Abercrombie & Fitch was established in 1892 in New York City by David Abercrombie and Ezra Fitch. The company was initially started as a retailer of excursion goods including shotguns, fishing rods, and tents. In 1988, the company was sold to ‘The Limited’, who was a famous clothing brand in Ohio State. The company then started selling the clothing for young adults and soon became one of the largest apparel brands in the United States.
Abercrombie & Fitch are located at more than 1,000 locations in United States and is expanding its operations internationally. The company operates four brands including the famous ‘Abercrombie kids’ and ‘Hollister Co.’. The company is listed on New York Stock exchange and is headquartered in Ohio State, United States.
Marketing Mix Analysis
The product range of Abercrombie is huge and varies with the brand name. The company clothes are named after three brands, and every brand is representative of its unique style. The company clothing symbolizes the youthfulness and the quality is aimed towards the company’s image of Casual Luxury. The most popular brand of the company is Hollister, which has the youth as a target market. The brand depicts the easy lifestyle of California Surfers. Another brand of the company is Gilly Hicks, which is famous for its Sidney Flair. Third is Abercrombie Kids which focuses on the target market of school kids and high school students (Blythe, Essentials of Marketing, 2008).
The two main symbols used are A&F and Moose. A&F is used to symbolize the casual and smart clothing such as t-shirts and sweatshirts. While, on the other hand, Moose is used on the clothes of more formal nature such as button up shirts. The clothing is shaped by the company to show the association with thinness. This is also the reason due to which the stores of Abercrombie didn’t use to keep clothes above size 10 (Fahy & Jobber, 2015).
The clothes at Abercrombie are sold using the premium pricing strategy. This strategy reflects the consumer’s perception of the product and his willingness to pay higher prices to own the Abercrombie labeled item. Premium pricing also reflects the exclusivity associated with the Abercrombie clothing. The pricing strategy of the company does not have any policy for discounts. The product price range is categorized according to the market segmentation and branding (Blythe, Essentials of Marketing, 2005).
It is the belief of the company that the in-store experience of the customers is the primary medium through which spirit of the products and brands could be communicated (Lamb, Hair, & McDaniel, 2011). To increase the customer experience, the company emphasize on the visual presentation of products, in-house marketing, and brand representatives.
The company also uses the unique technique of scent marketing in its stores. The company’s brand of fragrance, called ‘fierce,' is sprayed in stores after every few minutes. The company associates such fragrances with the cool, classic and good looking people. Also, the stores play their playlist of techno jazz music round the clock that engages the customers during the shopping. All the stores of the company focus the attention of their consumers on the youthful lifestyle coupled with the sensuality and young spirit.
Abercrombie seeks to promote its brand at the place where it may easily meet its customer. And in this digital age, the customer resides in the world of Facebook, Instagram, snapchat and Pinterest, etc. the company, in order to engage its fans, upload on average four pictures per day on Instagram where it is followed by the 1.5 million users. On Facebook, Abercrombie leads the rival brands with the fan following of nearly ten million (Baines, Fill, & Page, 2011).
The company is also repositioning its look by bringing back the feel of the campus environment. The advertisements of the products in this regard are filled with footballs, bikes and books and give the look of old campus environment (Hackley, 2010).
The company also offers heavy discounts periodically to get rid of their existing old stocks. Primarily, these discounts were only available to the online consumers but now the discounts are also being provided in the stores of the company. Discounts given to stock clearance ranges from 25% to 35% and attracts a huge amount of customers.
The main strength of the company is its low cost of production. The reason for the low cost is that Abercrombie’s products are manufactured in Asian markets where the cost of labor is low as compared to the cost of labor in United States.
Strength of the company is its unique strategy to engage customers during in-house shopping. They do so by playing a playlist of jazz songs and a spray of their branded fragrance named Fierce, which is done automatically after every few minutes. Abercrombie’s financial position can also be regarded as its strength. The company is financially sound and has a strong liquidity position that is evident from its annual financial statement.
An important area of weakness that should be considered by the company is its marketing strategy. The primary marketing of the products is done in its stores where the semi-naked posters of the male and female models are situated to promote the symbolic values associated with the product. Other than these posters, the company never places its advertisements on televisions, radio or magazines. Such narrows the marketing of the company and limits it to the existing customers. In order to penetrate the target market and new customers, the company needs to broaden its sphere of advertisements through which it may easily reach the masses.
