Report Outline

1. Introduction
Companys profile ............................................................................................. 2
History of the company...................................................................................... 2
2. Industry Analysis
Market of Gap Inc./Estimates ............................................................................ 4
Demand .............................................................................................................. 5
Trends ................................................................................................................ 6
Strengths of Suppliers & Buyers........................................................................ 7
Entry/Exit Barriers ............................................................................................. 8
Product Life Cycle Stages .................................................................................. 8
Competition........................................................................................................ 9

3. Corporate Strategy
Mission/Long-Term Corporate Objectives ...................................................... 10
SBU Analysis ................................................................................................... 11
4. Marketing strategy

Target market ................................................................................................... 12

Positioning/Differentiation Strategy ................................................................ 12
5. Competition Analysis

SWOT Analysis ............................................................................................... 13

Major Competitors ........................................................................................... 15
Competitive Defense Strategies ....................................................................... 16
6. Marketing Mix Strategies

Product & Pricing Strategy .............................................................................. 17

Distribution & Promotion Strategy .................................................................. 18

7. Return on Investment ........................................................................................... 19
8. Conclusion/Recommendations .............................................................................. 20

1|Gap Inc.: Marketing Strategy

 1. Introduction

Companys Profile
The Gap Inc. is one of the American leading international specialty retailers

(Verma, 2007) that offers a variety of products such as apparel, accessories and

personal care products for men, women, children and babies under the Gap, Old

Navy, Banana Republic, Piperlime, Athleta and Intermix brand names ("The Gap,

Inc." Gap, Inc. Marketline Company Profile, 2015). More specifically, the company

provides jeans, T-shirts, clothes for use in sports and in daily life, eyewear for both

men and women, footwear, bags, and jewelry ("GAP INC/THE (GPS:New York):

Stock Quote & Company Profile.", 2015).

The company it is based in San Francisco, California and except of the United

States and Canada it also operates in Asia and Europe. It currently employs 150,000

employees, approximately (Sapkota et. al., 2008) and as of January 2014 the

company made approximately $16,148 million in revenues, $2,149 million in

operating profits, and $1,280 million in net profits. Moreover, its revenues increased

3.2% over the financial year of 2013, its operating profit 10.7%, and its net profits

12.8% ("The Gap, Inc." Gap, Inc. Marketline Company Profile, 2015). Needless to

say, throughout its history, Gap, Inc. has established itself as a leader in the industry

(Sapkota, et. al., 2008).

History

The first Gap store was opened in San Francisco, by Donald Fisher and his wife when

they figured out that the demand for jeans exceeded their supply in the market.

Specifically, in July 1969, Donald Fisher and his wife decided to open a Gap store

2|Gap Inc.: Marketing Strategy

close to San Francisco State University, because they couldnt find a pair of jeans that

would fit them. Namely, they thought that other people experienced the same problem

as them, and shared the same need. Fisher decided to open other outlets as the young

customers started purchasing their jeans. In 1970, the company grew even more as the

sales kept increasing. In 1971, the company has made approximately $2.5 million in

sales. The sales increased to $97 million in 1976 with 186 stores in 21 states

(Sapkota et. al., 2008).

Because of the financial crisis of the 1970s the production of a larger variety

(Sapkota et. al., 2008) of clothes and the sale of the companys own labels took place.

In May, 1988 the corporation was reincorporated in State of Delaware. The company

had huge success in late 1990s with net income surpassing $824.5 million (Sapkota

et. al., 2008). Prior to this event, in 1983, the company purchased the Banana

Republic. Banana Republic was a catalogue retailer selling safari-themed clothes

(Sapkota et. al., 2008). From the point of time that Banana Republic has been

purchased from Gap Inc., became a well-established business womens store

(Sapkota et. al., 2008). In 1994, Gap Inc. purchased Old Navy, which started as Gap

Warehouse, and became one of the most successful sellers in retailing history.

Furthermore, Gap Inc. purchased the Piperlime.com in 2006, which sells private

branded shoes (Sapkota et. al., 2008).

According to Sapkota, Alikaj, Daily, et. al., (2008) due to the incorporation of

all these brands the Gap Inc. leads the apparel industry. Especially, with the

incorporation of Piperlime, Gap Inc. tried to diversify its customers and increased the

appeal from e-commerce as from Piperlime customers make purchases only online

(Sapkota et. al., 2008).

