Marketing of Zara fashion wear in

China

Spring semester, 2015

1
 Tutor: Hurlum Heisah

Module No.: HUMS 3006

Date: 14th Apr. 2015

Word count: 2047

Group members:

P1301x434

P1401049x

P14010x03

P140101x7

2
Table of Contents
Introduction ......................................................................................................... 4

Zara as a fashion wear .......................................................................................... 4

Chinese markets for fashion wear ......................................................................... 5

Geographic Segmentation in China........................................................................ 6

Demographic Segmentation by Income ................................................................. 6

Demographic Segmentation by age and gender ..................................................... 7

Competitive advantages ....................................................................................... 8

The differentiation of Zara (USP) ........................................................................... 9

Conclusion .......................................................................................................... 10

References .......................................................................................................... 11

Bibliographies ..................................................................................................... 12

3
Introduction

Chinese fashion culture has formed and developed only over the past 20 to 30 years.

With the steady growth of the Chinese economy, Chinese consumers' purchasing

ability keeps increasing, while the vast consumption potential will offer a great

opportunity for the people who engaged in China's fashion industry. This report

intends to examine the marketing of Zara fashion wear in China. It will include

analysis of the product, the pricing policy, the distribution channel and the product

with the details of segmentation. There are many famous and popular brands of

fashion wear in China, meanwhile, Zara faces a super market with strength

competition. Moreover, this report analyze Zara’s competitive advantage, and

through research, to describe the unique selling proposition of Zara.

Zara as a fashion wear

Zara is a Spanish chain store owned by Inditex Group, which was founded by

Amancio Ortega in 1975. So far, Zara runs about 1390 stores in 74 countries. Zara

designs and produces clothes, shoes and accessories for women, men and children.

Zara concentrates on excellent designs and lower prices, which catches the young

people’s eyes in the apparel market. Young people love Zara very much because

they can afford it as well as having high fashion.

4
Chinese markets for fashion wear

‘Now China is not only the biggest producer and exporter of textiles and clothing,

according for 50 per cent of world’s total fibre production and 58 per cent of world

texiles and clothing trade in 2009, but also a potential buyer and importer, backed by

a fast-growing market’ (International Trade Centre, 2011: 1). In 2008, the financial

crisis lead to world trade textiles clothing dropped sharply, the Chinese market was

consequently affected. However, the Chinese government began to implement

policies attempted to stimulate the domestic economy. International Trade Centre

(2011) has pointed out that, “China’s per capita fibre consumption increased from 4.1

kg in 2000 to 20.3 kg in 2008”. (p.1) Restoring the economy will accordingly enlarge

the market and provide more opportunities to the industry in the future. According to

the National Bureau of Statistics of China (NBS), the total apparel sales grew by 24.2

per cent year-on year in 2011, reaching 795.5 billion Yuan.

With a population of 1.4 billion and a rapid rising economic trend, China offers a

lucrative business opprtunity for the rest of the world. Due to the appreciation of the

RMB, which will bring huge changes in Chinese people’s lives style. In 2013 Chinese

clothing expenditure was £103 billion, a report by consultancy Conlumino says. At

the same time, this also means that Chinese consumers will have more stronger

purchasing power. China is accordingly providing a promising market with

unprecedented potentials to a crowd of business organizations. Chinese young

people, especially between the ages of 25 to 35, pay more attentions to fashion

wear. The key for the success of Zara is the fast fashion. Currently, Chinese apparel

5
market is moving towards the direction of fast fashion, which is in line with the

development direction of Zara. This offered Zara a very favorable condition for

entering the Chinese market.

Geographic Segmentation in China

China is the third largest country with an area of 9.6 million square kilometers, over

1.4 billion population that is more than any other country in the world. Based on its

distinct political and economic development, China has been divided into different

level cities. For example, the so called first-tier cities include Beijing, Shanghai,

Guangzhou and Shenzhen, second-tier cities has more than thirty and those cities

also have a good economic base with a large quantity of population. A data of China

National Bureau of Statistics (NBS) indicates that the first-tier cities have a massive

population with over CNY 60,000 of average annual income. Zara as a Spanish

clothing retailer should focus its consumer markets on the first-tier cities, due to the

high population density, a large number of middle-class and income level much

higher than the national average. Zara as a Spanish clothing retailer, suits the

consumer on both the first-tier cities and second-tier cities.

