According to Bowman’s Strategy Clock Levis displays Differentiation with price premium. The company has value to its product to justify high costs.
2.How confident are you that the “Personal Pair” will change the differentiation and low cost trade-off? Levi will move to incorporate a Focus differentiation strategy where focus is on the higher end of the jeans market, yielding stronger profit margins due to price premium.
3.What are Levi’s unique resources/core competencies?
Levi bodes well in all aspects of the VRIO framework:
Valuable: Has a history of Brand Loyalty and Recognition and remains number one internationally in its markets. Rare: Has a strong branding image. Levi’s is marketed as “authentic” and “genuine” and enjoys customer support. Inimitable: Jeans are “US made” unlike competitors. Levi’s provides generous packages to employees - retention of HR. Organised: Manufacturing is key and is managed to have maximum value for resources.
4.Should Levi go ahead with the joint venture? What would you recommend and why? Yes – Levis stands to loose this opportunity to competitors if it decides to not move forward. Market research stated that 3/4 of women are not fully satisfied with “fit” – guaranteeing a market segment. Low-cost and high value competition makes it necessary to create value features that would differentiate it in the eyes of the consumer. Inventory costs would move from 8 weeks to nil. Product would be paid for before rather than after. Customer intimacy must be marketed for Levis to enjoy benefits!