Marketing Research Report

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Assessment Submission Form Student Name Sinead Conroy 13332931 Ciaran Ryan 11425208 Louise McDonagh 13321861 Rachel Horetzky 15200936 Chizurum Nwachukwu 12254977 Assessment Title Market Research Final Report Module Code MKT30050 Module Title Market Research Date Submitted 10th November 2015 A SIGNED COPY OF THIS FORM MUST ACCOMPANY ALL SUBMISSIONS FOR ASSESSMENT. STUDENTS SHOULD KEEP A COPY OF ALL WORK SUBMITTED. Procedures for Submission and Late Submission Ensure that you have checked the School’s procedures for the submission of assessments. Note: There are penalties for the late submission of assessments. For further information please see the University’s Policy on Late Submission of Coursework, (http://www.ucd.ie/registrar/) Plagiarism: the unacknowledged inclusion of another person’s writings or ideas or works, in any formally presented work (including essays, examinations, projects, laboratory reports or presentations). The penalties associated with plagiarism designed to impose sanctions that reflect the seriousness of University’s commitment to academic integrity. Ensure that you have read the University’s Briefing for Students on Academic Integrity and Plagiarism and the UCD Plagiarism Statement, Plagiarism Policy and Procedures, (http://www.ucd.ie/registrar/) Declaration of Authorship I declare that all material in this assessment is my own work except where there is clear acknowledgement and appropriate reference to the work of others. Signed....................................................... Date ................................................... Assessment submission form_modular

Transcript of Marketing Research Report

Assessment Submission Form

Student Name

Sinead Conroy 13332931 Ciaran Ryan 11425208 Louise McDonagh 13321861 Rachel Horetzky 15200936 Chizurum Nwachukwu 12254977

Assessment Title Market Research Final Report

Module Code MKT30050

Module Title Market Research

Date Submitted 10th November 2015

A SIGNED COPY OF THIS FORM MUST ACCOMPANY ALL SUBMISSIONS FOR ASSESSMENT.

STUDENTS SHOULD KEEP A COPY OF ALL WORK SUBMITTED.

Procedures for Submission and Late Submission

Ensure that you have checked the School’s procedures for the submission of assessments. �Note: There are penalties for the late submission of assessments. For further information please see the University’s Policy on Late Submission of Coursework, (http://www.ucd.ie/registrar/)

Plagiarism: the unacknowledged inclusion of another person’s writings or ideas or works, in any formally presented work (including essays, examinations, projects, laboratory reports or presentations). The penalties associated with plagiarism designed to impose sanctions that reflect the seriousness of University’s commitment to academic integrity. Ensure that you have read the University’s Briefing for Students on Academic Integrity and Plagiarism and the UCD Plagiarism Statement, Plagiarism Policy and Procedures, (http://www.ucd.ie/registrar/)

Declaration of Authorship

I declare that all material in this assessment is my own work except where there is clear acknowledgement and appropriate reference to the work of others.

Signed....................................................... Date ...................................................

Assessment submission form_modular

American Apparel

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American Apparel

American Apparel

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Contents

Executive Summary........................................................................................... 4

Methodology....................................................................................................... 6

Findings.............................................................................................................. 8

- Qualitative

- Quantitative

Limitations......................................................................................................... 15

Conclusions/Recommendations....................................................................... 16

Appendix........................................................................................................... 19

- Secondary Research

- Copy of Survey (hardcopy)

- Presentation (hardcopy)

References......................................................................................................... 22

American Apparel

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Executive summary

Our group has conducting both primary and secondary research on American

Apparel, a clothing retailer founded in 1989 which currently boasts of having 260

stores worldwide in 19 countries. We discovered that the company has received a lot

of negative publicity over the last few years mainly due to the company’s

controversial adverts as well as the resignation of their auditors Deloitte and Touche

as a result of some irregularities found in the company’s financial statements in 2008.

Despite being backed by an investment firm with an offering of $382.5 million in

2006 the company has not been able to make a profit since 2009 and has lost so much

money that it was nearly delisted from the New York Stock Exchange.

