Because of its history and leadership long time in its industry, zara is one of the largest internal fashion companies, its belong to inditex one of largest distribution groups in the world. The company particular business model is customer-based and includes the design, manufacture, distribution and sale of it products through an extensive network of group owned shops.
Its first store featured low-priced lookalike products of popular, higher-end clothing fashions. The store proved to be a success, and Ortega started opening more Zara stores in Spain. During the 1980s, Ortega started changing the design, manufacturing and distribution process to reduce lead times and react to new trends in a quicker way, in what he called "instant fashions". The company based its improvements in the use of information technologies and using groups of designers instead of individuals.
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Zara's business model can be broken down into three basic components: concept, capabilities, and value drivers. Zara's fundamental concept is to maintain design, production, and distribution processes that will enable Zara to respond quickly to shifts in consumer demands. José María Castellano, CEO of Inditex stated that "the fashion world is in constant flux and is driven not by supply but by customer demand. We need to give consumers what they want, and if I go to South America or Asia to make clothes, I simply can't move fast enough." This highlights the importance of this quick response time to Zara's operations.
Marketing is another key element in the production of fast fashion. Two approaches are currently being used by companies as market strategies; the difference is the amount of financial capital spent on advertisements. While some companies invest in advertising, fast fashion mega firm Primark operates with no advertising. Primark instead invests in store layout, shop fit and visual merchandising to create an instant hook. The instant hook creates an enjoyable shopping experience, resulting in the continuous return of customers. Research shows that seventy five percent of consumer's decisions are made in front of the fixture within three seconds. The alternative spending of Primark also "allows the retailer to pass the benefits of a cost saving back to the consumer and maintain the company's price structure of producing garments at a lower cost" Production.
Generally speaking we can say Zara`s competitors are all quite big competitors that have actually reached international markets, all starting from spain with huge local distribution, that makes the market quite inflexible, as they apparently are doing the same, and that customers are stable, may be because of the nature of the product.(Diana)p37
Zara produces of-the-moment fashion and has developed a very successful vertically integrated company which can design, manufacture, and distribute garments to retail stores in as little as three weeks. Zara's target market is comprised of urban, fashion-conscious consumers who shop frequently for the latest trends. Currently under debate is a proposed upgrade to the POS system throughout the Zara chain. With over 950 stores, this would be a huge undertaking for Inditex, Zara's parent company. The current DOS-based system meets the needs of the company, and despite some of the benefits of upgrading, it is best to continue with the current system in place. (Fortune magazine)
Zara derives its competitive advantage from an astute use of information and technology. All of its stores are electronically linked to the company's headquarters near La Coruna, a midsized city on the northwest coast of Spain. Store managers monitor how merchandise is selling and transmit this information, as well as customer requests, to headquarters. "The role of the store manager goes way beyond that of Gap and H&M," says Wills of Goldman Sachs. Together with trend-spotters who travel the globe in search of new fashion, store managers make sure their designers have access to real-time information when deciding with the commercial team on the fabric, cut, and price points of a new garment.
Sustain Competitive Advantage
The concept of Quick Response (QR) is used to create new, fresh products while also drawing consumers back to the retail experience for consecutive visits. Quick response also makes it possible for new technologies to increase production and efficiency. The Spanish mega chain Zara has become the global model for how to decrease the time between design and production. This production short cut enables Zara to manufacture over 30,000 units of product every year to nearly 1,600 stores in 58 countries. New items are delivered twice a week to the stores, reducing the time between initial sale and replenishment. As a result, the shortened time period improves consumer's garment choices and product availability.
