Abercrombie And Fitch Harvard Case Solution & Analysis

Abercrombie And Fitch Case Study Solution

Positioning

The company has positioned its brand as a high-end brand targeting only a particular market segment. The company with its non-traditional ways of marketing through models and representatives posters its brand image as a luxury clothing brand targeted to the cool and good-looking personalities in society. Although, this market position attracts various elite people towards the brand but it hurts the company’s position in various communities focused at the equality in society. (Hisrich, 2016)

Note: A brief STP Analysis is given in the Appendix 3.

External Analysis

Competitor Analysis

A&F faces a lot of competition in the market with the presence of various number of competitors in the market. A chart showing the close competitors along with their characteristics and the marketing strategy is given in the Appendix 4. From the Appendix 4, it could be seen that the American Eagle Outfitters is considered to be the strongest competitors for company with its marketing strategy related to the television shows. Moreover, Gap is also considered to be a potential competitor in local as well as in international; markets as the company is considering to shift in the international markets. Along with it, Aeropostale Inc. with its flexible pricing strategy and the Victoria’s Street with its strong social status pose a severe threat to the current market share of the A&F.

Note: A chart in Appendix 5 shows the market share of A&F and various competitors.

Alternatives

Alternatives-1: Expanding International Brick and Mortar Stores

Expansion towards international markets through opening new stores in other Europe and Asian countries with closing domestic stores is although a good option for increasing the global presence of the company. However, the closing of domestic stores could highly impact the revenues of the firm as above 90% of its stores are located domestically and closing those stores would ultimately reduce the revenues of the firm. Moreover, the company has a long term market position in US which cannot be generated soon in the new markets. The option would help the company to expand in international markets along with the elimination of issues raised in its local markets related to its diversity. The pros and Cons for Alternative 1 are listed below;

Pros:

• Exploration of new international markets.
• Increase in revenue from international markets.
• Elimination of issues related to diversity.
• Revenue diversification.
• Step towards being a strong global brand.

Cons:

• Loss of extensive revenues from the local markets.
• Increase in competition.
• Differences in cultures could led to a failure of the brand especially in Asian countries.
• Low revenues at initial levels.
• Increase in marketing expenditures to gain market share.

Alternative-2: Introduction of Click and Mortar Stores

Alternative 2 includes the introduction of online market places through generating a proper company’s website. With the increased trends towards online shopping, the online stores like Amazon, Alibaba etc. could pose a severe threat to the market share of company. Moreover, the competitors are shifting towards click and mortar stores with Gap introducing Piperline. This shift towards online markets could reduce the revenues for company. In this scenario the company could consider introducing Click and Mortar stores. These stores with a low requirement of funds to settle would enable the company to reach international markets, without ending its domestic stores. The pros and cons of alternative 2 are given as follows;

Pros:

• Low investment
• Reducing competition threat
• Access to the world markets
• Enlarging consumer base
• Easy to manage
• Large Revenues
• Low Operating Costs
• Easy new market entrance

Cons:

• Threat to the market position
• Elimination of brand Uniqueness
• Elimination of the great store experience.
• Risk of decline in elite sales.

Alternative-3: Expansion towards International Markets Without closing Domestic Stores

Another option that the company could consider, is to expand towards the international markets without closing its domestic stores that contributes to the major part of revenues of the company. The pros and cons related to Alternative 3 are given below;

Pros:

• Reducing competition threat
• Access to the world markets
• Enlarging consumer base
• Large Revenues
• Exploration of new international markets.
• Increase in revenue from international markets.
• Revenue diversification.
• Step towards being a strong global brand.

Cons:

• Continuation of issues related to diversity.
• Differences in cultures could led to a failure of the brand especially in Asian countries.
• Low revenues at initial levels.
• Increase in marketing expenditures to gain market share.

Recommendations

On the basis of above internal and external analysis of the company along with the evaluation of various alternatives, the company is recommended to consider alternative 3. As alternative 3 would allow the company to expand in international markets without any reduction in its local revenues and any deterioration of its market position. By considering Alternative 3, the company could maintain its store experience and brand uniqueness. However, it could also consider alternative 2 that could allow the company to access the markets without any potential investment. Although, the company could pursue alternative 1 which would enable the company to focus on potential international markets rather than the local markets but as the company is highly dependent on the local markets with 90% of its stores in the US, there fore pursuing alternative 1 would result in the substantial decline in company’s revenue. Therefore, the company is recommended to consider alternative 3.

Conclusion

Although, expansion towards the international markets is potential in making the company’s brand as a strong global brand, but, the closure of domestic stores could pose a great decline in the company’s revenues with its high dependence on local markets. Therefore, the company is recommended to pursue alternative 3 that would not only aid the company in maintaining its brand image, but, it would allow the company to enlarge its revenues and became a strong global brand.

Appendices

Appendix-1: SWOT/TWOS Analysis

Appendix-2: International Segments

Appendix-3: STP Analysis

Appendix-4: Market Share

Appendix-5: Competitor Analysis

This is just a sample partical work. Please place the order on the website to get your own originally done case solution.

How We Work?
Just email us your case materials and instructions to order@thecasesolutions.com and confirm your order by making the payment here

Related Case Solutions & Analyses:

Note on Trust Rio Tinto and the Resolution Copper Mining Joint Venture (C): Planning in the Global Financial Crisis UFID(B) UFIDCase Series: CEO Video 2011 Video Bacardi Southampton (D): Analyzing Agile System Savings Peter Browning and Continental White Cap Video Value Stream Mapping Task New Life: Scaling Up Social Enterprise Start-Ups The Hostile bid for Red October : Implications of Government Fiscal & Monetary Policies