Online Users

Custom Search

Categories

« Thesis Chapter 1 - Analysis Of Sales Promotion By The Gap Inc. | Main | Thesis Chapter 3 - Analysis Of Sales Promotion By The Gap Inc. »

02/07/2012

Thesis Chapter 2 - Analysis Of Sales Promotion By The Gap Inc.


 Chapter 2

Review of the Literature

History of The Gap

 

 

The Gap Inc. started as a small store in San Francisco in 1969.  The Gap has now “grown from a single jeans store in San Francisco with a handful of employees to one of the world’s largest specialty retailers with more than 4,250 stores and 165,000 employees supporting three of the most recognized and respected brands in the apparel industry—Gap, Banana Republic, and Old Navy” (About Gap Inc, 2003).  Its 2002 revenues topped $14.5 billion (Gap Inc. 2002 Annual Report, 2003).  The Gap started in 1969 when its founder, Donald Fisher, tried to exchange a pair of blue jeans.  He found that every store he visited had jeans departments that were disorganized and poorly stocked.  Fisher and his wife, Doris, decided to open their own store and sell jeans that were neatly organized and easy to find.  They named the store The Gap, after the “generation gap.” (Nevaer, 2001, p. 16)  The Fishers mainly sold Levi’s jeans.  Drawing on a strong teenage customer base, The Gap continued rapid expansion throughout the 1970s.  In 1974 The Gap began to create its own private label clothes and accessories.  The number of private label items steadily increased until 1991, when The Gap began to sell only its private label merchandise.  In 1983 Millard “Mickey” Drexler was hired by the Fisher family and helped The Gap to make several profitable transitions.  When he joined The Gap, it was “an undistinguished apparel chain” with sales over $480 million (Cuneo, 1997).  His vision was a forward-looking strategy focusing on the emerging trend of “office casual” clothing. 

In 1983, The Gap continued its expansion by purchasing Banana Republic.  The safari theme had run its course and, after the acquisition, Drexler boosted sales, still under the Banana Republic name, by offering higher-end clothing, including leather products, at higher prices.  The company continued to grow rapidly in the 1980s.  In 1986, GapKids was born after Drexler went shopping for his son’s clothes.  He found that there was virtually no retailer who sold basic kids’ clothing.  In 1990, The Gap launched babyGap, a clothing line devoted to infants and toddlers.  The concept behind GapKids and babyGap was to appeal to parents who wore Gap clothing themselves (Nevaer, 2001).

In 1994 Drexler came up with the concept of selling clothing to price-conscious families.  The Gap’s Old Navy division made its debut in the same year.  This new expansion brought in $1 billion in less than four years – “a first for the industry”(Munk, 1998).  By the mid-1990s retailers across the industry were copying The Gap’s store design and core products.  The peak of The Gap’s success was in 1998; The 1997-1998 year-to-year sales increase was 39.1% (Gap Inc. 2002 Annual Report, 2003).

The economic growth and expansion have not been sustained, however, as year-to-year sales company-wide has fallen consecutively since 1998.  The rapid horizontal diversification within the industry and a refocus on young consumers may have improved sales and been a “model” of successful expansion, but it appears growth was temporary and may have been too focused.  Due, in large part, to industry competition and its strategy to differentiate itself from imitators, The Gap began to sell trendier items like leather jeans and sequined shirts.  The ill-fated attempt to appeal to the younger, trendier “Britney Spears and Bugglegum-set” (Munk, 1998) led market analysts to criticize The Gap because it had lost its identity.  The 2001-2002 year-to-year sales increase was only 1.3%.  Drexler called 2001 “the most difficult year ever” (Sanders & Cuneo, 2002).  

From Spring 2002 The Gap refocused its attention on getting “back to basics” by returning to its more successful, casual clothing line and a musically-reminiscent advertising campaign.   This strategy has been employed to slow down the rate of year-to-year sales decline.  Drexler, legendary for his talents as a merchant and still considered by many to be the brains behind The Gap’s meteoric rise, was at the helm of The Gap for 19 years and charted the firm into new waters.  However, on May 2002, Drexler announced his plan to resign due to the company’s recent struggles.  Paul Pressler, new CEO of The Gap, says that in order for The Gap to reemerge as the successful firm it once was, a new strategy focusing differentiation methods, including environmental differentiation, should be employed as a means of luring back their “office casual” client (Munk, 1998).

