brand situational analysis camilla hobbs
CONTENTS introduction 5 methodology 7 MACRO ENVIRONMENT pestle analysis
9 11-13 14-17
key macro trends competitive analysis
uniqlo swot
20-21
18-19
MICRO TREND ANALYSIS 22
brand positioning map 24-25
BRAND AUDIT brand overview aakar model brand health consumer segmentation pen portraits
27 28 29 30 32-33 34-35 2
CONTENTS 36 BRAND OPPORTUNITIES 38-39 swot 40-41 ansoff matrix 42 key conclusions and recommendations 44 issues 45 recommendations 46 conclusion 48-49 bibliography
50 references 51 illustrations 52-54 appendix
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BASIC. CLASSIC. I N D I V I D UA L . 4
INTRODUCTION Gap is an American, multinational, retail brand who offer simple, classic, high quality clothing and accessories for adults, children and babies. This report will explore and identify both the successes and key issues that affect Gap as a brand. 10 years ago Gap used to be the shop everyone relied on and was first port of call for all fashion basics. But over the years sales have plummeted and hundreds of stores worldwide have closed down. So where have Gap gone so wrong? Can they be saved?
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METHODOLOGY PRIMARY RESEARCH
METHOD
RESEARCH OBJECTIVES SAMPLE
The use of quantitate and To get a full detailed
We created a survey that
understanding of who
allowed consumers to
Gaps customers are and
express their views on
gain further insight on their opinions about the
brand.
Gap as a brand. We asked these questions to 100 different people, via email and face to face.
qualitative research enabled us to gather information from shoppers in two different locations - Nottingham and London. This helped show a
difference between the types of shoppers in different markets. 7
“IF YOU’RE FEELING BLUE — TRY PAINTING YOURSELF A DIFFFERENT COLOUR.” 8
macro environment 9
P.E.S.T.L.E. ANALYSIS
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KEY ISSUES Taxation Policies
Change in government
ECONOMICAL
POLITICAL
Recession
Disposable Income
Employment
HOW WILL THIS EFFECT GAP?
If the government increase tax on profit , Gap may have to consider increasing retail prices on stock in order to maintain current profit margins and generate some form of income.
If income tax increases then Gaps customers will have less disposable income, leading them to not buy expensive luxury products such as clothing and as Gap is relatively expensive, this could lead to decrease in sales and profit. Gap therefore must decrease their prices, or else customers will go else where to cheaper brands e.g. Primark which would be much more affordable.
Changes in government could lead to an introduction of new laws and rules for businesses, and ones that they most obey e.g. employment laws. This could force changes in the way that Gap operate and could be very costly.
A poor economic climate will have serious effects on Gap. Consumers will have a much more negative attitude towards spending money. E.g. after the recession in the USA Gaps sales went down by 20% (Forbes Article) due to the fact that consumers would have had less disposable income. Gap therefore would have to consider decreasing their prices to stop customers from shopping elsewhere at cheaper competitors and help maintain customer loyalty.
Gap’s target audience is 18-28 year olds. This is currently the age where their consumers are either education, or are struggling to find jobs in this current economic climate. This will effect consumer behaviour as no job means no income, therefore decreasing sales. Gap could offer student discount, which would appeal to a huge market as there are millions of students worldwide. This may not necessarily increase sales but won’t affect them any further.
Increase in cost of raw materials will decrease in profitability, as Gap will be spending more money on materials and textiles for production. A solution for this is that Gap could source fabrics and materials from cheaper suppliers. However if cost is low that means there is more money to spend elsewhere within Gap, where it’s needed more. For example on new marketing campaigns or market research.
Cost of Raw Materials
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KEY ISSUES
TECHNOLOGICAL
SOCIAL
Consumer attitudes and opinions
Lifestyle changes
Birth rate
Social Media
Online shopping
New inventions
HOW WILL THIS EFFECT GAP?
Consumer tastes and preferences are always changing, so it is vital for Gap to make sure they understand exactly what their customers want. This is something Gap are not very successful at doing and their consumers feel the brand has become dated and not very fashionable.
The population today are very driven towards having a healthy lifestyle. This will have a positive affect for Gap as their ‘GapFit’ range will be in high demand and increase sales.