There are many threats and risks faced by the company in its external environment. A major threat for Abercrombie is the prevailing competition among the clothing retailers in the US market. The primary competitors of the company include American Eagle and Nike who sells the similar products with their own unique marketing strategies. These competitors enjoy the strong brand loyalty from their customers and use different promotional strategies to attract the new customers. Similarly, the new competitors entering the market use the strategy of penetration pricing which also pose severe threat to the existing customer base of the company. In order to address these threats, Abercrombie needs to revise its pricing policy to retain the existing customers and attract new customers. It should also increase its product length which may help the company in becoming a brand for the people of all ages rather than specifically for kids and youngsters. Introduction of several new formal brands could be of strategic importance in this regard.
US retail market is gaining strength and the demands for clothing products are increasing due to rapid change in fashion trends. This could be the opportunity for the company to take advantage of such situation and introduce new brands and new product line to increase the size of its target market. The company should also focus on opening new stores in the big cities of United States. The quantity of the company stores in United States is still low as compared to the size of the target market and overall demand. The introduction of new stores in the populated areas of the country could open the doors of new opportunities for the company.
Clothes retailing industry in The United States is highly competitive due to multiple factors. Barriers to entry in the retail market are relatively low due to the lower cost of production and high economies of scale. The companies in the industry need continual self-assessment to improve their efficiency and maintain product differentiation. Consumers of clothing products are highly demanding and needs a rapid change in fashion. They are willing to pay higher prices in order to associate themselves with the famous brand (Pickton & Broderick, 2005).
The clothing industry had changed significantly in the past decade due to the impact of globalization. Globalization has forced the giant retailers to focus on international markets. The main advantage retailers are receiving is that their market share has increased. Marketing strategies are also changing and new methods such as emergence of social media have changed the entire concept of traditional marketing. Abercrombie has adopted the strategy of provocative marketing through publishing the controversial pictures and advertisements in the company’s magazines. The reason behind such marketing is that revealing clothes and exotic pictures attract the teenagers who are the primary consumers of the company.
The primary competitor of the company in the United States is Gap Inc. The gap is a large cloth retailer that offers various brands of casual clothing. GAP is the world’s third largest clothing retailer and is highly famous among the teenagers and enjoys the strong brand loyalty of its customers. The target market and products of both the companies is same due to which Gap Inc. is a direct competitor of Abercrombie.
H&M is another brand that offers a wide variety of clothing products for the people of all ages including male, female and children. H&M is Swedish-based company and is considered to be the world’s second-largest clothing retailer.
World’s largest clothing retailer is the Inditex, which is the company based in Spain. Inditex runs more than 5500 stores worldwide. Its brands include famous names like Zara and Pull and Bear.
All these companies are direct competitors of Abercrombie both nationally and internationally. The company needs to reinvent itself continually with the changing consumers’ needs in order to address the tough competition in the market.
Target Market and Positioning
The target market of Abercrombie majorly includes consumers above the age of fourteen and young adults. The company targets specifically cool and attractive people that have become its brand image. In order to communicate with the target market, stores of Abercrombie hires young, attractive male models who serve the customers during their in house shopping. The company was also criticized earlier on discriminating with the fat peoples and not keeping the clothes above size 10. However, recently the company took steps to eliminate the bad reputation and started keeping the bigger size clothes in their stores. Advertisements of Abercrombie also now show the fat models (Blythe, Consumer Behaviour: SAGE Publications, 2013).
Abercrombie has become a very famous brand over time among the college students due to its symbol of casual luxury and cool, high-quality products. The primary goal of the casual luxury product is to position itself in the middle class that wishes to wear the latest trends and luxury products. By doing so, the company aims to reach the niche market offering them the products that are a luxury and also within their price range (Lancaster & Massingham, 2010).
New Product Innovation
The company had been constantly engaged in development of new products to address the tough competition in the market. The most recent development and addition to the company’s shelf are their branded fox fur with the completely new design (Kotler, 2008). The company had been selling the faux fur earlier as well, but the recent product is introduced with unique style and development (Leader & Kyritsis, 1994). Furthermore, the company has also introduced the hooded shirts, hats and scarves with the faux fur that was a innovation in the market. All these products had increased the product length of the company. These innovations had not only increased the target market of the company but also resulted in the significant increase in winter sales (Mackay & Wilmshurst, 2012).
