Marketing Case Study - Essay Example

Some of the most important issues concerned Gap’s segmentation and targeting strategies with view to market size, growth potential and appropriate marketing mix. Gap’s segmentation model is a combination of demographic, psychographic and to some extent geographic characteristics (Etzel et al, 2001). For example the GapKids and babyGap branches target market segments based on their age, whereas Old Navy targets consumers with limited incomes (p. 196) and whole families. Specific market segments, identified by Gap are based on: Income: lower income groups with annual income between $20,000 and $50,000 were initially targeted by Old Navy.

This group comprises mostly of teenagers who represent a limited market potential for the company. Apparel products tend to be “commodity-like” (Datamonitor, 2005), and for most companies differentiation is based on competitive pricing strategies to win market share. In targeting market segments, Gap follows the “multiple-segment” model (Etzel et al, 2001), meaning that each market segment is targeted with a specific marketing mix. The Gap brand is targeted at the “20- to 30-year olds” (p. 196) who prefer the classic line of khaki pants and button-down shirts both for business and casual clothes.

The positioning of the brand is further completed by the large assortment of colors and sizes for all-cotton apparel. The company’s attempt to reposition the Gap brand into the fashion-oriented segment lead to market share loss, because the company "alienated" (p. 196) their core customers and failed to attract the "fickle" (p. 197) teenage consumers. Repositioning back "to its roots", along with other measures, improved Gap’s market position in 2001. Banana Republic, which was acquired by Gap in 1983 (p. 196) was positioned as an upscale Gap, extending the previous adventurous positioning of the brand.

Unlike Gap’s success in specialty clothes