GOOD NEWS CAMPAIGN

OVERVIEW
By the mid-1990s direct auto insurer GEICO had already enjoyed strong growth through the use of massmarket advertising, expanding beyond direct mail to include humorous television commercials. At the start of the new century GEICO scored a hit with its commercials that featured a cartoon gecko. In the spring of 2003 GEICO released a second, complementary effort, the ‘‘Good News’’ campaign.
‘‘Good News,’’ developed by the Martin Agency of Richmond, Virginia, was essentially a television campaign, although some of the material was recycled for radio spots. The commercials played off the familiar pattern of ‘‘good news, bad news’’ jokes. In each spot someone was told by another that there was ‘‘good news,’’ then learned that the good news had nothing to do with their predicament. Rather, the bearer of glad tidings had just saved a ‘‘bunch of money’’ on his car insurance by switching to GEICO. In one of the early spots, for example, a prisoner thought that his sentence had been commuted, only to learn that his lawyer’s good news concerned car insurance.
The ‘‘Good News’’ campaign was effective in carrying GEICO’s money-saving sales pitch, while the gecko advertisements served more to build the brand image, and a third campaign focused on a younger demographic. The company did not disclose how much of its more than $200 million ad budget was devoted to ‘‘Good News.’’ But it was clear that it worked: after the campaign began, GEICO’s brand recognition improved among consumers, and sales soared. Moreover, the ‘‘Good News’’ reversal-of-expectation ploy began to be adopted by consumers for comedic purposes, and they invariably mentioned GEICO by name. The value of such free advertising was incalculable.

HISTORICAL CONTEXT
A direct marketer of auto insurance that for nearly 60 years was dependent on direct-mail advertisements, GEICO began to spend an increasing amount of money on television spots in the 1990s.When legendary investor Warren Buffett acquired control of the company in 1996 through his holding company Berkshire Hathaway, Inc., GEICO allotted even more money to its advertising budget in order to meet the kind of growth that was expected. To get noticed GEICO and its ad agency, the Richmond, Virginia–based Martin Agency, looked to exploit humor in an industry that had traditionally adopted a serious tone in its advertising. Lacking the support network of State Farm, Allstate, and other agent-based insurers, GEICO made its humorous pitch on the basis of price and found a strong brand promise in the slogan ‘‘Fifteen minutes could save you 15 percent or more on car insurance.’’ Furthermore, because GEICO lacked the personal contact of an insurance salesman, it used humor to make the company seem less impersonal to potential customers, who needed to feel comfortable and confident, not to mention motivated, to place a telephone call—or later, log onto the Internet—to purchase a policy.
With an increasing amount of ad dollars at its disposal, the Martin Agency developed a wide variety of advertisements for GEICO. One, a television spot featuring a gecko (customers often mispronounced the GEICO name as ‘‘gecko’’), struck a chord in 1999 and became the anchor for the company’s marketing and the inspiration for a long-term advertising campaign. In 2003 GEICO and Martin developed the ‘‘Good News’’ television campaign, which ran alongside the gecko spots, sometimes back-to-back in 15-second clips. The gecko spots began to focus on reinforcing the GEICO brand, while the ‘‘Good News’’ spots reminded consumers of the insurer’s low-price promise.

TARGET MARKET
In general GEICO’s advertising targeted every person who owned a car and was required by law to carry insurance. But because older drivers tended to be loyal to their insurance companies, GEICO focused a great deal of its attention on a younger demographic, essentially 25 to 40 years of age, in hopes of peeling away customers from rival insurers. Younger drivers were especially attractive potential customers because they had not built up a relationship with an insurer and by nature were more willing to look around for a better rate. Having less money than most older drivers, they were also more price-sensitive and especially open to GEICO’s lower cost. For this group the absence of a personal relationship with an insurance agent was not deemed as significant a factor as the price of the policy. With their often irreverent and playful tone, the ‘‘Good News’’ commercials were especially effective in reaching younger consumers.

COMPETITION
When GEICO began its advertising push in the early 1990s, it was seventh in a crowded field of companies offering car insurance. As it moved up the ranks, its main competition was winnowed down to market leader State Farm, which had less than 20 percent of the business;
Allstate, with about half that amount; and the Progressive Corporation, a distant third. The big two spent hefty sums on advertising to remind the public of their individual brand promises: State Farm with ‘‘Like a good neighbor, State Farm is there,’’ and Allstate with ‘‘You’re in good hands with Allstate.’’ They were well entrenched with a strong core of loyal customers, and as conservative companies, it was not surprising that these insurers produced conservative advertising that focused mostly on their honesty and concern for their customers. Making a sales pitch on the basis of price was not part of the strategy and was almost beneath their image. Moreover, by emphasizing price State Farm and Allstate risked turning car insurance into nothing more than a commodity, the buying and selling of which was based on the lowest price possible.
Progressive, with more to lose to GEICO, quickly followed suit and increased its ad budgets. Thus, Progressive and GEICO forced their larger competitors to spend more advertising dollars as well. Allstate even began to compete in terms of price. But there was another reason why these insurance companies began to spend more on advertising: there were more profits to be made. Cars were better built and less prone to accidents. Moreover, the large baby-boomer population was growing older, driving slower, and experiencing fewer accidents. With fewer claims to pay out, insurers made more money, even if they lowered rates to lure business away from their rivals.
Because direct marketers such as GEICO did not have the expense of an agent network to support and could offer the lowest rates, the direct model became the fastest-growing segment of the auto insurance industry. GEICO had to continue to spend heavily on advertising to fend off a new breed of Internet direct marketers of car insurance. Traditional agent-based companies such as Nationwide, Hartford, Travelers, and AIG (American International Group) also began pursuing the direct model through their websites.

MARKETING STRATEGY
The ‘‘Good News’’ campaign broke on March 1, 2003, and adhered to GEICO’s successful three-part strategy. First, it used humor to make the television spots stand out; second, it reinforced the company’s brand promise, ‘‘Fifteen minutes could save you 15 percent or more on car insurance’’; and finally, it made a strong appeal for action, urging the audience to initiate contact with GEICO, especially via the Web.
The campaign began with a series of three television spots. In ‘‘Lawyer’’ a man waited in prison while his lawyer took a call and then pronounced, ‘‘Good news.’’ The prisoner hoped that he had gained his freedom but learned that, in fact, the good news was that his attorney had just saved ‘‘a bunch of money’’ on car insurance by switching to GEICO. This reversal of expectation was the pattern followed by all subsequent commercials in the campaign. In another of the initial spots, ‘‘Pitcher,’’ a baseball manager visited a pitcher on the mound with good news. The pitcher thought that he would be allowed to stay in the game but instead was told that his manager just saved money on GEICO; the pitcher was still on his way to the showers. The last of the three spots, ‘‘News,’’ featured a news anchor covering a volcano eruption. He told viewers not to worry because, despite the obvious disaster unfolding, there was good news: he had just saved money on his car insurance. The first wave of ‘‘Good News’’ commercials were effective but drew criticism as being somewhat nasty. Bob Garfield, critic for Advertising Age, called them ‘‘strikingly cruel.’’ The reason they were effective, according to executives at GEICO and the Martin Agency, as cited by Stuart Elliott of the New York Times, was ‘‘the added twist that the person being told the good news is on the outside looking in, almost chumplike, and is not invited to share in the good fortune.’’ Moreover, Elliott wrote, ‘‘The approach defies the hoary rules of so-called slice-oflife advertising, which require that the person serving as the sponsor’s proxy welcomes everyone else to change their lives wonderfully, too, by buying the product.’’ Although GEICO and the Martin Agency maintained that they received few complaints about the ‘‘Good News’’ commercials, the second round of five spots, which began airing in August 2003, were softer in tone. They also veered further away from the slice-oflife approach, as four of them focused on tricking viewers by parodying typical television fare. Brian Steinberg of the Wall Street Journal called them ‘‘situational commercials, ones designed to play off the shows consumers are watching.’’ One of the new spots spoofed a soap opera: a man told his lover the good news about his car insurance only to watch her storm out as he pleaded, ‘‘I saved. I thought that meant something to you.’’ Other programming that became grist for the mill included homeimprovement shows, televised congressional hearings, and infomercials (such as a parody of a hair-losstreatment product spot). To make the spots even more effective GEICO took care to shoot them on video rather than film and to air them during the type of programming that they tried to imitate—for instance, running the soap opera spot during soap operas and the prisoner spot with courtroom dramas.
GEICO and Martin also developed what they called ‘‘Mini- Campaigns,’’ a collection of humorous spots that began airing in 2004 along with ‘‘Good News’’ and the long-standing gecko spots. GEICO was now running three campaigns simultaneously, saturating the airways with 15-second spots that espoused the GEICO brand promise. In addition, each of the campaigns emphasized a different part of the marketing strategy. The gecko spots became more of a brand-polishing effort, while the ‘‘mini campaigns’’ mostly targeted younger viewers with their off-the-wall humor. For its part, ‘‘Good News’’ focused on GEICO’s savings pitch. The ‘‘Good News’’ spots were rotated constantly, with new ones occasionally added to the mix. In the spring of 2005, for example, GEICO unveiled a pair of new spots. ‘‘Speed Racer’’ was a parody of the classic cartoon series of that name. In it the hero, Speed, received a call from Trixie warning him that the bridge was out and that he was headed for disaster. ‘‘But I have good news,’’ she declared, then delivered the standard punch line to the bewilderment of Speed. The second spot featured personal trainer Tony Little, familiar to television viewers for his infomercial pitches. Once again, the viewer was tricked into thinking that the commercial was actual programming.

OUTCOME
It was impossible to determine how much credit the ‘‘Good News’’ campaign deserved for GEICO’s success, since it was initially paired with the gecko ads and then became one of three simultaneous TV campaigns. But there was no doubt that GEICO was pleased with the ‘‘Good News’’ effort. In August 2003 Edward Ward, GEICO’s vice president of marketing, told Elliott of the New York Times that, since the campaign had begun, the company was ‘‘ecstatic with the volume of phone calls and Web activity and sales.’’ He also told Elliott that results were ‘‘running at record levels.’’ The spots clearly resonated with consumers,who,much to the delight of themarketers, began to use the campaign as a source of humor in their own telling of jokes. ‘‘When a campaign slogan makes it into the common vernacular of popular culture, you know you’ve got yourself a hit,’’ wrote Rae Ann Fera for Boards in 2003. ‘‘Two famous instances of the tag being used—without duress or influence—are when an airline pilot and an on-air weatherman relayed bad news to their audiencewhile following upwith the good news that they [had] switched to GEICO.’’ Fera also reported that, after the spots began airing, GEICO’s unaided brand recall was the highest in company history.

