Marketing Scoop: Abercrombie and Fitch - Essay Example

Marketing One of the leading brands in the fashion industry, which is internationally known, is Abercrombie and Fitch, A&F or Abercrombie and Fitch is an American retail company that markets signature and quality clothing apparels. Currently, it has five clothing brands, namely: 1) Abercrombie and Fitch; 2) Abercrombie Kids; 3) Hollister Co.; 4) Ruehl 925; and Gilly Hicks. The company’s store outlets are located at primary upscale shopping centres within the United States, Canada and London (Abercrombie and Fitch, n.d.). Considered as a “lifestyle brand” and a “casual luxury wear”, Abercrombie and Fitch clothing items are quite expensive. Nevertheless, the company has built a reputation with teenagers and young adults who generally flock their stores to purchase fashionable clothes of their choice. As such, these clothing apparels, which are produced and marketed internationally requires strategic decision making. For A&F to make good judgements regarding its operations, the company must primarily perceive the external factors that may affect the company’s operation that are out of its direct control (CIPD, 2008). Understanding the macro-environment aids both in the detection of possible opportunities and financial threats for and to the business respectively. In order to perceive a better view of the environment where Abercrombie and Fitch operates in, the PESTLE analysis should be used to identify risks, growth and decline, proper market positioning and possible direction for the overall improvement of the company’s product and organizational management (CIPD, 2008). PESTLE stands for Political, Economic, Sociological, Technological, Legal and Environmental (CIPD, 2008). Taking into consideration the individual elements of PESTLE as previously mentioned the Abercrombie and Fitch Management should decisively analyze the following: 1. Political – as a retail clothes company that manages outlets internationally, management at A&F must de aware of the different government regulations regarding trading policies with regards to trade restrictions and tariffs that may apply. It should also be updated with political trends, international pressure groups and inter-country relationships. 2. Economic encompasses the overseas economic trends. Taxation changes specific to product/service. The company must also be aware of interest and exchange rates on international trade and monetary issues. A study of credit availability, cost of living, economic growth and wage rates among others must be done on a regular basis to secure the company’s offshore and inshore investments. 3. Social or sociological are events or happenings socially within the market wherein Abercrombie and Fitch operates in. Consumer attitudes, consumer opinions, brand company technology image, staff attitude, ethical issues, organizational culture, fads, advertising and living standards must be assess to be able to fit the company’s personality and standards in its market of operation. 4. Technological refers to global communication, internet and information technology that has a profound effect on the company’s products or goods. Formation of an accessible and customer friendly website to make purchases online should be given due deliberation to make buying or shopping more convenient for customers. 5. Legal includes changes effected in legislation with regards regulatory bodies and processes. It also has something to do with compliance on employment laws, industry specific regulations, competitive regulations, imports and exports, etc. 6. Environmental is all about the ecological and environmental aspects like environmental regulations/issues, customer values, management style, staff morale, etc. Most of the environmental factors are either economic or social in form. As an analytical tool, PESTLE likewise provides information of what is occurring outside the organization which “at some point” would affect what is happening inside the organization (CIPD 2008). By using the six elemental framework of PESTLE in analyzing a given situation, Abercrombie and Fitch would be able to critically examine its position within the market; implement a market idea; or proceed with the direction the company decides to take against rival competition. It is also essential for the Abercrombie and Fitch management to make necessary steps on targeting market segments. The principle behind market segmentation is to gain an edge of competitiveness within the present marketplace (Principles of Marketing Segmentation, 2001). Market segmentation is a strategy that gives the company a superior advantage over other businesses that are in the same kind of business. Since Abercrombie and Fitch is a foreign entity within the Canadian and European market, it has to gain a certain part of the market by strategically segmenting the market. By doing this, it would be able to discover potential loyal customers that are untouched by existing companies who are also in the clothing retail industry. As the company continues to explore its market of operation, it would eventually be able to establish its presence within the market segments that were previously uncovered. Hence, it could select it target market in accordance to the existing opportunities present within each uncovered segment (Principles of Marketing Segmentation, 2001). The rationale of subdividing the market for the Abercrombie and Fitch products are based on the following reasons (Marketing Scoop, 2007): 1. Better Matching of Customer’s Needs – since the consumer is the financial lifeline of any company, it must not be taken for granted that each individual has his or her own needs based on personal wants and personal choice of lifestyle. By dissecting the market, these differences would come to the open and management should do its best to create a variety of offers that are in line with the demands of the consumers. Proper implementation of matching customers’ needs will payoff in terms of client satisfaction and loyal following. 2. Enhanced Profits for Business – all businesses, large or small, should take into consideration that not all customers could afford the same product at the same price, since the buying or purchasing power of a client primarily depends on his or her available income or cash for expenses. Thus, price is a determining factor. By meticulously segmenting target markets, the management would be able to adjust its price or overhead expenses to increase gains/profits accordingly. 