Behind every successful business lies the hidden support of the successful marketing techniques adopted further shaping consumers perception towards it. The activities and functions involved into the distribution of goods and services are literally simplified by the marketing management. American marketing author, consultant, and Professor Philip Kotler had described marketing management as “the analysis, planning, implementation and control of programs designed to bring about desired exchanges with target markets for the purpose of achieving organizational objectives.” It is the roadmap driving organizations towards the achievement of greater results revolving around increased sales, brand recognition, higher market percolation, and much more. Product decisions and building a profit making structure by utilizing resources optimally are the key functions of marketing management. The success of marketing processes followed by organizations reflects the demand of a product or service within a target market. Developing a better understanding about marketing management concept is the purpose of this report. Fast fashion retailer Zara has been considered as the case study.
Zara is Spanish clothing and accessories retailer founded Amancio Ortega and Rosalia Mera in the year 1975 and a flagship brand of Inditex group. Its invincible familiarity with fast fashion and high quality makes Zara the most sought after clothing and accessories brand, available at reasonable pricing. The product range which includes men, women and kids clothing are supplied across the globe based on consumer trends. It is estimated that every year Zara produces over 450 million items that are retailed through its 7,200 stores across 93 countries. The company’s brand value as of 2017 is $11.3 billion. The mission statement ?of Zara is “Through Zara’s business model, we aim to contribute to the sustainable development of society and that of the environment with which we interacts.” Vision statement defines “Zara is committed to satisfying the desires of our customers. As a result we pledge to continuously innovate our business to improve your experience. We promise to provide new designs made from quality materials that are affordable” (Inditex, 2018).
Zara heads as a leading clothing brand in the world in terms of sales, profits and lead time. However, surprisingly the company does not have a formal marketing department, despite its global success, nor any advertising techniques are used for product promotions. The question here arises that how Zara does sustains its global customer base. The answer is hidden in how efficiently it makes use of market orientation strategy in order to retain a sustainable competitive advantage in the clothing industry, which further double-times as Zara’s branding strategy (Inditex, 2018). The key marketing strategy of the retailer is brand awareness, which significantly contributes in enhancing the brand’s value that results into closed sales. Advertising campaigns one of the primary purpose is to create brand awareness. Some companies, in this case Zara, rather widely uses market orientation as an alternate to common marketing tool, advertising. By successfully applying market orientation across Zara, it has turned the focus of many researchers in closely analysing this strategy. Many scholarly studies have revealed that implementation of market orientation within Zara has made significant contributions in cultivating a customer centric approach throughout the company. The business model of Zara can be outlined through a higher vertical integration and extremely short lead times. Zara hardly makes much investment on advertising and marketing. Upmarket locations are chosen to position all its stores. Investments are made of designing the store layouts and amenities for attracting the potential customers’ attention and delivering maximum comfort and satisfaction, every time they visit a Zara store. The average size of a Zara store is 1,376 square meters, which are renovated in every 3-4 years. Funds are also spent extravagantly in order to reduce the lead time (Crofton and Dopico, 2012).
One can describe 5C analysis as a technique used for conducting a business’s situation analysis, which is a key step involved in determining the research problem. Situation analysis revolves around reviewing the factors of external environmental and internal organizational capacities that influences the operations of a company. For comprehending the internal and external environments, 5C Analysis has strengthened its position as the most popular and useful structure. 5C is an extended version of 3C Analysis, includes Company, Collaborators, Customers, Competitors, and Context for making the analysis more comprehensive. The core areas of marketing are covered by this integrated analysis and the understandings generated are helpful in identifying the problems and challenges an organization faces. While the problem in a particular marketing area is been identified, it is utmost important that all five elements are taken into account (Clarke, et al., 2017).