3|Gap Inc.: Marketing Strategy

 2. Industry Analysis

Gaps Inc. Market

Today Gap Inc. serves customers globally through its 3,500 ("Case Study

Report: GAP Inc. - Supply Chain Managment.", 2014) company-operated stores. Four

hundred (400) out of the 3,500 are franchise stores and e-commerce sites ("Be the

World's Favorite for American Style.", 2015). The apparel market is a $1.4 trillion

industry, and Gap Inc. has 4 percent of the market share (Scott, 2014). The

companys current stock price is $37.86 ("GAP INC/THE (GPS:New York): Stock

Quote & Company Profile., 2015). Moreover, the companys current market cap is

$15.89 billion and its earing per share (EPS) equal 2.88 ("Gap Inc." GPS Stock

Quote., 2015).

However, the market of Gap Inc. is a market full of opportunities and

excellent potential market share (Sumyla, 2008). The table 2.1 below shows the

earnings per share estimates on a quarterly and fiscally basis.

Earnings Per Share This Quarter Next Quarter This Fiscal Next Fiscal
# of Estimates 34.00 34.00 36.00 36.00
Mean Estimate 0.67 0.79 2.77 3.07
High Estimates 0.73 0.82 2.85 3.50
Low Estimates 0.62 0.73 2.70 2.71
Coefficient Variance 4.32 2.12 1.30 4.74
Table 2.1: Estimation of earning per share quarterly and fiscally. ("Gap Inc."GPS Analyst
Estimates.,2015)

More specifically, the table shows the number of estimates, mean, high, and

low estimates as well as the coefficient variance, of this quarter and fiscal and those of

4|Gap Inc.: Marketing Strategy

the next quarter and fiscal. It is clear that these earnings per share will increase. Of

course, the coefficient of variation indicates the volatility (amount of risk) that is

assumed that the investment undertaken has in comparison to the expected return on

the investment. The coefficient of variation decreased substantially from the second

quarter but it increased in the second fiscal, indicating that the higher the earning per

share the higher the volatility on the investment.

Demand

It is well known that the demand for clothing nowadays is inelastic, as

clothing is one of the basic needs that someone should satisfy. However, the fact that

there are many substitutes for clothing makes the demand quite elastic. As Sapkota,

Alikaj, Daily, et. al., (2008) state, since there are a wide variety of products that

people can choose, they could either be substituted by sporting products, business

apparels, cheap clothing materials, and others.

So, the demand for clothing is quite price sensitive, leading people to

purchase apparel that are that are more affordable to them, depending on their

disposable income, and mostly on the economic condition. A booming economy

where individuals have more disposable income may result in the purchase of more

clothing. In the reverse situation, demand for new clothing will likely drop if the

economy is performing poorly ("Case Study Report: GAP Inc. - Supply Chain

Managment.", 2014). Moreover, when the price of clothing of one company increases

consumers tend to purchase clothing from another company, which sells less

expensive clothing. Namely, is of great importance that Gap Inc. retains the

popularity of and their customers association with its different brand images ("Case

Study Report: GAP Inc. - Supply Chain Managment.", 2014).

5|Gap Inc.: Marketing Strategy

 Due to the declining sales observed in 2001-2002 ("Case Study Report:

GAP Inc. - Supply Chain Managment.", 2014) recently Gap Inc. has shifted the

focus of its marketing campaigns to target a broader customer base, allowing more

customers to identify with its brands ("Case Study Report: GAP Inc. - Supply Chain

Managment.", 2014). For instance, in the case of Banana Republic line Gap Inc.

increased its efficiency as the identification of the target market improved.

Consequently, the sales increased showing that the threat of substitutability can be

effectively reduced through marketing efforts that maximize customer association

("Case Study Report: GAP Inc. - Supply Chain Managment.", 2014).

Furthermore, complements such as footwear, jewelry, bags do not have a great

impact on the demand of clothing. A consumer may purchase clothing to match a

pair of shoes or piece of jewelry ("Case Study Report: GAP Inc. - Supply Chain

Managment.", 2014) but only occasionally.

