Mass Custom market would also reinforce its history of being the first comer in the industry.
Even with the 10% in growth in the market, Levi’s net income has dropped 35% due to high levels of competition. Many of Levi’s competitors have moved their production over seas to reduce cost. Levi refused to do this because they wanted to keep their image as a “US- made” “social conscience” company that “provided generous salary and benefits.” This kept Levi from competing on a cost basis. Also, Levi could not compete on a premium base since their brand name was pulling less and less influence while new brand names coming out as premium. With these two conditions, Levi is stuck in limbo being at a disadvantage in both high end and low cost markets.
Advantages to the proposal are the lowered cost of inventory and distribution. The personal pair is a ‘Just in time’ process which eliminates the need to hold finished products as inventory. This also reduces waste and sales to clear the way for the new seasons product. Distribution costs are paid for by the customers via FedEx. Taking into account the history of Levi, the move will reinforce their image as being “first”, initially they are first in the denim jean market, and now they will be the first to make Mass Customization.
The proposition with create value by distinguishing them from other denim jean companies by giving customers exactly what they want from a pair of jeans. At this...