Briefly elaborate below is Zara’s 5 C analysis:
Company: maintaining exclusivity in the designs of its wide clothing line and accessories by bringing multiple globally acclaimed fashion designers on board who can read through customers mind and comprehensively understand the brand Zara’s global market, strong presence in the fashion industry and business expanded worldwide, are where this Spanish retailer’s strength is literally hidden. Spain being the biggest market, Zara at current caters to its global customer base from over 7,200 stores spread across 93 countries. Known for bringing the latest trends direct from runways to stores in a matter of days, the biggest clothing retailer in the world, in the past few years has been consistent in outrunning rivals like H&M. This has been made possible by pushing into new emerging markets like New Zealand, Vietnam and Paraguay and growth in online sales. Moreover, Zara has reduced the exposure of rising discount chains like Primark by diversifying more quickly into higher-priced brands (Tokatli, 2014).
For generating more revenues it recently has maximized online sales across its stable of brands in the markets of Turkey and India. In Forbes list, with a brand value of $11.3 billion Zara holds the 51st rank. Zara has never stopped from growing or surprising its customers by always being absolutely updated about what is trending in the fashion industry. The retailer has also ventured into a completely new market of laundry care products for capitalizing on the advantages of the immense success and popularity of its cosmetic collections, bath & body and fragrance sections. Seeing the increased sale and market demand of the cosmetic collection, Zara decided to amplify this product line apart from entering a new household product segment. The new laundry segment retails cheapest to the most expensive laundry detergents, fabric conditioners and ironing waters. This new product line reaffirms that Zara has expanded beyond from just being a cloth retailers and also specializes into furniture and decorative items (Calero, 2017). Although Zara is a globally successful name, lack of appropriate marketing activities like promotion and advertising can be considered its primary weakness. In the absence of public advertisings, Zara depend completely on word-of-mouth publicity and counts of the globally strong brand image. What the company widely considers it key strength, in case competitors push in perfect marketing strategy into the developing markets may become a fissure. However, Zara can retain its market position by creating demand and higher brand identity through its flagship company Inditex. Another area where Zara needs to focus urgently is on its distribution network, in America particularly. Comparing to Spain, China, Japan and France, there are only 78 stores in US. Zara invariably faces local (H&M, Massimo Dutti and Stradivarius) and international competition (ASOS, Loehmann's, Juicy Couture, SMCP and Nine West Group). Despite of owing a vast range of fashion designers, Zara unlike some of its competitors like H&M has lagged behind to enter into collaboration with top international fashion designers like Tom Ford, Donna Karan, Marc Jacobs and Betsey Johnson to name a few, which can give competitors an edge (Tokatli, 2014).
Customers: Zara’s global customer base is vast and focuses mainly on millennials who are fashion and at the same time price conscious. The target market is not defined through geographic, demographic, psychographic and behavioural segmentation, which empowers the retailer to tap the broader market thus, gaining a competitive advantage. Their product line is segmented by women, men and kids section. The regular customers of Zara have the tendency of purchasing multiple products at a given price further revealing an uncommon buying behaviour.
Collaborators: Zara’s clothing line and accessories are outsourced from countries having cheap labour such as India, Bangladesh Egypt, Vietnam, Egypt, Cambodia, UAE, African countries, Spain, and Portugal. Turkey, Morocco, Spain, and Portugal have hosted almost 55% of its workshops and factories. Zara’s strategy to outsource its production units in developing countries has significantly contributed in empowering the brand to provide its customers with latest fashion that too at unbelievingly lower prices, which competitors fail to beat. Importing has not only brought a substantial decline in its production costs but also simultaneously eliminated the need of completely depending on local suppliers to meet the demand of its globally expanded market.
Competitors: international fashion brand Zara over the years has been consistently outperforming the competitors with their gusty year-end gains. It is the only brand that on a consistent basis has been offering and wining the hearts of customers by offering interesting apparels, making it not surprising that the retailer has registered impressive annual sales results in 2017. Their net sale in the last financial year has witnessed a hike of 12% and there has been an overall growth in business by 10%. Zara has been continuously setting its foothold into major markets and replacing smaller stores with enormous flagships, by focusing objectively on brick-and-mortar stores. Zara has been beating competitors like H&M on areas revolving around pricing and velocity thus, increasing its market share in the global fashion industry. However, new generation of even faster fashion creators ASOS and Boohoo, with potentials to leave it in dust are gradually emerging as key threats for Zara (Heller, 2017).