GECKO CAMPAIGN

OVERVIEW
Relatively obscure until the 1990s, GEICO, a direct marketer of auto insurance, began to make its mark when it expanded beyond direct-mail solicitation and spent money on other media, especially television. Unlike rival insurers, GEICO took a lighthearted, humorous approach to its television spots, which produced steady growth for the company. Nevertheless, many consumers were still not certain about the pronunciation of the company’s name, often referring to it as ‘‘gecko’’ when calling for a rate quote. In the summer of 1999 GEICO aired a 15-second television spot that featured a cartoon gecko, a tropical lizard, conducting a press conference to tell people that it was not he but GEICO that could save them money on their car insurance and to please stop calling him. The gecko spot was just a single quirky commercial and was not intended as the start of a long-term campaign. But in reaction to an actors’ strike, GEICO instructed its advertising agency, the Martin Agency of Richmond, Virginia, to develop more gecko spots. The character became popular, and GEICO added more human features to him and created a new series of commercials featuring the gecko. In 2002, in a spot titled ‘‘The Meadow,’’ he ran through a field hand in hand with an adoring female customer. In ‘‘Big News,’’ a spot that aired in 2005, he urged fellow lizards to spread the news that GEICO could save people money. In the meantime GEICO released two other campaigns that ran alongside the ‘‘Gecko’’ campaign, which had become a general brand-building effort for the company but still received a hefty share of the more than $200 million that GEICO spent on advertising each year. Although it never garnered any major advertising awards, the ‘‘Gecko’’ campaign proved popular with consumers and played a major role in GEICO’s emergence as one of the leading auto insurers in the United States. In 2005, during New York’s Advertising Week, an annual industry event hosted by the American Association of Advertising Agencies, the gecko was named one of advertising’s top icons.

HISTORICAL CONTEXT
For 60 years, starting in the 1930s, GEICO was a relatively unknown automobile insurer that targeted federal government employees and noncommissioned military officers with its direct-mail pitches. By concentrating on customers with sterling driving records, it was able to offer low rates and carve out a profitable niche in the marketplace. In the 1990s GEICO, by then the seventhlargest auto insurer in the United States, looked to expand its client base. In 1994 it hired the Martin Agency to handle its advertising and add television, radio, and print to the marketing mix. The public company soon came into the orbit of Berkshire Hathaway, Inc., controlled by legendary stock-market investor Warren Buffett, who had owned GEICO stock since 1951. He took GEICO private in 1996 and made it a Hathaway subsidiary.
Commercials for car insurance were traditionally straightforward, serious appeals. To make GEICO stand out and to humanize car insurance, Martin decided to rely on humor. It also developed a brand promise in a slogan that would be reinforced campaign after campaign:
‘‘Fifteen minutes could save you 15 percent or more on car insurance.’’ Inherent in the promise was another key element in the marketing strategy: a call to action. Because GEICO insurance was not sold to brokers, customers had to be moved to mail in a response, call a toll-free phone number, or, with the advent of the Internet, visit the company’s website. To assure that GEICO was to customers more than a computer screen or a voice on the telephone, the agency also had to put a face on GEICO itself.
The new advertising emphasis quickly produced solid results for GEICO. The company had been writing approximately 26,000 premiums a year, but that number improved to 39,570 in 1995 and to 69,600 in 1996. When Buffett took control, GEICO was told to accelerate the pace of its growth strategy even more. Hence, ad spending increased from $10 million in 1995 to $270 million in 2000. With a great deal of money at its disposal and significant creative latitude, the Martin Agency produced a variety of humorous ads. In 1999 the creative team at Martin considered the common mispronunciation of GEICO as ‘‘gecko,’’ the small tropical lizard. This brainstorming session led to a single 15-second television spot, which gave birth to an advertising icon and initiated a long-term campaign for GEICO.

TARGET MARKET
GEICO and other automobile insurers tried to reach one of the broadest markets possible: virtually everyone who drove a car. ‘‘Who is GEICO selling to?’’ asked Seth Stevenson, writing for the online magazine Slate. ‘‘Pretty much everyone—man or woman, gay or straight, black or white, hip or hick. If you drive a car, they want your business.’’ Because older drivers tended to stick with their longtime insurers, GEICO hoped to appeal to a younger audience, roughly 25 to 40 years of age. GEICO vice president of marketing Edward Ward told USA Today ’s Michael McCarthy in 2005, ‘‘We have a lot of information that [says] those are the people who shop. We want to fish where the fish are biting.’’

COMPETITION
GEICO had to contend with well-entrenched competition. King of the hill since the 1940s was State Farm, which controlled nearly a fifth of the market. It had spent considerable sums to establish its own brand promise, one that did not rely on price: ‘‘Like a good neighbor, State Farm is there.’’ Second to State Farm was Allstate, with a share of more than 10 percent. It also had a wellknown slogan: ‘‘You’re in good hands with Allstate.’’ Less entrenched was the Progressive Corporation, which quickly stepped up its ad spending to fend off GEICO. Progressive also focused on price, making its mark through the use of the Internet and the promise to present its best quote alongside those of its chief competitors.
The heavy marketing activity of Progressive and GEICO forced Allstate to begin competing on the basis of price. While State Farm continued to remain above the fray in terms of pricing—stressing instead service and reliability—it felt enough pressure from the competition to increase its own advertising budget significantly. Furthermore, because of several factors, there were now greater profits to be made from car insurance, prompting insurers to scramble for more customers. One reason for the increased profits was that during the 1990s there were major improvements in the way cars were built, which resulted not only in fewer repairs but also fewer accidents. Also of importance was the graying of America: as baby boomers grew older, they began driving slower, again leading to fewer accidents, fewer claims, and greater profits for insurers. The fastest-growing segment of the auto insurance business was the direct model, as pursued by GEICO. In addition to State Farm, Allstate, Progressive, and other companies selling policies through agents—such as Travelers, Hartford, Nationwide, and AIG (American International Group)—GEICO had to deal with a new breed of direct marketers leveraging the power of the Internet. Another challenge was the fact that old-guard firms were beginning to use the Internet to add direct-sales capabilities to their offerings.

MARKETING STRATEGY
In July 1999 GEICO ran a television spot that featured a computer-generated cartoon gecko holding a press conference at which he declared, ‘‘I am a gecko, not GEICO. Please stop calling me.’’ GEICO’s Ward told Jim Lovel of Adweek, ‘‘It was a throwaway 15-second spot. . .It was an odd spot that didn’t fit, but we thought it was funny.’’ According to Lovel, ‘‘The gecko could have disappeared after the spot, if professional actors had not gone on strike that year. Because of the absence of talent, GEICO asked Martin to produce more spots with the gecko. The company was inundated with calls and letters from people who wanted to see more of the lizard.’’
The Martin Agency developed a number of television spots in 2000 in which the gecko, with his refined British accent, made the same point repeatedly: he could not save viewers money on their car insurance—only GEICO could. At the beginning of 2001 the agency proposed a change of tack to GEICO. Martin’s Steve Bassett, a senior vice president and group creative director, told Shoot magazine’s Sloane Gaylin that the agency’s creatives had thought it would be an interesting twist if the gecko gave up on telling people not to call him and decided instead to finally start working for the company. Out of this idea flowed several new gecko spots. In the one called ‘‘Audition’’ the gecko tried to land the GEICO spokesperson position and encountered an outof-work veteran of television commercials, the Taco Bell Chihuahua. Other spots in the series, ‘‘ ‘Hands,’’ ’ ‘‘Tail,’’ ‘‘Employees of the Month,’’ and ‘‘Food,’’ showed the gecko working at the GEICO office. In ‘‘Action Figures,’’ a parody of the movie Toy Story, a gecko doll broke up a fight between two action figures in a sleeping child’s bedroom while telling them about the GEICO’s affordability.
In order to make the gecko more suitable to these new scenarios, the animators reworked him to include more human attributes. In the press conference commercial the gecko had crawled on the microphone on all fours, but in later spots he moved on two feet and carried himself more like a person. Thus, in the 2002 spot ‘‘Meadow’’ he was able to hold hands, run down a beach, and spin around in a field with a woman. Although the gecko commercials proved popular, Martin developed two other television campaigns that ran in parallel: ‘‘Good News,’’ which consisted of comical spots in which someone told an unsuspecting person that they had just received good news, only to reveal that the news was that they had saved money on their car insurance; and a series of ‘‘mini campaigns’’ featuring a mix of humorous commercials. The three campaigns each carved out their own territory in GEICO’s overall marketing strategy. The ‘‘Good News’’ spots focused mostly on the cash-savings message, while the gecko spots became more of a brand-building vehicle, keeping the GEICO name front and center in the minds of consumers.
GEICO added another twist to the gecko-as-spokesperson spots in the fall of 2005. In the commercial ‘‘Big News,’’ the gecko, after two years of spots in which the only words he spoke were ‘‘well, hello,’’ delivered a pep talk to a group of other lizards in the woods, sending them forth to spread the big news that, by visiting geico.com, people could save hundreds of dollars on car insurance. Other spots featured the gecko encouraging other lizards to pitch GEICO. To exploit the gecko character even further, GEICO introduced an amateur filmmaking competition, giving people a chance to submit their ‘‘15-second conceptual movie trailers’’ involving the gecko character. The goal was to appeal to the 18- to 34-year-old demographic as well as to a create a viral campaign, one that would take on a life of its own and perhaps drum up some new ideas for using the gecko in future commercials.

OUTCOME
In the year after GEICO introduced the gecko character, the company generated sales of $5.6 billion. By the end of 2003 revenues had grown to $7.8 billion. It was impossible to say how much of that success could be attributed to the ‘‘Gecko’’ campaign, and with the launch of two parallel campaigns in 2003 and 2004, it became even more difficult to determine. There was no doubt, however, that the gecko had achieved the status of popculture figure. During New York’s Advertising Week in September 2005, the gecko tied with Juan Valdez, the face of Colombian coffee since 1960, as America’s favorite ad icon. The honor was determined by consumer votes. GEICO and the Martin Agency were still having fun with the character, as evidenced by the accolades they showered upon the gecko after it gained iconic status. In a press release Martin’s Basset commented, ‘‘He’s cute, he’s green, he works hard, he’s got a great attitude, and he could save people a lot of money on their car insurance.’’

