VIETNAM GENERAL CONFEDERATION OF LABOR

TON DUC THANG UNIVERSITY

FACULTY OF BUSINESS ADMINISTRATION

MARKETING CHANNEL

DESIGN AN OPTIMAL
MARKETING CHANNEL
STRATEGY OF ZARA VIETNAM

Lecturer: MBA PHAM VAN PHAT

Group: A&B
Course: 2020 – 2024
Major: Marketing Management (CLC)

HCMC, DECEMBER 2022

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 LIST OF MEMBERS
Member Student ID Task Completition

 How to approach the needs

Nguyễn Thị Mỹ Huyền 720H1384 and problems 100%
 Limitations & caveats
 Introduction
Vũ Thụy Thanh Hà 720H1375  Market background and 100%
context
 Recommendations for
Trần Hương Quỳnh 720H0992 optimizing the marketing 100%
channels system
 Needs and Problems
Nguyễn Như Ngọc 720H1394 100%
identification
 How to approach the needs
Huỳnh Anh Tài 720H1411 95%
and problems
 Word
Trần Nguyễn Bảo Ngọc 720H0947 100%
 Powerpoint

Ngô Trần Hồng Quyên 719H0902  Key findings / results 100%

 Needs and Problems

Phùng Gia Hy 51900509 identification 100%
 Conclusion

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 THANK YOU

In fact, there is no success that is not tied to the support and help, whether
more or less, directly or indirectly from others. During the time since I started
studying at the university until now, I have received a lot of attention and help from
teachers, family and friends. With the deepest gratitude, I would like to send to all
the teachers at the Faculty of Business Administration - Ton Duc Thang University
who, with their knowledge and enthusiasm, imparted valuable knowledge to us in
the future. throughout the school year. And especially, in this semester, the faculty
organized for us to have access to a subject that I think is very useful for students of
Marketing, which is Marketing Channel.
I would like to express my sincere and deep thanks to Mr. Phạm Văn Phát for
his dedication to guiding us in each class session as well as in conversations and
discussions on professional fields. Without the guidance and teachings of the
teacher, I think my lesson would be very difficult to complete.
Finally, I would like to wish the teachers of the Faculty of Business
Administration, Mr. Phạm Văn Phát, good health and faith to continue to carry out
his noble mission of imparting knowledge to future generations.
Best regard!

Hồ Chí Minh City December 15, 2022

Group
A&B

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 TEACHER COMMENT

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 CONTENT
THANK YOU.......................................................................................................................ii
TEACHER COMMENT....................................................................................................iii
INTRODUCTION...............................................................................................................vi
I. MARKET BACKGROUND AND CONTEXT.............................................................1
1.1. Manufacturer/producer & products’ overview.................................................1
1.1.1. Background:.................................................................................................1
1.1.2. Successful:.....................................................................................................1
1.2. Environmental factor...........................................................................................2
1.2.1. Economy........................................................................................................2
1.2.2. Technology....................................................................................................2
1.2.3. Competition..................................................................................................3
1.2.4. Social-culture................................................................................................3
1.2.5. Government..................................................................................................4
II. NEEDS AND PROBLEMS IDENTIFICATION.........................................................5
2.1. From manufacturer / producer’s perspectives.......................................................5
2.1.1. Product................................................................................................................5
2.1.2. Place.....................................................................................................................6
2.1.3. Price.....................................................................................................................7
2.1.4. Promotion............................................................................................................8
2.2. From the intermediaries’ perspectives....................................................................8
2.2.1. Product................................................................................................................8
2.2.2. Place...................................................................................................................10
2.2.3. Promotion..........................................................................................................10
2.3. From the customers’ perspectives.........................................................................11
2.3.1. Product..............................................................................................................11
2.3.2. Price...................................................................................................................11
2.3.3. Place...................................................................................................................12
2.3.4. Promotion..........................................................................................................12
III. HOW TO APPROACH THE NEEDS AND PROBLEMS......................................13
3.1. Primary data............................................................................................................13
3.1.1. Question table...................................................................................................13
3.1.1.1. Demographic..............................................................................................13
3.1.1.2. Survey.........................................................................................................13
For Zara’s Customer:............................................................................................13

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 3.1.2. Data analyze......................................................................................................14
3.1.2.1. Demographic..............................................................................................14
3.1.3. Part 2.................................................................................................................15
3.2. Secondary data........................................................................................................20
IV. KEY FINDING / RESULTS.......................................................................................23
V. CONCLUSIONS............................................................................................................26
VI. RECOMMENDATIONS FOR OPTIMIZING THE MARKETING CHANNELS
SYSTEM.............................................................................................................................27
5.1. Channel structure [Channel strategy]...................................................................27
5.2. Optimal marketing / distribution channel [Channel motivation].......................28
5.2.1. Vertical Conflict Vertical conflicts are conflicts that occur between members
at different levels of distribution in a channel..............................................................28
5.2.2. Horizontal Conflict...........................................................................................28
VI. LIMITATIONS & CAVEATS...................................................................................29
APPENDIX.........................................................................................................................30
REFERENCES...................................................................................................................31

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 INTRODUCTION
  In particular, fast fashion, also known as instant fashion, is a term used to refer to
items inspired by the latest fashion trends, which are produced very quickly to be
shipped to stores.  and sell for user users.  This fashion industry allows consumers
to purchase striking new, innovative, on-trend designs at affordable prices that are
affordable to most people.