Context: the macro environment of Zara is largely influenced by the external factors that can be assessed with the help of PESTEL analysis. The impact of political stability gets reflected on its policies whereas economic factors like inflation or changing exchange rates leaving their influence on customers buying behaviour and demands and sale of the products. The choices and preferences of its widespread global customer base are immensely influenced by their social and cultural upbringings. Technological factor like technology advancement has greatly affected its day-to-day operations. Zara is the most innovative and devastating retailer across the globe. Backed with a pioneering technological strategy, Zara has become the leader in its market by adapting tools like big data and out spacing the direct competitors. Despite being the last in venturing into e-commerce Zara offers its customers with a buying experience that is a unique amalgamation of brick-and-mortar and online stores. It has invested heavily on technology enhancements for improving customer experience. However, at times environmental factor leave an adverse effect on its production. For example, the supply chains and stores business of Zara were hardly hit by in 2011 when Japan was plagued with tsunami and its after-effects. Legal factors like different trade laws in different countries affect Zara as it has to comply the business operation with the governmental policies (McCormick, et al., 2014).
To gain business intelligence customers, competitors or market environment, market research is conducted by Zara to gather quantitative and qualitative data and information from primary and secondary sources. For collecting accurate and authentic information relevant to the purpose of the research the retailer utilizes primary or field research such as surveys, direct observations and conduct interviews with focus groups. Information gathered from field or direct research enlightens Zara about wants, expectations and feedbacks or complaints of customers as the questions are designed for specific research objectives (Forrest and Hoanca, 2015). The information gained is extremely valuable for identifying the strategic changes in business. Additionally, secondary or desk research is also largely used to seek relevant data from already published resources available either on internet, industry agencies or local bodies, prior sales and financial figures, other scholarly researches etc. By collecting numerical data through quantitative research methods like surveys and questionnaires Zara obtains information on customer repeated purchases, product sales numbers, online sales orders, competitor business report and current and future market trends. Quantitative research helps Zara in gathering information on business and market size, its significance in growing sales, and comprehending customer demographics (e.g. age, income, gender, lifestyle etc.) These statistics empower Zara in getting overview of the existing markets and future growth possibilities. Qualitative research method like interviewing the focus groups are arranged for understanding customer and supplier perceptions. The focus group includes both existing and potential customers to comprehend their expectations, desires and attitude towards Zara’s products. For determining the customers’ satisfaction quotient with the brand, feedbacks through formal or informal conversations are collected. In the absence of a formal marketing department, Zara completely depends on research for understanding the fashion industry and its latest trends. To understand the prevailing market conditions, competitors’ marketing strategies and industry analysis market intelligence is frequently sought by the Spanish retailer. Management and mangers evaluate the data collected from both qualitative and quantitative methods to conclude if a new product line must be launched or not, whether there is need to dispose an existing product etc. The outcomes derived from researches empower the management to make vital business decisions. Entry of new fashion players (e.g. ASOS and Boohoo) and rebound of existing competitors (e.g. H&M and Uniqlo) are posing a serious threat to Zara as all target similar markets (Forrest and Hoanca, 2015). In the current nature of Zara’s business a decisive and massive role is played by collaborators that have been cleverly mutated into digital mode for increasing operational efficiency.
Based on the outcomes derived from the market analysis, Zara can target the potential market segments focusing on demographic by identifying key characteristics like age, gender, occupation, income and religion. Zara must also focus on opening more stores in the European and Asia-Pacific regions like China, Australia, India, America, Italy, France, and Greece under geographic segmentation to tap the unrivalled market. Since most of the countries are famous tourist destinations, establishing a hold into these markets will reap higher revenues to Zara. The clothing giant can focus on lifestyles for targeting customers through psychographic segmentation while for segmenting the markets on behavioural factors, the markets can be segmented on this basis of their behaviour, usage and decision making. This segment should be targeted to increase sales and maximize revenues in the global markets during festivities like Christmas, Diwali, and Chinese New Year etc. as customers compared to other days are likely to buy more during this period (Chan, et al., 2017).
