STUDY ABOUT THE PRICING STRATEGY

OF ZARA

Submitted by :

Student Name: Pooja yadav

Class : B.com (hons) Sec - C ,

3rd semester

Enrollement No. : A7004616093

Specilization : Marketing

Faculty : Dr. Rekha Khosla

Designation : Assistant Professor

AMITY BUSSINESS SCHOOL, LUCKNOW

AMITY UNIVERSITY LUCKNOW

(TERM PAPER REPORT IN PARTIAL FULFILLMENT OFTHE AWARD OF FULL
TIME) B.COM(HONS)

(2016-2019)

AMITY BUSSINESS SCHOOL

AMITY UNIVERSITY LUCKNOW

1
 FACULTY CERTIFICATE

Forwarded here with a NTCC report ( TERM PAPER) on study of Pricing Strategy of Zara

submitted by Pooja Yadav , Enrollment No. A7004616093 , student of B.Com III rd

Semester (2016-19).

This project work is partial fulfillment of the requirement for the degree of bachelor in

commerce from Amity University Lucknow Campus, Uttar Pradesh.

Dr. Rekha Khosla

Assistant Professor

Amity University,

Lucknow Campus

DECLARATION
2
Title of project report study of Pricing Strategy of Zara .

I understand what plagiarism is and am aware of the Amity University’s policy in this regard

I declare that

a) The work submitted by me in partial fulfillment of the requirement for the award of
degree B. Com (H) assessment in this Term paper is my own; it has not
previously been presented for another assessment.
b) I declare that this Term paper is my original work. Wherever work form other
source has been used, all debts (for words data, arguments and ideas) have been
appropriately acknowledged and referenced in accordance with the requirements of
NTCC Regulations and Guidelines.
c) I have not used work previously produced by another student or any other person to
submit it as my own.
d) I have not permitted, and will not permit, anybody to copy my work with the purpose
of passing it off as his or her own work.

The work conforms to the guidelines for layout, content and style as set out in the
Regulations and Guidelines.

Date: Pooja Yadav

A7004616093

B.com (hons)

AMITY UNIVERSITY, Uttar Pradesh Lucknow Campus

3
 CONFIDENTIALITY AGREEMENT

This AGREEMENT is between the office of the register Amity University Uttar Pradesh Lucknow
Campus and Pooja Yadav , a student presently studying at the Amity Business School ,B.com (H) .

The student named above desires to undertake NTCC ( Term paper) , Amity University , Amity
Business School (ABS) , B.com(H) . Amity University as a part of his studies. The competent
authority of the institute where the student is presently studying has officially recommended the
student, confirming his antecedents, track record and good moral character.

CONFIDENTIALITY:

Confidential information means any information of a secret or confidential nature relating to the
internship / training workplace. Confidential information may include, but is not limited to, trade
secrets, proprietary information, customer information, customer lists, methods,plans, documents,
data, drawings, manuals, notebooks, reports, models, inventions, formulas, processes, software,
information system, contracts, negotiations, strategic planning, proposals, business, alliances, and
trading materials and / or any other intellectual property of the University.

The student / intern agrees to observe the confidentiality requirements of the Amity University, its
Disciplinary procedure in all respects and any additional requirements set out by the Amity
University. Specifically, the students / intern agrees to observe confidentiality in the following
respects.

As University intern, I agree that:

1. I will use confidential information only as needed by me to perform my legitimate duties as

intern. This means, among other things that.
A. I will not seek confidential information for which I have no legitimate need to know,
B. I will not any way divulge share, copy, release sell loan revise, alter or destroy any
confidential information except as properly authorized within the scope of my internship:
C. I will not misuse confidential information or carelessly care for confidential information; and
D. I will strive to protect the privacy of all confidential information that I come into contact
with.
2. I will safeguard and will not disclose my access code or any other authorization I have that
allows me to access confidential information. I accept responsibility for all activities
undertaken using my access code and other authorization.
3. I will report to my Head / supervisor activities by any individual or entity that I suspect may
compromise the confidently of confidential. Reports made in good faith about suspect

4
 activities will be held in confidence to the extent permitted by law, including the identity of
the individual reporting the activities;
4. I will be responsible for my misuse or wrongful disclosure of confidential information and for
my failure to safeguard my access code or other authorization to access confidential
information. I understand that I have no right or ownership interest in any confidential
information referred to in this agreement. The University may at any time revoke my access
code, other authorization or access or confidential information. At all time during my
internship with Amity University, I will act in the best interests of PMC.

I have read and understand the above definition of “ confidential information “ I agree that I will
not at any time, both during and after my enrollment in University Internship, communicate or
disclose confidential information to any person corporation or entity.

It is understood that any breach of confidentiality will result in immediate termination of the
internship and that a report of the breach will be made by the concerned Head of Institution.

HAVE READ THE ABOVE CONFIDENTIALITY AGREEMENT AND AGREE TO ITS TERMS.

AGREED ___________ (SIGNATURE)

Pooja Yadav (name)

__________ (date)

Signature of Authorized signatory of the institution

(Institution deputing the students)

ACCEPTED

REGISTRAR

AMITYUNIVERSITY, UP

NOIDA

ACKNOWLEDGEMENT

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 I would like to express my special thanks of feeling to my guide Dr. Rekha Khosla
mam , who gave me the golden chance to try and do this glorious project on the
marketing , that additionally helped me in doing lot of analysis and that I came to
understand concerning such a lot of new things . I am extremely glad to her .