In summary, it is fair to say that The Gap Inc. is a leading international specialty retailer offering clothing, accessories, and personal care products for men, women, children, and babies under the Gap, Banana Republic and Old Navy brand names.  Past two years (2000 to 2002), however, the Gap has gone a period of 24 consecutive months with year-to-year sales declines and considerable stock depreciation.  Of course, in some ways, it might not have been fair to compare The Gap’s sales in those two years to those of 1998 which recorded 39.1% increase and were unprecedented for an apparel retail company.  However, the perception that the company was in trouble had led to the departure of several key executives.  In addition, there was speculation about a loss of focus in the company’s marketing strategy both inside and outside the company. 

For these reasons, by the beginning of 2003, it was clear that The Gap needed to reclaim some of the momentum that had brought the company success in the past.  Store expansion had always been a key element in The Gap’s marketing strategy; however, The Gap has come to place a high priority on other marketing tactics such as media and print advertising (Kingstone, 2002).  Ultimately The Gap’s goal is to become a “mega-brand” like Coca-Cola or Nike.

The appendix shows The Gap Inc.’s milestones (Milestones, 2003; Nevaer, 2001).

 

How can a company address its target customers and keep them from purchasing from its competitors?  These questions should be considered in developing a company’s marketing strategy.  There is an increased awareness among almost every organization today that marketing provides essential information about the target customer.  Marketing and the information it provides have become increasingly important to the promotion planner as well.  Marketing looks outside the organization’s operation to understand the market in which an organization operates.  It weaves demographic and psychographic information into the merchandising, sales promotion, and selling efforts of the organization.  The purpose of a marketing strategy is to cut costs and operate more efficiently.  Thus in this literature review I would like to investigate what marketing strategy is, how it works, what the elements of it are, and the roles they play.

 

Marketing

This discussion begins with investigating what marketing is prior to investigating what marketing is.  According to Belch and Belch (1990), marketing refers to the wide range of activities involved in making sure that the retailer is continuing to meet the needs of its customers and getting value in return.  These activities include market research to find out, for example, what groups of potential customers exist, what their needs are, which of those needs retailer can meet, and how the retailer should meet them.  Marketing also includes analyzing the competition, positioning the retailers’ new product or service (finding the company’s market niche), pricing the company’s products and services, and promoting them through continued sales promotion such as advertising.

On the other hand, Phillips, Bloom, and Mattingly (1985) stated that

Basic, traditional marketing is as relevant as ever.  The Four P’s—product, price, place (distribution), and promotion—are still very much alive.  Strategic thinking, segmenting, and targeting can still earn the retailer a competitive advantage.  Marketing is still a process of (1) determining what customers need and want, (2) planning how retailers are going to meet those needs and wants, and then (3) implementing their plan. (p. 18)  

The market still has products, services, and ideas to sell at some price.  Some individuals still deliver directly to customers via some means of distribution.  The retailer promotes, and the retailer still advertises.  Those are the basics.  The basics still exist and always will; however, the existence of change can not be ignored.  The thing that has changed is the business environment  (Phillips, Bloom, & Mattingly, 1985).  Companies compete with more efficiently to sell merchandise.  Customers have better access to their cost options, and they communicate to each other in a way never before possible (Amber & Burne, 1999).  The changes in the competitive environment are numerous.  Likewise, what have also changed are the specific marketing strategies and the tactics the retailer takes to implement those strategies.  The truly successful retailer has a superior marketing strategy which not only satisfies customers’ needs but also anticipates them.  Thus marketing is logical and thought-out tactical implementation.

 

Marketing Strategy

      Marketing strategy is the tactic to promote sales and it makes the best of marketing information.  There are a variety of tactics, however, all are aimed to find prospect customers, to encourage them to buy with value and make profit.  Together, these objectives form a picture of marketing strategy.

 

Sales Promotion

 Sales promotion is an integral part of the process of development marketing strategy in most organizations.  Over the past decade, a tremendous amount of money has been spent on sales promotion. 

The American Marketing Association defines sales promotion as follows:

(1) In a specific sense, those marketing activities, other than personal selling, advertising, and publicity, that stimulate consumer purchasing and dealer effectiveness, such as display, shows and exhibitions, demonstrations, and various non-recurrent selling efforts not in the ordinary routine.  (2) In retailing, all methods of stimulating customer purchasing, including personal selling, advertising, and publicity. (Alexander, 1965, p. 9)

In the broadest sense, sales promotion is any activity used to influence positively the sale of merchandise, services, or ideas.