Trends

Gaps Inc. main trends, basically for the summer and spring of 2015 are some

1970s-influenced accessories such as mini bags, wide-brim hats, mid-sized belts,

and strappy sandals ("Style & Trends.", 2015). These accessories are in sale in Gap,

Banana Republic, Old Navy and Athleta stores. Moreover, Old Navy introduces

built-to-play active wear for the whole family ("Style & Trends.", 2015). Namely,

products such as yoga pants, sports bras, and footwear such as sneakers are in sale in

Old Navy stores. On the other hand, style stars share their favorite looks for summer

with Intermix ("Style & Trends.", 2015). That is, some of the products that are

basically in sale, are cotton-y whites and soft chambrays, elevated evening collection

meant for a special night out ("Style & Trends.", 2015) etc.

6|Gap Inc.: Marketing Strategy

 Furthermore, it seems the red color is the next most fashionable color for Gap

Inc. and has inspired women to wear. Gap Inc. is joining the movement to wear red

for National Equal Pay Dayin support of equal pay for equal work ("Style &

Trends.", 2015). At Gap Inc., every day is Equal Pay Day. Women and men are paid

dollar for dollar equal pay for equal work across the globe ("Style & Trends.",

2015). Last but not least, soft dressing is the companys comfortable new fashion

craze. Women are mixing up their wardrobes with soft dressing, taking track and

yoga pants way beyond the gym ("Style & Trends.", 2015). That is, women are able

to wear both comfortable and stylish clothes.

Strength of Suppliers and Buyers

Generally, the power of suppliers is concentrated in the firms who are

responsible for supplying the raw materials for clothing production and the factories

that are contracted to produce them (Springstubb. Brendan, and Michael, 2005). In

the case of Gap Inc. the power of suppliers is limited as if they demand a higher price

of that set; the manufacturer will purchase the raw materials from other suppliers. As

Sapkota, Alikaj, Daily, et. al., (2008) state, suppliers supply more than 3% of the

companys demand. This gives Gap, Inc. power to set the price of its raw materials.

More specifically, Gap Inc. has contracted factories in many countries (more than 60

countries) can easily switch to another factory if one factory demand a very high price

for the raw materials (Springstubb. Brendan, and Michael, 2005).

Since there are many substitutes in the market for clothing the buyers might

choose among the alternatives the product that fit them more, based on its price,

quality etc. As Springstubb. Brendan, and Michael (2005) point out, prices are being

set from the company and the fact that buyers can shop around for better prices is

7|Gap Inc.: Marketing Strategy

more a product of competition rather than buyer power. Thus, a lot of work is

necessary in order to maintain the customers (Sapkota, 2008).

Entry/Exit Barriers

Gap Inc. does not face a great threat by the entry of new firms in the market,

especially in price competition ("Case Study Report: GAP Inc. - Supply Chain

Managment.", 2014). Only small and local firms might be able to compete to Banana

Republic but not to expand internationally. Moreover, due to the economies of scale

the new firms will not be able to produce apparel at low costs, and they will not be

able to find suppliers that would supply apparel at competitive cost levels to them

("Case Study Report: GAP Inc. - Supply Chain Managment.", 2014). Moreover, many

consumers are brand loyal and it would be very hard for the new firms to increase the

number of its customers. As Sapkota, Alikaj, Daily, et. al., (2008) refer, although it is

not hard to enter the clothing retail business, it is hard to establish a distinct brand

name.

Product Life Cycle Stages

The product life cycle has four clearly define stages, the introduction stage, the

growth stage, the maturity stage, and the decline stage. At the first stage, the products

are being designed and merchandized and samples are created for the customers, in

order to try the product out. This is the most expensive stage for the company. At the

growth stage, planning and sourcing is taking place where specialists determine

quantities to order, and factories are selected to manufacture garments ("Case Study

Report: GAP Inc. - Supply Chain Managment.", 2014). The company at this stage

8|Gap Inc.: Marketing Strategy

starts to benefit from the economies of scale in production and the profits that are

being made.

At the maturity stage, the marketing teams review the samples in order to

develop marketing strategies ("Case Study Report: GAP Inc. - Supply Chain

Managment.", 2014). Then, distribution takes place where the merchandise is sent to

Gap Inc.s distribution centers where audits are performed, the products are

inventories and designated for particular stores, then shipped to the stores ("Case

Study Report: GAP Inc. - Supply Chain Managment.", 2014). Namely, at this stage

the product has been established and the main purpose of the company is to maintain

the market share through the different marketing strategies utilized.

