Eddie Bauer Analyzes High Value Customer Segments
In 1999 Eddie Bauer was a $2 billion apparel retailer, generating 25% of its revenue from its catalog operation and the remainder through its 600 stores. Eddie Bauer operated in the textile clothing industry in the United States, Canada, Japan, UK and Germany. The
company sold causal and office wear clothing to men and women, which is what we will be focusing on. Moreover, they also had eyewear, bicycles, furniture and home furnishings. They marketed their products in three segments, retail stores, catalogs and Internet websites. Eddie Bauer had 555 retail stores located in the United States. They produced and distributed over 4 million catalogs annually. In 1998, there was a 5% decline in same-store sales and bigger decline in profits. Based on the research survey results of many focus groups and in-depth segmentation analysis, CEO Rick Fersch decided on Communications policy of “One Brand, One Voice, One Customer”.
EXTERNAL ANALYSIS - Threat of Rivals The retail clothing industry has many different players that offer a wide range of products and services. The clothing industry has done rather well, but they are trying to capitalize even more by offering online shopping and mail orders. Eddie Bauer had a large threat of rivals because there were such vast arrays of clothing stores that sell active wear. Eddie Bauer had close competitors such as GAP, Abercrombie & Fitch, Victoria’s Secret, Lands’ End and L.L. Bean being the top five. Their top competitors were not closely related to them when it comes to the number actual retail store locations, but they offered relatively the same catalog and online services. Although, Eddie Bauer had strong brand recognition they did still have a lack of product differentiation. Looking closer at the major rivals it is easy to see that they posed a problem for Eddie Bauer.
Eddie Bauer did their best to differentiate their products and services, but they were still essentially the same goods that customers could get at their competitors. Eddie Bauer stressed its customer service and brand recognition in an attempt to give them an edge over the competition; however, this could be replicated. Granted, everyone wants to get the lowest priced items as possible, but they realize they are paying for a high quality product with a strong brand name. Eddie Bauer’s competitors that offer knock-off items can sell their lower quality items for cheap, but the customers know that “you get what you pay for”.
Eddie Bauer’s Customers included groups ranged from “Fashion Clothes Horses” to “Apathetics”. The segment priorities were “Quality and Cost” against “Lasting Styles and Trendiness”. The Quality/Timeless segment encompassed two segments that together made up 19% of all adult clothing buyers (9 million people) and 28% of clothing expenditures ($39 billion). The marketing appeal could spill over into other groups, while budget constrained, still sought lasting styles. These segments would add another 30% of all clothing buyers and 23% of apparel expenditures to the potential market. Overall, women’s products made up 55% of sales and 70% of actual store purchasers were women. Catalog and I-media had 70% female purchasers and 70% of products sold were women’s. In today’s busy world, Internet and catalog shopping has become more of the norm. Women have entered the workplace leaving them with less time to spend searching the malls for themselves and gifts for others. In addition, the World Wide Web has become an integrated part of our everyday lives and is easily accessible. Eddie Bauer already pursues both of these marketing channels, but they could expand their marketing to an even greater region. Considering Eddie Bauer was already one of the top companies in Internet retail technology, they did a very good job at...
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