The office for National Statistics stated that ‘More babies were born in the UK in 2011-2013 than any year since 1972’ (1) . This will effect gap to a great extent in terms of their Baby Gap range, as there will be a huge increase in demand for baby clothing. Increasing sales and overall profit.
Impact of social media has had huge effect on companies. The use of Facebook, Twitter, Instagram and Pinterest allow businesses to reach and connect with their consumers in a much more effective way. Even though Gap have been successful in creating these social media sites, their target consumers (18-35) don’t seem to choose to shop at Gap over other brands as can be proven by App. 2 and App.5.
The use of online shopping allows Gap to access a worldwide market without the cost of building stores. Gap’s website however comes across as cluttered, messy and confusing which puts of customers. Therefore Gap should consider changing the look and layout of their website for it to be easy and stress free for consumer to use.
Inventions such as the iPad and iPhone have changed how consumers shop and receive company news. This allows Gap to communicate well with customers and keep them update and involved with what Gap are doing. E.g. New clothing ranges, deals, campaigns etc. 12
KEY ISSUES
ENVIRONMENTAL
If the laws for products and packaging change, this will effect Gap in terms of expense as they will have to adapt their current product and packing to meet the new standards set. Leading to a decrease in profitability for the business due to an increase in costs.
The need to supply a safe and secure work place is crucial for a business. Therefore its very important that Gap make sure all equipment and working areas meet health and safety standards, not only important for employee well-being but health of the company. If not Gap could face a serious loss in reputation. Gap successfully do this by helping improve factory working conditions in Bangladesh through the ‘Alliance for Bangladesh’ worker safety.
Ethical manufacturing is important to create a positive brand image and good reputation. However it was revealed recently that toxic residue were found in some of Gaps clothing. This will have a serious negative impact on Gap as it will put customers off buying Gap’s products, resulting in a decrease in sales, something can’t afford to loose at the minute judging its current
Climate change can effect the clothing industry hugely and unfortunately is something that can’t be controlled. For example if winter turns out to be much warmer than expected and Gap have just released their A/W collection then sales aren't going to be very high as consumers will be clothes shopping for a warmer climate.
Health and safety Laws
LEGAL
Legislation on products and packaging
HOW WILL THIS EFFECT GAP?
Ethical Manufacturing
Climate Change
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KEY MACRO TRENDS Gap is a worldwide brand and therefore will constantly be affected by global trends. Gap need to be able to change to these different trends in order to develop and grow as a brand. If they ignore and don’t adapt to these ever changing trends it could lead to the failure of the business.
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AN AGING POPULATION
It is proven that todays population are living longer (E.g. improvement in health care).
The population is continuously growing and getting bigger, and a large proportion of this is now an older generation.
From our research (App 2) it shows that Gap is a quite popular brand with ages 41-50.
Considering there is an aging population Gap should think about marketing their brand to an older generation. There are many different ways in which Gap could do this, for example using older models in the advertising campaigns .
SMART TECHNOLOGY
New inventions such as the smartphone and tablets have changed the way in which people shop and experience a brand.
Through the use of this technology and social media, consumers are much more connected with brands and are constantly kept up to date with company news, helping maintain strong relationships with customers.
Gap have done well in setting up these social media websites, especially Instagram. Gap were the first brand to join ‘Instagram Direct’. They set up a campaign where they invited the first 15 commenters to take part in its #WIWT (What I Wore Today) challenge.
Gap being the first brand to do this on a new piece of social media is a fantastic way to get a huge amount of media attention.
This shows how much Gap wanted an opportunity like this by responding so quickly. Gap should continue to look for opportunities like this and should really focus on connecting with its consumers through these social media sights 16
EMERGING MIDDLE CLASSES
As a result of economic growth there have been huge sections of the population moving out of poverty and into the middle class.
This means that more of the population will have more disposable income and will be more willing to go out and spend that extra bit of money on luxury items (clothing).
Gap could therefore have the opportunity to increase their prices as consumers will be spend more money. Resulting in a rise in sales and overall profit.
THE URBAN TRANSITION
City growth has risen considerably over the past few years.
‘The global shift towards urban living is shaping consumer markets and demand.’ (2) - Euromonitor International
More people in metropolitan cities will mean there is a higher demand for clothing in stores. Therefore Gap must ensure that they have plenty of stock to cope with this high demand.
