ABOUT ZARA
The founder of Zara, Amancio Ortega, opened the first Zara store in 1975 in
a central street in A Coruña, Galicia. Its first store featured low-priced
lookalike products of popular, higher-end clothing fashions. The store
proved to be a success, and Ortega started opening more Zara stores in
Spain.
During the 1980s, Ortega started changing the design, manufacturing and
distribution process to reduce lead times and react to new trends in a quicker
way, in what he called "instant fashions". The company based its
improvements in the use of information technologies and using groups of
designers instead of individuals.
In 1980, the company started its international expansion through Porto,
Portugal. In 1989 they entered the United States and in 1990 France.
This international expansion was increased in the 1990s, with Mexico
(1992), Greece (1993), Belgium and Sweden (1994), etc. until the current
presence in over 73 countries.
Zara stores are company-owned, except where local legislation forbids
foreigner-owned businesses. In those cases, Zara franchises the stores.
The first Zara store was opened by Inditex in 1975 in its native A Coruña in north-western Spain. The
company made the decision to go down a very non-traditional marketing route at the end of the
Eighties. A more conventional marketing approach had been employed prior to that. This change
coincided with Zara's entry into international markets.
Today, the fashion chain has close to 1,500 stores in 70 countries worldwide. Many of the openings tend to
be concentrated in the second half of the year. With such rapid expansion and a massive global market
presence it's easy to see why a unified marketing approach is the most viable option.
"It was not an easy move at the beginning, especially since communication is such an important branch of
the business. The decision was made that Zara would no longer talk about itself (through mass marketing
campaigns), but would instead let the customer talk about it and so increase brand awareness
through word of mouth.
Zara's rise continues unabated, with the result that it is now present in almost every continent. The
company is currently concentrating on a line of expansion from Poland to Japan. "This is where Zara have
room to grow". It follows the company's strategy to prioritize Europe as its No 1 growth market,
followed by Asia.
• PRODUCTS AND ITS MARKETING.
As of 2007 Zara stores have men's clothing and women's clothing, each of these subdivided in Lower Garment, Upper Garment,
Shoes, Cosmetics and Complements, as well as children's clothing (Zara Kids). Currently their
sizing on women's clothing goes to a US size 12 or a UK size 14 or extra large.
• Manufacturing and distribution.
Zara is a vertically integrated retailer. Unlike similar apparel retailers, Zara controls most of the steps on the supply-chain: It
designs, produces, and distributes itself.
Regarding the design strategy, an article in Businessworld magazine describes it as follows: "Zara was a fashion imitator. It
focused its attention on understanding the fashion items that its customers wanted and then delivering
them, rather than on promoting predicted season's trends via fashion shows and similar channels of influence, which the fashion
industry traditionally used."
50% of the products Zara sells are manufactured in Spain, 26% in the rest of Europe, and 24% in Asian and African countries
and the rest of the world.So while some competitors outsource all production to Asia, Zara makes its most fashionable items --
half of all its merchandise -- at a dozen company-owned factories in Spain and Portugal, particularly in Galicia and northern
Portugal where labour is cheaper than most of Western Europe.
Clothes with a longer shelf life, such as basic T-shirts, are outsourced to low-cost suppliers, mainly in Asia and Turkey.
Zara can offer considerably more products than similar companies. It produces about 11,000 distinct items annually
compared with 2,000 to 4,000 items for its key competitors. The company can design a new product and
have finished goods in its stores in four to five weeks; it can modify existing items in as little as two weeks. Shortening the
product life cycle means greater success in meeting consumer preferences. If a design doesn't sell well within a
week, it is withdrawn from shops, further orders are canceled and a new design is pursued. No design stays on the shop
floor for more than four weeks, which encourages Zara fans to make repeat visits. An average high-street store in Spain
expects customers to visit three times a year. That goes up to 17 times for Zara.
SEGMENTATION STRATEGY.
The segmentation strategy employed by the fashion retailer Zara is based on the typical demographics of the
customers like gender, age and psychographics. However aside from this the company also targets customer
is based on their sense of fashion and style e.g., contemporary, trendy, classic, grunge, Latino etc. (Safe, 2007)
The ethnicity of the brand as well as its target market is blended by Zara in its product offering which match a
variety of tastes and settings.
