IT/IS Strategy/ Policy and Experience

Abstract

The use of technology as a marketing tool has been rapidly taken up by many organizations either as a sole mode or as a supplement to existing marketing tools. This report gives an overview of the use of social media as a primary marketing tool for American international fashion outlet; Banana Republic. Whereas most companies currently use social media as a marketing tool, it is mostly utilized to supplement mainstream media advertising. Banana Republic however, has a unique strategy where social media is currently its primary advertising medium. Further, Banana Republic finds itself in a situation where social media marketing is fundamental to its very survival. The cost-benefit analysis of using social media by Banana Republic shows a positive skew with challenges notwithstanding. 

Introduction

The business world in general is rapidly changing with technological advancement bringing an overhaul in marketing strategies of various organizations. Business functions in the past were highly considered official and social media was almost non-existent in the discussions made in such set ups. Today, organizations have transformed and adopted the use of technology that has led to most business aspects being made all-inclusive. A sense of a free and flexible business environment has even shown a president having a good time in the course of his official duties. Without this transformation, social media would never have had a chance in mainstream business where over 90% of commercial entities are currently using the informal social media as a business instrument in carrying out activities such as marketing. Whereas the advertising industry commentators had hypothesized that social media was a passing cloud in the multi-billion dollar industry, current trends show that social media is gradually taking over the industry.

Background of Banana Republic

Company History

Banana Republic is a wholly owned subsidiary of fashion industry giant GAP Inc. It however, has a sentimental history premised on a family background. The business was started by Mel and Patricia Ziegler back in 1978. Mel and Patricia were lovers of safari and exotic attire, and they incorporated the two when they started a cloths shop at Mill Valley in Northern California. The attires were exotic and the safari effect was introduced through a handwritten catalogue that gave fictitious safari particulars about the items being sold as shown.

The stratagem resonated with their clientele and the business flourished and in five years, the enterprise was successful enough to attract the attention of Gap Inc. who acquired its full ownership. Gap Inc. injected a lot of capital into the business and changed the fundamental operating principle thereof. The safari theme was scrapped and the merchandise changed from exotic to contemporary high end fashion. To retain the initial theme of the business however, Banana Republic opted for exotic shops and started buying and rebranding vintage buildings and rebranding them as exotic shops.

Current status of the Company

At its zenith in 2012, Banana Republic had six hundred and forty two stores situated in thirty eight countries cutting across all the six continents. Locally, the company has over 500 stores across continental United States as well as Hawaii and Puerto Rico. Among the notable international company shops include the megashop at Apkujeong district of Seoul opened in 2007. Another at the Avenue Shopping Mall in Kuwait city is also a major achievement. In Turkey, there is a major shop at the Kanyon Shoppin Mall opened in 2008. Among the biggest of the company’s shops outside the country is on Regent Street in London and is over 1600 square meters. The stores sell different kinds of brands and collections. 

The company has also achieved a high reputation for dressing world famous celebrities. Indeed it is an achievement for any fashion designer to have their products sold at the Banana Republic shops, but unfortunately due to the current global economic recession, Banana Republic has been forced to close some of its international stores (Kirtis & Karahan, 2011). It is however, using aggressive marketing drives to stem the downturn and indeed within its parent company Gap Inc., Banana Republic division has shown the highest level of resilience.

Overview of the company’s marketing strategy

The marketing strategy of Banana Republic from its very beginning has always encompassed two major components. The first is thinking outside the box and the second is minimizing the cost of advertisement. In the Post-World War II era, advertising blossomed into a multi-billion dollar industry such that by the time Banana Republic was starting in the late 1970s, mainstream advertising was quite costly. It could, therefore, be said that the philosophy of inexpensive advertising emanated out of necessity. The Zieglers, therefore, came up with thinking outside the box as a means of hyping their inexpensive advertising stratagem. In a manner similar to that adopted by the World Wrestling Entertainment, they devised fictitious stories to give ‘life’ to their merchandise. Even after getting financial backing from Gap Inc., the company still maintained creativity in their advertising. 

