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marketingnews 11.30.11

Gap’s new global marketing chief is helping the iconic brand rediscover its soul

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By Christine Birkner//Staff Writer

 cbirkner@ama.org

Images courtesy of Gap Inc.

o say that it’s been a chaotic year for marketers at San Francisco-based Gap Inc. is an understatement. Last October, Gap threw the marketing world and Gap loyalists for a loop when it unveiled a new logo, then within a week—in response to a steady stream of negative consumer feedback—it reverted to its classic logo. In February, Gap replaced its North American president and shuffled around its marketing organization, appointing a new global CMO and shifting its marketing operations from the company’s San Francisco headquarters to New York. Gap also created a New York-based “global creative center” to centralize its PR, design and production efforts. In May, Gap’s head designer, Patrick Robinson, was dismissed. In August, CEO Glenn Murphy blamed lackluster first-half earnings in part on the company’s marketing program. And last month, Gap announced that it will close 189 stores in the United States—or 21% of its U.S.-based Gap stores—by 2013 as part of its ongoing plan to reduce its U.S.-based square footage by 10% while it concentrates on expanding its international footprint and opening more stores in markets such as China. It’s safe to say that Gap is at a crossroads, and one of the people charged with steering the company into its next phase is Seth Farbman, the aforementioned new global CMO. Formerly the worldwide managing director at Ogilvy & Mather—which was brought on to handle Gap’s advertising needs earlier this year—Farbman brings extensive experience in marketing powerhouse consumer brands, having worked on campaigns for clients such as Coca-Cola and Time Warner Cable. He also founded Ogilvy’s sustainability marketing practice, OgilvyEarth— experience that meshes well with Gap’s recent cause-minded marketing efforts. Under Farbman’s watch, Gap is looking to its past to define its marketing future. The retailer is bringing its 1969 jeans line—so named in honor of the year that the company was founded by husband-and-wife team Donald and Doris Fisher—to the fore in its most recent marketing efforts, which feature vignettes from its hip-looking L.A. design studio in an attempt to position Gap as a fashion-forward brand. Marketing News caught up with Farbman to discuss this strategy, along with his plans for transforming the troubled 42-year-old brand.

Q: As Gap’s first chief global marketing officer, you have been charged with moving the iconic brand forward. That’s quite the challenge. Where do you begin? A: There’s been a lot going on, no doubt. For my role, from my vantage point, I begin at two places. The first is with people. I’m building a best-in-class marketing organization that’s a combination of people from inside and outside the company. A lot of my focus has been on structuring that team, building that team, so that we can further develop and execute the strategy in a truly global way. … Gap has traditionally been a North American company with overseas interests. That doesn’t work anymore. This is a global company and a global economy where a lot of our growth and expansion obviously will be outside of North America. That’s the first thing: building the team and finding the people. The second thing is really understanding the existing assets and the DNA of the brand that existed the day I walked in. The good news is that Gap as a brand, as a company, has a rich history, rich heritage, has been iconic for a number of years. As marketers, we look for ingredients in order to tell stories with our customers, and they exist. That’s not true in a lot of companies. A lot of companies have to search for what their soul is. Ours exists and simply needs to be re-found, reaffirmed and shared again with a whole new growing audience of people who I believe will embrace the brand in a very powerful way. Q: How many new hires are on the marketing team? A: We’re still trying to figure out what the right balance of the team is. We have a strong team in San Francisco that had been part of a leveraged model. They had part local and part global responsibility. We have marketing teams in our hub areas, in Tokyo and in London, and emerging in China as we launched there last year. We’re trying to figure out where the right placement of people should be in this balance between global and local. In New York, we’ve hired a half dozen new employees from outside the company and redeployed a number from inside the company. We expect to continue to grow. My view, in general, in marketing teams is it has to be just big enough but not any

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bigger. A smaller, very focused team is exactly what you need as you take a brand and re-center it, and start to express it in global markets. Q: Brand awareness obviously isn’t a challenge for Gap, so what would you say are the primary marketing challenges? Is it a brand identity question? Or positioning?

