FASHION MARKETING – GAP INC.

Background of the Company

Gap Inc. or Gap, as it is commonly known, is a multinational retailer for clothing and fashion accessories based in America and has its headquarters in San Francisco, California. The company came into being in 1969, founded by Donald Fisher and Doris Fisher. Gap operates half a dozen primary divisions, namely: Gap, Banana Republic, Piperlime, Athleta, and Intermix. The founders, the fisher family, collectively own much of the company’s stock and are still deeply involved in the issues that pertain to the company (Success Story 2015). The international presence of Gap is felt in the many stores that the company operates in the United States, the United Kingdom, Canada, Ireland, Japan, Korea, China, France, Brazil, and Australia. The company also has franchisee agreements with franchisees in other parts of the globe. Gap Inc. launched its first store in Melbourne, Australia, in August 2010 at Chadstone Shopping Centre (Success Story 2015).

Operational Industry and Personal Shopper Services

Gap Inc. operates in the clothing and fashion industry specializing in fashion accessories and wardrobe essentials, including hoodies, T-shirts, denim, and great-fitting pants among others. Additionally, the company is considered a cultural icon by producing and offering clothing and accessories that have their presence bent in a cool, confident, and casual style to its broad range of its clients around the world (Success Story 2015).

            In the wake of the rising customer needs and preferences across the world, most companies have had personal shopper services incorporated in their operations and added to the services they offer. Personal shopper and stylist services have grown popular in the recent years and still continue to attract more companies as subscribers. That is because most people today have developed fetishes inclined to customized services and product as well as personal attention and time saving (Morgan, Vorhies, and Mason 2009, p. 914). It is highly recommended that the company introduce such a service to handle the needs of customers. Clients across the world are increasingly looking for ways to express their individuality and personal sense of style. Customers tend to prefer stores where they get tailored service and advice on what looks work best for them. Stores that have an in-house stylist to help customers with their fashion choices do much better. It is for this reason that the company needs to hire personal stylists to carter to each individual customer’s requirements.  

Competitors, Opportunities, and Threats

The main competitors to GAP are similar retail outlets and online stores. Some of the main ones include the Iconic, BooHoo, Cotton On, and ASOS. In addition, GAP is facing stiff competition from local clothing retailers who are making their presence felt, offering cheaper and trendy apparel. Additionally, the consolidation involving mergers and acquisitions, and expansion of major competitors may result in the formation of large companies besides intensifying competition that may cause the company to lose certain customers. With regard to personal shoppers and stylists’ services, the biggest challenges comes from tailors, both local and international. Tailors offer more customized services and products to their clients. In addition, local tailors and retailers are viewed as having better chances of developing personal relationships with their clients, thus achieving customer loyalty.

            There are opportunities available for the company to exploit for the purposes of growth and increased returns. One such opportunity is the acquisition of the outstanding capital attached to Intermix for an aggregate purchase price of $129 Million USD (Gap Inc. 2015, p. 17). This gives the company a chance to incorporate the luxury component of Intermix to the company’s services. This aspect is especially important if personal shopper service is adopted. Ideally, people who subscribe to luxury and contemporary accessories are mostly busy and short of time; as such, they are more likely to find the personal shopper services useful. GAP also stands to benefit from its expanding business in the Asian market.

The company also faces threats. Threats for Gap include the current global economic recession, which affects the profit merchandising. (Gap Inc. 2015, p. 32). Global recession causes changes in consumer behavior, as consumers are left with less disposable incomes. It shows in their purchase attitude, as they tend to reduce their discretionary shopping (Weitz 1985, p. 230). Another key concern is the proliferation of counterfeit products in the market. These counterfeit products result in lost revenue and a bad company image for the GAP. Furthermore, the company reported a loss of US$47 million from foreign currency translation adjustment. While marginally smaller than past losses from foreign currency translation adjustment (US$51 million in 2014), the losses are still considerable and add quite a bit to the bottom line. Major elements exposed to exchange rate risks include the company’s investments in overseas subsidiaries and affiliates and monetary assets and liabilities arising from business transactions in foreign currencies (Global Data 2015, p. 3).

STAGE 2:

Importance of Market Segmentation

Aaker, Brumbaugh, and Grier (2000, p.137) define market segmentation as the process of sub-dividing a market into sub-sections of clients that are practically homogeneous. According to the authors, any such subsection can be identified as a target market. The chief market segment that the company targets to reach is that of the affluent people in the business world who have little or no time to spend in retail stores for their clothing needs. This group of people can be identified as rich moneywise and poor in terms of time available to be spent on matters that are not business.