Sales cannot occur in a vacuum.  The sale of a product occurs only it meets or satisfies a customer’s need, want, or desire.  In order for a customer to know that a product meets one of these criteria, communication must take place.  Sales promotion is one form of this communication.  One of the objectives of sales promotion is to build customer loyalty, to disseminate information, and to establish or reinforce a company’s image.  The communication of sales promotion is achieved through advertising, visual merchandising, special events, publicity, and personal selling.  Each area has a different role in the total communication effort but all have a common aim. 

      Stores today carry merchandise similar to that of their direct competitors.  Except for slight variations, the merchandise mix of similar stores could offer customers the same choice at the same price (Drake, Spoone, & Greenwald, 1992; Phillips, Bloom, & Mattingly, 1985).  Then what makes the customer choose one store over another?  Through its sales promotion activities, a store conveys its image to the customer.  The image may be one of service, price, or the latest in fashion, depending on the customer the store is trying to reach.  Differences in practice of sales promotion are achieved not only through advertising but in the kind of special events each store holds, the way it displays its merchandise, and the image it projects through publicity.  Sales promotion helps to build traffic and to make sales.  Without sales promotion, a store would have to survive on customers who happened to walk by the door.  Thus sales promotion could be viewed as the critical communication function of marketing.  What is the communication, and how does it work? 

 

Communication

      Communication has been variously defined as the passing of information, the exchange of ideas, or the process of establishing a commonness or oneness of thought between sender and receiver (Schram, 1995).  These definitions suggest that, for communication to occur, there must be some common thinking between two parties and information must be passed from one person to another.  Establishing this commonality in thinking is not as easy as it might seem.

      The communication process is often very complex.  Success depends on such factors as the nature of the message, the audience’s interpretation of it, and the environment in which it is received.  The receiver’s perception of the source and the medium used to transmit the message may also affect the ability to communicate (Belch & Belch, 1990).  Not only words and pictures but also sounds and colors may influence audiences differently, and perceptions and interpretations of them vary as well.

      Over the years, a basic model of the various elements of the communication process has evolved (Schram, 1995).  Two major participants in the communication processes are the sender and the receiver.  Two major communication tools are the message and the channel.  Four other communication functions and processes are encoding, decoding, response, and feedback.  Any extraneous factors are referred to as “noise”, which can interfere with the process and work against effective communication (Belch & Belch, 1990).

      The sender of a communication is the person or organization that has information to share with another person or group of people or a non-personal entity.  The communication process begins when the sender selects words, symbols, pictures, and so on to represent the message that will be delivered to the receivers.  This process, encoding, involves putting thoughts, ideas, or information into a symbolic form.  The sender’s goal is to encode the message in such a way that it will be understood by the receiver using words, picture, or symbols that are familiar to the target audience (Belch & Belch, 1990).  The encoding process leads to development of a message that contains the information or meaning the sender hopes to convey.  The message may be verbal, nonverbal, or symbolic.  A message must be put into a transmittable form that is appropriate for the channel of communication being used (Belch & Belch, 1990). 

       To better understand the symbolic meaning that might be conveyed in a communication, advertising and marketing planners need to focus attention on semiotics, which studies the nature of meaning and asks how our reality such as words, gestures, myths, signs, symbols, products/services, and theories acquire meaning (Ransdell, 1977).  Consumer researcher Michael Solomon noted,

            From a semiotic perspective, every marketing message has three basic components: an object, sign or symbol and an interpretant.  The object is the product that is the focus of the message (e.g., Marlboro cigarettes).  The sign is the sensory imagery that represents the intended meanings of the object (e.g., the Marlboro cowboy).  The interpretant is the meaning derived (e.g., rugged, individualistic, American).” (1999, p. 17)

       The meaning of an advertising message or other form of marketing communication lies not in the message but with the people who see and interpret it.  Consumers behave on the basis of meanings they ascribe to marketplace stimuli.   Thus, marketers must consider the meanings consumers attach to the various signs and symbols.  Semiotics may be helpful in analyzing how various aspects of the marketing program such as advertising messages, packaging, brand names, and even the nonverbal communications of salespeople (e.g., gestures, apparel) are interpreted by receivers (Mick, 1996).

      The channel is the method by which the communication travels from the sender to the receiver and can be divided into two types: personal and non-personal.  A personal channel of communication is face-to-face contact with the target audience such as salespeople have.  There is no interpersonal contact between sender and receiver in non-personal channels of communication, referred to as the mass media.  It consists of three major types, print and broadcast, and the Internet.  Print media include newspapers, magazines, direct mail, and billboards; broadcast media include radio and television (Belch & Belch, 1990). 