Secondly I would also like to thank my parents and friends who helped me to prepare the
project in this limited time frame.

STUDENT CERTIFICATE

6
Certified that the report is prepared based on the term paper project undertaken by me in

Study of Pricing Strategy of Zara under the guidance of DR . Rekha Khosla in partial

fulfilment of the requirement for award of degree Bachelor of commerce B.com (H) ,Amity

University, Uttar Pradesh

Date :

Pooja Yadav Dr Rekha Khosla Dr. Harshvardhan

Student Faculty guide Director ABS

CONTENT

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S. NO CHAPTERS TOPICS PAGE NO.
1 CHAPTER1 Introduction 9-10

2 CHAPTER2 Company 11-15

Profile
3 CHAPTER3 Literature 16-20
review
4 CHAPTER4 Research 21-23
methodology
5 CHAPTER5 Data analysis 24-37

6 CHAPTER6 Findings and 38-40

conclusion

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CHAPTER 1 : INTRODUCTION

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Handling 7000+ stores across the world and successfully popularising 8 fashion retail brands globally
under its umbrella brand architecture has helped Inditex  (parent company of brand ZARA) in
becoming one of the world’s largest fashion retail organisations. Zara’s 1st store was opened on 1975
in beautiful European nation Spain.  

Zara uses a mix of demographic, geographic and psychographic segmentation strategies in order to

serve the growing needs of the customers Zara has limited stores across the globe due to which it
uses selective targeting strategies to make their products available in the market. Usage-based
positioning strategies are used by Zara to highlight its customer’s centric approach to satisfy the
changing fad needs of the customers around the globe. Zara knows that its customers want new and
updated trends and accordingly it targets customers based exclusively on its designs. A business will
use a numerous of rating methods whereas marketing a product and services. The costs is set to
maximise earnings for every of the units oversubscribed or from the market overall .It may be wont to
preserve Associate in Nursing existing market from new comers , so to boost the market shares , with
within the market or to enter in an exceedingly new-fangled market .Price is most of the very
important and largely demanded module among the idea of selling combine. It helps the purchasers to
own a picture of the standards the firm must provide by their merchandise produce companies to own
Associate in Nursing exceptional name within the markets.

Inditex is the biggest fashion group in the world, operates over 7,200 stores in 93 markets worldwide.
The company's flagship store is Zara, but it also owns the chains  Zara Home, Massimo Dutti, 
Bershka, Oysho, Pull and Bear, Stradivarius and Uterqüe. The majority of its stores are corporate-
owned, while franchises are mainly conceded in countries where corporate properties can not be
foreign-owned.[ Zara is well-known as its high-fashion, low-priced business model. kids pursue
fashion however don’t have enough cash. José María Castellano expressed that “the fashion world is
in constant flux and is driven not by provide however by client demand. Zara provides shoppers what
they require .

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 CHAPTER 2
COMPANY PROFILE

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Industry Retail

Founder Amancio Ortega

Headquarters Arteixo , Spain

No. Of locations 2169 stores

Area served Worldwide

Products Clothing

Revenue US$ 15.9 billion

Website www.zara.com

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 WHAT IS ZARA

Zara is a Spanish clothes and accessories brand , it is the flagship brand of the Inditex group . few
clothing brands keep up with the latest fashion , are of high quality and yet ,affordable . It is probably
the amalgamation of all these qualities that made Zara , Spanish clothing brand become the go -to
fashion brand for all .

It is no surprising that Zara , which started off as a small store in Spain is now the worlds largest
retailer and its founder , Amancio Ortega , the 4th richest man in the world .

HISTORY AND FOUNDERS

It all begun when Ortega established a dress making factory , inditex , in the year 1963 . then years
later , he started off a mall store named as Zorba in La Corunna , Spain with a budget of 30 Euros .he
then changed the name Zara with no particular intensions thus with this our favourite fashion brand
was born . Slowly the empire from Spain expanded to rest of the country . And today it is close to
6500 stores across 88 countries around the world.

 The secret to Zara achievement largely is because of the way it kept up with street fashion
with the altering times . The brand takes a looks at how fashion is changing everyday . It
makes new designs and puts them into stores . Most of the other fashion brands would take
whole six months to get their new designs in the market .

 That is why Zara beats the rest of the brands and became the most wanted brand among
people who wanted to keep up with the ongoing trend . Ortega was famous for his view on
clothes as perishable commodity ; that people would love to use them and throw them back
away , just like yogurt or loaf of bread. It is often cited that he produces fresh baked clothes
that survive the changing street fashion trends for more than a month or two months .

 The customer is at the heart of Zara unique business model ,which includes design
,production ,distribution and sales through our extensive retail network .

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It is one of the international company . It belongs to inditex . It is one of the worlds largest
distribution group . The consumer is at the heart of their unique business model , which give
references to design , production , distribution and sales through the general retail network .

MISSION

Inditex group has clear and definite concept and plans for future. In their mission statement they have
described their priorities and general processes that are selected for organization. The founder has
chosen a set of strategies that ensures a long lasting, promising successful career. The group’s mission
statement for Zara, under the head of „Environmental Policies‟ says; “Through Zara’s business
model, we aim to contribute to the sustainable development of society and that of the environment
with which we interacts”. At every store level, the mission has been defined as,

 At the store they save energy.