Our secondary research led us to understand that American Apparel needs to make

drastic changes in order to turn the tide it is currently experiencing. From the release

of its most recent financial statements we discovered that its Net sales for the second

quarter of 2015 decreased 17.2% to $134.4 million from $162.4 million for the same

period in 2014, Gross profit for the second quarter of 2015 decreased 25.3% to $61.5

million from $82.4 million for the same period in 2014 and Loss per share in the

second quarter 2015 was $0.11.

In light of this we decided to focus our primary research on two key issues: the

shopping habits of people (who they choose over American Apparel) and their

attitudes, experience and opinions towards American Apparel advertising. We

conducted an online non-probability convenience sampling survey. We received 148

responses and it was from these findings that we chose the topic, issues and questions

to discuss in our focus group. We discovered that 84% of our audience would shop in

AA once a year or less with H&M being the number one choice for our shoppers and

AA ranking 5th out of 6 options. We also learned that 33% of people have found their

advertising offensive citing issues such as "extremely thin models", "Extremely

sexual", "poor portrayal of women". The issue of advertising was also discussed in

our focus group with the main issue being the reasoning behind why a clothing store

uses very little clothing in its advertisements. The findings and discussion are outlined

in detail below.

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Through our secondary research and conversations had throughout our investigations

we discovered that American Apparel make and produce their clothes in The United

States. Unlike other clothing brands that produce primarily in low-cost foreign

markets, AA operates on the idea of being a "home-grown" and locally produced

product. We felt that this was something we needed to explore further so it became

the second focal point of our focus group. We included a diverse range of students in

our group and asked whether or not the "home-grown" idea could be something AA

can trade on.

Our primary research helped us to understand a number of key issues behind the

problems facing American Apparel:

- Lower cost alternatives offering similar clothing

- Poor, offensive and ineffective advertising

- Poor brand image

- Lack of promotion of "the good stuff" eg, Home grown and made

Having come to the end of our research we have a number of conclusions and

recommendations for American Apparel going forward.

It is clear that there are minor issues surrounding who exactly AA are trying to target

and what their value proposition is as they struggle to compete with very similar low-

cost rivals. There needs to be better definition of who the company are targeting,

whether that be niche or broad, in order to better market and sell their products.

We recommend:

- A new advertising approach and focus centered around the clothing & style

that AA offer

- A greater emphasis on empowered, well dressed women to counter act the

opinion of over-sexualisation and derogatory attitudes towards women

representing their brand

- Better promotion of their standing as a good American employer creating and

maintaining home grown talent

- A more socially responsible approach to their business in order to capitalize

on the changing attitudes of shoppers who are well informed of fair trade,

labor rights and environmental issues.

American Apparel

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Methodology

After conducting the initial secondary research on American Apparel, we discovered

that the company has not made a profit since 2009. This is largely because the

American retailer has been unable to adjust to the changing behaviours and interests

of its target market. (Kurane, Ramikrishnan & Dastin, 2015) Through background

research on key issues, we were able to develop research goals and methods on

achieving them. In order to gain a better understanding of consumer attitudes and

beliefs about American Apparel and their products, we decided to implement some

exploratory and descriptive research. First, we developed a survey consisting of

seventeen questions on Qualtrics that contained both multiple choice and open-ended

questions to better define the opinions, attitudes, and behaviours that the proposed

target market.

We began the questionnaire with non-intrusive broad questions about consumer

shopping habits. Questions one through four help us discover how often consumers

shop for clothes, what channels they prefer (online versus in store), what criteria are

important in purchasing from retail stores, and where American Apparel ranks

compared to competitors. Then we became more specific in recognising the brand,

asking if consumers were familiar with American Apparel. If consumers answered

yes, they would be directed to another questions asking if they had ever shopped at

the retailer. We created more branching questions from here in order to discover how

often consumers shopped at American Apparel in particular. We created a scalar

question when asking about customer’s thoughts on different aspects of the retailer’s

marketing mix to see where the company could improve. Further down the survey, we

asked very specific, qualitative questions to find out what kind of market consumers

believed American Apparel would appeal to. Finally, we ended the survey with more

serious questions on the retailer’s offensive advertising to identify what exactly needs

to be addressed. We also added questions asking for consumer demographics (age,

gender, occupation) to help better identify a specific target market.

