Zara uses the strategy of Market orientation. This strategy is used for creating customer value by a focusing on the customer throughout the vertical organization of the company. The whole business model of Inditex (its parent brand) is characterized by a high degree of vertical integration and very short lead times.

It hardly uses advertising and spends just 0.3% of its revenues in advertising and marketing. This is significantly less compared to the industry average of 3-4%. Instead of spending on advertising, Zara positions itself in primary locations, invests more on store layouts and shortens its lead-time. All its stores are also located in prime locations in big city districts. The average store size is 1,376 square meters and makeover of old stores is done every 3-4 years.

Moreover, Zara draws power focuses on creating artificial scarcity of its products and fast response to fashion trends. The company produces fewer quantities for a certain design. They manufacture instead clothes of different designs; the latter averaging 12,000 pieces annually. Products lead-time is the shortest in the industry, which averages only 15 days. The stores are also replenished two times a week to create constant freshness of its ambiance. Customers will be forced to buy the product directly when they visit the store and not delay in buying it as it won’t be in the stores for long. In this way, it is relatively easy for Zara to know and forecast the slow moving items, cancel future planned production of a certain design thereby reducing probable product write offs.

Zara continuously monitors how its individual stores are doing. Frequent conversations with store managers are common with regards to communicating sales and orders data to the headquarters. To be also more flexible to the fashion trends, the store managers are given autonomy on its area, and customer feedback is considered very important. The company is also on a close watch of the current trends. Sources of new information include industry publications, TV, Internet, and films. Further- more, Zara’s trend-spotters focus their attention on venues like university campuses and discotheques. To add, Zara’s young and fashion-conscious staffs also have great inputs of new ideas.

Furthermore, Zara’s designers attend trade fairs and ready-to-wear fashion shows in Paris, New York, London, and Milan, brows through catalogs of luxury brand collections, and work with store managers to develop the initial sketches for a collection. This vertical integration allows Inditex to a supremely quick response to market fluctuations.

For Inditex, this is the key method of gaining competitive advantage. Zara even claims not to have a formal marketing department, as they use market orientation as a marketing strategy. Given the hard climate on today’s fashion market, this is a remarkable statement from a very successful business.

Other strategies used by Zara:

Customer Profiling

A typical Zara customer is a person who is up to date with the latest developments in the fashion industry and wants fashionable, trendy and unique outfits at affordable prices. The customer can be a man, a woman, a teenager or even a child who is interested in being up-to-date. As Zara has its origins in Spanish fashion and is primarily and European fashion brand, the customers of Zara also are also heavily influenced and moved by European fashion. Aside from this a typical Zara customer can belong to any social strata and demographic segment as Zara caters to a wide range of tastes.

Segmentation Strategy

The segmentation strategy employed by the fashion retailer Zara is based one the typical demographics of the customers like gender, age and psychographics. However aside from this the company also targets customer is based on their sense of fashion and style e.g., contemporary, trendy, classic, grunge, Latino etc. Zara blends the ethnicity of the brand as well as its target market in its product offering which match a variety of tastes and settings.

Targeting Strategy

Inditex with its brand Zara has targeted a wide gap in the retail market. The company targets customers that are interested in high fashion want to be inline with the latest fashion trends but are not able to afford clothes and accessories from the couture and high-end boutiques. In order to target the market, Zara strategy launches its outlets in high profile locations and provides customers with a turnover time of 4-5 weeks for its new collections made available at a fraction of the couture cost. This, along with the brand persona, the collection of the clothes and accessories and the marketing campaigns pulls the target markets to the Zara stores.

Positioning Strategy

The main objective for positioning the Zara brand in a market as mentioned by the company is to ‘democratize fashion’. The company aims to provide its customers with trendy and high fashion products at lower prices to accommodate their requirements. As a result the marketing strategy that is employed by Inditex for Zara is to open stores and outlets that provide the Zara experience at high profile locations to set the image of the brand as being trendy, hip, high fashion and accessible.

Differences in Marketing Strategies for the Different Customer Segments

Zara highly differentiates on the marketing strategies that it employs for targeting the different customer segments of its target market. The main theme of the brand Zara is uber fashion with a fashion guru/fashionista theme, which is common for all customer segments. For this the company uses innovative window displays and in store music, theme and grouping of ensembles to attract customers.

