Title: Evaluating Zara’s marketing strategies
1.0 Introduction
This report demonstrates how to evaluate the marketing strategies of a retail company by analysing the existing practice from the theoretical and best practice perspectives. A critical analysis of the strategies employed and media channels used by a company would provide an insight into the effectiveness of their marketing strategies. The retail company chosen for this assignment is Zara, which is one of the world’s largest and best-known high street fashion retailers. Zara, which is a brand of a Spanish fashion retailer Inditex, has more than 2200 stores world-wide. They design, manufacture, distribute and retail fashion products as a single company globally with an emphasis on latest styles and affordable fashion. They made it possible for mid-level income customers to buy designer clothes without necessarily paying a hefty price, which resulted in high volumes of sales and bigger market share.
2.0 Marketing Strategies
The marketing mix refers to the set of actions or tactics a company uses to promote its brand and products in the market (Kenton, 2018). The most commonly used marketing mix, known as the 4Ps, are Product, Price, Place and Promotion as shown in Figure 1. Product is very important element of the marketing mix, without the right product which should perform and attract the customers, all the emphasis and attention given to other elements will be pointless. Price refer to the value determined for a product, which is dependent on many factors such as production costs, targeted customer segment, supply demand situation and willingness and ability of the particular market to pay for it. Place refers the location of the sales and it is important to choice a right location which is easier for the customers to access. Retailers often have to pay very high premium to secure the right location for their business. Promotion refers to all the activities undertaking to inform the customers and market about the business and its products. All the marketing mix elements interdependent on each other and very important for the business success or failure.
Figure 1. The elements of the 4Ps marketing mix (© Entrepreneurial Insights)
There are some more new trendy marketing mix instruments which add Process, People and Physical Evidence, known as the 7Ps of marketing mix, as marketing instruments (ref). In this report, the discussion and layout are structured around these four elements of marketing because of its objectives and scope. The sections below examine the marketing mix principles and strategies in the context of Zara.
The main international competitors of Zara are Gap, Mango, Benetton and H&M. Zara is considered more fashionable than their competitor and their prices are lower than Gap, Mango and Benetton, but higher than H&M. Zara’s strength lies at the ability to adapt quickly fashion demands of their customers and deliver it in a timely manner without sacrificing the quality but still keeping the prices at an affordable level. They achieve this by constantly supplying more fashionable clothes, more styles but in lower quantities. This is made possible because they design, manufacture and distribute all the products themselves without too much relying on outside companies, which reduce the lead times and enable the company to identify and react to the new trends in the market place as they emerge.
2.1. Product range
Zara is a fast fashion brand which identifies the latest trends in fashion and delivers them quickly to stores at affordable prices. Their product styles and trends may vary from country to country as the traditions, needs and taste of its customers differentiate. They do not necessarily focus on producing niche products, most of their design ideas either from catwalks or other store designs. They manufacture and sell products such as clothing, shoes, and accessories for women, men and children.
An average Zara store is structured as men’s, women’s and children’s sections, each then is divided as lower garments, upper garments, shoes, cosmetics and accessories. Their women’s sections is the biggest and the most successful one as they aim more for younger women. Men’s sections is also very successful as the products they produce are in high demand like lightweight cotton tops and print shirts, however there is a big competition in the market for men’s clothing. Kid’s sections which has been introduced lately and has unique and sophisticated lines possess some questions as there are many specialised and more famous brands for kids in the market.
Zara’s product ranges vary quite a lot in different countries due to the demands, culture and life style of a particular society. They assess these variations in demand and interpret it in their design, for example they provide more conservative cloths like long skirts and long sleeves in Muslim countries in the Middle East and more lines which mix traditional clothing with modernism in India.
2.2. Price policies
Zara’s pricing policy is to supply the trendy and fashionable products to their customer in a price that they can effort. This affordable price policy enabled them to access to a large range of income groups which helped to increase their market share and helped a unique brand image. The affordable pricing is made possible by optimising development, production and deliveries.
2.3. Place, locations
Zara is a part of very big Spanish fashion retailing company Inditex, according to its web site, has more than 7000 stores in 96 markets and very strong in their online platform. They own 90% of their stores worldwide and concentrate on big and economically active cities. They make sure that they choose very popular prime areas of the high street and position themselves close to others popular brand retailers. They utilize their shop area effectively, change the store layout often, use in-store advisement and collect data from their customers.
2.4. Promotion strategies
The marketing spending of Zara is much lower than the average fashion retailer and their competitors. They do not have aggressive marketing strategies, they chose to spend the money on expansion by opening new branches rather than marketing activities. Large choice of styles and bringing the new products into the stores constantly at affordable prices make the customers keep on coming back. Research showed that (UKEssays, 2013)) on average a customer visit the same fashion retailer shop 3 times a year, but in Zara’s case this number is 17. Their styles, pricing and distribution policies are a strong part of their promotion strategies. Like other successful retailers, they seem to be using their online platform and social media effectively. Producing their products in-house enables a quick product turnover which creates a scarcity climate so they can sell their products more at full price.
Zara’s main customer segment group are in the age group of 18 to 40 years who live in the cities. These age groups are the most fashion conscious group who are middle class and educated.
3. Strategic and competitive advantages
Making a SWOT analysis for Zara based on the literature review on their marketing strategies will provide an insight on their weaknesses and strengths and the opportunities and threats they face in their market environment. The identified issues are shown in Table 2.
Strengths
• Global outreach
• Efficient distribution strategy fulfils customer demand
• Company image
• Financial strength and right price strategies
Weaknesses
• Lack of marketing
• Rapid growth
• Centralised distribution system
Opportunities
• Increased demand for high fashion at affordable prices
• Global expansion in key market
• Online marketing
Threats
• Fierce competition from local and international competitors
• Imitation of goods
• Exchange rate fluctuations
Figure 2. SWOT analysis of Zara
Strategic marketing objectives
The impact of digital age
Social media has become increasingly popular as a means of communications between customers and companies. It provides a platform for customer to express their views and opinions on the company’s activities and products, as well as the public’s perception and awareness of the company and its activities can be monitored (Menon, 2017). Social media such as Facebook and Twitter are also used for marketing activities. The most used social networking platforms are Facebook, YouTube and Instagram (Kallas, 2018). Zara official web site indicates that they are using Instagram, Facebook, Twitter, Pinterest and YouTube.
Zara has invested in more than 1 billion Euro in customer focussed innovations. The internally developed the Radio Frequency Identification system enables staff to help customers find items instantly in-store, nearby or online. This also speeds up stocktaking by up to 80% providing more time for customer care.
Brand positioning
Sustainability
Distribution strategy
4.0 Conclusions
References
UKEssays. November 2013. Analysis of Zaras Marketing Plan and Strategy. [online]. Available from: https://www.ukessays.com/essays/marketing/analysis-of-zaras-marketing-plan-and-strategy-marketing-essay.php?vref=1 [Accessed 9 January 2019].
2. https://www.cheshnotes.com/2017/02/zara-marketing-mix-and-marketing-strategy/
(Kenton, 2018) https://www.investopedia.com/terms/m/marketing-mix.asp
(Menon, 2017) https://www.techfunnel.com/martech/impact-social-media-business-communication/
(Kallas, 2018) https://www.dreamgrow.com/top-15-most-popular-social-networking-sites/