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CASE: M-276 DATE: 05/11/94 (REV‟D. 06/13/06)

In May 1993, Mr. A. John Chappell, president and representative director, Levi Strauss Japan K.K. (LSJ), was contemplating a conversation he just had with the national sales manager and managing director, Mr. Masafumi Ohki. They had been discussing the most recent information regarding the size of the jeans market in Japan. It appeared that after two years of market shrinkage in 1990 and 1991, the market contracted further in 1992. Although LSJ was still increasing its share of the market, Mr. Chappell was disturbed by this trend and wondered what new strategies, if any, LSJ should pursue. In addition, Mr. Ohki had brought up the issue of selection criteria for retailers and sales agents. The distribution channel was undergoing structural changes, and Mr. Ohki believed that LSJ needed to evaluate and possibly revise its distribution strategy. LSJ was very selective in choosing its retailers and had historically focused their distribution on traditional urban jeans specialty shops. However, there were many new, large stores opening in the suburbs which were carrying jeans, among other items. Although LSJ did sell its jeans in some of these new stores, the company had not pursued this new channel as aggressively as some of its competitors. As a result, its largest competitor, Edwin, was currently represented in twice as many stores as LSJ. Mr. Chappell realized that increasing the number of stores would improve LSJ‟s reach and possibly help to stimulate the overall market. However, this could have a serious impact on LSJ‟s image. LSJ had spent years developing a premium product image which had catapulted it to the market leader position. Besides its product and advertising strategies, this image had also been cultivated by the company‟s selectivity in choosing retail outlets and sales agents. Not only did this ensure that LEVI‟S would have a good image with the consumer, but it also was the...

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