At the decline stage, the visual merchandising team determines the floor set-

up for the products "Case Study Report: GAP Inc. - Supply Chain Managment.",

2014). The company at this stage reviews all the information regarding sales and

makes some assessments, as the market for a product or a product line start to shrink.

After seeing sales decline at this stage Gap Inc. decided that it had to immediately act

and remain competitive.

Competition

Clothing retailing industry is highly competitive industry (Sapkota, et. al.,

2008). There are many clothing retail industries in the market that compete with each

other in order to maintain or increase the number of their customers. Gap Inc. of

course is not an exception. The global specialty apparel retail industry is highly

competitive. That is, Gap Inc. compete with local, national, and global department

stores, specialty and discount store chains, independent retail stores, and online

9|Gap Inc.: Marketing Strategy

businesses that market similar lines of merchandise ("Connecting with Our

Customers.", 2009).

Gap Inc. in order to keep competing to other clothing retail companies makes

efforts to maintain or attract more skilled and educated employees and executives.

Moreover, the maintenance and development of its brands in the market is one the

keys of Gaps Inc. success. Moreover, Gap Inc. focuses on the design, quality of the

product and the distribution as well as on the brand recognition which keeps the

firms interested in entering the market away (Ciasullo, Blauvelt, and Lambert, 2012).

Some of the major competitors of Gap Inc. are American Eagle Outfitters,

Inc., Urban Outfitters, Inc., Macys, Inc., Ann Inc., Aeropostale, Inc., and

Abercrombie & Fitch Co., H & M Hennes & Mauritz AB and The Buckle, Inc ("The

Gap, Inc.", 2015).

3. Corporate Strategy

Mission / Long-Term Objectives

Gap Inc. aims to help people out to easily and freely express their personal

style (Sapkota et. al., 2008). Moreover, the company always develops all of its

brands in order to satisfy its customers needs though the innovative and inspiring

design, through the experience that the company offers while the customers visit its

stores, and by communicating with people in a way that connects to how they live,

work and play (Sapkota et. al., 2008).

Furthermore, in the long-run the company aims to be consistent in sales with

reliable inventory and strong brand identity, to create new brands in order to expand

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even more ("Presentation on Gap Inc." Presentation on Gap Inc.). As Cannon, Davis,

Mei et. al. state, one of the Gap Inc. objectives is to expand more internationally. In

addition, the company aims to increase online presence, to create stronger relations

with its customers and suppliers, and to contribute to Corporate Social

Responsibility ("Presentation on Gap Inc." Presentation on Gap Inc.).

SBU Analysis

After defining mission every company establishes SBUs (Strategic Business

Units) which is a self-contained division product line or product department within

an organization ("Identifying Strategic Business Units.", 2010). Four different

marketing strategies should be identified in order to maintain or increase the sales on

the strategic business units. Those strategies are market penetration, product

development, market development, and diversification ("Identifying Strategic

Business Units.", 2010).

The Gaps Inc. market penetration was pretty successful as it offers a very

wide selection of apparel, footwear, sports products, personal care products, children

and babies clothing etc, and it achieved to compete to other firms and maintain its

customers. In addition, Gap Inc. increased its market share (4% market share of the

entire apparel market) as the because of the high responsiveness of the consumers to

its products (Scott, 2014). This high responsiveness of the consumers is being

achieved because of the business-level strategy of differentiation that is being utilized

by the company.

However, by expanding more internationally (penetrate foreign markets more)

than domestically (United States) and by developing its brands the company could

increase its sales even more, and increase its market share. That is, Gap Inc. must

11 | G a p I n c . : M a r k e t i n g S t r a t e g y
move forward by diversifying more, and by trying to understand its customers wants

and needs better.

4. Marketing Strategy

Target Market

Each brand of the Gap Inc. has each own target market as each brand is

different. To illustrate, the Old Navy brand the lower middle-to-middle income

consumer ("Case Study Report: GAP Inc. - Supply Chain Managment.", 2014).

More specifically, the target demographics are parents, and to a lesser extent, young

adults and teens. Generally, Old Navy stores are generally the largest of the three

Gap brands ("Case Study Report: GAP Inc. - Supply Chain Managment.", 2014).

