American Eagle Promotion Connects With Teens

Discussion
Jul 12, 2010
Tom Ryan

By Tom Ryan

American Eagle Outfitters Inc. is giving away smartphones to customers
who try on jeans between July 21 and August 3. No purchase required.

Upon exiting
the dressing room (or checking out online), customers will receive an access
code to search online for more than 40 free phones, including the BlackBerry
Curve 8520, BlackBerry Bold, Motorola Backflip, LG Ally and HTC Aria. In order
to receive the phone, they must agree to a two-year contract with either AT&T,
Sprint-Nextel, T-Mobile or Verizon. In addition to the phone, they’ll receive
a $25 AE Money Card good towards online or in-store purchases.

"It’s one
of the smartest strategic moves that any U.S. teen, tween or specialty-store
retailer has ever initiated," analyst Burt P. Flickinger III told the Pittsburgh
Tribune-Review
. He noted that with many teens unemployed, school budgets
are particularly tight this year.

"American Eagle Outfitters wants to send our customers back-to-school
in style with new denim and a new phone," said Fred Grover, executive
vice president of marketing, American Eagle Outfitters, in a statement. "This
promotion adds a level of excitement and fun to our customers’ shopping
experience, as well as making a powerful statement about our confidence in
the denim collection."

American Eagle has given away movie tickets and
T-shirts in prior back-to-school promotions, spokeswoman Jani Strand told the Tribune-Review.

The popular iPhone is not included. According to the Pittsburgh Tribune-Review,
the promotion is being
handled through a third-party firm, and apparently no iPhones are available.

Discussion Question: What do you think of American Eagle’s free smartphone
promotion?

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21 Comments on "American Eagle Promotion Connects With Teens"


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Anne Howe
Guest
10 years 9 months ago

I have two adult children (21 and 23) who are going to get a call from me this morning with instructions to get over to American Eagle and check this out. Both are due for new contracts on their smart phones, and both are in the market for jeans at any given moment. I, however, am not in the market to do all the work and pay all the bills. This would be a good item to repost in a week or two and I, for one, would invite my kids to determine if it’s just a good promotion announcement or if it actually worked!

Dick Seesel
Guest
10 years 9 months ago

A bold promotion, and bound to be a successful one. It’s likely to drive much more trial of AE jeans during the back to school season, with AE presuming that a lot of these try-ons will convert into purchases.

As to the economics of the “free” phones, there is probably a great deal of cross-promotional dollars flowing between the vendors who produce denim for American Eagle, the various cell carriers (who make their money on plans and contracts, not the equipment, after all) and AE itself. It should be fascinating to see what the comp sales look like during the next quarter, and how AE’s competitors choose to respond.

Joel Warady
Guest
Joel Warady
10 years 9 months ago

How can this be anything but a winning promotion?

The target customer will come into to try and their jeans for the sole purpose of getting a phone. But in the meantime, they will probably purchase a pair of jeans. One has to assume that American Eagle is going to also get a share of the 2-year contract revenue from the phone company. How can it not work?

The only potential hiccup to this program is if there are so many participants that there are not enough phones, or the activation goes poorly. The backlash will be directed towards American Eagle, not the phone companies. Assuming that American Eagle has chosen the right promotion partner, this should be a huge promotion that proves extremely beneficial in driving traffic to their stores.

Smart move!

Kevin Graff
Guest
10 years 9 months ago

Free? No strings attached? Looks too good to be true, but from investigating the offer it’s legit. Looks to be brilliant, and probably isn’t costing them much if anything at all to do. A customers ‘dream’ promotion! Gotta run … time to try on some jeans and get a new phone!

Ryan Mathews
Guest
10 years 9 months ago

I hate to be the lone voice of dissent BUT (1) the phones are essentially free if you get the right deal anyway; (2) how many of those customers don’t already have phones and plans?; and, assuming a fair percentage don’t…one last question…where’s the iPhone they really want?

Len Lewis
Guest
Len Lewis
10 years 9 months ago

Brilliant promotion since it speaks to their core customers. but you’ve got to wonder how this will shake out. I’m willing to bet most of their customers already have smart phones of one sort or another. Kids can’t sign the contracts, so parents of younger ones will have to agree to it anyway and a free phone is not that hard to get on promotion from any of the companies involved.

Will it help them sell more jeans and accouterments? Worth a try but don’t bet the farm on it.

Bill Bittner
Guest
Bill Bittner
10 years 9 months ago

There is a twist to this whole thing that I did not see discussed in the WSJ article. Will AE have special access to the phone users tied to their promotion? Everyone is dazzled by the Apple products, but Apple has also monopolized the distribution channel by building the iStore for selling content. If AE gets continued access to the teens who sign-up for their (non-Apple) smart phone under the AE discount, it will be a promotion that pays off indefinitely (or for at least 2 years).

Liz Crawford
Guest
10 years 9 months ago

Fabulous! Sure, there are issues–paying for the monthly contract being only one. But still, a very sexy promotion indeed. You can see the strategy peeping through: drive traffic to the store, gain new customers, capture share from competitors, preempt many BTS promotions.

The fact that the iPhone is excluded makes sense too. These phones want to get into the hands of users.

Ok–I gotta run over to the store now. C U L8R!