Social Media as a Marketing Tool 

Social Media industry analysis

The nature, vastness, and malleability of contemporary social media have made it difficult to come up with a singular definition of the word. An overall definition thereof however, can be a computerized communication system that allows for online user creation, dissemination, and sharing of multimedia content (Kirtis & Karahan, 2011). The user may be an individual, organization, corporate body, or a government based entity. By extension, the multimedia content will also vary from extremely informal to extremely formal. Contemporary social media is used over Web 2.0 internet based applications that enables User Generated Content (UGC) through forums known as social networks (Kirtis & Karahan, 2011). The social network providers create user specific profiles to enable individual social networking with the major social network providers being Facebook, Twitter, Google+ and Snapchat. Some of the biggest listed companies in the USA such as Facebook Inc. and Alphabet Inc. are social network providers.

Advent of social media as a marketing tool

Social media had always been considered as more of a toy than a tool until the 2010-2012 Arab Spring. This was the first instance of social media being used to orchestrate an event with global connotations (BBC, 2013). History has shown that advertising will always adapt a publicity concept that seems to work. A good case in point is the concept by psychologist Edward Louis to employ propaganda into marketing as it had worked so well during the First World War. Immediately social media proved its mettle as a publicity tool, it was adapted by corporate organizations and used to market their products. This was the advent of social media as a marketing tool. As indicated earlier, today over 90% of commercial enterprises in the world have successfully incorporated social media as a market tool and the trend seems to be increasing by the day.

Advent and relevance of social media as a marketing tool for Banana Republic Inc .

Banana Republic was among the first organizations to innovatively adopt social media as a marketing tool. The initial explosive use of social media as a Banana Republic marketing tool left a lasting impact in the marketing industry. In February 2012, passengers in the regular Virgin Atlantic Flight 407 from New York to Los Angeles received a surprise at 35000 feet in the air when Banana Republic launched its second Mad Men collection through the 1st on air fashion show (Lee, 2012). 

The air show was just the precursor of a well-organized and orchestrated social media campaign. Using the publicity there from, Banana Republic officially launched its move to capitalize on social media as its basic marketing tool. Company employees, popular media personality and fashion executive took to social networks; twitter and Facebook to send pictures of the event and it was seen all over the world (Lee, 2012). The event was of monumental success and launched a marketing stratagem that is still utilized to date. 

Initially, the social media strategy was meant to recruit a fresh batch of loyal customers. This is premised on the fact that as the company nears the 40-year mark, most of its loyal customers are petering out due to advanced age. However, it now seems that in 2016, social media marketing is a survival tactic according to The Olive Gazelle (2016). With Gap Inc. considering the closure of over 20% of Banana Republic outlets, a highly effective and cost efficient marketing strategy is vital. Banana Republic seeks to find an answer to this impasse in social media.

Analysis of Social Media as a Marketing Tool for Banana Republic

Efficacy of social media as used by Banana Republic

Industry observers have lauded the Banana Republic social media marketing campaign as among the best in the world. Most major companies use social media as a secondary marketing tool, but Banana Republic innovatively adopted social media as the primary tool for marketing. The company created an executive position dubbed Senior Manager, Global Social Media and hired Amy Gilmer, a social media consultant. Among the commonly used social networks include Twitter, Facebook, Google+, Instagram and Snapchat. By mid-2012, Banana Republic was already being lauded by industry commentators for the success of their social media campaign. In the article by Rourke (2012), the strategy employed and the efficacy thereof is applauded by a major industry commentator. 

