Company GAP

Posted: January 5th, 2023

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Term Paper Analysis – Company GAP

Strategic Analysis

GAP is an American multinational company specializing in manufacturing and selling a wide range of clothing, shoes, and related accessories. The company was once famous, especially for its attempts to distinguish its operations from other operators in the sector. It once gained fame for being the only store selling Levi’s products (Biron). Its commencement of Banana Republic boosted its activities because it got the chance to attract more buyers and expand its portfolio. Moreover, GAP once gained glory for its unique jeans that differentiated it from other stores. Biron writes that for many years, GAP was one of the most praised retailers in USA and served as an emblematic aspect of fashion and style in the country. GAP became the to-go store to get a trendy t-shirt and jeans at an affordable rate. Its vibrant marketing techniques beamed with attractive jingles and renowned celebrities, and for a significant part of the 1990s and the beginning of 2000s, it was rare to walk around without noticing the GAP logo (Biron). Nevertheless, the retailer seems to be succumbing to a battle where leading operators in the sector are increasingly embracing more appealing techniques. For instance, the group was forced to shut down at least 250,000 stores in the U.S. that it deemed less essential following an increase in the spread of COVID-19 in March 2020 (AM Collective). The firm recently agreed that it has lost nearly half of its revenue because of the stores that remain idle. Overcoming the present tribulations requires GAP to re-strategize how it approaches buyers, including setting prices that reflect the quality of goods, and considering what buyers want before proceeding with designing, production, marketing, and selling.

Reason for Being

GAP’s reason for being is to build emotional connections with consumers around the globe through developing appealing and inspiring product designs, enhancing experience at various stores, and adopting competitive marketing techniques.

Customer Target

The age of the primary target audience for GAP ranges between 18 and 28 years old. This is presently the age where their customers are either pursing an educational course, or are in the process of finding a job in this tough economic time. The situation affects consumer behavior and power because many cannot afford to buy when they do not have steady income, which in turn affects GAP’s sales.  

Value Proposition

GAP’s value proposition is to encourage inclusion, and to facilitate the reduction of the gaps between people and introduce a new world of possibilities. It is the reason why the company is encouraging inclusion in all it does for its buyers, communities, and the world.

Blue Ocean Strategy Canvas & Value Curve

The blue ocean strategy canvas is a tool that visually shows how a firm will or has formed a blue ocean strategy, which refers to the pursuit of differentiation and affordable cost to identify a new market space and establish new demand (Kim and Mauborgne 62). GAP knows the significance of developing a blue ocean strategy and continuously reviews the plan. On the other hand, the value curve is a graphical presentation that shows instantly where value is formed within the firm’s products and services.

Four Action Framework

The four actions framework identifies the four primary activities to take into consideration to improve the production of existing products. Based on the chart below, GAP seeks to eliminate unfair competition, production of counterfeit goods, and lack of seller honesty and transparency. The group hopes to raise its quality, consistency, and transparency moving forward, and believes that it will attract more buyers by being honest in the way it acts. GAP anticipates that the industry should create new forms of technology that have not existed before to enhance production and innovation. The group would generate more revenue if taxes were to be reduced below the industry level because the company presently pays a lot of taxes to the government besides paying other dues.

The Golden Circle

Simon Sinek developed the golden circle rule, which states that customers do not purchase what a company offers or does, instead they purchase why they do it. According to the theorist, most consumers communicate by beginning with what they do and ultimately return to how and why they do or purchase a particular thing. Similarly, GAP considers how and why it does what it does. The following diagram represents the key elements of GAP’s golden circle;

Jobs-to-be-done model

The jobs-to-be-done model is a technique that businesses use to develop products depending on knowing both the consumers’ specific requirements. It highlights the company on where to create or increase value. Jobs-to-be-done could also be termed as a perspective through which the company can observe buyers, markets, and industry rivals, and by doing so, make product development far more lucrative and predictable. The following is a visual presentation of a jobs-to-be-done model at GAP;

4Ps

1. Product

GAP boasts of the fact that it sells some of the widely acknowledged brands, which gives it power over other companies. For instance, buyers can purchase a wide range of t-shirts, sunglasses, and denim apparels from GAP, perfumes, footwear, and clothes from Banana Republic, a wide range of apparels from Old Navy, and sport equipment and apparel from Athlete, which are all under GAP. Thus, the broad range of products by GAP, with dissimilar brand names, help target a wide range of buyers.  