POSITIONING STRATEGY.
The main objective for positioning the Zara brand in a market as mentioned by the
company is to ‘democratize fashion’. The company aims to provide its customers
with trendy and high fashion products at lower prices to
accommodate their requirements. As a result the marketing strategy that is
employed by Inditex for Zara is to open stores and outlets that provide the Zara
experience at high profile locations to set the image of the brand as being trendy,
hip, high fashion and accessible.
TARGETING STRATEGY.
Inditex with its brand Zara has targeted a wide gap in the retail market. The company targets customers that
are interested in high fashion want to be up to speed with the latest fashion trends but are not able to afford
clothes and accessories from the couture and high end boutiques. In order to target the market, Zara strategy
launches its outlets in high profile locations and provides customers with a turnover time of 4-5 weeks for its
new collections made available at a fraction of the couture cost. This, along with the brand persona, the
collection of the clothes and accessories and the marketing campaigns pulls the target markets to the Zara
stores.
CUSTOMER TARGET.
Zara’s main target customers are 18-year olds to 35-year-old adults. According to Zara retailer their consumers
are classed as middle-class individuals in society. The gender varies from men and women as Zara tend to be
quite open to both genders, especially through their advertisement, as they use models from both genders.
Zara tend to keep their styles “hot” according to Arif Harbott which in turn helps them to target their young set
of customers. This allows to be able to attain the interest of their customers as well as continuing to compete
with the nearest competitors like forever21 and H&M. They segment their product line by women’s (60%),
men’s (25%) and children (15%). what does a typical customer of Zara look like? The typical “Zara customer” is
a young fashion hungry individual that are always looking for the latest trend to wear. These types of customer
will be someone from today generation that tends to use various social media platforms such as Facebook,
twitter and Instagram.
• COMPETITOR ANALYSIS
• The greatest rivals of Zara include H&M, Benton and Gap. In phrases of being essentially the most modern and consumer
suggestions, Zara trumps Benton and Gap by a sizeable margin, but H&M remains to be a formidable competitor. The solely
thing maintaining Zara in the quick fashion lead is their outstandingly responsive supply chain model. Because of Zara’s
tendency to create an artificial scarcity with their merchandise, Zara collects eighty p.c of the ticket worth and Inditex’s
internet margin goes up to 10.4 %, versus H&M’s web margin of 9.5 %.
• The quick fashion trade is quickly rising because of the increasing fiscal crisis affecting the world. More and extra opponents
corresponding to Forever 21, Garage, and ASOS are coming into the trade, supplying customers with economical trend and
fast development turnover. The potential for model spanking new entrants is excessive, yet Zara preserves its edge in the
trade via the prime quality of their goods.
• The supplier power in the quick trend industry is sort of weak, given the low wage boundaries in East Asia. Moreover, the
monotony of supplies additional diminishes supplier power as they grow strongly depending on the attire industry for
operation. Nevertheless, the bargaining energy of suppliers in substantial, as the switching costs of suppliers is reasonably
high. Zara eclipses these struggles by maintaining manufacturing in-house.
• Given the freedom of consumerism within the trend trade, the ability of customers is tremendous. Consumers are free to
jump from model to model with out the troubles of switching prices, and have the choose of the litter in terms of cut, style,
and material high quality. By decreasing advertising prices to just about nothing via their word-of-mouth technique, Zara
spends a majority of the price range on analysis and development, ensuring they continue to seize consumer interest.
• When it comes to the quality and elegance of Zara merchandise, not many retailers can come shut on the identical value
point. The solely retailer who can marginally compete with Zara’s standard of quality and affordability is H&M. Again, the only
issue keeping Zara ahead is it’s swift supply chain.
• Strong Supply Chain Management –
Zara adopted vertical integration in its supply chain, it means that the major part of the
stages of production takes place in their factories. This way, Zara can follow new trends
and respond to the fast changes in the demand in a quick way. Unlike most of their
competitors, Zara just take two/three weeks to design new products, produce and put
them available at the stores.