After developing our questionnaire for our quantitative research, we had to identify

our target market for sampling. The element we focused on was fashion-conscious

millennials. Our sampling unit being households with fashion-conscious

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millennials. The extent, or location, we conducted our research was primarily at

University College Dublin in Dublin and Case Western Reserve University in

Cleveland, Ohio. We circulated the Qualtrics survey from the 14th to the 31st of

October. Our goal was to obtain about 100 responses, and we met our goal with 139

completed surveys. We decided to use the nonprobability sampling technique of

convenience sampling, as American Apparel’s target market is mostly our

generation. We shared the survey through social media sites with our peers that we

knew through the universities, which is why the extent is centered primarily around

Dublin and Cleveland.

In order to identify other company issues and areas for potential growth for American

Apparel, we decided to use a focus group for qualitative research. We assembled a

group of five people and met for about an hour on the 4th of November in a study

room in Quinn. Since we wanted to form a focus group that reflected American

Apparel’s target market, we recruited both male and female college students between

the ages of 19 and 24. We also wanted to ensure that all members of our focus group

had either shopped at, or had been familiar with, American Apparel so they could

give us informed and descriptive feedback on what they thought of the brands and its

products. While we conducted the focus group in Dublin, one characteristic that

differentiated members was their location of origin. Participants were either from the

United States or Europe, which could have affected their responses and how they

perceive American Apparel.

With Rachel as our moderator, we began recording the focus group discussion with

the participants seated in a circle. We opened the focus group by encouraging each

member to take turns introducing themselves with their names, ages, where they were

from, and where they most frequently shopped for clothes. These introductions

helped us to better identify target market demographics and main

competitors. Similarly to the survey we sent out, we drafted an outline of questions

for the focus group that began broadly and became more specific later on. The first

couple of questions in our group centered around the industry trends and what

American Apparel does well, whether it’s in comparison to the named trends or just in

general. The next question shifts focus to the retailer’s shortcomings, so we can

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better help them improve. The last two questions are extremely specific, one focusing

on American Apparel advertisements and the other focusing on a possible future

market campaign. We printed out ads from the past couple of years and asked what

the participants thought of them. Our purpose of asking such questions was to obtain

in-depth opinions on the retailer’s advertising campaigns and see what needed to be

changed. Our final question looked to the future of American Apparel to see what it

would take for consumers to purchase more of the retailer’s products. The finding

from our research are discussed in-depth in the next section.

Findings

Primary Research

Based on the findings our secondary research, the focus of our primary research was

centred on two main issues: Firstly, shopping habits of target market, including the

brands that they chose over American Apparel and secondly, their attitudes,

experience and opinions towards American Apparel. By asking researching into these

two main areas we would be able to test the findings of our secondary research on

sample portion of American Apparel’s target market and determine whether there is a

correlation between these findings.

Quantitative Method

Survey Results

The questions that were asked within the survey were centred on the clothing retail

shopping habits of American Apparel’s target market, their awareness of the brand,

their perception of it and factors that influence their buying habits. From the 139

people who participated in this survey, the detailed summary of our findings is a

follows;

1. When asked to rank the stores that the participants frequent at the most in

order from 1 to 6. 1 being the most and 6 being the least, their answers are as

follows;

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Order Ranked Brands

1st H&M

2nd Forever 21

3rd Nike/Adidas

4th American Apparel

5th Calvin Klein/FCUK

6th Calvin Klein/FCUK

The results above show that majority of sample population frequent at H&M

the most which is a fast-fashion brand, followed by Forever 21, Nike/Adidas,

American Apparel, and then Calvin Klein/ FCUK.

2. When asked how frequently they shopped for clothes, the majority stated the

following; less than once a month at 42%, followed by once a month at 29%, 2

to 3 times a month at 24%, once a week at 3% and 2 to 3 times a week at 1%.

