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There are quite large amount of literatures show the supply chain and the market strategy of the fast fashion firms. However, establishing new fast fashion firms in China also need to know the local information such as the Chinese customers’ buying behavior, the preferred location, the marketing tools they used, etc. The fast fashion model is suitable for the Chinese Market is the main hypothesis. In order to better understand the meaning from the collected data, some sub-hypothesizes were proposed and then be verified through data analysis and conduction.
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Thus, the income or the cost on clothes per month has the direct link with the buying behavior. The target customer for fast fashion brand prefer to be more fashionable, however, the budget is always limited. They did not quite prefer famous brands and foreign brands. That matches our hypothesis (The income will influence customers’ buying behavior.).
We use Zara as an example to analyze the consumer’s attitude to a fast fashion brand and their buying behavior. The satisfaction reasons for Zara, the kinds of clothes customers prefer to buy in Zara, the reasons for them to buy and the place they get the fashion information. We get the data as below. We classify those 132 of 228 people who have shopped or visited Zara stores for the following analysis.
We list seven main factors or namely the advantages for buying Zara. As analysis shows above that the Store Location is the most important factor which has an average score of 6.9 in 10. The speed of fashion update and the fashionable are following which both have an average mark of 6.6. Furthermore, the shopping environment and the design of clothes are also two influential factors.
Actual need is the main reason for consumers to buy new clothes.However, there are also quite a large amount also choose “spontaneous shopping”, “special discount” and “fashion followers”. That means besides the actual need, consumers buying behavior is also affect by the spontaneous, speicial discount, fashion trend and etc.
As the question “Where do you get the fashion information?” shows, magazines and Internet rank the first and second. More than half of the respondents choose these two as the major tool they get the information. Following with the store window decoration, the percentage of this tool is also very high which means it is also a factor can’t be ignore. Thus, the fast fashion firms need to put more emphasis on their marketing through magazines, Internet and the store window decoration.
According to feedback we get from the questionnaires, 95.50% consumers of Zara buy daily casual clothes, which means the demands for daily casual are the largest part. Meanwhile, actual need and special discount rank high in the reasons to buy clothes.
Moving forward to the income per month part, it shows that the major consumers of Zara are the middle classes. This group of customers is purposefully and efficiently and they are more knowledge about what they want, where they can buy them and when they will buy (Levy S. J. & Rook D. W., 1999). They have more own opinion for choosing the clothes. “Fashionable but in best price (H&M Annual Report 2009, 2010)” this slogan of fast fashion might be suitable for this group of consumers.
This group of people prefers to get the fashion information from magazine, Internet and store window decoration. Fast fashion firms always have opposite views for the marketing communication. Zara tends to use store window decoration to show its brand image it only has some marketing performance in the beginning of a new store (Ghemawat & Nueno, 2003). However, other fast fashion firms such as H&M invest more on marketing communications in order to enhance its brand image (H&M Website, 2010).
Furthermore, based on an analysis for the Frequency Tendency analysis of consumer behavior in Shanghai (He, 2006), we can summarize the characteristics of consumer behavior as the following points:
They consider not only the price, but also the taste of fashion. Consumers in Shanghai are generally more rational, price-comparison shopping. They will do more comparison with the products which have the similar feature and select the one with reasonable price. This means they seek the high quality and style.
Brand loyalty. Most consumers know their favorite brands. Some of them will not replace the daily use of the brand.
Great room for online consumption. Higher education, younger consumers with more online shopping experience, and they are more willing to accept this mode of consumption.
Combine our survey with the Frequency Tendency analysis of consumer behavior in Shanghai (He, 2006), we get the result that Zara is successful because of its ability to catch customers’ needs. They know the suitable store location in a city, the kind of clothes consumers buy most and also the right communication tool for a fast fashion brand. As fast fashion is quite unique and the business model is different from traditional fashion brand, knowing their customers buying behavior seems to be very important.
Thus, our hypothesis seems to be right in fast fashion brands. The store location should be in the shopping center so that customers could easily see their store and get the latest fashion information from the window decoration. Meanwhile, the major kind of clothes customer prefers is daily casual as it is the mostly actual need. Furthermore, as quick response is the vital advantage of fast fashion brand, the communication way is also need to be considered carefully. The magazine and the internet are the top two communication ways that the customers get the fashion information. Their rapid responses agree with the quick response spirit of fast fashion.
