Nowadays, Zara and Chanel are known worldwide as two successful brands. The former is a mass clothing retailer whose production takes only weeks whereas the latter is perceived as one of the most established retailers in haute couture, specialising in luxury goods whose production takes months. Zara has more than 800 stores worldwide, in sharp contrast to Chanel which has about 160 boutiques (wilkepedia).
Coco Chanel founded her brand 106 years ago while Amancio Ortega created the Zara label 35 years ago (www.misslopezplane.wordpress.com). At first glance these two companies seem alien in their market outlooks, however in many aspects, such as pricing, quality, and market strategy they are competitors. This is an unexpected outcome and one that will be investigated in this report.
The distinct similarities coupled with the obvious differences between these two brands make them useful and relevant for a comparative analysis. Thus, these brands are the focus of this investigation into the importance of market research and consumer segmentation in identifying and defining target groups and the application of basic marketing principles to ensure customer needs are met.
2. The Marketing mix of the stores investigated
The marketing mix is focused on 4 elements - product, price, place, and promotion - used by business in marketing products or services (Daniels et al., 2007).
2.1. Product and price: What are they selling and for how much Zara and Chanel have always been perceived as two strong brands which offer clothing to men and women .The former also offers a children’s wear and a Home department. The latter has developed a strength “maroquinerie” (bags, purses etc) and a jewellery offering.
Zara occupies an unusual niche in that it targets and appeals to a mid-market segment in its different operating territories. However, it also appeals to high and low end customer who enjoy the fashionable and easy to wear orientation of the clothing offering while being able to afford this product also. Thus, it is similar to Selfridges and other providers in this respect. Customers who frequent, and can afford, Coco Chanel will not feel embarrassment in shopping in Zara despite the much cheaper and mass produced product that is available there.
The design approach of Zara has become well known and is innovative. It adopts a “co-creation” approach in that the business appropriates the trends that are fashion trends that are emergent in urban centres and reports these back to its design department .In turn, this department completed designs that reflect these trends and then this product is marketed and sold. Thus, Zara is also fashionable in that it reflects prevailing trends in clothing and is usually first to market with this fashion because of its short supply chain. This creates competitive advantage as well as driving strong brand development. Furthermore, cleverly Zara have created the perception of product moving quickly through its stores and this creates urgency on the part of customers to buy an item.
Chanel’s products are driven by purer design motivations. Thus, Chanel reflects the interests of the fashion purist and the quality of its designs mean that the market is generally very positive as the product offers craftsmanship, exclusivity, and aspiration. This drives the brand development of the business. Because of the time and inputs used in Chanel products, the cost base is significantly higher than the mass and out-sourced production of Zara and, as a consequence, the price of Chanel products is much higher.
Where the two brands differ is in the nature of the demand they appeal to. They are not direct competitors but they do compete in a number of areas particularly as Zara’s products appeal to the wealthy as much as to lower economic groups. In many senses Zara meets the cliché, “when ‘haute couture’ meets fast fashion’.”
Waiting lists for certain item, such...