Demographic Segmentation by Income

In most cases, price is always people’s first consideration of purchasing. In 2014,

China’s GDP was CNY 63.65 trillion or USD 10.36 trillion. GDP per capita reached

46,652 Chinese Yuan, with a percentage of 9.9 increases over the previous year.

6
The rapid economic growth of China would represent plenty of opportunities for

foreign corporations (e.g. Zara) to expand the potential consumer markets. China as

a developing country could be segmented into three different consumer groups. That

is a small number of newly rich, a growing middle-class and a large number of poor.

China is the second largest luxury market in the world. The luxury consumption is

rising sharply among the rich people in China. In addition, Chinese middle-class with

higher education and good income is growing rapidly. Purchasing quality products

and foreign brands is becoming a growing trend. As a result, the Chinese middle-

class could be the biggest group of potential customers for Zara.

Demographic Segmentation by age and gender

Focusing on segmentation by age and gender could be necessary for Zara’s

development of consumer markets in China. According to the Boston Consulting

Group China Fashion Research Survey, the younger generation tends to spend more

on fashion wear than other generations, fashion conscious and foreign brands are

more considered by the younger generation. Especially consumers from 25 to 35

spend most on clothing, Zara as a Spanish brand is widely accepted by this age

group. In general, female consumers have stronger purchasing power on fashion

wear than male consumers. In China, population of female is over 650 million, which

provides the largest consumer markets for Zara women’s wear. Moreover, the

demands for women’s wear have continued to increase as the number of Chinese

career women has risen. However, China with a male population of nearly 690

million, Chinese male consumers is still a huge potential market for Zara men’s wear.

7
Competitive advantages

Nowadays, customers spend their money on electronics, education, healthcare,

vacation travel and so on. They are spending less money on clothes. Moreover, they

are selecting the latest fashionable clothes but they want it in less price. Thus, to

gain the market and attract the customer, Zara is the only brand who produces the

up to date fashionable clothes in affordable price. The European fashion plays an

important role in the society because people always want to look good and wear

something fashionable that is very important for them. People are always finding the

way that they can become the first one representing the latest fashion. Zara also

wants its customers to look different from others. Therefore, Zara provides the best

and most fashionable clothing to its customers with high quality and low price. Zara

has many competitive advantages, such as short lead-time, production completed by

Zara and no advertising cost. In a short amount of time Zara is able to distribute and

produce new style of fashion for their customers. According to research, Zara’s most

powerful competitive advantage is that they are newest design. However, Zara’s

marketing focuses on young people’s wears, so they offer latest fashion to their

young customer in less than two weeks due to their good distribution strategy and

fast production, which is 12 times faster than their competitors. It allows them to

attract the customer from the market. The next big advantage is that Zara provides

their distribution center closer to their retailers so they can reach the Zara’s retail

stores in less time. This advantage makes people have to buy the latest clothing in

time. Another big advantage is that Zara creates clients prospective by their

segmentation on different characteristics such as lifestyle and age. Zara sells three

8
different kinds of items, for children, men and women. Zara aims to cover young

consumers, and want to provide them best latest fashionable clothes in fewer prices.

The advertising cost of Zara products is significantly less than other company’s

products. The popularity of Zara’s products is magnificent. Moreover, Zara focus and

produces superstar inspired clothes. Zara attracts their customers in many ways.

They provide their customers best up to date and modern fashions. Mostly, Zara

having their distribution center out of Europe. Therefore the waiting time is almost

two weeks but in China is around two months. International brand are taking three to

four months. This means that Zara warehousing costs nearly 60 percent less than

other clothing. Zara has a following of more than six million dollars on fashion brand.

The differentiation of Zara (USP)

Young people like to follow fashion but fashion styles change very fast. Zara defines

its own unique selling proposition (USP) as its resolve and ability to react

immediately on changes in styles and fashion by responding to movement of

products in its own stores. Products remain on the shelves for no longer than four

weeks, and if a product or line does not sell fast enough, it is rapidly discontinued.

