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MARKETING MANAGEMENT
Assignment 2
Group 30%, 3 students in a team (4500 words) to be submitted on exam date
Gap Inc
There are numerous companies that follow an extremely differentiated product strategy. Just
like Procter & Gamble it shows just how finely the market for laundry detergents can be
segmented. Many consumer products companies follow this same strategy. But other types of
companies follow this strategy as well. Consider the portfolio of brands owned by Gap Inc.
The following is a description of each of their main brands as noted on the corporate Web site
(http://gapinc.com/public/index.shtml).
• Gap: Gap offers iconic American style to customers of all ages. Since 1969,
customers have looked to Gap for updated, casual clothing and accessories that help
them express their own personal sense of style. Today, Gap continues to be the best
destination for wardrobe essentials such as T-shirts, hoodies, great-fitting pants, and
denim. What began as one brand has grown to include Gap, GapKids, babyGap,
GapMaternity and GapBody. Gap has become a cultural icon by offering clothing and
accessories rooted in cool, confident, and casual style to customers around the world.
• Old Navy (may not be available here): Old Navy offers great fashion at great
prices, for everyone. For more than a decade, Old Navy has been famous for bringing
customers on-trend apparel and accessories, as well as updated basics, at a surprising
value—all in a fun, energizing shopping environment. From Old Navy’s Item of the
Week—a special item at a special price each week—to its much-talked-about
advertising campaigns, Old Navy is still the place to go for the latest fashion at
amazing prices.
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1. What is Gap Inc.’s segmentation strategy? What is unique about their market
segmentation strategy?
Areas to discuss-
• Segmentation variables like – geographic, demographic, psychographic and
behavioral issues
• Undifferentiated/differentiated/concentrated Marketing issues
(6 marks)
3. Are there weaknesses in the Gap Inc. strategy? If so, what are they?
Areas to discuss-
• Positioning statement and strategy
• Re-look into your answers in questions 1 and 2 to look into their weaknesses
• Apply SWOT and relevant marketing management models
(6 marks)
4. Do you see any uncovered market segments? If so, what are they? How could
Gap Inc. exploit this?
Areas to discuss-
• Must understand all previous questions
• Positioning or Perceptual mapping
• Target marketing
• Secondary research (possible primary research)
• Positioning or re-positioning strategy
• Apply BCG, Ansoff and other relevant marketing management model
(7 marks)
5. Elaborate how can you apply your understanding of marketing mix to penetrate
the market in Malaysia with consumer product of foreign brands within GAP Inc?
Areas to discuss-
• Primary and secondary research
• Porter’s five forces
• B2B & B2C issues
• Consumer buying behavioral issues
• Hofstede cultural dimensions
• Segmentation, differentiation and positioning issues
(12 marks)
6. Create an IMC proposal with your recommended positioning and target customers
in Malaysia market by gender or by a specific age group.
Areas discuss-
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• Communication model
• Promotional Mix
• Understanding of local media
• Target marketing
• Segmentation and differentiation issues
• Positioning mapping and strategy
• Porter competitive strategy
• Other relevant marketing management model
(13 marks)
The End
TABLE OF CONTENT
NO DETAIL PAGE
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1.0: Introduction 5
2.0: Segmentation Strategy 6 - 10
2.1: Geographic Segmentation 6
2.2: Demographic Segmentation 7-9
2.3: Psychographic & Behavior Segmentation 9 - 10
2.4: Uniqueness of Gap Inc.’s Segmentation 10
3.0: Differentiation Marketing 11 - 15
4.0: Gap Inc. Strategy Weaknesses (TOWS) 15 - 20
4.1: Threats 15 - 16
4.2: Opportunities 16 - 18
4.3: Weaknesses 18 - 19
4.4: Strength 19 - 20
5.0: Uncovered Market Segment 20
5.1: The Ansoff Matrix 21
5.2: BCG Matrix 23 - 24
6.0: Market Development of Old navy in Malaysia 24 - 32
6.1: Primary research 24
6.1.1: Shopper’s demographic and shopping behavior 25 – 27
6.1.2: Shopper’s Perception on GAP Inc. 27
6.1.3: Shopper’s Opinion on Old Navy 27
6.1.4: Concluding Remarks on the Survey Findings 28
6.2: Michael Porter’s Five Forces 28 - 30
6.3: Hofstede Cultural Dimension Analysis 31 - 32
7.0: IMC Proposal 33 - 38
7.1: Segmentation Strategy, Position Mapping &
Target Marketing 33
7.2: Integrated Marketing Communication 34 - 35
7.3: Understanding Local Media 36
7.4: target Marketing and Porter’s Generic Strategy 37
7.5: Select the Marketing Communication Channel 38
8.0: Conclusions 39
References
Appendix
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1.0: INTRODUCTION
The GAP, Inc. or simply known worldwide as GAP, established in July, 1969 and based in
San Francisco, California. The Gap functions as the largest specialty apparel retailer in the
U.S. It offers clothing, accessories and personal care products for men, women, children and
babies. It owns five apparel brands- The Gap, Banana Republic, Old Navy, Piperlime and
Athleta.
