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Case Study Analyses: The Gap, Inc.

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Autor:   •  December 21, 2010  •  1,660 Words (7 Pages)  •  1,558 Views

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The central purpose of writing this Case Study Analyses on The Gap, Inc. is to identify and isolate key issues and their underlying implications and offer practical solutions and plans for implementing those solutions.

This will be done by highlighting the social influences that influence the Gap, Inc. marketing strategy, segmentation strategies with respect to distinct retail markets, and positioning strategies that can be used or changed in a retail setting, as requested in the course assignment (as cited in the course module).

History, Development, and Growth

In 1969, Don Fisher opened the first Gap store in direct response to frustrations he was feeling as an inconvenienced customer. His objective was to provide a classic line of clothing in a wide variety of fits and styles and make the shopping experience easy and convenient for the customer. (www.gapinc.com).

Its unprecedented growth is a direct result of meeting a niche in the clothing market, at a time when The Gap was well positioned to meet the new demands of this "business-casual" trend, introducing other chains to expand its customer base, and aggressive expansion in the global marketplace.

Today, Gap, inc. is recognized as one of the world's largest specialty retailers. It. operates four of the most well known clothing brands on the planet: Gap, Banana Republic, Old Navy, and Forth & Towne. (www.gapinc.com).

Internal Strengths and Weaknesses

The Gap was bound for success early on because the utility of its product mix (Etzel, Stanton, Walker, 2004) was perfect for a specific market segment. The Gap offered a classic line of khaki pants and cotton button-down shirts (p.200), perfect for the new "business-casual" look, and gained great brand recognition as a result.

Not long after, in 1976, The Gap went public. With the new wealth the company was enjoying, it further strengthened its share in the market by continuing to expand its product mix and add new stores across the world (Etzel et.al., p.200).

Now, with over 3000 stores globally, the Gap name is easily recognized across the world for its simple clothing styles. By interpreting fashion trends and finding ways to present tried and true items, the Gap is able to sell "inexpensive staples that look good", according to Paul Pressler, CEO ((Stone, B., as cited in Newsweek, 2003).

With product utility, a product mix that met the needs of its target audience, brand name recognition, and global influence as its core strengths, the Gap, Inc. was in good position to grow through expansion.

Unfortunately, the great strength previously mentioned became one of its greatest weaknesses. Former CEO, Mickey Drexler, in response to his accurate prediction of the khaki craze of the '90's, decided to make plans for an aggressive expansion, and by 2001 there were over 4,100 stores across the world (Etzel, et.al., 2004).

When sales began to decline and other retailers caught on to the Gap's idea of offering simple styles, the Gap responded by attempting to create a trendier line of clothing and as a result lost a large share of its core market. (Etzel, et.al., 2004).

Gap executives figured that if they had the right clothes people would come. They may have been right in that assumption, however, they failed to query their customers about what they wanted to buy with devastating results in their bottom line (Stone, B. as cited in Newsweek, 2003).

Even with the strengths of brand recognition, product utility, and segmented markets, the Gap failed its customers by concentrating more on growth than meeting their specific needs. This failure can best be summed up by Drexler's statement, "We probably got a little bored at being consistent and simple. Big mistake." (Etzel, et.al.,2004).

External Environment (Opportunities and Threats)

The Gap, Inc. and its other business ventures still have a relevant place in the world of retail clothing. Brand recognition remains high and Gap's "Back to Basics" advertising campaign have allowed it to refocus and take a closer look at its purpose, "to make it easier to express your personal style throughout your life." (www.gapinc.com).

Gap has recently taken advantage of the Internet to help it regain its prominence in the marketplace. The unique opportunities this presents to the buying public (convenience, wider range of products, etc.) have created additional streams of revenue for the company (Etzel, et.al., 2004).

Coupled with a new advertising campaign starring a variety of hot actors, the company attempted to recapture the magic of a previous award-winning campaign called "Individuals of Style" (Etzel, et.al., 2004).

It's really all about getting back to the basics for this company. Drexler said, "I believe Gap, Old Navy, and Banana Republic are now in a position to offer the product assortments our customers expect and that reflect what our brands have always stood for. The time is right for me to move on, and for the company to bring in new leadership to take the business forward." (Etzel, et.al, 2004).

With Paul Pressler now at the helm, the company seems to be moving in the right direction. Since Gap already has an established reputation and recognition, Pressler can concentrate on paring down the product line and concentrating on what made Gap successful in the first place.

According to Harry Bernard, retail consultant, the Gap moved away from the fundamentals of researching the customers demands, maintaining quality, and keeping Wall Street expectations in check (Stone, B. as cited in Newsweek, 203).

The resulting loss of focus allowed competitors to move in. Other retailers like Target, Wal-Mart, and Kohl's were pricing similar items of clothing much cheaper than Old Navy and Gap. This became a threat that Gap responded to with a trendier style of clothing intended to target a teen audience, however, it failed because it still tried to market to the older crowd as well (Etzel, et.al., 2004).

Former CEO, Drexler, summed up this mistake by saying, "We changed too much, too quickly,

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