 The eco-friendly shop.
 We produce less waste, and recycle.
 Our commitment extends to all our staff.
 An environmentally aware team.”

VISSION STATEMENT

 For features and formation of products, the mission is as follows, “With the product We use
ecological fabrics.
 Organic cotton
 A business vision for specifically Zara, a fashion based products offering company is, “ZARA
is committed to satisfying the desires of the customers. As a result they pledge to
continuously innovate the business to improve the experience. They promise to provide new
designs made from quality materials that are affordable”
 Through Zara business model we aim to contribute to the environment with which we
interacts ’
 Focus on the variability and the uniqueness of the products.
 Eliminates waste by being in the right place at the right time.

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DESIGN AND DISTRIBUTION OF ZARA

 The collections were created ,when extended and modified over time
 In the typical year ,zara introduced approximately eleven thousand new items or product ;
and the competitors averaged over two thousand to four thousand
 Shortly the lead time and flexibility was enabled by a vertically integrated supply chain
management
 Using this network , zara could consistently move a new design from conception through the
production and into the distribution channel in as little as three weeks . Two days after that
,the garments could be on sales rack in stores all over the world.

EXPANSION

 In 1988, the company started its international expansion through Porto, Portugal.
 In 1989, it entered the United States, and then France in 199o.
 During the 199os, Zara expanded to Mexico (1992), Greece, Belgium and Sweden (1993).
 In the early 2ooos, Zara opened its first stores in Japan and Singapore (2oo2)
 Russia and Malaysia (2oo3)
 China, Morocco, Estonia, Hungary and Romania (2oo4)
 The Philippines, Costa Rica and Indonesia (2oo5)
 South Korea (2oo8)
 India (2o1o)
 South Africa and Australia (2o11).

In September 2o1o, Zara launched its online boutique. The website began in Spain, the UK, Portugal,
Italy, Germany and France. In November that same year, Zara online extended the service to five
more countries: Austria, Ireland, the Netherlands, Belgium and Luxembourg.

SIZE AND LOCATION OF ZARA

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* Zara has over 2ooo stores strategically located in leading cities a across 88 countries

* It produces about 45o million items each year

* The creative team of 2oo designers produce around 18ooo different designs each

CHAPTER 3
LITERATURE REVIEW

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Due to economic, social as well as environmental problems in the developing countries, the
fashion industry is focusing on sustainability within the working environment of Zara. They
are trying to make sure that they should give the same quality as well as standards in their
production throughout their whole supply chain process of Zara. Zara is a flagship chain store
of the Inditex group. It is the most internationalized of the Inditex’s chains. Zara controls its
supply chain by designing, producing as well as distributing itself. To produce its products at
the minimal cost, Zara opts in order to source 80 percent of its products from the Europe .   In
the Spain, Zara becomes one of the most successful fashion companies; they are a success to
build an effective information exchange system with its management of the supply chain.

The fashion industry such as Zara is becoming more sustainable if the designers, fabricator as
well as the retailers are more sustainable in their norms. The way to produce sustainable
garments is the most accurate way to catalyze the consumer revolution towards both durable
as well as ethical fashion. Zara introduces its new design of products as well as launches their
new products very quickly. The company believes that more style is similar to new choices.
Akbalik and Penz (2011) opined that this strategy made their products more accessible in the
market and sold out their stock quickly also generates in customer related to next launch.

Current model of supply chain in Zara

Job Shop Production

Zara develops its structure in such a way that it supports the method of mass customization.
This type of customization is among the mass production as well as customization. It is a
combination of the Job shop as well as a continuous flow of the production system with a
very high efficiency as well as low volume (Basin, 2012). Therefore, Zara develops its new
structure and adds some competitive advantage in their business operations. By taking into
account an aggressive approach to risk management of fashion, the job shop production
continuously flows its fashion items (Esper & Russell Crook, 2014). It helps Zara to achieve
a high margin, but it turns the production design into competition marketing theory with the
help of taking the concept of supply chain management.

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Just-in-time Production Model
Just-in-time (JIT) is a Japanese technology that observes the inventory of a company. It is
first used in the car manufacturing industry such as Toyota that eliminates the wastes by
minimizing the inventory cost of holding, time of production as well as reduces the defects.
JIT is being utilized in the manufacturing units as well as lean thinking across the supply
chain as well as the business operations of Zara. Bortolotti, Danese and Romano (2013)
argued that Zara has reached at a position in order to adapt its technology as well as
principles of the value of the customer as well as its modularization. Market winners, as well
as qualifiers, are the primary determinants of various approaches of both lean as well as agile.

At first, there is a need to relocate the manufacturing sites gives an unenthusiastic impact on
the established industry such as spinning, weaving, and effects in unemployment of workers.

Secondly, it affects the ecological burden that compels from raise in transportation mileage. It
gives pressure on the orders of the fashion industry as the most of their shipments are
transported through the air and causes the increase in Co2 emissions. JIT sets to cut the cost
by reducing the number of goods as well as materials as Zara holds its stock. It involves both
producing as well as delivering the finished products to be sold (Constantine et al. 2012). 
The finished products of Zara products are to be assembled into the finished goods. Giese and
Trockel (2011) argued that one of the drawbacks of the just-in-time is that the re-order level
closing by its preceding demand. If the demand of the products crosses above the amount,
then the inventory reduces a lot faster as compared to usual, and it causes some problems in
customer services. In the case of maintaining 95 percent rate of service, Zara carries two
standard deviations of the safety stock (Esper & Russell Crook, 2014).  The shifts in demand
should be forecasted until the trends are to be established to reset the correct level of demand.