GAP Inc. has a work force of 134,000 employees, operated 3,068 company-owned stores
mainly in the North America countries and 178 franchise stores across Asia, Europe, Latin
America and Middle East (Refer Figure 1). In 2010, GAP Inc. has recorded 14.66 billion of
net sales and 1.2 billion of net income, 9% higher than 2009. In the same year, GAP Inc. has
ranked 7th among specialty retailers in the list of World’s Most Admired Companies by
Fortune Magazine. Today, its present is felt around the world with customers in over 80
countries can buy the products (GAP Inc., 2011).
Figure 1: Store count, openings, closings, and square footage for Gaps’ stores
Source: GAP Inc.: Financial Information- Annual Report 2010
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http://www.gapinc.com/content/dam/gapincsite/documents/GPS_AR_10.pdf
2.0: SEGMENTATION STRATEGY
As a company or marketer, it is rare to satisfy everyone in the market. Therefore it is
necessary to start by dividing the market into segments. Segmentation strategy is an
approach to subdivide a market or population into segments where individuals have similar
needs for services and products (Kotler & Keller, 2012). GAP Inc. employs segmentation
strategies which include geographic, demographic, psychographic and behavioral
segmentation in order to make its brands and products competitive in the world market.
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2.2: Demographic Segmentation
Demographic segmentation divides the market into groups on the basis of variables such
as gender, age, income, occupation, education, family size, etc. (Kotler & Keller, 2012).
GAP Inc. portfolio consists of three major brands- Gap, Banana Republic and Old Navy
to cater a variety of customers (Refer Figure 3 and Diagram 1 to 9).
Diagram 2
Diagram 3
Diagram 1
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-8-
Diagram 4
Diagram 5
Diagram 6
Diagram 7
Diagram 8
Diagram 9
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Diagram 4
Brand Primary Target Market
Old Navy Family persons- dads, moms, and to a lesser extent,
price conscious though still fashion oriented teens to
young working adults.
They are basically low income to lower-middle
income groups of customers who reside in sub-urban
area or near urban area.
Gap Has the broadest customer base due to its brand
extension for different product lines.
It appeals to the middle income group of customers
who are highly educated professional or middle
management and reside in urban areas.
The target markets of all its product lines can be
classified into 3 generation clusters-
generation X (1), Y (2) and Z (3).
Brand Market Segments
The Gap Generation X, Generation Y
GapBody Generation X, Generation Y
GapMaternity Generation Y
GapKids Generation Y, Generation Z
BabyGap Generation Z
Note:
(1)
- People born in 1960s and 70s
(2)
- Also known as Millennium generation, born in mid 1970s
to early 2000s
(3)
- Children that born after 2000s
Banana Republic Represents the most pricey and fashion-conscious of
GAP Inc.’s brands, which appeals to successful
working professionals or top level executives.
They are basically upper-middle to high income
groups of customers who are willing to pay premium
for styles, and live in or near the metropolitan area.
2.3: Psychographic & Behavior Segmentation
Psychographic segmentation divides the customers into different groups according to
their personality traits, lifestyles and values. Behavior segmentation divides customers
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into groups on the basis of their knowledge, attitude and response toward a product or
service (Kotler & Keller, 2012). Thus, GAP Inc segmented the customers according to
the psychographic and behavior segmentation as discussed below.
Old Navy - Customers are practical, fun-loving and family-oriented people who
are resource constrained. They prefer comfortable and stylish clothing that
provides the best value for their money.
Gap - Customers are tends to be energetic, active and work-oriented people who
have significant time to shop. They have a great sense of style in their wardrobe,
and spend comparatively high proportion of income on fashion.
In sum, GAP Inc. diverse brand portfolio according to segmentation strategy will provide
a great opportunity for the target customers to remain loyalty because its brands are able
to fulfill different level of needs in Maslow’s Hierarchy.