  Fast Fashion's target audience is a group of young customers who always have a
fashion sense that follows "trends".  Because of this special feature, Fast Fashion is
transforming the traditional fashion industry with new collections and product lines
that are launched in an orderly seasonal fashion.  In fact, it's not surprising that Fast
Fashion brands continuously launch new designs, even within a week to catch up
with the new trend of the market.

  When it comes to big brands in the fast fashion market, names like: Zara, H&M
Group, UNIQLO, GAP, Topshop, Esprit, Primark, Fashion Nova and New Look. 
Not on the list of luxury fashion brands like Hermes, Chanel, Louis Vuitton or
Versace.  .. but Zara has become a major brand in the world and in the affordable
fashion market with its ability to capture the top trends.  Ingenious turning the
outfits on the catwalk into everyday clothes is Zara's first secret.  Just after the brief
fashion week, people saw the real versions of the Christian Dior, Prada dresses.  ..
has a price worth in zara stores with similar design for less than $100

  Despite bringing many benefits to customers and businesses, this fashion industry
is also only cited quite a lot because it narrows down the waste of wasted life. 
That's why there is another name for this industry that is disposable fashion.  Many
Fast Fashion followers, especially young people, students, and students who do not
have too many economic conditions, also admit that they only wear clothes they
have bought once or twice, they feel bored and don't wear them again.

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 I. MARKET BACKGROUND AND CONTEXT

1.1. Manufacturer/producer & products’ overview

1.1.1. Background:
In the first 6 months of 2022, the export of sewing needles (exports) from Australia
can be estimated at about US$22.3 billion (an increase of nearly 18% over the same
period in 2021) and the full year export target is 42-43 billion of USD. For many
years, Vietnam's garment exports have always stood in a high position, always in
the "top" of the world's garment exports, but "forgotten" the domestic market.

To fill the gap of the market, in the past, a series of foreign fashion brands such as
Zara, H&M, Uniqlo ... have landed strongly in the Vietnamese market and the scene
of "snake dragons" customers queuing to buy. Shopping on the opening day shows
the increasingly strong attraction of fashion to Vietnamese consumers.

In particular, Zara - a foreign fashion brand that has been welcomed and favored by
Vietnamese consumers in recent years, with products priced similar to Vietnamese
products of the same type, but the biggest difference is that most of the clothes.
Zara's clothes are modeled from high-end brands' designs, fashion designs are
always updated and changed so customers feel they can always buy those outfits.
unified, but the price is not mixed up like other fashion brands.

Zara is the first store chain of Inditex Group, the world's largest clothing retailer.
Inditex itself is a fashion retailer owning 8 brands: Zara, Pull & Bear, Massimo
Dutti, Bershka, Stradivarius, Oysho, Zara Home. Amancio Ortega - founder of
Zara, who adapted a unique, innovative and flexible business model. This makes
Inditex one of the largest retailers in the world. Amancio Ortega opened the first
Zara store in 1975 in Spain and merged it into Inditex in 1985.

1.1.2. Successful:
Zara's success stems from its ability to reduce delivery times and react to trends
almost instantaneously. The company is unafraid to go against conventional
wisdom, vertically integrating its supply chain and moving production to Europe
(near-shoring), while many in the fashion industry choose to outsource
manufactured in lower cost factories in Asia. The vertically integrated business
model covers all stages of the fashion process: Design, production, logistics,
distribution for their own stores. The key to this model is the ability to deliver
products to customers according to their wishes in the shortest possible time. Time
is the main factor considered to be comparable to the cost of production in ZARA.

Zara disrupted the fashion industry by shortening its time to market to less than
three weeks, creating a new category of affordable fast fashion. This model allows
the company to become a heavyweight in the highly competitive fashion industry:

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to date, Zara has been present in over 88 countries with over 6,500 stores, of which
2 are located in Vietnam and Its net profit for the three months to the end of
October 2021 hit an "all-time record" of 1.23 billion euros ($1.39 billion), up 42
percent year-on-year.

1.2. Environmental factor

1.2.1. Economy
- Cheap labor source: As mentioned before, Zara is a Spanish brand. Spain has
one of the highest unemployment rates in Europe, which means it has relatively
low labor costs — especially compared to other Western European countries,
such as France, Germany and the UK. Zara manufactures a large part of its
products in Spain, so this low labor cost allows them to reduce costs and
thereby improve profits.

- Global economy: Zara is one of the brands that operate worldwide. Therefore,
the global economy plays a significant role in its growth. The global economic
slowdowns can harm business. The whole world is presently experiencing
financial distress. Thus, it is affecting Zara's functioning. A high inflation rate
and less money at the hand of customers can show a negative impact on the
business of Zara. This economic condition can limit the financial growth of the
brand too.

- Relative affordability:
 Zara is a well-recognized brand, so those less familiar with its products
might think they’re quite expensive. On the contrary, Zara is considered
a relatively affordable brand in comparison to other European highstreet
fashion names. This allows the company to thrive even in poorer
countries; for example, despite Spain’s slow economy, Zara is still one of
the most popular clothing brands in the country.
 In Vietnam, with an average price of 8 to 100 USD (about 180,000 to
2,200,000 VND), it can be said that Zara's products are quite reasonable
with the average income of Vietnamese people.
 In addition, the price level of Zara is also "easier to breathe" than other
foreign brands in Vietnam such as Mango, Topshop. Even this price is
much cheaper than Vietnamese brands. Typically, Zara men's shirts are
only sold for 30 to 50 USD (about 669,000 VND to 1.1 million VND),
cheaper than Vietnamese brands such as Viet Tien, An Phuoc or Mattana
(with average price from 600,000 VND to 1.6 million VND)

1.2.2. Technology
- Use of big data:
 Zara is one of many brands looking to use technology to expand its
reach. As one of the world’s most popular fashion retailers, the company
has both the money and the audience needed to get the most out of data.

