Akanksha Gupta

History and Evolution

Zara is a Spanish clothes and accessories brand, it is the flagship brand of the Inditex group.

• It all began when Ortega established a dress-making factory, Inditex, in the year 1963.

• Amancio Ortega opened the first Zara store in 1975 in the central street in downtown A Coruna, Galicia,
Spain (Founder: Amancio Ortega and Rosalia Mera). The store featured low-priced lookalike products of
popular, higher-end clothing fashions.
• During 1980s, Ortega started to change the design, manufacturing, and distribution process to reduce
lead times and react to new trends in quicker way what he called an “instant fashions” which is the
responsive supply chain which enables the delivery of new fashions as trend emerges.
• In addition, company started an international expansion through Porto, Portugal. The international
expansion was increased in 1990s, with Mexico in 1992.
• Ortega has continued to grow in creating brands such as Pull & Bear, Bershka, and Oysho. He acquired
the groups such as Massimo Dutti and Stradivarius. Inditex is indeed the biggest fashion group in the
world.
• Today, Zara has close to 6500 stores across 88 countries around the world.
• Zara entered the Indian market in 2010 through a joint venture with the TATA group.
 Core Competencies
• Need to respond quickly to the
demands of target consumers.
• Emphasis on employee value
and intelligence, decision
making.
• Affinity for Information
Technology
• Speedy and decentralized
decision making.
Value Proposition

Fashionable, Affordable Clothes

Large choice of styles

Prime Locations
Inventory of Zara
*Zara launches approximately 11000 new items per year in compared to 200-4000 for H&M and GAP.
*Zara’s focus is on reducing time which holds 6 days worth of inventory while H&M holds 52 days of
inventory.
*Zara’s store is structured by having men’s clothing and women’s clothing, each is subdivided in lower
garment, upper garment, shoes, cosmetics and complements, as well as children’s clothing (Zara Kids) and
Zara Footwear’s.
 Zara’s Offerings

1) Women’s: Zara produced a range with better fabrics and more “womanly” cuts. Zara Basic
essential fashion-fix pieces and fashion for younger women (Lightness, looser silhouettes and
silky tops).

2) Men’s: Zara has produced the range of lightweight cotton tops and print shirts paired with
cotton twill shorts (Hints of ethnic Asian touches like robes and beads which provides hippie-
bohemian detailing).

3) Zara Kids: It produces unique and sophisticated range. It feels secure in finding unique, great
quality clothes with reasonable price point.

4) Zara footwear’s: Zara footwear is leading manufactures which offers wide array of ladies foot
wears which are beautifully crafted ( ladies sports sandal, formal sandal, fashionable sandals,
bellies, designer sandals, shoes, high heel sandals, flat sandals and flat bellies).
Strengths: Weakness:
Brand Awareness Centralized distribution system
Brand Loyalty Doesn’t spend much money on
Size and Growth advertising
High Fashion for Modest Prices.
Fast delivery of new products and trends in
the market.

Opportunity: Threats:
Global market penetration Local competitors
Online market Global competitors
Demand for high fashion at
affordable prices
Specialization

• Zara spends four to five weeks on the process of designing new product and getting the finished
products in the stores

• Zara is specialized on the complete stock rotation every 15 days, high development of new
designs in only 14 days and launches around 10’000 new products each year

• Zara controls and coordinates all the process and allows to reduce the times to minimum

• Zara’s core belief has three components which are concept, value drivers, and capabilities. 50% of
he 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
Differentiation

• Zara’s differentiation and competitive advantage is dominated by cost-prize leadership, fast rollover of
new products and strong branding

• Exploring its opportunities and suppressing weaknesses like the lack of plus sizes, Zara has
transformed the customer

• Vertical integration has allowed Zara to develop strong merchandising strategy which has led Zara to
create opportunity and work on ‘Economics of scarcity’

• Zara is a Designer boutique with an extreme difference on the average price so their competitors are
not luxury brands but dedicated ranges like H&M or M&S
Market Segmentation and Targeting

Demographic Segmentation Psychographic Segmentation

• up to 35 years of age, • Interested in fashion trends

• who prioritize fashion as lifestyle, • conscious about the looks
• who earns up to $60k per year, • Enjoy shopping and socializing
• graduated school • Hectic lifestyle
Zara’s Brand Positioning
Zara’s Marketing Mix
Product Promotion

• Sells apparels, footwear accessories • focuses less on advertisement-based marketing

for men, women and kids • more on internet online marketing opportunities
• affordable fashion industry • attracting visitors to the online shop
• not a luxury brand • original focus on the central European market
• different and unique • expanding to the Asian market
• more quantities of styles

Place Price

• present in 30 countries at private locations • fashion for people with a lower income
• 600 commercial stores • fast decision making process
• selling its service through out the world.
Competitive Analysis
 Zara’s Strategic Advantage Marketing Focus
• Zara manufactures 60% of own products where by owning its in-house production, Zara is able to be
flexible in the variety, amount, and the new styles they produce

• Zara’s in-house production creates rapid product turnover since its “runs are limited and inventories
are controlled. The rapid product turnover creates the climate of scarcity and opportunity in Zara’s
retail stores

• The climate increases frequency and rapidity with which consumer visit the stores and buy the
products. Zara’s scarcity allows company to sell more items at full price. The strategy minimizes
Zara’s total cost since it reduces 15-20% of markdown merchandise compared to the traditional
retailer

• Zara’s unique quick response system which is composed of human resources as well as information
technology allow Zara to respond to the demand for its consumer better than competition
 Zara’s Strategic Advantage Marketing Focus

• Zara’s focus is on the ultimate consumer which places an emphasis on using backward vertical
integration to be quick fashion follower than to achieve manufacturing efficiencies

• Zara was able to work horizontally with an open communication environment rather than hierarchal.
Zara’s centralized distribution facility provides the competitive advantage by minimizing the lead-time of
goods. Zara’s internally or externally produced merchandise goes to distribution center.

• Zara’s cuts in advertising investments reduce total expenses which makes an international expansion
more economical. This is significant since Zara relies on its stores to project an image.

• Since Zara’s target is young, educated one would like the fashion and is sensitive to fashion. 80-85% of
products Zara offers are relatively standardized fashionable products. The product which sells well in
fashion capital such as New York would also sell well in Milan or Madrid since fashion has become
globally accessible.
Conclusion
• Zara is successful international retailer less than 30 years.

• Zara has transformed from Spanish local brand into a truly global brand.

• Zara has the potential for the sustainable growth for its capability and competitive advantage to
experience the challenges of fashion industry.

• The concept of Zara is keeping production, design, and production process which would enable Zara to
react to shifts in demands of consumers

• Zara store should keep on innovating and re-inventing themselves to remain creative within the
fashion industry.