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COMPETITOR ANALYSIS Gap have several competitors within the fashion industry for different reasons.
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In terms of the apparel market:
In terms of high street fashion:
UNIQLO
TOPSHOP
HOLLISTER
ZARA
ABERCROMBIE AND FITCH
RIVER ISLAND
AMERICAN APPAREL
URBAN OUTFITTERS
In terms of quality:
In terms of price:
MARKS AND SPENCER
PRIMARK
NEXT
H&M
LEVIS
NEW LOOK
During our primary research in London, we had an in -depth interview with the store manager at Gap’s flagship store. He stated that UNIQLO were currently their biggest competitor, due to the fact they offer similar products at high quality. We also spoke with one of the store assistants and they said that in terms of their denim ware, Levi were their biggest competitor, in terms of quality and price.
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UNIQLO SWOT ANALYSIS
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STRENGTHS
Japan’s number one casual wear brand.
High quality
Low cost production and management
Fashionable and essential
Wide range of products— women’s, men’s, children.
WEAKNESSES
Hasn’t got a very strong brand loyalty
High cost due to import tax
Low product variety
OPPORTUNITY
Establish a store at Bukit Bintang, Kuala Lumpur
Low priced, apparel clothing are very popular in Japan, creating huge business opportunities.
THREATS
Lack of brand awareness and low popularity due to low availability in Malaysia
Difficult to gain market share due to high competition
Continue to spread brand awareness worldwide
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micro trend analysis 22
"THE POSSIBILITY TO BE APPRECIATED FOR SOMETHING IS MOTIVATING." #BACKTOBLUE
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COMPETITIVE BRAND ANALYSIS MAP HIGH PRICE
LOW FASHION
HIGH FASHION
LOW PRICE 24
From looking at the brand positioning map Gap have many competitors on the high fashion axis. This suggests that Gap should definitely think about becoming a more trendy, fashion forward brand in order to compete with brands such as Topshop and Zara. Gap need a strong USP in order to differentiate themselves and stand out from the crowd, which currently they aren’t very successful at doing. Gap are also relatively high on the price axis, suggesting that maybe their products are too expensive for what they’re offering. Therefore Gap could choose to lower their prices but still offer high quality products like brands Zara and Next. However, Gap still are successful in its brand position in terms of quality. They are one of the top brands for offering very high quality, long lasting products.
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‘WHAT’S RUN ITS COURSE IS COMMON CULTURE THAT CONFINES. WHAT TAKES ITS PLACE ARE ALL THE SPARKS AND INSPIRATION THAT CHARGE AN INDIVIDUAL WITH AN INDIVIDUAL STYLE.’ - GAP 26
brand audit 27
BRAND OVERVIEW BRAND MISSION “Gap, Inc. is a brand-builder. We create emotional connections with customers around the world through inspiring product design, unique store experiences, and compelling marketing." (3)
BRAND ESSENCE high quality / simple / casual / basic / durable
BRAND POSITIONING STATEMENT For ages 18-28 who want simple, classic, apparel clothing. Gap is the brand that will provide consumers with high quality, long lasting, wardrobe must haves. Gap believe their purpose is to ‘make it easier for you to express your personal style throughout your life. We have more than 150,000 passionate, talented people around the world who help bring this purpose to life for our customers’. (4) 28
AAKAR MODEL AS AN ORGANISATION
AS A PRODUCT
STRONG HERITAGE
HIGH QUALITY
DEDICATED TO QUALITY
BASIC
ACCESSIBLE BRAND
CASUAL DURABLE
LONG LASTING
AS A SYMBOL CLASSIC SIMPLE
EASILY RECOGNISED
AS AN EXPERIENCE RELIABLE STRESS FREE
TRUSTWORTHY
NAVY/WHITE
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BRAND HEALTH AWARENESS
USAGE
Gap is a worldwide known brand, but has decreased hugely in popularity over the years.
In stores
Online
Outlets
PERCEPTIONS High Quality
Basic
Boring
Dated
Not Fashionable
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CONSUMER SEGMENTATION CONSUMER PROFILE EXAMPLE AGE 18-28 RELATIONSHIP
Single, Relationship, Engaged PROFESSION: Student, Graduate, Intern, Artist, Teacher. INTERESTS
Gap’s target consumer is between the ages 18-28. Here is an example of who Gap would say their target consumer would be. However from our primary research, results show that this age range do not really choose to shop at Gap. Instead Gap is more popular with ages 31-50.