Zara’s Target market
Fashion forward but price conscious millennials are mainly targeted by Zara although clothing line for different age groups and genders are manufactured and retailed in the global markets hence, offering them with front line fashion at affordable prices is the brand’s value proposition backed with wide style range. For delivering latest fashion right from ramps to the stores, more than 12,000 styles are annually created by Zara. To increase appeal amid customers, periodically the quantities of each style is deliberately narrowed to create an artificial product shortage. By opening all its outlets in prime locations, Zara intends to reach the target market (Craft and Hassan, 2015). The retailers positioning statement should reflect its aim to position the brand on merits like pricing and quality thus, ‘Fashion in budget’ is an apt positioning statement further allowing the target markets to discern that Zara’s products meets their demand of fashionable wearing at modest pricing.
The detailed marketing mix of Zara:
Product: Zara’s key strength is hidden in its ability to bring fashion right from ramp to shelves and promptly responding to customers demands. All it’s globally spread suppliers are directly controlled by the retailer, enabling it to manage the product manufacturing. Although the brand’s unique selling point is hidden in creating fashion, it lags behind in maintaining seasonal variations in the clothing line and align them with the local culture, particularly in the Asian markets like India and China. By intermixing modern fashion trends with the local traditions, these flaws can be addressed.
Price: the core value of Zara is to cater fashion at modest pricing. However, to tap the premium market segment who may compare its offering with a Gucci, Armani, Chanel or Versace, premium products lines are marketed through few outlets to cater the socialites and fashionistas while affordable product range are catered through others to tap the middle and upper middle class section. Premium pricing strategy is widely practiced (Jain, 2013).
Place: for marketing its products Zara largely focuses on physical stores situated in busy upmarket. Its vast customer base spread globally experience similar shopping experiences, irrespective of their geographical locations. This because 90% of its stores are company owned catering similar amenities like spacious and luminous interior and modern infrastructure to all customers.
Promotion: a unique marketing policy can be seen at Zara, which has never invested on promotion and advertisings. Maximum revenue and profits generated are pumped back into the business to open new stores in both existing and emerging markets. Exclusivity, mass market, differentiation and affordability are the concrete pillars of its marketing strategy with complete dependency on WOM publicity (word of mouth) and urban population are targeted (Jain, 2013).
People: apart from consistent product development, Zara also seeks to beat competitors gaining supremacy in customer services through its professionally trained employees. For providing learning and development opportunities, regular trainings are arranged thus, preparing them to be creative and fashion forward. The in-house rewarding structure motivates them in walking the extra mile to deliver customer satisfaction.
Processes: in-store and online orders are the current process of Zara, which backs their services. For enhancing customer convenience, it has also launched a mobile app that can be easily downloaded from Google Play store for Android users and iTunes for Apple users and can also be installed on BlackBerry, IOS and Windows Phone thus, expanding its reach in small niche markets. Moreover, from 2016 it has rolled out in-store mobile payments across all its stores. Customers can scan a QR code at the terminal via the company’s InWallet mobile payment service this, building a simpler and quicker billing process.
Physical Evidences: increasing customer conveniences in terms of product packaging, user friendly websites, brochures and mail boxes etc. are the attributes where the physical evidences of Zara are hidden. Accessibility to free Wi-Fi, electronic payment terminals, stores cleanliness and well arranged and displayed products are the added aspects (Jain, 2013).
Finally, it can be inferred that marketing approaches of Zara has been consistent in gain success in the global markets and reaching out to desirable targets for delivering economically priced fast fashion. Zara’s unbeatable fashion sense backed by unprecedented word of mouth publicity has significantly contributed in strengthening its brand positioning across the globe. Moreover, Zara’s unique marketing measures have enormously helped in successfully attaining its business goals and seek a competitive edge over competitors.
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