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 As a result, Zara is looking to big data — the study of analyzing huge
data sets — to find better ways to reach and appeal to consumers. With
both online and in-person customer touchpoints, this isn’t a
straightforward task.
 They have a well-designed website that can help create a robust online
presence to grab the attention of potential customers. They can target the
communities for online marketing, eventually increasing their sales.
 Using advanced technology and worldwide reach, Zara does thorough
market research to learn the demand of their customers. It gives them
ideas about the sectors they need to improve.

1.2.3. Competition

Zara's biggest competitors include HM and Uniqlo. Zara makes a difference from
the other two brands thanks to the policy of "taking meat over people", in short, this
popular fashion brand launches more fashion products than any other competitor.
For example, each brand only puts on shelves from 2,000 to 4,000 products, with
Zara it is... 10,000! Thanks to the development of a huge quantity but still ensuring
quality, Zara can attract a diverse customer base, with an extremely diverse
aesthetic.

1.2.4. Social-culture

- Fashionable Brand:
Despite its affordability, Zara is a fashionable name for most shoppers. This is
where you can only praise the company for its hard work. Zara delivers a good-
quality product for not a lot of money. And thanks to the brand’s clever marketing
efforts, it feels rather exclusive for buyers. Overall, this strong, positive brand
presence allows Zara to collect healthy profit margins for its shareholders, while
buyers still feel like they’re getting a great deal.

- Online Shopping Trend:

There’s no doubt that online shopping is a major trend in the 21st century.
Although clothes shopping might not be the best fit for the web, consumers now
want to order their garments with the tap of a button, and from the comfort of their
own homes. This isn’t necessarily a bad thing for Zara, since they already have a
popular webshop. However, Zara will have to pay close attention to the
performance of its online store, since consumer’s preferred channels are definitely
changing.
- Thinking "foreign goods are better quality" of Vietnamese people:
Although in recent years, the trend of "Vietnamese people use Vietnamese goods"
has always been on top, everyone wants to buy foreign-labeled items because they
think: "These products will have higher quality , and when owning will make you
feel more valuable than using domestic goods”. We can see that, with costumes of

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the same type, with almost the same price, the name Zara always brings a higher
emotional value than that of Hanosimex or Made in Vietnam.

1.2.5. Government
- European Trade Agreements:
Zara is a Spanish brand, so it enjoys all of the benefits of operating a business out
of the European Union. In a political context, one of the biggest pros of running a
company in the EU is the country’s extensive trade agreements. Not only does this
make it incredibly easy to import raw materials and export finished products within
the European Union, but it also means that Zara can send its merchandise across the
world with little effort and for a low cost. Overall, the EU’s free-trade policies are
massively beneficial for Zara
- Laws in the place of operation:
The laws of the countries in which Zara operates can be crucial to the strategies the
company will follow in those regions to expand its business.

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 II. NEEDS AND PROBLEMS IDENTIFICATION
2.1. From manufacturer / producer’s perspectives
Overview:
Needs: High Profits
Wants: To be the leading brand in the fast fashion industry
2.1.1. Product

- Needs: Zara always wants to prioritize the variety of product designs with many
models being launched continuously, but the limited quantity is the highlight to help
Zara always catch the market's feedback, and quickly return to the market. The
production cycle increases new customers and grows revenue.

- Problems: With the philosophy of leading the industry in "fast fashion" and always
responding to the constantly changing needs of customers, Zara has eliminated
originality and innovation in its products. Instead, Zara has a team of more than 200
young designers responsible for imitating the latest fashion items from catwalks and
luxury brands. This way, Zara can save a lot of money on hiring famous designers.
However, the following problems that Zara may face are disputes and lawsuits
about exclusive ideas, creations from famous designs.

Image 1:Laduma once accused Zara of copying one of Maxhosa by Laduma's designs

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South African designer Laduma Ngxokolo, founder of the Maxhosa by Laduma
brand, has met with his lawyers and accused Zara - the international fashion retail
giant - of copyright infringement. Laduma said his company has consulted with
lawyers to figure out how to handle the matter. He said: "The lawyers have sent
letters to Zara notifying us of the copyright infringement and making our claims.
We do this to prevent our products from being appropriated and modified without
consent or permission".

Image 2: Celine is a high-end brand that has been massively imitated by Zara

Celine is a high-end brand that Zara has copied so much that many people even joke
that: Zara is a cheap version of the Celine brand. Most memorably, in 2013, Zara
caused a stir with a collection that was said to be a copy of the entire design of
Celine's brand.

2.1.2. Place

- Need 1: Currently, Zara is still quite dependent on physical stores, the number of
fashion stores in the world by 2022 is 2,047 stores in 88 countries. This is also a
challenge for Zara if it encounters any problems, such as the Covid-19 pandemic in
2020, ZARA's parent company Inditex said it reported a 44% decrease in sales
compared to annual average. The reason lies in the fact that the company had to
close 88% of its stores globally because customers could not go directly to the store
to shop. Zara's desire is to expand its distribution in the digital sphere.