As indicated, Banana Republic was facing the challenge of a petering out market as most of its loyal customers got older. Social media’s efficacy in reaching out to the younger generation is, therefore, a pertinent issue well lauded in the article by Sillitoe (2014). Industry commentator Ben Sillitoe expounded how effectively Banana Republic used younger generation social network Snapshot to reach out to millions of young people across the world (Sillitoe, 2014). In the article, Banana Republic global chief marketing officer Catherine Sadler is quoted indicating that the social media move was successfully indicating the company’s innovate rebranding (Sillitoe, 2014). 

By 2015, according to Keyhole.Co (2015), Banana Republic was the leading user of Facebook as a marketing tool in the global fashion industry. The research carried out by Keyhole showed that Banana Republic had made over 14, 400 engagements that involved over 60 million multimedia impressions, 1,100 of which were photo entries (Keyhole.Co, 2015). This Facebook interaction has reverberated across the globe with a very high conversion rate. Further, the rapport created between the dedicated Banana Republic marketing group and their global target created a huge loyal customer base for the company (Keyhole.Co, 2015). 

The contemporary situation is best indicated in the article Simpson (2016) that reported on the New York Fashion Week. According to research reported in the article, Banana Republic received 61% of the most positive data regarding the aforesaid fashion week. Considering that the amount of chatter tested was in the tens of millions, this article confirms that the social media stratagem employed by Banana Republic is highly effective (Simpson, 2016).

Cost benefit analysis of social media as a marketing tool

As indicated, contemporary advertising is a multi-billion dollar industry and national advertising in the US alone would cost an advertiser millions of dollars for any form of mainstream advertising. Indeed, major companies such as Toyota, Ford Motors, Samsung and Apple spend fortunes on advertising alone. According to O’Reilly (2015), which cited the Ad Age's annual "200 Leading National Advertisers" report, over US$137 billion was spent by the top 200 companies in the USA on advertising alone out of the over US$600 billion spent on worldwide advertising. However, specialization on the generally free and reasonably priced social media has ensured that Banana Republic does not incur these expenses. 

Further, the relatively lower price of social media use does not affect its general efficacy. Research as aforesaid has clearly shown that social media has as much, if not greater, reach than mainstream media and due to its interactive nature, the conversion rate on social media is higher than that of mainstream media. From a practical perspective, mainstream media only disseminates information to the target group. A TV, radio, newspaper or periodical advert will only disseminate information and hope for a positive response. Social media however, provide a two-way interaction between advertiser and the target customer. It is this factor that increases customer conversion and retention. The upshot of the foregoing is that social media as a marketing tool in general and particularly as utilized by Banana Republic is very cost effective.

Challenges encountered in the use of social media as the main a marketing tool

Whereas social media is a great marketing tool, Banana Republic has encountered several challenges in its utilization. The first major challenge is proliferation of social media marketers. The cost effectiveness of social media gives most entrepreneurs in the world an opportunity to market their products. Currently, there are over 2 billion social media users in the world (The Olive Gazelle, 2016). If only 10% of these numbers are entrepreneurs, a global marketer like Banana Republic will easily find its wares buried under over 200 million other online adverts and this will make it difficult for new customers to find Banana Republic adverts as they are overwhelmed by the sheer number of adverts online. 

The solution to this problem is utilizing the now available social media ‘push’ services, which are available across most major social networks. These services allow for users to pay in order for their content to be prioritized over other content in the social network. For example, if Banana Republic pays for an advert on Facebook to be ‘pushed’ in London, Facebook users in that area will find the advert appearing prominently in their Facebook walls albeit they have not made a connection with the company. The second option is the creation of incentives for individual users to ‘share’ the adverts with their respective social network groups. This can be done by making the content of the advert exceedingly juicy to motivate sharing, or creating reward programs for social media users who share the adverts.

The second major problem is language. Many of the major emerging market is China speak several versions of the Mandarin language with other major emerging markets such as India speaking a plethora of languages. Brazil on the other hand, speaks in Portuguese and Africa also has its own plethora of major languages. The success of social media marketing requires releasing many adverts and messages regularly to maintain a rapport with the target. The diversity of languages poses a major challenge to this strategy for Banana Republic as a global marketer, but this situation can be solved through hiring multi-lingual members of staff for specialized adverts. For ordinary messages, translator algorithms can be used to help automatically translate content to the different languages spoken by the various target groups.