3. Better Opportunities for Growth – segmenting the market provides “sales build-up” where the company could introduce new items at a lower introductory price. This is giving consumers the opportunity to acquire a good product brand at a lower price but of the same quality, while it also gives the organization or company the chance to promote its name through its products or services. 4. Retain More Customers – customers at one point in their lives change their lifestyle and their purchasing patterns. So as they grow older, their demand for a previous product may decline in favour of a more suitable one for their age or status at present. Therefore, Abercrombie and Fitch or any other company who is engage in any form of business must create additional products that could cater to biological and situational changes. So that clients could have more choices as they go through with their life cycle. 5. Gain Share of the Market Segment – by carefully improving “segmentation and targeting” of the market, Abercrombie and Fitch could achieve a competitive edge in terms of cost allocation for production and marketing. Segmentation provides opportunities for smaller firms to compete with bigger ones when approached with care and critical analysis. 6. Target Marketing Communications – to be able to reach a relevant portion of customer audience, the target market must not be too broad or too big because there could be a possibility of: 1) missing key customers and 2) increasing expenses for communication or advertisement. By dividing the market accordingly in terms of location, age, financial status, etc., costs pertaining to media advertisements could be reduced significantly and target customers could easily be reached. Moreover, to be able to allocate company resources effectively and efficiently, Abercrombie and Fitch must be able to identify the different characteristics or personality outline of its target customers within a particular market or place of operation. Analyzing the profile of potential customers will give the company an idea of the kind of consumers who will not only like their product but would have the means to acquire the products or goods which are being offered. Since Abercrombie and Fitch deals in fashionable clothes, the A&F clothing line for the ladies should project a personality of being attractive, sociable, confident, fashion conscious and outgoing. For the men, the clothes must depict a character of being outgoing, ambitious and sociable. As a casual wear, the A&F clothes for the kids must paint a picture of versatility, comfort and on-the-go that could meet the demands of wear and tear due to the demands of school, play and other outdoor activities. In congruence to having or using the PESTLE analysis in order to have a competitive edge within the market, A&F must also use the marketing mix which is composed of the following ingredients in terms of strategic marketing (MarketingTeacher, n.d.): 1) price, 2) place, 3) product and 4) promotion. The marketing mix or 4Ps allows the company to apply and combine all the elements by using a variety of strategic planning and approaches to enhance the product or service that is being offered, to wit (MarketingTeacher, n.d.): 1. Price – there are plenty of ways to price a product. The thing to consider when pricing is whether the customer is willing to pay the amount for the kind of product or service given. Thus, the question that needs primary valuation is: “Is the product/service quality commensurate to the asking price?” Normally if a customer is convince that the price is right or is what is normally expected, then the price demanded will be paid for. Discounts and bargains are often sought even by the fashion conscious or meticulous customer due to the fact that they would be getting the same quality for a lesser payoff. 2. Place – refers to the store outlet where the product or merchandise is put on display for purchase. Proper conceptualization of the store generally affords clients a “good physical experience” that would motivate and encourage them to return for more. A strategically situated store location will also assure good investment or profit depending on whether it is a place where the moneyed elite go or where many buyers flock in search of quality goods to buy. 3. Product – these are the tangible items that consumers buy. Packaging and arrangement requires artistic ability and originality that shows careful planning where the customers’ convenience and need were kept in mind. 4. Promotion – this includes all the marketing tools used to reach a target market audience. Using the local media and banking on quality and good service where word of mouth in terms of recommendation, helps in the promotion of the company’s products while cutting costs for expensive advertising. As discussed above, the PESTLE and Marketing Mix are essential tools that help a company in determining uncontrollable and controllable factors that needs to be assessed for the potential growth and long term viability of the entire operation. Having a good share of the market and knowing the rules and regulations required for a smooth flow of operation establishes good profits and excellent customer support. References CIPD. (March 2008). PESTLE Analysis. Retrieved on July 29, 2008 from http://www.cipd.co.uk/subjects/subjects/corpstrtgy/general/pestle-analysis.htm Marketing Scoop. (2007). Retrieved on July 29, 2008 from http://www.marketingscoop.com/market-segementation-why.htm Principles of Market Segmentation 2. (January 2001). Positioning and Segmentation: American Marketing Association. Retrieved on July 30, 2008 from http://jobfunctions.bnet.com/abstract.aspx?docid=57397 MarketingTeacher. (n.d.) Retrieved on July 30, 2008 from http://www.marketingteacher.com/Lessons/lesson_marketing_mix.htm Abercrombie & Fitch. (n.d.) Retrieved on July 29, 2008 from www.abercrombie.com/anf/onlinestore/index.html Marketing Mix. (n.d.) Retrieved on July 29, 2008 from www.netmba.com/marketing/mix Pestle Analysis. (n.d.) Technovate Research.Com Retrieved on July 29, 2008 from http://www.technovateresearch.com/pestle.shtml Read More