The Concept of the Augmented Product to A&F - Essay Example

 1. Apply the concept of the ‘Augmented Product’ to A&F. To what extent are the physical outputs of design activity, such as stores, products, websites, etc and brand status subject to changing fashion and design trends? Utilising appropriate theory and models, analyse the impact design has A&F’s brand positioning. It all depends on consumer behaviour at the time, which most experts will agree is increasingly difficult to predict. Currently, their store design and website (and product, etc) are being accepted by a U.S. and UK culture (desired markets) that want their lifestyle and attitude brand. They seem to have the opportunity to really expand their merchandise to have a longer product life cycle if they can adapt it to the changing characteristics of the demographic that is drive by culture and social attitidues. For instance, technological trends may occur which drive their competitors to more virtual shopping by use of sophisticated animations or some other element that gives them a competitive advantage. A&F would have a hard time adjusting to this type of external competitive threat because it would be increasingly difficult to make A&F appear viable to a virtual marketplace who has shifted away from the organic in favour of the technological. They must be adaptable and continue to understand the trends of their current demographic. Their design is all synonymous with youth and beauty and lifestyle attitudes. From their flagship mural to their in-store displays, everything is done to elicit this sensation in-store. It appears they’ve positioned their brand well, but on a more adaptable positioning map, I would suggest that A&F be prepared to shift a little more to the right and a little more to the left when necessary in order to draw in a different demographic (with only minor adjustments to the brand) when sales volumes decline. 2. Are there pressures and stresses that affect all brands as they outgrow their original “niche” market? I think all brands have pressures and stresses. A&F faces the real possibility that they could be outperformed by up-and-comers if they don’t consider contingency plans for their current marketing efforts. Though short-term they are finding considerable profitability through their new expansion efforts, they must realize (and it appears they do) that they must be flexible. They have obviously invested a great deal of funds into new technologies which improve both their in-store operations and their international merchandising campaigns. This means they are growing and meeting the demand of a global marketplace. So, by initial assessment it would seem that A&F is doing very well in this area. From Porter’s Five Forces viewpoint, they don’t currently face a great deal of rivalry, as nobody has been able to establish a brand identity as strong as A&F in this type of fashion marketing arena. Many of the barriers to entry have been completed and changed by the efforts of other retailers who have spread into European nations. A&F obviously maintains the capital necessary to expand if they wanted a more rapid market entry across Europe, so they seem reasonably secure in being more aggressive. Every brand faces the threat of substitutes, but A&F has built a strong brand reputation so only their counterfeit products could pose any serious threat to the identification they have with their target consumer audience. 3. Is there an institutional lifecycle that affects all businesses – maybe its not a question of whether the downturn will come, but when and how sharp it will be? Again, A&F seems to maintain a very good merchandising strategy in rotating its existing stock frequently to make the store always appear refreshed. A&F is so different than other retailers in so many different ways, from the music and the interior decoration and its methodology of displaying merchandise, that they really stand a chance at being a large-scale fashion hit across Europe and beyond. It would be somewhat irresponsible to say that there is an institutional lifecycle. But A&F needs to continue on its trend of setting the fashion for this type of youth apparel. They need to be the hub of luxury fashions without using any terminology that would erode the quality and attitude of their brand name. This might involve spontaneous shifts in their positioning strategy to illustrate the brand’s flexibility, as one relevant example. However, the downturn will only come if the consumer is turned away from A&F for any number of reasons. My largest recommendation is that they actively consider stretching the limits of their desired demographic to include a specific group which might still cling to the perception of youth and modernity. By expanding the brand to include those in their mid-20’s in the event of a downturn will likely see a turnaround in profitability if they can position the brand just right. 4. Can A&F succeed with an International strategy when so many US brands have struggled? A & F does not appear to have many limitations in their current international strategy. They are aligning the firm using different technologies, they are focusing on building a solid brand image in Asia, and they have the financial capital available to make these things happen. Youth and beauty are ageless and global concepts as almost inherent values. I believe it all comes down to knowing your consumer and what they desire and being able to fulfill it without eroding any of your brand equity. I use the term brand equity because the opportunities for further international expansion in a more progressive European Union would be beneficial to A&F. They have moved into the UK at a time when consumer spending on their merchandise is considerably high. They simply need to capitalise on how to adjust the brand to include different elements of lifestyle to illustrate a completely diverse brand. If they had seen profit slippages historically due to their current marketing efforts, I would offer that they might need to redevelop strategy. However A&F really appears to be right where they should be to create a global phenomenon only if they consider adjusting the brand when consumer interest wanes. 