The necessity for varying content is also another challenge as it stretches the imagination of advertisement designers to the uttermost. Whereas a good mainstream advert can successfully run for a calendar quarter, a social media advert becomes stale within hours. This, therefore, calls for continuous creativity and perchance a relay of creative teams, which can be quite expensive. This problem can be resolved through circumspect recycling of adverts with minimal but witty changes.

The final challenge, which is common in all advertising strategies, is the capacity to test efficacy. In a global market, it is challenging to tell the particular effect of a singular advert. In social media, this is exacerbated by the fact that several varying adverts are released contemporaneously. Research to establish global efficacy can be extremely expensive, but perfecting interactive use of social media can assist in resolving this challenge.

Conclusion

The totality of the foregoing shows that social media is a powerful, cost effective, and efficient marketing tool in the business field today. Its cost effectiveness is vital in contemporary times when millions of dollars are required for successful global marketing yet there is a consumer recession. Indeed, without social media, many a company would not have any means for advertising at all. Therefore, social media marketing is not a passing cloud in the marketing industry but a tool that is growing into a formidable fore therein.

It is also clearly apparent that Banana Republic has successfully incorporated social media as its primary marketing tool. So well engrained is social media marketing in Banana Republic that an executive social media position was created in the company and since its advent in the company, Banana Republic has become a global leader in advertising, yet it is using a small fraction of the budgets of other global companies. However, as compared to mainstream advertising, social media advertising is still in its infancy stages and industry leaders like Banana Republic are, therefore, continuously called upon to innovate and find solutions as and when problems and challenges arise. It is however, clear that the company is taking these challenges in stride and thriving as evidenced by the good commentaries from 2012 to date.

References

BBC (2013). Arab uprising: Country by country - Tunisia.  BBC World. Retrieved from <http://www.bbc.com/news/world-12482315/> 

Keyhole.Co. (2015). 10 best fashion social media campaigns. The keyhole Blog . Retrieved from <http://keyhole.co/blog/10-best-fashion-social-media-campaigns/ 

Kirtiş, A. K. & Karahan, F. (2011). To be or not to be in social media arena as the most cost-efficient marketing strategy after the global recession. Procedia-Social and Behavioral Sciences, 24, 260-268. 

Lee, E. (2012). “Mad men” collection lands on a plane. The Enquirer Daily News . Retrieved from <http://www.philly.com/philly/blogs/hautehouse_row/Banana-Republic-debuts-second-Mad-Men-collection-on-a-plane.html/> 

O’Reilly, L. (2015). These are the 10 companies that spend the most on advertising. Business Insider . Retrieved from <http://www.businessinsider.com/10-biggest-advertising-spenders-in-the-us-2015-7/> 

Rourke, C. V. (2012).  The Aww-Factor: Banana republic’s social media campaign is cute for a cause - the castle group . Retrieved from <http://www.thecastlegrp.com/the-aww-factor-banana-republic-s-social-media-campaign-is-cute-for-a-cause/#.V71N11t97IU/> 

Sillitoe, B. (2014). Banana republic uses Snapchat as marketing teaser . Retrieved from <http://www.essentialretail.com/news/article/53e883ff2761d-banana-republic-uses-snapchat-as-marketing-teaser> 

Simpson, P. (2016).  Fashion week heats up social media . Retrieved from US <http://www.campaignlive.com/article/fashion-week-heats-social-media/1333266/> 

The Olive Gazelle (2016).  Banana Republic: Can social media save the day?  Retrieved from <https://digitalpublishing2016.wordpress.com/2016/01/08/banana-republic-can-social-media-save-the-day/>