Coffee and lunch dates with friends, TV series, Art. STYLE Classic, Natural, Simplistic. 32
As said previously, Gap should definitely consider targeting their brand at an older generation as that’s where the demand seems to be. Here is an example of what a consumer profile would look like for a slightly older target market.
NEW CONSUMER PROFILE EXAMPLE AGE 35-45 RELATIONSHIP Single, Relationship, Engaged, Married
The next double page shows pen portraits of who Gap consider their typical male and female consumers to be.
PROFESSION: Housewife, Entrepreneur, Artist, Fitness Instructor INTERESTS Yoga, Running, Reading, Dinner dates. STYLE Sophisticated, Simplistic, Neutral. 33
PENPORTRAIT
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GRADUATE SMARTLY DRESSED
ACTIVE
OUTGOING
35
brand opportunities 36
“I’M LEARNING EVERYDAY, THE WORLD’S GETTING BIGGER.”
#BACKTOBLUE 37
SWOT ANALYSIS The SWOT analysis gives a clear overall view of Gap’s key successes and the areas in which they can improve. The key findings from my research strongly support the information in the SWOT analysis. For example, one of Gap’s weaknesses is that they are seen as an out of date brand. The opportunity I feel that will benefit Gap the most is for them to think about changing their product range. Although their new advertisement campaign for ‘Be Bright’ includes exciting new colours, the clothes themselves are still very basic. Gap should start trend forecasting and try something completely different in order for the younger generation (their so called target market) to become more interested and start choosing Gap over competitors.
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STRENGTHS
Global brand recognition. Strong brand loyalty. Clothing is high quality, durable and long lasting. Baby Gap is a very popular range that is always in high demand Successful and creative marketing campaigns. E.g. ‘Back to Blue’ and ‘Gap Red’
OPPORTUNITIES
Launch new stores in Taiwan
WEAKNESSES
THREATS
Continue expansion in China with a further 35 stores Push brand awareness through Facebook and Twitter and boost sales through online promotion. Change and adapt product range to in order become more trendy and fashion forward.
High competition in apparel market. Gap is not seen as a very fashionable brand in comparison to other high street stores such as, Topshop. Gap only markets in the apparel market. Gap market their brand to the wrong aged consumer.
Competitors are offering more fashionable clothing at more reasonable prices. Rapid changing trends. The current economic climate means less consumer expenditure and therefore less sales.
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ANSOFF MATRIX The Ansoff Matrix like the SWOT analysis, is a marketing planning tool that helps suggest growth strategies for a business. Overall looking at the model, I feel Gap should focus on diversifying. As Gap only current operate in one market (apparel market) it would be great opportunity for them to enter a new market and do something completely different. E.g. home ware. This would be the riskiest strategy for Gap as they would be moving into a market where they have little experience and knowledge. Therefore it would be crucial for Gap to have a clear idea of what it would expect, this could be done by both primary and secondary research. The higher the risk, the higher the reward.
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EXISITING MARKETS
EXISTING PRODUCTS
MARKET PENETRATION
PRODUCT DEVELOPMET
Gap currently offer a wide range of apparel clothing and accessories to the follow: Gap Women Gap Men Gap Toddler (Girls and Boys) Gap Baby Gap Body Gap Fit Gap Maternity
MARKET DEVELOPMENT
DIVERSIFICATION
NEW MARKETS
NEW PRODUCTS
Gap decided to take advantage of China’s growth and planned to open 35 stores by the end of 2012 (5). Planning new ventures in Europe. Gap is now available to several countries due to online shopping and worldwide shipping. New stores in Taiwan
Gap recently released their ‘Be Bright’ advertising campaign, which involves lots of brightly coloured denims and khakis. Gap wanted to inject new energy and confidence into their product range. Gap release seasonal trend collections such as ‘Style at Work’ and ‘Valentines Day’. This gives Gap the opportunity to re vamp their products.