      The receiver is the person with whom the sender shares thoughts or information.  Generally, receivers are the consumers in the target market who read, hear, and see the sender’s message and decode it.  Decoding is the process of transforming the sender’s message back into thought and this process is influenced by the receiver’s experiences, perceptions, attitudes, and values (Belch & Belch, 1990).  Throughout the communication process, the message is subject to extraneous factors that can distort or interfere with its reception.  Such unplanned distortion or interference is referred to as noise. 

      The response is the receiver’s set of reactions after seeing, hearing, or reading the message.  It can range from non-observable actions such as strong feeling on the part of an individual to immediate action such as going to shop to purchase the product advertised on TV.  Feedback is the receiver’s response that is communicated back to the sender; it may take a variety of forms.

      In The Gap case, the sender is The Gap; the receiver is anybody who sees or reads the message from The Gap.  Encoding is the process of inputting the message in the channel.  The message is, for instance, “we have khaki, which is in fashion and fits you perfectly.”  The channel is a TV commercial or print advertising in magazines or newspapers.  Decoding is the process of the consumer’s understanding the message.  The response is the consumer’s behavior stimulated by, for instance, TV commercial or advertising.  Feedback may be having a good image of its products or making an actual purchase and noise is, for instance, a competitor’s promotional activities. 

 

Target Audience

      To communicate effectively with their customers, marketers must understand who the target audience is, what the audience feels about the company’s product or service, and what is the best way to communicate with the audience to influence its decision-making process.  It is important for promotional planners to identify the target audience before they make decisions as to source, message, and channel variables.

      In general, marketers look for customers who have similar needs and wants and thus represent some type of market segment, which can be reached with the same basic communication strategy.  As market segments get larger, marketers usually rely on broader-based media such as newspapers, magazines, and TV to reach them. 

      Though TV advertising enables the company to send a message to millions of consumers at the same time, it does not mean effective communication has occurred.  Even if the advertising message is processed, it might not interest consumers or may be misinterpreted by them.  Past studies have shown that nearly 20 percent of all print ads and an even higher percentage of TV commercials are miscomprehended by readers (Jacoby & Hoyer, 1982).  Thus the marketer needs to know how the target audience is likely to react to the message, which means it is important for the marketer to understand the receiver’s response process they go through in and how the promotion influences consumer responses.     

In recent years, much attention has focused on the consumer’s affective reactions to ads, especially TV commercials (Batra & Ray, 1986).  Advertisers are interested in consumers’ reactions to advertising because they know that affective reactions are an important determinant of advertising effectiveness since these reactions may be transferred to the brand itself or may directly influence purchase intentions.  One study found that people who enjoy a commercial are twice as likely as those who are neutral toward it to be convinced that the brand is the best (Amber & Burne, 1999).

      Consumers’ feelings about an advertisement may be just as important as their attitudes toward the brand (if not more so) in determining an ad’s effectiveness (Moore, Harris, & Chen, 1995).  The importance of affective reactions and feelings generated by advertising depend on several factors, among them the nature of the advertising and the type of processing engaged in by the receiver (Moore, Harris, & Chen, 1995). 

      Many advertisers now use emotional advertising designed to evoke feelings and affective reactions as the basis of their creative strategy.  Then is emotional advertising really effective?  What is effective advertising?

 

The Effect of Advertising

      The process consumers may go through in responding to marketing communications can be viewed from a number of perspectives.  Vakratsas and Ambler (1999) reviewed more than 250 journal articles and books in an effort to better understand how advertising affects the consumer.  They noted that, in trying to understand the response process and the manner in which advertising works, there are three critical intermediate effects between advertising and purchase.  These include cognition, the thinking dimension of a person’s response; affect, the feeling dimension; and experience, which is a feedback dimension based on the outcomes of product purchasing and usage.  They concluded that individual responses to advertising are mediated or filtered by factors such as motivation and the ability to process information, which can radically alter or change the individual’s response to advertising.  They suggested that the effects of advertising should be evaluated using these three dimensions with some intermediate variables being more important than others, depending on factors such as the product category, stage of the product life cycle, target audience, competition, and impact of other marketing components.  

 

In summary, the essential function of sales promotion is to communicate so sales promotion planners must understand the communications process.  This process can be very complex.  Successful marketing communications depend on a number of factors, including the nature of the message, the audience’s interpretation of it, and the environment in which it is received.  For effective communication to occur, the sender must encode a message in such a way that it will be decoded by the receiver in the intended manner.  Feedback from the receiver helps the sender determine whether proper decoding has occurred or whether noise has interfered with the communication process (Phillips, Bloom, & Mattingly, 1985). 