The SWOT analysis technique lends itself to napkin planning and snapshot insights. To conduct a SWOT analysis, draw a vertical line in the center of your napkin (or whiteboard or flipchart), intersected by a horizontal line. Now you have four quadrants where you'll sketch your company's situation.(Dr. Ralph )
Web catalog sites are essentially wholesale or retail order-taking terminals. Zara is carrying products from dozens or thousands of it parent company inditex. But what is the product? Our own "store" is the product here. We are building an online "brand" that we hope will represent the kind of store where people can find and purchase just what they want. We market our product lines through HTML e-mail fliers (see http://www.wilsonweb.com/wmt5/html-email-multi.htm), by pushing the customer to the web site saying, "Come here, come to our store out of all the other choices on the Web. We have what you're looking for." One way to look at an online catalog site is as a shopping service that helps our customers find what they want among their carefully selected collection of best-of-class products.
Custom services, too, can be viewed as products. One of the keys to success was to define the "standard" product carefully, clarifying what was included in the standard website, and what items were considered add-ons. but a 12-page website that included a single response form, custom graphic header, background, menu system, certain marketing elements, etc. When zara package its services into clearly-defined bundles, they become a product that is clear to the customer and therefore saleable. Company's service packages constitute the product line.
One of the favourite sites is http://Britannica.com ; the website that includes the entire Encyclopaedia Britannica free to the visitor. What a wealth of material ; a great example of an information product (in this case, a free product). An online newspaper is another example of an information product, as well as our E-Commerce Research Room (http://www.wilsonweb.com/research/). Zara has done a good job by subscribing the encyclopaedia.
"Place" is supposed to signify the physical distribution channel, getting the goods to the customer. Yes, the Internet is either the point of contact or the point of sale, but the FAILURE to consider the distribution channel dooms many online businesses. In this issue we'll look at the problems and the marketing decisions that online business people are forced to make. Services are typically delivered digitally online, or with the Internet used to generate leads, and the service being delivered in person by a local vendor.
The Eight Essential Types of Internet Promotion
1. Search engines
Many people, perhaps even a majority of people, will use search engines and the Yahoo! directory to find what they're looking for on the Web. So the place to start in promotion is to design web pages that will be indexed well by the search engines, using descriptive titles and accurate META tags.
2. Linking strategies
Linking strategies are a second essential type of site promotion. The more links pointing to the site, the more traffic it will experience (and the greater perceived "popularity" will rank Zara higher in the search engines). Another popular method is to join a banner exchange. For every two banners displayed on the site promoting other businesses, one of Zara's banners will be shown an another member site. The biggest exchange is Microsoft bCentral LinkExchange. http://adnetwork.bcentral.com/. Another important form of linking promotion involves paying affiliates for sales resulting from links to Zara site.
3. Viral strategies
An increasingly important process is to design a strategy that encourages others to carry Zara marketing message via e-mail, using their own network of relationships ; and preferably their own resources. This is called "viral marketing" after the way viruses multiply rapidly in a cell, commandeering the cell's resources to do the virus's bidding. The classic example is HotMail.com, a free e-mail system. Each e-mail message (sent by definition to a person's own friends and associates) carries a message encouraging the recipient to sign up for a HotMail account, too. Another example is postcard or greeting cards, each of which carries a message encouraging the recipient to send a card to a friend -- carrying the siteowner's marketing message. If zara can write quality articles, we can offer them to others to use on their websites or in their newsletters, each article carrying a link to Zara website. Public relations to get press coverage is a kind of viral strategy, if the company think about it.
4. Public relations
Public relations, the task of getting press coverage, is still a vital type of site promotion. News release picked up by several print and/or Internet publications its will get a tremendous boost in traffic, all for "free," letting the news periodical's network carry our marketing message. Of course, nothing's really free. We will need to have a truly newsworthy event, contest, free service, chat room ; or something ; or no decent publication will consider it news. Coming up with "free" services and events isn't inexpensive, but the ensuing publicity can be excellent ; we may get an unbiased editorial recommendations that we couldn't purchase for any amount of money.