Thus, the fast fashion industry has a positive develop environment in the east of China, because most of fashion manufactories are located in China’s eastern regions. As the China Textile Exhibition Report (2008/2009) shows, China’s textile industry is mainly concentrated in coastal areas and almost over 80% of Large-scale manufactories are centralize in Jiangsu Province, Zhejiang Province, Guangdong Province, Shanghai and Shandong Province. The locations for manufactories are significant for fast fashion firms as they are famous by its rapid response. New firms which intend to open the Chinese market need to put emphasis on the east market not only for its leadership but also for the easy transport location.
From all these analysis and findings for questionnaires, we offered five recommendations. As our main aim for this dissertation is to find out whether the fast fashion model is suitable for Chinese market. Therefore it will be quite useful to give some recommendations to help the firms that want to use this kind of business model.
Zara is different in the organization and design stage with most of the clothing company. It gets the inspirations from the customer needs and quickly responds to them. Zara always keep pace with fashion, not to predict 6-9 months later or even longer needs as other traditional companies. The team of Zara is built up by the designers, marketers, buyers and cross-functional members. Their functions are to ensure rapid transfer of information, the executable program, and easy to implement.
Sourcing and Manufacturing
In the stage of purchasing and producing, Zara is different with most of the clothes companies. The major manufactories of Zara are in Europe, and many are based in Spain, around a small range. While other fast fashion firms such as Benetton, Gap, H & M are basically as a mode of “the first world’s brand, the third world’s production”.(Ghemawat & Nueno, 2003) The biggest advantage is low cost, while the disadvantage is slow response speed. Inditex in Spain has a capital-intensive manufacturing plant, and it is a vertically integrated organization, it has a dyeing, designing, tailoring and garment processing and delay manufacturing strategy(Inditex website, 2010). Inditex bought white cloth in advance, standardized semi-finished products significantly and shorten the production cycle. By maintaining control of dyeing and processing field, it makes Inditex have on-demand ability to produce new models for providing the necessary cloth. However, the majority of the Chinese fashion companies were not used to store the fabric and the quantity of every collection was quite large. Zara has the advantage of production speed because it contracts with some small factories. Thus, they could change easily according to the market.
Zara puts more emphasis on speed, and even grab at all costs some time. Because there is no loss of time is the concept of fashion. While other fashion firm pay more attention to the cost. Zara’s distribution center is in the fast, efficient operation. In fact, it works just as a clothing center and its main function is turnover, not storage. But many domestic garment enterprises’ distribution centers are larger and more built inside the mountain of storage product. Basically, all the stores of Zara from distribution centers are with direct distribution model, while most domestic garment enterprises are built of local branches and warehouses. They have links at all levels and a large backlog of finished goods inventory. However, Zara is high frequency, fast, with a small storage; variety of replenishment strategy also ensures a rich store of the kind.
Zara is totally broken the traditional clothing brand practice mode of operation and take a completely different destructive innovation road. The most fundamental factor is its efficient operation as the core operating system for collaborative supply chain. Zara is success of its collaborative supply chain operation. This could be learned by some domestic enterprises. It could be concluded as follows: taking consumer as the center; shortening the prepare time and all supply chain’s in order to squeeze time and eliminate possible problem; reducing or eliminating those which cannot bring value-added component; being more variety to create in order to enhance brand value and competitiveness.
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2. Marketing strategies
Comparing with the traditional fashion firms, Zara’s marketing strategies is quite unique. It spent quite small amount of money in advertising only in the start of a new store open. (Ghemawat & Nueno, 2003) They put emphasis on the rapid consumer information feedback by the store sales people and the decoration for the own store and the window. Through these ways, Zara builds its brand image. In comparison, H&M use celebrity effect to attract the consumers. The advantages and disadvantages of Zara’s marketing strategy will be explored.
A store as a show platform
One of the most important reasons of Zara’s success is that the company takes every store as its show platform. At the beginning of the new store launched, the location selection is the premier crucial thing for the company to inject fund. Usually, the most prosperous shopping center will be targeted and a large amount of money will be spent on renting the store. Meanwhile, expense will not be saved on window decorations and store settings. The staffs of the stores are asked to wear the uniform and communication skills will be trained as well.