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 Figure 1: Just-in-time Production Model

Keeping Costs Down

While manufacturing in Europe, Zara controls to keep the cost of their products down.
Concerning the cost of marketing, Zara relies on its key retail locations as compared to
advertising in order to attract the customers (Gold, 2014). The company spends 0.3 percent of
its sales on advertising as compared to its competitors. In order to keep their cost down, Zara
chooses highly visible locations for their stores. Further from designing to the fashion of the
day, the strategy of Zara is dependent on producing small volumes as per their style. The
changing of products enables them to cut their discounts as well. Kashmanian (2015) opined
that only 18 percent of Zara clothing does not work with the consumers as well as it is
discounted.

The competition of Zara has being shown in the following figure:

The core competencies of Zara are mainly revolves the following:

The products have high turnover

Well-organized distribution system

Flexible production system

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Due to fast supply chain, the level of inventory is low

Assurance of the employees

Scanning of the fashion and market trends to meet up with the demands of consumers
associated to fashionable clothe

Material Requirement Planning (MRP) Model

Zara uses MRP model for its supply chain, as it is a fabrication planning as well as inventory
control structure. Mironov (2013) opined that using this model, Zara production system helps
to ensure their customers that perfect resources are available for production and those goods
are accessible to the consumers in order to prevent shortages. It diminishes the wastes by
sustaining the lowest probable material and product levels in stock. Zara divides their fashion
companies into two groups. The first group will compose of those businesses that oppose the
practices of sustainability, and they are trying to stay alive in the demanding environment.
The instant group improves the viability throughout the supply chain in order to utilize some
tools such as eco-labelling, administration systems, the community as well as environmental
audits, a society of practice, fair trade as well as clear transportation modes (Mostafa,
Dumrak & Soltan, 2013). Therefore, this model helps Zara to produce their products on time
by dealing with changes in the order.

Agility Model
Agility in the supply chain is used to become norms as the product life cycle shortens as well
as environmental forces are sometimes created and results in higher level of supply chain
management (Markman & Krause, 2014). It helps Zara to give the right products to the
consumers and at the accurate time. In the fashionable business concept of Zara, this model
helps to route the manufacturing flexibility of the company through automation and results in
rapid change. As compared to lean manufacturing, agile is more demand driven, it has
localized configuration as well as helps to maximize the effectiveness of the Zara Company
as well as its business operations.

Proposed Models of supply chain in Zara

Lean Production Model

Zara attempts to use both the tools as well as models of the lean operations to include the
green metrics in order to compute the excellence of the particular companies. Dues, Tan and
Lim (2013) opined that the lean, as well as the green approach, is obvious in practice; it
achieves what are the benefits of it. Sarkis (2012) suggested that based on the lean principles,
Zara specifies the value from the side of the end customers. It determines the value system
for the company by identifying the steps that are useful to create a unique value, mapping the
value stream as well as challenging each of the steps. The following issues are to be tackled
to take sustainable clothing into the mainstream:

Consumption of fashion increases in the number of fashion items that the customers buy and
then dispose of

Intense of cotton production and it requires lot of energy, water as well as pesticides

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Using toxic chemicals in the process of production that damages the health of workers and
environment

Unsustainable manmade fibres that take long time in order to degrade in landfill sites

The carbon burned as fabrics as well as clothing are being transported in the entire world

The consumption of energy while washing the clothes.

Inventory Optimization Model

The model helps the company to resolve the quality that should be delivered to each single
one of its retail stores via shipments that go away twice in each week. The stock those are
distributed is limited and ensured that each of the stores only receive just what they need
(Ozdemir et al. 2012). It goes on the way to the brand image of Zara. This quick in-season
turnover would locate Zara’s distribution headquarters in Spain; it allocates Zara to ship often
and within lesser batches. Tate and Ellram (2012) argued that if the design of Zara’s products
makes an attempt to pursue the latest trend, then it does not sell well as well as small harm is
done. Each of the Zara’s outlets sends in two orders per week on the particular days as well
as timing.         It extends the customers of Zara, who know what time to visit the stores for
getting new garments (Vincent, 2011). Therefore, this change should not disrupt the system
of Zara, but this success shows the strength of their operations. It enables the mass production
and leads to well-organized inventories, high profitability as well as creates value for the
shareholders in both short and long term

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 CHAPTER 4
RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

 To study the pricing strategies adopted by zara

 To study its preference among customers
 To analyse the awareness of customers regarding zara

RESEARCH DESIGN

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 Research available is descriptive so that to study the marketing strategies used by zara
 This project is based on secondary data . it refers to the data that was collected by someone
other than the user . ie internet ,newspaper and book.

OBJECTIVE.OF STUDY

 The objective of this report is to analyse the valuation strategy used by zara .

 The main objective of this project is how ,it use the effective pricing strategy to attract its
customers .