PEOPLE RULE CAMPAIGN

OVERVIEW
In August 2000, in the midst of a collapse of the global personal-computer market, direct marketer Gateway, Inc., launched the ‘‘People Rule’’ branding campaign. Developed by New York advertising agency McCann-Erickson Worldwide, the campaign was built on the premise that average consumers were not getting the most out of their computers and would welcome more support from a PC maker.
‘‘People Rule’’ extended beyond television, radio, and prints advertising. It also included free help at Gateway Country stores in the form of weekly ‘‘Ask-a-Tech’’ sessions and clinics that taught the rudiments of computers and the Internet. The advertising portion of the campaign also included the company’s first use of a celebrity spokesperson: actor Michael J. Fox.
The $150 million campaign petered out in 2001, as Gateway underwent changes in the top ranks of its management and as McCann-Erickson was dismissed as the company’s ad agency. The campaign was disjointed from the start; all along McCann-Erickson was second-guessed by Gateway’s founder, who, in the middle of the campaign, brought in a documentary filmmaker to create a pair of television spots that clashed with the style of the ads the agency had developed. ‘‘People Rule’’ did little to prevent Gateway from losing a major slice of the market, and economic conditions were such that, in all likelihood, it had been a doomed effort from the start, no matter how effective individual parts of the campaign may have been.

HISTORICAL CONTEXT
In only a handful of years, Gateway, Inc., founded in 1985, grew from a $10,000 startup in Sioux City, Iowa, into one of the leading direct retailers of personal computers in the world, with annual sales approaching $10 billion. From the time it began advertising, Gateway took a folksy approach and played off its rural roots, featuring pictures of cows and even shipping its products in white boxes adorned with black spots resembling the markings of a Holstein cow. The company developed an in-house marketing team in the early 1990s but in 1997 hired an advertising agency, D’Arcy Masius Benton & Bowles. Gateway’s young founder, Ted Waitt, brought in an AT&T veteran, Jeffrey Weitzen, to run the company in January 1998, and one of Weitzen’s first moves was to change ad agencies. He hired McCann-Erickson Worldwide, with whom he had worked closely while at AT&T.
Business was booming for Gateway when McCann-Erickson took over the account, but the relationship with the client soon began to sour. In 1999 McCann-Erickson won Microsoft’s huge advertising account, after which Gateway officials became increasingly dissatisfied with McCann’s level of service. More importantly, in 2000 the global PC industry was hit by the worst slump in its brief history. Because Gateway relied greatly on the consumer and small-business markets, the hardest-hit sectors, it began to see a serious erosion in sales. Although revenues reached a record $9.2 billion in 2000, Gateway’s sales tailed off severely during the course of the year. Weitzen was under great pressure from Waitt to stop the bleeding, as was McCann-Erickson, Weitzen’s handpicked ad agency, which Waitt also criticized, considering its approach ‘‘more corny than folksy,’’ as reported by Aaron Baar and Kathleen Sampey of Adweek. It was under these difficult circumstances that McCann-Erickson launched its ‘‘People Rule’’ campaign in August 2000.

TARGET MARKET
Earlier in 2000 Gateway had employed the
‘‘Gateway@work’’ campaign, which targeted mediumsize businesses to boost sales in that market. The ‘‘People Rule’’ campaign focused on the other key sector, consumer sales. The company commissioned research that revealed that there was ‘‘a disconnect between people and technology,’’ as Brad Heimdichner, one of Gateway’s ‘‘technology ambassadors,’’ told Lyn Berry of the Denver Business Journal. According to Berry, a random sampling of 750 Americans showed that ‘‘69 percent of people who own personal computers believe they are not maximizing the potential of their personal computers. Only 32 percent said they even know the full potential of their computer.’’ The survey also revealed that 44 percent did not believe they had enough training on how to use their computers and did not have enough available technical support. Furthermore, just 15 percent believed that their computers delivered everything their manufacturers had promised. It was these dissatisfied, less technologically knowledgeable consumers that the ‘‘People Rule’’ campaign hoped to reach. As Heimdichner explained, ‘‘It’s Gateway’s promise to always put people before technology, and that’s why we’re focusing more than ever on helping people understand their technology.’’

COMPETITION
As the ‘‘People Rule’’ campaign broke in 2000, Gateway faced competition in the commercial market—in which Gateway ranked fifth at the time—from another direct marketer, Dell, as well as from IBM, Hewlett-Packard, and Compaq Computer Corp. About 70 percent of Dell’s sales came from large corporations and government organizations, but it had begun to commit greater resources to competing in the home-PC market, Gateway’s strength. Gateway ranked third in the global consumer-PC area with a 13.9 percent market share, trailing top-ranked Compaq and the number two company, Hewlett-Packard. But it was Dell that emerged as Gateway’s greatest threat in this market. Dell had perfected a build-to-order model that kept down costs by not keeping hardware stockpiled, and with its size came buying power that allowed it to offer PCs at low prices that Gateway and the others were unable to match. Moreover, a seemingly unlimited marketing budget allowed Dell to promote its affordable PCs around the clock on television and through other media. Ironically, it was a similar strategy of building affordable computers that had made Gateway an overnight success in the late 1980s, when Waitt found a way to assemble off-the-shelf components to make a computer that offered customers a better value than the competition. Gateway might have been able to undercut some of its other rivals in price, but it could not come close to matching Dell, which, at the time the ‘‘People Rule’’ campaign began, was starting a price war that crippled the competition. Dell quickly assumed the top spot in global PC sales, while Hewlett-Packard and Compaq joined forces through a merger and Gateway struggled to hang onto market share.
MARKETING STRATEGY
Gateway’s ‘‘People Rule’’ campaign was part advertising campaign, part educational program. The company leveraged its chain of 290 Gateway Country stores to offer a range of programs, a number of them free, to demystify technology for both consumers and businesses and to help them get the most out of their computers. Full-time computer experts, called ‘‘technology ambassadors,’’ were hired for the stores, which hosted weekly ‘‘Ask-a-Tech’’ sessions at which consumers could get free advice and have their computer problems analyzed. The ambassadors also held free mobile clinics and conducted outreach programs with local community groups. Free weekly clinics at the stores taught PC users—whether or not they were Gateway customers—a wide range of subjects, including PC and Internet basics, online investing, and the elements of digital photography and digital music. Gateway also increased the number of classroom and online training sessions it offered. The company’s Web presence was beefed up with the introduction of a ‘‘supportal,’’ a website intended to augment the technical support Gateway made available to its customers over the phone.
The $150 million ‘‘People Rule’’ campaign included television, print, and radio elements. Because it was in essence part of a long-term positioning of the Gateway brand, the advertising portion of ‘‘People Rule’’ focused on the brand more than on specific products. In the words of a press release announcing the launch of the campaign, the goal was to expand ‘‘the definition of ‘Gateway Country’ from the name of its revolutionary retail concept to a more human way to approach technology.’’
The first of four television spots McCann-Erickson developed showed a typical living room with a PC sitting unused, ignored by family members; two girls played while a father opened bills. A voice-over described the many uses of a computer but stated that none of them mattered if a person was not shown how to use it. Viewers were then urged to call or visit a Gateway Country store for help in unlocking the power of their PCs. In another of the early television spots a boy traded in his computer for a new one and then tried to trade in his little sister for a scanner. An ad called ‘‘Apartment,’’ which debuted later in 2000, was especially well received. It featured a young woman entering her date’s apartment and being surprised to see a series of framed pictures in which he posed with an odd assortment of celebrities: boxer Evander Holyfield, rock singer David Lee Roth, actress Marilyn Monroe, and Lassie, the canine star of TV and film. A voice-over posed the rhetorical question, ‘‘Wish you could add a little something to your photographs?’’ Viewers were then told that Gateway would help teach them all about digital photography. The television spots appeared on network television and national cable channels as well as on local television on a spot-market basis (as time slots opened up at attractive prices at the last minute).
To accompany the initial TV spot, a two-page print ad on the same subject appeared in a number of national and local newspapers. Further print ads were employed throughout the campaign. One of them incited the ire of Maryland’s state comptroller, however. A Gateway ad that ran in the Baltimore Sun on September 12, 2000, read, ‘‘Buy one now and we’ll pay the sales tax.’’ But ‘‘sales tax’’ was crossed out, ostensibly by a Gateway lawyer who in a handwritten note commented, ‘‘Can’t say this! Must say ‘we’ll offer a discount equal to the sales tax rate.’ ’’ It was intended to poke fun at the legal maneuvers in advertising but did not amuse the comptroller, who charged the ad was misleading and violated Maryland’s tax code prohibiting ‘‘tax sales.’’ He instructed his compliance division to force Gateway to drop the ad or change it.
The run-in with the state of Maryland was just one of a number of distractions McCann-Erickson faced as it launched the ‘‘People Rule’’ campaign. In late October Gateway, at the insistence of Waitt, circumvented the agency and began running a pair of commercials produced by documentary filmmaker Henry Corra, whose low-key, no-frills work included George, a film about his autistic son. Corra and Waitt had become friends in the mid-1990s, and the filmmaker had done some work for Gateway shortly before McCann-Erickson took over the account. Corra’s two new commercials were at odds with McCann-Erickson’s work. According to Stuart Elliott of the New York Times, Corra’s spots, ‘‘which are fast-paced and mix footage of actual shoppers shot in black-andwhite as well as color, contrast markedly with McCann’s, which are shot conventionally and feature actors.’’ McCann-Erickson was initially diplomatic about the situation, stating, through spokesman Stewart Alter, ‘‘The ‘people rule’ brand platform is a big one and it can accommodate a documentary approach.’’ But Elliott reported that a few months later, after McCann-Erickson and Gateway had parted ways, agency heads called Corra a ‘‘behind-the scenes thorn in our sides’’ and accused him of trying to ‘‘undermine the agency in many ways.’’ For his part, Corra commented, ‘‘I don’t think McCann understood what I did.’’ The relationship between McCann-Erickson and Gateway was clearly falling apart in the final weeks of 2000. At the same time, with the severe drop-off in sales during the fourth quarter of the year, Weitzen’s tenure as Gateway’s head was coming to an end. Adweek reported in December 2000 that Gateway was talking with East Coast ad agencies. When Waitt dismissed Weitzen and reassumed the CEO post in January 2001, McCann-Erickson’s prospects of keeping the Gateway account dimmed further. The agency made one last stab at saving the ‘‘People Rule’’ campaign. Actor Michael J. Fox was hired as Gateway’s first celebrity spokesman. In recent months he had been diagnosed with Parkinson’s disease and had established a foundation dedicated to find a cure for it. As part of the Fox advertising Gateway became the technology partner for the foundation. The premise of the new humorous television spots featuring Fox was that he was just like the target audience, overcoming technology challenges. Two weeks after the Fox portion of the campaign debuted, the McCann-Erickson ads were scrapped as Gateway dropped the agency.

