Zara Case Study Answers

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Explain the data collected by Zara to predict the trend.
What makes the middle aged mother to buy cloths in Zara while the daughter aged in mid 20s buys Zara clothing? Because it is fashion able and up to trend. By collecting data and focusing on shorter response times, the company ensures that its stores are able to carry clothes that the consumers want at that time. Zara can move from identifying a trend to having clothes in its stores within 30 days. That means Zara can quickly and catch a winning fashion trend, while its competitors are struggling to catch up. Catching fashion while its hot is a clear recipe for better margins with more sales happening at full prices and fewer discounts. In comparison, most retailers of comparable size even smaller, work on timelines that stretch into 4-12 months. Thus, most retailers try to forecast what and how much its customers might buy many months in the future, while Zara moves in step with its customers. Unlike other retailers, Zara’s machinery can react to the report immediately and produce a response in terms of a new style or a modification within 2-4 weeks. Many other retailers have such long supply chain lead times that for them it would seem a lost cause those to even try and respond to sales report. In order to collect data, they also visit university campuses, discos and other venues to observe what young fashion leaders are wearing, from daily feedback from the stores and from the sales report. There are 200 designers who are the major players in the Zara creative beehive. They are not allowed to let anything get by them. They receive data from the boutiques on what is selling and adapt their products almost simultaneously with purchasing behavior. They are also kept up to date on what is selling at the different designers from whom they draw their inspiration, in order to determine their pieces' selling potential. Collecting vital information, such as daily sales numbers, allow designers to approximate what types of fashions are selling well. Thus, the designers have real-time information available when deciding which type of fabric, cut, and colors to use when designing new clothes or modifying existing ones. Information and inspiration comes from forecasting agencies, trade shows, and various other places. Over a period of 3-5 months they are develop the ideas into physical samples. Data are collected at any time for forecasting trends. Zara largely concentrates its forecasting effort on the kind and amount of fabric it will buy. Similarly garment styling for Zara actually starts from the email or phone call received from the stores. Thus, from the beginning Zara is responding to an actual need, rather than forecasting for a distant future. Collecting information on consumers’ needs trend information flows daily, and is fled into a data base at office. Designers check for these dispatches as well as daily sales numbers, using the information to create new lines and modify existing ones thus, designers have access to real-time information when deciding with the commercial team on the fabric, cut, and price points of a new garment. On the whole Zara believes in react rather than predict.

Briefly explain the target market for the Zara’s product.
Zara’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. Zara started operations in Spain in 1975, and now operates in 74 countries worldwide. Basically, Zara target market is people from teens to adult, men and women. Zara’s target market is a young, educated one that likes fashion and is sensitive to fashion. Today people around the world through various communication devices have more access to information about...
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