Why American Eagle Has Outperformed Abercrombie, Essay Example

From the analysis presented in the sources, it is evident that Abercrombie & Fitch has lost connection with its potential buyers, and built a self-serving brand, which focused on an ideology that the target market did not share. The long-term influence of Jeffries made the company less customer-focused, and more protective. Berfield & Rupp (Holding on) describes how the former CEO stuck with the image that appealed to the teenagers of the 60-s and 70-s, but failed to change as new generations grew up. Therefore, the main focus for revitalizing the company, and its marketing strategy would be two of the four P-s: product, and promotion.

Product

The current product line of Abercrombie & Fitch is limited and excludes some people. The brand for a long time did not have black clothing items; even though some people believed that it made them look more attractive. Further, criticism of customers and advocacy groups has hit the company when it introduced kinky underwear for pre-teen girls. As Berfield & Rupp (Holding on, p. 50) quotes Durando: “we were becoming narrower in terms of who was able to wear our clothes”. The first question the new management needs to ask before creating a marketing strategy is why teen girls decide not to wear A& F clothes any more (Holding on, p. 51), and which brands’ product lines serve their taste and preferences better than Abercrombie & Fitch. Further, it is important to note that the global teenage and young generation clothing market is competitive. Some brands are already making success, taking away A&F’s market share that it earned through decades of hard work. Some of the successful brands are GAP, H&M, and the discount retailer, Primark (Pricing Strategy). According to Cheng (Pricing Strategy), the value propositions offered by these brands are more attractive than A&F’s. Finally, it is also important to mention that another rival. American Eagle managed to succeed in growing its business, by introducing “improved merchandise” created in “testing labs” designed to spot customer and fashion trends.

Promotion

The promotion of the company should reflect the organization’s culture (BACW, p. 210), which should also connect with the market. This is not the case at the moment, and advertising is based on highly sexual billboards (Holding on, p. 50). Further, promoting the products with models and salespersons who have a perfect body and exclude men and women who do not (Cheng). Further, the company failed to listen to what stakeholders were telling them, and built an image that excluded some groups, and triggered demonstrations, boycotts, and court cases (Holding on, p. 51). A classic example of failing to connect with the audience and market through promotion was the creation of A&F Quarterly, which clearly did not connect with buyers. It simply ignored the lifestyle of potential buyers, and talked about anything that the company considered being relevant to their lifestyle: group sex and drinking games. The centralization of the organization (BACW, p. 219) prevented the promotion to talk to customers instead of talking about the ideology of the CEO (Abrupt Exit).

Related Consumer Trends

During the recession, many younger buyers turned to discount retailers, and looked for promotions. Further, young buyers are now more focused on technology, and have a different lifestyle than those who grew up in the 80-s or 90-s. As Cheng (Pricing Strategy) confirms, customers have already turned to unbranded items available for lower price, offering the same style – and often quality –, therefore, special promotions do not help companies like GAP and A&F to increase their revenues (Pricing Strategy). Many customers “refuse to be weaned off sales” (Pricing Strategy). Many of them shop online, and web promotion is a cheap alternative to expensive billboard ads and magazine full page adverts. Brand loyalty, however, exists in the specialty clothing market, as Nike, Adidas, and Levi Strauss is still holding on to their market share, because they can connect with the customer through the product and promotion alike. This is something that A&F needs to re-learn in order to turn sales slump (Sales drop) into growth again.

Consumer Behavior

The consumer behavior has greatly impacted the sales made by the Abercrombie and Fitch Company. Adapting to behavioral change from the prospective customers was an obvious risk to the company’s clothing market. The market orientation mandates that the company should gather consumer information regarding their needs and expectations towards the company’s products. Sharing information concerning consumer behavior is vital for the company management to identify business strategies they can use to establish better organizational and customer relationships (BACW text, p 348).

Abercrombie and Fitch Company also lacked a successful team effectiveness that could predict through the theoretical models. Organization, teamwork and communication are essential components that make up the structure for a prosperous business (BACW text, p 215). The main reason identified as to why the Abercrombie and Fitch Company stock keeps plummeting is lack of it adaptation to the changing consumer market. Keeping up with trends is important for keeping the business market active and competitive for the company.

Grappling with inventory challenges also forms a bad sign on the consumers, besides, closing some stores in the effort to increase profit margins. The surprising change in teen behavior and preference caught the company on the wrong side of the trend. Focusing on the innovation, research and design of new products is a positive step towards ensuring the company’s future in the competitive consumer market (BACW text, p 230). The specific challenges in the A & F Company are that it requires exceptional skill sets that can solve the adversities affecting business performance.

Properly managing all the sections and department of the business is imperative for the company to excel. Promotion of the Company’s product is a good way of establishing a good connection with the customers and the general public regarding the company’s products. Assigning tasks according to personnel specialization, frequently motivating the staff and conducting consistent research on the market will help the management in coming up with better decisions regarding the company’s continued operation in the clothing market.

Works Cited

Business: A Changing World. (BACW) Berfield, S. & Rupp, L. January 16, 2015. “Holding on to relevance: Behind the Decline of Abercrombie & Fitch and the fall of its mastermind: Michael Jeffries”. Bloomberg Businessweek.

Cheng, A. March 5, 2015. “Why American Eagle has outperformed Abercrombie” MarketWatch.

Cheng, A. “Gap, Abercrombie need a pricing strategy shift” Market Watch.

Chen, A. & Dulaney, C. March 4, 2015. “American Eagle Shows Strength Among Teens” The Wall Street Journal.

Dulaney, C. March 4, 2015. “Abercrombie Sales Drop 14%, Warns of Tough Months Ahead”. The Wall Street Journal.

Kapner, S. & Lublin, J.S. December 9, 2014. Abercrombie CEO s Abrupt Exit Followed Weak Sales. The Wall  Street Journal.