- Problem 1: Even though ZARA has focused on investing in online stores, their
revenue is only 89% compared to 2019 - when it was not affected by COVID-19.
Zara's competitor in this area is Shien, a fast fashion house in China, the largest
fashion retailer in the world with an entirely online presence. In just one month,
Shien reached 10.3 million downloads and installs on mobile devices. Meanwhile,
ZARA only reached 2 million downloads. Therefore, the digital field is a new

6
battlefield, where ZARA must be extremely vigilant and have a development
investment plan.

- Need 2: Currently, although Zara can optimize its distribution channel, delivering
products to each store in Europe in 24 hours and in 40 hours with Asian and
American stores. With product prices already listed, stores can immediately display
and sell to customers. Zara's supply chain has the capacity to handle more than 450
million products per year, the number of new product models launched twice a
week. However, Zara's desire is to reduce shipping costs, thereby meeting the price
demand of the Asian market, especially Vietnam. So Zara wants to set up a
manufacturing plant in Asia to reduce shipping and tax costs.

- Problem 2: The absence of a manufacturing plant in Asia can cause the price of a
popular fashion brand like Zara to be raised to a very high price, making it difficult
to meet the demand for product ownership in Vietnam.

2.1.3. Price

- Needs: Zara is positioned as a popular fashion brand, with a pricing strategy based
on customer needs, not pricing according to the cost of the product. Their desire is
to offer cheaper prices than luxury fashion brands like Chanel, and Gucci but still
provide customers with models that are close to these luxury brands.

- Problems: Stores in Europe and especially in the head office - Spain have 20-30%
cheaper prices than stores in Asia and America, the reason is because of taxes and
shipping charges. This can be a problem for Zara, because, for a brand that is
positioned as affordable fashion, having a pricing strategy according to customer
needs, not following the cost of the product, this is a high price. compared to the
general income level of Vietnamese people. Therefore, most customers, especially
young customers, will want to order online on the official website in Spain rather
than buying directly at a store in Vietnam.

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 Image 3: Statistics on the average price of Zara in countries around the world
2.1.4. Promotion

- Needs: Due to the shift in sales of fashion items at this uncertain time. Zara is also
gradually transforming from offline sales at traditional stores to online sales. Zara's
desire in this regard is to be able to increase sales and increase brand coverage on e-
commerce platforms thanks to advertising programs.

- Problems: In order to penetrate deeply into e-commerce platforms and increase

coverage on the digital platform, Zara needs to create many promotions, in
conjunction with those who have a voice in the fashion industry in Vietnam. .
Compared with traditional advertising, this way of advertising can increase revenue
better. According to MediaKix, 89% think the ROI from influencer marketing is the
same or better than from other channels. Nearly 75% of consumers surveyed say
they would pay more than $600 for products recommended by an influencer.
However, Zara is facing a big competitor, Shein with many forms and promotions,
so Zara needs to have a smart combination with celebrities, thereby creating a
difference in brand level.

2.2. From the intermediaries’ perspectives

Overview:
Needs: High Profits
Wants: There are win-win policies, win-win with suppliers

2.2.1. Product
- Needs: Intermediary retailers in Vietnam now understand that the purchase price
at Zara stores is quite high compared to the average income of Vietnamese people.
Therefore, they want to both sell goods at a good price and earn high profits.

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- Problems: There are many intermediary channels currently taking advantage of
this loophole to sell items of unknown origin, not genuine from Zara or surplus
goods, illegal "smuggled" goods. These surplus goods, these "smuggled" goods may
come from a number of defective goods, or because enterprises produce surplus and
then liquidate it to earn more. And either way, these intermediaries are breaking the
contract and are wrong about the law. This could affect Zara's brand reputation in
the long run.

Image 4: A series of shops that accept Zara fashion orders on social networks

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 Image 5: Clothing branded Zara but products of unknown origin

Source: Yourpassportplease

2.2.2. Place
- Needs: Intermediary distributors expect Zara to have its own policy for
intermediaries.

- Problems: Zara only focuses on investing in store locations as the main element of
its marketing strategy, the locations Zara chooses are usually large shopping centers
with expensive facades. Therefore, it will be very difficult for intermediate
distribution channels to meet this location requirement of Zara. For the most part,
intermediary channels are only deployed online or by hand-carrying goods from
abroad. Zara also does not focus on distribution investment for intermediary
channels, but only opens 1-2 main stores in 2 big cities in Hanoi and Ho Chi Minh.

2.2.3. Promotion
- Needs: Zara has almost no advertising policy and spends only 0.3% of its sales on
advertising compared to the 3.5% average of its competitors. Instead of advertising,
Zara uses its store location and in-store displays as key elements of its marketing

10
strategy. By choosing to stay in the most prominent locations in the city, Zara
ensures a very high number of visits. Therefore, the desire of the intermediary
channel is that Zara has special discount policies for intermediary customers who
order in large quantities on the website (because most Vietnamese customers will
buy goods through intermediaries - who are experts in the market) receive hand-
carried goods or place orders directly on the website for customers), or there are
programs to create membership cards for members to buy in bulk, with many
incentives.
- Problems: For intermediaries, this is a disadvantage because most middlemen can
only sell through online channels or order goods through the website, but do not
have a space like a store to attract customers. In addition, Zara's discounts are not as
attractive as other brands, which will make it more difficult for intermediaries.