      Sales promotion planning begins with the receiver or target audience as marketers must understand how the audience is likely to respond to various sources of communication or types of messages.  For promotional planning, the receiver can be analyzed with respect to its composition, such as individual, group, or mass audiences, and the response process it goes through.  It is very important for promotional planners to learn about their target audiences and how they may respond to advertising and other forms of communication.

     

After sales planners determine communication objectives, they need to think about the promotional budget.  Ideally, the amount a firm needs to spend on promotion should be determined by what must be done to accomplish its communication objectives.  In many cases, promotional budgets are often determined using a more simplistic approach, such as determination of how much money is available or use of a percentage of a company’s or brand’s sales revenue (Belch & Belch, 1990).

 

Budget

Rapidly rising media costs, the ability of sales promotions to motivate trial, maturing of the product and/or brand, and the need for more aggressive promotional tools have also led to shifts in strategy (Marketers fuel promotion budgets, 1984).  Some marketers have used the allocation decision to stretch their advertising dollars and get more impact from the same amount of money.  General Motors recently reevaluated its advertising and promotional expenditures, and made significant shifts in allocations by both media and product (“Marketers Fuel Promotion Budgets,” 1984).

One of the factors which might influence budget allocation is the individual policy of the company or the advertising agency.  The agency may discourage the allocation of monies to sales promotion, preferring to spend their expenses on other marketing tools.  The agency position may be that promotional monies are harder to track in terms of effectiveness and may be used improperly if not under its control (Welch, 1993).  Both the agency and the client may favor certain aspects of the promotional program, perhaps on the basis of past successes, that will substantially influence where dollars are spent.

The size of the market will affect the decision.  In smaller markets, it is often easier and less expensive to reach the target market.  Too much of an expenditure in these markets will lead to saturation and a lack of effective spending.  In larger markets, the target group may be more dispersed and thus more expensive to reach.  To reach large markets such as New York, Chicago, or Los Angeles would be much more costly and would require a higher budget appropriation.

In an article on how allocation decisions are made between advertising and sales promotion, Low and Mohr concluded, “Organizational factors play an important role in determining how communications dollars are spent” (1999, p. 668).  The authors noted that the following factors, which might vary from one organization to another, influence the allocation decision:

(1)    The organization’s structure,

(2)    The use of expert opinions such as consultants,

(3)    Characteristics of the decision maker,

(4)    Approval and negotiation channels, and

(5)    Pressure on senior managers to arrive at the optimal budget.

The budget decision is not typically based on supporting experiences or strong theoretical foundations nor is it one of the more soundly established elements of the promotional program.  It seems obvious that many factors must be taken into account in the budget allocation decision such as market size and potential, specific objectives sought, and previous company and/or agency policies and preferences—all influence this decision.

 

Mass-Media Advertising

For many years, the promotional function in most companies was dominated by mass-media advertising such as TV commercial and print advertising due to the fact that they can appeal to a vast and desired target audience.  The inherent character of each influences the roles it plays in the overall marketing program.

 

TV

       It has often been said that television is the ideal advertising medium.  Its ability to combine visual images, sound, motion, and color presents the advertiser with the opportunity to develop the most creative and imaginative appeals of any medium.  The average American household watches over seven hours of TV a day.  Nearly 85 percent of the TV households in the United States have a VCR and many people have entertainment centers with big-screen TVs, VCRs, and stereos.  On any given evening during the prime-time hours of 8 to 11 p.m., more than 90 million people are watching TV.  Popular shows such as “Friends” or “ER” may have more than 30 million viewers (“Nielsen Media Research,” 2003).  This means that TV can not only convey advertising creativity and impact but also can reach a vast audience.

 

Magazines

       Although consumers have turned to TV viewing, not only as their primary source of entertainment but also for news and information, magazines have remained important media vehicles.  Print media such as magazines are not intrusive like TV and generally require some effort on the part of the reader for the advertising message to have an impact.  Over 80 percent of U.S. households subscribe to or purchase magazines while the average household buys six different magazines each year (“The Magazine Handbook,” 2003).  Moreover, magazines are the most specialized of all advertising media.  There is a magazine designed to appeal to nearly every type of consumer in terms of demographics, lifestyle, activities, or interests.  