OUTCOME
Early in 2001 Gateway was on the verge of hiring Minneapolis-based agency Fallon to replace McCann-Erickson, but Fallon too ran afoul of Waitt after it proposed a complete rebranding of Gateway. The company decided to handle its advertising in-house once again, trying its best to make use of Fox’s celebrity. But he proved ill suited to the task. As Frank Priscaro noted in MC Technology Marketing Intelligences, ‘‘One of the most important rules of using a spokesperson is to pick someone who tied in with the product in some way. Pretending that Mr. Fox is going through the rigors of buying a new computer himself doesn’t wash . . . Barring an obvious tie-in, a spokesperson should be famous, but not too famous, so he doesn’t steal the show. It’s nice that Mr. Fox would do these commercials, but he’s a lot bigger than Gateway is, and so he overshadows the campaign.’’
Aside from the problems that cropped up during the ‘‘People Rule’’ campaign, the effort appeared to have been ill fated from the start. No one questioned that consumers wanted help in getting the most out of their computers, but when it came time to buy a new PC, they generally opted to get the most features for the lowest price—a lesson Gateway itself had taught the market. At the time, Gateway simply could not match Dell in terms of price, and no amount of in-store tech sessions, arthouse commercials, or celebrity endorsements could stem the tide of eroding sales.

THIS IS EASY CAMPAIGN

OVERVIEW
Gap, Inc. was established in 1969 with the purpose of selling one product: Levi’s jeans. In 1991 Gap cut its ties with the Levi’s brand and limited its merchandise offerings to Gap’s private-label brand of jeans, khakis, and colorful one-pocket T-shirts, which had been introduced beginning in 1974. Despite the company’s profit and sales growth through 1991, sales went into a slump in 1993 and 1994, increasing just 1 percent each year. The chain reported no sales growth in 1995. As the downward slide continued, Gap began looking for ways to expedite a turnaround. Part of the strategy included opening more than 200 new stores in 1996, and in 1997 its in-house marketing team created a new brandbuilding campaign titled ‘‘This Is Easy.’’
Gap’s $15 million ‘‘This Is Easy’’ television campaign was introduced in April 1997 to promote the company’s line of Easy Fit Jeans. Although a few Gap commercials appeared on television during the early 1990s, the ‘‘This Is Easy’’ campaign marked the company’s first significant journey into television advertising since the mid-1980s, when the Gap opted to put its marketing efforts into print advertising. The spots were intended to renew enthusiasm and boost sales at Gap stores, which in 1996 showed the poorest sales performance of the three Gap Inc. divisions—Gap, Old Navy Clothing, and Banana Republic. Gap was also responding to the highly competitive market for denim jeans by reasserting its strong brand image.
The renewed foray into television and increased spending on advertising helped Gap achieved its goal of growing sales and boosting its brand image. Following the campaign’s launch in 1997, sales increased 23 percent from the previous year. BusinessWeek listed Gap 17th on its 1998 list of best-performing companies, and the chain announced plans to open 300 new stores that year. Also in 1998, Gap began a new global marketing campaign that was a modified version of its ‘‘This Is Easy’’ campaign.

HISTORICAL CONTEXT
The Gap skated along relatively smoothly after its inception in 1969 until the mid-1990s, when management realized that other retail companies were imitating its store design and products, essentially relegating the Gap to being just another retailer. The stacks of jeans, khaki pants, and multicolored one-pocket T-shirts that could be purchased at every Gap turned up in other stores, often at lower prices. Sales figures reflected this turn of events. BusinessWeek reported that, although profits at stores that had been open for more than a year had grown an average of 12 percent from 1986 to 1991, earnings skidded in the mid-1990s. Sales grew a mere 1 percent in both 1993 and 1994, and there was no growth in 1995. Donald Fisher, Gap founder and chairman, confessed to BusinessWeek, ‘‘We were looking at ourselves as a store rather than a brand. When you do that, you draw thick, heavy lines around your freedom.’’
Marketing strategies were shifted, and the company’s upper management made efforts to solidify Gap’s brand image. Millard ‘‘Mickey’’ Drexler, Gap’s president and CEO, studied companies with strong brand presence, such as Coca-Cola, McDonald’s, and Nike, and concluded that Gap should follow in their footsteps. According to BusinessWeek, Drexler discovered that ‘‘the first thing that hits you is that you can buy [such highly branded products] in a lot more places than you can buy Gap.’’ The company, therefore, opened 203 new stores in 1996 alone. Drexler also introduced new products, such as nail polish and perfume, and he decided to invest more time and money in advertising. Drexler told Advertising Age that, in addition to building the brand, ‘‘We also realized we had to expand what advertising and marketing mean to this company.’’ The Gap, reported BusinessWeek, increased its advertising budget and spent an estimated $90 million in 1996, compared to $64 million in 1995, and comparable store sales (sales at stores open for more than a year) jumped from being flat in 1995 to a 5 percent increase in 1996.

TARGET MARKET
The Gap’s appeal had spanned generations, and thus its target market was also wide-ranging. When the company opened its first store in 1969 and sold Levi’s jeans, it appealed largely to the youth market, consumers between the ages of 15 and 25. The Gap attempted to expand its core consumer group in the 1970s by adding additional clothing items and active wear, but for the most part its popularity through the 1980s remained with teenagers and the youth market. In the 1990s, however, Gap began to open more stores and offer new products to expand its consumer base.
The Gap customer, regardless of age, appreciated comfortable, simple clothes and went to the Gap for its ease of shopping and inventory of classic styles. In a conversation with MSNBC Business Video, Warren Hashagen, Gap’s senior vice president and chief financial officer, explained the diversity of its consumers: ‘‘[The Gap] is certainly a company that likes to think of itself as relevant to the youth of America as well as people of all ages.’’ Through its merchandise the company ‘‘give[s] a consistent message to the customer how easy it is to take clothes from our store and mix with their own wardrobe for their own style.’’ June Beckstead, Gap’s vice president of product design for the women’s division, asserted that Gap clothes appealed to the full spectrum of consumers.
She told the Wall Street Journal, ‘‘We dress
America. . . . You walk down the street, and you see people wearing our clothes. They’re young and old, they’re hip and they’re not.’’
For the ‘‘This Is Easy’’ campaign the Gap chose to hone in on the target market that consisted of younger men, including teenage boys. The men’s line had not performed as well as the other divisions, and Gap wanted to lure back male customers. Alice Ruth, an analyst at Montgomery Securities, told the Wall Street Journal that the men’s clothing line had suffered because it had gotten a bit too trendy and because the Gap had deviated from its reputation as a store that offered wardrobe basics such as jeans, khaki pants, and solid-colored T-shirts. The Gap hoped to reassert its position in men’s clothing by focusing again on the basics. In the Wall Street Journal McCadden explained the ‘‘This Is Easy’’ campaign’s message to men:
‘‘Gap offers you all the pieces. No matter who you are there is something at the Gap for you.’’

COMPETITION
Because the Gap was a major retail clothing chain as well as a manufacturer of private-label clothes, it faced competition in virtually every corner. When asked during Biz Buzz, a business-oriented show on the cable network CNN, about the companies that provided competition, McCadden responded, ‘‘In the case of Gap, probably just about everyone. I mean we’re [a] very large, very broad brand . . . I think how we view the brand and how we manage the personality and the message of the brand really isn’t in relation to competitors.’’ Hashagen, in an interview with MSNBC Business Video, agreed with McCadden and stated that the Gap provided a level of quality and service that set the company apart from its competitors. Hashagen noted, ‘‘there’s always a tremendous amount of competition in retail. We think of our business as being a great value . . . The quality of the product, how long it will last, how well it works with your other wardrobe items or our store, the service level you get, how easy the store is to shop and all of that is meant to give a good value overall.’’ Regardless of whether Gap stores possessed a competitive edge over other retail and private-label companies in terms of value and brand identity, the lack of sales growth in the early 1990s indicated that the company needed to adopt new strategies to boost profits. Competition from stores that imitated Gap’s core products and display styles prompted the company to strengthen its brand identity and provide a constant flow of new products. In fact, approximately every six weeks Gap stores introduced and rotated styles. Robyn Waters, the trend director for Dayton Hudson’s Target Stores, told the Wall Street Journal, ‘‘If there is anything we emulate it’s [Gap’s] great core product and the constant flow of newness and fresh product all the time.’’
According to figures from the market-research specialists NPD Group, published in the San Francisco Examiner, the jeans industry exploded in the 1990s, hitting $8.7 billion in sales in 1996 alone. This reflected a 10 percent increase over sales in 1995. Beverly Butler, a spokesperson for Gap, said, ‘‘It’s a really crowded market and getting more so.’’ Designer labels such as Tommy Hilfiger and Nautica entered the jeans market, and private-label jeans by Sears and J.C. Penney grew in popularity. BusinessWeek published data compiled by NPD Group that indicated a considerable increase in the market shares of private-label jeans, from 16 percent in 1990 to 25 percent in 1997. The Gap, as the largest manufacturer of private-label jeans, held some of this valuable market, but as flat earnings demonstrated, it needed more.