marketingnews 11.30.11

A: Everybody knows Gap; everyone’s aware of Gap. When we come into international markets for the first time, even there, there’s no awareness problem. We also have deep knowledge. People know the brand, or at least they think they do. Our challenge is two-fold. In North America, in particular, we actually have to change that knowledge because people feel like the Gap that they know is the Gap of yesterday. In fact, there’s a lot of invention going on inside the company; there are passionate people inside the company. We haven’t told those stories, so we’ve looked a bit too corporate over the past few years. In international markets, it’s simply to tell a greater depth of story so they understand what I think of as the shared values that we hold with them. As a strongly American brand, as an optimistic brand, one that comes from the founders, the husband and wife looking for an opportunity in a growing marketplace, it resonates especially well with our international audience. Really, it’s not about changing positioning or

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getting greater awareness, but about providing greater context and depth of knowledge and information about Gap, something we haven’t done as much of, especially in the past five years.

“We wanted to anchor people in a product that’s core to our brand and our company: denim. We’re a denim company.”

Q: So is getting into the personal stories of your employees and the history of Gap something you’re going to include more of in your marketing? A: The history of Gap actually is important because it gives us permission and authority to tell the story of today. It’s not a going backwards; it’s a moving forward. The design studio in L.A. was a perfect example, as I first came into the company, to find an existing story that demonstrated the same kind of energy and passion that the Fishers did 40-some years ago when they started the company. Focusing on employees during the fall campaign, that’s not a formula. It’s really focusing on the interesting, inventive, current and very connected things that we’re doing as a company. That story can be outside the U.S., as well. In the fall campaign, we wanted to anchor people in a product that’s core to our brand and our company: denim. We’re a denim company. [When] we started out, our name was ‘Pants and Discs,’ and it was all about selling jeans and records. To then show how an investment in talented people, in a place that is the heartbeat of denim in America, in an entrepreneurial, inventive and fun place like West Pico Boulevard, is how Gap is proving that this is real, that it continues to be a very contemporary and forward-looking brand. If you just start at the truth, that’s a pretty good place to start.

“A lot of companies have to search for what their soul is. Ours exists and simply needs to be re-found, reaffirmed and shared again with a whole new growing audience of people who I believe will embrace the brand in a very powerful way.”

Global CMO Seth Farbman

New Leadership Minding the Gap Gap’s business hit such turbulence in recent years that it impacted revenue, prompted the logo snafu and rattled C-suite veterans. In February 2011, Marka Hansen, president of Gap North America, departed after a 24-year career with the company in the wake of the logo redesign debacle in the fall. Art Peck, head of Gap’s outlet business, was named president of Gap North America, while Pam Wallack, president of Gap Adult North America, was named head of Gap’s new global creative center in New York. The global creative center was created to centralize creative resources—including design, marketing, fashion public relations and production—and drive more consistent results in North America. As part of the shifts, Gap selected its new global chief marketing officer, Seth Farbman, from its new advertising agency, Ogilvy & Mather Worldwide. “I expect more from our Gap business in North America,” said Glenn Murphy, chairman and CEO of Gap Inc., in a statement announcing the leadership changes. “The changes we’re making are intended to propel the brand to deliver the product and brand experiences our customers demand worldwide.” Murphy said that New York would serve as the “global epicenter for creativity for the Gap brand, which is exactly what we need to compete effectively here at home and internationally. This move will allow us to build upon the momentum demonstrated by our successful store openings in China and Italy.”

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Q: Let’s talk about the jeans, then. Gap used to be known for its staples such as khakis and T-shirts. Now you’re focusing on jeans. Why is that? How do you compete in a marketplace that’s increasingly interested in $300 designer jeans? Last year, Gap opened a creative design office near L.A.’s fashion district in a bid to boost the authenticity of its 1969 jeans brand. Tell me about that move and how it fits into the evolution of Gap’s brand message. A: Jeans are part of our DNA. It’s an amazing product area in that people still love them. Styles and fashion may change, but jeans never go out of style. People just love denim and we’ve got that rich heritage there. Two years ago when we completely redesigned our denim line and started calling it 1969, what we realized is that the market, having recognized denim as a higherend, more aspirational product line, that there had been an opportunity. Our brand’s view is that you should have the quality, the design, the fabrication, the development, all of those great things about premium denim but not at a premium price. The brand has always been about democratization, accessibility. It left a very nice market space for us that was really well-aligned with our brand. That continues today. If you go to L.A. where all the premium jeans are developed and designed, that’s the place that Gap should be. The people in [Gap’s L.A.] office have worked at premium denim companies. Because of our scale and our point of view, we’re able to take the same input, the same beliefs that people deserve these jeans and want these jeans, but give them at a price that’s more accessible. That’s been successful and that formula will continue to be successful. That’s part of the good thing about being as big as Gap. Q: Where do you think the Gap brand should fit in fashionminded consumers’ new high-low approach to fashion?

