importantly, it encourages customers to come back regularly and,because styles are only available for a limited period, it promotesa sense of exclusivity.Small batch production creates a scarcity premium andencourages impulse purchase. The process starts with an order from the store manager. Becauseof the logistics system, the time between receiving the order atthe distribution centre and delivering the goods instore is, onaverage, 24 hours for Europe and 48 hours for the remainingstores.Inditex's roots as a manufacturing company served as a greatasset in devising the efficient fulfilment model it uses today. From1975 onwards its factories manufactured specifically for its stores. The advantage of having started the supply chain process frominside the company meant customer service was always at theforefront.
2.How does its pricing structure impact the marketing andbusiness strategy?
Zara’s business model makes it more profitable then any otherretailer. We already know from marketing that the retailer getsalmost half the price of the commodity sold. So by playing boththe role of the manufacturer and the role of the retailer, Zara isdefinitely much more profitable than the average retailer withsimilar posted prices.Zara’s pricing strategy is to set price equal to cost plus a targetmargin. “Zara prices are based on comparables within the targetmarket, subject to covering costs plus a target margin.”