is that the reason that you prefer to do it on your own very much no I'm more conservative than she is I like to be able to buy my pinstripe suits I must have six pinstripe suits of different colors and that's what I like we are watching a seldom seen ritual of modern corporate marketing the men beyond the glass are the subjects of minut scrutiny what are their habits what makes them feel comfortable what in short will make them want to buy a new product but the world's largest apparel manufacturer is preparing to sell to
them and to you this week on enterprise Levi's not buy jeans alone I'm Eric severide and I predate the blue jean era when I was young they were worn only by farmers and laborers they were work clothes in the 1950s the image of jeans began to change Marlon Brando and James Dean wore them as symbols of rebellion in the 60s jeans emerged as a uniform of a generation receiving a priceless seal of disapproval and they were banned from schools around the country and about that time Levi Strauss and company began as rather lucky rise to
the top of its industry today it's the world's largest clothing manufacturer but with over five hundred million pairs of jeans now in the collective American wardrobe and competition from designer jeans of all things the market is both saturated and changing this week on enterprise we will watch Levi Strauss attempt to end its dependence on dungarees before the fashion fad of the century begins to fade away San Francisco home of Levi Strauss and company the largest apparel manufacturer in the world in 1980 Levi's gross 2.8 billion dollars over 50% from jeans Levi's recently produced its 2
billionth pair of jeans sales have grown an average of 23 percent each year for the last decade but no corporation believes in limits to growth staying the same size is commercial class for me the jeans market is saturated for Levi's the question is what next this is Peter Haas jr. Harvard MBA son of Levi's chief executive officer and the great-great grand nephew of Levi Strauss himself in June of 1980 Haas became general manager of a new marketing division created specifically to introduce the most expensive and formal clothing ever to carry the Levi's name how many
the marketing director for launching the new product is Steve Goldstein Goldstein Yale 61 has marketed everything from ultrasonic plastic welding equipment to liquid yogurt too cold capsules he's been with Levi for five years paws and Goldstein are charged with extending Levi Strauss and company's name into a different and lucrative segment of the menswear market Levi's is in all kinds of businesses today we make shirts hats socks belts skirts glasses all of them are in moderate price points if we want to grow we're probably gonna have to go to upper moderate price points and somewhat higher
taste levels for our products in order for a company like Levi Strauss to extend its sales and profit growth we need to diversify to develop new products and this is a lot more difficult than it was when we're just filling demand for a five pocket Western Jean filling an existing need is one thing uncovering new needs is another Levi Strauss has spent millions attempting to predict consumer behavior Hoss and Goldstein's new product is not based on hunch but on an extensive market segmentation study involving over 2000 consumer interviews we took apart the men's market about
18 months ago and examined five basic segments within it and we really understood what's going on within each one of those five segments the q3 segment we call the utilitarian jeans customer this guy's our old familiar Levi's loyalist he doesn't care much about clothes and he wears jeans for work and for play he's a big chunk of the men's apparel market about 26% q4 we called trendy casual he's basically you're John Travolta tights he buys high fashion brands he loves to be noticed me wear jeans to work but he really comes to life after dark
the q4 occupies 19% of the market q5 customer we've all seen as a price shopper his main concern is the price of his goods The Shops at department stores and discount stores wherever the bargains are best when we come to the two largest segments of the pie the q1 our mainstream traditionalist the q1 loves polyester he's probably over 45 years old married hard core department store shopper most likely he's a conservative both in his political views and in his tastes he likes to shop with his wife and he values her opinion you really is the
heart of our Levi's action slack and Levi's action suit business which at the moment makes up a good portion of all of the sales for the menswear division the most significant thing about the menswear segmentation study was the uncovering of this q2 segment we call it the classic independent the classic independent is a fascinating animal he's a real close horse he spends more on his clothes than any other group he buys 46% of the wall in more blended clothing sold yet he's only 21 percent of the market looking right is real important to him his
dress is traditional lapels are never too wide and never too narrow he really likes to shop and he really likes to shop alone not with his wife or his girlfriend he knows what he likes and he goes to specialty stores to buy it we're going after this guy tooth and nail and the bait a full line of tailored clothing for men slacks sport coats and most notably three-piece suits the suits will be sold as separates jacket slacks and vest can be selected by the customer in his correct size eliminating the need for tailoring the cut