 

Newspapers

      Newspapers represent the largest advertising medium in terms of total volume, receiving nearly a fourth of all advertising dollars (Belch & Belch, 1990).   Newspapers are a very important medium especially to local retailers and it is also used by national advertisers.  Newspapers are a broad-based medium that reaches a large percentage of households in a particular area.  In addition, newspapers can offer the advertiser flexibility, geographic selectivity, reader involvement, and special service such as audience information.  However, newspapers face increasing competition from such other media as TV, magazines, and the Internet as their lack of high-quality ad reproduction, and audience selectivity short life span, and clutter.  Thus newspapers are working to improve the quality of their circulation bases.

 

The Internet

The Internet is a worldwide means of exchanging information and communication through a series of interconnected computers.  The most popular component of the Internet is the World Wide Web (WWW), and its growth shows no signs of slowing.  Sources estimate that 85 percent of all college students use the Internet, with over 40 percent accessing it on a daily basis (McNulty, 2000).  For many students, it has become their first source of information for everything from school research to leisure planning.  Like broadcast or print, the Internet is an advertising medium.  Companies and organizations working to promote their products and services must consider this medium as they would television, magazines, or newspapers.  In 1999, $4 billion was spent by advertisers on the Internet to promote and sell their products (Greenwalt, 1999).  Advertising on the Internet employs a variety of forms and its advantage includes the ability to target markets, interactive capabilities, and relationship building.  However, not every company has been able to capitalize on the market potential of the Internet.  For instance, Procter & Gamble has experienced a problem with establishing a brand identity for its products on the Web, and Levi’s abandoned its attempt to sell its jeans through the Internet (Belch & Belch, 1990).  Companies have learned that merely putting up a homepage does not guarantee success and that the strategies that have worked effectively in traditional markets do not necessarily transfer well to the Internet.  Overall, the Internet offers marketers some very definite advantages over traditional media; however, there is ample scope for improving its use as an advertising medium at the same time. 

 

Summary of Mass-Media Advertising

      One of the most important elements of mass-media advertising is the advertising message.  While the fundamental role of an advertising message is to communicate information, it does much more.  The commercials on TV or the print advertising in magazines and newspapers are not only sources of information but also are a sources of entertainment, motivation, and sometimes irritation.  Advertising and commercials appeal to and often create or shape consumers’ problems, desires, and goals.  For the marketer, the advertising message is a way to tell consumers how the product or service can solve a problem or help satisfy or achieve goals.  Advertising can also be used to create images or associations and position a brand in the consumer’s mind as well as to transform the experience of buying and/or using a product or service.  Creativity underlies all messages in TV ads, in print ads, or ads on the web and it helps to create images and associations.  The creative development of mass-media advertising and its execution are crucial parts of a marketing program and are often the key to the success of a promotional campaign. 

     

Measurement of Effectiveness

Although the success of a sales campaign cannot always be judged in terms of sales, many advertising and marketing personnel believe that sales promotion must ultimately lead the consumer to purchase the product or service.  In any case all marketing managers want to know how well their promotional programs are working.  This information is critical to planning for the next period since program adjustments and/or maintenance are based on evaluation of current strategies. 

      Both the message and the means by which it is communicated are bases for evaluation.  Sometimes the message is memorable but does not achieve the other goals such as real purchasing.  One study showed that 7 of 25 products that scored highest on interest and memorability in Video Storyboard Tests’ ad test had flat or declining sales.  This indicates that every memorable advertisement does not lead the consumer to make a real purchase; however, a number of factors regarding the message and its delivery may have some impact on its effectiveness, including the illustrations and layout (Bird, 1994).

Media decisions also need to be evaluated.  Options include mass media such as TV, newspapers, magazines, and the Internet.  TV combines both sight and sound, an advantage not offered by other media.  Magazines can convey more information and may keep the message available to the potential buyer for a much longer time.  Newspapers and the Internet also offer their own advantages.  Media decisions could be evaluated by examining if the media can communicate the message in the most effective manner to the largest number of potential customers at the lowest cost (Belch & Belch, 1990).  

A number of studies have examined the effects of budget size on advertising effectiveness and the effects of various advertising expenditures on sales (Aaker & Myers, 1987).  Many companies have also attempted to determine whether increasing their advertising budget directly increases sales.  This relationship is often hard to determine, perhaps because using sales as an indicator of effectiveness ignores the impact of other marketing elements.  Though researchers know what should be evaluated to know the effectiveness of advertising, it seems there is no conclusive way to test advertising effectiveness in reality.

