Gap Inc Business Strategies - Case Study Example

24 February 2009 The Gap Case Study Recent years, Gap Inc has lost its popularity as a unique brand and cloth retailer. Traditionally, the strong brand image of the company has been based on uniqueness and exclusive designs, ability to deliver a competitive product and respond effectively to market changes influenced by demographic variables and life styles changes. Strategic objectives and marketing processes was the main method for Gap to remain competitive and plan its future growth. At the beginning of the 21st century, the situation has changed and gap cannot attract loyal and repeat buyers with its classic American style jeans and T-shirts. For every company, setting strategic directions require sales projections for such periods as one, three, five, and ten years ahead. These projections predict customer and competitor reactions; attempt to gauge acceptance for new products; and highlight economic, social, demographic, technological, psychological, and political changes, all of which are difficult tasks to perform -nor can they be performed with the degree of precision available in other more concrete situations A visit to a local Gap store allows to say that the majority of Gap's customers are women and girls from low and middle social classes. The average age of the consumers is 14-17 years old, and 17-24 years old. In the store, there were 4 middle-age women (40 years old) with teen daughters. I saw any men in two Gap's stores. Most of the young women are unmarried. All of the customers wore casual cloths and neither looked like a business woman. This information allows to say that age is not a major determinant of marketing influentials. Opinion leaders cross age lines, especially in fashions. Influence does not travel from the older to younger women. However, it reveals status homogeneity, and travels within a social stratum. When influence does cross status lines, there does not seem to be a discernible direction -- there is no more advice-giving coming down the status ladder than going up. In another sense ours is an age of mass change. Mass conformity, which exists within this dynamic setting, results in the democratization of consumption, in the sharing of abundance. Marketing has had a hand in this process. Marketing programs are based on the existence of similar wants, motives, attitudes, opinions, and re- actions (Drejer 22). They are designed to furnish similar goods to diverse markets. Modern technology is the necessary and sufficient condition for the creation of mass culture. Our society with its mass culture emphasizes higher standards of living and expanding expectations. But this massification has been assailed. Ours has been termed the homogenized, Philistine society. The mass media, television, movies, newspapers, and magazines, which are among the tools of market communication, have been proclaimed the purveyors of a mass culture that has a relatively low common denominator. The Internet site allows to say that the merchandise is oriented to teen girls and housewives, who do not care about fashion and style. Their main criteria is price, simple design and subtle colons. Gap's consumer is a young woman who wants to look nice but does not care much about fashion and style (Dobson and Starkey 33; Gap Inc Home Page 2009). Gap's merchandise selection is based on traditional classification including top sales, classics, jeans, pants and accessories. A visit to the local store shows that Gap pays no attention to design of its premises: they look unattractive and even sad in contrast to such brands as the United Colors Benetton or T. J. Maxx. Gap follows a traditional method of products display when all goods are sorted by color. it is possible to say that sociological factors and forces are as important as any in determining and shaping buyer behavior. Society has a way of getting consumers to conform and make approved purchases. Group pressures are effective. Life style (the distinctive or characteristic mode of living), which is the result of such forces as culture, values, resources, symbols, license, sanction, mobility, leisure, social class, life cycle, status, conformity, mass, and the family, affects purchases (Drejer 22). Gap's products are purchased not only for inherent functional benefits but also for social utilities. Items selected are usually similar to those bought by other members of "the group" -- both physical and reference groups. The majority of the products are priced as discounted. A conversation with Gap's sales people proved the impression that Gap has not changes its strategy for a long period of time. Following this way, Gap tries to position itself as a brand with loyal customers who do not care about store design and annual changes in its policy. The Internet website made better impression that its stores. It is easier to find the product you need and select colors on the site that in the store. Still, the Internet site does not display the latest trends and products available at the store (Gap Inc Home Page 2009). The information mentioned above suggests that old strategies and marketing initiatives do not work in modern environment. Traditionally, gap attracts young girls who value freedom and independence, unique style of cloths and trendy brands. The main problem is that Gap is not able to change and respond effectively to demographic and social changes. Strategic marketing processes help companies to analyze its current position and market share and develop a clear and concise strategic plan for future growth and development. However, current actions and decisions greatly influence a company's well-being ten or twenty years hence. Today's intelligent action has significant consequences for hazy long-range plans. The alert marketing manager keeps the need for planning always uppermost in mind (Dobson and Starkey 35). The main techniques which will help Gap Inc to assess where there are now are historical sales and financial analysis, historical growth rates and profitability, position towards competitors and market share. Setting strategic directions are a rational way of translating experience, research information, and thought into marketing action. It is a pragmatic, organized procedure for analyzing situations and meeting the future. Based on information about ends and means to determine various causal