What are the 5 P’s?
Product, price, place, promotion, and participation (people)

Levi’s specialized in making jeans and they had a sizeable market share in this industry. However, with the advent of the 1980s, other companies were starting to encroach on their market share such as designer jeans companies. Levis conducted an intensive market segmentation study that involved 2000 clients as they attempted to predict consumer behavior, the habits of the consumers, what makes them feel comfortable, what would make them buy new products?

Value proposition
Levi’s value proposition strategy for men’s clothing was to divide them into 5 segments so as to appeal to the needs and fashion differences of the different male consumers. They planned to break up segments based on Demographics, attitudes and beliefs. Their plan for the Q2 consumer (Classic Independent male) was their main focus as they have no clout in this particular market. The classic independent male is well-dressed, cares about his appearance, shops alone, does what he wants, and is partial to high-end clothing of 46% wool/wool blend in blend conservative colors. Levis had 21% of total men’s market.

Place:
Levi’s had a good relationship with department stores as they sold in large volumes, but had no real relationship with specialty stores such as Armani, Calvin Klein and Burberry where the Classic Independent male preferred to shop.
Levis’s core competency was their brand, but their brand equity was defined around jeans not suits, however starting a suits product line Levis conducted focus group meetings and they knew that their customer values retailing, they preferred different pieces for different prices, it makes them feel special, but Levis was not listening to their clients and preferred to put their point of view over the market, so product was wrong in that sense. Customers said that the product was nice and if it did not have the Levi brand associated with it, it would have been attractive to them. It was suggested that they focus on goods like sport jackets and blazers as a leap to suits was a deviation from their formula.

Price
Rather than placing their new products which were considered as high-end in these specialty stores where they would be among the lower range in terms of prices, they chose to place their goods in the department stores where their products showed a deviation from the normal Levi formula and were considered very pricy as compared to other high-end department store brands such as Haggar’s. The price was wrong for the place they intended to sell their good at.
was wrong the price was wrong, otherwise the price would not be a problem.

Promotion:
Levis did not use any kind of promotion they could hardly reach 65% of their moderate sales target, while their competitor Hager used promotions and their sales tripled!
Participation (people):
There was no internet at that time, so no blogs no forums to communicate with clients.

Conclusion
Levi failed to understand the needs of their customers and failed by promoting the wrong product under their brand at the wrong price in the wrong place. However they learned from their mistakes and used their research to create the Dockers brand which was immensely successful.

Questions:
How do we evaluate a company?
What mistakes did Levi make in terms of customer focus?
Levi is a brand that is known for it's casualclothes and they tried to sell formal clothes. The biggest mistake is that Levi tried to sell these formal clothes in their same stores with their casual clothes for the same segmant of customers. Customers saw these formal clothes at the same place with casual clothes but with higher price . customers who are used to Levi Prices considered these formal clothes expensive to them .

Levi did not listen to what the target customer revealed to them in the focus group interviews.
People were saying that they knew Levi for casual clothes and can not imagine it for formal clothes.

Was it the right decision to make a foray into that unknown market under the Levi brand?

Posted by: Kelechi Ugochukwu and Ardemis Chubukjian


Zach Riggar, Lindsay Lewis, Kelechi Ugochukwu, and Ardemis Chubukjian

Questions from the Reading

Marketing Plan Basics

- What are the benefits of a well-developed, sound marketing plan?
      • A well-developed marketing plan will help the business identify opportunities, leverage core capabilities, focus market strategy, allocate resources, and build a performance roadmap.
- How should one identify opportunities to develop a marketing plan?
      • The process of building a marketing plan will help a business identify new opportunities. A systematic evaluation of the market allows the company to take a broader, more in depth view of the market and its competitions. New opportunities may present itself in this evaluation.
- What general core competencies, or capabilities, would be the most beneficial to entering a market?
      • Leveraging our existing core competencies and expertise are most beneficial when entering a new market

Situation Analysis

- What are the key indicators you should develop in a situation analysis?
      • Current performance, market demand and growth, competition and industry, market share metrics, customers' needs, positioning and value, SWOT analysis
- Which performance metrics would be best to use?

SWOT Analysis

- What is the basic definition of a SWOT analysis?
      • A SWOT analysis is a situational analysis which looks at strengths, weaknesses, opportunities, and threats.
- How does it apply to you Marketing Plan?

Strategic Market Plans

- What is the relationship between specific market share objectives and share performance metrics in terms of planning?
      • A company must have specific market share objectives in their marketing plan. The more comprehensive approach to achieving these objectives is to specify the changes necessary in the share performance metrics in order to achieve these objectives.