When introducing the personal shopper service, it is important for Gap to undertake market segmentation. This is because segmentation enables the company to have a greater understanding of the needs of the target customers. Additionally, market segmentation helps the company to identify the segments of the market that are less satisfied. It also enables the company to expand its market since it identifies the customers and enhances their relations while improving communication.

Bases of Market Segmentation

The market segment selected has a wide range of characteristics. Geographically, the clients expected to subscribe to the personal shopper service are scattered all over Australia with most of them in the major cities (Xia et al. 2015, p. 503). Those whose geographical proximity is linked to that of the physical shops get to access the services in person. In regard to demographic segmentation, the company expects to reach people in their late 30s to late 50s, the reason being that people in that age group are mostly overwhelmed by work and responsibilities despite having high earnings. Additionally, the targeted segment includes both males and females, with more emphasis on the male sex. Individuals in the target segment have high incomes of approximately $100,000 per annum.

Gap’s Marketing Strategy

The company adopts a differentiated marketing strategy. This is because the target segment is made up people with roughly the same age although it transcends gender differences (Roese 2000, p. 278). In addition, the clients hail from different locations in the vast Australia. By introducing the personal shopper service, Gap betters its chances of being rated highly in the casual and luxury sections of the fashion industry (Hoy 2014). This is because the service is best described as a luxury service and attracts an affluent crowd. In addition, the company retains other services that are suitable to the less affluent population, thus taking care of virtually all the aspects of the fashion industry.

STAGE 3:

The Product – Personal Shopper Service

A product, according to Roese (2000, p. 270), is a good, object, information, idea, a method, or a service that is a result of a process and is created to satisfy a want or serve a need. It is an aspect that meets the requirements of a market. The personal shopper service can be described using the three levels of a product. The core product description of the service is the benefits accrued to the client after acquiring the service. The core product is the benefit of convenience and time saving enjoyed by the customer. The actual product description attached to personal shopping is the service rendered by the personal shoppers. The augmented product level of the personal shopping service is the side advantages that the customer gets for subscribing to the service. It includes the after-sale services such as being escorted to the car.

Offering the personal shoppers service, Gap should be aware of a range of issues. Firstly, the individuals selected as personal shoppers must be taken through a training program since it is a new aspect of the business. Moreover, the company should clearly understand the various issues attached to the personal shopper service, such as the service should provide for a crowd of customers with diverse traits. The service will be subscribed to by clients from different backgrounds and of different age, as well as clients who speak different languages. As such, the company will be expected to provide for such differences.

The Lifecycle of a Product

A product’s lifecycle can be divided into four stages. The first phase is the introduction. This is usually the most expensive stage of a product since it is here that the company launches a product (Stark 2011, p. 3). This stage is characterized by slow sales and consumer testing. The costs incurred in this stage include consumer testing, marketing, and research and development. The second phase is the growth stage (Stark 2011, p. 4). This phase features strong growth in sales and consequently profits. At this stage, the company can benefit from profit margins and the economies of scale. More profit enables a company to grow by initiating more investments. The third phase is the maturity stage (Stark 2011, p. 7). The product, at this stage, is established, and the company’s main aim is to maintain the market share and retain the clients. The stage is characterized by modifications and improvements of the product. The last stage is the decline phase (Stark 2011, p. 9). Here, the market of the product begins to shrink due to market saturation or customers subscribing to another type of product. The personal shopper service offered by Gap is at the first phase, the introduction stage. That is because the service has not been launched yet, and the research and development are still in progress.

Branding the Service

Branding is the process of creating an exceptional and unique image and name for a product or a service in the mind of a customer (Roese 2000, p. 279). This is done mainly through campaigns linked to advertising with themes that are consistent. Branding aims to establish the presence of the product to the market to attract and retain the customers that are loyal to the product or service.

Branding is important to the organization and also the customers receiving the service being offered by the business. It is important to the organization since it makes the service stand out from those offered by its competitors. The brand sticks to the mind and clings to the hearts of the customers and clients. To the organization, the brand of the service is the source of promise to the clients. A good brand motivates a buyer and builds a connection between the company’s target prospects (Yoo, Donthu, and Lee 2000, p. 200). To the client, branding delivers the message from the producer or company clearly. It also confirms the company’s credibility. As such, branding of Gap’s personal shopper service will be of great importance to the two parties.

            The brand value that the organization offers its customers is the features attached to the personal shopper service. The company links the service to the renowned ‘Gap’ brand and assures customers of services not below the standard of products produced by the company. The company adopts the family branding strategy where the selling of the service will use the brand name that the company identifies with. Gap personal shopper service takes the same definition and does not have additional brand names or symbols associated with it. This strategy should be adopted since it links the service to the fashion accessories that the company trades. Additionally, loyal customers will find it easier to try out the personal shopper service if it is branded as the company than when it is branded by individual personal shoppers. Moreover, it is cheaper for the company to have the service take the family brand.

