Topshop, Zara, Uniqlo and H&M are all four fast-fashion companies.

These
fast-fashion brands have cheap labor, cheap materials and fast production
schedules. This factors enable Zara to adopt low pricing strategy. Zara was
recognized as its first-class image, second-class production and third-rate price.
That means it doesn’t have expensive design, advertising and raw material
costs. Zara’s prices are about ¼ of other brand prices. For example, in
Singapore, women’s coats usually sells at 19-26$ in Zara’s shop. However, the
same type products in other shops sale at 40-60$.

Luxury fashion brands should pay attention to the increasingly activities of Zara.
Most luxury fashion brands adopt high pricing strategies. They aim to provide
high-quality products for high-income groups. We understand that being
expensive is a significant marketing strategy to build a luxury brand. However,
Zara provides products at a reasonable price to target customers. Zara will win
on price. Zara’s prices are less expensive than luxury fashion brands’. Gucci,
Chanel and Louis Vuitton have raised the price of products in recent years.
Compared with these luxury fashion brands, one of real competitive advantages
for Zara is price (Ghemawar&Nueno,2003). Zara’s pricing strategy not only the
value proposition is evident, but also is affordable to most customers. Luxury
brands have to admit Zara has a strong position in the global market.

In consideration of optimizing development and training costs, the current

pricing strategy is suitable for Zara. It mainly uses value-based pricing
approaches. The strategy focus on customers’ perceptions of value rather than
company’s costs to set price. Its target customers want fashion clothes but
could not afford the high price of luxury fashion brands. Zara counts broken
code and unsalable products every day. These products will be sold at low
price. In addition, it often provides discounts at the end of season.

To sum up, Zara provides its customers the last fashion trends at a low price,
and they surely know how to do that and keep improving every year. As José
María Castellando stated: “the fashion world is in constant flux and is driven not
by supply but by customer demand. Zara provides consumers what they want”.