According to Gap’s recent reports as of September 2007 their sales have increased by 4% as compared to those of 2006.The international sales of the company on the other hand have decreased by 7% as they were flat in the last year. Gap has also been struggling to maintain its profit in UK as it had declined by £1015 in 2006.|The competition in UK’s retail market is still on and has extended beyond these brands after the entrance of the UK’s super market giants like Tesco and Asda . These potential entrants are trying their level best to pass the introductory stage in the product life cycle. However, from the above given facts and figures Zara can be considered as the leading fashion retailer followed by H&M and Gap (www.bbc.co.uk).
Findings, Analysis and Discussion
The research shows that companies like Zara, H&M and Gap have been using different marketing strategies to gain the maximum market share and their customer’s loyalty. These strategies are based on the Marketing mix and especially focuses on the promotional mix which consists of advertising, personal selling, public relation, direct marketing and the sales promotion.
Zara has established as a brand after developing an image of being low-cost, high fashion product. The brand maintains its quality through computerized cutting before the sewing process starts. The products at Zara include a vast range of clothes and accessories that are specially designed for men, women and children. Zara has a different policy of setting the prices as they are according to different market conditions. Zara charges a higher price in UK as compared to that in Spain, this is because people in UK are willing to pay more for the new fashion trends. Zara charges 30% to 50% more prices than H&M but charges less than Gap, for a similar product. Zara’s heart is the vertical integration of design, just in time production, delivery and sales. This is made possible through the hard work of 200 designers, company owned factories and the private contractors mostly based around the companies distribution centre in Europe. The finished products are directly delivered to the retail outlets using the trucks and air crafts, without bothering for the ware houses. The completion of the process in two weeks time is the advantage that Zara has over its competitors in the retail market. (Binkley 2007)
Advertising
Advertising is done by companies to create awareness amongst the consumers or the targeted market. The way in which the companies can advertise may vary from network and cable TV, radio, magazines, newspapers, billboard, internet, shopping bags, retail outlet and the list is almost endless. Zara is a multinational brand but surprisingly the advertising budget of the company is 0.3% of the total while its rivals spend 3-4% on their advertisement. The little money that is spent by Zara goes in to highlighting the company’s image of being low cost but high fashion. The retail outlets of the company are also used as a source of advertisement by company as the shop windows are used in communicating the brands image. These displays in the windows are changed regularly using the designs sent by the head quarters. Chief executive of inditex Pablo Isla says “our advertising is our stores” (www.businessweek.com). The company also claims that instead of spending million on different forms of advertisements we focus on the top location of the stores and this is part of their strategy.
Public relation
Companies try their level best to improve their corporate image by building a good public relation. This can be achieved through a favourable publicity and by handling unfavourable rumours, stories and events. In 2007 people are more worried about their future as they are facing a threat from global warming. Zara being the biggest clothing retailer in Europe has decided to reduce the pollution and carbon dioxide by 20% through the use of bio diesel, zero emission vehicles for transportation and new power generation plants. The company is also planning to develop an eco scientific store model which would recycle the biodegradable items including coat hangers and card boards. The company’s environment friendly image may attract more customers who are conscious about global warming. In order to improve the relationship with their worldwide customers, the company removed their hand bags on which the Nazi swastika was printed, that were also a sacred sign for Hindus and Buddhists.(ref.)