3. 71% of the sample prefer to shop in stores while 29% prefer to shop online.

4. When asked to rank the criteria that they considered when buying a product

from a retailers from 1 to 6, 1 being the highest priority and 6 being the

lowest, the following was the result. Indicating that style and price and their

most important priorities.

Criteria Order Percentage

Style 1 59%

Price 2 54%

Promotions 3 44%

Brand Image (e.g loyalty to logo) 4 33%

Location Convenience 5 38%

Social responsibility (e.g sustainable business

practices) 6 62%

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5. 86% of the sample said that they were familiar with the American Apparel

brand, while 14% were not.

6. However only 48% of the population have ever shopped at American Apparel.

7. The ages of the sample population was mostly from 19 to 21.

8. When asked how often they shopped at American Apparel, 84% said once a

year, 14% said once every three months and 1.75% said once a month.

9. When asked who they thought the target market for American Apparel was,

the most common description was that they were young adults male and

female or young adults that were mostly female and who were teenagers or

older.

10. When asked about their opinion of the following aspects of the store; Layout

of the shop, facilities, quality of clothes price and staff, the following where

their answers;

As can be seen above, the majority believe that the layout of the shops, the

facilities, the quality of the clothes and the staff are either good or fair but the

majority also believe that the price is very poor. This suggests that the price of

the clothes fail to reflect the disposable income of the target market may also

be reflected in the store’s sales.

11. When asked if they had ever noticed American Apparel advertising, 55% said

no.

12. When asked where they had seen American Apparel advertising, 70% said

online, 48% had seen an advert in either a paper or magazine, 46% had seen

an advert on either a billboard or a bus stop.

13. 67% of these people stated that they had found the brands advertising

offensive at some point.

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14. When asked what they found offensive about the brands advertising, majority

of the sample population stated that they felt that the brand’s adverts over

sexualised women’s bodies.

Conclusion from the survey

From the survey, we have learned that American Apparel’s target market are;

• Young adults who prefer to shop in stores once a month.

• Their two most important concerns when buying clothes are quality and price.

They are not too concerned about corporate social responsibility.

• Most of them have heard of American Apparel. Even though more than half of

them claimed to have not seen their adverts at first, 70% of them say they have

seen their adverts online.

• Most of them found the adverts offensive and too sexualised.

Qualitative Research

Focus group

The following students were interview for the focus group;

Name Devin David James Tony Julia

Age 20 24 19 21 21

Country of Origin

Pennsylvania

, USA

Dublin,

Ireland

Mayo,

Ireland

Detroit,

USA Spain

The last store they shopped

at H&M H&M

Holliste

r

Holliste

r Mango

1. When asked if they had all heard of American Apparel, they all said yes.

2. When asked what sort of trends they saw happening in the fashion industry in

terms of what they could currently see as popular they said the following;

“There appears to be mixture of tight clothes and loose clothes and cheaper

stores such as H&M are now adapting”.

“Sports stores have recently become more appealing to girls, like with

leggings and leg warmers”.

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3. For those of you who have shopped at American Apparel, what do you like

most about the products and why have you shopped there?

“I like the way there’s no branding on their shirts, it’s just plain colours and

usually I just like plain clothing or maybe something written across”.

“My friend liked their hoodies, apparently they’re they best in the market.

They were always a good gift”.

“I would never shop there for girl clothes even though I wear non branded

clothes I wouldn’t”

4. How does American Apparel fail where other companies succeed, where do

they fall short?

“There’s only one shop in Ireland and I’ve just never been there before”.

“There’s an American Apparel store on my campus at home. I walked in there

but then I walked out. I find that their stuff is really plain and simple, which I

like, but if I were going to buy something that simple I would just go to J.C

Penney or Walmart and buy it for a lot cheaper”

“The thing is the price, but at the same time I understand why they make it

more expensive. They want it to be more luxurious, more premium because

it’s made in America.

5. The group was presented with the following adverts and asked if they feel that

they are effective in encouraging to them to purchase their products. They

reactions were as follows;

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“I don’t know what’s being advertised”

“It’s very hyper-sexualised, I would assume that it is targeted towards men but

it’s female clothing, so it’s actually targeted towards women”.

