Presentation on theme: "Marketing analysis project BUS 260c Iva Naumova"— Presentation transcript:
1Marketing analysis project BUS 260c Iva Naumova Kevin Zappia Valeriia Tretiakova Victoria Lyubykh20\03\2013
2In this presentation we are going to talk about: Inditex Group – Basic information Emphasis on ZARA affordable fashion retailer ZARA marketing strategy: Target Markets and Marketing MixThe fashion company Zara has a marketing strategy that is quite unique. Zara only spends about 0.3% of their revenue on promotion. This would be the reason Zara does not appear on television or poster advertisements. Zara focuses heavily on their product, place and pricing as opposed to promotion. Zara rarely advertises any store sales or have sales promotions other than sale items unlike other retailers. It is also interesting to note that Zara never places their brand or logo on their products. In contrast to local retailers like J2 Clothing, Zara’s sales associates do not need to focus on personal selling. Their customer service within the store is rather weak. It is their innovative products and affordable pricing that keeps customers returning to their store. Their products seemingly advertises itself.In addition, Zara has remarkable logistics and they are able to get a product from design to the shelf in just two weeks. With such efficiency, they are able to produce thousands of new designs a year. In fact, Zara produces new products every week as said on their website. Zara is known for their fast fashion, which means popular products may disappear off the shelf within days, forcing customers to constantly check for new items.Zara also markets it’s brand through rapid expansion. With more than 1,500 stores around the world in over 70 countries, they open around 150 new stores every year. With the brand becoming world renown, the company is also focusing on sustainable marketing by opening stores which consume 30% less energy compared to the average conventional store. The new stores also save 50% of water consumption and maintains their CO2 emissions below 150 toms a year.It is no wonder a Louis Vuitton spokesperson described Zara as “possibly the most innovative and devastating retailer in the world”.Outline
3Stores Around the World ZARA1,770ZARA Kids166Pull & Bear825Massimo Dutti634Bershka910Stradivarius816Oysho533ZARA Home363Uterque87Total6,104INDITEX is one of the world's largest fashion retailers, welcoming shoppers at its eight store formats -Zara, Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe - boasting stores in 86 markets.We will focus our attention on ZARA stores, as Inditex has three branched for this brand: Zara, Zara kids, and Zara Home. We would like to pay more attention to the ZARA brand only. Inditex is one of the world's largest fashion retailers, welcoming shoppers at its eight store formats -Zara, Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe - boasting 6,104 stores in 86 markets.Who are they?
4Founded by Amancio Ortega and Rosalia Mera in 1975, headquartered in Arteixo, Spain One of the largest international fashion retailer companies belonging to InditexMain competitor: Swedish H&M; along with GAP and Benetton due to global retailing statusThe formula for Zara is simple: latest catwalk trends reproduced, plus new stocks delivered to stores in fewer than 15 days, plus giggle-inducing prices, equates to global success. FAST FASHION
5How did we gather our observations? Visited online sources: official Inditex website official ZARA website Andres Vicente Ranz online blog dedicated to ZARA Zara brand profile by Belle Kwan
7Zara’s target market is young, price-conscious, and highly sensitive to the latest fashion trends. They have an advantage over traditional retailers because they do not define their target by segmenting ages and lifestyles giving them a much broader market.They segment their product line by women’s (60%), men’s (25%) and the fast growing children’s (15%) department.Who is the customer?