Word of Mouth
Word of mouth is a promotional technique through which publicity is done by discussion between general public members. People recommend products to their friends, families and others, usually after using those products. This reflects the real views of the user and the recommendation would be unbiased. For Zara word of mouth has a great significance because it has been very effective in establishing the brand. The company has never advertised its product using the mass media but is still popular amongst the masses. This proves that people do discuss about Zara’s designs, quality and the dates on which the new products are delivered to the store. This discussion amongst the people helps a great deal in promoting Zara as a brand. (Manchanda 2007)
H&M after considering UK as its third largest market has been providing a wide verity of clothes including sportswear, underwear and accessorise to men, women and children by efficiently engaging in the designing, producing and retailing of their products. H&M is considered to be a cheap and trendy brand amongst the consumers. It charges the lowest price as compared to Zara and Gap claiming that they do not enjoy economies of scale from large quantity orders instead they pass these profits to their customers by reducing prices. H&M produces a range of product with the help of more than one hundred in-house designers. The physical product is then supplied by 700 contractors mostly based in Europe and Asia, as the company does not have its own factories. This process of designing, producing and delivering takes a week more than its rival Zara. Finally products are then delivered by distribution centres to retail outlets located in the best locations on shopping streets. These stores range from Big-full to small concept stores in different areas of the world. (www.hm.com)
Advertising
H&M has used many mediums to advertise the brand globally. TV adverts starring the material girl Madonna and her collections have helped this company in projecting its positive and healthy image in retail industry. The brand has also used billboards, newspapers, website and its own fashion magazine to advertise its product to the potential customers. Although these adverts may use different languages in different countries but the message they try to convey is same in every country. It does not only rely on the traditional ways, instead it is looking forward for an innovative advertisement. According to its partnership contract EA will post an advertisement on the virtual billboard purchased by H&M. This will have an effect on the consumers who spend most of their time on video games. (Wall Street 2006)
Public Relation and sponsorships
H&M does a lot to promote their brand image by sponsoring horse riders. The company has been sponsoring Malin Baryard-Johnsson since 1996, later in 2003 she was joined by Peder Fredricson to form the team H&M. Malin has won European World Cup final at Gothenburg in 2004 and at the German Masters in Stuttgart in 2006.Peder has also proved himself by wining Wierden Grand Prix on H&M Lavito in 2006. ( David 2007) (www.hm.com)
Further to improve public relation the company has strict policy towards the exploitation of child labour .In order to minimize the use of child labour in third world countries like India and Bangladesh the company monitors the factories and provides children with schooling facilities. H&M at the same time also makes sure that the labour used by the contractors and the sub-contractors is paid fairly for their work. Apart from sponsoring the public’s favourite horse riders, the company continues to fulfil its corporate social responsibility by maintaining a fair-trade policy. For many years both at local and global level H&M has been involved in various form of charity in partnership with UNICEF helping women, children and focusing on education. Reducing carbon dioxide by restricting the use of harmful substances and eliminating water pollution has been at the top in company’s agenda regarding environmental issues. (www.hm.com).
Sales promotion
H&M launched a promotional campaign “Madonna & Crew love H&M” in 2006. The retailer entered in a contract with Madonna and her touring family by providing her with complete wardrobe and specially designing a unique track suite for her to wear while she was on road. To promote this campaign along with the brand an H&M mobile internet site was created for customers to browse the Madonna & Crew Love H&M collection and also locating the local stores. () In addition, H&M promoted a free T-shirt and 25% off any shirt in the store for the first 500 customers who donated a top to charity (Duff 2002)
Direct marketing
Direct marketing is used by the businesses to interact with their customers by using different advertising mediums such as direct mail, teleshopping and online shopping. H&M is not using direct mail and the online shopping facility to promote its sales in UK as it is using them in five other countries in Europe. (Lec.slides)
Word of Mouth
Word of mouth in fashion industry spreads like a fire on a gusty day. H&M does enjoy the benefits of the word of mouth as people have been sharing views after the Launch of the Madonna’s campaign for H&M. Some people get inspired by H&M’s advertisement in the video games while the others discuss about the Brand’s bold decision of firing Kate Moss after finding about her drug scandal. This kind of positive promotion is always free of cost.H&M does not relay only on this technique where as its opponent Zara captures most of its market through word of mouth.
Gap after appointing Glenn Murphy as their new C.E.O is hoping that the gap between Gap and their rivals do not increase in future. Gap covers a wide range of products from wardrobe basics such as khakis and T-shirts to fashion apparel for men, women, children and maternity. Gap kid and Gap baby is specially designed to focus on the children. Gap prepares its own designs and places orders to the contractors in the third world countries like India, Srilanka and Bangladesh. The final product is transferred to the distribution centres and at last it is delivered to the retail outlets. This process takes a lot more time as compared to its competitors Zara and H&M. Gap’s unhurried production process restricts it to produce only 4000 designs in relation to Zara’s 11000 in a year. People have stopped considering Gap as a cheap brand; instead they prefer to walk to other high street shop that offers new trends for lower prices. Gap could not maintain the market share and had to sale 10 branches to H&M in Germany. (Nolan, 2007) (Wilson 2007)
Advertising
Gap focuses more on its advertisement than H&M and Zara. “Classics Redefined” is the advertising campaign launched by Gap to regain its original position. The campaign casts range of artists including Forest Whitaker, Sarah Silverman and the musician John Mayer. Gap is using its stores, Billboards, online advertisements, Bus shelters, TV, Radio, newspapers, and especially the fashion magazines as a medium to promote its Brand. To gain the maximum buyers for the (product) RED products the company is also hiring the celebrities that are socially conscious, as the sales of the brand are used for the women and children infected by HIV in Africa. (Newman 2007) (www.gap.com)
Public relation
Gap has been suffering in maintaining a good public relation as compared to Zara and H&M.The company does claims that they have a good working conditions in factories but the story took dramatic change when child labour Allegations by an under cover news paper observer in 2007 had embarrassed the company. The critics believe that the company has its social audit system launched in 2004 but it’s not practical to monitor the labour in India while the head quarter is based in New York. The brand on the other has been removing the stain by destroying the products made by a 10 year old child.() The brand in order to have good public relation had also started to sell (product)RED by giving 50% of the profit as a charity for mother and children suffering from HIV in African countries. (David 2007)
Direct marketing
Gap uses direct marketing techniques to promote its products. Gap runs its own website to interact to the customers. This website is also used for online selling but it does not deliver to the customers in UK. The brand also focuses on the direct mails by sending catalogues to there customers before the start of the season. These catalogues offer up to 15% discount on the products and also facilitates to order through a toll free telephone number. Most of these offers are only limited to the Gaps market in USA. (.)
