MITTAL SCHOOL OF BUSINESS

Course Code: MKT201 Course Title: Essentials of Marketing

Course Instructor: Dr. Shamily jaggi Section: Q1907
Academic Task No.: 3 Academic Task Title: Report Writing
Date of allotment: 1.10.2020 Date of submission: 19.10.2020

Student’s Roll No.: B66 Student’s Reg. No: 11905440

Submitted by Rahber
Declaration:
I declare that Assignment is my individual work. I have not copied it from any
other students work or from any other source except where the
acknowledgement is made explicitly in the text, nor has any part been written
for me by any other person.

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, the
Spanish clothing brand become the go-to fashion brand for all.

History and Founders

It all began when Ortega established a dress-making factory, Inditex, in the year
1963.Ten years later, he started off a small store that was named as Zorba in La Coruna,
Spain with a budget of a meagre 30 Euros. He then changed the name as Zara with no
intention. And that’s how the world’s favourite fashion brand of today was born. Zara
slowly expanded its empire from the town in Spain to the rest of the country and then later
to Portugal. By the 1990’s the store had expanded into the United States, France and most of
the Europe. Today, Zara has close to 6500 stores across 88 countries around the world.

About Zara
The secret to Zara’s success largely was because of the way it kept up with street fashion
with the changing times. The brand looks at how fashion is changing every day. It makes
new designs and puts them into stores in a week or two. Most other fashion brands would
take a whole six months to get their new designs into the market.

Success
That is where Zara beat the rest of them and became the favourite brand among people who
liked to keep up with the fashion. Ortega was famous for his view on clothes as a perishable
commodity; that people would love to use them and throw them away, just like yogurt or
bread. It is often cited that he produces ‘fresh baked clothes’ that survive the changing
street fashion trends for not more than a month or two. You go to the store a week too late
and all the clothes would be changed.

Head Quarters
Zara is also known to be one of the most eco-friendly companies. It uses solar panels and
wind turbines in the headquarters in La Coruna. Zara is also known to be one of the few
clothing brands that produces 100 % toxic-free clothing, but not until after the uproar that
was caused on how it was using the cancer-inducing azo dyes in its clothing.

Profile
There is one thing about Zara that is surprising. The name has poor marketing for all the
success it continues to bask in. The brand does not advertise itself in any form at all.
Amancio had never spoken to the media nor has in any way advertised Zara. Zara needed
no advertisement to become such a widely loved brand. Talk about quality doing all the
work!

Locations of Stores
Zara has stores in over 88 countries, with just over 6500 outlets. Zara has flagship stores on
Fifth Avenue in New York, Oxford Street in London, Calle Serrano in
 Madrid, Via del Corso in Rome, Champs-É lysées in Paris, Nevsky Prospect in Saint
Petersburg, GUM in Vladivostok, Shibuya and Ginza districts in Tokyo, Myeongdong in
Seoul, amongst many others.

Zara also sells online through their own website.

Products
Zara sells both Men's and women's clothes. They also sell shoes, cosmetics, and accessories.
Recently they started with children's clothes as well.

What is the STP (Segmentation, Targeting,

Positioning) of Zara?

Segmentation of Zara
The development of Zara Marketing Strategy requires identifying segmentation basis to
understand the specific buying behaviour of customers. The needs, expectations and buying
behaviour of customers are heterogeneous and depend on multifaceted factors- like:

• Age
• Gender
• Income
• Lifestyle • Values etc.
 By using the segmentation technique, Zara can narrow down the large, diversified target
audience into specific and narrowly defined groups. Market segmentation surveys are
common methods of obtaining the customer-specific information that could be used to
create groups sharing common characteristics.
After understanding the unique buying behaviour of customers and getting the required
information through surveys, Zara can divide the market into small homogeneous groups. It
can be done by exploring the geographic, demographic, behavioural and psychographic
characteristics of customers.
The company can use one or more of these segmentation strategies to choose the right
market segments and develop an effective Marketing Strategy.