5. Traditional media
Don't discount traditional media in promoting our website ; news releases, of course, as well as paid advertising. A very effective way to promote our site is to place a small display ad in a targeted trade publication, offering some teaser copy and pointing readers to our URL or an auto-responder e-mail address for more information. This way the site serves as an online brochure, providing full information to interested shoppers day and night. A no-brainer is to make sure that all our company's literature, cards, letterheads, and envelopes carry our website URL. http://www.amazon.com/exec/obidos/ASIN/0395906253/wilsoninternetseIf we're immersed in the Internet, we may have forgotten that most people still get the majority of their marketing messages through traditional channels.
6. E-mail Publishing
The company has to be married to an e-mail publication. The website is the shy partner who passively waits for people to come to him. But the e-mail publication is the bold, active partner who goes out to where people are and invites them to come meet her groom. Together they make a great couple.
publishing is primarily a way to conserve the people who have shown some interest in the business by coming to zara website or responding to one of the offers. One of the highest priorities of the website MUST be to get the visitor to sign up for the free newsletter or discussion list or updates publication. Offer a variety of inducements ; entry into a contest, a free gift, a free coupon ; whatever it must do to insure a steady stream of subscribers to the newsletter. Once they are subscribers ; if we give them content they enjoy and learn from ; they'll stay with Zara for years, and we can gently build their trust month after month. When they're ready to make a purchase, the site is at the top of their mind, and they'll probably buy from Zara. With so much SPAM (unsolicited e-mail) abounding, it's too easy for recipients to mistake the promotion for just another ad, and unsubscribe forever. Though an occasional promotional e-mail may be okay, the marketing messages in the context of news and helpful information is much more effective, and builds loyalty that can never gain by just bombarding the customers with ads.
An extremely important way to promote the website is through networking. Networking isn't quick, but it's the basis of relationships that will grow your business through word-of-mouth over the years.
8. Paid advertising
It is notice that most of the first seven types of Internet Marketing can be done in-house relatively inexpensively (with the possible exception of search engine positioning). Of course, the company may be able to find a marketing firm to which it can outsource some of these functions, but it can probably do a fine job in-house ; after all, it's our business, and staff's are the one who can promote it most effectively.
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But there comes a point that to get wider exposure, to break into the consciousness of the thousands of people who never haunt it end of the Web, the company may need to resort to paid advertising. Paying high traffic sites or Internet publications to include a graphic or link that will channel large numbers of people to the site. There are several popular forms of paid advertising, with new approaches cropping up all the time:
Pricing Strategy as Part of Zara Internet Marketing Plan
Of course, pricing isn't just scientific. It has a lot to do with your particular niche on the Internet, and how you've determined you can best succeed. Here are some demand-oriented approaches to pricing:
Skimming pricing. When offering a new or innovative product it can initially charge a high price, since the "early adopters" aren't very price sensitive. Then lower prices to "skim" off the next layer of buyers, etc. Eventually, the price will drop as the product matures and competitors offer lower prices.
Penetration pricing. Zara have to set a low initial price in order to penetrate quickly into the mass market. A low initial price discourages competitors from entering the market, and is the best approach when many segments of the market are price sensitive.
Prestige pricing. Cheap products are not taken seriously by some buyers unless they are priced at a particular level.
Demand-backward pricing is sometimes used by manufacturers. First, they determine the price consumers are willing to pay for a product using an approach such as Make Your Price Sell! (http://sales.sitesell.com/myps ) automates. Then they work backward through the standard markups taken by retailers and wholesalers to come up with the price they can charge wholesalers for the product.
Bundle pricing is offering two or more products together in a single package price. This can offer savings to both the buyer and to the seller, who saves the cost of marketing both products separately. And the customer is willing to pay more because he perceives that he is getting a lot more, even though the cost to the seller may not really be that much more.
Here are some cost-oriented approaches to pricing:
Standard mark-up pricing. Typically a manufacturer marks his price up 15% over his costs, a wholesaler 20% over his costs, and a retailer 40% over his costs. The retailer gets a larger markup based on the idea that, since he is closest to the end user, he is required to spend more services and individual attention meeting the buyer's needs.
