Zara Is A Flagship Brand Of Spanish Fashion Marketing Essay

3143 words (13 pages) Essay in Marketing

5/12/16 Marketing Reference this

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The founder of zara , mancio Ortega(eerand boy to richest man in spain),opened the first zara store in1977 in a central street in A Coruna, Spain. Its first store feactured low priced look like products ,higher end clothing fashions.the company based its improvements in the use of information technologies and using group of designers to react to new trends in a quicker way “instant fashion”.in 1980 the company started its international expansion through Portugal ,then in 1989 entered in united states and in 1990 france and further increasing its expansion with mexico(1992),Greece(1993) and sweden(1994).

Zara is a flagship brand of the Spanish fashion giant inditex. The group operates approaximately 1520,stores in 72 countries for zara brand(inditex group 2009),primarily operates in Europe,where about 80% of its sale made.the company headquater is in la coruna spain.product line target is from women’s men’s and kid’s wear and known for its fast introduction for runway fashions as well as its own design to relative mass market.

Matalan is uk’s fastest growing retailerwith 45% last year growth.

john Hargreaves, the founder of Matalan,started his business in retail us concept with food and non food products at low price in 1970’s.john decided to implement the same retail concept in uk in 1985 ,and first store opened in preston.Matalan is one of the uk’s leading clothing and homewares retailers offering fashion as well as quality ,and with the range of upto half the equivalent high street price.matalan offers a comprehensive selection of homewares ,ladie’s,men’s,and children’s clothing and footware all under one roof.the latest key looks for the season, from modern basics to classic styles, customers can choose from a range of in-house brands like Be Beau, Et Vous, Rogers & Rogers, 24:7 and Denim 73, as well as top fashion names including Wrangler, Falmer, Wonderbra, Wolsey and Lee Cooper.

EXTERNAL ENVIRONMENTAL ANALYSIS: company is directly get affected by marketing external as well as internal environmental factors ,which can guide further to analyze the overall performance of the business .the external environment can be analyzed by SWOT , PESTEL and PORTER’S FIVE FORCES etc.The external environmental factors are as follows:

SWOT ANALYSIS: STRENGTH:

1. Diversified product range in the market, customers has brand awareness as well as brand loyalty is directly going to affect the companies positively .as a result of which the sale increases. Whereas Matalan also brand for quality and value.

2. Remarkable revenue growth i.e. because of consistent business system as in Zara that gives the company its competitive advantage. From BBC reported that Spanish group rose profit to 628m Euros i.e. net sale rose to 14%.

3. Higher turnover as in terms of size and growth as they are approaching JIT in order to achieve their goal is an advantage for the companies. High fashion for modest prices in fashion industry within a short time period.

4. Effecient distribution can be a positive factor as they are proper management to distribute the product in order to succeed.

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WEAKNESS: 1. In EUROPE as there is lack of flexibility. And new in these segments may take time to adjust with in that environment. So it will obviously take little time to gain the same position as it is in Spain or other countries.

2. Diseconomies of scale, impact indifferently to the companies. It impacts on the cost of the product and service.As because of recession people would rather decrease the way they used to spend before instead they will keep for future.

3. Frequent new product is not going to affect in any way as they are having the strategy to product the most recent fashionable cloths to their stores within short time period. But they have to be more cautious regarding experienced competitors in the market.

4.Lacking of e- commerce nowadays would affect negatively to the company as people don’t have time to go for shopping ,instead they want delivery to door and online facility.

OPPOURTUNITY: 1. Saturated industry is so there is nothing lacking

Increasing demand from ageing population.35-44 year’s olds is the largest age band in the ageing population demanding certain types of clothing.

Increasing level of income more disposable income to spend on clothing. Higher number of men and women reading magazines has impacted the clothing market, particularly designer wear.

2. Expansion of premium level of customer base this is going to affect negatively in long run , as they are well established companies ,they should slowly increase the price as they are providing quality products with short lead time with good brand value.

3. If thinks about decentralization, Zara can make use of resources of India and make it distribution& manufacturing hub. Responding to current industry trends is a positively impact on expansion of the companies to other countries.

4. Identifing the need for the product in the market is the effective in positive growth of the company as they are using this strategy and gaining success.

THREATS: 1.Rivals has studied the secret recipe can impact in a negative way but none have attained the efficiency of Zara, many are trying to learn from the master. The firm is potentially more susceptible to financial vulnerability as euro has strengthened relative to dollars. So, companies should be cautious in this regard.

2. Design challenges is really tough in order to satisfy customers as per the time . so, companies should continuously work for it.

3. Existing customer challenges is hard to go with.

4. Fat is not fashionable ,companies really have to struggle for them .as people who are fat and still concern about their look, can impact negatively as to go along with them dress designer have to keep in mind lots of thing this may affect the customers ,if they are not satisfied.

PESTEL ANALYSIS:

POLITICAL ISSUES: 1.Political situation emphasizes on rules of government and its impact in a company .The company should consider legal and political sectors which involve the given policies and regulation regarding Tax policy,political stability,trade and tariff restrictions.