5. In case study brief, [[ Some commentators claim that A&F is more vulnerable than many fashion businesses because of its heavy dependency on “tops”. Tops have a lower unit price than “bottoms”, and are more subject to fashion trends – and hence potential mark-downs, if the brand gets the season’s fashions wrong. They are also ripe for “fast fashion” treatment – something that US retailers have yet to manage as well as the leading European brands now entering their market. Morgan Stanley (July 2007), cite Bob Shultz, an American fashion guru and Professor at New York’s Fashion Institute of Technology (FIT) as claiming that "Abercrombie & Fitch’s recent product lines lack newness and focus too much on logos – an outdated trend”. With new European fashionshitting the US, maybe the logos will soon be too prescriptive, even for the American market.]] I completely disagree. A&F has done a tremendous job with their current positioning strategy for the A&F brand. Their tops represent the lifestyles and attitudes of their current demographic, which has brought them growth in terms of profit over the last several years, despite the rising costs of logistics and other foreign-related operating costs. Hence, a shifting in their current marketing strategy to include similar logos on their variety of jeans would appeal to the same consumer mind-set (for their target demographic). Somewhat ambiguous, somewhat risqué, the phrase NIZE AS, strategically added to the rear of the jeans, can bring similar attitude from the waist down. As consumers are currently flocking to the tops, it is a natural assumption that similar diversity in A&F methodology could be incorporated into the new fashion line of jeans. This would not only prevent their target consumers from getting bored or disconnected with the brand by simply creating a new bottoms sensation, with the same models depicted in a variety of seductive photographs illustrating the A&F variety. Depending on the financial capabilities of A&F, this stitching process is likely requiring a change to the processes of manufacturing in whatever foreign facility is producing the jeans. However, it is likely, having no practical knowledge of budgetary issues at A&F, that these changes would likely be offset by the new fashion trend for “attitude which walks away with you”. A&F would not be redeveloping its brand by incorporating various trademark phrases, it would simply be synonymous with change as a fashion brand which never grows old. (Hence, appealing to the desire for youth and beauty). In the event of a market that simply is abandoning A&F (as a future precaution), such flexibility in brand image must be considered so as to spring into proverbial action. If A&F moves quickly enough on this new concept and corners the market, they can set a global fashion trend that will be synonymous with A&F, thus allowing them (perhaps) easy market entry simply by word of mouth and media attention. This would surely fit their long-term and short-term advertising budget to include no external advertising. It is somewhat intense to consider the potential opportunities for profitability and market share if A&F becomes a flexible brand and begins to illustrate the diversity that its target market likely desires. A&F cannot afford to be seen as a brand follower, it must always take the lead as a fashion icon devoted to their values of youth and attitude. Much like the youth market, who I believe are sophisticated and somewhat intense in their pursuit for change, they will relate even better with A&F which becomes less of a sales agreement and more of a relationship or partnership. Finding no love in your relationships? Let A&F be your companion because you can find some with our variety of assorted designer jeans that carry a very high price that is largely profit. Question: Could A&F become American FCUK? 6. However, sine 2006 apparel manufacturing costs have risen consistently as a result of shortages of raw materials, rising local wage costs, rising local prices and competition from the demand created by the rapidly rising “middle classes” in Asia. 2007 has seen the first signs of the return of clothing price inflation, which is expected to gather pace in 2008. Question: What is the solution of these problem? My original solution stands as is. Their new A&F flexible strategy in marketing an entire lifestyle based on trademarked logos would certainly outweigh any operational expenses. The consumers are already willing to pay the price to receive A&F brands as an image-conscious lifestyle brand. These changes require only minor adaptations to manufacturing facilities, and it is a likely assessment that such stitching would only require a minor change to the methodology for producing the A&F garments. In all practicality, nothing supply-chain related of any financial significance would likely be required. However, A&F would have to consider their operational capacities in a variety of offshore manufacturing facilities. By creating the new fashion trend, A&F will be able to establish a pricing policy that fits in league with the designer jeans craze in the 1980’s. Any sales volume increases, or ease of market entry due to the media attention, would offset any of these labour costs and rising prices of supply chain-related materials. Let’s assume for a moment that A&F abandons this proposal for its new bottom-focused marketing efforts. These costs described appear to be the primary rationale for the price increases in the UK to as to offset international logistics costs for moving materials to produce. A redesign of the supply chain system at A&F to find alternative methods in delivering international goods could be considered. It could just be a matter of identifying different routes, ground infrastructures, etc. in order to determine methods to reduce costs in this fashion. Since it is likely that international cost issues are not going to be flexible, A&F needs to be flexible in identifying streamlining improvements for cost reduction internally and externally. For instance, an analysis of whether to construct an A&F distribution centre that can service multiple locations could be the answer to international logistics costs. Though, this analysis would have to occur at the strategic level with proper access to freight and shipping costs. This might involve establishing a sort of external relationship marketing effort, where the business gets involved with third-party freight vendors who can be on call in the event that A&F manufacturing and distribution require instant support from an outsourced freight hauler. It basically means that A&F must examine its financial capabilities, which appear quite strong, which might suggest they need to consider more capital investments such as a new distribution division. The short-term costs would likely be offset by sales volumes within a short period of time and they would have a hub in operation that can service an entire European area at the same time in the event of having enough cash flow to secure a rapid international expansion effort. Read More