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American Apparel Case Study

3272 words - 14 pages


Company Analysis

In today’s market economy, American Apparel places a premium on differentiating itself from the competition by creating a unique brand image based on a hip, comfortable line of clothing, and a “Made in the USA” slogan. Founded in California, American Apparel is a company that wants its customers to be comfortable in its merchandise, as well as in their own skin above all else. American Apparel offers clothing and accessories for men, women, children, and even pets. The vertically-integrated company prides itself on providing value to its customers, making them loyal shoppers of their brand. With over 150 retail store locations ...view middle of the document...

Although, as previously mentioned, while American Apparel is not targeting teenagers or their parents. Having one’s parents shop at a store would likely deter their teenagers from shopping there in later years. Although American Apparel offers basic items at reasonable prices, the company does not target customers who earn less than $30,000 annually. If a customer makes $80,000 or more annually, it is unlikely that the customer will go to American Apparel for a t-shirt rather than go to an upscale alternative such as Barneys. The company chose not to aim their products at people with less than a high school diploma, or at the opposite end of the spectrum, those with a PhD or doctorate degree.
American Apparel has a very distinct culture in the retail market and many people in the United States have a difficult time identifying with the company. For instance, Americans with conflicting characteristics such as those who love guns and country music will choose to shop elsewhere. Additionally, if a person does not use a computer on a daily basis, and more importantly does not subscribe to any type of social networking service, then this company’s products will not be the right fit. Finally, for those ultra-conservatives who do not believe in equal rights and who are offended by advertisements featuring scantily clad young women, the American Apparel brand is likely to irreparably damage their psyche, thus deterring them from entering a store for anything other than making a complaint.

After American Apparel successfully determined the specific segments of the market, its next step is to evaluate the different segments and choose a target market. After dividing up the market using segmentation to find a substantial, differential, information-accessible, measurable and actionable target group, American Apparel branched out from conducting strictly wholesale operations to launch major retail endeavors in the United States. The company chose to set up its first stores in fashion conscious cities: Los Angeles, San Francisco, New York, Houston, Chicago, and New Orleans, among others[2]. The main criterion for selecting a city for a new urban store is having a population of at least 75,000, with a few exceptions for college markets. The company states that, “the young adults we want to reach are in the cities.”1 Not only does it make sense to launch its product in cities with a vast number of consumers, but also choosing cities along both the East and West coasts is a logical move for a company that prides itself on its urban appeal. Additionally, American Apparel locates many of its retail operations in college towns that are populated with residents in the target age bracket of 20-32 years of age. For instance, the company has recently chosen to open stores in college markets including “Gainesville, Fla., and East Lansing, Mich., home to the University of Florida and Michigan State University."1
American Apparel does not...

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