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3.0: DIFFERENTIATION MARKETING STRATEGY
After identify and profile distinct group of buyers who differ in their needs and preference,
the next step is to decide which market strategy the firm will adopt to enter its target market
segments. There are 4 target-marketing strategies:
Undifferentiated marketing
Differentiated marketing
Concentrated marketing
Micromarketing
In this aspect, it is evident that GAP Inc. uses differentiated marketing strategy to market
its products. In differentiated strategy, the firm decides to target several market segments
whose needs, product usages, or market responses are appreciably different. As mentioned in
section 2, the three main brands of GAP Inc. are catered to different group of customers
based on demographic, psychographic and behavior segmentation, which is developed on the
basis of age, gender, income and some personal attributes. By having different positioning of
its brands, GAP Inc. is also able to fulfill different individual needs in Maslow’s Hierarchy of
needs (Refer Figure 4). Rather than integrating the various customers that the Gap are
targeting, the affordably priced Old Navy and high-end Banana Republic are reaching
different customer segments at different price-points, and each has thrived as distinct entity.
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Figure 4: Maslow’s Hierarchy of needs of GAP Inc.’s brands
The brand positioning map of GAP Inc.’s is shown in Figure 5. It is very important for a
company to determine how it wishes to position its products in relation to the product
attributes that are important to the target customers. With brand positioning map, it can
develop separate marketing mix to attract its potential customers in each segment and cater to
their specific needs and demands. As a result, GAP Inc. will achieve higher sales volume and
stronger position in the chosen markets segments, although the cost also increased to some
extent.
Some variables of differentiation will be analyzed below to show how GAP Inc.
differentiate and position each of its brands by providing superior values.
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(from newborn through adults).
It offers inexpensive on-trend modern clothing,
accessories, and updated basics at lower price-points
than other two brands to the price- & value conscious
customers.
Gap Being an iconic retail brand, it offers modern-sexy,
cool and American style of high quality casual
apparels, personal care products, and accessories at
lower price-points than Banana Republic.
Also introduces brand extension for its product lines
such as babyGap, GapMaternity, GapKids and
GapBody.
However, jean remains as its core products.
Banana Republic Elevated design, high quality and accessible luxury
that bring modern, fashionable and sophisticated
seasonal collections of apparel, shoes, accessories and
personal care products to high-end customers (women
and men) at higher price-points than Gap.
Besides the product and image differentiation, GAP Inc. also focuses on personnel and
service differentiation to provide the pleasant shopping experience for its target
customers. GAP Inc. offers tuition reimbursement for approved work-related courses for
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full time employees. It also provides opportunities for employees to learn and develop at
any time during their career through online, classroom and on-the-job training.
At the service side, it is more innovative to be the first retailer to offer an additional
online store with easy return and exchanges policy. Shopping on these websites is quick,
safe and simple for all its brands. Furthermore, it also offers credit card with its own
branding for members to enjoy extra benefits and earn rewards during purchase (GAP
Inc, 2011). All these superior value added services have successfully differentiated its
brands from competitors. Refer Diagram 10 to 12 for the store outlets of GAP Inc.
Store Outlets of
GAP Inc.
Diagram 10
Diagram 12
Diagram 11
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over-reliance on North America markets and cannibalization risk amongst its own brands
need to address.
SWOT analysis stands for examination of Strength, Weakness, Opportunities and Threats of
a company. This is an extremely powerful tool to understand the current standing of Gap, Inc.
and to predict it future perspectives. SWOT analysis of Gap, Inc. as below:
4.1: Threats
• Currency and political risk – Laws and regulations at the state, federal, and
international levels frequently change, and the ultimate cost of compliance
cannot be precisely estimated. The impact that may result from changes in the
regulatory or administrative landscape can be predicted by no one. Any
changes in regulations that impacts employment and labor, trade, product
safety, transportation and logistics, healthcare, tax, privacy, or environmental
issues, among others, could have an adverse impact on Gap Inc. financial
condition and results of operations as nearly all of Gap Inc. products are
manufactured by independent 3rd party.
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4.2: Opportunities
• Launch of Forth and Towne - Gap launched Forth and Towne brand, the
company’s new women’s apparel retail in April 2005. The new brand focuses
on women over age 35 and would offer a broad range of sizes, with a focus on
fit, and assortments that serve a variety of occasions. A rapidly growing
segment of the population, this group’s spending power accounts for about
39% of women’s total apparel expenditures. Forth and Towne will launch in
four test stores in the Chicago market and one in New York in fall of 2005.