• In-house Production –
The major part of the production takes place inside their own factories. Zara controls
the design stage, production, distribution centres and transportation. The in-house
production allows them to be flexible in the amount, frequency and the variety of new
products that are about to get launched
• Support Activities in Zara Value Chain Analysis.
Infrastructure:
Due to Zara’s very particular business model of high-speed production and change, and decentralized decision
making, the company has configured its infrastructure to respond and support this aspect.
Therefore, at the core of the business infrastructure is the IT technology, which supports several activities,
including assessment tools for store managers, but also production and distribution management.
The brand's main direction is made by the CEO, who keeps in close connection with headquarters, which are
responsible for brand management, Human Resources, IT, transportation, and real estate.
Below these headquarters are a group of commercials, which analyze market trends, sales, and strategies
designed as guidelines for country and store managers and Human Resources directors.
Country and store managers are in the bottom line of the hierarchy and brand infrastructure, not meaning that they
do a lesser important job, as they are responsible for keeping store’s image and branding, having inventories
constantly replenished, and maintaining a sense of exclusiveness, all of this responding to their low expense in
marketing and promotion.
Human Resource Management:
In Zara’s business model, Human Resources Management is very important. All the Inditex brands have their
own Human Resources directors, which address all related issues outside operations. They rely a lot on
employee training which tends to last at least one week in all stores.
Product development teams need to be in contact with fashion trends, so they are usually asked to attend shows
and exhibitions. Satisfaction and motivation of employees via store managers is a very important aspect of their
HR Management strategy.
Technology Development:
Information transfer is one key aspect of Zara’s technology development strategy. They keep their
whole supply chain connected through a flow of data and information from store managers to
headquarters and backward.
They made gross investments in IT before major expansions to produce some assessments tools
like their PDA (Personal Digital Assistance) software, which is used in stores to keep the supply
chain well informed with data from sales and distribution, allowing fast response to market changes
if needed.
Procurement:
Inditex group acquires raw materials through regional departments and offices in the United
Kingdom, China, Holland, and other branch offices in Europe, Asia, and Australia. They also buy
inputs and some amount of finished products from outside suppliers which usually move in low-cost
input markets.
They own several fabrics within Spain and have a big factory in La Coruna, where they transform
those inputs to produce their own designed products as fast as possible to keep a constant flow of
goods to be sold, in agreement with their business model.
Market analysis in the Marketing strategy of Zara-
The clothing retail industry is highly competitive and the changing fads, socio-economic and behavioural culture
possess a major challenge for the companies operating in this industry. Back end integration, high raw material
cost and advertising cost are the other factors that affect the apparel industry companies by and large.
Customer analysis in the Marketing strategy of Zara –
In men’s and women’s clothing segment customers of Zara are in age group of 15-40 years. Recently it also
launched kids section in their stores across the world.
Promotion & Advertising Strategy:
The promotional and advertising strategy in the Zara marketing strategy is as follows:
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, It doesn’t engage in any flashy campaigns. This is the reason why
Zara’s advertisements are not visible on television. However, its outdoor advertising is eye-catching and
focuses on the fashion trends which the youth prefer. Zara’s unique selling proposition is its short processing
time, a large variety of styles and affordable pricing. It relies on word of mouth promotion and social media
rather than expensive marketing tools. Zara’s social media reach is quite exceptional. It has 30 million
followers on Facebook and 45 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.
CONCLUSION.
Zara competitiveness as highlighted in number 4 managed to travel globally
successfully. As 55% of Zara revenues coming from abroad, one can see that
Zara was successful in migrating its competitiveness globally.
By adapting to each culture, Zara has managed to position itself differently in
different market. Zara strategy of opening one store for information gathering
in the initial phase of entering a new market is one of its key strength points.
By starting with such "information gathering" store, Zara manages to obtain
insight of the local market and how best to adapt to it.
Internationally, the strategy ZARA adopted was to test the market by
flagging one store then expanding according to market needs. This strategy
helped the fast growth of the company as well as eliminating the risk factors.
Moreover, the image ZARA created over the years minimized the need for
any marketing activity and the flagged pilot store, based on a prototype, would
develop the company brand awareness in the new country.