STAGE 4:

Price and Pricing Strategies

According to Jobber and Shipley, price is the quantity of compensation offered by a party or an individual to another in return for a good or service sold to them (Jobber and Shipley 2012, p. 1649). Essentially, prices are expressed in units of currency. It is important for Gap to have a good understanding of pricing and the issues attached to it when offering the new service. Chiefly, pricing determines the extent of returns to be earned by the company for selling the product. Pricing affects sales volumes, profit margins as well as the market share (Viglia 2014, p. 47). If the company adopts a pricing strategy that overcharges clients for the service, the market share and profit margins may reduce. Additionally, pricing affects the position of the company in the market. This is because it sends a message to the clients about the business and the products or services that it offers, creating a perception regarding the items. For instance, if the company charges highly for the service, consumers might grow a perception that the quality of the service the business offers is high.

            Gap’s pricing objectives include increasing market share, obtaining a target rate of Return on Investment (ROI), and maximizing long-run profit. It targets to increase the market share to secure its chances of having a maximized long-run profit. The company also aims to receive a certain return on investment value that offers substantial satisfaction considering it is a new service for the company. The company plans to adopt the penetration pricing strategy to introduce the personal stylist service to the market. With this pricing strategy, Gap will set low prices for the new service to attract customers and gain market share. This will be especially crucial in the countering of similar services offered by other competitors. The company will later raise the fees for the service once the target market share is achieved. Gap will also use the target pricing strategy. This pricing strategy will include the company calculating a safe value for the service that produces a particular rate of ROI. The aforementioned strategies are mainly adopted when a business is introducing a new product or a service to a market (Tellis 1986, p. 148).

STAGE 5:

Place and Availability of the Service

Roese (2000, p. 280) defines a place as the channel through which goods move from the producer or manufacturer to the end user, the consumer. A right place translates to better chances of sales and greater market share. Regarding Gap’s new service, it is important that the company understand everything that pertains to place while setting up the service. This is because place determines the ease or difficulty of access to be experienced by customers while reaching for the product or the service (Bloch 2011, p. 379). Proper placing translates into more profits that are linked to the size of the market share professed by the company. In addition, better placing makes it easier to track the changes experienced in the thinking, fashion, styles, and needs of the marketplace.

            The personal shopper service will be offered in most stores that identify with Gap. The store in the heart of Melbourne at Chadstone Shopping Centre will offer this service based on its proximity. Situated in Melbourne, a fairly large city, the company will have the chance of serving a huge market since most of the target market hail from such an environment. Franchisees’ stores like Oroton Group will be required to offer the service as well. The stores in Melbourne Central, Westfield Sydney, and Macquarie Center will also offer the personal shopper service. This is because the aforementioned stores are located in strategic locations that are frequented by individuals in the target market segment. The relations between personal shoppers/stylists and the company’s clients will be more personal. A personal stylist will be required to identify with various clients with whom they share a closer relationship. This will be necessary for ensuring customer loyalty, and the company will benefit from retained clients.

STAGE 6:

Promotional Objectives and the Promotion Mix

Promotion refers to raising the awareness of customers with regard to a product or a brand (Roose 2000, pg. 284). It is important that Gap adopts a well–integrated marketing communication strategy as it promotes the new service. This is chiefly because a good marketing communication strategy presents information to the public, an aspect that significantly helps the organization achieve the purposes of promotion (Bloch 2011, p. 379). Proper information helps to increase the demand for the service and helps customers to differentiate the service from those offered by the competitors.

            The promotional objectives adopted by Gap to promote the service are to differentiate the service from those provided by other companies, to increase the demand for the service and to provide information to the public regarding the service. To promote the service to its customers, the company will adopt a promotional mix with advertising, direct marketing and product placement (Suthar and Pradhan 2014, p. 39).  The company will incur market in expenses to have the service advertised in mass media. The company will also reach to its customers directly by the use of consumer websites, online ads, and fliers among others to promote the service. The aforementioned promotional tools are effective in communicating with the target market. For instance, direct marketing that include issuance of fliers and catalogs to clients will help pass the information to the target audience. Finally, the product placement technique will also be useful in communicating the promotion information, especially if the ads are placed in crucial moments such as during the airing of news bulletins.

References

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Bloch, P 2011, ‘Product design and marketing: reflections after fifteen years,’ Journal of Product Innovation Management, vol. 28, no. 3, pp. 378-380.

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Tellis, G 1986, ‘Beyond the many faces of price: an integration of pricing strategies,’ Journal of Marketing, vol. 50, no. 4, p.146.

Viglia, G 2014, Pricing, online marketing behavior, and analytics. Palgrave Macmillan.

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