Competition: characteristics, types, and organizational applications

Old Navy began operations as an affordable option for trendy apparel in 1994. After years on intense, low-cost competition from Target, Kohl's H&M and Walmart, the company wisely introduced new products and prices aimed at the more upscale shopper beginning in July 2006. To do so, it revised its store design and began advertising campaigns in upscale women's fashion magazines such as Style, Lucky, Vogue and Marie Claire. Old Navy's new advertising slogan was, "get your fash'on" at Old Navy." They elevated the product line with better fabrics such as silk and leather and improved quality. Even so, Old Navy is still having a hard time getting customers to its store and is now trying to figure out its next turnaround strategy.

Six months isn't enough time to justify switching strategy. "If you can't make up your mind about what this brand is supposed to be and stand for in the marketplace, how can consumers be expected to figure it out?" (Marketing myths of January). Moving in yet another direction would likely do Old Navy more harm than good. Instead, Old Navy should try to figure out what about its strategy isn't working. It needs to look at its target audience, it positioning and product mix and its advertising campaign, just to name a few of the variables that can influence market success for the retailer.

Upscale retail competitors such as Abercrombie & Fitch, American Eagle Outfitter, J.Crew and Urban Outfitters are all performing well, but all Old Navy flounders. The reason is that they have found their niche in the market by targeting specific demographics while Old Navy seems to be aimed at everyone. Abercrombie & Fitch targets high school and college students; American Eagle Outfitters targets consumers 15 to 25; J. Crew targets slightly older, more affluent professionals; and Urban Outfitters aims for your adults aged 18 to 20.

Old Navy needs to pick its own niche, perhaps in the over 30 crowd where the competition isn't as entrenched. Old Navy needs to be careful to avoid overlaps with Gap and Banana Republic which are all part of the same company. Once Old Navy hones its target, it can do a better job of determining the product mix and positioning that will appeal to its intended audience.