Innovative Marketing Strategies
Abercrombie applies certain innovative marketing strategies in the promotion of their product. One of the most important strategies adopted by the company is the use of their branded fragrances to promote their organizational culture. The company uses automatic spritzers in their stores around the globe to spray the fragrances on to the customers. Most of the time fragrance used in the stores is ‘fierce’, which is the signature perfume brand of the company. Additionally, the perfume brand is also used by the company in their tags and posters, which constantly remind the consumers of the existence of their famous brand (Reynolds & Lancaster, 2005).
The company also used the strategy of not keeping the size XL and XXL in order to keep its products exclusively for the targeted audiences that are regarded by the company as cool kids. However, the company faced severe criticism from media and other stakeholders, and the strategy was taken as being negative and discriminating. The company was also criticized by the human rights organizations for keeping male models shirtless in their stores (Dearden, 2015).
Conclusion and Recommendations
The above analysis of the Abercrombie tells that the company had been successful in developing their marketing mix that is also in line with their overall corporate goals and objectives. The company has entered several new international markets and is planning to enter further markets in the near future that indicate the positive growth in the future. SWOT analysis also indicated towards the opportunities that are available to the company and which are arising in the result of the globalization. However, there are certain areas where Abercrombie needs to reassess its position to remove its weakness and eliminate the potential risks.
The recent steps and change in marketing strategies by the company are likely to bring the significant and positive change in its financial performance, which was in decline since past few years. The enhanced product portfolio and better leadership will result in increased goodwill of the company that was previously affected due to negative controversies.
Baines, P., Fill, C. & Page, K., 2011. Marketing. Oxford: OUP Oxford.
Blythe, J., 2008. Essentials of Marketing. New Jersey: FT Prentice Hall.
Blythe, J., 2013. Consumer Behaviour: SAGE Publications. Thousand Oaks: SAGE.
Cravens, D.W. & Piercy, N.F., 2012. Strategic Marketing. New York: McGraw-Hill.
Dearden, L., 2015. Abercrombie & Fitch model tells of 'racism, sexual harassment and discrimination' at store. [Online] Available at: http://www.independent.co.uk/life-style/fashion/news/abercrombie--fitch-model-tells-of-racism-sexual-harassment-and-discrimination-at-store-10175646.html[Accessed 24 June 2015].
Fahy, J. & Jobber, D., 2015. Foundations of Marketing. Chennai: McGraw-Hill Education.
Hackley, C., 2010. Advertising and Promotion: An Integrated Marketing Communications Approach. Thousand Oaks: SAGE.
Kotler, P., 2008. Principles of Marketing. New Delhi: Pearson Education India.
Lancaster, G. & Massingham, L., 2010. Essentials of Marketing Management. London: Taylor & Francis.
Lamb, C., Hair, J. & McDaniel, C., 2011. Essentials of Marketing. Boston: Cengage Learning.
Leader, W.G. & Kyritsis, N., 1994. Fundamentals of Marketing. Cheltenham: Nelson Thornes.
Mackay, A. & Wilmshurst, J., 2012. Fundamentals and Practice of Marketing. London: Routledge.
Mani, 2015. Abercrombie & Fitch Co. Posts Wider-Than-Expected Loss. [Online] Available at: http://www.valuewalk.com/2015/05/abercrombie-fitch-co-posts-wider-than-expected-loss/ [Accessed 24 June 2015].
Pickton, D. & Broderick, A., 2005. Integrated Marketing Communications. Chennai: Financial Times Prentice Hall.
Pride, W. & Ferrell, O.C., 2012. Foundations of Marketing. Boston: Cengage Learning.
Reynolds, P. & Lancaster, G., 2005. Management of Marketing. London: Routledge.
Team, T., 2015. Abercrombie & Fitch's Business Transition Will Weigh On Its Q1 Results. [Online] Available at: http://www.forbes.com/sites/greatspeculations/2015/05/27/abercrombie-fitchs-business-transition-will-weigh-on-its-q1-results/ [Accessed 24 June 2015].