MARKETING STRATEGY
The Gap’s brand-building ‘‘This Is Easy’’ campaign debuted on prime-time television on April 27, 1997. In the initial two-week period the first six spots were aired nationally more than 600 times on the major networks and also on cable channels, including MTV, ESPN, and Comedy Central. As McCadden explained to the Los Angeles Times, ‘‘That whole campaign of easy-fit jeans really springs off a 28-year history at Gap of personal style . . .What we’re doing right now is simply taking what’s been a core equity and carrying it to new mediums.’’ The resurrection of the ‘‘Fall into the Gap’’ theme and jingle served both a nostalgic and marketing purpose. McCadden elaborated, ‘‘It subtly says to someone, ‘This brand has a great history. You’ve trusted this brand for a long time.’ ’’ Jeans were selected as the Gap product that best represented the brand image.
The decision to return to national television advertising in full force after a hiatus of nearly a dozen years was necessary to achieve the ubiquity of a well-known brand. As Drexler related to Advertising Age, ‘‘TV was critical for us . . . You can’t consider yourself a serious marketer without, in fact, having a major presence in TV long-term.’’ Hank Wilson, a consumer-goods analyst for Hambrect & Quist, voiced his agreement in the Los Angeles Times when he stated, ‘‘The Gap is of a size and scale where traditional television advertising can yield the kinds of awareness improvement that they would probably like to see.’’
The ‘‘This Is Easy’’ television spots featured jeansclad celebrities singing, playing musical instruments, dancing, or performing other artistic specialties they considered to be easy. The Gap’s choices of celebrities were designed to attract as wide a range of viewers and consumers as possible. Younger stars drew in the youth market, while older celebrities were chosen to appeal to a more mature crowd. Each spot was filmed against a stark white backdrop to evoke the Gap’s simple and easy style and ended with the Gap logo and the tagline ‘‘Easy Fit Jeans.’’
The first spot starred rapper and actor LL Cool J. Outfitted in Gap jeans and T-shirt, LL Cool J offered his take on what he considered to be ‘‘easy.’’ McCadden explained the concept of including celebrities in the television spots in his conversation on CNN’s Biz Buzz when he said, ‘‘The whole idea of that campaign is about personal style, and what we do is we invite the stars to come, and the first 20 seconds is about them. It’s what’s easy for them. They wear our easy fit jeans. LL arrived on the set and had actually written that entire rap himself about the Gap.’’ The pervading theme of what is easy also conveyed the message that Gap provided ease in shopping, especially for males. McCadden told the Los Angeles Times, ‘‘The message is that we’ve figured it out for you. We’re going to make this as easy as it can be.’’
LL Cool J’s rap started with ‘‘I know you like your outfits stylish. Any other line but the Gap is childish. Everybody working there’s a personal stylist. You’re fallin’ once you hear the Gap callin’,’’ and it included ‘‘‘G’ is for gritty, ‘A’ is for always, ‘P’ is for power and the people.’’ To conclude the 30-second spot, LL Cool J stated, ‘‘How easy is this? Fall into the Gap,’’ and he then threw a kiss to viewers. Although the spots promoted Gap’s Easy Fit Jeans, the company and product being pushed were not revealed until the end of the ads, when the tagline and Gap logo appeared. ‘‘This Is Easy’’ included four additional television spot during the initial campaign launch. Two spots featured actors Lukas Haas and David Arquette, with Haas playing the keyboard while Arquette accompanied on the trumpet. Arquette ended by stating, ‘‘This is definitely easy,’’ and the ‘‘Fall into the Gap’’ theme was heard. Rounding out the ads were two spots with actor Eric Mabius, who beat on conga drums and concluded, ‘‘This is really easy.’’
At the beginning of July 1997 the company initiated a radio campaign and introduced several new television spots. The two radio spots featured LL Cool J and the musicians Junior and Tanya Rae Brown and ran in major markets that included Los Angeles, San Francisco, Chicago, New York, and Boston. One of the new television spots showed ballet star Nikolaj Hubbe dancing in jeans and sneakers, with jazz piano music in the background. Hubbe announced, ‘‘This is super easy,’’ and he finished by performing pirouettes to the ‘‘Fall into the Gap’’ theme. The Hubbe spot debuted in United Artists Cinemas, where it ran for a month before moving to television. The other new spots featured actors Peter Berg and William H. Macy and country music stars Junior and Tanya Rae Brown. Macy, who appeared in the motion picture Fargo, played a harmonica, and Berg, star of the television show Chicago Hope, strummed an electric guitar. Junior Brown performed on his ‘‘guit-steel,’’ a guitar and slide steel combination he created, while his wife played a guitar. Brown surmised, ‘‘This is totally easy,’’ and the spot closed with the signature theme.
The Gap continued its tradition of using the print medium and invested heavily in outdoor advertising. The company also used its stores as an advertising venue, putting approximately 170,000 posters in its windows. Billboards displayed the Gap ads, and enormous outdoor signs known as spectaculars, which were large enough to cover the entire side of an office building, appeared in major cities. McCadden, in his discussion on Biz Buzz, explained, ‘‘The whole idea behind them is to really present Gap jeans in a different format . . . [W]e like the idea of the walls because they just present it to the consumer in sort of a new . . . light. And they’re also—you know, they’re larger than life.’’ In 1998 the campaign was revised and a new series of commercials was released to promote another of Gap’s jeans styles: Original Fit Jeans. The new campaign included television spots and prints ads that followed a format similar to that of the ‘‘This Is Easy’’ effort. No specific budget for the campaign was released, but a company spokeswoman told Women’s Wear Daily that it was Gap’s ‘‘biggest campaign to date.’’ The four 30-second television spots, which were released in July, featured music stars from various genres, from blues and jazz to hip-hop and rap. Appearing in the spots were blues guitarist Kenny Wayne Shepherd, singer and rapper Missy Elliott, legendary trumpeter Herb Alpert, and hip-hop group Run-DMC. In a press release Gap described the campaign as a ‘‘tribute to originality.’’ Each spot included the chain’s familiar white background and the theme ‘‘Fall into the Gap.’’ The print ads showed models dressed in Gap’s Original Fit Jeans. Ads ran in consumer magazines such as Vanity Fair, Vogue, and Rolling Stone beginning in August. The campaign also included billboards displayed in 24 cities worldwide that featured models wearing Gap Original Fit Jeans.

OUTCOME
The return to television and the increase in spending paid off for Gap. According to BusinessWeek, Gap’s 1997 sales increased 23 percent from 1996, and the company ranked 17th on BusinessWeek ’s 1998 list of best performers. Industry executives applauded the Gap’s marketing efforts and brand-building campaign, and it became the company to emulate. Alan Millstein, a retail analyst and publisher of Fashion Network Report, told Advertising Age, ‘‘They made their name into a brand . . . They are one of the few retailers that has that luxury.’’ Sergio Zyman, senior vice president and chief marketing officer at Coca-Cola, agreed: ‘‘The Gap accelerated to the point that the brand is on fire . . . There is no competitor who has a kind of brand essence that can pose a threat.’’
The Gap showed no signs of slowing down. The company announced plans to open 300 new Gap stores in 1998, and by May 1998 the company operated more than 1,000 Gap stores, up 15 percent from the previous year. Hashagen told MSNBC Business Video, ‘‘I think if you have a good store, a destination people want to shop at, you can have quite a few of them.’’ The Gap appeared poised to become ubiquitous. According to Stores, Fisher believed that there was plenty of room for more Gap stores: ‘‘When you look at the total number of dollars spent on our kind of apparel, we’re a small market share player. I think Wal-Mart does $30 billion and they continue to grow, so I have every reason to believe that we will continue to grow as well.’’
While the 1997 and 1998 marketing campaigns and store-expansion efforts seemed to pay off with increased sales and praise from industry insiders, trouble was looming on the horizon for Gap, and it was coming from its sister chain Old Navy. In 1999 Gap was reporting that sales were flat or down compared to the previous year, versus Old Navy, which had increases of 20 percent. Old Navy, with its bargain-basement prices on products that were similar to those that Gap was selling, was winning away Gap’s customers. Gap’s clever advertisements with music stars that crossed generations were beginning to have a negative effect as well. Analysts complained that Gap lacked focus. Bob Buchanan, an analyst with A.G. Edwards, told BusinessWeek, ‘‘I’ve got a problem when I see Gap trying to appeal to people age 12 to 60.’’ In late 1999 Gap announced plans for a new marketing campaign to kick off the 2000 spring season. It shifted its focus from jeans and basic khakis and tees to its fashionforward sportswear in bright colors. Also in a change from its 1997 and 1998 efforts, the new campaign had no tagline.

KHAKIS CAMPAIGN

OVERVIEW
On April 23, 1998, Gap Inc. launched a global advertising campaign for its chain of nearly 1,600 casual-clothing stores. This campaign, created by Gap’s in-house agency, Gap Direct, focused on the company’s khaki pants. The U.S. khakis market was growing at a rapid rate. Younger consumers fueled the expanding market as they increasingly eschewed blue jeans, the traditional badge of youth culture, because their baby-boomer parents often wore denim. Furthermore, ‘‘business casual’’ clothes, including khakis, were gaining acceptance as appropriate professional attire. In an effort to claim a greater portion of the khakis market, as well as to burnish the Gap brand, Gap dedicated an estimated $20 to $30 million to its 1998 ‘‘Khakis’’ campaign. The initial three commercials sought to ‘‘reinvent khakis,’’ according to a Gap news release. Each spot was set to a distinct type of music and featured active young adults sporting different styles of Gap khakis. In ‘‘Khakis Rock,’’ skateboarders and in-line skaters executed moves to the music of the alternative rock band Crystal Method, while ‘‘Khakis Groove’’ portrayed energetic hip-hop dancers and funk music from Bill Mason. The most popular and acclaimed ad of the trilogy was ‘‘Khakis Swing,’’ in which stylish khaki-wearers expertly swing danced to Louis Prima’s ‘‘Jump, Jive an’ Wail.’’ The spots, which ran during such high-profile programs as Ally McBeal and ER, used Gap’s trademark white background and showcased Gap’s newest varieties of khakis—flat front, low rise, slim fit, and cargo. Print and outdoor ads also appeared in major markets and in national magazines such as Spin and Details. ‘‘It’s about what you bring together to khakis, and what you want that look to say about you,’’ a Gap representative stated in the May 25, 1998, Daily News Record in an effort to explain the underlying premise of the campaign. Once known as comfortable ‘‘old man’s’’ clothes and then as the preppy pants of the 1980s, khakis were presented as the ultimate in cool in this campaign.
The campaign was an immediate success. Consumers were effusive about the commercials, and Gap’s sales soared after the release of the ads. A USA Today AdTrack survey revealed that younger consumers—a key target for the campaign—responded particularly favorably to Gap’s new message. By March 1999 the company had created a new trio of ‘‘Khakis’’ ads: ‘‘Khakis A-Go-Go,’’ with a 1960s-inspired soundtrack; ‘‘Khaki Soul,’’ set to soul music; and ‘‘Khaki Country,’’ which featured line dancers and the music of country star Dwight Yokum.

HISTORICAL CONTEXT
The Gap was founded in 1969 when Doris and Don Fisher opened a San Francisco store that primarily offered Levi’s blue jeans. Although the couple had originally planned to name their business PAD, they settled instead on the Gap, in honor of the generation gap that defined the young baby boomer generation. The company rapidly expanded in the 1970s, debuting private-line labels, of which ‘‘Gap’’ eventually became the only brand offered in the stores. The company developed a loyal following of teenagers and young adults, who responded to the catchy ‘‘Fall Into the Gap’’ advertising campaign that ran from 1974 to 1979. In 1981 the Gap acquired the chain of Banana Republic stores, and in 1986 it launched its children’s-clothing venture, GapKids. A seminal moment in Gap history occurred in 1983 when Fischer brought aboardMickey Drexler as his deputy. Not only did Drexler hire newdesigners and renovate stores, but he also honed and simplified the Gap’s brand image. Gap’s advertising reflected its new, carefully cultivated cachet. In 1988 the company began its ‘‘Individuals of Style’’ campaign, a series of striking black-and-white print ads that portrayed famous individuals in simple articles of Gap clothes. Actress KimBasinger appeared in a crisp white Gap shirt and pearls, while Dizzy Gillespie donned a black turtleneck. As the May 15, 1998, edition of Women’s Wear Daily explained, Gap ‘‘flouted the convention of showing fashionmodels in pretty poses, [instead] featuring poets and musicians.’’ Gap continued this theme—described by Fortune as ‘‘extraordinary people in ordinary clothes’’—in its 1993 to 1995 ‘‘Who wore khakis?’’ campaign. These print ads incorporated photos of past celebrities, such as Pablo Picasso, Marilyn Monroe, and Ernest Hemingway, clad in khakis.
Gap’s design and marketing formula of studied simplicity proved imitable, however. ‘‘Apparel companies from J.C. Penney to Armani had started selling ‘basics,’ ’’ said Fortune. With new competitors, such as Abercrombie & Fitch, gaining the loyalty of teenagers and 20-somethings, Gap’s sales dwindled. By 1995 store sales were flat. As part of a broader effort to bolster both its sales and its image, Gap launched its first television campaign in 12 years in 1997 with ads for its Easy-Fit jeans. The campaign starred a variety of performers, including L.L. Cool J., Lena Horne, and David Arquette, and revived the ‘‘Fall Into the Gap’’ tag line. For its efforts Gap was named 1997 ‘‘Marketer of the Year’’ by Advertising Age.