8Fashionable, affordable clothes Zara’s strategy is to offer cutting edge fashion at affordable prices by following fashion and identifying which styles are “hot”, and quickly getting the latest styles into stores. They can move from identifying a trend to having clothes ready for sale within 30 days (where as most retailers take 4-12 months). This is made possible by controlling almost the whole garment supply chain from design to retail.Product
9Product Mission Statement “Through Zara’s business model, we aim to contribute to the sustainable development of society and that of the environment with which we interacts.”ZARA follows the strategy of: Fast fashion => Quality Design => LuxuryProduct
10Positioning: Fast Fashion at Affordable Prices Vision“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”Fashionable, affordable clothes Zara’s strategy is to offer cutting edge fashion at affordable prices by following fashion and identifying which styles are “hot”, and quickly getting the latest styles into stores. They can move from identifying a trend to having clothes ready for sale within 30 days (where as most retailers take 4-12 months). This is made possible by controlling almost the whole garment supply chain from design to retail.Large choice of styles Zara produces around 12,000 styles per year (compared to the retail average of 3,000), which means that fresh fashion trends reach the stores quickly. A typical Zara’s customer visits the store 17 times a year compared to the average of 3 times per year. This high number of styles also means that the commercial teams have more chances to find a winning style.Scarcity By reducing the manufactured quantity of each style, Zara creates artificial scarcity and lowers the risk of having stock it cannot sell.Scarcity in fashion increases desirability, which means shoppers need to buy quickly as the item may not be available next week. Lower quantities also mean there are not much to be disposed when the season ends; Zara only discounts 18% of its stock in sales, which is half the industry average.Prime locations Zara spends relatively little on advertising (0.3% of revenue) compared with traditional retailers (3-5%), instead they reach their target market by locating their stores in prime town-centre locations.Positioning: Fast Fashion at Affordable Prices
12Price: Contribution 12 years after Even though Zara strategy is claimed to be low-cost fashion, the company succeeded to contribute with 66.11% in 2012 to the overall company profits, compared to other companies contribution of which does not exceed 10%. This table was taken from Inditex annual ReportPrice: Contribution 12 years after
13The most important advantage of Zara is the fact that they optimize a fast-response distribution network, whereas they can react fast to the rapidly changing consumer demand. Basically, Zara has control over a big part of the supply chain. Not only does Zara makes its own fabrics, but it also designs, manufactures and distributes its own clothes. Only a small part of the distribution is being outsourced. Consequently, the new collection is distributed in 2 weeks, while competitors usually need 6 months for the same results. The new collection of Zara will not remain more than a month, which makes the collection even more exclusive. When having overproduction, companies often sell their clothes at a lower price. The chance to have outdated products is lowered with the fast change of Zara’s collection and the consumers have a broader range of choice in clothes due to the different styles in the stores. In this figure you can find Zara’s design, Product and Market CycleDistribution
15Social Media ZARA.COMThe Zara website is the major and most successful tool used for communication with customers. It is very simple and easy to navigate. The merchandise is divided into Men's, Women's, TRF (Trafaluc), and Kids. There are also additional links that have the Zara campaign videos, their lookbook, and People!, which shows numerous photos taken from blogs that have posted about Zara merchandise. There is also an online store available for most European countries.
16Social Media Facebook 7.5 millions fans “Light” social media strategy Encourages brand love, but not purchase considerationZara have a very popular Facebook page with 7.5 millions fans. Zara post official content rather infrequently (perhaps once a week) and then let the clothes do the talking by posting photos of their latest collections. WaveMetrix analysed the consumer response to this rather “light” approach to social media strategy to understand whether it was successfully engaging consumers.WaveMetrix social media monitoring shows that the Zara social media strategy is successful at engaging consumers around their products and brand. Consumers “love” the “cool” fashion collections and “beautiful”, “quality” clothes from their “favourite” fashion brand. Using 100% human analysis, WaveMetrix can ascertain that while Zara are successful at encouraging brand love, purchase consideration is at very low levels.Social Media Facebook
17Social Media Pinterest Pinterest is a pinboard-style photo-sharing website that allows users to create and manage theme-based image collections such as events, interests, and hobbies. Users can browse other pinboards for images, "re-pin" images to their own pinboards, or "like" photos. Zara uses the website to introduce new arrivals and promote brand and purchasing.
18Available for Android, iPhone, Windows Mob, Nokia, and BlackBerry Zara and Zara Home have created applications for mobiles, which are available in versions for the iPhone, Android, Windows Mob, Nokia and Blackberry, which allow users to have access to a large photographic gallery of the commercial offer available at the stores. The new apps -which are launched under the claim ‘All fashion in your pocket’- will receive immediate updates with the images of the new models, which arrive at Zara and Zara Home stores twice a week. What is more, in the applications, both the season’s catalogue and the look book prepared by the chains’ stylists will be available, making it possible to get to know the collections and the selection of articles which may be of interest to each customer.Mobile Applications