relationships, trends, and patterns of behavior, it is concerned with the selection of alternative strategies. In essence, purposeful research, experience, judgment, and decision making (all of which are directed toward guiding the corporate system and bringing it growth, survival, and adjustment) form the fabric of the marketing process. Marketing planning is an integrated, intelligent, rational process for guiding business change (Dunneand and Lusch 87). Group leaders, influential, and gatekeepers are often responsible for the acceptance of products by others. Social class, the classification of groups of consumers on the basis of class standing, helps achieve an understanding of buyer reactions. Social position depends on how income is derived, education, family lineage, and type of house and dwelling area -- not on money alone. The orientation and life-style outlook of each of the classes differs from members of other strata. Societies engender conformity and shape social character in different ways (Hollensen 65). Some are tradition directed and others are inner directed, but ours is largely other directed. People pay close attention to the signals received from others -- friends and mass media. Our society also has the permanent traits of innovation, change, mobility, and movement. As a result, the tendency to conformity and massification is tempered by dynamism and change. Marketing analysts should be well aware of the significance of sociological factors; they have been described as sociographics. Predictions of them give indications of the dimensions of future markets (Dobson and Starkey 65). The proposed strategy is based on new market position of Gap as fashioned and trendy cloths retailer. This strategy will help Gap to attract the same age group but sell more products daily. Gap should take into account the fact that marketing acknowledges that human motivation has an impact on economic and corporate growth and on development. It concentrates on achievement as a significant stimulus for economic advance. Marketing recognizes that consumers, stimulated by the achievement motive, try by increasing productivity to satisfy their desires for consumption and to improve their standards of living. The utilization of resources is not determined merely by availability and technological advancement. To a large extent marketing is responsible for efficient systems of production and for the implementation of zmuch technology. It is impossible to understand our culture without a comprehension of marketing as an institutional force. Marketing is an institution of social influence in much the same sense, but not of the same degree, as the school or the home. It exerts an extensive influence that can lead to the betterment of social and economic life (Kotler and Armstrong 74). The main elements of the new marketing plan are new design of all stores, new display of goods based on styles rather than colors. A special attention should be paid to designs and fashion trends. Strategy implementation will involve the following stages: The first step is to prepare and coordinate management staff (this stage will take a week). The second step is to implement training programs and new production solutions (this stage will take from 4-5 weeks and will be provided simultaneously involving both training and technology implementation). The third step is verification in production (it will take 2 weeks). The next step is modification of all process and procedures (one week). The last step is control and monitoring. The concatenation of needs requirements design strategy implementation demonstrates that strategy success requires Gillette to get each of the pieces right. Too often, strategy focuses entirely on implementation. In many cases, they can pay lip service to capturing needs and defining requirements and are also oblivious to the role of design. After all, management is an action-oriented discipline, so managers are eager to roll up our sleeves and get to work. However, if any link in the chain is flawed, the final solution will be defective. This means that strategy teams must give needs definition, requirements development, and design creation the same degree of attention they give strategy implementation. The Gap manager's structural "fix" was to make his central role on the strategy clear to everyone and to insist that consequential communications be routed through him. For example, he told the consultant not to deal independently with anyone in the customer (Rosenbloom 76l; Gap Inc Home Page 2009). . The proposed strategies will help Gap to maximize profits in twp three months. This, it will take half a year to develop new designs of goods and introduce new trends. Gap should pay attention to the Internet site and its convenience for potential customers. More colors and goods should be available for consumers. Consumption is no longer exclusively a home-centered activity, since consumption of many goods outside the home has become common. Hard physical work and drudgery, which were heralded as a virtue, are being replaced by machines. The life of toil is changing to one of greater leisure. Inherent values of thrift and saving are now challenged by prosperity through spending. The retailer's main target market is the price-sensitive, style-conscious consumer -- most notably, young families just beginning a new home. Along with the idolatry comes an effort to completely understand the customer. In doing so, Gap has attempted to create a wholesome family shopping orientation in all of their stores. In order to improve the current performance, a special attention should be paid to customer relations and communication with repeat buyers. Culture and unique attitude towards all customers should be the core of marketing philosophy. Works Cited Dobson, P., Starkey, K. The Strategic Management: Issues and Cases. Blackwell Publishing, 2004. Drejer, A. Strategic Management and Core Competencies: Theory and Application. Quorum Books, 2002. Dunne, P. M., Lusch, R. F. Retailing. South-Western College Pub; 6 edition, 2007 Gap Inc Home Page. www.gapinc.com Hollensen, S. Global Marketing: A Decision-Oriented Approach. Financial Times/ Prentice Hall; 4 edition, 2007. Kotler, Ph., Armstrong, G. Principles of Marketing. Prentice Hall; 11th edition, 2005. Rosenbloom, B. Wholesale Distribution Channels: New Insights and Perspectives. Haworth Pres, 1994, Read More