Mel Kleiman
Guest
10 years 9 months ago

Brilliant move on everyone’s part. Build traffic, sell more jeans, and give away something that is not going to cost you any money. In fact if they did this right, the carriers are most likely paying them for each phone activated.

Matt Hahn
Guest
Matt Hahn
10 years 9 months ago

This is a win for AE. There can’t be (that I see) any substantial cost to them, except for marketing, but the promotion company they’re working with is likely handling most of that to drive the phone plans for the carriers. It will drive more traffic and the only downside is that there will be a number of customers who don’t buy. However, it is back-to-school shopping and they’re going to buy anyway, so it might as well be in the store they’re in.

Cathy Hotka
Guest
10 years 9 months ago

Wow. Every parent in America will send their teens there…and will probably be found lurking around the dressing room themselves in the hope that AE’s denim will fit THEM.

Camille P. Schuster, PhD.
Guest
10 years 9 months ago

From the comments so far, parents are very excited about this offer. If it is time for a contract renewal and if the phones are ones students want and if they hear about this offer, then it is a great deal. As the words spreads virally among the target audience, American Outfitters is likely to see an increase in people visiting the store and that is what they want. Sounds good.

Marge Laney
Guest
10 years 9 months ago

This is a brilliant promotion and one that will drive traffic at the critical BTS time for AEO. Tied with the right staffing and service strategies, it has the potential of putting them over the top performance wise against their peers.

The customer who uses the fitting room is more than 70% likely to buy and getting them to make the commitment to try on is (or should be) the goal of every B&M apparel retailer service strategy. Hopefully, once they get these customers into the fitting room they will capitalize on the opportunities and sell additional items that improve all key performance indicators, not just conversion.

Chuck Palmer
Guest
10 years 9 months ago

This is a great example of consumer-centric thinking–for all the functional reasons above, but also the emotions that drive their customers: vanity and connectivity.

This is very buzz-worthy and should get them significant activity on social nets and their own site.

I love the choice embedded in this offer. It’s not about one phone or carrier; the customers have choices, if they choose to go that far and actually activate a new contract. I am interested in the trial vs. activation (vs. social media activity) rates.

If they and their partners are smart, accessing and learning from the residual data should be a priority. This is one to follow.

Ed Rosenbaum
Guest
10 years 9 months ago
American Eagle Outfitters has hit a home run with their phone giveaway program. I love the aggressive style and can see this as a win/win for both AE and the cellular phone companies they are partnered with. I see this as a giveaway by the phone service providers with little cost to AE and a huge magnet to draw people into the stores or to make online purchases. I bet we hear about this on the evening news tonight. So AE gives away a phone, they get customers to purchase and of course, those customers will be satisfied and spend the next few weeks telling all their friends and Facebook followers about it. No loser here, is there? The service provider picks up new two year contracts. History shows these contracts get extended at least an additional year. No loser here either? The customer gets the phone and new jeans plus return trips for more clothing. No loser here. End of story until the next aggressive marketing program is unveiled to help stimulate the economy… Read more »
Dan Berthiaume
Guest
Dan Berthiaume
10 years 9 months ago

American Eagle’s target demographic of young, single consumers is also a heavy smartphone demographic. Assuming that promotional agreements keep the cost to AE within reason, this is an excellent move. Even though many plans enable consumers to get free smartphones, everyone loves something for nothing, and the fact the phone comes free with a try-on rather than a purchase makes it even more appealing. The publicity this promotion will give AE alone makes it worthwhile. Great thinking by AE’s marketing team.

Ralph Jacobson
Guest
10 years 9 months ago

Bottom line, right or wrong, this promotion gets AE publicity. And that’s what it’s all about.

Craig Sundstrom
Guest
10 years 9 months ago

I don’t want Ryan to get lonely out there, so I’ll join him in dissent: as the analyst noted–apparently without a trace of irony–this will be a “great” chance for unemployed (and otherwise underfunded) teens to try out two things they probably don’t need and likely can’t afford.

OK, maybe I’m being cynical…we all know retailers have two duties–prying as much money out of consumer’s wallets as possible, and getting their name in the news–and even if AE doesn’t succeed in the former, it (already) has in the latter…good job!

Mark Burr
Guest
10 years 9 months ago

It may get publicity and if that works–great, good for them. The problem is someone has to pay. Mom and Dad, run don’t walk as far as you can from AE, otherwise, you’re stuck with a pair of jeans that you’ll be paying monthly charges for for the next two years!

Kai Clarke
Guest
10 years 9 months ago

This is a good way to get attention, but the phones are not free (nor should they be promoted this way). Each phone requires a 2 year contractual commitment, that many teens are not legally able to fulfill. This should be noted and emphasized in all advertising, with a full caveat. Otherwise, American Eagle is setting themselves up for a bait and switch lawsuit over a phone that is really not free!

Gib Bassett
Guest
Gib Bassett
10 years 9 months ago

Interesting idea, sure to drive a lot of foot traffic into their stores and online, but I think it’s a missed opportunity. Since the phones will be given away no matter whether a purchase is made or not, they should have considered creating and pre-loading on the devices a mobile application of some kind. For example, a wardrobe “configurator” with the ability to share ideas with friends or social networks. There’s lots of possibilities that could have made the promotion much more worthwhile.

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