Zara Clothing Company Final Doc

Running head: ZARA CLOTHING COMPANY 1

Zara Clothing Company

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Table of Contents

Background Overview .................................................................................................................................. 3

Objectives ..................................................................................................................................................... 4

Target Audience ............................................................................................................................................ 5

Message ........................................................................................................................................................ 5

Tone .............................................................................................................................................................. 6

Scheduling..................................................................................................................................................... 7

Competitor analysis ...................................................................................................................................... 8

Main competitors ...................................................................................................................................... 9

H&M ..................................................................................................................................................... 9

Gap (clothing retailer) ......................................................................................................................... 10

Mango ................................................................................................................................................. 10

Zara vs. Competitors (Comparison) ............................................................................................................ 11

Budget ......................................................................................................................................................... 11

References ................................................................................................................................................... 13

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Zara Clothing Company

Background Overview

Zara was established in 1975 by two founders namely Amancio and Rosalia Meria. Zara

company is an accessory and clothing retailer. Zara clothing company was initially started as a

flagship store of a group known as INDITEX. The retailer boasts of more than two thousand

branches all over the world incurring over 9 billion dollars as annual revenue, something that has

been driven by the new approach it has taken on the clothing industry (Zara.com, 2017). Zara’s

use of unique strategies gives them a competitive advantage especially over its competitors like

NEXT, GAP, MANGO and H & M. Zara is an apparels’ distributor and offers a variety of

choices including collections for children, women, and men. The branch has gone further to

launch a line of household products, cosmetics, and perfumes and thus expanding its market and

target audience. Five years after its formation, the company commenced its international

expansion making its way to Portugal. Later in 1989, the market was expanded to the United

States of America, and a year later they made entry into the French market (Zara.com, 2017).

Zara’s vertical integration as a company and a retailer enables it to control design, the

supply chain, business and delivery of different products all over the world. The major idea that

lies behind Zara’s formation is manufacture and distribute luxury products, making them

available to all at prices that are affordable. With the policy, the company has over time

democratized various manufacturers of products being inspired fashion evolution. This,

therefore, gives the company the capability of offering products that are trendy and at prices that

are reasonable. Zara Company aims to be closer to the young people, a desire that can be seen in

its recruitment policy (Zara.com, 2017). The youth are a major target for the company due to

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their sense of fashion. The company understands the needs of its customers and responds within

the shortest time possible; this is the company’s major secret which gives them a competitive

advantage over all its competitors.

Objectives

The apparel market is regarded as one of the industries that are consumer driven globally.

New technologies and globalization have provided better fashion access and success to

customers. It, therefore, means that the initial objective of any company or industry that lies

within the apparel industry has to be aimed at satisfying the needs and wants of the customers

and meeting the corresponding conditions of the market that is ever changing and Zara is not an

exception from this rule. Zara clothing company focuses on satisfying the needs and wants of its

customers irrespective of the age or income level by directing its efforts on evolving and

developing a line of products that are consumer based. For instance, a middle-aged father shops

at Zara due to the affordability of their clothes while on the other hand, his daughter in her early

20s buys clothes from the company because of their fashion sense (Zara.com, 2017).

Zara’s objective is to combine fashion and low prices thus interpreting and adapting the

demands of its customers. Through its primary objective, the company has grown to be effective

in the apparel market which is contemporary and as one of the most recognized brands in the

worldwide apparel industry. The philosophy of Zara as a company is based on ensuring

immediate response to the wishes or its customers. As a company, Zara aims to continue its

expansion to other countries like Italy, Switzerland as well as on other continents; Asia and Latin

America. The third objective is to continue growing their stores in countries they have already

penetrated for consolidation of its position and to increase its share in the market.