This represents an important long-term growth opportunity for the company.
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• Elimination of textile quotas - The elimination of textile quotas offers
immense growth opportunities to retail apparel companies such as Gap. Under
the terms of World Trade Organization’s (WTO) Agreement on Textile and
Clothing, US quotas on imports of textiles and apparel from most WTO
members were lifted in January 2005. This will enable US retailer to produce
high quality merchandise at a low cost, whilst providing the opportunity to
broaden their product portfolios. This event would improve flexibility in
obtaining imported merchandise manufactured in WTO countries. Since Gap
sources its merchandise from more than 700 vendors in 50 countries, such an
agreement may provide ample savings opportunities to the company.
• Online data mining – The data collected via customer’s online shopping will
enable Gap Inc. to analyze customer’s attributes such as shopping experience,
spending habits, styles and their favorite items. It will help to retain loyal
customers and improve requisition process efficiency.
4.3 : Weaknesses
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• Relatively less differentiated fashion collection - Basic apparel items tend to
be commodity-like, and thus differentiation comes mainly through price, with
lower priced competitors usually winning market share. The current price-
driven sales environment places the company at a disadvantage. In an
environment where basic wardrobe product offerings are indistinguishable
from one specialty retailer to the next, and the shopping decision is made on
price, Gap is likely to lose its customers to lower priced discount retailers.
Moreover, the more fashion-conscious customers would be willing to buy
from other supply chain leading stores that offer exclusive fashion garments
such as H&M, Target and Zara. The company’s competitors have become
much quicker in getting in new fashions, increasing competition and putting
Gap at a comparative disadvantage.
4.4: Strength
• Strong brand recognition - The Gap's multiple brands have become some
of the most recognizable labels within the apparel industry. Its product
line offers a selection of clothing for all ages. The company used multiple
brand strategy to acquire greater market share. This strategy allows a
company to seize their opportunities from multiple approaches. For some
benefits of the multiple brand strategy, it enables a company to get more
shelf space of its products and to respond to consumer demand for
something new. It can saturate a market by filling all price and quality
gaps. It also offers products to brand-switchers who like to experiment
with different brands. In 2009, CRO magazine ranked Gap Inc. one of the
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"100 Best Corporate Citizens" among major U.S. companies for the fourth
straight year.
• Strong online presence - The role of the internet has been a major growth
driver for the company. Gap operates three websites for trapping this
opportunity – gap.com; bananarepublic.com, and oldnavy.com that offer
the respective brands. Websites provide a virtual showcase for companies;
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giving customers the ability to shop for merchandise, whilst allowing
them to see and experience the brand. In light of rising online sales, a
strong web presence has given the company a competitive edge within the
market.
The global apparel industry is growing at very high rate as the demand for garments are
increasing rapidly. Mass merchandiser like Tesco, Walmart and Target, category killers and
specialty retails (J.Crew, and Abercrombie) have all developed successful retail models. Due
to the intense competition, GAP Inc needs to continuously to expand the store globally to
enhance its profits and positive growth.
One of the potential country in South East Asia is Malaysia, This is because it subsidiary -
The Gap and Banana Republic brands are represented by FJ Benjamin, a specialist retail
which is the official franchisee for Malaysian market. There is an opportunity for GAP, Inc to
introduce Old Navy through FJ Benjamin by providing useful insights and guidance to Old
Navy to penetrate the untapped market segments in Malaysia.
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i) Market Penetration: - This growth strategy is where the business focuses on
selling existing products into existing markets. There are four main objectives:
Maintain/increase market share of current products.
Secure dominance of growth markets.
Restructure a mature market by driving out competitors.
Increase usage by existing customers.
ii) Market Development :- This growth strategy is where the business seeks to
sell its existing products into new markets. Here are four possible ways of
approaching this strategy:
New geographical; for example, exporting the product to a new
country.
New product dimensions or packaging.
New distribution channels.
Different pricing policies to attract different customers or create new
market segments (niche).
iii) Product Development :- This growth strategy is where the business aims to
introduce new products into existing markets.
This strategy may require the development of new competencies and
requires the business to develop modified products which can appeal to
existing markets.
iv) Diversification :- This growth strategy is where the business markets new
products into new markets.
This is an inherently more risk strategy because the strategy involves
moving into markets in which the business has little or no experience in. For a
business to adopt a diversification strategy, it must have a clear idea about
what it expects to gain from the strategy and an honest assessment of the
risks.