2. Extent of participation in a political situation.

3. Indian market; open market. Political changes relate to changes in government influence and can have huge significance for companies. Changes in the priorities for public spending or the UK ‘s relationships with other countries can open or close major markets. European Union (EU) regulations can have similar effects while the accession of new members (e.g. Poland) can bring business opportunities. 

Political changes are closely tied up with legal changes. Laws are continually being updated in a wide range of areas, e.g. consumer protection legislation, environmental legislation, health & safety and employment law, etc. 

4.Government wiling for foreign investment so trading terms are become thin in order to cover the economy growth.

5. Government has their own policy which they adhered by organizations (joint venture)

TECHNOLOGICAL FACTORS: 1. Matalan to keep in pace with the breakneck performance the company is undertaking a major change programmae, encompassing the replacement of almost all their it systems

use of technology since 1970’sUse of advanced technology for operational purposes.

2. It has established internet platform where recent trends can be purchased on line (wall street journal 2009)./ coping with change/ just in time manufacturing.

3. Strong information technology for business operation and organization purpose. /high tech distribution system.

ECONOMIC FACTORS:1.When the economy flatters, consumer simply buy less and move a greater share of their wallet to less stylish and lower cost offerings from deep discounters like Wal-Mart.

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2. Zara is particularly susceptible to conditions in Spain, since the market accounts 40% of inditex sales as well as to broader western European conditions (which with Spain make up 79% of sales)

3. Global expansion will provide the firm with the mix of locations that may be better able to endure downturns in any single region.

SOCIOCULTURAL FACTORS: 1.where important factor when entering in a foreign market. Indians do not change their wardrobe too often.

Foreign market such has India has diverse culture & society &there is a vast amount of change across regions.

2. Spending power has increased but still the customers are very price conscious.

3. Western wear concept is catching on but traditional still dominates.

4. Strong preference for bright color as opposed to black white and brown in west.

LEGAL FACTORS: 1.plagrism in fashion industry has become a huge issue. Trends are often copied and cheaply as well as legally sold in the street.

2. Global expansion bears problems in terms of legal securities and political stability.

3. As European market has a well working trade and legal system facilitating business operations in member countries, other countries globally will not offer same securities.

4. Especially in communist countries threat of losing a private run company to a local government is very real.

ENVIRONMENTAL FACTORS: 1.ZARA is respected as the most responsible fashion manufacturer. ZARA is pioneer in going green. In fall 2007, the firms CEO unveiled the environmental strategy that includes the use of renewable energy systems at logistics centers including the introduction of biodiesel for the firms trucking fleet. It gives a lot of to sustainable management of all its operations (inditex group).

PORTER’S FIVE FORCES:

THREATS OF NEW ENTRANTS: Zara immediate competitors are GAP, H&M, Topshop, TK Maxx.They all are competition a gain greater share of similar markets. Threat of new entrants in today’s world in fashion retail industry is expanding aggressively in today’s era and is homogenized that retailers can market identical products throughout the global market. As which excites other potential competitors to reap the benefits of such mass trading block.

POWER OF SUPPLIER: majority of the manufacturing is outsourced to dependent companies, where suppliers can impact on the buyers behavioral patterns of the industry. As Matalan is accused for squeezing suppliers which impacts adversely in their business.

POWER OF BUYER:

POWER OF SUBSITUTES: the existence of substitutes will result in fluctuation of elasticity of demand. A direct relation with the number of substitute compared to the price is evident, where the more substitutes there are the lesser the price.

INTENSITY OF RIVALRY:

KEY ISSUES IMPACTING ZARA AND MATALAN:

In today’s modern area there is diversified product range in the market which can impact on companies’ sale positively. Customers has brand awareness as well as brand loyalty which in turn able to generate revenue and there is no probability that customer may go anywhere else and with brand awareness will attract more customer.

As this company is not concerned about advertising this may impact the company adversely as others are equally concerned about advertisementing.

2. Fashion is ever-changing within a short time period, which can impact positively to the company. As the company has a business strategy to provide customer in a short Span.?????????????

3. More experienced competitors are there in the market which can adversely effect to the company.

4. These companies are lacking in ecommerce which is the need in today’s world where this may impact negatively for the company.

5. Nowadays as people are more educated and they earning is also. As men and women are more aware of the new upcoming fashion which can have positive effect on these companies.

Level of competition is high, globally Zara closet international competitors are GAP, Benetton and H&M. as the product positioning map, inditex’s flagship brand, Zara is relatively perceived as more fashionable than all the other three and prices less than Benetton and GAP and but higher than H&M. among these four competitors Benetton and GAP are less fashionable and higher price, while Zara and H&M are more fashionable and low price. Price points are mostly below its international competitors in India including Mango, Guess, Esprit, and French connection

ZARA AND MATALAN CORPORATE STRATEGY:

MATALAN GOALS:strengthen financial processes and control.

Ensure that all the payments were made through a single integrated legder

Remove reliance on the spread sheets for core financial processes.

Provide backbone for future system providers.

