The Marketing Approach of the Gap Company - Case Study Example

Introduction The Gap Company, which focuses on clothing, is one of the most widely recognized companies in the world. The simplicity of the name, which is easily pronounceable by people from many different parts of the world, has certainly not hurt the company’s name recognition value. The company has obviously enjoyed a period of success which is why it has been able to expand to many parts of the world, notably Asia. In recent years, however, the company seems to be floundering, jumping from one marketing campaign to another without necessarily seeing an increase in the number of people patronizing its shops or actually buying products. The company has continually sought to rethink its marketing approaches and to seek ways by which it can connect with various demographic groups. It is not clear if the company’s loss of cachet in the market place is because of having missed signs that their traditional market base was shifting in terms of their interests. Also, another possibility is that the competition has grown smarter, taking the pulse of consumers much better than the Gap. This paper is concerned about the extent to which the company’s marketing approach has been able to meet the expectations for a company that is market-oriented. Generally speaking, companies that are marketing oriented have the numbers, that is a good bottom line to show for their efforts. Why? Because they make a good effort to find out what consumers want and go out of their way to ensure that all those in their organizations are aware of not only how to get information from customers but also how to cater to the consumer’s continually changing whims and caprices. Being market-oriented is not easy because it requires a great deal of effort on the part of a company. Research, however, indicates that there is a link between being market oriented and profitability. While the Gap has been very busy in the market place a close examination of the company’s approach to marketing reveals that they do not meet the basic tests of being market oriented – despite the incessant activity. Market orientation As Lawrence Yarbrough (1996) explains in the report, “Corporate culture, market orientation, and customer satisfaction: Interrelationships and impact on firm performance,” Market orientation is concerned with an organization’s use of information processes to provide customer value that is enhanced; in other words, a market oriented company makes an attempt to stand out from the herd. In fact, market orientation stems from the marketing concept, which “holds that the customer is the reason for firm existence and survival” (Yarbrough 2003). In fact, there have been numerous pieces of research that confirm that there is a link between market orientation and a company’s economic performance. Customer satisfaction is, in fact, at the very core of market orientation. Yarbrough (1996) explains further that, “Organizational values such as participativeness, open communications, teamwork, and cooperation, support the idea that the customer should come first” (Yarbrough 1996). Thus for the Gap or any other company it is not enough to understand what the customer wants. It is also important for people within a company to be able to share relevant information and thus produce the kind of output that will meet or exceed customers’ expectations time and time again. Gap As noted above, a company that is market oriented is concerned about the needs of its customers. Such a company is also likely to operate in such a way that its cherished customers would not be inconvenienced in any way. This could mean that in some cases the company has to go out of its way, even if it would cost a little extra, to ensure that the customer is happy in the short term. After all, if the customer is happy today she may bring her business back tomorrow -- rather simple concept. In 2005, however, the Gap company shocked its customers and others interested in the company’s products by closing down three of its websites, without any warning. The company apparently was in the process of unveiling a new website and needed to add new features. While that is a common enough problem, “e-commerce experts have questioned the way the closure has been handled. One says: “Putting a ‘site under construction’ message like this on your home page is the kind of thing a company completely new to the Internet might do. For a company like Gap, it seems shockingly amateurish. The transition should have been handled better” (Gap pulls retail websites 2005 21). Customer disconnect In recent years, the Gap has resurrected the memory of various movie icons to try to get consumers interested again in its products which have been languishing in sales over the past five years. Among the “resurrected” stars are Audrey Hepburn and Fred Astaire along with John Wayne and Humphrey Bogart. There is no question that these individuals, in life, could draw millions of people to the box office. It is doubtful, however, whether these dear departed stars could excite young people today for whom Audrey Hepburn and Fred Astaire might as well have lived along with Abel and Cain mentioned in the Bible! In a commentary on the advertisement featuring these stars who have gone to the great theatre in the beyond, Robin Abcarian reports: “Some love the spot; some are appalled that a dead Hollywood icon is being used to sell skinny black pants. "The Gap should be ashamed of themselves," wrote one commenter on ThirdWay Advertising Blog. "It's a desperate attempt by a desperate company to align itself with someone classy" (Abcarian 2006). Even as the buzz on the Internet regarding the advertising spots remain far from upbeat, the company seems quite excited about the talk it is generating, perhaps, following the notion that no publicity is bad publicity. In fact, as Abcarian notes, For the last two years, the company has failed to excite customers who have fled elsewhere for inexpensive basics. Reviving a staple like the slim black pants, part of its new "Keep It Simple" campaign, could help revive Gap's sliding fortunes. "The worst thing a marketer can do is spend a lot of money and people are like, 'Oh well, another ad for