“It’s weird, I would never shop because of that. I don’t want to look like that”.

“It’s good for publicity, it gets people going to the store”.

“It’s controversial so it gets people going through the door”.

6. If American Apparel decided to move away from their sexualised imagery

would you shop there? What would it take for you to shop there?

“One of their main things is that they are made in American, but I think I

would rather buy products from my home country, Spain or Ireland”.

“I think people in American would rather buy something because it’s cheaper

rather than because it’s made in America”.

“American Apparel sells essentials such as plain t-shirts and plain shorts. I

guess I would go if they were on sale. If they were cheaper I would buy it”.

“The quality is good, but I would never shop after that type of advertising.

Also there are other stores that I prefer and are more palatable”.

“I think if they tailored the stuff more towards a specific style, maybe more

people would shop there, other than just plain clothes”.

7. When you think of American Apparel, what characteristics would you give

their brand and what type of people do you feel shop there?

“Hipsters, annoying hipsters”

“I would say very preppy people”

“Their target audience is the same as Urban Outfitter”

“I would say that they are targeting 11 to 15 years olds”

“Every girl in America who has a crop top and high waist jeans”.

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8. If the company were going to rebrand its product ad more of a “home grown”

marketing campaign for example if they opened stores in Dublin and said that

their products were made in Dublin or if they opened up stores in Spain and

said that they were made in Spain. Would this persuade you to purchase the

products?

“I feel that not everyone will be bothered about such things like where the

clothes are made”.

9. What are the main factors that influence you to purchase a product or

branding?

“Price, quality and fit”

“Brand association e.g when I heard about the things that were happening with

the CEO I didn’t wasn’t sure that I wanted to shop there anymore”.

“Majority of people don’t care about brand association, even when apple was

accused of mistreating workers, people didn’t stop buying from them. It’s a

very select few”.

10. What is they did something similar to Tom eg they give an item for free to

poorer countries. “There are other way of helping people that are more

effective than clothing”.

Closing thoughts? The clothes for men seem simpler than the clothes for

women, all the clothes for women are crop tops and short shorts. Maybe if

they make their women’s clothes similar to the clothes they make for men I’ll

go there.

Conclusion from focus group

The results from the focus group reflect that of the survey but the following news

findings were found;

• Their controversial adverts may be an effective means of creating awareness

for the brand on social media platforms such as Facebook but they are still

repelling a lot of people from feeling comfortable about buying their products.

• Brand association also plays a part in influencing some buyers eg. Dov

Charney’s numerous sexual harassment lawsuits may have repelled a lot of

women from buying the brands products.

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• The Made in American promotion approach is not effective for an

international audience. What about other countries? But still only a select few

in the target market care about where the clothes that they buy are made.

• The brand needs to provide more female clothing options other than mini-

skirts and short shorts. Their hoodies are of very good quality.

Limitations

Lack of time

Due to the time constraints imposed for this project we knew we had to design and

send out our survey as quickly as possible. This could have resulted in a survey more

rushed than we would have liked adding to the factor of human error. For example, a

grammatical error was spotted as the first batch of surveys were being sent out.

Consequently, we had to revise the survey and resend it to all our participants. Lack

of time also had an influence on our approach method. As a result, convenience

sampling was chosen in order to try to overcome this problem as we did not have to

endlessly search for appropriate candidates. This was also a decision based on

resource availability which is discussed in greater detail in the next paragraph.

Lack of resources

Due to the fact that we had no budget for this marketing research campaign, we were

limited in terms of our research scope and approach. The Quantrics online survey

facility greatly helped us overcome this issue. It allowed us to analyse the data with

ease and efficiency, for example, as we could all access and edit our work. Evidently

we did not have any financial resources for this marketing research. This narrowed

our scope in terms of the variety of participants we could reach. Once again we found

a solution from the internet, which allowed us to reach most specifically the American

audience bracket. This said, older participants were not as easily reached, as they do

not use social media forums to the same extent as younger cohorts. While this may

not have been a massive issue due to the fact that our results showed us our main

audience is the teenage and/or young adult category, we feel this is an issue that

should be highlighted as the use of social media on the internet in particular does not

overcome all market reach issues. Furthermore, while convenience sampling was

appropriate for our research project, lack of financial and other resources narrowed

the various approaches we could have taken to begin with.