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 CHAPTER 5:
DATA ANALYSIS

DATA ANALYSIS

SITUATIONAL ANALYSIS

Zara has satisfied the customers and has implemented strategies that made it possible to
become dominant in fashion industry. Zara has been in market since two decades and has
developed its brand image in shoppers. All the 68 countries are following same concepts that
are associated with the original brand. Zara has an efficient and continuous communication
system with its customers and thus changes in markets and streets flow directly to the
designers and this information is depicted to be used in next range of designs. This continuous
steady market communication has enabled Zara to get know and respond to its customers and

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 ultimately meeting their expectations cause the success. Such demand management was
lacking in Mark & Spenser and to some extent with Sainsbury in 1990s, they did not match
their products with customers‟ expectations and this caused problems (Gluyas, 2004). Sudden
supply changes may cause wastage of resources, as done by Sainsbury. There should be an
optimal combination of demand management and supply chain management to cope with
market trends and to earn advantage over competitors (D. Walters, 2006). For retailers, the
main objective is to ensure delivery of product to end-user at reasonable prices and providing
consumer satisfaction, this is done by value chain emphasis and controlling the flow of
products. Zara has managed this by supplying the products from Spain directly and reduce the
intervention of third parties.

Environmental Analysis
Zara is working dominantly in Spain till now. The working environment, industry surroundings,
competitive pressures and other effective factors will be discussed now. This section will analyze the
existing choices i.e. opportunities and potential risks prevailing in environment.

Industrial Analysis ( PESTLE)

Successful organizations conduct a deep assessment of environment before expansion and making
decisions or setting goals for future. So is for Zara, we are going to discuss on PESTLE analysis for
Zara.

Political Factor
Government and political parties in a country are responsible for developing political environment.
Government is the major and silent factor in a business; in form of policies they may support an
industry. Zara has been in Spain till now and only one more major distribution centre for Europe. For
expansion of business in more countries, political support provided should be evaluated critically.
Zara has options to expand its business in European countries because of their safe and predicable
economic circumstances.

Economical Factor
Zara has been dealing in a single currency since its origin. The economical conditions of overall world
have been fluctuating in last few years but Zara is successful in getting market share and has not been
affected by the recession. The main reason behind was that Zara is not currently dealing in dollars and
is using a relatively safer currency for its dealings. Before entering new markets, the currency rates
and the economical condition of that country is evaluated. Spain has a stable market and predictable
demands in market.

Social Environmental Factor

Zara is currently operating in a single county Product, Price, Place, Promotion and that‟s why faced a
social influence that was already coped by Inditex group for its other brands. Zara luckily got a

25
country based on independent cultural roots. Spain has a long history, with fabulous contributions in
artistic and designing domain. This country has a calm social environment, attracting tourists on large
scales, having lots of bright cultural events. Strong tourism exchanges enables retailers like Zara to
get obtain customers and then retaining of customers is done by quality satisfying customers‟ needs.
Zara‟s strategy of higher turnover encourages sale of items in a single visit and thus tourists become
customers. Fashion at lower prices makes it easy to purchase for shoppers.

Technological Input
Spanish retailing companies have often gone through technological improvements. Many of the
competitors of Zara have brought new technological concepts in market in sales point atmosphere and
manufacturing processes. Zara has launched its technological growth in form of eco friendly stores
openings. Moreover, manufacturing processes have been made easy and simple by breaking process
into simpler tasks and then done by machines and final assembly is done by workers.

Legal Factor
Spanish government has rules that support and promote industrial development in country. Logistics
of country provide generic supportive and productive rules for safer business transactions.

Environmental Issues
Business environment is a combination of customers, competitors and internal corporate factors.
Overall business growth is favorable for new businesses but for Zara it‟s time to invent new domains
and to cross boundaries

INTERNAL ANALYSIS
Zara it’s time to invent new domains and to cross boundaries. Internal Analysis Here, we will discuss
the strategic implementations of Zara under the context of Porters three generic strategies. As the
generic strategies have three parts i.e. segmentation strategy, cost leadership and differentiation
strategy. Zara has followed an optimal combination of all these. Products have been characterized into
three major parts i.e. male, female and children but extensive distribution of products is avoided, e.g.
clothes of young girls have not been separated from that of 40+. Product has got differentiation on
base of fast fashioning concept, a high turnover rate i.e. 10,000 single products in a year. Moreover
products are manufactured on day to day varying trends in market. Zara has offered products at lower
prices in market and has developed skills to produce items at lower prices as well yet it is has not got
leadership in cost management, a minor operating capital has been gained.

26
ZARA’S SWOT ANALYSIS

STRENGTH

it is truly efficient in following its cost , it is having leadership strategy along with proficient
distribution

WEAKNESS

central distribution and lack of expenditure on advertising can have a outcome in future

OPPORTUNITIES

global market penetration and utilization of online market place are scoops which is yet to be cracked

THREATS

Zara’s operation being skewed in Europe is distinguished to be threatened by global competitors

Competitive analysis of Zara

The fashion clothing retail industry is highly competitive with various brands such as H & M,
Mango, Gucci and many other national and international brands fighting with each other in the
same segment. However, the designs made by Zara are based on the consumer & market
feedback which they continuously work upon to be more of the consumer-oriented brand

CHALLENGES FACED BY ZARA

Competitive advantages of zara is that it has cost leadership strategy and designer quality at rational
price

Based on product positioning are as follows as zara has cheaper price then Benetton and Gap

Zara initates fast productions as it has the ability to design and finish goods in stores within four to
five weeks

It is very quick to get designer influenced products into the store

Product variation as it has the ability to launch new trends from a designed and distinction of product

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MARKETING MIX

Product in the marketing mix of Zara such as women clothing and accessories. Zara is known as the
coca cola of fashion .such is the craze of this brand among the fashion of the major strength of the
firm is that , it is able to respond very quickly to the changing customers . The firm does not sources it
manufacturing process , making it fully in control of the produced. Its unique selling preposition is to
imitate or design the latest trends .in most cases , normally available on the sales store within two
weeks , and maximum in four weeks . if the product does not stored ,it is immediately taken out from
the store . However when its comes to India ,it has few problems to sort out ,prominent among those
being seasonal variations in there range .