Gap,' " said Kyle Andrew, Gap's vice president of marketing. "This is polarizing. Any time we can do anything that elicits passion is great. (Abcarian 2006) There are no indications, however, that hordes of consumers are flocking to the Gap to buy their skinny black pants. For others, however, it is not a question of who the Gap uses in its advertisements. The problem really is that the much touted skinny black pants are not as popular as the company’s advertisements suggest. As Susan Pickett writes in the Chicago Sun Times, “In an ad campaign featuring the timelessly beautiful Audrey Hepburn, the Gap has decreed that the skinny black pant is back. But, really, did anyone miss the skinny black pant? Had anyone even noticed its absence?” (Pickett 2006 p2). In America, the truth of the matter is that women are getting larger and larger, bringing a boom to plus-size shops. This raises the question of whether there is a disconnect between the Gap and one of the largest consumer bases it serves. In fact, while the Gap continues to worship thin-size models some other retailers are catching on to the need to focus on women as they are not just as they dream of becoming. It is with this in mind, no doubt, that some companies have begun to target women over 35 with clothes that fit the body-sizes and types of such women rather than forcing them into teen-like bodies, an attempt that can only make these women look ridiculous. Actually, it is not the case that the Gap has not caught on to the over-35 market. The company has been developing a new store concept for just such a demographic. These stores, called Towne and Forth, aim to provide stylish clothing for the over-35 set because some of those in this age group do not like the idea of shopping alongside teenagers. What complicates matters for the Gap and indeed, other aspirants that want to tap into this market is that women of a certain age do not want to be labeled. They do not want everyone to know that they are over 35 because they are patronizing such shops. As such, rather than emphasizing the age, the Gap might have simply found what kind of clothes these middle-aged women want and tailored their marketing with an emphasis on clothing and style rather than age. Since 1995 the Gap has been busy opening shops for the non-teen older set. While some of the individuals in this increasingly popular demographic prefer to shop in shops where they do not have to rub shoulders with teenagers there are those who like the Gap precisely because they can mingle with the younger set and get stylish clothes that are stylish. As one Gap regular comments, "I don't want the 'older Gap.' I like what they have now," said Judith Lederman, who said she's in her early 40s. She likes to shop for jeans and leather jackets in department store teen sections with her 12-year-old daughter because she feels that the clothes aimed at her age group are too conservative” (Dinnocenzio 2004 1). The Gap certainly know where the money is these days. Selling to the over-35 group is less tricky than marketing to teens, who keep wanting new styles and don't stick to any one store, according to Marshal Cohen, senior industry analyst at NPD Group Inc., a market research company based in Port Washington, N.Y. Older shoppers tend to be more loyal to their stores, and have more money to spend. Female customers ages 35 to 54 spent $30.7 billion in the 12 months ended July, up 1.7 percent in the year-ago period, according to NPD. That compares with $11.9 billion spent by the 13-to-17 age group, a 10.3 percent decline from the previous period. (Dinnocenzio 2004 1) Feeble signs of success It would be unfair to suggest that Gap company has never done anything right. The company has survived, in part, because it has maintained its links with the music industry, which has a strong connection to young people who are in turn turned on by endorsements and recommendations from their favourite stars. In fact, Gap made this connection between music and jeans as far back as 1969. In the company’s 2005 campaign, the company emphasized the notion of “favourites,” pointing out “how favorite jeans and favorite songs are individual expressions of personality and style” (Gap Music and Jeans http://www.prnewswire.com/mnr/gap/22461/ ). In terms of media chosen for advertisements, Gap focuses both on print and television. In its 2005 campaign featured stars such as “Alanis Morissette, Joss Stone, John Legend, Michelle Williams (Destiny's Child), Jason Mraz, Keith Urban, Liz Phair and Brandon Boyd (Incubus). The TV campaign captures each musician performing an original remake of their favorite song while wearing their favorite Gap jeans” (Gap – Music and Jeans http://www.prnewswire.com/mnr/gap/22461/). As with any advertisement, ultimately one has to ask the question whether these interesting sounding advertisements do translate into sales in the Gap stores. From skinny black pants through jeans to clothes for teenagers and those over 35, it seems that Gap is everywhere that people go. Such a marketing approach and the advertising campaigns that go with them appear scattershot in the hope that something will stick. There is no indication that the company has taken the pulse of the market place and truly understands how to make a connection with the buying public. Information sharing: Internal and external In fact, even though Gap is one of three brands handled by Gap Company the company has not been able to communicate this message to the marketplace. Thus, those who appreciate the quality of Banana Republic, or Old Navy, two of the company’s brands, may not realize that they could get the same high quality of products at a Gap store. It is not clear what the thinking might have been for Gap not to actively share this information. It would seem that the company does not have a good internal communication system which could also translate into their having a weak communication link with their customers. Gap, which is the largest clothing retailer in America, with over over 4000 shops (Newman and Darshika 2004) in the United States, Canada, United Kingdom, France, Germany and Japan. may have become too big and unwieldy to maneuver. As writer Colliver (2004) reports of one shopper commented, "I