will be traditional not faddish the fabrics will be wool and wool blends in conservative colors and patterns 30 to 45 dollars for the slacks 85 to 100 for the jackets and the three-piece suit will retail for about $160 just what the target consumer the Q 2 should be looking for the man in charge of design and production of the new line is Steve Schwartz Bock a garment industry veteran from New York in August 1980 one year before Levi's tailored classics will be in the stores Schwarz bak brings samples from other manufacturers to serve as models
for prototype garments are you gonna make this this garment yeah that's one okay now we want a belt loop garment which is basically the Tod okay except that we want to drop the watch bottle so it's a Tod well I shouldn't say it's a Tod because actually there's no simulated topstitch a vital part of Levi's strategy is selling in department stores for volume sales not in specialty stores work you to consumers habitually shop the sales manager for tailored classics George Miguel Drake has the formidable task of selling this new approach to department store buyers the
success of the line rests ultimately on the shoulders of McGoldrick and his 12 salesman well the sales force is extremely excited they've been very antsy to get going with this concept and they know we have something that's good potentially going to be some very large business down the road to come in 1850 a television commercial will be crucial to the campaign mode but the message will need to be very different from the casual image that has appealed so successfully to the q3 segment the jeans worries these ads mirrored the values held by young consumers in
the 70s nonconformity and doing your own thing the stranger came into our town he was tall and had eyes that could look right to the bottom of you but aren't we different the same the commercial for tailored classics must be ready for September of 81 to coincide with the introduction of the line it will be carefully designed to appeal to the q2 consumer it will definitely not have a woman in the commercial along with him as a support for for his purchase that would antagonize this guy we know that he doesn't want to have somebody
telling him that he looks good or he doesn't look good there's an awful lot of research under underlayment that has to go on and it is that's going on right now in November 1980 the tailored classics marketing team gathers behind a one-way glass to watch their target consumers being interviewed whether you prefer a shopper but I don't always have a choice I want the discussion leader is Malcolm Baker an independent research consultant the consumers are paid $20 to participate they all match the q2 profile in a preliminary telephone interview I don't agree on what I
should wear very often is that the reason that you prefer to do very much so and I'm more conservative than she is and I like to be able to buy my pinstripe suits I must have six pinstripe suits of different colors and that's what I like Goldstein and advertising manager Leslie Schumann have arranged consumer discussions known as focus groups in New York and Atlanta as well as here in San Francisco the basis of the discussion is a fairly new concept in men's clothing this is a full line of traditionalist styled men's suits or slacks and
blazers made of a natural and blended fabric the clothes are reasonably priced and they require no tailoring but your reactions to them there's a big difference between something that you take off the rack and something that you can have a little something done too if you can spend $30 for something you can walk out of the store with but if you can spend 45 and have them do a little tailoring on it it looks terrific on you spend $15 more and look like something but you're damn right do not wanna feel mass-produced to it if
they are mass-produced it's the last thing they want to be reminded a we're willing to put it on but and compromise at the rack but they don't want to be told it's like millions of others in their minds that it can't be done so it goes back to the ritual significance of having a tailor there and a few adjustments that make it your own thing so that you're being pinstriped is your blue pinstripe and it's not the same as mine so you should stress the idea that an hour separates we can make a suit because
the top fits your top and our bottom fits your bottom final peel away tells us that this line of clothing will be made by Levi's the party-like atmosphere and the booth changes abruptly the use of the Levi's name is a critical issue so the idea of Levi's producing a line of traditionally styled men's slacks and blazers that works doesn't you you feel that Levi would do that while traveling so sure I think we might hide you know I think jeans yeah if they're meeting suits I'd have to be convinced what about its gel acts are
okay what about blazes sort of thing that Jack is wearing well better be hard that would be easier to convince me than suits so here the same thing over and over you're right real it's gotta be right well well consumer research continues George Miguel Drake is on the road presenting the concept of tailored classics to retailers stores need to place orders by February to ensure delivery in August and the salesmen are eager to get started the only concern they have right now is is one of price we're going into a tough year economically and we're