Q: How are you marrying the marketing message with the merchandise? Your marketing efforts lately all center around that 1969 jeans line, with fold-out print ads in Glamour and Vogue, and online videos filmed inside the L.A. design studio, positioning Gap more as almost an indie, designer-led brand than the mass-market retailer that it has come to be known as. What’s your strategy here? How do you make this message authentic? A: We have to raise the perceived value of the product. We’re not getting enough credit for the product that we have available every single day. The differentiation these days is not just functional, it’s emotional. It’s also about understanding what went into making the product when we share stories of the real designers, the real inspiration, when we tell stories about how the products are made and how they’re conceived, how you care for them.

“If you go to L.A. where all the premium jeans are developed and designed, that’s the place that Gap should be.”

Gap Goes More Global in October, Gap announced the closure of 189 U.S.-based stores as part of its goal to reduce overall square footage in North america by 10% by the end of fiscal year 2012. Meanwhile, as retail sales from outside North america increased 16% in the first half of 2011, the company said that it plans to triple the number of Gap stores in China, from 15 to 45, by the end of 2012. “the combination of our global strategy and formidable growth platform puts us in a strong position to expand our reach into the top 10 apparel markets worldwide,” said Glenn Murphy, chairman and CeO of Gap inc., in a statement. “in North america, we’re taking a number of steps to improve sales in the near term and i’m confident that with a strong management team in place, we’re well-positioned for sustained growth across the business.”

The Fashion of the Times 1969 1970 1971 1972

1973

Debuts “Fall into the Gap” jingle.

1974 1975

Goes public.

1976 1978 1979 1980 1981 1982 1983 1984 1985 1986

Opens first store outside the United States, in London.

Introduces its Individuals of Style campaign, featuring black-and-white photos of celebrities in Gap clothing, the first time the company uses celebrities as models.

Debuts award-winning Gap Khaki campaign, showing models dancing to various music genres, with taglines including Khaki Swing, Khaki Country and Khaki-A-Go-Go.

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

1998 1999 2000 2001 2002

2003 2004 2005

2006 2007 2008

2009 2010 2011

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is founded in San Francisco by Donald and Doris Fisher. Its name is a reference to “the generation gap” and the average cost of a pair of jeans in 1969 is $7.

Continues celebrity-studded strategy with Madonna and Missy Elliott.

(RED)

Launches (RED) campaign, with proceeds benefiting the Global Fund to Fight AIDS, Tuberculosis and Malaria. Introduces Classics Redefined, a marketing campaign featuring black-and-white photos of celebrities including John Mayer, Liev Schreiber, Lucy Liu and Sarah Silverman photographed by Annie Leibovitz.

Returns to holiday television campaigns after a three-year hiatus with its Holiday Cheer campaign.

Unveils new logo and reverts to original logo within one week after negative consumer feedback.

Shifts marketing operations from San Francisco headquarters to New York; hires company’s first global chief marketing officer.

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A: The kind of people we’re for—and a brand can’t be for everyone—the way they dress is not in terms of uniform. Many people like to buy the perfect 1969 denim and they may match it with a very high-end blazer. This is the way people dress today and we don’t have to own all of that. We don’t have to have the high-priced blazer that goes with the accessibly priced denim. We just have to make sure that our accessibly priced denim is of high enough quality and design and value that it all works together.

This is an important recognition for our brand, that we are part of people’s wardrobes; we don’t have to be 100% of it. It allows us to focus on what we do best, which are things like denim, khakis, and the absolute perfect T-shirt and white Oxford. It’s the foundation of the wardrobe because it’s a foundation of what makes them feel like their most authentic self every day.