• The geographic segmentation divides the market according to geographic areas, like- city,
country, and region.
• The demographic segmentation will require Zara to divide market according to demographic
characteristics, like- gender, age, income, and ethnicity.
• If Zara chooses behavioural segmentation, then customers will be divided according to their
buying pattern like usage frequency, benefits sought, usage occasions and brand loyalty.
• Use of psychographic segmentation will result in customers' grouping according to their
lifestyles, interests, attitudes, values, and traits.
Zara can combine the different segmentation strategies for more specific targeting as
explained in the next section.

Targeting and Positioning of Zara

After dividing the large diversified customer market into smaller groups with homogeneous
characteristics, Zara should wisely choose the target segment/segments whose needs and
expectations match the company’s resources and capabilities.
The targeting can be done by evaluating the commercial attractiveness and growth potential
of identified segments. Zara can choose one or more segments depending on the segments’
characteristics and the company's resources, capabilities, and growth objectives.
The commercial attractiveness and growth potential of each segment can be evaluated by
using the following indicators:

• Identified segments have the appropriate size

• Have concrete differences.
• The estimated profits should exceed the additional marketing costs.
• Segments are easily accessible.

After segmenting the customer market and choosing the right target market, Zara now
requires setting a clear positioning statement that could create a positive image of the
 offered product in the customers' mind. Zara can follow the following steps to develop an
effective positioning strategy:

• Develop the positioning statement for Zara Marketing Strategy by answering the following
questions:
✓ What your brand stands for?
✓ What are the needs and wants of your target market?
✓ How your brand serves those needs?
✓ How different is your offering from competitors?
• Answers to these questions will yield enough information to develop a positioning
statement.
• The comparison of their communication and messaging strategy with competitors will
reveal the potential areas that could be addressed with targeted positioning message.
• Identify the strengths/weaknesses of business by comparing with competitors to find that
gaps that offered product can fill.
• Analyse positioning of competitors and evaluate own position in the market.
• By using the analytical data collected from a different market, customer, and competitor
surveys, develop a positioning statement, and periodically test its effectiveness by collecting
qualitative and quantitative data (like focus groups, polls, interviews etc.).
• Use the test results to make necessary adjustments in the brand positioning.

What Marketing Strategies do Zara Apply

Zara Marketing Mix: 4P’s

Product:
Zara is fast fashion brand – a maker of apparel that has earned a lot of growth and
reputation in a short period. It identifies the latest trends in fashion and brings them quick
to its stores at reasonable prices. However, the products can be different from market to
market which is because Zara does its research before releasing any product in the specific
market’s world over. It sells products that suit the local culture and people’s taste. It is best
known for its latest styles and trending designs.
Place:
Zara has spread to several nations with its more than 7000 stores (Fortune, 2016). Its
7000th store opened in Hawaii in 2015. Apart from its stores, it also sells online. However,
online sales have not been expanded to all markets and are limited to specific ones. In India,
people cannot shop from its website but still can check the latest designs and trends on its
official website. Now, Zara is looking to grow its online sales further.

Price:
The pricing strategy of Zara is focused on the average shopper that wants the latest in
fashion at affordable prices. Zara is a fast fashion brand selling affordable clothing. Its
apparel is priced to cater to the price sensitive consumers who want latest fashion but not
at high prices. The affordable pricing strategy has helped it address the needs of a very
large consumer segment. Latest fashion at affordable price is highly popular among the
millennials. This type of pricing strategy has also helped at two other points. It has helped
create a unique brand image and grow market share faster.

Promotion:
The marketing expenses of Zara are much lower than the average fashion retailers. It does
not market itself as aggressively as others. However, that does not mean Zara has not
focused on marketing at all. It still markets its brand and products. A lot of marketing takes
place through word of mouth. Because of the large choice of styles and affordable prices, the
brand loyalty is high. Zara has kept its consumers happy. A lot of marketing takes place
through its thousands of stores worldwide. The customers visiting the stores which are
mainly located at prime locations can select from thousands of styles. The pricing and
distribution strategy of Zara are an important part of its promotion strategy. They have
helped it achieve the image of an affordable and stylish brand. This has helped build
popularity. However, when it comes to promotion, the brand has used the other channels
like social media skilfully and effectively.
Marketing Strategies-
1. Creating Exclusivity & Scarcity
One of the major reasons for Zara being successful is that the company never produces too
many products of a single design. This creates scarcity in the mind of customers which
makes them take quick decisions to buy their fav designs as they know it will go out of the
stock soon.