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Figure 6: Ansoff Matrix
Getting the right product to the right market at the right time is very important. GAP,
Inc can implement the market development strategy by setting up a joint venture with
FJ Benjamin that has vast experience in Malaysia fashion industry. With the joint
venture, GAP Inc. can access to greater resources of FJ Benjamin such as distribution
channels, technology, and management expertise to reduce risk of investment.
In order to mass market in Malaysia, they can use new distribution channel in major
retails outlets like Jaya Jusco, Tesco and Giant Hypermarket. With high traffic flow
and provided superior shopping experience for its target customers. The existing Old
navy product positioning of low price, on trend casual wear will be the key attributes
to reach the price-conscious in Malaysia.
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Old Navy Piperlime
Banana Republic Athleta
The Gap
Malaysia’s retail industry has recorded sales growth of 8.5% in Q4’10 (Eugene, 2011) The
hypermarket, supermarket, and department stores such as Parkson and Jaya Jusco have seen
tremendous growth with continuing dominance of the market in urban areas. In addition,
government has allocated more funds for advertising and promotional campaigns aimed at
making Malaysia a preferred shopping destination leads the growth of Malaysia’s textile and
apparel industry both directly and indirectly.
Gap Inc has been in Malaysia for quite a while now with 5 Gap stores and 3 Banana Republic
boutiques throughout the country. It is no surprise as Malaysia has a growing population of
28 million in 2010 out of which demographics show a substantial 63% of the population
between 15 – 64 years old and a 315 from 0 – 14 years old. This alone would justify the
move by Gap to penetrate into Malaysian market. Furthermore, 70% of the population is
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urbanized of which would be primary market for an apparel brand like Gap Inc. Also, the
increasing spending power of the population enables Gap Inc. to sustain and grow their
business. Hence, there is promising future for Gap Inc. to introduce Old Navy in Malaysia.
This section will present the simple data from the survey that was conducted in Klang
Valley with the objective to analyze the characteristic of shoppers and popularity of
GAP in Malaysia.
Three main shopping malls located in city centre were selected as research locations,
namely Time Square, One Utama, and Mid Valley. Data was collected using a self-
administration of short survey questionnaire. The survey was done over the weekend
to target different age groups of shoppers including their family members, partners
and friends. A convenience sampling was used to recruit 150 respondents to complete
the survey.
The survey findings are divided into three sections, which are shopper’s demographic
and shopping behavior, shopper’s perception on GAP and shopper’s opinion on Old
Navy
Age
Gender
11% 3% 8% <20
20-30 48% Male
31-40
52% Female
33% 45% 41-50
>50
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<RM18K
Income
RM18K -
3%
23.99K
13% 1% 9%
RM24K -
35.99K
RM36K -
35% 47.99K
39% RM48K -
71.99K
>RM72K
From the total of 150 shoppers who took the survey, it was consisted by 48% male
and 52% of female while 78% of them are fall under the age category 20-40 years
old. Besides, 74% of the respondents are from middle income group which can earn
between RM24,000 to RM47,999 per annum.
Every day
Shopping Frequency Like Shopping For Clothes & Accessories
More than once a
1% week 1%
15% 0% 8% Once a week
Yes
More than once a
22% month No
54%
During sales period
only 99%
Rarely
10% Casual
4% 8% 0% 19% Strongly agree
33% Smart
20% 28% Agree
Elegant
Moderate
Sporty
Disagree
Classic 45%
17% 16% Strongly disagree
Sexy
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Type of store Amount Spend in The Store
Department
10% store
0% Fashion 10% 2% 10% <RM100
store
7% 42% RM100 - 200
Specialty
store RM201 - 300
Others 32% RM301 - 400
41% 46%
>RM400
All of the above
The survey also attempt to find out the amount respondent spent in the store for each
shopping trip. Based on the survey, department and fashion stores are the most
popular store which occupied 83% of total respondents. 46% of respondents spent
RM100 – RM200 while another RM32% spent RM201 – RM300.
10%
0%
0%
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The respondent also asked about their opinion on the popularity of GAP. From the
result of the survey, 90% of the respondent aware with the brand of GAP, however,
only 53% of them bought from GAP. Also, only 17% of respondent agreed the price
paid for the clothes are reasonable for the brand and quality while 60% chosen
moderate, which believe brand can provide better values.
