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Marketing of Services

Case Analysis: Ann Star Fashion Shop

Submitted By : Group 2
SHAGUN (PGP/16/344)

Introduction to the case
Ann Star Fashion Shop
Ann Star Fashion Shop is one of the reputed women’s fashion wear store in Philadelphia. It
started operations in the year 1947 and by Laura Taylor’s grandmother and subsequently run by
her. Till now the store faced no major competition. However, when a low cost fashion clothes
company, Hillman’s, opened its store in the area it became a concern for Laura Taylor.
Hillman’s Store
Hillman started its operations five years ago. The Fairmount store opened near Ann Star Fashion
Shop was the company’s ninth store. The company targeted the women with expensive tastes
and limited funds, and who did not want to wait for the newest look until it has been copied in a
lower price range. The concept was to buy the clothes in lots close to actual buying season of
well-known brands. Thus, they were able to offer 20% lower price as compared to departmental
and specialty stores.
Filene Basement
The strategy of Filene Basement is to sell branded clothes off season.
1. Prime Space (12 days)
2. Less Desirable Location
3. Third Area
4. Charitable organization

They had regular suppliers like Neiman-Marcus in Texas and Bergdorf Goodman in New York.
Issue in the case
Ann Star Fashion Shop is faced with competition from a discount fashion store Hillman’s and it
has to decide upon a strategy to maintain it sales
Alternative 1- Continue with the same strategy

•Higher per unit profit-50% markup currently
•Clear positioning-fine designer cloth shop
•Retain its loyal customer base who are very particular
about designer wear

•High mark up will be exposed due to price comparison
with Hillman’s
•Loss of consumer base to a certain extent (consumers
who are less particular about color, style, service)
Altenative 2- Imitate the competitors exactly

Alternative 3- Filene’s Basement along with current operations

Linking objectives of Ann Star fashion Shop with their strategy
The objective is to seek profit and maximize patronage. The pricing strategy has to be in
alignment with the objective of the pricing which is value based pricing (high markup with
comparatively lesser volume)
Increase the value to the customers. This can be done by improving the monetary value to the
customers by offering customized products, the time spent can be reduced by offering online
services, knowledgeable staff and extended service time, Physical efforts can be reduced through
online store and knowledgeable staff, Psychological burden can be reduced by way of
testimonial advertisements and online review. Thus the following actions are recommendations :
 Managing the perception of value to the customers
 Additional value to the consumer by adding supplementary services and enhancing the
customer experience
 Reducing non-monetary costs to the customers

•Customer’s won’t switch to Hillman’s
•Risk of price war with Hillman
•Hillman enjoys economy of scale- 9 stores
•lower procurement cost
•Ann Star can’t win in price war with Hillman
•Lowering Price is not consistent with current positioning
•Loss of reputation
•Lowering price means Reduced Profit
•Maintaining profit means reducing costs
•Less service
•Less selection
•Loss of customers who need service & selection
•Rate fencing will self segment the customers
•Target customers will be retained, and prevented from
being lost to Hillman’s
•Filene’s basement would offer garments at half the price as
compared to Hillman’s (that sold at 20% markup)
•Dilution of Ann Starr brand due to shift of focus away from
the current positioning
•Not offer direct competition to Hillman’s
•Unable to capture the target customers of Hillman’s