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Lack of control

Because American Apparel has a strong association with being American, it was

essential that we got some perspective from Americans themselves. This said, it was

difficult to control the response levels from both American and non-American

participants to achieve an even/accurate spread. We have an American in our group,

so it was not too big an issue in terms of reaching this audience. However if we had

not had access to the American audience in this way, we would have had to rethink

our marketing research approach entirely. As well as this, we could not control the

gender mix from the respondents. This was a consequence of our non-probability

convenience sampling approach and restricted our results in ways, because there were

significantly more female respondents.

Conclusion & Recommendations

Our research gave us great insights into the young consumer of today and we were

delighted that the results from the survey and the focus group corresponded well. This

information allowed us to discover what AA are doing right and the areas in which

the need to improve to gain competitive advantage. From our research, the main

things we learnt as follows:

Our first question in our survey asked participants to rank in order the store the

frequent most. We gave them 6 options with American Apparel being one of them.

Out of 139 responses, American Apparel was ranked 5th with only one participant

marking it as the store they visit most. This told us very quickly that the company was

not to the forefront of consumers’ minds and we began to delve deeper to find out

why.

From the survey we concluded that consumers feel that American Apparel charge too

much money for their close and as result shop elsewhere to find cheaper alternatives.

The research showed that when it comes to shopping, consumers value things such as

style price and promotion ahead of social responsibility and brand loyalty. 21st century

shopping is all about finding the best value for one’s money and loyalty is non-

existent. At present, American Apparel manufactures their clothes in the United States

and as a result are forced to charge higher prices. They need to hone in on this and

constantly remind consumers that their clothes are made on home soil and use it to

their advantage. They should encourage customers to shop in their store as their

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money will be going straight back into the American economy, thus helping

American people. This may be a cultural difference between Ireland and the United

States. In Ireland, people tend you get behind Irish made products to support our

economy and all things Irish. American Apparel needs to find a way to make this

work for them or else begin to think about outsourcing their manufacturing to a

cheaper country to reduce the costs of their clothing.

In today’s competitive market, digital marketing has become extremely important for

businesses. American Apparel should get their customers involved more through

social media by running competitions and offering incentives such as

discounts. According to Socially Stacked, 42% of Facebook fans like a page in order

to receive a coupon or discount and doing this would incentivize customers back to

the brand. Content marketing is something that could be cleverly implemented by the

company. We believe that they should consider creating a blog and vlogs that talk

about all things American apparel and detailing information about their store and

customers experiences with the company

Of the participants who had heard of the company, 52 percent had never shopped

there and of the 48 percent or 57 people who had, 48 of them claimed they only

shopped there once a year. This is in no small amount due to their advertising

campaigns that have been heavily criticized since the company was founded with

some respondents going as far as saying that they would never shop in a store that

conducts themselves in this manner. Our participants found the advertising to be

explicit, full of sexualisation and nudity, and ultimately a poor portrayal of woman.

We would recommend that in the future, American Apparels advertising campaigns to

be more focus on their clothing and promoting real and empowered women. The

company needs to dispel the perception that the women who represent the brand are

only sex symbols. They need to create a positive image of empowered women who

wear their clothing and who are proud to represent the brand.

Another interesting problem we identified was that our participants were unsure as to

what style the brand is trying to portray. When asked the question; in your opinion,

who do you feel the target audience of American Apparel is? (e.g., style, age,

gender?), we received some very interesting responses. Some said young skinny

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preppy people; others said hipsters, while some even stated that they had no idea who

they are trying to target. There were very few answers between all participants.

American Apparel needs to start portraying this to potential customers through better

advertising campaigns. We also believe that they need to identify themselves who

they are trying to target, and tailor styles and preferences to their customer’s needs.