17%
35% Yes
Yes
No
No 52%
Maybe
83% 13%
Competitors
8% 15% G2000
15%
Giordano
Padini
Hang Ten
24%
12% Bossini
26% Romp
It is not surprise that majority of the respondents (83%) did not aware of the Old
Navy brand since it is not available in Malaysia. However, 52% of the respondents
are excited and willing to try the Old Navy products after they were informed that it is
a parent brand of GAP and positioned as affordable, high quality clothing retailer. On
the other hand, 50% of the respondents feel that Old Navy able to compete with
Giordano and Padini which offer similar line of merchandise.
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From all the survey findings, it is obviously shown that huge opportunities for GAP
Inc. to introduce Old Navy in Malaysia. Target customer group can be those
consumers fall under the age groups of 20-40 years old, which normally shop once a
week and willing to spend around RM100-200 in the store. These shoppers area
middle-income group with monthly income of RM2,000 – RM4,000 and always look
for casual wear that provide best value for their money. Furthermore, they are aware
of GAP brand and willing to try the new product from GAP. However, a few
competitors compete against the proposed Old Navy and further external analysis
need to be evaluated clearly before enter the market.
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• Rivalry and threat of substitutes
The fashion and apparel industry is a highly competitive and constantly
changing. Thus, Old Navy needs to compete with various retailers who have
established their strong portfolio in Malaysia. The primary competitors of Old
Navy will face are predominantly local or Asian based which are perceived to
be fashionable and affordable such as Padini, Baleno, Giordano and TopShop.
Also, Old Navy needs to face the stiff competition from large retailers or
departmental stores offering in-house brands as well as non-private labels
such as Metrojaya, Parkson, Jaya Jusco and Isetan. Thus, it is crucial that Old
Navy to differentiate itself with the competitors and create the value to attract
customers and retain customers.
Theoretically, as companies grow and become bigger, the barriers for entry
become larger as well. Gap inc. is already a well-established retailer and has
already overcome most barriers. Thus, the threat of new entrants is consider
low for Gap Inc. although low start-up cost required when enter the fashion
industry in Malaysia. Gap’s vertical structure and centralized buying gives
chain stores a competitive advantage over independent retailer. In addition,
brand equity also is Gap’s advantage appealing to the esteem needs of the
individual customer. However, the entrant of well-established international
brands might pose a significant threat, but subject to their target market
segments and the pricing strategy.
• Supplier power
The bargaining power of supplier is low for Gap Inc. As stated in the annual
report 2010, independent third parties in 50 countries manufacture nearly all
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the products. Although there is a risk of rising materials and labor costs,
however each manufacturer only accounted for a small proportion of firm’s
output that is not more than 3% of the annual demands. Therefore, supplier
power overall can be judged to be low. There is also little threat of vertical
integration by suppliers, as they are not residing within U.S. As such, the
suppliers have limited power to dictate the price and quality standards of the
products as Gap Inc. has little reliance on single sourcing.
• Buyer power
Consumers enjoy high buying power in the apparel industry because of the
intense competition. Because of the Gap’s mid level prices for the type of
clothing it sells, the Gap’s strength is in its quality. Still, buyers have power
because of the numbers of competitors and the ease at which buyers can
switch to a different retailer. Shopping-savvy consumers relish the search for
value and will buy more sale merchandise in department stores. These
tendencies have shifted the industry market share somewhat to discount and
factory outlet stores.
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Diagram 12: Hofstede’s Dimension for Malaysia
• Power Distance Index (PDI) that is the extent to which the less
powerful members of organizations and institutions (like the family)
accept and expect that power is distributed unequally. Diagram 4 above
shown it is high for Malaysia (104), which indicates the society’s
readiness to accept power and authority in the social hierarchy. It suggests
that the fact superiors want to clearly differentiate themselves from
subordinates by dressing differently. Gap Inc. won the competitive
advantage at this point as it subsidiaries – Banana Republic and Old Navy
which is aiming different market segment able to satisfy the different
customer group respectively with different price range.
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correctly, Gap Inc. manages to cater the huge market share due to the
needs of the collective to follow.
Based on the above analysis, the conditions do favour the growth of the apparel
industry in Malaysia.
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marketing communications, Gap Inc. needs to identify the target audience and product
positioning of Old Navy, determines the marketing strategy, design the communications,
select the marketing communication channel and establish the budget.
