The Problem of Rival Promotions: Consumer Analysis in Gap Incorporated - Term Paper Example

?RUNNING HEADER: The Problem of Rival Promotions The Problem of Rival Promotions in the Apparel Industry: Gap Inc. BY YOU YOUR SCHOOL INFO HERE HERE EXECUTIVE SUMMARY Gap Inc., a clothing retail company in business since 1969, recently attempted to reposition the business as a more modernized brand with an emphasis on quality as the business moved toward a premiumization strategy to capture new market attention. Through this effort, redesign of the long-standing logo was constructed, but it met with dismal results and negative consumer backlash. Furthermore, this effort even managed to erode some brand loyalty that existed with certain younger consumer segments that are highly profitable for this retailer. Research indicates that young consumers strongly believe in fashion consumption as a tool by which to improve their social status and social relevancy. To identify whether this was true, a primary study was constructed that surveyed 14 youth consumers to determine whether they believed the Gap should or could provide for these needs. Findings indicated that conspicuous consumption is not a primary concern for younger markets, leading to formulate a set of recommendations that The Gap should focus more on product in the marketing mix and select certain lifestyle-relevant celebrities to gain more interest from youth consumers. The Problem of Rival Promotions in the Apparel Industry: Gap Inc. 1.0 Background Gap Inc., based in San Francisco, was founded in 1969 as a small retail store selling record albums and blue jeans. By 1970, the Gap had achieved $2 million in revenues allowing the company to expand to 25 different stores by 1973. It was not until 1974, however, that the Gap began offering consumers private-label apparel and accessories, a tradition that has positioned the business as a stand-alone innovator able to maintain strong sales volumes without reliance on various established apparel brands. 1.1 The Marketing Strategy Problem Gap Inc. has diversified its merchandise offerings from its original foundations of providing blue jeans and record albums to a variety of merchandise that maintains mass market appeal. Gap not only provides apparel and accessory merchandise in the United States, but in Europe as well, competing with major clothing retailers Zara (the fast-fashion company owned by Inditex) and H&M, two retailers offering clothing that is generally targeted to the younger, trend-centric consumer markets. It is the European market that provides the majority of sales revenues to this business that is in a growth stage in Europe and in decline in the United States. The main problem with Gap Inc. is the firm’s lack of focus on creating effective promotional strategies in order to position the business properly with its desired target markets. When sales began to decline significantly in 2007, Gap executives attempted to modify its long-standing logo to make it fresher and more contemporary to a changing consumer audience. (See Figure 1). However, the business received such a significant outpouring of consumer discontent about the modified logo that the business scrapped its 2010 modification to return to its iconic blue box logo (Fredrix, 2010). In fact, the Chief Executive who authorized the change swiftly resigned from the company allegedly due to the failed repositioning effort (Wahba & Sage, 2011). Gap learned a significant lesson that its legitimate marketing problem was not associated with its corporate image, as consumers had built attachments and loyalties to the blue box logo. The problem was inefficient promotional strategy that could not outperform rival companies in the U.S. and Europe. From the consumer perspective, repurchase intentions are based on stereotypes and physical appearances when interpreting marketing communications from a retailer (Schiffman & Kanuk, 2010). Internally, Gap had determined that it would need to seek out new markets in order to boost profitability, but did not take into consideration the cognition patterns of dedicated customers that already maintained loyalty. Repositioning the business effectively would have involved using promotional strategies aligned with consumer behavior attributes. Gap failed to understand the social dynamics of its primary target market effectively. Figure 1: A logo evolution to reposition the business 1969 – 1986 1986 – 2010 2010 + Source: Schaefer, Katrina. (2010). What do YOU think of Gap’s New Logo?. Retrieved April 20, 2013 from http://www.abc15.com/dpp/news/local_news/water_cooler/what-do-you- think-of-gap%E2%80%99s-new-logo 1.2 Consumer Issues The notion that consumers utilize stereotypes and physical appearances when determining their future repurchase intention is of critical importance to The Gap. Though the business attempts to capture the attention of mass markets, through the provision of diverse merchandise for multiple market needs and benefits, the business has failed to sustain once-prevalent brand loyalty with its most profitable market: the youth market between 16 and 25 that is trend-focused, contemporary in cognition, and those that utilize fashion consumption to secure their social identities. Teenage markets are highly focused on product consumption to build a sense of identity amongst peer reference groups (Executive Digest, 2008), an ideology known as conspicuous consumption. Sentiment in the youth social, peer environment about fashion is a significant influence in how youth markets find attachments with clothing brands. Conspicuous consumption