Marketing Strategy Mix

- Product Position Strategy
- Channel Strategy
- Communications Strategy

Revenue Plan and Marketing Budget

- What are some important entries to consider when forming a marketing budget?
- Percent of Sales Market Budget
- Customer-Mix Marketing Budget
- Bottom-Up Marketing Budget

Profit Plan

- What is the relationship between market segment profitability and the overall profit plan?
- What components go into a Break-Even Analysis?

Performance Review:

- Is a performance review restricted to the creation of the marketing plan? Or should it be considered ongoing?
- What are some common performance gaps that are revealed by a performance evaluation?

Customer Visit Programs

- What are the goals of these visits?
- What are some best practices of these visits?
- How do you target a group to talk to?
- How do you recruit a group to talk to?

Class Notes
a. Marketing plan
i. Can change from the value proposition, but you’ll have to justify the new value prop in marketing plan and you’ll have a higher bar
ii. Designed to pursued that this is good plan moving forward? Maybe, if you truly believe you have a good idea moving forward with. But, if you get through financial analysis and you think it’s not doable for certain reasons, then you are encouraged to go through the whole thing and say you have decided not to go through with it for X Y Z reasons.
1. You need to make a decision based on incomplete information
iii. What are we looking for? Tell us:
1. What’s the opportunity? Product, service etc
2. Target market? Size, benefit profile, competitive set
3. Benefits you’ll be providing better than the competition
Benefits - Include superior highly weighted benefits claimed to be deleivered to customer, directly individually and with combination.
4. And something new: want you to tell us why this WON’T work, big risks (most significant threats to success).
iv. Talk about the five Ps (when talking about them, think about how they work together because this is your message to the market place, they need to reinforce the same benefits)
1. Product/service
2. Price
3. Place
4. Promotion
5. Participations
v. Revenue model
vi. Profit model (expected that you use knowledge from your accounting class) MUST TALK ABOUT
1. Cost structure to support tactical plan
a. Fixed asset investments
b. Expenses
c. Variable costs
2. Breakeven point
Breakeven point is the point at which the business is receiving POSITIVE cash flows.
3. Projection of when you will achieve positive cashflows
a. By the fourth quarter, you better be generating positive cashflows
4. Intermediate benchmarks (want non-financial profits?)
vii. Creativity vs. structure
1. Tell a story (don’t put all your appendices in the 12 min presentation, it can’t be done)
a. If told in straight forward way, it should be the clearest
i. But if told in more creative way, you’ll catch profs interest, but be careful you’re still getting points across
2. You have 12 minutes or 15 pages to:
a. Explain your market offering
b. Peak our interest
c. Persuade me you have the capabilities to pull this off
d. Present a positive risk/reward profile
i. Need to clearly understand why came down on the positive or negative side
viii. Executive summary
1. In one page, summarize (tells you what is in the rest of the document and why you should read it…it’s the most important!!! Write it last)
a. Current market situation needs, wants growth
b. Objective-what’s the solution/product
c. Description of customer-benefit profile
d. Marketing strategy-grow the market, capture share
e. Value proposition
f. Action programs (tactics)-product, price, place, promotion, participations
g. Financial projections, Revenue Model, Profit Model
ix. Step 1 swot analysis
x. Step 2 situation analysis
1. Big thing to tell us is who is going to pay for this?
a. Revenue from users? Intermediaries? Ads from google?
xi. Step 3 value prop
xii. Step 4 (how do the value prop things communication the highly valued) marketing mix strategy
xiii. Step 5 marketing budget
1. Costs you incur to make your product available for sale
a. Costs directly relating to the sale
b. Costs relating to getting to the sale
c. Non personnel costs-things like travel costs, IT costs, software, hardware (that help these guys manage it efficiently)-figure those costs into your “participation”
d. Personnel costs
e. Both types of costs should be incorporated in your thing
xiv. Step 6 timeline
1. Must have benchmarks:
a. Net marketing contribution
b. Profit performance
c. Sales revenue
d. Market share
e. Things that lead to all of those outcomes (customer satisfaction, customer awareness; must have some awareness of what’s driving these outcomes). All of these things should be on one document
xv. Step 7 setting targets
1. Must have some sort of performance indicators to see if things are on track. Must be part of the plan.
2. Also, what is your fallback position? I can be “we’re done” or we have leading indicators to help you diagnose what the problem is and you can “chip”-more compelling way to think about it: have a good enough system so that you know when you’re going wrong and figure out how to deal with it.
xvi. Takeaways
1. Key components of a marketing plan
a. Opportunity
b. Value proposition
c. Marketing mix
d. Revenue and profitability projections
e. Present a compelling story
f. Implementation depends on monitory- if you can’t measure it, you can’ manage it (you almost always will have to change course, so need to know how you’re going right).