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Assignment 1: Retail Marketing Management

(Gap Inc Case)

Prepare by:
Dilraj Kaur Puni (T00702941)

MKTG 4431_SW5 - Retail Marketing

Instructor: Prof Juan Caldera

October 2024.
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TABLE OF CONTENTS
1.1 Retail Mix……………………………………………………….. 3
1.2 Target Market……………………………………………………. 5
1.3 Consumer Decision and Psychological process ………………… 6
1.4 Types of Retailers ……………………………………………….. 7
1.5 Value Creation……………………………………………………. 9
1.6 References ……………………………………………………….. 10
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1. RETAIL MIX

The Gap
•Product: Gap products are casual everyday clothing for men, women, and children. Includes
basic clothing like jeans, t-shirts, and outerwear.

•Price: Mid-range prices ranging from 30 to 80 CAD with regular offers and promotions.

•Promotion: frequent discounts, loyalty programs, and seasonal sales.

•Place (Distribution): Available both in stores and online with worldwide shipping.
•Presentation: Store design is simple and minimalistic with differentiated product segmentation.
The website has a similar minimalist design with easy navigation and photo displays.
•Customer Service: Standard customer service with in-store helpers and online support like chat
boxes.

Banana Republic

•Product: premium fashion, focusing on business casuals and formal wear for men and women.
•Price: Higher-end pricing ranging from 80-200 CAD, reflecting long lasting quality and
materials.
•Promotion: Less frequent and more exclusive promotions than Gap. Uses targeted marketing to
luxury consumers.

•Place (Distribution): Selective premium locations in major big cities and online availability.
•Presentation: Stores have an elegant, modern design. The website mirrors this, with a
sophisticated interface and polished visuals.
•Customer Service: Personalized services like in-store personal shoppers and high-level online
assistance.

Old Navy

•Product: Affordable and trendy fashion for families, offering a wide range of sizes and styles.
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•Price: Low-price strategy ranging from 10-50 CAD targeting budget-conscious shoppers.

•Promotion: Heavy reliance on promotions, discounts, and campaigns.

•Place (Distribution): Substantial distribution in suburban malls and online platforms.
•Presentation: relaxing atmosphere with vibrant energy and colourful scheme. The visual content
on the site is also positive with emphasis on promotions.
•Customer Service: Simplified customer service with self-service options, both in-store and
online.

Comparison of Online vs. In-Store:

•Product: All brands offer similar items across both channels.

•Price: Pricing remains consistent, but online deals pop up more often.
•Promotion: Old Navy and Gap run sales both online and in stores, while Banana Republic
tailors its web offers more.

•Place: Distribution stays the same, though online shopping reaches more people.
•Presentation: Stores let you touch and feel products, while websites make it easy to browse and
buy from home.
•Customer Service: Banana Republic gives more personal help in stores, but online support is the
same for all three brands.

2. TARGET MARKET
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Characteristic The Gap Banana Republic Old Navy

Age Age: 25-45, young Age: 30-50, career Age: 18-35, young professionals
professionals families
Income Income: Middle- Income: Upper-middle-class Income: Lower to
income households consumers middle-income
Lifestyle Style-conscious, prefers Quality-focused, values Budget-conscious,
trendbasics luxury drive
Values Sustainable, values Seeks exclusivity and prestige Practical, values durability
affordability
Location Urban areas in North Affluent, metropolitan Suburban and rural areas
America locations
Country US, Canada, global US, select international Primarily North
America markets

•Demographics: Banana Republic caters to an older, affluent demographic, whereas Old Navy
appeals to younger, cost-conscious families. The Gap targets a more middle-class market.

• Psychographics: Banana Republic targets high-end consumers, while Old Navy focuses
on budget-friendly and fashionable shoppers. The Gap aims to cater to eco-conscious shoppers
by finding a balance.
• Geographics: Banana Republic targets wealthy regions, while Old Navy focuses on
suburban and rural areas. The Gap has a global presence, attracting customers from different
places.

3. CONSUMER DECISION AND PSYCHOLOGICAL PROCESS

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1.Problem Recognition:

Example: A consumer wants new, affordable clothing for a family get together.