2.3. From the customers’ perspectives

2.3.1. Product
Needs: The majority of fashion-loving customers want to own for themselves the
latest trending outfits. Zara has been very pleased with customers when quickly
"imitating" and slightly modifying its designs compared to the designs that have just
been shown by big brands. Instead of taking 5-7 months to order clothes, the
company has cut that time to 2 months. With such a rush, Zara also accepts to spend
money to bring a small amount of products to the store to meet the needs of buyers.
Thereby creating scarcity to stimulate buyers to make purchasing decisions to avoid
"out of stock".

Problems: This act of Zara has worked by collecting huge amounts of money.
However, with the current competition from fast fashion brands such as H&M,
Pull&Bear, etc., customers may have more choices with models that are considered
to have similar designs. Therefore, this strategy of Zara may backfire and the brand
must accept the loss of costs when launching such a small number of products.

2.3.2. Price
Needs: Zara is positioned as a popular fashion brand, the brand has a design with
the direction of major fashion brands but at a much more attractive price. Zara
products are also worn by many celebrities and stylists. The price for Zara's
products is considered reasonable with the product quality at a decent level or
higher, as a faux suede shirt for women costs about 70 USD (more than 1.5 million
VND) while the navy blazer with gold-plated buttons is 140 USD (about 3.1 million
VND). These prices are nothing compared to similar branded models but often cost
up to several thousand dollars. In the discount seasons, Zara's clothes are sometimes
only about 30 USD (about 670,000 VND).

Problems: Although it is positioned as a popular fashion brand, compared to the

Vietnamese market, it is still considered by Vietnamese customers to be quite
expensive compared to the current common ground. In addition to fashionistas,

11
general customers will tend to choose products with similar designs from domestic
brands at a lower price.

2.3.3. Place
Needs: Zara mainly promotes its brand by opening a lot of stores in prime locations
such as in central districts, large commercial centers. Zara's stores are also
decorated in an eye-catching way to attract customers, opening more stores to
increase brand coverage so that customers know Zara more and can easily find the
nearest place for convenience for shopping.

Problems: However, Zara did not anticipate the consequences of the Covid-19
pandemic, resulting in a 44% drop in sales in the first quarter compared to the same
period last year. The company reported a loss of 482 million USD. Inditex has
announced that it will close between 1,000 and 1,200 stores worldwide, focusing on
smaller stores in Asia and Europe. While online sales are positive - Zara's online
sales in Q1 2020 increased by 50% - that is not enough to mitigate the damage. Not
only that, the majority of Zara stores are closed, which will affect the shopping
experience of customers later, because they can no longer choose the nearest store
to buy, but instead have to move to other areas. downtown, the malls where Zara
chooses to decorate their stores.

2.3.4. Promotion
Needs: Overcoming the consequences caused by the Covid-19 pandemic, Zara
began to push into sales platforms on e-commerce according to the current buying
trend of the market. Zara launches many attractive promotions not only on its online
sales channels but also in its direct stores. Creating such promotions will easily
attract customers to the brand and product experience

Problems: Zara currently has not invested much in advertising programs but only
depends on word of mouth marketing as well as the brand's promotions that do not
spread throughout the year but only at any time. . Compared to competitors in the
same industry, they have invested a lot in advertising and have a promotion strategy
that spans the whole year. In addition, promotional products are also very diverse,
unlike Zara, which only promotes items that are out of season and the quantity is
small in models and sizes.

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 III. HOW TO APPROACH THE NEEDS AND PROBLEMS

3.1. Primary data

3.1.1. Question table
3.1.1.1. Demographic
The purpose of this section is to identify demographic factors such as occupational
age gender income client subjects of the survey

1. What is your gender?

2. What is your current job?
3. What is your average monthly income?
3.1.1.2. Survey
For Zara’s Customer:
Survey about experience purchasing and brand awareness to find out new
customer’s insight
1. Through what channels did you get to know Zara and its products?
2. What occasions do you usually shop? (year-end, sale, or monthly)
3. Is there a Zara store near your place
4. By what criteria do you usually choose clothes?
5. Have you experienced shopping at Zara Vietnam?
6. Do you think Zara's price in Vietnam is suitable for you?
7. Where do you usually buy genuine Zara clothes (at the shop or via online or
1 other store)
8. Are clothing materials in line with environmental protection trends?
9. What difficulties do you have when buying products from Zara
10. Where do you usually know about promotions and gifts?
11. The return policy is convenient and easy
12. If Zara sells on e-commerce platforms, will it be easier for you to buy?

For Zara's manager:

1. After the covid 19 pandemic, how has Zara's supply system been affected?
2. Is it really really effective to distribute your products only in the current
digital transformation period?
3. What if Zara is sold on the e-commerce platform?
4. Is Zara's supply chain team capable of responding to the Vietnamese market
without being dependent on 3rd parties?
5. Fast fashion trends are being phased out, how Zara will change to meet
customer tastes.

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 6. The absence of a factory in Vietnam leads to a high price of products, is
there a suitable change solution or not?

3.1.2. Data analyze

3.1.2.1. Demographic

Image 6: What is your gender?

Image 7: Your Age?

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 Image 8: What is your current job?

Image 9: What is your average monthly income?

The survey reached 65 audiences with a sex ratio 67.7% of women and 32.3% of
men, indicating that the Zara brand is more interested in women. Moreover, this
survey focuses on students, students with incomes ranging from 5 million years old,
aged 18-25 years old.

