Abercrombie And Fittch Case
Abercrombie & Fitch is a department store which targets college students aging from 19 to 22 years of age. It has two offshoot brands: Abercrombie for consumers ranging from 12 to 14 years and Hollister Co. which targets high school consumers 15 to 18 years old.
This report will highlight the problems that A&F has been experiencing since 1992 as a result of the clear vision of the CEO, Michael Jeffres, which was to reinvent the brand as well as implementing a strategic plan to create a segmented target market (Blanchard, 2014).
Furthermore, this report will address the question whether the company should continue with the current segmenting strategy or should it widen its clothing selection to appeal to a greater number of potential consumers? …show more content…
Recommendations & action plan with regards to the problem will also be emphasized upon in this report.
II. Problem
In 1992, according to the article Abercrombie & Fitch: is it unethical to be exclusive? A&F has “lost $25 million” (Blanchard, 2014), which clearly is a sign that something didn’t go according to what was planned. A&F’s value proposition has created a vibe or sense of exclusivity among their loyal customer; as stated by the CEO “…good-looking people attract other good-looking people, and we want to market to cool, good-looking people. We don’t want to market to anyone other than that” (Blanchard, 2014).
In spite of the sense of exclusivity which led to tremendous success for the company, it has also raised a negative sentiment among a significant number of customers who were left behind in the sense that the clothes were not appropriate for them. A&F doesn't offer sizes for women of large size. Their biggest size for women’s pants is 10, although the average size of women’s pants in the US is 12 to 14 (Blanchard, 2014).
In 2013, according to the article, Ellen DeGeneres and Kirstie Alley had their say about A&F being discriminatory towards the clothes sizes and the fact that the brand created a lot of negative vibe around the company’s customers. Out of 118,834 mentions of the brand on the social networking sites, 79% of comments were negative. Due to the decrease in the customer’s satisfaction of the brand, in 2013 summer sales dropped by 10% overall and women apparel sales dropped by 30%. In the same year, a lawsuit was carried out against the company’s unethical behavior when a woman employee was fired for wearing hijab, a veil traditionally worn by Muslim women, because it didn't go with the company’s culture. Hence, consumers have started to perceive A&F as a discriminatory brand (Blanchard, 2014).
III.
Options
Should the company continue with the current segmenting strategy or should it widen A&F’s clothing selection to appeal to a greater number of potential consumers?
Firstly, it should be mentioned that every brand faces negative criticism no matter what their strategy is. Criticism is always present in the world of the 21st century. In the case of H&M for example, it placed large sized mannequins to show it accepts plus size women, but this raised an issue of promoting obesity (Blanchard, 2014).
Looking from the financial point of view for A&F, introducing large sizes would increase cost of production because more fabric would need to be used for production for bigger sizes. As stated in the article, “many clothing manufacturers have a set sizing system and changing their system line to accommodate bigger sizes would rise the cost for the manufacturers and lower margins for the brand.” (Blanchard, 2014). In addition, “the body proportions of average to larger women vary from the proportions of smaller women” (Blanchard, 2014).
As far as the marketing side is concerned, one could assume that adding larger sizes would increase customer satisfaction, increase the potential market and create a positive vibe around the brand. But would that lead to greater profits in the long …show more content…
run?
In this analysis the answer is that it wouldn’t incur increased profits.
This is because creating exclusivity in brands is a powerful strategy. When we look at other apparel luxurious brands such as Louis Vuitton, Gucci and Prada, they're all very exclusive in the sense that their target market is elite consumers. One might say they're discriminatory too, because of their higher prices. But their exclusivity creates a dream for any customer who's not under their target market to be under their segment too. And exclusivity also creates loyal customers. If we look at Apple iPhone’s and Samsung Galaxy’s specification, Samsung beats Apple, but why then does Apple charge higher prices? Because it targets the segment of upper-class consumers. It works more on the design and create its products in aluminum and glass, whereas Samsung uses plastic. Apple has same features as Samsung but with easier usability. A&F, Apple and Gucci make their consumers feel part of their exclusive community. And it works, it leads to a good number of loyal consumers and larger profits. They may not have a greater market share but their strategy works great with their business
model.
IV. Recommendations & Action Plans
It is recommended that in order to alleviate the severity of the criticisms customers have against the brand, A&F should, at the same time as choosing the status quo strategy, convey to consumers by appropriate means that they are conscious about the problems concerning obesity and willing to take action to reduce the severity of the problem. This would be a valid reason for not adding larger sizes, the latter being the opposite of what H&M did. The reason for the recommendations stated is because obesity is a significant and life-threatening problem. For example, as stated in a National Institute of Diabetes and Digestive and Kidney Diseases study in the US, more than two-thirds (68.8 percent) of adults are considered to be overweight or obese. More than 1 in 20 (6.3 percent) have extreme obesity (Overweight and Obesity Statistics, 2012). Additionally, with regards to Youth Risk Behavior Surveillance System, “13.9 percent of high school students were obese, and an additional 16.0 percent were overweight.” (Obesity rates and trends, 2016). With this in mind, it is highly recommended that A&F show customers that it would like to promote healthy life style which in turn will reduce the negative assumption that customers currently hold against the brand.
The proposed action plans in order to achieve the target of conveying their health concern of their customers is to run an advertisement video that shows how obesity is a problem in America, and also put more weight in investing in fitness related advertisements. This will result in customers viewing the brand as a brand that promotes healthy living and hence minimize the discriminatory perception that customers have currently against the brand.
V. Conclusion
Overall, it is evident that A&F had a crucial customer related problem which did affect their profits significantly. However, by choosing the status quo strategy, as well as by sending their own message through advertising that obesity is a critical issue and creating more sports related advertisements with regards to their sports clothing, the negative perception that customers have on the brand will be alleviated as customer’s will feel that A&F really cares about their well-being. This will in turn attract a larger pool of customers and lead to greater profits for the brand.