Gap could consider producing a home ware range. Brand such as Marks and Spencer's and Next have done this have has resulted in great success. Gap could become more vertically integrated. Currently all Gap’s manufactures and suppliers are independent. Therefore Gap are affected by the increase in production cost. By becoming vertically integrated Gap become in control of cost and production time. 41
ke y c o n c l u s i o n s & recommendations 42
“WHAT MAKES SOMEONE UNIQUE?”
#BACKTOBLUE 43
ISSUES & RECOMMENDATIONS The top 5 big issues Gap need to address going forward into the future are: 1) Gap are marketing to the wrong segment of the market in terms of age. 2) Gap are considered as an out of date and unfashionable brand. 3) Gap have very high competition. 4) Gap only operate in the apparel market. 5) Gap have seen a decline in sales over the past few years.
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WHAT CAN GAP DO? 1)
Gap should definitely consider marketing to an alternative age range. Our primary research (App.2 and App.5) shows that their current target market (ages 18-28) do not choose to shop at Gap, but the brand is popular with ages 31-50. Gap should reflect the consumer they want to attract through the use of social media, various marketing campaigns and using older models in advertising. Therefore Gap should be targeting this older generation, where they know they have demand and can ensure sales. An example of the type of consumer they could target is seen on page 33.
2)
Todays generation are much more experimental in the way they dress. Although Gap offer great, basic, every day, high quality clothing it’s not enough to keep up with the pace of other high street stores who are dedicated to following the latest fashion trends. E.g. Topshop. Gap could think about launching a trial clothing range with all new designs that reflect current fashion trends. By doing a temporary trial Gap could see whether or not a new brand image would be a success or failure for them, and if successful could lead to great success for the brand and would be much more appealing to a younger market.
3)
Gap has lots of competition within the fashion industry. It is crucial for a business to have a USP in order for them to stand out and differentiate themselves from other competitors. This is something Gap are struggling to do. The main reason for this I believe is due to them not being a trendy, fashion forward brand. So, similarly to what has been said above Gap need to consider changing and adapting their clothing range in order for them to compete with these other high street brands who strive on being unique.
4)
Gap currently only operate in one market, the apparel market. This is quite risky for Gap because if that markets collapses for example due to economic reasons in my PESTLE analysis, there is not another branch for Gap as a company to fall back on and bring in some source of income. Therefore, Gap could consider looking into a new markets, such as homeware. Although it would be a big risk moving into a new market with little experience, Gap’s fellow competitors Marks and Spencer and Next have had great success branching into homeware. This would suggest that Gap could also have the same success through lots of market research and a clear business plan.
5)
Over the past 10 years Gap have seen a considerable decrease in sales in the USA and UK. However their aim over the next few years is to focus and grow in international markets and open up new revenue channels. Gap should definitely take advantage of China being the second largest apparel market in the world. Total apparel sales increased from $110 billion in 2009 to $140 billion in 2012 and expects to reach $200 billion by 2016 (6).
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CONCLUSION From the issues and recommendations highlighted in this report, it is clear that Gap have several problems that need to be addressed. In order to determine future and continuous success, Gap need to focus on the strategies suggested. This will give Gap the opportunity they need to move forward and become the brand that everyone used to love.
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BIBLIOGRAPHY Books
JACKSON, T and SHAW,D. 2008. Mastering Fashion Marketing. Palgrave Macmillan.
POSNER, H 2011. Marketing Fashion.
Articles:
ASSOCIATED PRESS. 2013. Daily Mail: Gap is back in fashion!
BIRNBAUM,D. 2012. Just Style: Strategies for success (Part V).
EASTON.M. 2013. BBC: More UK births than any since 1972.
FASHION UNITED. 2013. Gap is the first brand to use Instagram Direct.
FORBES.2013. Gap Inc stumbles into industry weakness but long-term outlook is still positive.
HUFFINGTON POST. 2012. The Gap pushes its way into China, After closing shops at home.
POULTER, S.2014. Daily Mail: Toxic chemical residues found in children’s clothes and shoes made by major brands. 48
ADDITIONAL SOURCES INTERVIEWS
Gap Store Manager, 2013. Interviewers: HOBBS,C and LAMPARD,E. London 7th November.
Gap Shop Assistant, 2013.Interviewers: HOBBS,C and LAMPARD,E. London 7th November.
WEBSITES
BIRKNER, C. 2011. Back to Basics.