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Target Audience

The target markets for Zara are extremely broad as the company unlike other traditional

retailers does not define its markets based on gender, age or style. Zara’s targets men and women

aged between 18years and 40years. Their target market is very conscious about the fashion

trends and mostly prefers up to date stylish clothing but at a pocket-friendly price. Zara identifies

certain demographic factors to when targeting a particular group. For example, Zara implements

certain fashion directions to catch older consumer that would like to become “young” by wearing

clothes from Zara. Zara has targeted the millennial generation that is known to be very sensitive

to prices; however, this does not mean that the company compromises on the quality of its

production. More than a half of their sales are made from female customers while a slightly

lower number is made from male counterparts and the rest of kids, this can be translated to 60%

25% and 15% respectively. Globally, Zara has positioned itself as a price friendly fashion brand

to the millennial generation. A distinctive feature about trends and fashion is that they come and

go especially in the clothing industry as compared to other industries (Eccles et al., 2012). Zara

provides a large variety of designs to its customers and the potential clients compared to most

average retailers in the market.

Message

The main reason for effective message communication is to create a competitive

advantage and enhance value to potential customers. Austin, & Pinkleton, (2015), assert that an

effective communication about the company’s product or services is incorporated into the

strategic marketing of the company to create a value proposition. The company identifies the

best message to communicate to the market by considering the following; understanding the

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market trends, developing a market plan, doing a SWOT analysis of the company, the expected

outcome after the message is conveyed to the public.

The company identifies mostly slogans or short sentences that carry the message about

the product that captures the minds of the customers and prospects (Ulmer, Sellnow, & Seeger,

2013). In a clothing industry and especially driven by trendy and fashionable aspects, the

message should describe the product in a manner that suits the target market. Zara powerful

brand in clothing gives it an added advantage in conveying messages to its target market. Zara

Company should invest in E-commerce and most importantly in media marketing campaigns.

These decisions to focus on social networks enhance positioning and branding (Bovee, Thill, &

Raina, 2016).

Tone

Zara is already an established company with a strong brand. The messages and product

reviews from the company in most cases ought to be in a friendly tone. These include the

posters, advertisements, brochures, the web content, billboards, marketing articles, online videos

and product printouts (T-shirts). Messages are meant to grab the attention of the customers and

target market. Important messages should be written boldly and stylishly to suit the demographic

factors of the target market. When the customers are confident with the type of products they are

buying, then the company is assured of return customers (Covello, McCallum, & Pavlova, 2012).

Just like the designs, the messages should be stylish and feature current trends affecting the

millennial generation. Customers are always right, therefore, conducting a market research more

frequently is very imperative in ensuring the company receives the kind of message they expect.

Therefore, the company becomes customer-centric. Zara marketing strategy is based on not using

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images of celebrities, whether a model, musician or an actor differently from other brands.

Therefore, the company’s designs, colors, and wordings are not influenced by any personalities.

The company relies on anonymous models to market products. According to Zara.com, (2017),

Zara depends on young talented designers (majority are women) because they understand the

market better.

Scheduling

The marketing and advertisement schedules of Zara ought to follow some approaches for

it to become a successful company worldwide; research on the market trends, design products

that feature current trends and meet customer satisfaction at the same time, place the products in

stores within 15 days, identify strategic locations for the stores (luxury places), study how the

market respond and make necessary adjustments (pricing). Hopkins, & Turner, (2012) claim that

the main task of advertising using media planners is to consider the budget and identify the

suitable media schedule when advertising. For example, Zara could consider doing a continuous

advert depending on the response of the market to its new products. The quality or effectiveness

of an advert can decline. Therefore, it is important for Zara to use the strategy of pulsing where

the company only makes its advertisements in specific weeks or certain days. However, this kind

of scheduling may lower the of advertisement copy but does not decrease the aggregate of brand

awareness. This is referred to as advertising wear out. Pulse scheduling is best in this case

because it is associated with market seasons or others influences on the side of the customers.

There are six different types of scheduling that can feature in Zara’s advertising and marketing

strategy; steady, seasonal, period, startup, and promotional pulse.

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The company can choose which one to feature in its strategy depending on the budget its

expenditures and the market. According to Carrascosa, González, Cuevas, & Azcorra, (2013),

Pulsing advertisement schedule is the most preferred since it incorporates all other scheduling

patterns; continuity and flighting. The media activities increase only during some periods. Zara

advertises at the time when the products have a higher chance of being sold. All products

advertised should be present in stores to avoid any inconveniences and customers complaints.

