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MEMORANDUM
7 September 2006
To: Rick Stevens
From: Brian Hentz
Subject: Assignment
I understand and respect your decision to gather some feedback from me and my
cohorts as you make a decision regarding Gap’s expansion plan. I’ve read up on the case
recently, and I think you’ll find this analysis addresses your major concerns. Specifically,
this memo offers an overview of Gap’s pressing problems and provides some marketing
strategies for addressing these problems.
While Gap recognizes the merits in penetrating select international markets, the firm
also is acutely aware of both internal and external forces that impede these expansion
efforts: (1) online purchasing options have made Gap vulnerable to fickle shoppers’
fashion proclivities. While Gap historically could set the proverbial “bar” in setting
seasonal fashions, online shoppers—global or otherwise—are in a unique position to
change fashion preferences after Gap has established inventories for its retail seasons,
making the firm potentially less responsive to its customers’ needs. Also, (2) Gap needs
to demonstrate concerted efforts in building brand loyalty in the burgeoning European
and Japanese markets. Although Gap’s casual, Western wear has received kudos for
comfort and style, Gap faces much more stiff competition from established brands in
these markets. If Gap wishes to penetrate these markets, then Gap needs to create an
impetus for broadening these consumers’ consideration sets.
Further, (3) Gap is finding it difficult to compete with low-cost producers in Asia. In
fact, these Asian manufacturers have such a stranglehold on European markets (and
France, in particular) that Gap finds it increasingly difficult to make a demonstrable dent
into these markets. Case in point? Asian countries have 31.7% of the French market for
women’s apparel. Also, (4) Gap must find some creative solutions for curbing Japanese
companies’ animosity towards American firms. This significant barrier to entry is
particularly troublesome for Gap, when one considers that Japan is arguably the largest
market for US-made apparel, with total demand for apparel reaching $70 billion.
While these problems offer concerted challenges, Gap can proceed with international
expansion and reap significant profit margins by following these suggested proposals.
First, (1) Gap should market its Banana Republic brand—its premium brand—more
forcefully in Germany and France, while simultaneously placing more of its marketing
emphasis on its lower-priced brands in Japan. One thing Gap can’t afford to do is cling to
a monolithic representation of the “international market” and promote a marketing mix
that worked well in the US abroad and falsely assume that this mix will result in similar
successes. Because Gap has had difficulty cultivating brand awareness and convincing
customers to switch to their products from more established brand names in France, Gap
should recognize that certain markets—such as Germany and France—are much more
willing to pay premium prices for quality, Western wear.