19Other communications Real-estate Marketing Word of Mouth Location of stores is one of Inditex most focused marketing tools. The company invests heavily in the beauty, historical appeal and location of its shops. For example, one of Zara’s location strategies is to get as close to luxury brands such as Gucci as possible. (probably to show price differences to buyers). Another example is in Spain they purchased a historical cinema to convert into a store. Also in NYC not only did they buy space on 5th ave, but the building is known for being the most expensive ever sold in Manhattan.Customer satisfaction is very important as inditex as it relies on advertising through word of mouth. For example, when they bought space on 5 ave they provided one page in the NY times simply announcing information on opening the new store. It was not a campaign on how great the store would be as they felt customers would advertise that for them.Other communications
20Effectiveness of marketing communications Management EfficiencyThe focus on the customer and product requires that the unit is constantly re-inventing itself to avoid becoming obsolete.The final goal ultimately is to create a communication matrix for this purpose.In Inditex every store manager is responsible for a business unit similar to a small to medium sized business of about 100 employees. The focus on the customer and product requires that the unit is constantly re-inventing itself to avoid becoming obsolete. Because of this, it is important to maintain direct lines of communication between the store manager and other points of contact such as the design team, a sales persons, and the window designers.For example, mangers must communicate if demand is high or low to prevent over/under stocking. Also managers must communicate customer positive/negative feedback on a product so designers can take into consideration while preparing their next line.The final goal ultimately is to create a communication matrix for this purpose. There is also 15 person Communication Teams who goal is to eliminate communication barriers in the company.…………………..One example could be that ZARA communication director is always available immediately when an international journalist calls.Communication about the customer demand being made at individual stores. From what they need more or less of, or what is liked and disliked about a specific product.Effectiveness of marketing communications
21Effectiveness of marketing communications Different Approach then CompetitorZara only spends about 0.3% of their revenue on promotion so they can instead focus heavily on product, place, and pricing as opposed to promotionWhile the advertising endeavors of inditex are important, they can hardly be credited with overall success of the company. The marketing department in Inditex is very small and hardly plays a role as they don’t invest in flashy campaigns (teaming up with big name fashion designers and ect.) , they don’t appear on television or poster advertisements, and they rarely advertises any store sales or have sales promotions.Instead part of what makes Inditex so successful and marketing effective is it’s different approach then competitors. A company like Zara only spends about 0.3% of their revenue on promotion so they can instead focus heavily on their product, place, and pricing as opposed to promotion. And while they use a lot of cheap advertising like social media and simple word of mouth, this has been enough to penetrate their target market successfully .Effectiveness of marketing communications
22Events Vogue Fashion's Night Out by ZARA ZARA fashion show 1 slides describing communications through events:Description of events (what? where? who?)Event patterns (regularity and schedule)Style of communicationOther observations?Vogue Fashion's Night Out by ZARAZARA fashion showVogue Fashion's Night Out by ZARAThere are not so many events organized by ZARA for its customers. However, it is impossible to omit Vogue Fashion's Night Out by ZARA. It is one of the most crucial events in the world of fashion industry. The company introduced it to the public a couple of year ago in order to show a respect to the loyal customers. The event became extremely popular and now is held every year in the end of September in the major fashion capitals: Paris, Milano, New York, Tokyo, etc.“It’s binge night for fashionistas and shopaholics! It’s the one night of the year to celebrate all that is fashion and fun…at discount prices. It’s Vogue Fashion’s Night Out by ZARA….”ZARA fashion showZARA fashion show is another type of interaction with the public.Events
23Marketing behavior Segmentation Targeting Differentiation Market Segmentation: In regards to the information read and personal knowledge, Zara has clearly segmented itself into many regions. For instance, Inditex has conglomerated various clothing line designers such as Bershka and Massimo Dutti in addition to Zara. This clearly demonstrates their demographic intentions to segment consumers with various tastes towards clothing as well as pricing preferences. Inditex, and Zara in particular tend to create the full value of certain products and services differently from one another.Market Targeting: Based on the research through primary or secondary data, Zara creates demographics options for the particular targeting group. Zara is mostly attempting to target young teenagers, which are looking for stylish clothing for a cheaper price because many do not earn their own income. Zara tries to implement a certain fashion direction by attempting to catch older consumers that are willing to become young morally just by wearing Zara clothing. Moreover, Zara tries to target high fashion followers as they produce modern clothing.Market Differentiation: Zara has carefully targeted certain groups such as young teenagers or fashion freaks, in regards to targeting, they believed in differentiating themselves by offering high quality for low value. Hence, offering stylish fashion deals that were for premium price by other clothing manufacturers.Segmentation Targeting DifferentiationMarketing behavior
24The most interesting discovery Zara was described by Louis Vuitton Fashion Director Daniel Piette as “possibly the most innovative and devastating retailer in the world.” Zara has also been described as a “Spanish success story" by CNNThe most interesting discovery
26Analyzing Zara's business model. (2011, March 03) Analyzing Zara's business model. (2011, March 03). Retrieved fromChan, C. C. (2011, September 16). [Web log message]. Retrieved fromGregorio. (2013, August 10). Vogue fashion’s night out Lisbon – 12 September Retrieved fromHANSEN, S. (2012, November 09). How Zara grew into the world’s largest fashion retailer. Retrieved fromKWAN, B. (2011, September 03). Spanish domination – Zara brand profile. Retrieved fromRanz. (2011, March 15). [Web log message]. Retrieved fromSWOT analysis . (n.d.). Retrieved from(2001, May 18). Retrieved from