Competitor analysis

Being customer-centric might not be as equally important as focusing on competitors.

Focusing on customers’ needs is repeatedly on the top of the list of any company’s objective

(Hollensen, 2015). Customer satisfaction is the simplest guideline to any organization despite its

size. However, it is important to consider the competitors in the market, what kind of approaches

they’ve adapted, the effectiveness of their goods and services and their pricing strategy.

Companies should research whether customers perceive competitors as alternative suppliers.

Using competitors as a frame of reference, firms that are competitor focused can conduct a

SWOT analysis and achieve a competitive advantage.

Swayne, Duncan, & Ginter, (2012) assert that consistent variations of the competitors’

strategic guiding principle may occur such a close monitor of the latter is necessary to

understand more their competence. Therefore, a company can adapt to changes and respond on

significant advancements of its goods and services. The weakness of the competitors is mostly

used to attain a competitive advantage. Some companies develop an advantage by rapidly

responding to the changes in the market trends or predicting the actions of the competitors. For

instance, online Zara launch in different countries. Later on, H & M launched Home division.

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Main competitors

The main competitors of Zara clothing company include; H & M, GAP, Benetton,

Forever New, Primark, and Mango. The above-listed companies sell almost the same products at

a similar price to Zara (Hansen, 2012). In addition to that, they all have a common target market.

H & M is considered to be Zara’s key competitor because the two companies aim too high-

quality fashion products at a lower price. The other companies produce somehow fewer fashion

products at a high price.

H&M

Hennes and Mauritz Company was started in 1947. Initially, the company began as

Hennes and only sold women’s clothes. The first store was in Sweden –Vasteras. Later in 1968,

the owner introduced the sale of men’s clothes and children as well through the help of Maurtiz.

Finally, they created the H&M Company. According to H & M. (2017), the company has enjoyed

a top market position since its establishment. The companies worldwide have made it the largest

retailer in fashion products, however, in 2005, Zara Clothes Company surpassed it. Hennes and

Mauritz accounted for more than two thousand stores in forty-eight markets. More than a half of

these sales came from other countries. H & M has also adopted strategies to offer fashion

through many ways, similar to Zara. Different from Zara’s market approach, H & M outsourced

most of its production and made an order of its items 6 to 8 months earlier though nine hundred

suppliers.

To enable prompt delivery almost a half of production took place in Europe. However,

marketing time was still considerably slower compared to Zara clothing company. The pricing of

the products was slightly cheaper than the ones set by Zara and were outstandingly displayed on

all the shelves. H & M has also adapted sustainable choices, for example, the introduction of

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greener clothing and processes. The company also poses a competitive challenge by running

solid outdoor marketing campaigns with outstanding slogans. A good example is “Pamela

Anderson from Naomi Campbell.” Their brand continuously offers an exclusive collection of

clothes in partnership with personalities that are very influential in the modeling and fashion

industry.

Gap (clothing retailer)

Gap was established in 1969, San Francisco (GAP, 2017). The company has an estimate

of three thousand and fifty stores in just five countries, thus making it the largest specialist in

clothing retailer. These countries include the following: US, UK, Canada, Japan, and France.

Besides selling clothes, this company also sells personal care products for male, female and

children, and accessories. Similar to Inditex, Gap deals with other clothing brands such as Old

Navy and the Banana Republic. The company outsources all its production from one thousand

suppliers in the US and other countries. The market segmentation is mainly based on four

approaches; expanding internationally, diversification into personal care articles and accessories,

creating new brands and developing another channel of sale, for example, electronic commerce.

Gap’s strategic approach has been steady and focused in some countries. The main driving forces

for its attractiveness in countries like Japan and France are; the experience and the brand image.

Gap is said to consider franchising in five markets in the Middle East as a strategy to expand its

business.

Mango

Mango is clothing design and manufacturing company mainly dealing with women’s

clothing. The company opened its first stores in 1984 Barcelona. Mango accounted for more

than eleven thousand two hundred employees and had an estimate of twenty-four thousand stores

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in a hundred and four countries globally by the end of 2012. The company has kept control of its

production process since its establishment and invested more in store and window displays.