3.1.3. Part 2

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 Image 10: How did you know about Zara and their products?

Through the survey, we see that Zara's accessibility is having problems reaching
consumers on mass media platforms when the data shows that consumers often
know Zara when they see the store directly or from referring friends is the most
prominent compared to other media channels.

Image 11: What criteria do you usually choose clothes according to?

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 Image 12: Is there a Zara store near where you live?

Image 13: Have you ever had a shopping experience at Zara?

Image 14: Where do you usually buy Zara products?

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 Image 15: Where do you often know about Zara's promotions and gifts?

Through survey data, in Vietnam Zara is not really widely distributed but only
concentrated in large commercial centers and malls. And the buying behavior only
focuses on buying offline at Zara's store by 70.8% and the promotion policies are
mostly noticed when customers experience shopping at the store, which shows that
the distribution channel distribution strategy is not really diverse on the digital
channel, ecommerce, retail distribution channels

Image 16: When do you usually buy?

Image 17: Do you think Zara's price is suitable for Vietnamese people's income?

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 Image 18: What difficulties do you have when buying at Zara?

Through a survey of consumer behavior in Vietnam, we found that consumers'

buying behavior often buys goods when there are promotions, and goods that meet
the needs of preferences. Especially important because the cost is too high in terms
of supply chain, Zara's price is quite high compared to the income of Vietnamese
people when the survey shows difficulties when buying goods due to high prices
and few promotions.

Image 19: How do you rate Zara's product material in accordance with the trend of
environmental protection compared to other brands?

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In terms of customer need, policies as well as catching up with sustainable fashion
trends that minimize environmental harm are extremely effective in receiving good
customer reviews through surveys. What's more, the right return policies bring good
reviews from consumers through their buying experience.

Image 20: If Zara appears on the e-commerce platform, do you think it is suitable or
not?

Through the survey indicators, consumers tend to prefer to buy fashion goods (and
here is Zara) on e-commerce platforms because this is a platform that gradually
becomes familiar and is the general shopping trend of fashion customers today.

3.2. Secondary data

In 2020, the Covid epidemic was complicated, the disruption in the fashion industry
began as people were asked to stay at home as a precaution to prevent the spread of
the virus. Retail stores, markets, shopping malls are all closed, which leads to the
maximum restriction of outside shopping, forcing consumers to shop online. In
addition, authorities around the world also allow online shopping for essential items
only, restricting the sale of non-essential items, including fashion, during a certain
period. As a result, fashion sales decline and inventory is retained throughout the
supply chain, while limited global freedom and shipping also jeopardize supply
chain operations around the world.

Fashion market revenue in 2020 decreased by more than 10% compared to 2019
under the impact of the epidemic. In which, clothing still contributes a large amount
of revenue with more than 50% of the total revenue of the whole industry.
Communication channels, online shopping received outstanding growth when
people started to have the habit of shopping online. Lazada accounts for about half
of the total revenue of online fashion shopping channels, followed by Sendo,
Facebook, Tiki...

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 Image 21: Source: VIRAC compilation

Young people in the age group of 25-34 years old are the group that spends the
most on fashion. This is understandable because young people always pay attention
to their appearance and invest in taking care of their appearance. Besides, this is
also the age group that quickly grasps new trends and whose consumption behavior
is heavily influenced by the media and celebrities. In which, the percentage of
women's fashion spending in Vietnam is slightly higher than that of men, reaching
more than 50% by 2020.

Image 22: Source: VIRAC, Statista

Average revenue per product decreased slightly in 2020 as consumers cut back on
spending. According to the survey of Asia Plus. Inc on Vietnamese fashion
consumption behavior, the price criterion is always placed on the brand's popularity,

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plus the influence of the epidemic, the sales of luxury goods have decreased
significantly. tell.

Image 23: Average revenue per customer of Vietnamese fashion products, 2017-2021

Regarding shopping channels, according to Statista 2022, Shopping channels for

fashion products among consumers in Vietnam as of June 2022 are mostly in offline
stores with 38%, followed by on e-commerce stores with 32%.

Image 24

The results of this study also contribute as a basis for the group's recommendations
on distribution channels in the following section.

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 IV. KEY FINDING / RESULTS
In short, the global Covid-19 epidemic in 2020 has severely crippled a number of
fast fashion sectors. Zara, the industry pioneer in quick fashion, suffered greatly
from the crisis' suddenness. And 1200 Zara stores throughout the globe had to shut.
After the epidemic, Zara launched a second location in Hanoi, Vietnam, in addition
to remaining open. It is evident that Zara has enjoyed success in Vietnam despite
the fact that it has only been on the market for five years. The brand-new Zara
formally entered the Vietnamese market in 2016 by opening its first location in Ho
Chi Minh City. However, Vietnamese citizens now embrace global clothing brands
like Zara. Data from 2019 indicate that after three years in Vietnam, Zara had
earned more than 3,000 billion VND, demonstrating how popular this fashion brand
is with Vietnamese consumers. Zara's sales in Vietnam decreased significantly due
to the pandemic, which was clearly felt from the beginning of 2020 to the beginning
of 2022, however following the epidemic, Vietnam's well-known and significant
fashion sector never went away.