Secondly ,it needs to tackle and cope up with the cultural needs . Marketing Mix of Zara analyses the
brand/company which covers 4Ps (PRODUCT ,PRICE , PROMOTION AND PLACE )

Zara’s Marketing Mix:

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Product:

Zara is one of the leading luxury fashion labels in the world. Zara’s offer products for men, women
and children. It offers jeans, trousers, tops, skirts, knitwear, T-shirts, shoes, bags and accessories. All
these are the product strategy in the marketing mix of Zara. It is a one stop solution for everyone
whether you want to buy formals or causals. One can choose from different styles Zara has to offer. It
launches at least 10,000 new designs in a year. Zara products are a hit with the high end fashion as
well as with the masses..
Zara believes in sustainable development and is committed to reduce the production of waste. It
recycles its hangers and security tags. Zara gives out their products in paper or biodegradable plastic
bags. Zara uses ecological fabrics like organic cotton in the production of some of their items. These
pucts rodhave a unique and distinct label which can be identifies easily.

Price
Zara’s products are high on fashion and low on prices. Zara provides latest fashion at much lower
prices in all its international stores as compared to other competing international brands. Zara follows
low pricing strategy. It can afford to do that as it doesn’t spend enormous amount of money on
advertisements and raw material. It has an overall low cost structure compared to its competitors.
Zara’s prices are country specific. The tagging on their products are done locally in each respective
market. Zara sets market-based pricing strategy which sets the target price consumer is willing to pay.
The budget for production according to the target price. This in turn fixes the profit margin they earn
on every item. This gives an insight on the marketing mix pricing strategy of Zara.
The brand uses various schemes as a way of sales promotion. Zara has low level of discounting
around the year and discount sales of 50% or more twice in a year, for which the consumers eagerly
wait.

Place
Zara has enormous reach with stores in 88 countries, with over 6500 outlets. Zara also sells through
its online store. All these cover the marketing mix place & distribution strategy of the brand. It is a
vertically integrated company. Zara’s supply chain is what provides them a competitive advantage. It
uses its unique business model to bring new products and fashion to the market in shortest time
possible. Store managers send orders to the headquarters twice a week based on the sales data of the
store and the shoppers’ preferences. The commercial team compiles the order then sends it to the
manufacturing hub. The commercial team also coordinates with the in-house designers to find out
new trends and develop new products. New products are produced in relatively small batches which
helps them give exclusivity.
Most of the Zara stores are owned by the company and are not a franchise. This helps in keeping the
shopping experience at Zara intact and constant be it London or Paris or New Delhi. The stores are
located in posh locations and are spacious and modern in look with walled mirrors and excellent
lightings. Their stores are designed by Zara’s decoration team.

Promotion:
Zara barely spends any money on advertising. It is famous for being press shy. Even its owner never
gives any press interviews. Unlike its competitors, Zara doesn’t engage in any flashy campaigns. This
is the reason why Zara’s advertisements are not visible on television. Zara’s unique selling
proposition is its short processing time, a large variety of styles and affordable pricing. It relies on

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word of mouth promotion and social media rather than expensive marketing tools. Zara’s social media
reach is quite exceptional. It has 2.5 million followers on Facebook and 15 million followers on
Instagram. It is interesting to note that Zara doesn’t put its logo on their products.
Zara prefers spending their percentage of revenue in opening new stores. The brand spends money on
expensive real estate for its stores and on its décor. Zara believes that its show windows are suffice for
advertisements and they do not need anything else to sell their products. This concludes the marketing
mix of Zara.

PRICING STRATEGIES FOLLOWED BY ZARA

Retail Pricing of zara

The sale of goods from fixed points (malls, department stores, supermarkets and so on) to the
consumer in small quantities for his own consumption is called as retail. According to the concept of
retailing, a retailer doesn’t sell products in bulk; instead sells the merchandise in small units to the
end-users. the business, or operating expense, includes overhead, payroll, marketing and office
supplies Regardless of the pricing strategy used, the retail price of the products should more than
cover the cost of obtaining the goods plus the expenses related to operating the business. A retailer
simply cannot succeed in business if they continue to sell their products below cost

Spanish chain Zara, which opened its first store in India in 2010, had set the benchmark as the fastest-
growing — and now the biggest international apparel brand in India — with sales of 1,023 crore
during FY16-17. Levi Strauss and Benetton, which have been around for two decades, and Marks &
Spencer, which started a decade ago, had sales of 700-800 crore.

Fab india remains the biggest local lifestyle brand, with sales of 918 crore in the year ended March
2016.

