Thursday, 20 August 2009

buying jeans on monthly instalments plans

Please click the title of the note to read Levi's pilot campaign in Bangalore (India). They are offering purchase of the brand on a 3 month installment plan.

This will stir up a lot of discussion. Its been done before - TVs- cars- houses- holidays- are all available on loan schemes. But Jeans? Interesting.

And if Jeans, what next?

Our opinion? Lets look at 2 issues first and then we will give our verdict:

- does this promotion serve the target audience of the Levi's brand in India? Given Levi's pricing, (4-5 times that of a 'local player', their target market would be the top 10% of India's population)

Is this person going to buy Levi's because of the instalment scheme? Maybe. But an instalment scheme cannot alter the price proposition of the brand- especially a 3 month instalment scheme. If it was a 12 month scheme, suddenly the equation changes. But that takes guts for the bank to execute. And it is expensive for the brand to implement.

- does this promotion increase consumption of the brand , or bring in more users?

Will the possibility of spreading my purchase cost over three months make me more inclined to buy Jeans (and T shirts) versus other Indian dresses- casual shirts- trousers? Unlikely.

A pair of jeans in India competes with other pairs of Jeans. In a market where a pair of Levi's costs 5 times the "private label", does this promotion really address the price issue?

Given that credit card penetration is very low in India, does this scheme actually enable to bring in more consumers?

Or is Levi's simply trying to get more share from the other brands such a Pepe/ Wrangler?

We think someone at Levi's India got really excited by the idea of selling jeans on credit. The bank charges restricted them to a 3 months scheme. And the marketing team just pushed ahead anyway.

Levi's may report a change in volumes and market share, but this is not going to expand the category. Sooner or later the other brands will launch the same offer, and the bar will be reset to zero.

Thumbs down! An installment scheme for Levi's cannot be a competitive advantage. But it makes for interesting news.

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