The CBBE Pyramid for ZARA

How ZARA creates Brand Awareness:

Visibility is a major tool used to create brand awareness. Zara creates awareness for its brands by :

The Stores

Choosing prestige retail locations

By Store publicity like store launches, Vogue Fashion Night Out etc.

Alternative media channels

Fully integrating its online store, Facebook page & App store

ZaraConnect!, ZaraPeople!, Zara LookBook

Zara YouTube, Flicker and Twitter

Zara Newsletter

Word of mouth

Social circle friends, family, colleagues

Opinion leaders – fashion bloggers

Product reviews by Fashion industry experts

ZARA Brand Wheel

CURRENT MARKETING PROGRAMS ( POP’s and POD’s)

Zara’s marketing strategy focuses on three main aspects:

Product variety,

Speed-to-market, and

Store location.

Zara does not advertise its brand. If a customer wants to find about the latest collections, they must either visit the website or visit their store. The advertising and marketing spends are 0.3% of the total revenue, significantly lesser than their competitors which averages at 3-4%. Hence, a cost advantage is maintained.

If a customer goes to a Zara store and does not find anything to match their choice or interest, they are reassured by the fact that in a week, there would be an entirely new collection that might interest them, and therefore there is reason to visit them again.

Zara has developed a business model based on short deadlines; decrease quantities and a great choice of style and clothes. The company succeeds to make moderate prices with a large choice of new clothes every time.

The success of ZARA is based on two principals: follow the trend to be able to sell garments at a moment where people want this kind of style, without using any advertisements as the concurrence does. They don’t want to convince people to buy their clothes but give the public what they desire at the moment. Secondly, the trust that had been given to employees allowed the company to delegate. They decide what clothes should be in stores, the designed the garments by pairs for a specific collection. Their role is to create clothes not to be sold for a long time but only for a short period in appropriateness with the current trend.

Other PoDs for Zara are:

Design (most fashionable)

Speed of launching products/collection – 11,000 distinct products are produced annually compared to the industry average of 2000-4000

Being a “fashion imitator” – Zara follows a reactive strategy rather than a predictive strategy which is followed by its competitors. It focuses attention on understanding consumer wants and implementing them in their designs rather than promsing predicted trends via fashion shows etc.

Origin of production: 50% of Zara’s products are made in Spain and 26% is made in the rest of Europe. The remaining is produced in Asia and Africa. This is unlike their competitors who generally outsource all their production to Asian countries.

The main communication objectives of Zara are:

Inform about the new collection

Create positive emotions surrounding the new collection

Generate consumer interest and purchase intentions.

For the full body shape woman (target consumer), Zara(brand name) is the fashion expert (brand character) for your wardrobe (product/competitive frame) that helps you look the best you can (brand promise) because it takes the high fashion trends and adapts them for the REAL you (support)ADVERTISING POSITIONING STATEMENT FOR ZARA

Their strategy: What qualify the best Zara is reactive and creative. They adapt to their environment. They mix secret and popular takings: The commercials don’t reveal what clothes will be produced. It’s not an elite team who draws and makes the design of clothes: the collections are modified all the time, divided in 3 sections “men”, “women”, and “children” and into different groups (“sports”).

There are 2 designers and 2 commercials and managers who imagine and realize the clothes. It is adapted to the client desire: it is the concrete application of the “marketing d’étude”. The clothes have to be worn about 10 times. For that, Zara don’t receive a lot of return of clothes from the clients.

Organizations: Zara firms use a system of decentralization.

Every unit or groups of work have his autonomy.

Furthermore, employees have much more responsibilities than those other clothing chains. They trust in the judgment of their employees and they take care of it.

Commercials and products are much closed, very linked into the chain: in fact, commercials travel all around the world to pick up new desires or tendencies of people; for example, they look for what clothes Zara would sell if Zara made it.

Distribution and diffusion: Managers decide where set the clothes in the store. They set its in order they want the clothes to be bought. At the difference with other firms, there are not the headquarters who decide. The prices are decided for all stores.

So, Zara has demonstrated how her business model could be very successful. Her capabilities to focus on one strategy wish is to change and be innovative all the time made of her one of the best profitable clothing firm. In the future, they will have to continue to adapt their marketing and strategic development using new information and communication technologies to make better and better exploitation operations.

ZARA SWOT ANALYSIS