TARGET MARKET
One of the primary target audiences of the ‘‘Khakis’’ campaign was teenagers. These members of the so-called Generation Y (or ‘‘echo boom’’) provided obvious opportunities to the company that could capture their allegiance. In 1999 there were 31 million consumers between the ages of 12 and 19, comprising 28 percent of the American population. This group spent an estimated $149 billion of its own money in 1998, according to Long Island (N.Y.) Newsday, and also heavily influenced many family purchasing decisions. In an effort to appeal to Generation Y, Gap sought to create ‘‘Khakis’’ commercials that expressed the values and activities of this segment. ‘‘Khakis Rock,’’ for instance, featured in-line skating and skateboarding, sports that the November 9, 1998, Daily News Record labeled as ‘‘Gen Y pastimes.’’ The khaki pants modeled in the spot were of the baggy style popular among teens. The music choice in ‘‘Khakis Rock’’—the pulsing alternative sound of Crystal Method—was in tune with teens’ tastes. The ad, which was produced to look more like a music video than a traditional commercial, was designed to appeal to a group raised on MTV. Although a Gap spokesperson cautioned the Newark (N.J.) Star-Ledger that the ‘‘Khakis’’ campaign was meant to curry favor with ‘‘all ages,’’ she did emphasize that ‘‘we think the campaign is very young and high energy.’’ The ‘‘Khakis’’ campaign also attempted to court the notoriously cynical Generation X, those consumers born between 1964 and 1979. ‘‘X-ers are decidedly antimarketing [and] anti-hype,’’ an analyst told the Daily News Record. This demographic group, which came of age during economic recession and the onset of the AIDS epidemic, tended to be pessimistic and reluctant to respond to standard hard-sell advertising messages. ‘‘Khakis’’ ads were accordingly stylish in their execution but deliberately understated in their pitch. ‘‘With us, it’s about entertaining as much as it is about fashion,’’ a Gap spokesperson explained to the Chicago Tribune. The ‘‘retro’’ craze that captivated Generation Xers was also apparent in the ‘‘Khakis’’ campaign. Twenty-somethings in the 1990s embraced cocktails, cigars, and lounge music with a fervency that had eluded their parents, and ‘‘Khakis Swing’’ featured young people swing dancing with aplomb. Moreover, all the actors appearing in the ‘‘Khakis’’ ads were young adults, a calculated choice that conformed to Generation X’s ‘‘prefer[ence for] images that portray people like themselves,’’ according to the Daily News Record.
While the ‘‘Khakis’’ campaign tended to skew toward younger consumers, Gap took care not to alienate baby boomers. The ‘‘business-casual’’ boom of the 1990s meant that more employees—of all ages and positions—took to wearing khakis to work more often. Indeed, in September 1997, Gap handed out free khakis on the floor of the New York Stock Exchange and convinced the exchange to relax its strict suits-only dress code for one day. The ‘‘Khakis Swing’’ ad exploited boomers’ ‘‘nostalgia for the old days,’’ an industry analyst told the Daily News Record. In fact, the Daily News Record concluded that the ‘‘Khakis Swing’’ commercial ‘‘reach[ed] all three generations.’’

COMPETITION
Gap was not the only company seeking to capture younger consumers. Levi Strauss & Company launched its $50 million ‘‘One Leg At A Time’’ advertising campaign for its Dockers division in March, 1998. Founded in 1986, Dockers dominated the khaki sector, controlling 26 percent of the market in 1998. While Dockers had experienced considerable success with its ‘‘Nice Pants’’ campaign (which ran from 1995 through 1998), Dockers, like Gap, expected growth to come from Generation Xers and echo boomers, according to Advertising Age. This new campaign, conceived by Foote, Cone & Belding was intended to draw in younger consumers. ‘‘One Leg At A Time’’ had different components, including television commercials (which appeared during programming such as the NCAA basketball championships and prime-time shows), print, and outdoor spots. Dockers also utilized more unconventional marketing strategies. The brand sponsored independent film festivals, showed movie clips from these festivals on the walls of buildings in trendy neighborhoods, and sent free khakis to cutting-edge figures such as Harmon Lee and Omar Sosa. ‘‘We don’t want to be the big corporation, banging you over the head with our message,’’ a Dockers spokesperson told the Daily News Record. ‘‘We’ll try to set ourselves apart by making ourselves a part of life on the street level.’’ In July 1998, however, Dockers ended ‘‘One Leg At A Time,’’ citing increased advertising pressure from Gap. In its place Dockers tried a new strategy when it ‘‘dropp[ed] the ordinary guy image it has had since its launch, [and] switch[ed] to a sexier approach,’’ according to Advertising Age on January 18, 1999. Two new commercials—both of which featured attractive young men who receive considerable attention from women because of their pants—aired mostly during sports and male-oriented programming. Gap faced other challengers as well. Like Dockers, the Haggar Clothing Company sold its khaki pants at retail stores. In June 1998 the company debuted print ads that portrayed model Billy Brown clad only in Haggar khakis. ‘‘The ad,’’ said the Washington Post, ‘‘communicated the sentiment that khakis, specifically those from Haggar, are cool.’’ Recognizing that women purchased nearly half of all men’s clothing for their partners, Haggar’s new campaign targeted females. Thus the ads appeared in publications popular among women, such as Glamour and Marie Claire. Tommy Hilfiger, a trendy casual-wear designer, represented an additional threat to Gap. Advertising Age called Hilfiger a ‘‘marketing titan’’ and the ‘‘sportswear choice’’ for fashion-minded 20- and 30-somethings. After launching a women’s sportswear line in 1996 to augment its successful men’s line, Hilfiger and Miramax films teamed up to tout the 1998 movie, The Faculty. Stars from the film appeared in print and television ads (wearing Hilfiger creations, of course) that ran on MTV, VH1, and Comedy Central and in magazines such as Teen People, Spin, Details, and Rolling Stone. Gap also faced competition from hip retail chains such as Abercrombie & Fitch, which targeted consumers below the age of 30. The bulk of Abercrombie & Fitch’s sales were derived from its glossy catalogue, but the company also operated a chain of 159 stores across the United States.

MARKETING STRATEGY
A year before the launch of Gap’s ‘‘Khakis’’ ads, the company’s designers and marketers had determined that ‘‘1998 would be the year of the khaki,’’ said Fortune. In addition to conceiving the campaign Gap developed new styles of the classic tan pants in hopes of capitalizing on booming khakis sales. (Total khaki sales were 12 percent higher in 1997 than 1996, and 1996 sales had been 22 percent higher than 1995.) While Gap certainly hoped to sell large quantities of khakis, the massive effort it devoted to the campaign undergirded its overarching goal: to strengthen and contemporize the Gap brand. Khakis offered the Gap a means to draw a broad crosssection of American consumers into the company’s stores. As the Daily News Record asserted, ‘‘[i]t’s rare for one item to stretch its legs from the golf clubhouse to urban streets to the corporate boardroom.’’ Khakis did just this, however, proving to be popular school attire for teens, ‘‘casual day’’ garb for employees, and clubbing clothes for Generation Xers. The ‘‘Khakis’’ campaign attempted to reach all of these distinct demographic groups.
Since Gap sought to reach across demographic divides, the company used different media to carry its ‘‘Khakis’’ message. Television commercials were the foundation of the campaign. For the most part Gap selected programs that garnered a younger audience of Generation X and Generation Y viewers, including ER, Ally McBeal, The Practice, and The X-Files. When the company ‘‘re-debuted’’ these ads in August 1998 it added to its roster Felicity, a hit show among teens, and Party of 5, a drama that had a cult-like following among teens and 20-somethings. Gap also ran ‘‘Khakis’’ commercials during more high-profile programming. In May 1998 the company spent an estimated $1.7 million to advertise on the final episode of the tremendously popular sitcom Seinfeld. The 1999 installment of ‘‘Khakis’’ ads first appeared during the Academy Awards telecast, which was a ‘‘major hit with women and young people and dr[ew] a more affluent audience than the Super Bowl,’’ according to the San Jose Mercury News. Print ‘‘Khakis’’ ads were published in more youth-oriented magazines, such as Spin, Details, Vibe, Vanity Fair, Vogue, ESPN, Teen People, and Entertainment Weekly. Bus and billboard ads were also used in key markets.
Since the campaign had the dual purpose of enhancing the image of the overall Gap brand, the company was careful to ensure that the ‘‘Khakis’’ ads projected the Gap’s desired image. The look and feel of the spots, with their stark, white backgrounds and minimalist feel, shared the design principle of Gap stores. Moreover, despite their music-video undercurrent, the commercials remained focused on Gap’s khakis and the Gap logo that silently appeared at the end of each spot.

OUTCOME
The ‘‘Khakis’’ ad were lauded by viewers and critics. A USA Today AdTrack survey revealed that the spots were ‘‘very effective and very popular with consumers of all ages.’’ The survey indicated that the ‘‘Khakis’’ spots scored ‘‘especially well among young consumers.’’ Teen marketing studies showed that ‘‘Khakis’’ ads were the second most popular of any advertisement among teenagers and that consumers under 20 ranked Gap fifth among brands they liked most.
Advertising critics and apparel industry analysts were equally enthusiastic. The New York Times named ‘‘Khakis Swing’’ one of the year’s best ads, and the Chicago Daily Tribune declared that the ‘‘Khaki’’ ads ‘‘created the biggest cultural stir of any TV spot’’ since a popular 1997 ad. An analyst for the Wall Street Journal reported that the ‘‘Khakis’’ commercials had bolstered Gap’s brand: ‘‘They have a brand, not just retail stores. People are buying the brand, not just something to cover their nakedness.’’
Gap stores experienced a stunning 24 percent gain in same-store sales during May 1998 alone, which USA Today credited to the ‘‘Khakis’’ advertising. Year-end figures for 1998 revealed that Gap had increased its sales nearly 40 percent during the year. The San Francisco Chronicle praised Gap’s ‘‘high-energy advertising’’ for ‘‘fueling’’ this rapid growth.