hoping that the consumer will see the value of our garment and be willing to pay the price we don't think we're going to have that much of a problem selling it to the retailer in early December a sample from the factory is ready for approval by Steve Schwartz Bach to feel big on you would you it feels large on me okay I have an awful lot of room I think the middle I think in front of the code a little the back seems to be the back is perfect yeah okay I think we don't have
to take that front end a little bit if you were in the market for a navy blue pinstripe suit and we made these adjustments you think that could be something you'd be inclined to buy absolutely sure no problem at all in the market maybe blue pencil isn't work but it's not just any navy blue pinstripe suit it's a Levi's suit and consumer perception of the Levi's name is a prime topic when the tailored classics team meets for a debriefing with the focus group leader we had people saying well if I mean I if I wore
this suit and I went to work and someone said to me hey that's a nice you Joe who sue is it and I said Levi I would not feel comfortable and I think it has it has a lot to do with with with their agent with and with convention rather than the belief that Levi is not capable of making a suit that would function perfectly well and it would look alright so you're saying that maybe they would feel very comfortable about wearing it as long as they put someone else's label in it yes yes what
does that lead you in terms of where we what we should be doing in terms of that how well my right a messenger or I can't oh I'm going to talk about message in a minute but my record basic recommendation at the moment is lead with slacks and sports coats and it suits slipstream with Levi's images it's currently is with this segment however positive I think the image is still a little too casual you're absolutely right the thing that's gonna overcome the Levi's image for casualness as no other thing can do is a suit that's
made by Levi's that doesn't look like all the other stuff we've made and once that gets in on the shelves or on the racks they're gonna be a lot of people who will put a little asterisk on the Levi's image which says oh and also they can make up a good suit when they when they put their mind to it December 15th the selling of Levi's tailored classics begins Schwartz Bach presents the line to buyers from weinstock's department stores is our expression twill stretch brushed done in the hall hosted colors including basics after the buyers
have shown the entire tailored classics line the talk turns to Levi's wholesale prices here and here you're talking 1590 for the slack and you're talking $43 for the coat the wholesale prices are higher than wine stocks had anticipated retail prices will need to follow suit big jump to the customer last year we were at $28 on this slack I just I have to be leaving in a couple of minutes I just wanted to come in and find out any observations or questions that heat Hawes is acutely aware that stated classics are priced higher than the
competition he is beginning to feel nervous about his first new product launch with the company and is anxious for firm commitments to buy when do you think you'll be be giving us paper actually making selection in order just so that we know in 30 days I would see Jeff you'll be finished up with only all the four of them do you think often as I essentially by February first now you've gotta get a new suit by Saturday no problem Levi's tailored classics it's not the only game in town a very similar line of clothes is
offered by Hager introducing Hager Imperial separates for the no problem suit and 100% wool and wool black figures ad is not aimed at the cute Orem but at the more casual dresser who needs a suit for special occasions and Hager speaks from experience we've been in this business since 1926 we make all of our own products we control our quality and our track record unlike our friends that you mentioned they're a fine firm but they were making another type of product completely different than what they're making Levi's venture into finer clothing is certainly a risk
and initial sales are not encouraging after months of optimism doubts begin to service I think about this a lot no I don't dream about it but I do think about it and that is we really have one shot at this I mean everything we do relative to this line has to be right everything I mean if we could all January 5th 1981 McGoldrick is having a tough time money is tight department stores are cautious and the salesmen are getting discouraged ok listen as much as we need to book those goods I think you still have
to get to Detroit we've got it we've got to get placement in Detroit right away you can call in call Dayton from there and if they're not willing to give you a paper right away then maybe I can call them maybe next week I'll even come in despite slow sales pattern layout and cutting begin at the factory in San Antonio Levi's contract with Burlington Mills gives option dates by which additional fabric must be ordered if sales don't improve soon the February first option will not be exercised by late January the sales picture is worse two