1. Place

The company has an elaborate distribution network ensuring quick and reliable transportation of goods to many parts of the world. The firm operates more than 3700 stores across the globe, with a huge number being in the U.S. Other than accessing the products from the various physical stores spread across the world, the retailer runs an online platform that allows buyers to order and pay for their items. Furthermore, buyers can purchase GAP’s products via third party online avenues such as Amazon and Alibaba.

1. Promotion

The retailer uses various sales promotion techniques to market its products. The group provides various e-gift cards, which buyers can use for purchasing across all stores and sites. The company also utilizes digital media platforms such as social media and its website to promote its products. The group also uses print and traditional media avenues such as TV and radio stations to market its goods, and occasionally offers discounts to loyal customers and those who make large orders.

1. Price

GAP was once an affordable brand, but concerns have emerged in the recent past that the company charges higher prices than the quality of their products. The claim that the company charges higher prices that do not reflect the quality of goods has resulted in a reduction of those who go for the products.

Reason for Need

GAP conducts its operations with the aim of achieving several goals and objectives. Overall, the firm aspires to generate revenue from its activities because this is the primary goal for any business. The group also aspires to gain new skills and technology as it goes about its operations to become more influential in its operations. More fundamentally, the company hopes that it can do things much better using the most recent technology.

Conclusion and Implications

GAP must know that several other retailers are facing similar challenges considering that the health pandemic is a global issue and has a negative impact on many business practices. However, it should not give up and let the closed stores remain dormant because this would mean that it cannot compete, especially when things are difficult. The group must know that relenting at this time may deter it from realizing its reason for need, which entails generating more revenue and gaining new operational techniques. The company should know that failing to act may give its competitors the chance to become more influential in the market, which may present more tribulations to the retailer.

Strategy

1. What are we going to do?

GAP must pay more attention to the 4P model and ensure that it improves on all the four elements (product, price, place, and promotion. The company must ensure that the products are of high quality and meet all the international standards, especially those set by the International Organization for Standardization (ISO). Specifically, the firm should pay considerable attention to ISO 9001:2015, which presents the chance to follow international guidelines aimed at improving quality management systems (ISO). The company should also ensure that it adopts the latest forms of promoting the products, as well as ensure that buyers do not have any challenges accessing the products.

1. Why are we doing it?

Improving on the four areas presents several merits to the company. The improvements are likely to advance the company’s reputation and competitive advantage. In addition, the changes will result in increased demand for goods, as well as elevate production volumes. GAP should focus on the changes to record fewer complaints from buyers, and reduce chances of recording huge waste.

1. How are we going to do it?

The group will develop a work plan to guide it on how to handle the necessary adjustments. It will also select a team of experts to steer the initiative and ensure that the group overcomes the current tribulations and becomes more productive moving forward.

Recommendation

Goals/Objectives	Strategic Initiatives	Tactics
To produce high quality items	Following stipulated rules and regulations on quality	Identifying the latest and the most effective regulations that would guide the company to produce and sell quality items.
To apply modern and appealing marketing techniques	Gaining adequate information on how to develop an effective marketing plan.	Identifying how leading companies market their products and borrowing helpful tips.
Delivering products to as many destinations as possible with much ease.	Creating a plan on how to distribute goods to as many destinations as possible.	Developing the chance to acquire goods through online platforms and physical stores with much ease. The company must find ways of reviving some of the stores that closed due to the pandemic, but this would require cutting spending on less essential areas.
To embrace the cost-leadership approach that allows the firm to set prices depending on changes in the market.	Acquiring more information from various sources on how to set appealing prices.	Setting prices and monitoring how buyers respond to them and making any changes whenever appropriate.

Works Cited

AM Collective. Why is the Gap Failing? AM Collective, 15 June, 2020,

https://amcollective.sg/reads/why-is-the-gap-

            failing#:~:text=The%20Gap%20recently%20admitted%20that,%242.25%20billion%20in

            %20secured%20debt. Accessed 30 March, 2021.

Biron, Bethany. “The Rise and Fall of Gap, One of the most Iconic and Beloved American

            Retailers. Business Insider Africa, 11 December, 2019,

https://africa.businessinsider.com/strategy/the-rise-and-fall-of-gap-one-of-the-most-

            iconic-and-beloved-american-retailers/3yvc634. Accessed 30 March, 2021.

ISO. “ISO 9000 Family Quality Management.” ISO, 2021, https://www.iso.org/iso-9001-quality-

            management.html. Accessed 30 March, 2021.

Kim, Chan and Mauborgne Renee. Blue Ocean Strategy, Expanded Edition: How to Create

            Uncontested Market Space and Make the Competition Irrelevant. Harvard Business

            Review Press, 2015.