Gap Marketing Strategy Plan

Strategy Brief (Part I)

April 3, 2007

GOALS AND OBJECTIVES

The retail landscape has changed dramatically since the Gap's emergence as a powerhouse several decades ago. As the company has grown to become one of the giants of its industry, new challenges, including a more complex market and a more competitive landscape, have arisen that threaten to unseat the Gap from its casual-wear throne. Compounding the problem, the company has responded to this new competition by trying to change its brand identity, leaving its consumers confused and frustrated. Due to these internal and external pressures, the Gap is facing a decline in sales and revenue.

For the Gap to thrive, it must respond to the new retail landscape and its new competitors in an authentic way that will resonate with its core consumer. By reinvigorating the brand, the Gap has the opportunity to once again re-define the category.

Goal:

This plan will take advantage of the Gap's strengths and opportunities in the market, by organizing around the company's strengths and the competition's weaknesses, in order to execute the plan to position the Gap brand as the destination for everyday fashion.

Three objectives must be met to enact this goal. These objectives are both narrow and measurable, enabling the company to determine its progress. Additionally, the objectives present pragmatic solutions to solving the Gap's recent troubles; by tightening the core target audience and clarifying the company's messaging, the Gap will be able to more effectively reach its most valued consumer.

Objectives:

1. Efficiently integrate the brand message within the market environment

* Plan execution, reach and application of resources

1. Determine the positioning for the brand within the core purchaser segment

* Focus on the market the Gap can attract with a message that will resonate with them

2. Increase the percentage of the core customer segment that views the Gap as the destination for everyday fashion

Essentially, the Gap must find a niche in the retail landscape by identifying a market it can claim and by fulfilling a function it can champion.

As stated, the retail landscape is over-cluttered. However, the Gap still has the opportunity to discover an unclaimed space in the industry and work to own that space. For the Gap, a brand with roots in quality, comfortable merchandise, which was valued by consumers for trend-resilient product offerings, this unclaimed space is every day fashion.

Strategy Statement:

By positioning the company as the champion of everyday fashion, the Gap will create an opportunity to reach an underserved market and serve a function for consumers who already view the brand in a positive light. This tightened messaging and segmenting will allow the Gap to more effectively reach its market and better utilize its vast resources.

SITUATION ANALYSIS

State of the Business

The retail industry is facing a variety of new pressures in today's marketplace. Within the industry itself, the increased cachet of luxury brands has forced the rest of the market to adapt, resulting in discount shoppers "trading up" from discount stores, while expecting discount prices. This causes the profit margins at such retailers to shrink. Combined with the nation's uncertain economic future and the increasingly fragmented media landscape, it is a hard time to be a discount retailer.

The implications of this new pricing strategy are of great importance to the Gap. With the creation of its sister brands, Old Navy and Banana Republic, the Gap reinforced its image as "the middle-of-the-road retailer." However, as consumers' expectations increase, seeking greater quality at a lesser price, the Gap has been forced to engage in a price-slashing strategy, prompting Women's Wear Daily to dub the company "a discount retailer in the mall." For the company to be profitable in this environment, sales would need to increase to make up for the lower profit margins. Unfortunately for the Gap, it has been unable to convert its many visitors into customers.

Another issue the Gap must face is its ubiquity. The number of Gap retail outlets is enormous for a store of its size and selection. Women's Wear Daily, in its analysis of the Gap's woes, recommended scaling the company down. Since one of the goals of this strategic plan is to grow the company, this is not the recommended approach. Still, the sheer size of the Gap presents a challenge for moving forward. The design of the products at the Gap must keep in mind this issue; one of the parameters for the product is a broad design appeal.

State of the Customer

Market

The retail market is one of the least fluid, for branding purposes. Once a company establishes an identity it becomes difficult to alter that perception in the minds of consumers. For a brand as mature with an identity as fixed as the Gap, this would be especially difficult.

Due to these constraints, the Gap has limited options available to it from a market creation perspective.

Strategic Parameters:

Existing Product

New

Product

Existing Market

Market Penetration

Product Development

New Market

Market

Diversification

Market Development

The Gap is dealing with a mature customer who has a fixed emotion towards all the brands