fulfills the psychological and sociological needs of younger markets, allowing them to gain social prestige through fashion merchandise consumption (O’Cass & Frost, 2002). This is strongly associated with youth market values, which are defined as “enduring beliefs that are psychologically or sociologically preferable” (Schiffman & Kanuk, p.271). From the consumer perspective, Gap Inc. was not taking into consideration their social status needs and utilizing appropriate communications and strategies that would be aligned with fulfillment of these cognitions. The youth market was proven very valuable and profitable to The Gap in the 1990s when the business utilized a variety of youth-centric celebrity endorsements ranging from LL Cool J to Luscious Jackson, two artists that maintained reference group appeal to the youth markets at the time. However, this strategy of utilizing celebrity involvement in promotions was relevant for this particular youth segment in the late 1990s that have, today, evolved into a new market of maturing consumer segments. Gap has been unable to establish effective promotion that takes into consideration what would be considered effective reference groups that are relevant to a modern youth market between 16 and 25 years of age. 2.0 Consumer Analysis In order to fully identify the current attitudes, stereotypes and physical appearances that influence consumer decision-making and future repurchase intentions, a primary study was developed in order to gain real-time knowledge about youth market sentiment, values, their impression of the modern Gap business model, and the role of celebrity endorsers in influencing consumption behavior. A quantitative survey was developed with a ranked order scale between 1-10 indicating the aforementioned dimensions of consumer behavior and their impression of Gap’s current promotional focus. A random sample of consumers was targeted, all aged between 15 and 28 years of age. In total, the primary study achieved effective responses from 14 different consumers that were questioned in a commercial shopping mall environment. Consumers were asked to provide their basic demographic information (e.g. age and gender) to determine whether any correlations in cognition or values could be identified to assist Gap in creating more effective promotions aligned with consumer characteristics. When asked, first, about the level to which consumers believed the current business model of The Gap provided relevant and socially-centric merchandise, there was a mixed sentiment from the recruited sample. Primarily, the female market (representative of eight respondents in the sample) believed that the Gap provided relevant lifestyle-focused merchandise. A mean total was determined based on the ranked responses from the female participant group, indicating an average sentiment of 6.9 regarding Gap’s merchandise selection and its perceived relevance and importance in improving one’s social status. Male consumers scored a mean total of 3.7 in the same category, indicating that male youth consumers between 15 and 28 found Gap’s merchandise unable to fulfill these complex social and psychological needs. The respondent group was also asked to rank their impressions of effectiveness of utilizing celebrity endorsers to promote the business. In this category, it was the male consumer segment that found more personal connection with celebrities when determining whether to make future purchases at a retail organization. Sentiment regarding celebrity endorsement as a positive influencer of consumption for the male group scored a mean total of 7.2, indicating a very high set of consumer beliefs about how celebrities can influence more brand interest. The female respondent group in this category scored a mean total of only 5.3, indicating there might be less influence on female youth markets when using celebrity reference groups in promotions. Consumers were also asked the question, “I believe that The Gap currently offers fashion products that help me attain a better social status”, informing the respondent group to rank this potential belief. It was in this category that the male market responded with a much higher sentiment than the female youth market. Males in the survey scored 7.4, while females averaged a score of 4.9. This would tend to indicate that it is the male youth demographic that is more concerned with conspicuous consumption and social status through fashion merchandise selections than their female counterparts in the same age range. Furthermore, consumers were asked, “When I wear clothing with the image of the Gap brand or logo imprinted on the merchandise, peers in school or the social environment think I have purchased a prestigious brand”. In this survey category, it was nearly unanimous with both the male and female youth respondents that Gap was not considered a socially-relevant, prestigious brand name. In this category, male respondents scored an average of 3.8, while female consumers scored a 4.1. This provides evidence that under the current promotional strategy and business model of The Gap, youth consumers are likely not purchasing Gap-branded products to satisfy conspicuous consumption needs or to improve their social status. This tended to refute the literature on conspicuous consumption as provided by O’Cass & Frost (2002) and the supporting sentiment of Executive Digest (2008) that indicated this was a common set of beliefs and values with the teenage consumer segments. Finally, the survey allowed for the respondents to add one favorite celebrity for Gap to utilize in promotions that would be considered a proper fit for the Gap brand and with consumer lifestyles. Though there were no correlations, such celebrities provided by the respondents included the singer Justin Bieber, sports celebrity David Beckham, and actress Bridgit Mendler from the Disney television program Good Luck Charlie. These celebrities are typically attractive and relevant to the youth market, thus supporting the notion that lifestyle-relevant celebrity endorsements aligned with age and interests could have significant value to Gap promotional strategy development. 