2. New range throughout the year

While most fashion brands come up with new designs during seasonally, ZARA brings new
patterns constantly throughout the year. This makes customers visit their stores more
frequently than others.

3. Making customer feedback as a part of Creative

Process
ZARA takes customers feedback very seriously. Employees at their stores have been told to
note down what customers want and these feedbacks are very quickly sent to design and
production team to make new designs according to requirements. On online platforms, it
regularly analyses what customers are searching for. This involvement of customers also
helps in building brand loyalty.

4. Location of stores
Most luxury stores tend to locate their stores away from normal audience reach but Zara
stores are usually situated in city centres where footfall is consistently high.

Talking about social media, due to their massive brand loyalty ZARA believes in making fans
rather than just followers. For this ZARA never invests high on billboards and collaborates
with Digital influencers.

Summarising ZARA marketing strategies for you, the fashion retailer is successfully by
focussing on ‘less is more’ ideology which creates the Fear of Missing Out (FOMO)
What is the innovation done by the Zara?

You need a lot of ideas from a lot of different

places.
The Zara design team consists of 350 people and they are charged with generating and
delivering 18,000 new product designs a year i.e. 360 a week, over 70 every working day.
Loreto Garcia, a designer explains, ‘We get our ideas from books, magazines, twitter and
blogs but above all from feedback from our shops. Our customers tell us what they like and
do not like. We attend shows and talks about fashion to get ideas. It is a continuous process.’

Move rapidly from design to market

From initial idea origination to the shop shelf takes less than four weeks for Zara; they move
far faster than their competitors. They want to create waves and be ahead of the wave. What
is more they put their products into 5500 stores from Brisbane to Lisbon at just about the
same time? They make very few adaptations for local markets. Their products are global
and sell on all five continents giving great economies of scale.

Innovate all aspects of the business.

Innovation at Zara does not apply only to products. They have used creative approaches to
streamline and optimise manufacturing, supply chain management, data tracking, inventory
management, store layout and staff operations.

Prototype and Model Quickly

Designs and ideas are tested quickly. At Zara’s headquarters in Arteixo La Coruna, Spain
there are 25 full-size shop windows with differing displays and lighting. This enables
designers to see what retail shop store windows will look like under different conditions –
e.g. day and night, sunshine, and rain.

Fast feedback
Store staff use wireless communications to relay information every day back to Spanish HQ
about sales and inventories. Fast information about what is selling and what is not enables
the group to respond to the public mood and to quickly supply more of the most popular
 designs to where they are needed. But even the top selling fashions are discontinued after
four weeks. Zara deliberately kills them in an act of creative destruction. It must continue to
innovate. This policy also means that customers must visit the stores often to ensure that
they do not miss out on the hottest items.

Flat structure
Traditional fashion companies have hierarchical management structures with many big
egos getting involved in every decision. Zara has a flat structure with designers empowered
to make fast decisions.
All these competitive advantages have led Zara to an enviable position where it does not
need to advertise. Word of mouth and its popular websites provide the key communication
needed to its avid customers. Innovation, speed, and agility are what keep the company
ahead of the pack.

CONCLUSION

1. Zara has an unordinary supply chain, which gives them a highly competitive advantage.
2. Zara has successfully introduced a new, unique business model into the apparel
manufacturing and retail industry.
3. Zara choose to handle design, production, and distribution in-house and concentrate the
whole production close to their headquarters in Spain.
4. By entire process, Zara can react much faster than its competitors do to both the ephemeral
trends in the world of fashion and the capricious tastes of its customers.
5. Zara have achieved their success by thinking out of the box.
6. Their success is directly related to their ability to understand their customers must innate
needs and desires and tle these to successful innovation strategies, which ultimately lead to
these new and unique approaches to the business.