•Psychological Factor (Motivation): The consumer’s desire to stay budget friendly while
still dressing fashionably. Old Navy is known for offering trendy, budget-friendly clothing,
motivating the consumer to shop there.
2.Information Search:
Example: The consumer begins searching for affordable clothing options, both in-store and
online, comparing Old Navy with other budget retailers like Walmart or Amazon.

•Psychological Factor (Perception): consumer’s search is influenced by the perception of

Old Navy as value-oriented with a strong selection of trendy styles. The convenience is further
enhanced by the reputation of the store and its omnichannel presence.

3.Evaluation of Alternatives:
Example: The consumer considers alternatives such as shopping at other general merchandise
retailers like Target or discount stores. They compare the style, price, and availability of clothing
at these retailers.

•Psychological Factor (Attitude): The consumer has a positive inclination towards Old Navy
because of its consistent offerings of discounts, trendy products, and ease of access through
multiple channels. This favourable attitude may result from past positive experiences and brand
loyalty.

4.Purchase Decision:
Example: After weighing all options, the consumer decides to buy from Old Navy because it
matches their style and affordability requirements.

•Psychological Factor (Learning): The consumer’s decision is influenced by their

acquired preference for Old Navy from previous purchases and promotions, as well as the
convenience of both in-store and online shopping options.

5.Post-Purchase Behavior:
Example: After purchasing, the consumer evaluates the product performance for quality, fit, and
value. If satisfied, they may become more loyal to Old Navy and return for future purchases.
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•Psychological Factor (Perception): The consumer’s post-purchase evaluation depends on

how well Old Navy meets their expectations of quality and value. If the clothing holds up and
fulfills the perceived value, it reinforces the positive perception of the retailer.

4: TYPES OF RETAILERS

1.Statistics Canada Retailer Types

•Store Retailers: Retailers that primarily operate through physical stores. All three brands—The
Gap, Banana Republic, and Old Navy—belong to this category as they each have a significant
network of physical stores in addition to their online presence.
•Non-Store Retailers: Retailers that operate outside of traditional physical locations, such as
ecommerce platforms, direct mail, or telemarketing. While each of these brands also has a robust
online presence, their core operations are categorized under Store Retailers due to their heavy
reliance on brick-and-mortar locations.

2.NAICS Segmentation
•The Gap: NAICS Code 448120 - Clothing Stores. The Gap is classified under this segment
because it sells a broad assortment of men’s, women’s, and children’s apparel, focusing on casual
wear.
•Banana Republic: NAICS Code 448140 - Family Clothing Stores. Banana Republic offers
premium clothing for men and women, particularly focusing on professional and luxury fashion
for work and special occasions.
•Old Navy: NAICS Code 448150 - Family Clothing Stores. Old Navy also falls under this
category, offering budget-friendly clothing for all age groups, including men, women, and
children.
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3.Type of Ownership

The Gap, Banana Republic and Old Navy, are part of the corporate family and retail chain that is
Gap Inc. A corporate chain is a set of similar franchise stores that are centralized under
ownership and management by a large parent company, providing common branding practices
and standardized business methods in all the outlets.

• The Gap: — Another corporate-chain fashion store, The Gap is owned by the same name
and located in most countries as well.

• Banana Republic: Another child of Gap Inc., but at the opposite end of the pricing
universe and aimed squarely at a professional audience with tier-two top-range fashion.
• Old Navy – owned by Gap, Inc., Old Navy is also one of the corporation's budget-
conscience fashion segments targeting families and young demographics with its generally low-
cost apparel.

4.Type of Merchandise Offered

•The Gap: Apparel Specialty Retailer. The Gap is categorized as an apparel specialty retailer
because it primarily focuses on casual clothing, offering a wide selection of everyday basic
essentials for men, women, and children. Its merchandise assortment includes jeans, t-shirts, and
outerwear.
•Banana Republic: Premium Fashion Retailer. Banana Republic is positioned as a premium
apparel retailer, offering a more premium and luxurious product line. Its product line includes
professional attire, dress shirts, blazers, and elegant outerwear, which aims at customers looking
for higher-end, stylish clothing.
•Old Navy: Budget Family Apparel Retailer. Old Navy is classified as a budget retailer because it
offers affordable, family-friendly apparel. Its merchandise is centred around basics like t-shirts,
jeans, and kids’ clothing, while focussing on providing value at lower prices compared to The
Gap and Banana Republic.