of McGoldrick sales reps have quit the line they aren't selling enough to make their Commission's high prices are blamed and McGoldrick is feeling frustrated well I think it's a lot of emotions from someone to punch someone in the mouth to wanting to leave and never come back well hey Mike I would spend the day here or spend a week on the road and come home and get a call at 11 o'clock at night you know damn and I can't do this I can't do that you know this one's throw me on I want to leave
you know and then you got to calm down and you end up talking to people half the night to keep them going cuz they have to get up and go out the next day listen pal you're number two in the whole region you've done a phenomenal job you've been thrown out of accounts before we all have listen this is one tough season something had to be done on the morning of January 29th after much debate pitas made a desperate move Daily News record the trade paper of the garment industry carried the news wholesale prices were
dropped four to seven percent and McGoldrick took immediate action the biggest department store in the United States is is bamberger's which is part of the Maisie organization they I knew we're going to pass us and they are big they were going to Dallas Texas to work with with our competition and place orders and the day that Pete got authority to roll back the prices I caught a one a.m. plane to Dallas found these people in their hotel eating breakfast at 7:00 in the morning ten minutes before our competition sent the limousine to pick them up
and save the day I felt like the cavalry rode covered but they flew right from Dallas to San Francisco and they gave us about good garlic must have been three four hundred thousand dollars worth of goods March 10th the first selling season is over the tailored classics team flies to Los Angeles for the menswear trade show called magic magic is an opportunity for thousands of manufacturers and retailers to get together to display new products to make deals and to celebrate sales successes see Haggar had done well sales of their Imperial line had more than tripled
in the past year but the tailored classics team is not celebrating despite the price rollback they've achieved only 65% of their modest sales goals tailored classics are not being prominently displayed at Levi's exhibit the emphasis in the menswear division has shifted to a new line of washable polyester suits this line is seen by Levi's senior management is having more immediate profit potential Bob Segall Pete Hodges boss is losing confidence in tailored classics he has canceled plans for the television commercial and put all research on hold Hawes and Goldstein are fighting to keep the line alive
one of the major stumbling blocks is the Levi's name itself - better merchandise is an unknown and we'll never know that if I just started to retail never and I'd like to get it out and get it settled I'd like to find out that it can't be it doesn't work if this does not work upon returning from magic they decide to confront the dissonance between a casual Western image and elegant clothing head-on the agency prepares an ad for the sunday New York Times magazine for September 81 Levi's tailor classics you expected Bruins perhaps I love
the juxtaposition of a horse and an elegant man and of you expected Ribbit's Ribbit's perhaps because of Levi's azan and I'm and you have it confront a guy issue directly so the selling of Levi's tailored classics moves forward but at a walk not a gallop there will be no big television commercial but the newspaper ad will run in New York they will feature a sport coat not a suit they will try to gradually warm up retailers to their ideas and await the verdict from the consumer I would be much happier if this new business of
ours had taken off and flown brilliantly but you know that's that's business most new products fail most new products fail one feels a responsibility would have liked to have done better than we did would have liked to have had 20/20 foresight instead of 20/20 hindsight I don't see how we can come in like the Messiah and teach people how to make money that nobody else can because we're new in the business too but I think there's that if you never take a chance you can never have a success you win some and you lose some
in July 81 George McGoldrick resigned after 16 years with Levi Strauss he was unhappy with trying to sell better clothing would the Levi's name he is now a National Sales Manager at rpm a pants manufacturer in New York Pete Haas has a new position he has been assigned to the office of Levi's chief operating officer Steve Schwartz buck now has primary responsibility for tailored classics it's really his baby now Steve Goldstein has been spending considerable time marketing the washable polyester suits he is every bit as enthusiastic about that as he was about tailored classics I'm
getting to see a snake about almost anything you know I can get it to see a thing about a cheeseburger as of November 1981 consumer response to Levi's tailored classics is mixed sport coats and slacks are selling well but suit separates are moving slowly this program was presented by WGBH TV which is solely responsible for its content