Moreover, Gaps target market is more difficult to define as it ranges from

lower middle to upper-middle income ("Case Study Report: GAP Inc. - Supply

Chain Managment.", 2014). More specifically, the target market of Gap is adults

between 18 and 35, but consumers range from babies to baby boomers ("Case Study

Report: GAP Inc. - Supply Chain Managment.", 2014). Banana Republic targets adults

between 25 and 35 years old and its brand are very fashionable and pricey. Namely, it

targets people that believe that fashion and style is very important.

Positioning / Differentiation Strategy

The image that Gap Inc. have created in peoples minds is a positive one, as it

is considered to be a clothing retail company that sell high-quality products at

relatively moderate prices. Throughout the years, Gap has earned the reputation of a

12 | G a p I n c . : M a r k e t i n g S t r a t e g y
brand (Sapkota et. al., 2008) that offers high-quality and up-to-date clothing with

reasonable price ("Gap Case Study (Group Project).", 2011).

To differentiate their products, Gap, Inc. not only added additional stores

such as Old Navy, Banana Republic (Sapkota et. al., 2008) and Intermix but they

also added more fashionable apparel in order to meet the needs of the younger

consumers. However, they tried too hard and had to eventually face not only failure

but also loss of interest from their existing customers (Sapkota et. al., 2008). Thats

why it launched a new back -to -basics campaign (Sapkota et. al., 2008) in order to

attract again the customers that it lost.

However, Gap Inc. utilizes multichannel and e-commerce strategies except of

differentiation strategies. For instance, customers even if they make purchases online

they can return the products to stores, and because of the Gaps Inc. well-established

brand and reputation ("Gap Presentation (1) [recovered].", 2015) the customers feel

more comfortable to make purchase online. In addition, Gap Inc. established new

markets, focusing on stylish value driven product, and keeping value-drives tightly

controlled in the house (Milstead). So, by incorporating technology into Web sites

they could enhance the customer experience ("Gap Presentation (1) [recovered].",

2015).

5. Competition Analysis

SWOT Analysis

13 | G a p I n c . : M a r k e t i n g S t r a t e g y
 SWOT analysis has to with examination of Strengths, Weakness,

Opportunities, and Threats of a company. SWOT analysis is very useful as it helps out

to find how a company stands and how it will perform in the future.

To begin with, some of the strengths of the Gap Inc. is its global presence is

the market, as it is recognized all over the world (Sapkota et. al., 2008). Moreover,

Gap Inc. utilizes a lot research and development and is catalyzed by franchise and

company-owned stores and online presence ("The Gap, Inc.", 2015). The company

maintains a well-balanced portfolio ("The Gap, Inc.", 2015) and has been able to

maintain its supply chain.

Some of the weaknesses of the company are the fact that it is dependent on

outside merchandise vendors for supply of products ("The Gap, Inc.", 2015).

Furthermore, according to Sapkota, Alikaj, Daily, et. al., (2008) the narrow niche is

one of the major weaknesses of the company. The fact that it hasnt maintained a

fashion identity is another weakness of the company. However, the company has

plenty of opportunities that should take advantage of. That is, the company can

expand into the growing luxury retail market and in Asian markets ("The Gap,

Inc.", 2015), so as to increase its sales, as well as it can grow more its e-commerce

market. Plus, it will be easy for the company to establish its name in most of the

other sectors (Sapkota et. al., 2008) due to its recognizable name.

Unfortunately, the company it is being threatened by the increasing labor

costs in foreign countries that is operating, by the possible market growth of

counterfeit products ("The Gap, Inc.", 2015), as well as by the possible firms that

may enter the market. The company may be threatened by possible tariffs from

government over the imported materials (Sapkota et. al., 2008) as well.

14 | G a p I n c . : M a r k e t i n g S t r a t e g y
Major Competitors

There are many clothing retail companies that compete to Gap Inc.. Two of

the major competitors of the company are the American Eagle Outfitters, Inc., and

Abercrombie & Fitch Co. ("The Gap, Inc.", 2015).

According to Springstubb, McKibben, and Mandelbaum (2005), Gaps Inc.

profits are much lower than those of its competitors. Both Abercrombie and Fitch Co.

and American Eagle Outfitters,Inc.. have a higher return on assets as well as net

profits margins. Moreover, it seems like inventory cost, turnover, and asset turnover

of Gap Inc. lag behind market averages (Springstubb, McKibben, and Mandelbaum,

2005).