Mango Company has also invested more in advertisements and marketing communication. The

company has also diversified the products it offers by introducing a plus size collection. Violeta.

Zara vs. Competitors (Comparison)

Zara controls all its production chain while most of its competitors outsource their entire

production. The vertical integration adopted by Zara ensures the firm has a better turnaround

compared to its rivals. The main directions for growth and development for most of Zara’s

competitors include development in new channels of sale and electronic commerce. Zara does

not offer its products online unlike its competitors. According to Zara.com, (2017), despite all

these, Zara has a more comprehensive international presence compared to its rivals. Within a

shorter period, Zara has become a global company.

Budget

There are very many factors that affect the company’s budget. The key factors include

the following; a competitive environment, sales volume, customers buying power, suppliers, cost

of production and other related expenditures. A good starting point to prepare a budget is

preparing a forecast that covers all economic conditions, and market trends that affect Zara. A

detailed five-year budget can either be considered as unrealistic or impractical (Lee, Keil, &

Kasi, 2012). Therefore, the best suitable in this case is an annual budget. Planning on long-term

bases for an industry that is driven by up to date trends (fashion) is quite difficult. Zara budget

involves establishing procedures, and time schedules, deciding on overall policies affecting the

budget across all countries (such as inflation rates), receiving and reviewing all budgets from

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every store and finally recommending acceptance of the budget to senior management. Every

store should have a budget manual which typically addresses Zara’s operational objectives.

General objectives need to be highlighted so that key priorities are considered when preparing

the budget. The factors that determine the budget of a company can be further categorized into

two; the company’s inputs and outputs. The questions to be addressed include the following; is

every store generating income? are the company legal duties addressed? Are all expenditures

settled? The inputs include money generated from the sales while the output include suppliers,

wages, renovations, advertisements, premises (store rent) and other business costs.

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References

Austin, E. W., & Pinkleton, B. E. (2015). Strategic public relations management: Planning and

managing effective communication campaigns (Vol. 10). Routledge.

Bovee, C. L., Thill, J. V., & Raina, R. L. (2016). Business communication today. Pearson

Education India.

Carrascosa, J. M., González, R., Cuevas, R., & Azcorra, A. (2013, October). Are trending topics

useful for marketing?: visibility of trending topics vs traditional advertisement. In

Proceedings of the first ACM conference on Online social networks (pp. 165-176). ACM.

Covello, V. T., McCallum, D. B., & Pavlova, M. T. (Eds.). (2012). Effective risk communication:

the role and responsibility of government and nongovernment organizations (Vol. 4).

Springer Science & Business Media.

Eccles, M. P., Grimshaw, J. M., Shekelle, P., Schünemann, H. J., & Woolf, S. (2012). Developing

clinical practice guidelines: target audiences, identifying topics for guidelines, guideline

group composition and functioning and conflicts of interest. Implementation science, 7(1),

60.

GAP. (2017). Women's Clothing | Gap. Retrieved from http://www.gap.com/products/womens-

clothing.jsp

H & M. (2017). H&M offers fashion and quality at the best price. Retrieved from

http://www.hm.com/in

Hansen, S. (2012). How Zara grew into the world’s largest fashion retailer. The New York Times,

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Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education.

Hopkins, J., & Turner, J. (2012). Go Mobile: Location-based marketing, apps, mobile optimized

ad campaigns, 2d codes and other mobile strategies to grow your business. John Wiley &

Sons.

Lee, J. S., Keil, M., & Kasi, V. (2012). The effect of an initial budget and schedule goal on software

project escalation. Journal of Management Information Systems, 29(1), 53-78.

Swayne, L. E., Duncan, W. J., & Ginter, P. M. (2012). Strategic management of health care

organizations. John Wiley & Sons.

Ulmer, R. R., Sellnow, T. L., & Seeger, M. W. (2013). Effective crisis communication: Moving

from crisis to opportunity. Sage Publications.

Zara.com. (2017, November 2). ZARA Official Website. Retrieved from https://www.zara.com/

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