The Gap Inc. business strategy is a combined of cost leader and differentiation. The company provides a highly competitive price with some differentiated fashion features. As a cost leader, Gap supplies the similar products at a lower price, uses the simple design, and applies a tight cost control system to its store space. At the same time, Gap also equipped with some unique product features. The company has variety products designed for different group of target customer, like GapKids and Banana Republic. The company reinforced the advertising through mass media. In addition, Gap aims to expand the business and continues to grow in the future years.
The main success factors of Gap’s combined strategy of low cost and unique features are the ability to attract and retain customers and the ability to change the customers’ attitude to “no logo” product. Gap is able to attract new and retain old customer, since its competitive price and customers’ current shopping attitude towards “ no logo” brand. Also, Gap invests huge capital in advertising its products through massive media. The company is also able to change the customers’ shopping attitude. The current economy environment limit the customers’ purchasing power, but Gap provides the basic affordable products, yet stylish to satisfy the customers’ needs. Customers have positive attitude to these “no logo” clothes instead of traditional upscale clothes.
The risk factors for Gap in its specialty retail business are the competition in the industry and the customers’ shopping attitude in the long run. The specialty retail industry is highly competitive. For Gap, the risks of likehood of imitation is increased gradually, since Gap does not have too many special operation secrets, and the special features of clothing are too easy to imitate. Another risk is the customers’ attitude. The change in economy situation may change the buying power of customers, so the retain of customers would be harder for Gap....
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