3.0 Recommendations The Gap found considerable profit success when using relevant celebrities that were considered to be reputable and aligned with lifestyle values of Gap’s previous youth market in the late 1990s. However, over time, the business has abandoned these celebrity endorsements, instead focusing on the tangible product as a means of differentiating and positioning the business among intensive domestic and international competition in fashion retailing. Schiffman & Kanuk (2010) indicated that stereotypes and physical appearances are strong influencers of purchase intention for a particular company or fashion brand. Gap Inc. should return to its previous ideology of utilizing celebrity endorsers as a means of creating lifestyle connections with consumers. This is a type of psychographic segmentation and targeting that first identifies values, beliefs and social behaviors in order to create a series of integrated marketing communications that strike a proverbial nerve with consumer youth segments that share these ideologies. Using relevant, youth-centric celebrities such as Justin Bieber and Bridgit Mendler could alter the cognition and coding processes of youth consumer markets, making Gap appear more contemporary and flexible as it relates to understanding consumer lifestyles in this particular age category. Gap Inc. should be considering potential celebrity endorsers that have a great deal of personal brand presence with youth markets and then recruiting them to freshen what is quickly becoming an outdated brand. The survey, much to the astonishment of the researcher, refuted the notion of youth markets using conspicuous consumption to improve their social condition amongst peer networks. However, this could be a learning lesson for The Gap which also leads to a new promotional philosophy to gain more market loyalty. It was established through the survey results that peer networks do not consider The Gap to be a premium and prestigious brand name. Gap attempted to reposition the business in this direction by modernizing the brand logo to appear more contemporary, but it was a dismal failure as identified by Fredrix (2010). Therefore, it is recommended that the business does not seek to promote and position the company as a high-quality brand, instead focusing on the lifestyle dynamics of consumer markets as a means of creating sustainable brand connections socially and psychologically with youth markets. The Gap cannot change pre-existing and enduring values about certain brands without a significant financial and labor investment into establishing a premiumization strategy. Gap should be focusing on its core competencies in fashion procurement to continue providing functional, Gap-branded clothing at affordable prices, and promote the business in terms of economic value to the consumer as well as simplistic clothing functionality. The survey indicated that consumers considered The Gap to be an organization that is able to provide generally fashionable clothing, but were not seeking consumption through this retailer for the purpose of improving social status and peer networking. Therefore, more emphasis on product in the marketing mix should be inclusive in promotional strategy rather than attempting to reposition the business under a quality or exclusivity positioning strategy. Advertisements should be developed, then, that show functionality in design and form using relevant lifestyle actors to gain market attention. Future research should focus on using a larger sample of youths, using a qualitative approach in the form of focus groups. Having youth markets able to network during the study in a focus group environment would provide subtle and overt cues about legitimate social behavior with youth consumers. The intricacies of how these consumers socialize and relate to one another could provide valuable data to improve Gap’s current competitive position. References Executive Digest. (2008). How to Market to the Overlooked 25-34 Year Old Age Segments. Retrieved April 20, 2013 from http://www.marketing-execs.com/news/11-08/2.asp Fredrix, Emily. (2010). Gap gets Rid of New Logo, Huffington Post. Retrieved April 19, 2013 from http://www.huffingtonpost.com/2010/10/12/gap-gets-rid-of-new- logo_n_759131.html O’Cass, A. & Frost, H. (2002). Status Brands: Examining the Effects of Non-product-related Brand Associations on Status and Conspicuous Consumption, Journal of Product & Brand Management, 11(2), pp.67-88. Schaefer, Katrina. (2010). What do YOU think of Gap’s New Logo?. Retrieved April 20, 2013 from http://www.abc15.com/dpp/news/local_news/water_cooler/what-do-you-think- of-gap%E2%80%99s-new-logo Schiffman, L.G. & Kanuk, L.L. (2010). Consumer Behavior (10th ed.). Upper Saddle River: Prentice-Hall International. Wahba, Phil & Sage, Alexandria. (2011). Head of Gap Brand out, Outlet Executive in Line, Reuters. Retrieved April 19, 2013 from http://www.reuters.com/article/2011/02/01/us- gapidUSTRE71052V20110201?feedType=RSS&feedName=businessNews&rpc=23&sp =true Read More