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especially in this emerging social space in which we have not been doing as much as we should. It … let us know that if we have fun as a company, the consumer has fun and it’s automatically going to convert into something good. Q: Did you see an increase in sales as a result or was this more of a brand-building effort? A: It was more of a brand-building

“This is an important recognition for our brand, that we are part of people’s wardrobes; we don’t have to be 100% of it. It allows us to focus on what we do best, which are things like denim, khakis, and the absolute perfect T-shirt and white Oxford.” [We did] a very popular video about caring for your jeans. [The tip was] don’t wash them; freeze them. It was done by one of our wash specialists, Rob Crews. We went out in a journalistic style and spent a week with the designers, and started capturing their thoughts and started to ask them questions, and one of the things he talked about was when you wash your jeans, you’re damaging the [texture]. He likes to … put them in his freezer to kill the bacteria and it actually works. When you tell that story, what you get is a shared interest in value between the consumer and the company. When you tell personal stories about the product, it raises the value of the product in a very authentic way.

marketingnews 11.30.11

Q: Honestly, the magazine ads piqued my curiosity and made me want to give the 1969 jeans line another look. I’m guessing that’s what you’re going for? A: Absolutely. The magazine ads, in particular, were an attempt to do something inventive, new, in a traditional medium. Rather than placing a single-page ad showing our product, we thought we would extend this idea into a deeper storytelling in these mediums in a more engaging way. … We are connecting at a brand level rather than an individual product level. … We really want people to focus on: ‘Gap. Is that a brand for me? Do the people there and does the company share my beliefs and share my interests? Do I want to shop Gap versus buy that particular pair of jeans?’

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Q: Who’s Gap’s target audience? Historically, the brand was all about clothes for the masses, right? Are you keeping that mass-market approach or are you hoping that the 1969 campaign particularly resonates with the 20- to 40-year-olds who consider Vogue their fashion bible? A: The short answer is yes and the operative word is target. We’re shifting our target to be a bit younger, sort of the leading edge of the millennial generation: 28-year-olds. Historically, we’ve always been a cross-generational brand. We started by understanding the boomer generation in 1969. As the boomers matured, we focused on Generation X. …When [Gap] focused on the Xers, it didn’t leave the boomers behind. It’s the same now. As we focus on millennials, it doesn’t leave others behind. A 28-year-old is an influencer to all Gap customers. Generally, we tend to look towards the emerging generation for cues on style, music, etc. By focusing on them, we’re not leaving anyone else behind. We’re simply looking at what’s happening in culture now, which has always been a strength for Gap. … The millennial generation … is highly connected and influential. They consume media in a much different way. They’re much more engaged with brands that have a point of view, that have a narrative, and they are key to any brand as it establishes its strategy in the future. In a practical sense, this is the next generation of Gap customers. Knowledge is everywhere, awareness is everywhere, but we are differentially

focused on that target to bring along the next generation of customers. Q: The 1969 campaign also includes playful experiential elements such as the ‘Pico de Gap’ taco trucks, where customers in L.A., New York and Chicago can purchase tacos with Gap coupons or get free tacos for making same-day purchases of Gap’s 1969 denim. That seems like another attempt to humanize the brand and go after the counterculture consumers, the influencers. Was that your plan? How was the effort received? Do you do smaller marketing initiatives like that regularly? A: This is an important part of the marketing mix [because of] the shifting way people get information. It was so successful for us. We were in Los Angeles spending the week with our designers and merchants at the West Pico Boulevard design studio. I was thinking, what we need is the quintessential downtown L.A. experience. Nothing is more so than an L.A. taco truck. We had an L.A. taco truck come out, we had dinner, and the photographer decided [we should] go out and shoot some of our models outside the taco truck, and we turned it into an ad. … We had so much fun that we thought, how do we take this on the road? Our director of experiential marketing [helped] build this idea called Pico de Gap. It’s fun, it’s engaging, it’s branded without being overly so. It gets people talking, sharing content, and gives us something to talk about online,