Available at: http://www.marketingpower.com/ResourceLibrary/Publications/MarketingNews/2011/11-30-11/ back2Basics.pdf (Accessed 15th January 2013) KJAER LISE, A. 2013. Looking at society and tomorrow’s people. Available at : http://kmhassociates.ca/resources/6/MACRO%20TRENDS%202015+.pd (Accessed 19th January 2013)
THE TIMES.
Business Case Study.2011. External Environmental theory.
Available at: http://businesscasestudies.co.uk/business-theory/external-environment/how-businesses-are-affected-bygovernment-policy.html#axzz2qs2ml1g0 (Accessed 20th January 2013)
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REFERENCES (1) EASTON.M. 2013. BBC: More UK births than any since 1972. Available at: http://www.bbc.co.uk/news/uk-23618487
(2) The Euro Monitor International. 2012. 10 Global Macro Trends for the next five years. Available at: http://blog.euromonitor.com/2012/11/10-global-macro-trends-for-the-next-fiveyears.html
(3) & (4) FARFAN, B. 2012. The Gap stores mission statement. Available at: http://retailindustry.about.com/od/retailbestpractices/ig/Company-Mission-Statements/ GameStop-Mission-Statement.htm
(5) & (6) HUFFINGTON POST. 2012. The Gap pushes its way into China, After closing shops at home. Available at: http://www.huffingtonpost.com/2012/02/15/the-gap-china_n_1278898.html 50
IMAGES Front Cover: Water Colour Image of Gap http://www.pinterest.com/hobbs3083/gap/
Page 5: Woman in black http://www.globalgiants.com/archives/2007/08/gap_introduces.html Page 6: Gap models http://brynnjohnson.com/Gap Page 9: Guy in denim shirt and jacket http://www.pinterest.com/gap/ Page 10: Models in multi-coloured trousers http://blog.jedroot.com/jri/2013/02/dennis-gots-for-gap-spring-2013-collection-campaign-.html Page 14: Gap shopping bag on flowers http://www.pinterest.com/pin/72409506481017389/ Page 16: Ageing hands https://www.google.co.uk/search? q=aging+population&source=lnms&tbm=isch&sa=X&ei=9lPdUqWfNKve7AaZsoDQBQ&sqi=2&ved=0CAcQ_AUoAQ&biw=1280&bih=907#q=old+people+hand&tbm=isch&facrc=_&imgdii=_ &imgrc=xgY4JeOSj3yTzM%253A%3BahNo_U38klHcQM%3Bhttp%253A%252F%252Fhbi.ucalgary.ca%252Ffiles%252Fhbi%252Fimages%252FOld%252520hands_modified.jpg%3Bhttp% 253A%252F%252Fgoodcompanyapparel.wordpress.com%252Fpage%252F5%252F%3B1131%3B959
Iphones: http://www.technobuffalo.com/2013/07/29/iphone-5c-named-confirmed/ Page 17: Shadow family picture http://teachingkidsnews.com/2012/09/23/1-the-average-canadian-family-has-changed-according-to-new-census-data/ City skyline: http://www.tripadvisor.co.uk/Tourism-g60763-New_York_City_New_York-Vacations.html Page 18: shoes http://www.pinterest.com/gap/gapgrams/ Page 20: Uniqlo stores http://www.pinterest.com/uniqlo/uniqlo-around-the-world/ Page 27: Dotty Jeans http://www.pinterest.com/gap/gap-advertising-campaigns/ Page 31: Denim Collage http://www.pinterest.com/anythingstuds/edgy-indigo-styldby/ http://www.pinterest.com/megangilger/styldby-striped-classics/ Page 32: Girl in Striped jumper http://www.pinterest.com/pin/219339444325744900/ Page 33: Woman http://en.mediamass.net/people/laura-ponte Page 36: Hands in pocket http://www.pinterest.com/pin/72409506482024516/ Page 42: Guy in denim jacket http://www.pinterest.com/gap/ 51
APPENDIX App.1
App.2
App.3
App.5
App.4
App.6
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App.7
App.9
App.8
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App.10
SURVEY 54
I confirm that this work has gained ethical approval and that we have faithfully observed the terms of approval in the conduct of this project.
Signed……………………………………
Date……………..
WORD COUNT—1,307 words. 55
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