Looking at Gap Inc. case, it was only set-up it first store in Malaysia in October 2006,
thus, it is consider still a rather brand new in the Malaysian market and has the most
potential to grow. Presently Gap Inc. already has presence in Malaysia retail market
through Banana Republic and Gap. Banana Republic is a luxury and high quality
brand, which target high income group of consumers. Gap appeals to middle income
group of consumers with its cool and casual style of apparels. It even introduces
brand extension to target baby and kids.
The clear product attributes and pricing positioning defined the competitive
positioning of each brand. To prevent cannibalization of its own brands, the Old Navy
needs to focus on the new target market segments by introducing high quality and
best value products. Furthermore, it also provides an opportunity for consumers to
remain loyalty and upgrade from affordably priced Old Navy to accessible luxury
products of Banana Republic at different stage of their life.
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• Young-couple & Family with kids: As Old Navy provides a wide range of
apparel, shoes and accessories as well as maternity line, consumables and
personal care product, it is suitable for the lower-income family who fashion-
oriented with bargain-minded.
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• Source/Sender: In this case, Gap Inc is the sender and will deliver its
message through different channel for instance advertisement, articles and
etc.. to its receiver- the target customer of Old Navy in Malaysia.
• Encoding: It is the formulation of messages in the sender’s mind, that is, the
sender not only translate his purpose (ideas, thoughts or information) into a
message but also decides on the medium and media to communicate his
planned message. In this case, Gap Inc encoded the message through different
channels such as promotion and advertisement to reach its targeted customers.
• Medium: The most important step in the communication process where how
the sender conveys its message to the receiver. In this case, Gap Inc. can make
use of effective media such as print media, outdoor media and electronic
media to grasp the customers’ attention and thus lead the customer do more
purchase.
• Response: This refers to the reaction given by the target market after being
exposed to the message provided by the sender or company.
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• Feedback: It is the response or acknowledgement of receiver to the sender’s
message. The exchange is possible only of the receiver response. This process
is extremely important for an company such as Gap Inc in continuing or
improving the existing products and strategies.
The advertising industry in Malaysia can be divided into three mediums, which are
traditional media, digital media and out-of-home media. The traditional media are
newspaper, magazine, and radio which comprise of 3 languages (Chinese, Malay &
English) as well as Pay TV (Astro), and Free-To-Air TV (RTM, TV3, NTV7, 8TV,
NTV9); the digital media are online advertising, mobile advertising, gaming, blogs,
social network, and email marketing; out-of-home media are billboard, digital
signage, banner, floor graphic, table-talk advertising (mamak stores), transport
advertising (bus, taxi, LRT), and out-of-home television media (Power Screen)
(SKMM, 2009).
Gap Inc. advertises mainly through major newspaper publications, but it also
advertises in fashion magazines and on mass transit posters, billboards, and exterior
bus panels. All advertisements stress the central theme of American design, quality,
and moderate pricing, although they are produced separately in each country to suit
local tastes.
• Undifferentiated marketing
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• Differentiated marketing
• Concentrated marketing
• Micromarketing
In GAP Inc’s case, it should adopt differentiated marketing strategy to market each of
its brands, which appeal to different target market segments. By doing so, GAP Inc
able to differentiate itself with other competitors and seed the branding in the
customer’s mind clearly to avoid cannibalizing their sister brand.
For Old Navy itself, it needs to build a sustainable competitive advantage that the
competitors cannot or will not match. Again according to Michael Porter, there are 3
general types of strategies, namely – cost leadership, differentiation and focus. Old
Navy, which is appeals to broad market scope, needs to adopt differentiation strategy.
It can ride on the strong brand image of its parent brands in Malaysia to introduce the
affordably priced, high quality casual apparel. This will become the unique attribute
of its image differentiation in the low-end casual fashion market segment.
Furthermore, the strong global supply chain management of GAP Inc. in sourcing
merchandises across the world will help Old Navy to remain the cost as low as
possible compare to its competitors.
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• Sales Promotion: used to create desire for customers to purchase the
firm’s products. As mentioned above, Old Navy can provide attractive
offers via tie-up with banks and credit cards. Customers can also be
reached through database collected by Gap stores which have been
operating in Malaysia for several years.
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8.0: CONCLUSIONS
Established in 1969 as a small retailer of jeans, Gap Inc. has been able to surpass various
hurdles to reach today’s designation of top U.S apparel retailer. However, in order for Gap
Inc. continues to expand into foreign markets, for instance, Malaysia, it requires an in-depth
study of internal and external factors of the country. Market research needed to be conducted
to get insights of the fashion industry of the target country before identify target market
segments and create the brand positioning for its products. Besides, a practical and effective
IMC plan needed to be designed to counter the market competitors and gain the market share.