❖ And through the survey, we can get some results as follows:

● It can be seen that Zara is positioning its brand very well to consumers
when the customers coming to them are the target customers they are
targeting. Most of Zara's fashion designs will be more suitable for
young women and it is also more interested by most women. And
Zara's strategy has targeted this element and produced trendy and low-
priced designs. Therefore, Vietnamese people only need to have a
good income to be able to use Zara.
● Zara's brand awareness is quite high. When asking young people
about Zara fashion stores with good prices, people will definitely
mention Zara. From that, it shows that its communication is very
good. And especially the brick-and-mortar stores.
● However, up to now, Zara has only 2 main stores in Ho Chi Minh
City and Hanoi. This prevents a lot of people from all over the
country from buying. Because Zara's production quantity is limited,
plus online ordering, many times, you won't be able to buy your
favorite items, it's over. Therefore, if possible, Zara should expand its
store distribution in many other major cities. It is natural that having
very few stores leads to a store's revenue not equal to other brands.
Survey shows that when buying, people will come directly to the store
and also want to experience the product there.
● Despite being limited in supply, Zara lavishly spends in its goods and
clothing creations. Zara focuses on decreasing quantity and

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 developing designs rather than making several goods for the same
model. As a consequence, there are still other models in the pipeline
when one model runs out of supply. Additionally, clients' buy rates
are significantly greater when they have more options. Customers will
constantly purchase more or less, therefore Zara can always sell
clothing alone.
● Most people purchase because it's something they're interested in
doing; they don't need a reason. Therefore, it is clear that Zara's
product prices are reasonable and easy for customers to afford. It is
not, however, a poor salary relative to Vietnamese people's average
income. Because Zara is an imported international brand with a
production outside of Vietnam, this may be explained.
● Survey shows that Zara can completely appear on e-commerce
platforms and sales from these online stores will not be small. When
people want to buy goods, they have to go to the store to shop. And
through the Covid 19 pandemic, Zara once claimed that they survived
because of online sales. Therefore, being present on e-commerce
platforms will help all customers have more channels to choose from
and make shopping easier for customers in other regions of the
country. And today the trend of shopping through e-commerce is
increasing. It shows that the shopping behavior of consumers through
this floor has also started to increase - this is a good channel for Zara
to penetrate.
❖ Following the pandemic, customers' increased supply chain knowledge has
slowed the expansion of fast fashion and increased demand for sustainable
clothing. Zara is severely harmed, making Covid recovery challenging.
However, in general, Zara is still growing and rebounding quite well in
Vietnam following the epidemic.
❖ Zara's items are only distributed in malls, which can actually prevent an
unforeseen increase in sales during the present digital transition age.
Although it increases the visibility of Zara in the fashion business, buyers
may get more interested in the brand as a result of the difficulties of
shopping.
❖ The fast fashion trend is progressively dying out, and in order to satisfy
customer demand, Zara is also steadily protecting the environment while
simultaneously raising the caliber of its materials and products.
➢ The garment industry is a global industry that is most prominent when all
value-creating activities for garments are spread across many countries and
continents, so when there are fluctuations from the Global markets such as

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the Covid-19 pandemic will be greatly affected. In the future, uncertainties
such as the Covid-19 pandemic may occur many times and have great
impacts. Therefore, Zara needs to seriously review its business strategies and
especially the distribution channel strategy to be the most diversified and
optimal.

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 V. CONCLUSIONS
Overall, Zara is a fast fashion brand with high recognition among young people.
Zara with its distinctive strategies is to focus on product scarcity and focus mainly
on extremely large brick-and-mortar stores in prime locations. Zara is a fashion
brand that pleases customers when it comes to catching up with the trends on the
catwalk and launching in the fastest time with very affordable prices.

However, under the impact of the Covid 19 pandemic, the brand has also suffered
negative impacts. The epidemic caused many Zara stores to close, leading to a
serious decline in Zara's revenue. The application of e-commerce has also partly
helped Zara recover its losses during the crisis.

In the current Vietnamese market, Zara has only two main selling points in Ho Chi
Minh City. Ho Chi Minh and Hanoi. This leads to customers feeling uncomfortable
in shopping. Therefore, we also suggest that Zara needs to be more diversified in its
distribution channels, specifically the current trend of online shopping.

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 VI. RECOMMENDATIONS FOR OPTIMIZING THE
MARKETING CHANNELS SYSTEM
5.1. Channel structure [Channel strategy]

Image 25: Channel structure

Until now, Zara has sold mainly through genuine stores, which are located in large
shopping centers. Typically, in Vietnam, there are 2 genuine Zara stores: Vincom
Ba Trieu (Hanoi), Vincom Dong Khoi (HCM). Although the number of genuine
Zara stores is not much, most of the revenue depends on these actual stores.
Therefore, the group still maintains the distribution of products through genuine
stores, so as not to change the buying behavior of Zara consumers so far. Besides,
the group wants to propose and open more genuine Zara Vietnam stores in other big
cities such as Da Nang, Hai Phong, Can Tho,... to increase horizontal brand
recognition. These are cities with high economic capabilities and potential, so the
sale of luxury brands is no stranger.

