Title: Marketing of Services and Global Marketing
(Case Study: Abercrombie & Fitch)
A&F has undergone several unique transformations since its formation over 100 years ago. It began as a sporting goods store selling expensive and exotic merchandise to adventurers, presidents, businessmen, writers and movie stars. Its assets were acquired by Oshman’s Sporting Goods, where the Abercrombie brand had floundered for several years. A&F stores were acquired by the Limited Incorporated in 1988. The business experienced a period of rejuvenation and rebirth. A&F was spun off in 1996 and became a successful teen retailer selling casual apparel and accessories with a cool “preppy” look. It took a leading role in the creation of a new store format -- one that other retailers were eager to imitate. The format was intended to provide an entire experience for young shoppers with trendy music, appealing visuals, and perfumed interiors. This encouraged teenagers to “hang out” and “browse.” They wanted to act and look just like the models they saw in the stores.
A&F engaged in many controversial strategies and was the target of several lawsuits. Despite A&F’s experiences with recessions, war-time troubles, bankruptcy, changing ownership, and legal battles, it has survived. In recent years, it has benefited from significant financial success as well.
1. A&F paid $50 million to settle three lawsuits charging it with racial discrimination. Do you think the lawsuits were justified? Did A&F’s marketing strategies which apparently insulted certain minority groups encourage a corporate culture that was intolerant of diversity? Does A&F, as well as other retailers, have the right to market itself to any ethnic group it wants? Should retailers be free to hire employees with personal appearances that match the image they are trying to project – even if it means not hiring African-Americans and Latinos?
2. Consumers today are following two tracks: necessity shopping when convenience and price are important and recreational shopping when an individual shops for fun. Many retailers are trying to attract the latter consumer by providing an extraordinary shopping experience. According to a retail marketing expert, Pam Danziger, stores that rock -- or “pop” -- have the following distinctive features:
- high levels of customer involvement and interaction
- a contagious, electric quality
- an ability to evoke a shopper’s curiosity to explore and experience the space
- atmosphere, store design and merchandise that contribute to a comprehensive vision with tangible and intangible elements
Do you think that A&F has implemented these features in its stores? Why or why not? Can you identify other retailers who are using emotional branding or appealing to the “experiential” buyer?
(Case Study: Respironics, Inc.)
The case describes some of the competitive dynamics in the sleep and respiratory markets, with special emphasis on the OSA segment of the home medical equipment industry.
- Identify the major driving forces in the OSA market segment. What are the key success factors (KSFs) for competing in this segment?
- Evaluate the competitive environment for manufacturers of OSA devices, using Michael Porter’s (2008) “five-forces analysis.” Is this an attractive industry segment?
- Analyze Respironics’, ResMed’s, and F&P Healthcare’s recent financial performance. How do these rivals stack up in terms of market share and financial health?
- Describe Respironics’, ResMed’s, and F&P Healthcare’s current strategies, considering both generic strategy and time-to-market entry. How well are these working? What are these rivals’ competitive advantages and disadvantages? Perform a SWOT analysis to support your evaluation.
- Based on your responses to the previous questions, identify some strategic options for Respironics. Should it expand geographic markets, invest in and apply new technology, identify and serve a market niche, pursue selective mergers and acquisitions, or agree to be acquired by a larger medical device manufacturer? What are the pros and cons of each strategic option? Which option would you recommend?