H&M, the world’s second-largest clothing giant, had said it will open 50 stores in India with an
investment of 700 crore by 2020.

The retailer stocks fast fashion items created in-house and teams up with designers for one-time
collections. It keeps a large inventory of basic, everyday items sourced from places including India
and Bangladesh that carry a lower price tag than most of its rivals.

In comparison, Zara emulates the latest fashion, makes affordable versions and stocks them for a very
short span of time. H&M’s entry into India prompted Zara to slash prices by 1o-15% for some of its
merchandise last year.The Indian retail market was worth $641 billion in 2o16 and is expected to
reach $1.6 trillion by 2o26, according to the India Business of Fashion 2o17 report.

Zara prices are based on comparable to the other without retagging es within the target market . before
the year 2oo1 they had a dingle tag that showed all of the different prices by country .this simplifies
the tagging procedure of zara and aloso permitted goods to be moved from one stores to the other

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without retagging and also permitted goods to be transported between one county to another without
retagging

Zara divides the products sold within its stores into lower garments and upper garments, with price
points being higher for the upper garments. Zara hopes to be perceived as a high-end retailer with
affordable prices. Its flagship stores are strategically opened in key traffic points worldwide that have
high real estate costs, such as its Fifth Avenue location in New York City. Zara does not stress
advertising as a part of its branding strategy, differing from Uniqlo; the company instead funnels the
dollars that would have gone toward advertising into new storees openings.

Zara's strategy is to offer a higher number of available products than its competitors. While most
clothing retailers manufacture and offer to the public for sale 2,000 to 4,000 different

articles of clothing, Zara's production has been markedly higher, at over 1o,ooo pieces produced per
year. This unique feature of the company's strategy has allowed Zara to appeal to a broader number of
customers with unique taste .

Zara is the youngest of the trio, having begun in Spain in 1975. The company is owned by textile
giant Inditex. Zara’s ownership of its supply-chain steps allows for more rapid product turnover; Zara
can design a product and have it sold in stores a month later

WORLDWIDE PRICING STRATEGY OF ZARA

*Low price strategy ( a cost leadership strategy , low cost what gives low prices )

* They set prices equal to cost plus a target margin

* It have external suppliers

* It produces 5o% in Barcelona , 25% in Europe , 13% in Hongkong ,12 % in Turkey

* There are 2o factories for internal manufacturing

* There are high turnovers of products

* It follows just-in –time (JIT ) production .

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 Pricing strategies of Zara

Retail Pricing

The sale of goods from fixed points (malls, department stores, supermarkets and so on) to the
consumer in small quantities for his own consumption is called as retail. According to the concept of
retailing, a retailer doesn’t sell products in bulk; instead sells the merchandise in small units to the
end-users. the business, or operating expense, includes overhead, payroll, marketing and office
supplies Regardless of the pricing strategy used, the retail price of the products should more than
cover the cost of obtaining the goods plus the expenses related to operating the business. A retailer
simply cannot succeed in business if they continue to sell their products below cost

Factors affect pricing decisions

Four biggest fashion companies are all fast-fashion companies, including Topshop, Zara, Uniqlo and
H&M. These fast-fashion brands have cheap labor, cheap materials and fast production schedules.
These factors enable Zara to adopt low pricing strategy. ZARA was recognized as its first-class
image, second-class production and third-rate price. It doesn’t have expensive design,
advertising and raw material costs. Zara’s prices are about 1/4 of other brand’ prices. In Singapore,
women’s coat usually sells at 19-26 dollars in Zara’s shop. However, the same type products in other
shop sale at 40-60 dollars.

Two different types of pricing strategies

It is a little crazy to say that luxury fashion brands need 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 raise 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

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every day. These products will be sold at low price. In addition, it often provides discounts at the end
of season.

The reason for change their prices

Zara does not have a large design team. At the same time, it doesn’t have factories close to target
markets. In order to solve its problem, Zara uses low-cost Asian factories produce its products. In the
recent years, the cost of materials and labor in Asian countries increase. Zara is forced to increase
prices in response to increased materials and labor wages (News,2013).
More expensive clothes and less exciting design have bad influence on business model. Although this
fast fashion industry dominated the clothing market, they will face some environmental impact of the
industry.

With a brand value of 13 billion euros, H&M is currently the highest valued fashion brand in Europe.
Close on its heels is the equally ambitious Zara, valued at 7.8 billion euros. Both retailers have global
vision and excel with their affordable fast fashion offering, but the shopping experience and product is
greatly different. We’ve turned to data to understand what sets the two apart and here we’ll share the
key findings relating to price, product and timing

On March 18, the Inditex Group released the results of its 2o14-2o15 fiscal year, which saw net
profits of 2.5 billion Euros. A few months later, its founder, Amancio ortega, became the second
richest man in the world with a fortune estimated at 64.3 billion Euros .Global retail players have
wondered what has been Inditex’s secret in achieving these historical sales figures.

In order to analyze the Spanish company’s pricing strategy in the 88 countries where it is present, the
bank Morgan Stanley, with the assistance of research firm AlphaWise, conducted a survey comparing
nearly 7,ooo products from 14 sites in markets where Zara is present, the brand representing two
thirds of the company’s physical stores.

