Levi’s Company’s Data Mining & Customer Analytics Report (Assessment)

Introduction

Levi, the renowned name in jeans is feeling the heat of competition from a number of other brands, which have come upon the scene well after Levi’s but today appear to be approaching Levi’s market with a variety of measures to attract customers. What is worrying for Levi’s is, these companies are also succeeding in their efforts and giving a tough time to Levi’s. The company desires to make intelligent decisions based on the factual positions and circumstances prevailing in the market. Data mining is one such process that the company intends to adopt.

Data mining

Data mining is the process through which a company or an organization tries to extract useful information by compiling data from various sources, analyzing it, and subsequently coming out with some key components, which can be further probed to predict the future trend for the market and the company. In fact, as the name itself suggests, this process involves mining the data from almost everywhere having a direct or indirect link with the business operations of the company.

The useful data is then sifted with the help of available analysis techniques to narrow down to usable data. Subsequently, the company is supposed to take a number of decisions like deciding about the range of products, pricing strategies, marketing communication, and promotion strategies, etc. For example, a product can be priced in many ways depending upon the cost of manufacturing, variations in the cost of raw materials, the cost of reaching out to customers, the prevailing economic conditions, the income levels of the market segment, etc. Product pricing also depends on the availability of competitors in the market and certain rules and regulations of the land.

Similarly, propagating a brand and making investments for creating a brand identity also depends upon the potential of the market assessed with the help of data mining.

Brand promotion

Biswas et al. (1998) state that technological advancements have made it possible to collect and store data quite easily. What actually causes the problem is the abundance of data and it becomes quite challenging to effectively and efficiently analyze this data using the automated mechanism to better understand, characterize and validate known phenomenon and trends and discover the new and interesting phenomenon. This appears to be the case with Levi’s. Levi’s is an internationally renowned name for jeans. It all began in 1853 when a Bavarian immigrant named Levi Strauss opened a wholesale dry goods business.

He continued to be a small-time business for the next twenty years, till he patented the process of putting rivets in pants for strength. This gave birth to the world’s first jeans[1]. The rest is history. Today we have a number of well-known brands in jeans, but Levi’s continued its dominance over denim, the cloth which was initially meant for sailors but became a fashion statement gradually, for well over a century. Today, there are a number of brands that are vying for the market space, therefore, Levi’s is supposed to;

1. Make efforts to retain the existing customer base
2. Tie up with major retail outlets to make the brand available with prominence. Nowadays retail outlets have their own loyal customer base.
3. Work out the maximum benefit that can be passed on to the customers as well as the retailers, which might imply constraints on the company’s profit margin.
4. Look for volume sales as well. Having a strategic tie-up with high-end stores definitely gives a value proposition to the brand and its customers, but the association with high-end stores only might result in alienating the major consumer base, which relies on retailers like Wal-Mart, Tesco, etc. Today we are living in a competitive era, which implies more the merrier. As has been pointed out in the article in San Francisco, last year, the company’s profit plunged 32% to $151 million on sales of $4.25 billion. The need for having a pair of denim pants that sells for under $25 has been pointed out in the article as well.

Data mining will certainly help Levi’s in making an informed decision and understanding the socio-cultural and economic profile of its customer base. Data mining can be carried out by;

1. Analyzing the sales figures of previous years and comparison of targets with actual achievements.
2. Analyzing the variations in sales figures i.e. increase or decrease over the years.
3. Taking a look at the motivation levels of its employees. A satisfied and motivated workforce proves to be a big boost for the competitive strategies of the company.
4. Comparing the effect of factors like pricing, brand promotion, salary hikes, etc. on the production and sales.

But the company will do a world of good if it could take a lead from other available indicators like the general profile of jeans customers. Similarly, it will also help the company if it could start exploring the customer base outside the developed market. For instance, the Asian region in general and markets like China and India particular are major consumer markets for such items. Questions might be raised on such strategies by way of;

1. Questioning the dilution of brand value
2. Doubting the success of strategies in somewhat closed and protected economies like China
3. Viability of investing huge amounts in generating demand for the Levi’s

But the company needs to answer such criticism by taking a round look at the prevailing scenario of consumerism and its compulsions for a sustainably profitable business. For example;

1. Brand value depends upon its recognition by people. Trying to give a premium look to a product like Jeans, might not be a wise move in these times of market-driven economies.
2. China is gradually opening up its economy to the outside world and the billion-strong consumer base is a big attraction for companies nowadays.
3. Investing towards establishing brand awareness certainly helps in remaining in public memory, which is translated towards sales in the long run. The kind of advertisement and promotion did by companies like Coke and Pepsi even during off-peak seasons like winters, is an example.

In order to make a mark in the developing markets, Levi’s will certainly have to adopt a competitive and penetrative pricing strategy instead of skimming strategies. Online retailing by supermarkets is a new trend nowadays, which can work to the advantage of the company if it is able to create awareness and desire amongst the prospective customers. For this marketing communication strategies prove quite handy. Of late Levi’s has certainly realized this and ventured on to a promotion campaign. It needs to continue the momentum.

References

1. Levis’. About LevisStore.com. Web.
2. Biswas, Gautam; Weinberg, Jerry B., and Fisher, Douglas H. (1998). ITERATE: A Conceptual Clustering Algorithm for Data Mining. IEEE Transactions on Systems, Man, and Cybernetics—part c: Applications and Reviews, vol. 28, no. 2.