The Problem
Abercrombie and Fitch is an international retail clothing brand which was incorporated in 1892 in New York. Until 2011, the company had followed an intensive business strategy of expanding its direct-to-consumer operations and brick and mortar stores through closure of local stores. When its share value dropped in 2011, A&F was faced with the decision of choosing between market segments and re-evaluating its focus strategy. The paper aims to evaluate A&F’s existing business strategy to maintain competitive advantage through SWOT analysis and to provide alternatives and recommendations for employing a strategy in the present situation.
Analysis
A SWOT analysis of A&F’s marketing strategy reveals that it has several strengths which it effectively exploits to achieve success. The company has sound financial background and renowned history. Its brand name is popular and reputed to provide quality apparel. It employs attractive marketing strategies and provides a unique shopping experience to the customers. It targets customers of different age groups through different chains and marketing techniques. On the other hand, several of the company’s weaknesses include offensive advertisement and racial employment practices. The company has faced several lawsuits in the past because of infringement of civil rights and creating a non-diverse work culture. It has also faced criticism for provocative advertisement and over-pricing of products. The company’s failure to reach Wall Street’s projected estimates and the resulting loss of credibility in the market can also be viewed as one of A&F’s weaknesses. The company has several opportunities which can prove beneficial to the company. It has the opportunity to exploit unexplored international markets and to expand its operations to all the other age-groups. It can add several new styles and items to its existing line of products. It can add value to its brand by engaging previously ignored customers and communities in its marketing initiatives. However, in doing so A&F faces several threats. The biggest threat is the increasing popularity of its competitors in the domestic market. It also faces the challenge of competing with established brands in the regional markets of foreign countries. Re-building public trust and investor confidence is another major threat the company faces.
Alternatives
In the present situation, the company has two alternatives. The first alternative the company has is to focus on its domestic market and concentrate on re-establishing its brand image through better advertisement, inclusion of people from diverse cultures in workplace and ads, and developing its product line further. The second alternative is to concentrate on international expansion projects and focus on building brand image in foreign markets to increase revenue.
Recommendation and Plan
A&F’s current situation demands that the company must focus on its domestic market first. The first alternative is recommended since the company has not been able to meet investors’ demands in the U.S. because of which its value has dwindled in the market. The public has lost confidence in the company and it would in the best interest of A&F to re-establish ground in the U.S. first. Moreover, there are several key concerns such as workplace issues, advertisement campaigns and over-pricing of products which need to be addressed in the domestic market before entering the foreign ones. A plan of action recommended for the company is to use product differentiation in its marketing strategy. The company must introduce and launch products which target different age-groups and different income-groups in the country. It would also be better for the company to hire individuals from varied cultures and ethnicities in the workplace and in its advertisements. A&F’s rigid ‘Look Policy’ also needs to be amended according to the changing times. The company would also benefit by creating non-provocative but creative electronic and print ads.
Conclusion
The case study shows how companies can improve their business strategies and make better business decisions by focusing on their strengths and improving upon their weaknesses. An analysis of their business environment and their current marketing techniques can help companies such as Abercrombie and Fitch, to maximize their wealth and increase their market value.