HOW DO YOU WEAR IT? CAMPAIGN

OVERVIEW
As Gap, Inc., approached its 35th birthday in early 2004, the 1,500-store chain was experiencing an upswing in profits and sales, reporting steady increases since 2002. First-quarter profits in 2004 were up 55 percent, and sales were up 9.4 percent compared with the same period the previous year. To celebrate its birthday and maintain the profit and sales momentum, Gap charged its advertising agency, Laird + Partners, New York, with creating a new global marketing campaign to be released in summer 2004.
For the ‘‘How Do You Wear It?’’ campaign Laird + Partners turned to what had worked well for the chain in the past: celebrity-centered television spots and print ads. Signed on as the celebrity spokeswoman was Sex and the City star and fashion idol Sarah Jessica Parker. Although no specific budget for the campaign was available, Adweek reported that Gap’s advertising budget the previous year was $140 million. Further, Gap reportedly paid Parker $38 million for her three-season, six-month contract. Besides Parker, other celebrities featured in the campaign’s different television spots and print ads included singer Lenny Kravitz, actress Jada Pinkett Smith, and New England Patriots football star Tom Brady.
Despite the success of previous celebrity-centered campaigns, Gap’s new effort failed to drive sales or resonate with consumers. Within months of the campaign’s start Gap reported its worst overall sales performance in two years. The spokeswoman of the campaign, Parker, also took a hit as consumers posted their criticisms on the Internet. When Parker’s contract expired in spring 2005, Gap replaced her with a new spokeswoman: 17-year-old British singing star Joss Stone.

HISTORICAL CONTEXT
The Gap chain of retail clothing stores got its start in 1969, when the first store was opened in San Francisco by Doris and Don Fisher. Motivated by the desire to provide customers with an easy option for finding jeans, when the store opened, it sold only one product: Levi’s jeans for men and women. By 1970 Gap had grown to six stores, and in 1974 the rapidly expanding chain introduced its own private-label jeans as well as accessories. Over time Gap expanded its brand to include other basic casual styles, such as khakis and tees for men, women, and children. It stopped selling Levi’s in 1991. In late 1999 the chain was beginning to show its age, and as its marketing focus and product mix shifted from its core customers—baby boomers—to teens, sales fell into a steady 22-month decline. In April 2002 the chain reported a 24 percent drop in sales at stores open at least one year. Furthermore, in May of that year the company reported that overall sales for the month fell to $962 million compared with sales of $1.2 billion for the same month one year earlier.
In an effort to reverse the downward spiral, in 2002 Gap replaced its agency, Modernista! of Boston, with New York–based advertising agency Laird + Partners. The agency worked with the chain’s in-house marketing team on a new advertising campaign that would target a broader audience than the teens on whom Gap had been focusing. The partnership resulted in the ‘‘For Every Generation’’ campaign. Featuring a list of celebrities ranging from country-music icon Willie Nelson to comedian Whoopie Goldberg and actress Christina Ricci, the campaign moved Gap back to its roots of offering basic casual clothing for consumers of all ages and showed how Gap fashions were adaptable to each person’s individual style. Following the campaign’s introduction, the chain reported a sales increase of 1 percent in October 2002. While small, the sales improvement was significant considering the 17 percent drop reported for October 2001.
In 2004, as the chain prepared to celebrate its 35th anniversary, Gap also planned to release a new global marketing campaign. Based on the success of its celebrity-centered campaigns, which included the first such effort, ‘‘Individuals of Style,’’ which ran from 1988 through 1993, and the 2002 ‘‘For Every Generation’’ campaign, Gap and its agency stuck with what had worked in the past. Laird + Partners’ new campaign, ‘‘How Do You Wear It?’’ featured celebrity and fashion icon Sarah Jessica Parker as well as other celebrities who would connect with consumers and send the message that Gap offered clothes that enabled people to express their individual style.

TARGET MARKET
Through the use of celebrities of all ages and genders in its marketing campaigns, Gap attempted to reach a broad range of consumers: men and women, teens to baby boomers. Earlier campaigns featured celebrities such as counterculture writer Jack Kerouac, country-music elder statesman Willie Nelson, and 20-something actress Christina Ricci wearing Gap clothes. The campaigns were designed to send the message that everyone, regardless of age or sex, could find a Gap style perfectly suited or adaptable to his or her personal taste. When, in 2004, the chain released its ‘‘How Do You Wear It?’’ campaign with 39-year-old actress Sarah Jessica Parker as its spokeswoman, it was clear that women were the target market. Parker’s TV show Sex and the City was highly popular with women. In addition, the actress was the ideal person to convey the idea of individuality, because she was closely linked with her character’s eclectic, cutting-edge style, a combination of vintage and couture clothes and pricey Manolo Blahnik shoes. According to a Gap press release, Parker’s spots were intended to connect with ‘‘women of all ages and to help them understand the versatility of our products and our spirit of individual style.’’ Not forgetting its male target, for some spots Gap’s campaign partnered Parker with singer Lenny Kravitz, also wearing Gap clothes, while additional print ads featured top athletes and actors who resonated with male consumers.

COMPETITION
American Eagle Outfitters, Inc. (AE), which had 828 shopping-mall-based stores scattered throughout the United States and Canada in 2004, got its start in 1977 selling outdoor gear. By 1992 the retailer’s product line had been expanded to include a wide selection of casual attire, from polo shirts and khaki pants to shorts, sweaters, and skirts. For the brand’s target market—men and women 15 to 25 years old—the high quality and reasonable prices of AE’s merchandise were particularly appealing. By 2004 the chain was ranked 9th among the country’s top 10 specialty retailers. The company reported a 19.9 percent sales jump to $350 million in the three months ended May 2004 compared to the same period the previous year.
Keeping its marketing eye on its target audience of high school and college students, in 2004 AE began a new marketing campaign, ‘‘AE Jeans Will Rock You.’’ The campaign kicked off in September at 22 college football stadiums across the country. Each time the 1977 hit rock song We Will Rock You by Queen was played during football games, AE product giveaways were announced. To reach the high-school crowd, campaign television spots featuring the Queen song aired on MTV as teens prepared to go back to school. In addition to its new marketing campaign, in 2004 AE also began a redesign of its stores, replacing its original beach-housethemed decor with a trendy city-lofts theme featuring concrete floors, high ceilings with skylights, and plasma televisions running AE ad spots.
Abercrombie & Fitch (A & F) was also founded as a provider of outdoor gear. But unlike AE, which was a relative newcomer in the market, A & F opened its doors in 1892 and had counted author Ernest Hemingway and U.S. president Theodore Roosevelt among its clients. In 1988 the chain was bought by the Limited, which operated the women’s clothing chains the Limited and Victoria’s Secret. After the acquisition A & F’s product focus shifted from outdoor gear to contemporary casual clothes for upper-class suburban teens and 20-somethings.
Ten years after its purchase of A & F the
Limited phased out its ownership of the chain. As an independent public company, A & F took a new approach to its marketing strategy.
In 2002 the chain’s in-house marketing team developed a campaign that included a 280-page sales catalog titled ‘‘XXX.’’ The title clearly portrayed the catalog’s contents, which featured sexually suggestive photographs on more than half its pages. The catalog targeted high school and college students, but it raised the ire of parents and consumer watchdogs. It also pushed sales at the chain up 18 percent. By 2004, however, A & F was experiencing a sales decline, reporting an 11 percent drop in same-store sales in the quarter that ended January 2004. For the same quarter, overall sales chainwide inched up slightly (4.8 percent) to $560.4 million. Acknowledging that the chain’s marketing had occasionally crossed the line, A & F’s chief executive officer, Michael Jeffries, told Women’s Wear Daily of plans for changes to the strategy. A & F introduced a new national advertising campaign in 2004 that included ads in magazines and outdoors as well as a 60-page catalog. The promised changes to its marketing strategy were evident. While the catalog featured photos of bare-chested young men and young women in bathing suits or skimpy outfits, it lacked the nude models in suggestive poses found in previous publications. The summer 2004 catalog was also plastic-wrapped and had a tag noting that it was not for sale to anyone under 18 years old.

MARKETING STRATEGY
Since the 1980s Gap had relied on celebrities to promote its brand in several advertising campaigns. Celebrities were featured in its ‘‘Individuals of Style’’ campaign, which ran for six years beginning in 1988, and in its ‘‘For Every Generation’’ campaign, which was created for Gap in 2002 by Laird + Partners. Based on the success of its previous celebrity-centered campaigns, when Laird + Partners designed its ‘‘How Do You Wear It?’’ campaign for Gap, stars were front and center in the television spots and print ads. Signed to a three-season, six-month, $38 million contract as the campaign’s spokeswomanwas actress Sarah Jessica Parker, known for her role as fashionista Carrie Bradshaw on the hit television show Sex and the City. A 90-second television spot featuring Parker and musician Lenny Kravitz first aired during the MTV Video Music Awards in August 2004. In the spot Parker danced while Kravitz performed a mix of his songs Lady and Are You Gonna Go My Way. As Kravitz sang and played the electric guitar, Parker added to her outfit, showing the variety of ways that Gap jeans could be worn. Eventually six different versions of Parker appeared to be dancing with Kravitz. Parker was shown in Gap jeans customized with everything from velvet ribbons to millions of dollars worth of antique jewelry. During the spot Kravitz’s Gap clothes also were customized with a variety of items, including studs, grommets, and gold-braided ribbon. The campaign also included a series of 30-second spots and 15-second teaser spots, which aired on all major networks and cable channels in the United States and Canada.
Print ads began running in September in national magazines, including Vogue, Vanity Fair, Harper’s Bazaar, and Essence. In addition to Parker, the print ads featured other stars from television, music, fashion, and sports, such as actresses Jada Pinkett Smith and Jessica Alba. Ads also broke in men’s magazines such as GQ and Details; these versions featured Kravitz as well as New England Patriot football star Tom Brady and actors Michael Vartan and Josh Duhamel.
Other marketing elements of the campaign were outdoor, direct mail, in-store, and online efforts. The online aspect included a special website, www.howdoyou. com, that allowed customers to post photos of themselves showing how they personalized their Gap clothes. Customers who logged onto the site could also vote for their favorites of the posted pictures, view the campaign’s TV spots, and get fall fashion tips.