thing, except we did give people a coupon to go back to stores and we did see good redemption of those. We also gave away denim. We could do much more; we were careful. We didn’t want to turn a fun and interesting way of engaging with customers into a roving store. It’s all part of the marketing mix and it’s all part of engaging again, especially with the millennial audience. Who doesn’t like celebrity chefs making tacos for $1.69? Q: How do you keep tabs on what those influencers think of Gap? Do you rely on social media listening tools to assess what consumers are saying about the brand? A: Of course there’s traditional research and that’s always important, but more and more, all of your research happens in real time every single day. We have not had the tools necessary to really capture that. Social listening is critically important. For being such a large retail company with so many stores, we get real-time data on what people like and what they don’t. Our North American president likes to look at employee purchases. When new product comes out into the store, we can know pretty quickly what the runaway hits are going to be because the employees on the first day are buying it. The employees are our target. Q: Why are your employees your target? A: For people to come and work at the Gap … these are not just people who are working at a store in a mall; these are people who are passionate about the product, about the brand, about how they help customers, about how they educate people on what’s new and what’s interesting. They ultimately just believe in the company, so they are an early indicator for us of what’s good and what’s not. If they’re excited, they help the consumer get excited, too. Q: With all of the changes going on in your marketing efforts, are you investing more heavily in market research to gauge your progress?

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A: We will, but not in a traditional sense. When you have a brand like ours that has such high awareness and knowledge, traditional brand tracking is not as helpful, so things like social listening, active communities, those are better places for us to put our investments. We’re still developing what a global view of that is and this gets back to this fundamental change we’re going through. We are entering markets like Chile, Panama, we opened in Australia this past year and we’ve got South Africa as a market that’s about to explode for us. We need to make sure we’re understanding the local customer but delivering a very consistent Gap set of messages. We’re an American brand with an American point of view. … It’s a balance between local needs and an aggregated view on how to meet them. Q: So I would assume that you would have to do more market research, at least initially, in your global markets, right? A: Absolutely. We recently launched in China and everyone is excited by China. We’ve done exceptionally well there. We had people lining up for hours around the block to come into our stores, and that’s a different marketplace; it’s a different mindset. It was really important for us to put a very senior marketing leader in China so that we could understand the audience a bit better and make sure that, culturally, we understood [them]. … But we don’t change who we are simply to mirror the local culture. Q: Speaking of your global efforts, according to Ad Age, the 1969 campaign is the first created with an eye toward distribution in global markets, whereas Gap’s previous campaigns were created in North America and then leveraged by overseas markets. Does this shift represent a new focus toward Gap’s growing global presence? You mentioned entering Chile, Panama, Australia and South Africa. Are you honing in on other specific markets as well? Going for global domination?

marketingnews 11.30.11

A: We’ve expanded the team for our international business quite a bit. This is where growth opportunity exists. When you look at the geopolitical landscape, there’s clearly an emerging middle class with more disposable income. There are markets that are maturing so rapidly and that is a great opportunity for us. China was a big one. In Panama City, the expansion is tremendous. There are entire continents that have yet to experience Gap unless they travel to the U.S. or other markets, so that’s a big part of our growth potential. When you see the brand embraced in places like Egypt or Australia, when you see how the world embraces the brand, it’s a reminder for us back in North America that the brand is relevant, that the brand is powerful and that the brand’s central tenets endure today just like they did when it began in 1969. Q: We’d be remiss not to ask about the logo change last year. Obviously, the company responded quickly to consumer feedback and switched back to the classic logo. Was the company surprised by consumers’ vocal response? What lessons did you learn from that? What do you think Gap’s prompt response in reinstating the old logo says to the marketplace about the Gap brand?

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A: What an amazing lesson, right? What happened—

and this happens with many companies—is you look past what some of your greatest assets are and you forget, at times, just how much passion people have with your brand, and you have to realize, as we did, that a company doesn’t really own its brand anymore. People own your brand. People have the ability to communicate about your brand, to talk about your brand, to engage with it much more than you do. It’s a wonderful thing if you embrace it, which is part of what we’re doing now. It was a stark reminder, a fast reminder, that people do care about this company and about this brand. … We have to move it from a deep interest to a deep engagement by being more open and transparent about what we do and how we do it. I think people will understand that we do appreciate the value that they have for the company. m

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For more on Gap and retail marketing:

article Minding the Gap: Retailer Caught in Logo Fiasco Branding experts react to Gap’s experimental logo change in this Marketing News Exclusives story.

Podcast Author Series: Shopper Intimacy This podcast offers a road map for creating winning retail strategies for retailers, brands and agencies. Visit MarketingPower.com/marketingnews.

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