Gap Five Forces
Five Forces Model is a framework used in the analysis of industry structure and profitability. This model evaluates the ability of company to assess their standing in the industry. Understanding the industries is essential for any firm to be successful. This model evaluates the risk of entry by potential competitors; rivalry among established companies; substitute products; bargaining power of buyers and bargaining power of suppliers.
Risk of entry by potential competitors
It is not difficult to enter the clothing industry and consumer switching costs are low, therefore, companies face many competitors who taking the same private label and give a challenge for the profit. It also is hard to establish a distinct brand name which helps the company generate profit and extend market share. The discount retailer who is Target however does a go job; he competes on price with trendy and becomes the second large retailer in America.
To compete with the challenge in the market, Gap Inc. reestablished a larger core of consumers who were brand loyalists. For instance, he created such higher end clothing lines as Banana Republic, Old Navy which targets price conscious’s consumers. In an industry where the right mix of product differentiation and price play a key role, these three brands allow them to be competitive and maintain a superior brand image.
Rivalry among established companies
There are a lot of experience specialty retailers in clothing industry, such as Gap, Abercrombie & Fitch, and American Eagle which are a disadvantage to the new firms as this industry is extremely competitive. Companies therefore should be up to date with fashion and customer satisfaction. For instance, Banana Republic was established in 1983, this helped Gap to stay in the business as a major retailer in businesswomen clothing. Gap also opened Old Navy stores in 1994 to compete with the existing discount retailers including Target and Sears. New entrants want to complete with
Risk of entry by potential competitors
It is not difficult to enter the clothing industry and consumer switching costs are low, therefore, companies face many competitors who taking the same private label and give a challenge for the profit. It also is hard to establish a distinct brand name which helps the company generate profit and extend market share. The discount retailer who is Target however does a go job; he competes on price with trendy and becomes the second large retailer in America.
To compete with the challenge in the market, Gap Inc. reestablished a larger core of consumers who were brand loyalists. For instance, he created such higher end clothing lines as Banana Republic, Old Navy which targets price conscious’s consumers. In an industry where the right mix of product differentiation and price play a key role, these three brands allow them to be competitive and maintain a superior brand image.
Rivalry among established companies
There are a lot of experience specialty retailers in clothing industry, such as Gap, Abercrombie & Fitch, and American Eagle which are a disadvantage to the new firms as this industry is extremely competitive. Companies therefore should be up to date with fashion and customer satisfaction. For instance, Banana Republic was established in 1983, this helped Gap to stay in the business as a major retailer in businesswomen clothing. Gap also opened Old Navy stores in 1994 to compete with the existing discount retailers including Target and Sears. New entrants want to complete with