This report will highlight the problems that A&F has been experiencing since 1992 as a result of the clear vision of the CEO, Michael Jeffres, which was to reinvent the brand as well as implementing a strategic plan to create a segmented target market (Blanchard, 2014).
Furthermore, this report will address the question whether the company should continue with the current segmenting strategy or should it widen its clothing selection to appeal to a greater number of potential consumers? …show more content…
Recommendations & action plan with regards to the problem will also be emphasized upon in this report.
II. Problem
In 1992, according to the article Abercrombie & Fitch: is it unethical to be exclusive? A&F has “lost $25 million” (Blanchard, 2014), which clearly is a sign that something didn’t go according to what was planned. A&F’s value proposition has created a vibe or sense of exclusivity among their loyal customer; as stated by the CEO “…good-looking people attract other good-looking people, and we want to market to cool, good-looking people. We don’t want to market to anyone other than that” (Blanchard, 2014).
In spite of the sense of exclusivity which led to tremendous success for the company, it has also raised a negative sentiment among a significant number of customers who were left behind in the sense that the clothes were not appropriate for them. A&F doesn't offer sizes for women of large size. Their biggest size for women’s pants is 10, although the average size of women’s pants in the US is 12 to 14 (Blanchard, 2014).
In 2013, according to the article, Ellen DeGeneres and Kirstie Alley had their say about A&F being discriminatory towards the clothes sizes and the fact that the brand created a lot of negative vibe around the company’s customers. Out of 118,834 mentions of the brand on the social networking sites, 79% of comments were negative. Due to the decrease in the customer’s satisfaction of the brand, in 2013 summer sales dropped by 10% overall and women apparel sales dropped by 30%. In the same year, a lawsuit was carried out against the company’s unethical behavior when a woman employee was fired for wearing hijab, a veil traditionally worn by Muslim women, because it didn't go with the company’s culture. Hence, consumers have started to perceive A&F as a discriminatory brand (Blanchard, 2014).
III.
Options
Should the company continue with the current segmenting strategy or should it widen A&F’s clothing selection to appeal to a greater number of potential consumers?
Firstly, it should be mentioned that every brand faces negative criticism no matter what their strategy is. Criticism is always present in the world of the 21st century. In the case of H&M for example, it placed large sized mannequins to show it accepts plus size women, but this raised an issue of promoting obesity (Blanchard, 2014).
Looking from the financial point of view for A&F, introducing large sizes would increase cost of production because more fabric would need to be used for production for bigger sizes. As stated in the article, “many clothing manufacturers have a set sizing system and changing their system line to accommodate bigger sizes would rise the cost for the manufacturers and lower margins for the brand.” (Blanchard, 2014). In addition, “the body proportions of average to larger women vary from the proportions of smaller women” (Blanchard, 2014).
As far as the marketing side is concerned, one could assume that adding larger sizes would increase customer satisfaction, increase the potential market and create a positive vibe around the brand. But would that lead to greater profits in the long …show more content…
run?
In this analysis the answer is that it wouldn’t incur increased profits.
This is because creating exclusivity in brands is a powerful strategy. When we look at other apparel luxurious brands such as Louis Vuitton, Gucci and Prada, they're all very exclusive in the sense that their target market is elite consumers. One might say they're discriminatory too, because of their higher prices. But their exclusivity creates a dream for any customer who's not under their target market to be under their segment too. And exclusivity also creates loyal customers. If we look at Apple iPhone’s and Samsung Galaxy’s specification, Samsung beats Apple, but why then does Apple charge higher prices? Because it targets the segment of upper-class consumers. It works more on the design and create its products in aluminum and glass, whereas Samsung uses plastic. Apple has same features as Samsung but with easier usability. A&F, Apple and Gucci make their consumers feel part of their exclusive community. And it works, it leads to a good number of loyal consumers and larger profits. They may not have a greater market share but their strategy works great with their business
model.
IV. Recommendations & Action Plans
It is recommended that in order to alleviate the severity of the criticisms customers have against the brand, A&F should, at the same time as choosing the status quo strategy, convey to consumers by appropriate means that they are conscious about the problems concerning obesity and willing to take action to reduce the severity of the problem. This would be a valid reason for not adding larger sizes, the latter being the opposite of what H&M did. The reason for the recommendations stated is because obesity is a significant and life-threatening problem. For example, as stated in a National Institute of Diabetes and Digestive and Kidney Diseases study in the US, more than two-thirds (68.8 percent) of adults are considered to be overweight or obese. More than 1 in 20 (6.3 percent) have extreme obesity (Overweight and Obesity Statistics, 2012). Additionally, with regards to Youth Risk Behavior Surveillance System, “13.9 percent of high school students were obese, and an additional 16.0 percent were overweight.” (Obesity rates and trends, 2016). With this in mind, it is highly recommended that A&F show customers that it would like to promote healthy life style which in turn will reduce the negative assumption that customers currently hold against the brand.
The proposed action plans in order to achieve the target of conveying their health concern of their customers is to run an advertisement video that shows how obesity is a problem in America, and also put more weight in investing in fitness related advertisements. This will result in customers viewing the brand as a brand that promotes healthy living and hence minimize the discriminatory perception that customers have currently against the brand.
V. Conclusion
Overall, it is evident that A&F had a crucial customer related problem which did affect their profits significantly. However, by choosing the status quo strategy, as well as by sending their own message through advertising that obesity is a critical issue and creating more sports related advertisements with regards to their sports clothing, the negative perception that customers have on the brand will be alleviated as customer’s will feel that A&F really cares about their well-being. This will in turn attract a larger pool of customers and lead to greater profits for the brand.