Gap Analysis Is An Integral Part Marketing Essay

Gap analysis is an integral part to change where dissatisfaction among customers and its various channels with the current situation is expressed as differences between the present and desired scenarios, which drive strategies for closing “the gap”. This helps to identify what is to be change in what manner and how the strategies should be implemented to get desired result in more effective manner. It becomes essential in a highly competitive marketplace, like in fashion industry to detect gaps. In this section of the report an analysis into supply and demand side gaps will reveal any areas of the current channel design that may need improvement. An effective and efficient channel design can be the determining factor in gaining competitive advantage in this industry, especially due to standardised products that are offered at all retailers (including competitors). In other words gaining competitive advantage lies with either the augmented offerings (services), or back end processing (channel design). Time-based dimensions of a product are becoming an increasingly important component in assessing strategic advantage. Traditional long lead times and high inventory levels are less appropriate and more costly endeavours. [1] In conducting a supply/ demand side gap analysis it makes it possible to assess the marketing competencies in buyer-supplier relationships, and the role these competencies play in creating value for the customer. [2] Superior financial returns come about by superior performance of marketing competencies as input into organisational processes, such as customer relationship management and channel design.

1.1 DEMAND SIDE GAP

More stores are required to support the JIGSAW brand and values as many of JIGSAW’s customers travel a distance to purchase from a JIGSAW store. This assists in closing the supply side gap identified for spatial convenience, in that JIGSAW does not meet the needs of its customers by being convenient enough. Simultaneously, high elite customers may have difficulty in mobility, cannot cover the costs of travelling and do not want to travel the distance to a JIGSAW Stores. The supply of items by a particular store is of little importance to this segment as these items can be purchased from any departmental stores (MYER, DAVID JONES etc.) as there is no value besides convenience which motivates the customer to specifically purchase from JIGSAW.

Due to the process of ordering in stores, customers who purchase are expected to wait a short period, for instance usually two to five minutes. While customers who purchase from departmental stores do not want to wait, they usually want to pick up their items and leave as quickly as possible. This indication of service output supply does not meet the demands of customers of JIGSAW. All consumer segments want variety from their local stores. In this instance, JIGSAW aims to have a wide range of products and offers a cheaper alternative than other stores which give JIGSAW a competitive advantage in terms of value for money.

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This means that this segment is met by all aspects of service output demands. There may be no motivating factor for these customers to visit a JIGSAW stores to purchase their items. JIGSAW can meet this demands with little issues.

Over-the-counter can possibly be over-serviced by JIGSAW as these customers do not require the excess service and information provision that JIGSAW offers. On the other hand, the JIGSAW website does not provide enough information on over-the-clothes, the customer may want to purchase products and have specific questions and enquiries that they want answered by a retailer. On the JIGSAW website however is not thorough enough for the customer to make the judgment of which range of clothes they need to purchase. The supply of information does not meet the demands of the customer who will want to purchase items from the website.

1.1.1 Strategies to Close Demand side gaps

JIGSAW need to consider the convenience it offers to its customers and take into account the popularity of its stores. By having retail locations in easy accessible locations, there are still not enough stores to service the JIGSAW clientele. In order for JIGSAW to maintain its loyal customer base, it should open more stores in large local elite areas (LEA) to provide more locations. This will secure their current clientele as well as establish more customers who currently do not want to travel the distance which in some cases can take up to 30 minutes to have to pick up which should only take them 5 minutes.

Waiting and delivery time also needs to be addressed, particularly in the case of the website channel. JIGSAW can adopt a new delivery method without the service from a premium vendor. The new delivery method will be outlined in supply-side strategies to close this gap. Since the website does not offer enough information for a customer to decide which product would be best to satisfy their needs, the website should implement a live chat program for consumers that want to enquire about a particular product. This will enable the customer to feel more valued and being more efficient.

JIGSAW may be over-servicing their customers by offering too much support when they are in the store. As the majority of JIGSAW store’s customers already know what they want to purchase before coming in. To counteract this issue, staff should be mindful that customers who come in store to purchase over-the-counter may not require any service.