Zara is now participating more in social performance in order to enhance its brand awareness. However, H&M represents much wiser than Zara on this point. To illustrate, in terms of brand value, H&M’s brand value is $12,131 million while Zara’s is $8,966 million. (Millward Brown: Top 100 Most valuable global brands 2010, 2010) According to the market value, H&M equals to $50,587 million which is 10,468 million more than Zara (about $40,119 million) (H&M Annual Report 2009,2010; Inditex Annual Report 2009,2010) . In addition, the brand value of H&M takes 24% of the total market value. In comparison, the percentage of Zara’s brand value in total market value is 22%. However, the situation above does not means that Zara do not think highly of building brand image. Through the management of every store, namely, the decoration, service, turnover speed and so on, Zara demonstrates its advantages to the customers and passes-by vividly. This is also a good way to build the corporation’s image and promote itself.
Methods for consumption stimulation
Pricing strategy is also another important factor for Zara’s success. The accurate position for target customer, the control of cost and the reasonable price setting plays equal significant role and cannot leave anyone. Because of Zara mainly targets on the young generation, the price element seems to be quite important. Most of the young generations are students in the universities or senior schools. Since they have no job and the parents are their only economy source, they can not afford too expensive clothing or they may hold the conception of saving money. When talking about the young people who are in careers, as they are the trainees or the new arrival staffs, they may have the big pressure of renting house and solving living problems, and have no extra money to buy expensive clothes. Therefore, the young customers might be the price-hunting shopper. They may be hesitating when they decide to buy one new item. Zara’s fast update rate solves the problem as it promotes people to buy the products quickly. Furthermore, discount is absolutely a wise approach to stimulate consumption.
To sum up, although Zara still have some disadvantages such as its branding and communication, we can learn quite a lot of experience especially in its unique supply chain. However, the domestic firms can not directly copy Zara’s mode because of the business environments, the local markets and the corporation’s target are distinct from each other.
First, if the Chinese company want to build international fast fashion brand, effectively collecting the fashion information partly from the customers is quite significant,(æ‰¾ä¸ªREFERENCEï¼Œè¿™æ ·æ‰æœ‰å¯ä¿¡åº¦) the store managers and employees have a serious responsibility of this task. Basically, the company should interview and employ the staff who is sensitive at fashion and capable to collect, conclude and express the element of fashion trends. In addition, the staff could adopt the method of questionnaires to investigate the preferences and suggestions of the consumer. Copies of questionnaire could also be sent to the university students in the big city, like Shanghai, Peking, Hangzhou and so on. In order to catch the fashion trends, the company could send the specific investigator to different fashion zones to travel, observe and get the fashion trend, for instance, Nanjing Street of Shanghai, Wangfujing Street of Beijing, and etc.
Second, China mainly plays a role of an export country rather than an import country. The material in China is relatively sufficient and ready to use.(è¿™ä¸ªç®-Recommendationï¼Ÿ) Like Zara, the vertically integrated structure of the organization could be found, forming design, manufacturing and delivery as a vertical line. Therefore, both the time and the money will be saved. From the domestic country, the rough material is relatively cheaper than that from other countries and there will be no tax on the freight. Furthermore, the shipping expense will be saved as well. In addition, discount is a good way to sell as well if the cost price is low.
Third, in China, most of the companies still hold the perspective of saving cost rather than saving time. Absolutely, saving time needs money. However, saving time could gain more time, more chance, and more profit which could cover the costs. It benefits the company’s image and strengthens the competitive power.(æœ€å¥½åŠ ä¸Šref) Aiming at the time element, the inventory or distribution center should pay more attention on turnover rather than storage. The direct distribution model and variety of replenishment strategy could be adopted in the company to ensure the high speed of goods turnover and storage supplement. On one part, it will build good image of the company at the operational level. On another part, fast-changing goods in stores could stimulate the consumption. It gives pressure on the consumers and reduces the time on considering whether to buy or not.
Fourth, the company in China often is divided into several parts and each manager only take note of his own department.(Referenceï¼Ÿ) However, it will be better if the departments of the whole supply chain can work coherently and communicate with each other in time. For example, the time to replenish the goods should be supervised orderly and strictly. The daily sales, inventory and after-sale information should be counted and reported to the company. For instance, which are the best and the worst selling, how many items have been sold, and so on. In addition, the unsold clothing could be sent back to the company for the re-manufacture.
Fifth, building the brand image through display of stores rather than celebrity effect is a new way for Chinese companies. The new open store should be decorated attractively, especially the display window. The staff in stores could wear the new arrival clothing instead of the uniform to have a show and to attract the consumers. In addition, it is still a good way for Chinese company to invite a film or singing star as a brand image standing for the company because the celebrity effect is relatively strong in China.
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