Zara Case Study

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ZARA CASE STUDY

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Introduction

The history of Zara started in 1975, when the first store has been opened in Spain. It has been followed by several other stores all over the world. The company’s owner, Amancio Ortega, accumulated 340 million Euros (according to 2001 datas), which is a remarkable growth if compared with other companies. Zara’s brand has become popular because of its quality and efficiency.

The secret of Zara is to understand the customer’s need and demands and respond to those needs quickly. In order to speed the design process he partnered with Joseph Castellano, who reduced the process to just 10-15 days. The manifacturing and distributing process is so fast that Zara needs onlt two weeks to develop a product, whilst other companies need up to 6 months.

Zara’s Business System

D Design

RetailingSourcing and Manufacturing

Distribution

Zara doesn’t invest money in advertising but prefer to produce low priced and high quality goods, which can be available around the corner.

Question 1

“Explain the existing segmentation, targeting and positioning strategies of the Zara brand”

The existing segmentation, targeting and positioning strategies in Zara act as a The following below explains the

“Segmentation and the Market Driven Strategy Process.”

Segments

Value Opportunities

Capabilities/segment match

Targets

Positioning

Process:

Zara created a new product which wasn’t in the market. Then they analysed the market segmentation and considered the companies competitive advantages and market opportunities. This was done by taking buyers’ preferences into consideration and then compared the organizations’ strenghts and weaknesses. So they realised that the market needs good quality but low cost products. That’s why they created affordable and trendy clothing.. “According to Castellano, Zara-unlike its competitors- focused more on market price than on its own costs in forecasting its prices in a particular markets” (Craven, David, 832).

Action:

From this, Zara then segmented certain variables such as the characteristics of people and organizations like age, gender, income, lifestyle and geographic location.

Zara ‘s targets are men and women, rom children to aged people. The people’s income was also an important factor and targets a low to middle class group. They also focused on people’s different lifestyles; such as sleep, gym, work and comfortable clothing for every kind of occasion. At the moment Zara is operationg in 30 different countries and are still expanding.

Question 2

“Indicate the differences they have adopted to their marketing strategies and marketing mix in the international markets for the different customer segments.”

Price:

First of all, Zara has adapted the same business systems for all the different countries where it’s operationg, but there are some differences in retailing operations. They first refine the marketing mix by identifying local demand in its various operating areas and then apply that same demand to all the stores in that country. They primarily use a market-base pricing strategy, but they also determine their pricing from another important factor. When another store of Zara is introduced in another new country other then Spain, they have to pay the extra price of supplying their clothing from there. “Prices were on average, 40% higher in Northern European countries than in Spain, 10% higher in other European countries, 70% higher in the Americas and 100% higher in Japan (Craven, Davis, 834).”

Place:

Zara has retail stores across 30 different countries.

Product:

The products are derived by many factors such as “physical, cultural and climate differences (Craven, David, 835).” For example, they had to incorporate smaller clothing sizes in Japan, different types of specialty products in the Arab countries and...
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