The best our participants could give us is that they provide plain, tight clothes for

skinny people. This problem needs to be addressed or American Apparel face losing

out on a large percent of the market.

In conclusion, American Apparel has a long way to go in regards to repairing the

relationship it has with its customers but with the correct leadership and guidance, we

believe that they can make a full recovery and return to the heights they were once at.

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Appendix

Secondary Research

Competition in the U.S market

Through researching online articles and journals, we learned that American Apparel’s

main competitors are clothing brands who target young adults between the ages of 18

to 25. Such brands include Abercrombie and Fitch, Gap, H&M, and Zara. American

Apparel receives majority of it sales from the U.S market. At the moment fast-fashion

brands such as H&M and Zara have taken a lot of market share from the U.S over the

last five years. As can be seen in the pie chart below, 65 percent of the apparel market

is being occupied by fast-fashion brands and private retailers. Other leading brands

include Macy’s with 9%, Walmart with 8%, Gap with 5% and Abercrombie and

Finch with 1% (Trefis, 2015)

(Trefis, 2015)

The key reason behind this current trend is because while traditional specialty brands

have design teams who create products that they predict will be trendy a year in

advance and risk losing profits if their predictions fail, fast-fashion brands have teams

of buyers who source current trending fashion from third party vendors. While

traditional brands update their collections once a season, fast-fashion brands such as

Zara stock very little in their inventory and update their collections with new designs

twice a week. Their strategy works because it encourages customers to come back to

the store expecting to see new products. It also gives the buyer a sense of urgency to

buy the products that they feel they like before it sells out (Lutz, 2013).

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Brand Positioning

In 2005, American Apparel was known as one of the most influential brand is

America, it opened its first store in Britain in 2004 and by 2008 it had flourished and

was named the Guardian’s brand of the year. The company marketed itself as a brand

that produced high quality clothes that were sexy and not too expensive. The brand

successful managed to differentiate itself among other expensive brands by portraying

a socially conscious of image of stating that its products were “Made in the USA”

providing jobs for people within the country and paying an hourly wage that ranged

from $8 to $18 depending on their rate of production within that period, while many

of its competitors were moving their factories to countries where they found

opportunities for cheaper production (Dean, 2005).

However, since 2010 the company has seen a significant drop in sales and has

recently filed for bankruptcy. Some of the blame is suspected to have come from the

negative media attention that its founder and former chief executive officer Dov

Charney brought to the company as a result of the numerous lawsuits that were

brought against him over several years (Hartley-Parkinson, 2015).

The brand also has a reputation for using unnecessarily sexualized adverts, one of

which was banned earlier this year for appearing to sexualize a child. Another reason

could be due to the increase in customers currently buy from fast-fashion retailers

who them similar products at much lower prices (O’Reilly, 2015).

Classification of Segments

Demographic Segmentation

The brand target young adults, both males and females between the ages of 18 and 25,

a demographic that is known to invest in fashion, these are usually college students or

recent graduates with entry level jobs and so the brand’s prices need to reflect what

this demographic can afford.

Geographic Segmentation

The company opens its stores in areas where there is high density of people within its

target market such as the in college towns in the U.S such as the store on the Harvard

Campus in Cambridge Massachusetts and busy urban city areas such as the store on

Grafton street in Dublin (Segran, 2015).

Psychographic Segmentation

American Apparel

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The brand targets young adults who have a desire to appear unique and to make a

statement about their personality through the clothes that they wear, in 2006 the brand

was described as being hipster-centric. The brand also targets socially conscious

shoppers which is why it promotes its clothes as made in the U.S.A and sweatshop

free (Segran, 2015).

Conclusion from Secondary Research

The key points that we have learned from our secondary research are as follows;

• Fast-fashion retailers are currently stealing market share from mainstream

brands in the fashion industry and this may be a main cause of the brand’s

drop in sales.

• The negative publicity it has received over the years may be another cause to

its decline in sales.

• The brand was able to differentiate itself in the U.S market through vertical

integration and its ‘Made in the U.S.A’ promotions.

• Its target market are young socially conscious adults who have a desire to

appear unique.

American Apparel

22

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