However, according to Milstead, the Gap Inc. is doing way better than its

competitors, at least based on their revenues.

Picture 5.1: Revenues of significant competitors

of Gap Inc. Year 2010 (Milstead)

15 | G a p I n c . : M a r k e t i n g S t r a t e g y
More specifically, as we can see from the picture 5.1 above the American Eagle

Outfitters, Inc., and Abercrombie & Fitch Co. which are two of the major competitors

of Gap Inc. in the clothing retail market made both approximately $3 billion in 2010.

On the other hand, the Gap Inc. made approximately $14 billion. It is obvious of

course, that the Gap Inc. is doing a great job compared to its major competitors but

the revenues generated by a company is not the only factor that determined the

companys success. For instance, the share price of Gap Inc. in 2010 was $20.59

while the share prices of American Eagle Outfitters, Inc., and Abercrombie & Fitch

Co. was $16.46 and $47.70 respectively (Milstead).

However, the current share price of American Eagle Outfitters, Inc is $16.15

("American Eagle Outfitters Inc.", 2015) while the current price of Abercrombie &

Fitch Co. is $19.36 ("Abercrombie & Fitch Co.", 2015). Gaps Inc. current price is

way higher than those of its competitors ($37.86).

Competitive Defense Strategies

The Gap Inc. started defending itself in order to survive in the market years

ago when it acquired Old Navy, and Banana Republic in 1983 (Sapkota et. al.,

2008). The acquaintance of Banana Republic assisted the firm to continue operating

and producing businesswomen apparel while the acquaintance of Old Navy in 1994

assisted the company to keep competing with the other existing discount retailers

including Target and Sears (Sapkota et. al., 2008).

Currently, what is really important for Gap Inc. is corporate social

responsibility. Gap Inc. wants to be viewed as concerned and responsible ("Image

Patrol: Gap Inc./Wal-Mart..", 2004) by others. As Sapkota, Alikaj, Daily, et. al.,

(2008) point out social responsibility is fundamental to Gap, Inc. and how they

16 | G a p I n c . : M a r k e t i n g S t r a t e g y
operate as a company. Namely, the Gap Inc. wants to attack other retailers by being

viewed as socially responsible and ethical, and ultimately being liked and preferred by

both consumers and stockholders, and especially by those who are socially conscious.

If the Gap wanted to position itself as heads and shoulders above other retailers on

the social responsibility scale, it succeeded. Almost every media outlet positioned the

report as "first-ever" and positioned the company as caring and concerned ("Image

Patrol: Gap Inc./Wal-Mart..", 2004).

Generally, based on the data the better reputation you have, especially locally

the more attractive and more ethically promoted you are. The Gap has always been

on the leading edge of good corporate communications and this is just one more

example of why its actions should be followed ("Image Patrol: Gap Inc./Wal-Mart..",

2004).

6. Marketing Mix

Product & Price Strategy

Gap Inc. has basically five brands. Those brands are Gap, Old Navy, Banana

Republic, Piperlime, Athleta and Intermix brand names ("The Gap, Inc." Gap, Inc.

Marketline Company Profile, 2015). Also, the company under its brands sells

products such as apparel, accessories, and footwear. More specifically, it sells jeans,

pants, capris and shorts, skirts and dresses, outerwear, sweaters, shirts and T-shirts,

active wear, swimwear, sleepwear undergarment, bags, shoes, belts, socks, hats, cold

weather gear ("Gap Presentation (1) [recovered].", 2015) etc. Those products are

trendy and fashionable, of high quality and of good design.

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 Furthermore, the prices set by the company are affordable for the upper

middle class of consumers (Cannon, Davis, and Mei et. al.). Namely, there is a

moderate wholesale price zone ("Gap Presentation (1) [recovered].", 2015) in the

company. For instance, the retail price of a womans tank top, a pair of jeans, and

handbag may be $16, $65, and $200 respectively ("Gap Presentation (1)

[recovered].", 2015). On the other hand, the retail price of a mans T-shirt, polo,

and pair of jeans may be $20, $35, and $85 respectively ("Gap Presentation (1)

[recovered].", 2015).