Table 3: Service Output Level Demand versus Service Output Supply by JIGSAW Stores

1.2 SUPPLY-SIDE GAPS

In conducting the supply side gap analysis it is important to note that JIGSAW are running a well functioning channel. Any gaps are not too detrimental to the overall performance of the channel. JIGSAW have very short lead times and low in-storage inventory. Their relationship with their supplier allows for high two-way responsiveness and flexibility.

Most of gaps identified are situations that may occur which could have negative impacts, but are not currently experienced. In other words, the table assists in identifying possible supply-side channel risks and highlighting strategies for closing these gaps are methods to mitigate this risk.

As depicted in the table below, all three main channels flows share common gaps. They include:

Communication: This may include communication from manufacturer to retailer when, for example, an item is recalled off the shelves or the manufacturer is providing some sort of product specific promotional material. Additionally the opening hours of the supplier are much shorter than the opening hours of the retailer. Therefore communication is not responded to until the next morning. This is often very frustrating for the inventory manager at JIGSAW.

Out-of-stock gap: Products may be out-of-stock from either the manufacturer, which would mean most retailers are out-of-stock as well, or out-of-stock on a supplier level. Unfortunately for JIGSAW 90% of their stock comes from the one supplier, therefore they are more susceptible to changes on the supplier level. This is a very risky strategy.

Inefficient channel members: Most channel members are generally very efficient, especially the relationship between supplier (various countries) and retailer (JIGSAW). However in conducting this analysis it is possible to detect some small gaps. For instance, there is little control over the third party freight members. Various suppliers from different countries employee a courier service to transport the ordered goods to the retailer. However, JIGSAW not control their route, timings, driver etc. Furthermore, JIGSAW choose to use Australia post for their delivery service offering, of which comes with many other problems, including time it takes to deliver goods, and the high delivery costs which are transferred to the consumer. For instance, it takes up to 3 days to deliver items, of which consumers should not be willing to accept especially if their order is medication. Furthermore, it costly to deliver an item. Therefore delivery may cost more that the product itself.

The potential for Strike action: As rare as this is, it must be addressed. As JIGSAW relies heavily on one i.e on it own supplies from various parts of the country supplier, as mentioned previously, they are vulnerable to the actions of that business operation. If for instance drastic action, like a strike takes place, or more dramatically they close down, JIGSAW will experience major inventory sourcing, and with no other firm relationships intact, this will be increasingly difficult to counter the effects of such actions.

2.2.1 Strategies for Closing the Gaps

JIGSAW should aim to introduce these strategies where ever possible. In doing so they dramatically decrease the possibility of risk occurring and the effects of such actions. Some of the strategies indicated below, would close the gap, and however require actions from other channel members that may not be viable;

Top of ForSupplier should consider extending their operational hours, in order to meet the requirements of the retailer. This will allow for better two-way communication about products, which will ultimately benefit the end-user (customer).

AlAAAlternatively, should consider having a 24 hour hotline / email service available which retailers can call up / email and ask questions, with a responsive feedback.

The channel should implement an intranet of which efficient communication can occur between different channel members. This will better inform retailers and suppliers of any product recalls or upcoming promotional discounts etc.

JIGSAW really needs to develop relationships with other suppliers, to counter the risks of falling off the radar. Diversifying their suppliers will mean that JIGSAW is NOT ‘putting all their eggs in one basket’.

JIGSAW should invest in a couple of JIGSAW branded delivery vehicles. This will serve two purposes. It will firstly enable them to deliver goods between other JIGSAW retailers. This is especially useful for when JIGSAW manages promotions and they purchase in bulk from the supplier and later bulk-break to other JIGSAW retailers. They will enable them to have better control over logistics. Additionally, when end users order online, JIGSAW currently use Australia post. This is very costly and their delivery times are inefficient. Owning their own delivery trucks, will ensure end users get their orders in a timely / responsive manner and the costs for such delivery service offerings will not be unrealistically high.

Table 4: Supply-side Gap Analysis

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CONCLUSION_____________________________________________

After conducting this analysis, it is evident that JIGSAW already operates in a well functioning channel flow. Its current strategies are effective and efficient. Our analysis has not detected any major conflicts with channel partners and they operate using reward power, which is preferred. Conversely, there were a few risks found (outlined in gaps), and it would be ideal to mitigate them, and ensure if these risks were to arise that contingency plans are in place.