Word of Mouth
Word of mouth has a great importance for Gap as it is a recommendation from a consumer to consumer. Gap’s campaign “How Do You Wear It?” had invited people to upload their pictures. This campaign was used to promote the brand by using the word of mouth technique as people discussed about the brand.
Conclusion & Recommendations
From my research I have reached to a conclusion that Zara and H&M are the major rivals in the fast fashion industry. Gap on the other hand is struggling to maintain its original position as new entrants like Tesco and Asda are giving a tough time to Gap. Although Gap and H&M are spending a large amount of their profits on advertisement and other in accordance to UK’s expanding retail market, instead it is considering the UK’s market to be the same as the American. Promotional activities but they are still facing a great competition from Zara. The production model being the back bone of Zara has enabled it to excel in the fashion industry. Gap has been left behind because it has not improved its public relation and advertising.
After analysing the Fashion industry in UK I will recommend Gap to revise its brand image by producing better quality for cheap prices as it had started as a brand for the middle classes. The Fashion market leader Zara and its rival H&M should start selling the clothes on their web sites for the UK’s market to gain maximum market share as people have stopped visiting the shopping malls and prefer to buy their things on line. Gap should start using the European celebrities to capture the market in UK.H&M and Zara should consider promoting their sales by offering money off coupons, free tickets for the concerts and some lucky draws on specific amount of shopping. This technique will not only promote their brands but it will also encourage them to shop more.
REFERENCES
Websites:
Journals:
McAfee “Do you have too much it” Vol. 45 No. 3 (spring 2004)
Binkley “On style: tracking the trouser cycle” Wall street Journal New York Edition (Aug. 16, 2007)
David “How Gap manages social compliances” Apparel, New York Vol. 48 Iss. 5, p. 32-34 (Jan 2007)
Wall street Journal “Hennes & Mauritz AB: Madonna Agrees to Design Line of Clothes, Accessories” Eastern Edition, New York, P. b.5 (Dec. 2006)
Duff “H&M asks shoppers to disrobe for charity” DSN Retailing Today. New York: Vol. 41, Iss. 1, p. 2,46 (2 pp.) (Jan. 7, 2002)
Nolan “ Gap's troubles lead it down designer road once again” Retailing Today. New York: Vol. 46, Iss. 6, p. 4,28, 2 pp(Apr 23, 2007)
Wilson “ A Good Fit? Chain Store Age. New York:. Vol. 83, Iss. 9, p. 96 (1 pp.) Sep 2007
Manchanda “The quality effect on word of mouth” Vol. 49 No. 1 (Mar. 2007)
Newman “Holy Gap These ads are really boring” Brandweek; 48, 30; ABI/INFORM Research pg. 46 (Aug 20-Aug 27, 2007)
Appendix:
Questionnaire for the fashion industry
Q1) Gender.
Q2) how often do you shop for clothes?
- Every week
- Once a month
- Twice in a year
- Other please specify
Q3) which of the following brands do you like?
Q4) why do you prefer buying this brand?
- Brand loyalty
- Advertisement
- Quality
- Design
Q5) Can you differentiate between these brands?
Q6) you will differentiate between these brands through
- Quality
- Designing
- Price
- innovations
Q7) what can make you change your brand?
- Advertisement
- Peer pressure
- Special offers
- Price
Q8) how would you rate the following brands out of 10?
- Zara_________
- H&M_________
- Gap________
- 0ther__________
Q9) would you like to see improvement in your brand?
How?
________________________________________________________
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