OUTCOME
Although the strategy of relying on celebrities to promote its brand worked for Gap in the late 1980s through the early 1990s, the idea seemed to fall flat in the first decade of the new century. The chain’s ‘‘Individuals of Style’’ campaign, which ran from 1988 through 1993 and featured a variety of celebrities, boosted sales and earnings an average of 43 percent from 1990 to 1993. The sales growth for 1993 alone was a reported 30 percent. In 2002 the chain released a campaign, ‘‘For Every Generation,’’ that also featured a long list of stars and contributed to a slight turnaround in declining sales. The celebrity spokespersons also helped establish Gap’s reputation as a cool brand. But whether it was a sign of changing consumer tastes or the increasing retail options available to shoppers, Gap’s subsequent celebritycentered campaigns, including a single television spot featuring singers Madonna and Missy Elliot, failed to resonate with customers. Wendy Liebmann, president of the New York–based marketing consulting firm WSL Strategic Retail, told Advertising Age that the Gap had lost its meaning and edge. She said, ‘‘It’s the name everyone knows but aren’t real sure what it stands for anymore . . . there are other choices that mean more to consumers anyway today.’’
The 2004 ‘‘How Do You Wear It?’’ campaign also failed to accomplish its goal of driving sales, and despite her image as a fashion icon, its celebrity spokesperson, Sarah Jessica Parker, failed to enhance Gap’s former cool image. The Advertising Age report stated that, following the campaign’s introduction, the chain reported its worst sales performance since 2002. Additionally, comments that consumers posted about the advertisements on the New York–based blog Gothamist (www.gothamist.-com) were generally less than kind about both the Gap clothing featured in the spots and about its celebrity spokeswoman. One writer described the print ad in which Parker had cut her Gap jeans off at the knees and embellished them with black velvet bows as ‘‘weird.’’ Another described Parker’s appearance in the same ad as looking like ‘‘Little Bo Peep on acid.’’ Another asked the question, ‘‘Could those pants be any less flattering?’’ In March 2005, just weeks after announcing a new series of advertisements featuring Parker, the star’s threeseason contract with Gap expired, and the chain reported that it was replacing her with a new celebrity spokeswoman: up-and-coming 17-year-old British singing sensation Joss Stone.

FOR EVERY GENERATION CAMPAIGN

OVERVIEW
In 1999 Gap Inc., with a reputation for offering consumers affordable casual clothing basics such as khakis, jeans, and T-shirts, shifted its marketing focus to teen shoppers. To attract teens to its stores, Gap began offering trendy merchandise such as glitter-decorated denim jackets and body-hugging shirts. The strategy backfired when Gap’s core customers, baby boomers who had relied on the chain’s basic, casual styles, took their clothing dollars elsewhere. Gap’s sales went into a downward spiral, and in April 2002 the company reported a 24 percent drop in sales at stores that had been open for a year or more.
In 2002, in an effort to win back its core customers and reverse its declining sales, Gap again changed its focus. Working with the New York–based advertising agency Laird + Partners, the chain launched a global marketing campaign titled ‘‘For Every Generation,’’ which was aimed at a broader audience. Although executives declined to release the campaign’s budget, a spokesman for Laird + Partners stated that it was one of the largest projects Gap had undertaken in several years. The campaign included television spots, print and billboard ads, and direct mailings. Commercials featured a roster of some 50 celebrities dressed in their own Gap clothes. By the end of 2002 it had become clear that Gap’s marketing strategy had accomplished its goal. Prior to the campaign’s launch, the chain had reported 29 consecutive months of declining sales. Following its launch in October 2002, Gap’s sales were on the rise, up 1 percent compared with a 17 percent drop in the same month the previous year. In addition USA Today’s weekly poll Ad Track concluded that consumers, especially adults between the ages of 25 and 64, found the ads highly appealing.

HISTORICAL CONTEXT
In 1969 Doris and Don Fisher opened the first Gap store in San Francisco. According to the company Don Fisher’s motivation for opening the store was ‘‘to make it easier to find a pair of jeans.’’ In an effort to update the look of its merchandise, Gap in the late 1990s turned away from its founder’s original idea and began selling trendy fashions geared toward teens instead of the basics preferred by baby boomers. As a result it lost many of its core customers, sending the company into a financial free fall. In 1999, prior to the shift in product, the company had reported $1.13 billion in earnings. After the switch in 2001 Gap reported a loss of $7.8 million. In early 2002 Gap reported its worst financial performance in its 30-year history.
Gap’s product switch was partly a result of a shift, in the late 1990s, in fashion trends away from basic casual clothes to a flashier look favored by young women. In 2002 the Washington Times described Gap’s product change as a fashion faux pas. The paper stated, ‘‘Gap’s problems started well before this season as the company moved away from the look that made it famous and added trendy clothes like denim jackets with glitter and tight-fitting fashions to its product mix.’’ Customers walking into their favorite Gap store in search of a pair of basic khakis fled when they instead saw orange and turquoise cropped jeans embellished with silver studs. The chain also found itself losing business to its sister chain, Old Navy (also owned by Gap Inc.), which sold products similar to Gap’s but at lower prices. Further confounding Gap Inc. was what many analysts saw as the company’s lack of focus when it came to establishing an identity for the Gap brand that would help distinguish it from Old Navy.
When the brand launched its new campaign in 2002, it returned to its roots and original philosophy of enabling people of all ages to buy Gap products and adapt them to fit their personal styles. The company admitted that chasing fickle teens with trendy clothes was a no-win plan. Kyle Andrew, vice president of marketing for Gap, said in a Women’s Wear Daily interview, ‘‘Let Gap be Gap. Let’s not try to be trendy.’’ For the new campaign, in addition to returning to its offerings of basic jeans, khakis, and tees, the company also revived and slightly modified a slogan it had used in the past but had failed to take full advantage of: ‘‘For every generation, there’s a Gap.’’

TARGET MARKET
Although Gap’s ‘‘For Every Generation’’ campaign alienated trend-obsessed teens, it shifted the company’s focus back to a broader range of customers. The consumers Gap’s new campaign targeted ranged from infants to senior citizens. It also was designed to win back its former core customers, baby boomers who had always relied on the chain’s quality, affordable basic clothing styles. Explaining the new strategy, company president and CEO Millard Drexler told Business Wire, ‘‘Gap speaks a common language that everyone understands, and this campaign reflects the connection that people of all ages have with Gap. Whether you are six, sixteen or sixty, nothing is more universal than a pair of Gap jeans. That’s the kind of classic style, product and message we stand for.’’

COMPETITION
As Gap struggled to reverse more than 22 months of negative same-store sales, one of its top competitors, Abercrombie & Fitch, was embroiled in its own problems related to marketing and product offerings that many considered offensive. Also among Gap’s top competitors was American Eagle Outfitters, which was on the opposite end of the marketing spectrum from Abercrombie, with climbing sales and a reputation for offering wholesome advertising and merchandise. Abercrombie & Fitch was founded in 1892 as a purveyor of quality camping, hunting, and fishing clothing and equipment, and by 1917 it was the world’s largest sporting-goods store. Among the store’s customers were Teddy Roosevelt, who purchased gear at the store before setting off on an African safari, and Ernest Hemingway. In 1988 the chain was bought by the Limited (which also owned Victoria’s Secret) and shifted from selling sporting clothes and equipment to outfitting suburban kids.
The Limited phased out its ownership in 1998, and Abercrombie became an independent public company. The chain’s marketing and merchandise, produced inhouse, turned toward the explicit and sexual. In 2002 the company was listed by PR Newswire as producing one of the 10 worst public relations blunders of the year. The publication reported that Abercrombie had offended the public with its thong underwear for prepubescent girls and its T-shirts that portrayed stereotyped images of Asian-Americans. Despite pulling the controversial merchandise from its product line, the company remained known for the ‘‘sex sells’’ theme in its marketing. The company’s 2002 catalog, titled ‘‘XXX,’’ included sexually suggestive photographs on more than half of its 280 pages. Despite consumer complaints about its merchandise, Abercrombie reported a 21 percent sales increase in October 2002 compared with the same period the previous year. It noted, however, that same-store sales had dropped 5 percent from January through November 2002.
American Eagle Outfitters, founded in 1977, was originally known for selling men’s outdoor gear. In 1992 it underwent a rebranding and became known for its classic American, mainstream style, which successfully appealed to its target market: mature teens and young adults. By 1997 the chain had begun making additional improvements to its selection of merchandise, and it introduced marketing—which included ads in such magazines as Mademoiselle, Seventeen, and Spin—intended to broaden the brand’s customer base by promoting its affordable, casual, and basic clothing. American Eagle reported that first-quarter sales overall in 2002 were up 14.9 percent over the same period in the previous year; however, same-store sales for the first quarter of 2002 were down about 2 percent.

MARKETING STRATEGY
As Gap’s ‘‘For Every Generation’’ campaign was prepared for its launch, a company spokesman said that the new marketing strategy had been created to broaden its appeal to consumers and to attract people of all ages back to the chain. In addition the campaign was the first one the company had used for all Gap divisions, including adult, kids, and baby.
The campaign starred some 50 celebrities of all ages from a variety of fields (such as movies, music, art, and fashion) in TV spots and print ads. The latter included a 48-page portfolio in Vanity Fair magazine. Personalities featured in the print campaign ranged from country music icon Willie Nelson and up-and-coming singer Taryn Manning to comedian Whoopi Goldberg. Among the film stars dressing in their favorite Gap fashions for the ads were Sissy Spacek, Lauren Hutton, Salma Hayek, and Christian Slater. Trey Laird, president and executive creative director of Laird + Partners, explained to Business Wire, ‘‘We selected a broad range of personalities who each have a highly defined individual style. We worked with each person to create their own look in Gap jeans—keeping it personal, authentic and real.’’ Each ad featured a celebrity wearing a pair of Gap jeans combined with other Gap items as well as their own clothes and accessories. Nelson appeared in a TV spot wearing his Gap jeans and performing a guitar version of the Hank Williams classic ‘‘Move It On Over.’’ Another TV spot starred models Shalom Harlow and Alek Wek showing off the comfort and style of their Gap jeans while dancing to the 1960s hit song ‘‘Bend Me, Shape Me.’’ In one print ad Kelly Klein, socialite, photographer, and ex-wife of fashion designer Calvin Klein, paired her Gap jeans with one of her favorite lacy tops.

OUTCOME
With more than two years of negative same-store sales results at the end of 2002, following the launch of its ‘‘For Every Generation’’ campaign, the company reported that, while its earnings remained down, they still came in above expectations. Although in October its same-store sales had been up only 1 percent, this was a turnaround from a 17 percent drop during that month the previous year. A report in USA Today stated that, based on the data, ‘‘It looks like Gap’s more familiar basic merchandise and new ad campaign are working.’’ Gap executives also said that the campaign appeared to be moving the company back in the right direction. According to information gathered by Ad Track, USA Today ’s weekly consumer poll, about 21 percent of those surveyed liked the ads ‘‘a lot.’’ The commercials also scored higher with two key groups—women and adults ages 25 to 64—indicating that Gap was reconnecting with its former core customers. An article in Women’s Wear Daily noted that Gap’s ‘‘increased advertising, and increasingly amusing advertising, [had] helped expand sales in recent months’’ for the retailer. It further noted that, while the chain’s rebirth was not complete, it was clearly occurring.