don't think their product is innovative or their marketing campaign is particularly exciting," she said. "In this market, you can't be an also-ran. When you're that big you have to set out and lead." (Colliver 2004 1). Newman and Darshika (2004) have carefully studied the Gap, in the UK< comparing it to another company, Top Shop, in an effort to find what may be the spark behind the success or lack thereof of each of these two companies. Newman and Darshika (2004) acknowledge that fashion retailing is a business that is very competitive, in the United Kingdom and elsewhere. “Consumer behaviour in this dynamic marketplace is characterized by impulse purchasing and fickle customers. To achieve and maintain competitive advantage, retailers must, therefore, pursue a retail strategy that aligns closely with customer merchandise preferences” (Newman and Darshika 2004). Part of the long-running success f the retailer Gap, which was founded in San Franciso and has been around since 1969, stems from the love of its customers for the simple look as an expression of identity. As Newman and Darshika (2004) note, part of the company’s problem may be that in 2001, after the company repositioned itself by going after the higher end of the market they “arguably neglected its core customers through limiting the proven merchandise from the shelves of its UK stores. A recent re-imaging campaign that targeted fashion conscious consumers has alienated existing customers (Patten et al., 2002). This action contributed to a £24 million loss and the deflection of trade to rivals, such as H&M and Zara (Whitehead, 2002; cited in Newman and Darshika 2004). The success of the Gap in steadily expanding its reach around the world may have focused the company quite intently on the building and store opening part of their business rather than on what actually makes the customers come through the door. It is interesting that while Gap and Topshop both target the savvy consumer for whom fashion means everything Topshop has been able to stay well in the game by continuing to show profit while Gap continues to struggle. According to Newman and Darshani (2004) poor positioning may be part of Gap’s problems. The importance of good positioning is linked with market orientation because if the customers are not able to see a company as having what they need they are likely to take their business elsewhere. As reported by Newman and Darshani (2004), the pursuit of retail management may lead to the creation of competitive advantage or help establish a point of differentiation between a particular company and its rivals. The alienation of the core customer base, and a failure to establish credibility with the fashion followers (Whitehead, 2002) would seem to suggest that Gap's attempt at market orientation has been far less successful that that of Topshop. For instance, Armstrong (2002) points to the responsiveness of the Topshop fashion chain to consumer values, and trends that drive consumer preferences. The fast response time from first identifying fashion statements of celebrities (such as David Beckham) to merchandise availability in stores has created considerable competitive advantages for the retailer. In addition, Topshop's fast catwalk to shop floor lead-times ensure the availability of cutting edge fashions at a high street price, thus satisfying target market expectations and creating a competitive edge. Conclusion and recommendations From the foregoing it seems quite obvious that Gap has lost its way. The company’s success over the years may have blinded those at the helm in that it seems that once the money was flowing it would never stop or at least, that, it would continue for a long time. Gap seems to be a company confused. It is not sure whether to cater to teenagers and the young, those individuals who are between the ages of 10 and 35 or strive to please those in the higher age brackets. The company did well to get some popular musicians on board in its 2005 campaign. That is not enough, however. The company should employ some people who understand style. Such people, these days, are not found in the design academies but on the streets. If Gap knows where to go, in Tokyo, New York, London, or Los Angeles, it would be able to capture the spirit of the times as young people want to see in their fashion. Dictating fashion from on-high, the top, does not seem to work, at least not for the demographic that has traditionally patronized Gap stores. Gap may be too diffused and thus unable to understand the core needs of their customers. To do so successfully would mean understanding the basic tenets of market orientation, which includes getting intelligence about customers, sharing such information in a company, and catering to the current and future needs of customers. Gap has a long way to go, it appears, to meet the test of being market oriented and to benefit from the almost inevitable rewards that come from having a true understanding of what customers want. Bibliography Abcarian, Robin. “Love it or hate it: A ‘Fair Lady’ in Gap’s skinny pants.” Los Angeles Times (Sep 23, 2006):E20. Blain, Joanne. “Classy, affordable clothes for over-35 set.” The Vancouver Sun )No 3, 2005):D14. Campanelli, Melissa. “The Gap Aims to Bridge Chasm Among Its Brands.” December 8th, 2004 http://www.dmnews.com/cms/dm-news/shows-assns/31227.html (September 29, 2006) Colliver, Victoria. “Struggling Gap sees credit rating lowered.” www.chronicle.com August 22, 2001 Dinnocenzio, Anne. “Retailers try new concepts to attract 35-plus consumer.” Advocate (Oct 3, 2004):1. “Gap: Jeans and Music – the perfect fit.” http://www.gapinc.com/public/Media/Press_Releases/med_pr_GapFallJuly280 5.shtml (September 29, 2006) “Gap pulls retail websites.” Marketing Week (Sep 8, 2005):21. Newman, Andrew J & Darshika, Patel. “The marketing directions of two fashion retailers.” European Journal of Marketing, Vol. 38 Issue 7 (2004):770. Pickett, Debra. “If the skinny black pant fits – you’re one in a hundred.” Chicago Sun – Times (Sep 22, 2006):2 Yarbrough, Lawrence King. “Corporate culture, market orientation, and customer satisfaction: Interrelationships and impact on firm performance.” University of Arkansas (1996):AAT 9721268. Read More