According to the results published in the newspaper El Confidencial, with Spain serving as a base
with a score of 1oo, and taking into account the exchange rate at the time of the study, Zara’s clothing
was priced between 22% and 24% higher in France, Italy and Germany, an increase that rises to 5o%
in Mexico and Britain.

The market with the highest prices was South Korea (96% more expensive than in Spain) followed by
the USA (92%) and China (78%). Given these results, it’s not surprising that Asia recorded the largest
sales in 2o14 for Inditex, accounting for 21.1% of the company’s total turnover as compared to 2o.4%
during the previous year.

Spain accounted for 19%, as compared to 19.7% in 2o13, while the rest of Europe accounted for 46%,
as compared to 45.9% one year earlier. Latin America, meanwhile, generated 7.9% of sales..

Amancio Ortega’s company thus responds to client’s demands and meets the particular needs of a fast
fashion industry that requires flexibility and innovation at affordable price..

Zara follows what it calls an “oil stain” strategy. It means Zara opens its first few stores in a country
to get an understanding of a market and then uses that knowledge as it expands into that market. “The

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most important thing for us to enter a new market is the existence of potential customers: People
sensible to fashion phenomenon. And, in an operational sense, the availability of suitable locations.

Its initial performance are that , Zara has had an opening few foreign brands have had in India.
Through the opening weekend, there were long queues outside its trial rooms as women jostled to try
out clothes. According to industry sources (Zara itself is famously reticent about sharing numbers), it
had sales of close to Rs. 1.25 Crore in the first weekend in Delhi and nearly the same in its Mumbai
store. Delhi’s Select City walk mall recorded 4o% more footfalls than it usually does and Mumbai’s
Palladium mall recorded close to 3o% higher footfalls.

QUESTIONNAIRE

1) Have you heard of Zara?

Approximately 75% of the people know about Zara

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 DATA

YES
NO

2)How did you hear about Zara?

Through magazines and retail stores /malls

data

magazines
internet

3)What categories of clothing would you be most likely to purchase from

Zara?
Casual

Work/Corporate

Evening

Shoes

Accessories

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 data
casual
work
evening
shoes
accessories

Casuals and assessories were the most likely products which were to be purchased from zara.

4) Do you feel Zara has a strong presence in INDIA?

A) yes B)no

data

Yes , about 60 % of the data says that it has strong presence .

5). What is your gender?

A)male B) female

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The main preference of product of zara are of females

data
male
female

6. )How old are you?

Under 16 years old

16-25 years old

26-35 years old

36-45 years old

Older than 45 years old

The survey was under the age group of 16-25 years old people

7.) What is your work status?

Student

Working

Self-employed

Retired

Other

Mainly they were students .

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8.Zara has low prices?

A) yes B)no

It was 50 % yes and 50% no

DATA

9.Zara has a well-known brand name

A) yes B)no

Yes , it has a well known brandname

10.Zara produces high quality products

A) yes B)no

Yes , it produces the best quality products .

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 CHAPTER 6
CONCLUSION AND FINDINGS

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 CONCLUSION AND FINDINGS

 Zara is a successful internal retailer which in less than 3o years has translated itself from a
Spanish local brand to a truly global brand us . This paper seeks to improve our
understanding of the business . The pricing strategies the brand follow to exist in this dynamic
world . Zara has the potential for the sustainable growth for its capability and competitive
advantage to experience the challenges of fashion industries .
 The concept of Zara is keeping production , design , and production process which would
enable Zara to react to shift in demands of consumers .
 Zara is an excellent clothing brand worth considering because of its reasonable price.
Increased cost will be a challenge for Zara. Thus keeping reasonable prices may be a good
strategy for development.
 Zara store should keep on innovating and reinventing themselves to remain creative within
the fashion industry .
 It was hard to find out the pricing strategy of Zara , I have to find by practical observation

FINDINGS

The company follows the Low price strategy (a cost leadership strategy, low cost what gives low
prices)

 They set prices equal to cost plus a target margin .

 It have external suppliers therefore it helps in achieving the desired goals in time .
 It produces 5o% in Barcelona , 25% in Europe , 13% in Hongkong ,12 % in Turkey .
 There are 2o factories for internal manufacturing thus there is no issues regarding the
manufacturing process.
 There are high turnovers of products , therefore they are easily able to sell their products
 It follows just-in –time (JIT ) production as this company is based on the current situation
thus it follows the just in time production techniques.

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 LIMITATIONS

The limitation of the examination were as under:

 The investigation is not the genuine agent of the company as the question cannot be
addressed properly as it is less mindful.
 Secondly the understudies are not completely mindful of the policies and the working
environment therefore sometimes communication was not possible
 The understudy sometimes is disregarded and proper criticism is not gotten from the
outsiders.

BIBLOGRAPHY

 https://successstory.com/companies/zara
 https://en.wikipedia.org/wiki/Zara_(retailer)
 https://en.wikipedia.org/wiki/Zara_Home
 https://en.wikipedia.org/wiki/Inditex
 https://en.wikipedia.org/?title=Zara_(clothing)&redirect=no
 http://www.mbaskool.com/brandguide/lifestyle-and-retail/3814-zara.html
 https://www.slideshare.net/sheshir/zara-29538661
 https://www.slideshare.net/rainajhamb/case-study-zara News.(2016),Zara’s Business Model,
Information and Communication Technologies, and Competitive Analysis
from http://www.123helpme.com/view.asp?id=97642

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