This imposes pressure on fashion conscious customers to buy new products to keep

up with the designs in the stores before they go out of fashion. According to the

research, Zara has more than 200 professional young designers from different ethnic

groups with 20 countries, and their average age is about 25 years old. They are

closely following the pace of fashion. Designers always work with passion to catch

the fashion styles so that the young people pretty faithful Zara. The artistic directors

9
lead the designers to follow fashion, the artistic directors in charge of decision-

making, incorporating the latest prevalence information, moreover, redesigning the

styles, finally, and combining into a new clothing series. They are always shuttling

between fashion shows in Paris, Milan, New York, Tokyo and other fashion cities. So

that they could launch the simulation fashion items as soon as possible. Zara

merchandise spends on average three weeks from design to shop sales, the fastest

one only need one week.

Through this strategic, once the most fashion styles appear in anywhere in the world,

which can be produced within five days by Zara, at the same time, it will be off Zara’s

sale shelf in five days when the same fashion style come out in the market. Zara try

to make sure that put all the similar products off Zara’s sale shelf. Therefore, to

competitors, the “copy master” Zara has the latest style with reasonable prices. For

the competition of Chinese retailer, it is still great. Zara’s character is always at the

forefront of the fashion trend. The targets of consumers are these who wear women’s

fashion clothes. The requirement for quality is low. The USP of Zara is a big

advantage of completion in fashion. In perspective of Zara current develop situation,

there is still a big room for it.

Conclusion

In short, China is a developing country with such a large number of people. However,

there are many first-tier cities and second-tier cities with a good economic base and

Chinese young people more and more pursue fashion. Meanwhile, China is a big

market for fashion industry. With this situation, consequently, the profit will be very

10
impressive so that many companies want to have a market share in China. Zara has

its own unique characteristics and it has developed very well in the past few years in

China. According to above, Zara has steady progress and achieved remarkable

results. With China’s booming economy, thus, fashion will increasingly play an

important role in the future, especially for young people. They are getting intense

pursuit of fashion clothes, but fashion changes fast. Zara is a leader of fashion and

with a low price, it make young people can easily follow fashion in time. Anyway, It

has a good position in China. As the great potential, it leads to strength competition.

Any company wants a further development and more opportunities must have

outstanding sides. Zara, in order to stand out from others, has its own unique selling

proposition (USP). This is a big advantage for competition in the market. It is the

trend consistent with Chinese fashion standards. Therefore, the USP of Zara is a

very important element for defeating others in the fashion world in the future. Zara,

hopefully, will develop better in China and the young people around 25 to 35 years

old will welcome it.

References

‘Number of stores of fast fashion specialty retailer ZARA in China from 2010 to 2012’.

(2015) The Statistics Portal. [Online] Statista.com. Available from:

http://www.statista.com/statistics/289368/china-zara-store-number/ [Accessed

08/04/15].

11
International Trade Centre, (2012), The Chinese Market for Clothing, [Online]

Intracen.org. Available from:

http://www.intracen.org/uploadedFiles/intracenorg/Content/Exporters/Sectors/Food_a

nd_agri_business/Cotton/AssetPDF/China%20final%20technical%20document%20f

or%20print1.pdf [Accessed 09/04/15].

Strother and Stuart, C. (2014) The Consumer Market in New China, Journal of

Global Business Issues, fall, 8, 9, 2, 9-17, ProQuest Business Collection, last

updated 20/02/15.

Bibliographies

2014, Available from: http://www.indexmundi.com/china/demographics_profile.html

[Accessed 08/04/15]

‘China overview’, 2015, Available from:

http://www.worldbank.org/en/country/china/overview [Accessed 12/04/15]

Matterw, G. Available from:

http://yongkim.ba.ttu.edu/MKT3352/MattrewG_ICA05Best.pdf [Accessed 08/04/15]

12
‘English business report’, 2011, Available from:

http://www.ensight.ro/newsletter/no45/art1_2_en.html [Accessed 07/04/15]

13