1.0 Background Abercrombie & Fitch (A&F) is an American leading retailer of casual clothing marketed toward young people (from children to young adults), predominantly university students. A&F’s history began in 1892 when David T. Abercrombie opened his first store in Manhattan, New York. The company is running over 1000 stores nationwide, mostly in shopping malls, and also markets its product on-line and mailing. 2007 A&F opened its first international Flagship store and since then has been opening stores around the world: The UK, Italy, Japan, Denmark and France (Abercrombie & Fitch International 2011).
The company’s style has become identified with the more open aspects of upper-middle-class youth culture, classic American lifestyle. They have been in the media exposure from time to time for years because they are having over line marketing campaigns (Case: Ethics in retailing).
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2.0 Situational Analysis At the beginning of situational analysis, it is essential to use SWOT analysis to identify main issues of this case. This analysis tool includes Strengths, Weaknesses, Opportunities and Threats. (Houben, Lenie & Vanhoof 1999)
For the A&F in this case, strengths: Foremost, A&F has solid financial position. According to Abercrombie & Fitch 2009 Annual Report, the company recorded revenues of $2,928.6 million during the financial year ended January 2010 (FY2009). Moreover, A&F has relatively strong brand portfolio. At last, A&F has been applying effective market strategy for years.
Weakness: First of all, A&F’s marketing strategy has been controversial these years. Second of all, due to hiring discrimination, A&F’s employees are non-committed. Opportunities: In terms of domestic market, in spite of A&F’s sales market share is not bad, on line retails and discount stores are behind the market demand. In respect of international market, although A&F already began its international marketing strategy in 2007, it is far from enough.
Threats: Firstly, American economy is still in recession. This seriously impact American’s purchase power. The company recorded revenues during the financial year ended January 2010 (FY2009) decreased 15.9% compared with FY2008 (Abercrombie & Fitch 2009 Annual Report). Secondly, increased minimum wages in the US would affect A&F’s profitability.
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2.1 Identification of case issues
A&F has become the focus of media source frequently throughout the past couples of years. It has been using buzz marketing strategy and discriminatory hiring policy, but the form of buzz marketing and hiring policy they are implementing is controversial. The main areas that A&F are using to develop public concern for promotion are product lines, direct marketing and hiring practice. 2.1.1 Identify the dilemma The problem for A&F in this case is that A&F is choosing high media exposure result from creating controversies on purpose instead of right guidance for young people and teenage. First, referring to case, the product lines that resulted in arguments were introduced in April and May 2002, when A&F began to sell T-shirts with racist sayings pointing to Asians and child-size thong underwear with sexual indication sayings. Second, A&F’s direct marketing strategy which specializes in catalogs with sex appeal and magalogs with drinking recipes is misleading young people. Ultimately, the hiring policy in A&F is relatively discriminatory because they only hire those people who are young and attractive. In this case, TV Test could be used to determine whether these problems are ethical situation (Murphy, Laczniak, Bowie & Klein 2005). Apparently, those buzz marketing strategy and hiring policy mentioned before are not only negative for young generation’s education, but also are offensive to some people in society. A&F’s manager would not feel comfortable presenting their activities on TV to people. Therefore, the problem of A&F choosing high media
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exposure instead of right guidance for young generation is an ethical problem. 2.1.2 Gather all relevant facts As delivered in the case, all the actions that A&F has been taking are having ethical problems, but they are all working effectively. For incidence, the controversies created by A&F about T-shirt with racist sayings and children underwear with sexual indication sayings result in company’s stock hit a 52-week high and company received repeated media exposure, respectively. Those campaigns could be considered success because they let people talk about A&F all the time. 2.1.3 Define the ethical issues at stake In these days, there are some standards marketers should use to concern questions that have ethical implications. A significant type of shorthand decision rules can be used to simplifying marketing ethics is: ABCs of Marketing Ethics (Murphy, Laczniak, Bowie & Klein 2005).
Foremost, ＂Beyond the bottom line＂is a basic thought for decision maker to think about what is he or she going to do. Marketing decision makers have to consider not only financial influence of their strategy, but also social performance. Although A&F’s buzz marketing strategy has been implementing successfully, they are creating controversial debates on purpose. Thus, it is sure that they ignore social performance.
In addition, marketers must concern ＂Consequences＂ of their plan when they are developing the marketing tactics. Mostly decision makers are only anxious about the
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positive consequences of their marketing policy. However, they really need to think about negative consequences for the company under ethical situation. In terms of drawbacks for A&F, they are giving misleading to young generations including drinking, racist, sex attitude and hire discrimination problems.
In the end, ＂Contributions＂for marketing managers not only mean profit, but also imply social responsibility. Referring to case, A&F is putting economic profit prior to Entrepreneurs social responsibility because they are using buzz marketing in a negative way.
2.1.4 Identify all stakeholders Primary stakeholders in this case are: young generation consumers of A&F, parents of young consumers, employees of A&F, shareholders of A&F and A&F’ owners.
Secondary stakeholders in this case are: local community organizations such as Mothers Against Drunk Driving, the media who are giving A&F’s controversies the exposure, other clothing retailers (Murphy, Laczniak, Bowie & Klein 2005). Based on case, young generation and A&F are opposite sides. Giving young generation a good growing environment and right guidance is every parent and society want. Thus, young generation should be ranked prior to A&F. 2.1.5 Identify all the consequences (1) In the short run
Young generation consumers of A&F: Those promotion strategies A&F have been
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