Under the leadership of its new CEO, Abercrombie & Fitch focuses on a segmented target market. The company does not offer extra larger (XL) or double extra-large (XXL) sizes for women. This customer segmentation received criticism from the media and the public. Amidst the controversy, should A&F abandon its exclusionary tactics?
Seung Hwan (Mark) Lee, June Cotte, Danae Blanchard
Harvard Business Review (W14096-PDF-ENG)
April 09, 2014
Case questions answered:
Should Abercrombie & Fitch stick to its current marketing strategy (exclusionary tactics) or become more inclusive by adding more sizes?
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Case answers for Abercrombie & Fitch: Is It Unethical To Be Exclusive?
I. Background information – Abercrombie & Fitch
In 1898, Abercrombie was a small waterfront shop founded in Manhattan. At that time, Abercrombie targeted hunters and fishers for outdoor gear. In 1970, Abercrombie & Ezra Fitch (A&F) was formed to be an American retailer that focused on casual luxury clothing style. Still, it became solely apparel-based after being bought by The Limited Inc (L Brands).
There are three subsidiary stores of A&F with three different target customers: pre-teens (12-14 years old), teenagers (15-18 years old), early adults (19-22 years old).
What makes Abercrombie & Fitch experience a big change in the operation is Michael Jeffries’s appearance, a new chief executive officer (CEO) hired to become the leader of A&F.
Under the CEO’s leadership, the company has achieved many successes through his clear vision and strategic plan for instituting a segmented target market that targets cool, sexy, and younger customers and uses sex appeal to refresh the brand. Nevertheless, this also aroused many controversies for A&F as it faced problems from the public about marketing strategy.
During an interview, Jeffries declared that the target audience of A&F was “cool and good-looking people” as the brand just only created a quality brand that serves cool groups and has a sense of exclusivity. This claim alluded to his strategy, which is the exclusive strategy to make Abercrombie & Fitch become an exclusive sought-after brand.
However, this strategy is debatable when it comes to limited size for women – “the largest size was only 10”. Additionally, customers perceived this strategy as unethical practice as A&F restricts customers to buy products because the average US women could not fit.
The company also emphasized that those who were not its target customers would never belong to the brand. Consequently, a lot of pressure from the media and consumers made the company had to consider “should the company stick to its current marketing strategy (exclusionary tactics) or become more inclusive by adding more sizes?”.
Therefore, this analyzing paper clearly defines Abercrombie & Fitch’s segmentation, targeting, and positioning. Then, we draw out the pros and cons of two (2) options in the company.
From that, the last part is to give the final recommendations for the situation exposed in the Case Study, which is maintaining the same line (continue using the exclusivity strategy) or adding a fuller range of sizes (amplifying more sizes such as extra-large (XL) or double extra-large (XXL).
II. STP Analysis of Abercrombie & Fitch, Co.
1. Segmentation of A&F Co.
There are two perspectives to take a look on the A&F segmentation, which are macro segmentation and micro-segmentation.
In the macro segmentation, A&F focused on the consumer group, consumer needs, and product use.
Abercrombie & Fitch wants to create a quality brand to cater to teenagers’ cool cliques, which Jeffries supposed that the group should strive for a beautiful image. Though serving many students, the company experienced amassed a majority market share in the teen apparel market.
It is not like other brands that serve everybody: young, old, fat, and skinny. A&F went differently in customer type. Being a part of A&F’s community represents the customers as cool, sexy, good-looking, hip, and spirited people who show a certain status in their environment and differentiate themselves from casual basics.
By clearly defining a vision of what customers’ needs, Abercrombie & Fitch had become the envy of the fashion world after the loss of $25 million despite operating 36 stores in 1992.
Jeffries stated that “we want to market to cool, good-looking people. We don’t market to anyone other than that”. Therefore, A&F just produced limited sizes for women to target good-looking people.
In the US, the average woman’s pants size is 12 to 14. Nevertheless, A&F’s maximum pants size was only 10 for women.
To make customers feel they belong to the brand, Abercrombie & Fitch did not offer extra larger (XL) or double extra-large (XXL) sizes for women. Those sizes are available for men though.
In turn, A&F uses this type of exclusionary marketing tactic (via customer segmentation) to market their products like a high-desired brand that stands for a sought-after brand and is not easily attained by ordinary people.
Putting the general information into details is the concentration on Micro-Segmentation. A&F focuses on 4 main types of market segmentation which are…