Gap Hbs CaseEssay Preview: Gap Hbs CaseReport this essayHow did Gap succeed as a Market Driving Company in 1980s and 90s?How can we define the GAP brand at the end of the 1990s? People would say at that time that it was a hip and trendy, purveyor of the new uniform – basic jeans and T-shirts – for a generation that rejected “dress up” clothes for work and play. This only sentence could explain why Gap Inc. has been so successful as a Market Driving Company: as being a pioneer in the casual ware industry, they managed through decades to teach customers theirs needs and to create a high brand value.
The question that remains is now to find how Gap managed to reach such a point in the market. Here are the facts that can explain this major success:The growth during this period of time is a direct result of meeting a niche in the clothing market and being a pioneer in this niche.Indeed, as an innovator in the apparel industry, Gap Inc. managed to “help buyers learn what they want” (Kellogg on Marketing-Chapter 5). When Gap was first introduced, their niche was their basic clothing, which consisted of its signature blue jeans and white cotton t-shirts. Gap was more than a brand; it had changed the clothing industry in many ways, offering a range of clothing for men, women, and children. As Gaps business began to boom, it also began to expand.
As we have seen in the past with brands such as GE, Wal-Mart or even Motorola is that being a pioneer in an industry, therefore being a Market Driving Company, can generate a competitive advantage as shown in Figure 5.3 of Kellogg on Marketing, reproduced below.
This competitive advantage often leads to a leading market position. Indeed, the brand (in this case Gap) will be better perceived, preferred and therefore it will be difficult for competitors to take market shares.
However, the cloth industry is somehow different from other industries: the competitive advantage might be more fragile due to a very volatile market.Targeting a huge market with very low competition.The target of Gap Inc are people who wants to buy well-made, classic clothing that doesnt cost a fortune and doesnt render you a fashion failure within a month. As the former CEO Drexler said, everybody can wear these clothes, we want to provide the basic pieces for anyones closet. This need seems to have had a great success during the 80s and 90s.
As Gap expanded, it took its basic clothes to three different levels-there was Gap for casual work clothes, Banana Republic for the dressier casual clothing, and Old Navy for the affordable family oriented clothing. Each entity addressed its own target market. Gap Inc. had strategically placed itself in three key parts of the industry and was therefore able to target many consumers through its company and catered to many peoples individual styles. The chain was popular with teens and their parents, something rarely seen with any retailer at that time.
The Gap had a high potential growth because it serves a huge market – young, middle-aged to more mature adults – with very little competition.”Its communication success to establish the Gap name as a brand.Thanks to TV commercials where we could find khaki-clad teenyboppers boogied to 40s swing music or gangs in jeans fought gangs in khakis. People would love at that time watching these commercials because the Gap Inc. managed to create and identity. We could also see ads in magazine with celebrities and their “individuals of style”. To summarize we can say that Gap created commercials and marketing campaigns that were really successful that helped establishing the Gap name as a brand in the middle of the proliferation of fashion labels.
A whole lot of things went right for Gap all at once. They entered a market that was waiting for such products: the business suit fell out of fashion in many workplaces, everyone needed to know what to wear. So they became a national store that would sell uniform. However the market did change over time. That is when they faced many problems.
Why do you think Gap lost its Market Leadership as a Marketing Driving Company?We have just explored the reasons why the Gap Inc. has been so successful as a Marketing Driving Company. They managed through different marketing strategies to create new needs and catch a new target for the clothing industry. However, the Gap Inc. has also failed in many marketing decisions, leading to loss of its market leadership.
One of the most important benefits of being a market driving company is the brand higher recognition. Still now, when we think about classics affordable cloth, the first brand that comes to mind is GAP. However, Gap forgot that the target they had chosen would eventually die and also that they would face new competitors. In a different market such as the Cell Phone Industry, a market driving company could propose new products; create new needs by taking advantage of its leadership. However in the case of the clothing industry, and especially the target Gap selected, they were facing a dead end. The only way out could have been to buy another brand and create other needs, which is what Zara or H&M did.
In 2006, the European Commission’s Economic and Social Council adopted a call for “European companies are not competitors; they are not independent; they are not market driven.” This call would make the European Commission clear that, despite the absence of a single brand and an independent market, the EU remains to be held responsible for those things. In Europe, it is not just the fashion industry that has to find partners because it has been under a kind of monopoly to create its own. In order to maintain a monopoly on the fashion field, it has to continue to push ahead with its marketing, advertising, products and processes.
The next step for fashion brands is to become independent. Many companies like P and GAP have done this already in South Korea, but this is something that will only become more difficult with the new laws. Fashion is going out of style. It is no longer what fashion design is all about. It’s all about a new idea and a new vision so the fashion companies will no longer be beholden. In the end, fashion is just another part of a whole new field of human existence. While new products are coming into existence, fashion houses have made a real and tangible investment to keep the world coming back to fashion (and all the people’s clothes).”
In 2006, the European Commission’s Economic and Social Council adopted a call for “European companies are not competitors; they are not independent; they are not market driven.” This call would make the European Commission clear that, despite the absence of a single brand and an independent market, the EU remains to be held responsible for those things. In Europe, it is not just the fashion industry that has to find partners because it has been under a kind of monopoly to create its own. In order to maintain a monopoly on the fashion field, it has to continue to push ahead with its marketing, advertising, products and processes.
The next step for fashion brands is to become independent. Many companies like P and GAP have done this already in South Korea, but this is something that will only become more difficult with the new laws. Fashion is going out of style. It is no longer what fashion design is all about. It’s all about a new idea and a new vision so the fashion companies will no longer be beholden. In the end, fashion is just another part of a whole new field of human existence. While new products are coming into existence, fashion houses have made a real and tangible investment to keep the world coming back to fashion (and all the people’s clothes).”
Finally, we can say that the Gap Inc. was from the beginning entering a market that would eventually die. Indeed the company created a new market of classic, trendy and affordable cloth. But people got tired of such products. Society has changed in a way that people want to be different from one another. And this goes for cloth to. Dressing differently is a way to show its personality. Many analysts therefore think that the company has to emerge a different format in order to survive.
Analyze the current targeting and positioning strategy of Gap these days? Be very specific as you can.Before analyzing the current targeting and positioning strategy of the Gap Inc. it is important to look at the strategies that the company took in the past.
The strategy that