Zara Business Model

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  • Topic: Sales, Customer service, Marketing
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  • Published : December 5, 2012
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By Wendy –Zara exericse 1

Q5. Who are the customer ?
The target market is broad, women, men, children that likes fashion and is sensitive to fashion.

Q6 .Who are the customers, and what product/ service attributes do they consider important?

The target market is very broad, Zara do not define their target by segmenting ages and lifestyles like what traditional retailers are doing. Its target market is working in big cities, with mid range income, a young, educated person that likes fashion, care about the looks and enjoy shopping. Zara segment their product line by women’s (60%), men’s (25%) and the fast growing children’s (15%) department.

 
The Product attribute that the customer consider important are as below:

Cost
Zara offers reasonably price, radical clothing, the cost should be at affordable level and is acceptable by the public. Currently the price is combatively higher than H&M. customers effectively bore the extra costs of supplying it from Spain

Response Time
Customers require Zara to offer fast response to the fashion trend.

Variety
Zara has a vertical scope and sell clothing for men, women and children, and women section is the major section of these clothing retailers. Zara owns much of its production, and can offer more choices in more current fashions than many of its competitors. It delivers merchandise to its stores twice a week, and since re-orders are rare the stores look fresh every 3-4 days.

Quality
Zara runs its own design and production unit in La Coruna, Spain, which leads cancellation of the large out-sourcing operations. It is modern, offering up-to-date lifestyle yet standard clothing lines for men, women and children. It is not of the top quality, which will last only for some seasons.

Q7. What process competencies should the organization aim for ?

Process Competency (Internal)

Cost
It should offer reasonably price that is affordable by customer.

Flow time
Flow time is short, the system is designed for short production cycles, quick response (QR) to demand and reduced number of mark down, to increase throughput and minimize operational complications. The design of the supply chain is a streamlined procedure to gain fast response time efficiencies and accurate replenishment.

The key objective of the company is “ to get the shortest time to the market”. By focusing on shorter response times, the company ensures that its stores are able to carry the product that the consumers want at that time.

Flexibility
The store aims to offer a variety of clothes and accessories in order to meet the customer at any age and any type of people. It can basically satisfy different customer needs. The strategy requires the generation of a great deal of product variety throughout the year. The stores are places where you can find something new and, crucially, of limited supply

Quality
The core value aim to provide good quality product, It is not of the top quality, which will last only for some seasons. It can charge comparatively higher price. By controlling the value chain, the supplier quality level, has to be maintained, and keeping the suppliers without varying standards of quality. Also, it can focus on training the best people to make product in high standard quality.

4. Customer relationships
Type of motivation
Boosting sales
Zara has special discounts boost sales for short period before launching new collections in each season, this can attract new non-loyal customer to the shop. It also prevents the stocks to be hold for long periods, and less accumulation of non-saleable inventories.

Customer retention

Zara can move from identifying and catching a trend to having this new design and release the new product clothes in its store within 30 days, where as most retailers take 4-12 months.

It offers large choice of styles, with around 12,000 styles per year (compared to the retail average of 3,000), which means that...
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