Cost-plus pricing adds a small percentage to the retailer's costs -- and "cost plus 5%" sounds so modest in ads for new cars! Ah! If only it were that simple. :-)
Experience curve pricing assumes that it costs a company less to produce a product or provide a service over time, since learning will make them more efficient.
Then there are competition-oriented approaches to pricing:
Above-, at-, or below-market pricing. Certain stores advertise "low cost" or "discount" pricing. Others price at the market, while others deliberately price above-the-market at premium prices to attract prestige buyers.
Loss-leader pricing works on the basis of losing money on certain very low priced advertised products to get customers in the door who will buy other products at the same time.
Flexible-price policies offer the same product to customers at different negotiated prices. for example inditex, give out its product at negotiated prices. Many B2B sales depend on negotiated contracts.
8 Ways to Learn about the Site Visitors
According to Dr. Ralph we can learn about our visitors in a number of ways. But before we look at any of them, our main concern has to be the issue of privacy. One of the visitors concerns is the steady erosion of his privacy.
1. Monitor E-Mail Inquiries and Complaints
It's vital that the company find a way to monitor e-mail inquiries and complaints from the site visitors. Even if Zara have an employee handle this e-mail for the company, have them print out an extract of key questions and complaints so Zara can keep it finger on the pulse. Don't look at these e-mails as enemy fire; these are the friends who'll help Zara improve it site. When it spot a question occurring again and again, it's a sign that it need to deal with it more fully or more visibly on the site. And, it tells Zara what's important to about visitors.
2. Provide Online Questionnaires
Zara might want to create an online questionnaire with which it can gather information from the site visitors. After enough people have completed the survey, it will typically download the data file, import it into Microsoft Access or Excel, and conduct an analysis using queries or cross-tabs, and graphing. An increasing number of companies are offering survey services online.
3. Send Out E-Mail Questionnaires
The strength of online forms is the ease with which the data can be collected for analysis. The downside is that online forms are essentially passive, they wait until someone comes to them. E-mail questionnaires, on the other hand, are active; the recipient can fill it out and reply without having to open a web browser.
But e-mail questionnaires can be more difficult to analyze quickly. A special program must be developed to harvest information from fields delimited by brackets or some other symbol. If the recipient places an answer outside of the brackets, or gives the wrong kind of answer, the survey may have to be discarded or manually scored. E-mail questionnaires, however, may be the survey of choice because of their immediacy and ease in sending.
5. Examine Order Files
Another way to learn about visitor shopping patterns is to analyze individual order files as well as summaries. Once a visitor places an order or provides an e-mail address, any information collected about that individual can be used to develop a personal profile.
6. Provide Site Personalization
Larger company sites are employing database tools that harvest information about visitors by what products they look at or purchase, which banners they click on, etc. Then this data is merged with other databases providing demographic information by ZIP code, etc. to give a customer profile.
7. Study Your Traffic Logs
Considerable data about the customers and their surfing habits can be gained from studying the traffic logs for the website. These can tell us how the visitor came to the site, browser used, route used to surf through the website, most popular pages, domain name of visitors, and much more.
As a conclusion, the key to successes of this strategy is the internet to see how best I can figure out a consistence marketing plan. The models are based only in empirical example, and this is likely to be a limit on the ability to generalize for such a complex environment. The plan has been able to analyze competition in the digital marketing plan which point out that Zara has been doing well despite some irregularities and little changes that need to be done. Zara has proved strong in the competitive arena of its business activity; due to it unique way of doing things which gave it a competitive advantage.
Globalization challenged companies with the proposition of no national and organizational boundaries; some tools like internet were created in this time change and instability for companies, new technologies has been created in a desperate hurry to cover companies requirements. And Zar It comprises the study of different authors perspectives who have contribute in the digital marketing plan or have done a paper work on Zara clothing.
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