5. VALUE CREATION
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Retail value refers to the perceived value or benefit the consumers get in exchange for the price
they pay for goods or services. It surpasses more than just the functional aspects of the product; it
includes the experience, convenience, and emotional satisfaction associated with the purchase.
For consumers, value is created when a retailer provides high-quality products at competitive
prices, along with excellent customer service, convenience, or unique product offerings.

The Gap Inc creates several kinds of value for their customers, including:
• Functional Value: It is the usefulness of a product, which is usually determined by its
quality, durability, or performance. A suitable example would be the line at Old Navy,
which offers customers functional value in fashionable yet reasonably priced daily wear.
• Emotional Value: The retailers create an emotional touch with the consumers by selling
products related to personal style or identity. Banana Republic communicates on
emotional value by using high-end and sophisticated fashion products that appeal to
consumers looking for a high-class look.
• Convenience Value: The ease of shopping, which may be in terms of store locations,
online presence, delivery alternatives, customer service. Gap does this through ensuring
convenience by providing easy-to-browse websites and a large network of physical stores
to access products fast.
• Social Value: Retailers help a consumer create social value where a product improves
their status. Banana Republic creates premium positioning to make the consumer feel
elevated in their social interactions by wearing upscale clothing.
• Experiential Value: how the consumer experiences the store and digital shopping
experience. Retailers like The Gap bring consumers into experiential value through clean
store layouts and integrated omnichannel shopping.

Gap Inc can add value to the customer's experience through enhancement of elements of the
marketing mix as follows:

• Product: By increasing variety in style and product lines, for example, Old Navy for
casual and cheap casual wear, The Gap provides basics, and Banana Republic offers
highend professional wear - each brand can appeal to different customers' tastes, hence
offering value through product differentiation.
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• Price: Competitive pricing means adding value for the customer and matching the price
of the goods to at least one if not several market segments. The point of differentiation is
that Old Navy is cheap, while The Gap sells middle-range items and Banana Republic
sells higher-priced, luxury clothing. So, their pricing strategy reflects the perceived value
in quality and brand identity.
• Place: Each of the brands in the portfolio has an omnichannel experience-a top-notch
online presence and an immense number of physical stores. The multi-channel adds value
in providing flexibility for consumer shopping either through brick-and-mortar stores or
seamless online shopping.
• Promotion: Driving value first requires promotional strategies that may include discounts,
loyalty programs, and even special sales events. For instance, Old Navy often allows for
deals-like "Super Cash"-where customers can accrue rewards to use in the future. The
Gap and Banana Republic do targeted promotions by allowing value to be made from
personal discounts and events specifically made for their loyalty members.
• People: Retailers add value by offering superior customer service. Banana Republic
instore staff may provide personal styling, while Old Navy is focused on friendly service
catering to the wide demographic of families and others. Store associate training and
store associate support add to a positive customer shopping experience.
• Physical Evidence: The physical settings and atmosphere of retailers add value by
assuring that customers will have a pleasant experience when shopping. Old Navy stores
are designed to be easily accessible and comfortable as well as appeal to families. Banana
Republic has a more luxurious appealing atmosphere where customers can enforce the
perceptions of a premium brand.
• Process: Retailers smooth processes like online order fulfillment, in-store pickups, and
returns to create value through making life more efficient and convenient. As an example,
Gap simplifies the shopping experience with options such as "Buy Online, Pick Up
InStore" to create quick and easy access to products.
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REFERENCES

1. Deloitte. (2023). Offline vs. online retail: Development, comparison, and

consumer view. Deloitte Insights. Retrieved from
https://www2.deloitte.com/insights/

2. Gap Inc. (2023). Annual Report 2023. Retrieved from

https://www.gapinc.com/content/gapinc/html/investors/reports/annual-
reports.html

3. Levy, M., Weitz, B. A., & Grewal, D. (2018). Retailing management (10th
ed.). McGraw-Hill Education.