In a recent article in PromoMagazine.com, although there have been several poor financial quarters for Gap Inc., the company still plans to support Product RED, its brand that gives a percentage of the product sales to The Global Fund to Fight AIDS, Tuberculosis and Malaria. Gap Inc. is five months into a five-year license for RED, which is set to expire in 2011, according to the article. With a big promotion for Valentine’s Day products and with celebrity backing, Gap has put the biggest marketing push behind the RED campaign among the five other U.S. RED licensees. According to the article, Gap has made about $103 million in RED sales, with 50 percent of the profits donated to The Global Fund.
Even though this endeavor only promotes Gap Inc.’s dedication to social responsibility, and will hopefully strengthen the brand name among costumers and other publics around the world, the company is in financial trouble and in need of a turnaround. According to the article, the sales for The Gap brand were down 8 percent, in comparison with 7 percent the previous year. Analysts are guessing that the company may be sold as a whole or in separate pieces, with each of the brands going to new owners, according to the article.
As Gap Inc.’s sales continue to decline, the future of the company and the different brands is obviously at stake. Could it be that the brand names do not carry the company as far as they used to? There are many other competitors in the market of “casual wear,” and this kind of external threat may be causing sales to decline. Regardless, Gap Inc. is committing itself as a socially responsible company by donating part of the profits it receives from the Product RED line to The Global Fund. As Gap Inc. is only five months into this licensing agreement, could this be a strategy to salvage the brand and to boost sales? Socially responsible companies are well-respected, and many costumers appreciate a company that is aware and in tune with social issues. Perhaps the sales from Product RED’s line combined with the added boost to the company’s name will help drive sales up and secure Gap’s financial situation. Are the sales and reputation-enhancement that comes with a brand such as Product RED enough for the company to survive? How important is social responsibility to a company and to its publics? How important is to a brand name? Does it really enhance a company’s reputation or boost its sales? Or does it depend on the situation?
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I think it is great that Gap is promoting its RED products, but is this line really helping or hurting them? My mom actually bought me and my two sisters the RED shirts for Valentines Day, and I see a lot of people wearing them around campus. So people must me buying the products, and I would think that these products would be helping Gap. If they are not then how far should Gap go with their social responsiblitiy if it is going to hurt them in the long run.
Gap might want to look at other companies such as M.A.C. and see how they are using AIDS/HIV awareness to help their publicity. It might even be helpful for all the companies that are contributing to AIDS or using something along the RED lines such as M.A.C., Gap and Apple to get together and put on an event. The event would raise AIDS awareness as well as give publicity to the companies.
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