Distribution & Promotion Strategy

The distribution of Gap Inc. products is being done in more than 1,500

locations, not only in the United Stated and Canada. Stores in shopping malls and

lifestyle centers ("Gap Presentation (1) [recovered].", 2015) have been opened in

Europe and Asia as well. However, there is a limited marketing channel of

distribution ("Gap Presentation (1) [recovered].", 2015). Actually type of channel

distribution that is being utilized in this case is selective distribution as a limited

number of retail stores are available in a specific geographical area. The selective

distribution lies between the intensive and exclusive distribution.

For promotion purposes, Gap Inc. utilizes print, television advertising, and

billboards ("Gap Presentation (1) [recovered].", 2015). Moreover, the Gap Inc.

collaborates with the Red Campaign, and it utilizes websites in order to increase

consumers awareness about its products. In addition, the company improved its

marketing campaign Be Bright and launched a new marketing campaign, called

"Dress Normal (Zmuda and Diaz, 2014). This new marketing campaign includes a

series of lush, black-and-white films capturing models in the midst of cryptic scenes

18 | G a p I n c . : M a r k e t i n g S t r a t e g y
 that make viewers feel they're caught in the middle of a story (Zmuda and Diaz,

2014). For instance, in one advertisement a man breathlessly running up a set of

winding stairs as a young woman looks down on him from several flights up. The

tagline: "Simple clothes for you to complicate." (Zmuda and Diaz, 2014).

7. Return On Investment (ROI)

Return on Investment is very important a company as it measures the net

income for the last four quarters as percentage of Long-term Investments (Long-term

Liabilities plus Stockholder's Equity) ("Return On Investments ROI.").

Table 7.1: Gaps Inc. Return on Investment on a quarterly basis. ("Gap,'s ROI per Quarter.")

(Feb. 3, 2015) (Nov. 3, 2014) (Aug. 3, 2014) (May 3, 2014) (Feb. 3, 2014)
Return On Investment
IV. Quarter III. Quarter II. Quarter I. Quarter IV. Quarter
Y / Y Investment Change 0.96 % 2.75 % -4.01 % 2.9 % -
Y / Y Net Income Change 3.91 % 4.15 % 9.57 % -21.92 % -12.54 %
Return On Investment (TTM) 23.3 % 23.14 % 23.03 % 22.26 % 23.77 %
GPS's Overall Ranking # 30 # 33 # 33 # 33 # 28
Seq. Investment Change 3% -2.2 % -1.38 % 1.63 % 4.83 %
Seq. Net Income Change -9.12 % 5.72 % 27.69 % -15.31 % -8.9 %

From the table 7.1 above information about the Gaps Inc. return on

investments on a quarterly basis can be derived. It is obvious that in quarter IV. the

Gaps Inc. return on average invested assets equals 23.3%. Even though the net

income in quarter I. and IV. Is negative (Gap Inc. is making losses), the company

improved ROI compare to previous quarter ("Gap,'s ROI per Quarter."). Within

Retail sector 5 other companies have achieved higher return on investment. While

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Return on investment total ranking has impoved so far to 30, from total ranking in

previous quarter at 33 ("Gap,'s ROI per Quarter.").

8. Conclusions/Recommendations

In conclusion, it is clear that Gap Inc. what the profile and history of Gap Inc.

is and that the company was able throughout its history to surpass most of the barriers

and reach its objectives. The company by providing a large variety of classy, trendy,

casual and affordable apparel it attracted a lot of consumers. However, it is still one of

the market nichers as it has only 4% of the entire market share of the clothing retail

companies. Thats why the company should make more efforts in order increase its

market share.

Actually, what is best for the company in order to increase its sales and its

market growth is to expand more internationally than domestically (in United States)

as most of its stores are located in the United States, and to try to change its

marketing, management, or financial strategies in order to attract more consumers,

become more efficient and effective, and increase their profits and market share.

Their need to be viewed as ethical and socially responsible it is important as

the reputation matters for both customers and stockholders, even though the

stockholders first interest is always the shares price. Moreover, it would be wise for

the company to create a consistent brand identity. That is, the five different brands

that the company has, give consumers more options available to choose it seems like

the company it does not have a specific brand identity.

20 | G a p I n c . : M a r k e t i n g S t r a t e g y
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