With the strong market preparation, Gap Inc. will have no difficulty to introduce Old Navy in
Malaysia fashion industry.
REFERENCES
1. Clow, K.E & Baack, D (2007). Integrated Advertising , Promotion and Marketing
Communications 3rd Edition. Pearson Education
2. Eugene, Mahalingam (2011). “8.5% sales growth for retail sector in Q4 last year”,
The Star. Retrieved May1,2011, http://biz.thestar.com.my/news/story.asp?
sec=business&file=/2011/3/5/business/8193660
3. Kotler,P. & Keller, K.L. (2012). Marketing Management (14th e Ed.). Upper Saddle
River, Pearson.
4. Malaysian Retailer Chains Association (2011) “Latest News & Events – Retail
Players expect 5 -6 percent growth this year”, Retrieved on 2 May, 2011 from
http://www.mrca.org.my/news/newsdetails.aspx?id=155
5. Price Waterhouse Coopers – China (2010) “ Strong and Steady – 2011. Outlook for
the Retail and Consumer Product Sectors in Asia”, Retrieved on 2 May, 2011 from
http://kc3.pwc.es/local/es/kc3/publicationes.nsf/V1/90C27490610D19C125781E003
CA6C8/$FILE/Strong%20&%20Steady.pdf
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9. GAP Inc., (2011). “Old Navy”. Retrieved from
http://www.gapinc.com/content/gapinc/html/aboutus/ourbrands/OldNavy.html
13. Boston Consulting Group - Wikipedia, the free encyclopedia. Retrieved from
http://en.wikipedia.org/wiki/Boston_Consulting_Group
14. http://www.gapinc.com/content/dam/gapincsite/documents/GPS_AR_10.pdf
15. http://reviewessays.com/print/Case-Study-Analyses-Gap-Inc/24942.html
16. http://www.theproduct.com/marketing/segmentation_circle.htm
17. http://encyclopedia.jrank.org/articles/pages/1754/The-Gap-Inc.html
18. http://www.jiffynotes.com/a_study_guides/book_notes/cps_01/cps_01_00110.html
19. http://www.docstoc.com/docs/70713973/Family-Clothing-Industry-Gap-Inc
20. http://www.docstoc.com/docs/6476689/Gap__Inc
21. http://www.ukessays.com/essays/management/gap-ceo.php
22. http://www.jiffynotes.com/a_study_guides/book_notes_add/emmc_0000_0002_0/em
mc_0000_0002_0_00115.html
23. http://ivythesis.typepad.com/term_paper_topics/2009/09/pest-analysis-for-gap.html
24. http://www.scribd.com/doc/58946985/Swot-Analysi-of-GAp
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APPENDIX
QUESTIONNAIRE & FINDINGS
Questionnaire:
1. What is your age?
< 20
20 – 30
31 – 40
41 – 50
50
2. What is your gender?
Male
Female
3. Please indicate your annual income.
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< RM18K
RM18K – 23.99K
RM24K – 35.99K
RM36K – 47.99K
RM48K – 71.99K
>RM72K
4. How often do you go shopping?
Every day
More than once a week
Once a week
More than once a month
During sales period only
Rarely
5. Do you like shopping for clothes and accessories?
Yes
No
6. What type of cloth do you look for? (you can tick more than one)
Casual
Smart
Elegant
Sporty
Classic
Sexy
7. A brand doesn’t matter to me, as long as the clothes are reasonably priced and of
good quality.
Strongly Agree
Agree
Moderate
Disagree
Strongly Disagree
8. What clothing store do you shop in? (you can tick more than one)
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Department store
Fashion store
Specialty store
Others _________
All of the above
9. How much do you usually spend in the store for each shopping trip?
<RM100
RM100 – RM200
RM201 – RM300
RM301 – RM400
>RM400
10. Have you heard about of GAP, Inc.?
Yes
No
11. Have you bought any clothing items from GAP?
Yes
No
12. Is the price paid reasonable for the brand and quality?
Strongly agree
Agree
Moderate
Disagree
Strongly disagree
13. Have you heard of the Old Navy (parent brand of GAP in US)?
Yes
No
14. Would you be interested if GAP introduces Old Navy as affordably priced, high
quality casual clothing retailer in Malaysia?
Yes
No
May be
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15. In your opinion, what other brands offer the similar line of apparels as Old Navy?
(you can write more than one)
Answer:
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