For decades advertisers have struggled with the fact that it is difficult to establish a direct relationship between advertising and sales.  As advertising budgets increase, so does the pressure for accountability.  However, there is some progress being made in this area.

One approach rapidly gaining acceptance is that of econometrics.  This method builds statistical models for predicting sales performance.  One promising effort is AdWorks2, a joint project undertaken by MMA (Media Market Assessment) and Information Resources and sponsored by ABC, CBS, Fox, and NBC.  In the AdWorks2 study, actual sales and data for over 1,500 brands in over 200 categories are analyzed to determine incremental sales effects that may arise from TV advertising.  Preliminary results show, for instance, that brands with at least 30 percent of their impressions in prime time had higher sales than other brands (Collier, 1998).  Another conclusion is that various forms of advertising support each other to achieve an overall greater effect; for instance, magazine advertising enhances the impact of a television commercial and vice versa; however, it is important to recognize that different measures of effectiveness may lead to different conclusions.

Though there is no sure way to test the relationship between advertising and sales, advertising has surely some effect on sales.  To measure its effectiveness, researchers can evaluate several elements such as the message of advertising or the media chosen and compare the relation of budget to sales. 

 

Summary

The objectives of sales promotion for fashion retailers are:

(1)   To communicate the store and brand image to its target customers,

(2)   To disseminate timely information and become a source of it,

(3)   To generate interest that will bring a flow of customers to the store,

(4)   To persuade customers to make purchase decisions,

(5)   To sell the merchandise to customers, and

(6)   To achieve a reasonable profit (Drake, Spoone, & Greenwald, 1992).

 

Throughout the planning of the entire process, it is important that a continuing promotional program should be established and executed.

All promotions should continually deliver a clear message about a company’s product or service in a creative way, by effective media, and with an appropriate budget so the company can expect the desired traffic of targeted customers to the store and make a profit. 


 

References

 

Aaker, D. A., & Myers, J. G. (1987). Advertising management (3rd ed.).

Englewood Cliffs, NJ: Prentice-Hall.

About Gap Inc. (2003). Retrieved March 13, 2003, from

http://www.gapinc.com/about/about.htm

Alexander, R. (1965). Marketing definitions. Chicago: American Marketing Association.

Amber, T., & Burne, T. (1999). The impact of affect on memory of advertising. Journal of Advertising Research, 29(3), 25-34.

Ary, D., Jacobs, L. C., & Razavieh, A. (1985). Introduction to research in education . New York: Holt, Rinehart & Winston.

Batra, R., & Ray, M. L. (1986). Affective responses mediating acceptance of advertising. Journal of Consumer Research, 13, 234-249.

Belch, G. E., & Belch, M. A. (1990). Advertising and promotion. New York: Irwin/McGraw-Hill.

Bird, L. (1994, April 7). Loved the ad. May (or may not) buy the product. The Wall Street Journal, p. B1.

Brisk, L. (1999, March 18). Gap primp for Oscars. Retrieved March 9, 2003, from http://www.adage.com/news.cms?newsId=24861

Collier, R. B. (1998, March). Predicting the sales effectiveness of advertising. Quirk’s Marketing Research Review, pp. 36-39.

Cuneo, A. Z. (1997, December 15). Marketer of the year. Retrieved March 8, 2003, from http://www.adage.com/news.cms?newsId=31159#

Cuneo, A. Z. (2002, April 25). Gap goes Hollywood for new push. Retrieved March 9, 2003, from http://www.adage.com/news.cms?newsId=34561#

Cuneo, A. Z. (2002, May 20).

Gap to increase ad spending. Retrieved March 9, 2003, from http://www.adage.com/news.cms?newsId=34804#

Cuneo, A. Z. (2002, November 13).  

In major switch, Gap uses discount promotion. Retrieved March 9, 2003, from

http://www.adage.com/news.cms?newsId=36561#

Cuneo, A. Z. (2002, December 3).

Gap turns to Burnett for strategic help. Retrieved March 9, 2003, from http://www.adage.com/news.cms?newsId=36675#

Data center. (2003). Retrieved April 11, 2003, from http://www.adage.com/datacenter.cms

Drake, M. F., Spoone, J. H., & Greenwald, H. (1992). Retail fashion promotion and advertising. New York: Macmillan.