SEGMENTATION, TARGETTING AND POSITIONING:

Zara segmentation;

1. Main segment: size, full shape body women

2. Demographic: aged 18-40 yrs work in big cities/ pursuing high level of education

3. Pschgraphics: interested in fashion trends, conscious about their looks, enjoying shopping and socializing, and hectic life style.

4. Benefits: clothes that fit their body shape and make them look beautiful

Zara positioning: fast hard fashion at affordable prices

The only true fashion brand that thinks about your body shape, respects it and design especially for it.

TARGETTING: ZARA WOMEN, ZARA BASIC, ZARA TRAFALUC.

Zara woman is a special breed for woman.Targetting women who only know how to dress stylish and fashionable. They have targeted perfumes, shoes which gives a Zara woman a perfect look.

Zara basic is all about simplicity of design .women all around the world knows that sometimes great fashion is simple and wearing basic clothes can go a long way to accentuate their beauty. It becomes about woman, man, and child.

Zara Trafaluc: It includes jeans of all tastes. They offer great variety of jeans with economical and affordable prices for all budgets. They are perfect for woman who are looking for variety instead of a very special jeans.

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POSITIONING

Limitations of zara’s spain centric ,just in time model:by moving all of the firm’s delieveries through just two locations, both in spain , the firm hostage to anything that could create a disruption in region.

Firms often hedge risks that could shut down the operations: think weather, natural disaster, terrorism, labor strikes, or political unrest- by spreading facilities throughout the globe. If problems occur in northen spain,zara has no such fall back.

Rising transport cost is another concern. If feul cost rise ,the model of twice- weekly delieveries that has been the key to defining the zara experience becomes more expensive to maintain.zara is able to make up for some cost increases by raising prices overseas.[in us , Zara items can cost 40% or more than they do in spain.zara reports that all north America stores are profitable, and it can continue to grow its presence, serving 40 -50 stores with just 2 us jet flights a week.

TARGET MARKET: ZARA target market is people from teens to adults, men and women.

Young, educated ones that likes fashion and is sensitive to fashion

Zara don’t compete on price. The usual Zara customer is not price sensitive.zara rather compete on fashion they can only do that by having quick response capability.

POSITIONING: BASED UPON DESIGN, QUALITY & PRICE.

{Zara’s marketing strategy focuses on product variety, speed-to-market, and store location. It is also notable for what it excludes. Zara does not advertise in the traditional sense. If you want to find out what’s currently available at the Zara stores you have two options: go to the web site or go to the store. Zara puts 10,000 different items on the store shelves in a single year. It can take a new style from concept to store shelf in 10-14 days in an industry where nine months is the norm. In its primary European markets, Zara locates its stores close together. Visitors comment that Zara in Madrid is like Starbucks in a major U.S. city-you see another store on every street corner.}

MATALAN: SEGMENTATION:

TARGETTING:

POSITIONING:

MARKETING MIX:

ZARA: PRODUCT

PRICE

PLACE

PROMOTION

MATALAN: PRODUCT

PRICE

PLACE

PROMOTIONMatalan’s strategy is clear:

– Consolidate (i.e. reduce) the number of suppliers to drive purchasing efficiencies 

– Look to use its bargaining power to cut supplier prices to allow it to maintain gross profit margin and still offer customers discounted goods.

CONCLUSION:

Marketing mix: product: 1. Back to drawing board: design products that complement full body shape.[feel product. High involvement]

Incorporate consumer feedback on most salient attributes.

2. Product symbolism: ZARA KNOWS MY BODY SHAPE

I LOOK GOOD IN ZARA CLOTHES

I FEEL BEAUTIFUL

3. Colours and material: important choice for perceived quality of the products

Differentiate Zara for competitors bring a fresh look to the plus size segment

4. The ZARA label: feed on the existing Zara name and values associated with the brand.

Aimed at customer loyalty, still away from the competitors the variety seeking customer.

2. PROMOTION: print advertising:

Main communication objectives:

3. PRICE: affordable prices, good quality

4. Place: zara typical store layout, wide open spaces, as store is the important communication channel.

Create enjoyment while shopping in the store / positive emotions, comfortable feeling,impulse buying,spending more than planned.”{consistent & strong store image , high store loyalty}

Line having own section in store, consistent with current store space distribution.

{Points of interaction with clients, store staff gathering is important feedback, taking the pulse of the market}

CORPORATE STRATEGY:

ZARA: OBJECTIVES: maximize profit.

Maintain and ability to go further fashionable (quality), at reasonable price.

Aims: is to democratize fashion, by offering latest fashion in medium quality at affordable prices. Aiming to deliver unique product to the customer.

BRAND : Zara developed a multibrand strategy.zara (1975),pull bear (1991)

Kiddy’s class(1993),Barshka(1998),oysh(2001).then extended to ZARA home. Inditex used the name of existing brand zara to take advantage of transfer of associations between the flagship product and the extended one zara home.

ZARA CLOTHING

I

N

D

I

T

E

X

ZARA

Bershka

Massimo Dutti

Pull and Bear

G

R

O

U

P

Stradivarius

Oysho

Zara home

Uterqüe

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