Zara: a Marketing Analysis Case Study

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INTRODUCTION

This assignment identifies an organization portraying superior performance and then analyses the marketing concepts, marketing environment and marketing mix, and identifies critical success factors.

THE ORGANISATION

Dubbed by The Economist (Fashion Forward -The Economist, 2012) as Spain’s most successful brand, my organization is ZARA.

Based in La Coruna, Spain, Zara is Inditex’s main brand, (Fashion Forward -The Economist, 2012). Founded in 1975 by Amancio Ortega Zara now has stores in 73 countries. With estimated annual revenue in excess of 7 billion Euro, Zara has over 1700 stores worldwide, (Wikipedia, 2013). Zara has been described by Louis Vuitton fashion director as “possibly the most innovative and devastating retailer in the world”, (Wikipedia, 2013).

WHY ZARA?

I have used 4 suggested “superior performance” indicators to motivate my choice of Zara:

1. Competitive position:
Zara has a competitive edge against its rivals such as H&M, Gap, Benetton and Mango by producing fast fashion. Its extremely quick to know what is selling, and with this information they put the right products on shelf for customer purchases. (Pearson, A)

2. Financial Performance
Zara has defied the economic recession and reported growth through tough financial times. In 2011 sales grew by 10% and EBIT was 1.7 billion Euros. (Inditex 2011 Annual Report). By comparison, Gap was forced to close 200 stores in the US in 2011, and saw a slump in profit by 19% in one quarter (Chang, A. 2011)

3. Brand Strength:
Zara is ranked 37th in the world by Interbrand (“the world’s largest brand consultancy”), with a brand value in excess of nine million dollars, (Ranking the Brands – Best Global Brands). This exceptional ranking is testament to Zara’s strong brand.

4. Speed of international expansion:
International expansion of Zara started 5 years after its founding. (Wikipedia, 2013). International expansion continues with Zara opening 107 stores in 2011 alone. 30 of these stores were in China and 2011 saw the expansion into 5 new markets: Australia, South Africa, Peru, Taiwan and Azerbaijan, (Inditex 2011 Annual Report, p.27).

ZARA’S MARKETING CONCEPTS

Out of the 6 main marketing philosophies, the 3 most relevant concepts have been identified for evaluating Zara.

1. The Production Concept

The production concept is “the idea that consumers will favour products that are available and highly affordable”. The concept suggests that organisations should then improve efficiency of distribution and production (Kotler et al. 2013p.10), Zara creates cutting edge and stylish affordable fashion purchased by the cost conscious (Business Thoughts, 2011).

Zara products being affordable, it focuses on distribution efficiency and production, through an controlled distribution and integrated supply system. It takes an average of 24 hours (Europe) and 48 hours (America/Asia) for goods to arrive in store from the time the distribution centre receives an order. Production is efficient considering it take as little as two weeks to have a new product on the shelf. Production and distribution efficiency enable Zara to introduce around 30,000 items a year, competitors average of less than 10,000 (Kotler et al, 2013. Zara: Fast Fashions – Really Fast).

2. The Product Concept
The product concept maintains that “consumers will favour products that offer the most in quality, performance and innovative features” (Kotler et al. 2013, p.10). An organization following a product concept should focus on continuous product improvement (Kotler et al. 2013).

Zara follows this philosophy by constantly evolving. Store managers watch their target market identifying what is selling and ensuring they have the latest fashions in store (Kotler, et al, 2013). Zara demonstrates it values innovation and performance of its products by offering a vast variety of designs that are fashion forward to keep...
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