Brand Positioning and Market Segmentation
Brand positioning is an important strategy for achieving differential advantage. Essentially, positioning reflects “the place” a product occupies in a market or segments. GAP has a wide range of products that are reflected in multi-segments. Initially, as a specialty clothing retailer, GAP segmented the market using price as the sole criterion. GAP strategically decided to serve three major segments, which can be seen from price differences among GAP’s three brands: Old Navy (discount/value), Gap (mid-price), and Banana Republic (high-end). In the past decades GAP’s differential strategy worked successfully, and this allowed GAP to enjoy phenomenon growth. Part of the success was clearly to due to GAP’s ability to play on its brand names. As stated by Grant, “brand names and the advertising that supports them are especially important as signals of quality and consistency”. GAP brand names provide a guarantee by GAP to customers of the quality of GAP products. Nevertheless, in the recent years competition intensified as new players also targets some of the same market segments aimed by GAP brands. GAP’s major competitors included vast array of companies from three market segments. In the discount/value market the main competitor is Wal-Mart, who is capturing shares in the apparel market as it is striving to target more fashion-conscious consumers. In the mid-priced market, the major players that Gap faces are Abercrombie & Fitch and American Eagles Outfitters. All three brands target the same age group. Thirdly, in the high-end apparel segments, J. Crew and Urban Outfitters are Banana Republic’s biggest opponents. Based on the information, a positioning map can be constructed to show GAP’s current position relative to its competitors. EXHIBT is a diagram that shows GAP’s three brands and its competitors in terms of the price and the targeted age group.
Beside the three original market segments, GAP also explored a...
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