As we all know, the Covid 19 pandemic has caused Zara's sales revenue to decline
significantly, down 44% compared to the average annual revenue. The reason is that
Zara's fashionistas cannot buy directly at stores. Our team would like to propose
expanding distribution channels in the digital field, especially through e-commerce
channels to optimize brand recognition and consumer accessibility. E-commerce
channels are divided into two categories including sales through Zara's genuine
website in Vietnam and sales through popular e-commerce channels in Vietnam
such as Shopee, Lazada.Although in the past, sales on Zara's website have been
available, however, with competition with SHEIN – the famous Chinese online
retail channel, Zara has not been able to optimize its revenue. We propose that Zara
should focus on the sales website by developing the website at the most optimal

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level, increasing reach and reach through advertising, implementing many large and
attractive promotions on occasions, regularly updating and upgrading sales features,
about product information on the website. Besides, goods sold at Shopee or Lazada
are distributed in genuine Malls to increase the trust of consumers.

In addition, we would like to propose a new form of distribution channel: Supplying

goods from manufacturers, to retailers, to consumers. As mentioned above,
currently the number of genuine Zara stores is too small, the e-commerce channel is
not too popular for consumers to search and access products, most of Zara's
intermediary channels are unofficial such as through some online channels or
portable goods from abroad, The intermediate distribution of goods through
retailers is a necessary option. Hoang Phuc is an exclusive distribution system of
fashion brands in the world. Zara can cooperate with this distributor to be able to
expand its customer reach. However, when distributing goods through
intermediaries, manufacturers must consider commission discounts, appropriate
pricing strategies.

5.2. Optimal marketing / distribution channel [Channel motivation]

5.2.1. Vertical Conflict
Vertical conflicts are conflicts that occur between members at different levels of
distribution in a channel.

According to the distribution channel structure proposed above about Zara, vertical
channel conflicts do not take place much. There is mainly a conflict between the
manufacturer and the retailer if they cannot agree satisfactorily on the discount of
the goods, affecting the selling price of the product.

5.2.2. Horizontal Conflict

Horizontal conflict is a conflict between intermediaries at the same level of
distribution in the channel.

With Zara's channel structure, horizontal conflicts take place mainly. The difference
in price can be seen when selling directly and selling through intermediaries. Goods
at Zara's stores will be priced more softly because they are not bound by shipping
costs. Meanwhile, through retailers, their manufacturers have to extract a
commission for them. When selling on e-commerce platforms, websites, the selling
price will also be changed more or less depending on some costs: transportation,
marketing, storage, sales ... Therefore, the price determines a significant part of that
form of distribution. If the product price difference is too large between channels, it
is possible that consumers will consider the benefits of purchase, and choose the
type of purchase in which they will gain the most. It also creates a reason for the
uneven development of channel forms, affecting Zara's overall revenue.

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 VI. LIMITATIONS & CAVEATS
- About limitations when making the report:

 Since Zara is an international brand and has only 2 branches in Ho

Chi Minh City and Hanoi, it is difficult to get access to information
online / directly from the manager. This limits the taking of objective
information from two sides: managers and customers.

 Due to limited resources and finance, the team can only collect survey
samples from students of Ton Duc Thang University - those who have
known/have had experience with shopping at Zara Vietnam. This
reason leads to the fact that the information collected may only be the
views of the students, who do not have much experience or
understanding of the proper distribution.

- Regarding the limitations of Zara's distribution channels in Vietnam:

 Zara has taken full advantage of the vertical integration in its supply
chain resulting in significantly improved delivery times and more
market share. However, with the rate of online shopping and the time
customers spend on social networks has increased significantly, Zara's
website has not been chosen by many Vietnamese as a place to shop,
they prefer to go to stores - offline. Therefore, Zara needs to invest
more in perfecting its website and shopping app, allowing customers
to have a more enjoyable experience when shopping online.

 In addition, the lack of association with the official intermediaries

(retailers, wholesalers) leads to the rampant sale of fake Zara
products, customers who do not have a good understanding will trust
and order. Receiving products that are not as expected will make them
lose confidence in the brand. Zara needs to strengthen policies to
protect the interests of customers.

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 APPENDIX

Image 1:Laduma once accused Zara of copying one of Maxhosa by Laduma's designs. .5
Image 2: Celine is a high-end brand that has been massively imitated by Zara................5
Image 3: Statistics on the average price of Zara in countries around the world...............7
Image 4: A series of shops that accept Zara fashion orders on social networks................8
Image 5: Clothing branded Zara but products of unknown origin.....................................9
Image 6: What is your gender?.........................................................................................13
Image 7: Your Age?............................................................................................................13
Image 8: What is your current job?....................................................................................13
Image 9: What is your average monthly income?.............................................................14
Image 10: How did you know about Zara and their products?.........................................14
Image 11: What criteria do you usually choose clothes according to?.............................15
Image 12: Is there a Zara store near where you live?.......................................................15
Image 13: Have you ever had a shopping experience at Zara?........................................15
Image 14: Where do you usually buy Zara products?.......................................................16
Image 15: Where do you often know about Zara's promotions and gifts?.......................16
Image 16: When do you usually buy?................................................................................16
Image 17: Do you think Zara's price is suitable for Vietnamese people's income?.........17
Image 18: What difficulties do you have when buying at Zara?......................................17
Image 19: How do you rate Zara's product material in accordance with the trend of
environmental protection compared to other brands?.......................................................17
Image 20: If Zara appears on the e-commerce platform, do you think it is suitable or
not?......................................................................................................................................18
Image 21: Source: VIRAC compilation.............................................................................19
Image 22: Source: VIRAC, Statista....................................................................................19
Image 23: Average revenue per customer of Vietnamese fashion products, 2017-2021. 20
Image 24..............................................................................................................................20
Image 25: Channel structure..............................................................................................23

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