Financial summary. (2003). GapInc.com. Retrieved April 10, 2003, from

http://media.corporate-ir.net/media_files/nys/gps/QFS.pdf

Gap Inc. 2002 annual report. (2003). Retrieved March 11, 2003, from

http://www.gapinc.com/financmedia/annual_reports/pdf/Gap_inc._AR_2002.pdf

The Gap, Inc. (2003). Retrieved March 14, 2003, from

http://www.hoovers.com/co/capsule/9/0,2163,11469,00.html

Garfield, B. (1999, August 16). Gap secretes sweet smell of ad success. Retrieved March 8, 2003, from http://www.adage.com/news.cms?newsId=15698

Greenwalt, L. H. (1999, December 15). Brokers who traffic in eyeballs: What advertising networks do and how to approach them. Internet World, pp. 1-4.

Jacoby, J., & Hoyer, W. D. (1982). Viewer miscomprehension of televised communication: Selected findings. Journal of Marketing, 46, 12-26.

Kingstone, A. (2002, May 4). Bridging the Gap. National Post, p. SP1.

Lee, L. (2000, April 24). Gaping holes at The Gap. Retrieved March 9, 2003, from http://www.globalexchange.org/economy/corporations/gap/bw042400.html 

Lockwood, L. (2003, March 3). Gap’s new ad campaign: A stretch. WWD, p. 35.

Low, G. S., & Mohr, J. J. (1999, January/February). Setting advertising and promotion budgets in multi-brand companies. Journal of Advertising Research, 39, 67-78.

The magazine handbook. (2003). Retrieved March 15, 2003 from http://www.magazine.org/resources/downloads/MPA_Handbook_02.pdf

Marketers fuel promotion budgets. (1984, September). Marketing and Media Decisions, p. 130.

McNulty, T. K. (2000, February). Fostering the student-centered classroom online. Retrieved April 5, 2003, from

http://216.239.33.100/search?q=cache:iVRjJChF0yIC:www.thejournal.com/magazine/vault/A3855.cfm+marketing+how+many+students+access+the+Internet+a+day%3F&hl=ja&ie=UTF-8

Mick, D. G. (1996). Figures of rhetoric in advertising language. Journal of Consumer Research, 22, 424-438.

Milestones. (2003). Retrieved March, 13, 2003, from

       http://www.gapinc.com/about/ataglance/milestones.htm

Moore, D. J., Harris, W. D., & Chen, H. C. (1995). Affect intensity: An individual difference response to advertising appeals. Journal of Consumer Research, 22, 154-156.

Munk, N. (1998, August 3). Gap gets it. Retrieved March 8, 2003, from

http://www.fortune.com/fortune/articles/0,15114,377542,00.html

Nevaer, L. (2001). Into-and out of-The Gap. Westport, CT: Quorum Books.

Nielsen media research estimate 102.2 million TV households in USA. (2003). Retrieved March 9, 2003 from http://www.nielsenmedia.com/newsreleases/2000/2000-01UE.htm

Phillips, P., Bloom, E., & Mattingly, J. (1985). Fashion sales promotion: The selling behind the selling. New York: Wiley.

Quarterly financials. (2003). Retrieved March 14, 2003, from

http://www-2.hoovers.com/quarterlies/9/0,2167,11469,00.html

Ransdell, J. (1977). Some leading ideas of Peirce’s semiotic. Semiotica, 19, 157-178.

Sanders, L., & Cuneo, A. Z. (2002, March 13). Gap selects NY start-up for creative work. Retrieved March 9, 2003, from

http://www.adage.com/news.cms?newsId=34231#

Schram, W. (1995). The process and effects of mass communications. Urbana: University of Illinois Press.

Solomon, M. (1999). Consumer behavior (4th ed.). Upper Saddle River, NJ: Prentice-Hall.

The 25 top executives of the year. (1999, January 11). Businessweek Online. Retrieved March 8, 2003, from http://www.businessweek.com/1999/02/b3611014.htm

Vakratsas, D., & Ambler, T. (1999, January). How advertising works: What do we really know? Journal of Marketing, 63, 26-43.

Welch, M. (1993, February). Upbeat marketers wield bigger budgets, shift marketing mix. Business Marketing, p. 23.

Welling, H. (2000, August). Gap direct adds depth to this khaki colossus. Apparel Industry Magazine, p. 40.

Women. (2003). Retrieved March 13, 2003, from http://www.gap.com/asp/Dept_index_all_paging.asp?pgnb=0&wdid=2010

 


 
comments powered by Disqus

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

The comments to this entry are closed.

Get posts by email address:

Delivered by FeedBurner








Blog powered by TypePad
Member since 09/2011