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Abercrombie & Fitch: Exam - Case Study Example

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Abercrombie & Fitch: Exam

For instance, A&F chose to mark up their prices when they expanded into the UK. However, their profits were affected when individuals in the UK’s macro-trading environment noticed they could order A&F products via the USA website for much cheaper and were angered. Another example is the complaint mail and lawsuit threats that A&F received for their racy and explicit ads. There, the activities in the micro-trading environment of A&F were influenced as the company decided to take measures against the complaints. There are several major macro trends that are impacting on A&F’s sales performance in the UK. The first is the economic trend of high cost of overhead. Secondly, the products are being sold at a considerable mark-up from United States prices, which is a competition trend. Third, a social trend is that the fashion scene in the UK is similar to that in the USA, but must also be followed carefully to ensure that the products that hit the stores are the ones that customers want. The fourth is a social trend mentioned in the case brief is that UK customers are attracted by that souvenir appeal. Customers previously would only buy A&F merchandise on a visit to the USA, and this is affecting the company’s popularity now that they have moved to the UK....
E - Economic (pressures on consumers PDI and A&F's costs)
S - Social (fashion trends, popularity, changes in perception of clothing value)
T - Technological (Internet affects web and catalogue sales, new scanners)

Porter's Five Forces
1. Competitive rivalry exists between suppliers (A&F makes its own products)
2. Threat of new entrants into market (new stores could enter at any time)
3. Buyers have bargaining power (buyers could choose to shop at GAP, etc.)
4. Suppliers have power (manufacturers can always buy cheaper materials if available)
5. Substitute products threat (rip-offs, counterfeits dilute brand image)


2. A. Apply the concept of the 'Augmented Product' to Abercrombie & Fitch.
(20 Marks) - 100 words
B. To what extent are the physical outputs of design activity, such as stores, products, websites, etc and brand status subject to changing fashion and design trends (30 Marks) - 100 words
C. Utilising appropriate theory and models, analyse the impact design has on Abercrombie & Fitch's brand positioning. (50 Marks) - 100 words

2. Answer
A. The Augmented Product model is represented by 3 circles: inner, middle, and outer. The inner circle represents the core products that are seen at every A&F store; i.e. basic jeans and logo t-shirts. These are expected by every consumer at every store. The middle circle represents the products that are just beyond the basic elements; i.e. clean and comfortable stores. In order to be classified as a quality provider, A&F needs these elements. The outer circle represents the surprises that customers are not expecting if they have never been to the store before; i.e. the loud music, lighting, and fragrance. This is what really sets them apart from their competitors.

B. They take ...Show more

Summary

The activities, sales, and profits of Abercrombie & Fitch are likely to be influenced by the macro-trading environment in which it operates. A&F tends to play it on the safe side when it comes to making macro-trading investments. …
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