Gap Incorporated

Bargaining Power of Buyers: The bargaining power of buyers is high in the department store retail industry. The volume of buyers is high, and buyers are very price sensitive in this industry. The products are not highly differentiated, and there are numerous stores that offer the same, or similar, products, giving buyers the opportunity to search for the lowest prices and information. The industry has substitutes available in the form of specialty, differentiated products and stores. This increases the power of buyers,

3 Import some sweaters from low-wage countries labels the brand name Etcetera which target downmarket.

Numerous of announcements these days make the buyers feel like they have an amorous relationship with a products, and that the imaginary promise of advertising will always leaves them hungry for more. They can never be contented, because the purchase they love cannot love them back.

Bargaining power of buyer: 46% percent brand loyalty means product is important to customer and he can pay more for the product – had positive effect. Also a large number of customers minimize bargaining leverage.

Sometimes it’s not so important that your product fits the exact needs of the segment you target; rather, it’s vital that customers perceive that you do, even if it’s not true. In order to achieve this, the proper amount of advertising and sending the appropriate message are both vital.

Brand competitors and the diversity of choice that is available to consumers, puts brands under pressure to offer high quality products and service, excellent value and a wide availability (Clifton et al., 2009). Brands must differentiate themselves from the competition and create an unforgettable impression.

* The consumer market is not brand loyal basing most purchase decisions on in-store promotions and sales staff recommendations.

Primarily the loyalty is based on perception, not tangible evidence. Here we can see how important brand equity and positioning can be to a product that is otherwise probably on par with many of its competitors, but the message conveyed by the brand is quite different.

Entrants erode the market and rarely grow it enough to the incumbent’s advantage. New entrants have an impact on the industry business but at a moderate level. This is mainly because new firms will find it difficult to compete against the incumbents’ strong brand, like Starbucks and McDonalds, and because the market is saturated. However, the costs of entry are relatively low. Most of the raw materials are cheap and the distribution chain is not complicated. This makes it easy for new companies to enter the market. Also, established companies might leverage their brands as they enter the industry to compete against the incumbents.

This gain value and addresses a key decisive achievement factor in the industry (Grant,2010). As position is important to offer convenience and a deep assortment, An extra unique intangible resource would be their brand representation and customer loyalty, this is vital since it can attract or attract consumers and it could be necessary to build the brand image .

2. Richard M. Johns (2006). The Apparel Industry. 2nd ed. UK, London: Blackwell Publishing Ltd.. 1-124.

Rivalry among existing competitors: The apparel industry is highly competitive with a great number of both local and global competitors. As the market is mature, its growth is small. Accelerated growth and expansion to new markets are not easy goals to achieve. The barrier to get out of the industry is quite low for distributors, but high for producers. Most fashion manufacturers moved their production base to low-cost countries like China as wage and raw materials in developed markets like Western Europe are high. Besides, there is no great discrepancy in terms of quality of products, so customers make their purchase choices based on price and brand recognition.

Bargaining power of buyers is seen as a moderate force (Kissinger). Brand loyalty is a strong force for Tesla’s when it comes to the company’s customers. Lack of significant substitutes limits the bargaining power of customers and is seen and a moderate force (Kissinger). Customers that live in suburban areas need a vehicle to get to and from places, adding the low volume of purchases made weakens the influence customers have on Tesla (Kissinger).

According to the article, Gap is facing a difficult situation as their head designer, Patrick Robinson, leaves the company. Retail analysts believe that the company needs to be downsized by closing unproductive stores, they need to make management changes, and they need improved products that are consistent with the merchandising strategies. The basic problem is that Gap’s image has declined and people are starting to associate them as “tired, commoditized, driven by price.” Gap needs to be repositioned, and they need someone who understands the customer, that will turn the brand around. Gap’s strategy is to close all stores that are underperforming in order to cut costs. They will also spend more money on advertising and marketing to a younger market and to minorities such as Hispanics, Asians, and African-Americans. By doing so, they hope to acquire greater market share. They will also use new technology that will locate products online and in stores.

Gap Inc., a leading global specialty apparel retailer, continued to lose market share and revenues as customer loyalty declined across the company’s five brands. Struggling to deliver a consistent product and customer experience, Gap Inc. was challenged to redefine its strategy once again. Going forward, the company is focused on driving long-term growth by expanding its customer base.