Zara varies in price, promotion, and positioning from some of its main competitors, H&M and Gap. Zara uses very little of its budget on promotion and marketing and relies more on its store windows to advertise its name to the public. Zara also places stores in busy areas and predominantly in more affluent areas in order to attract the most customers who will have the financial resources to purchase clothes from them. Zara’s store windows are designed to capture and entice customers and have won numerous awards. Zara produces “knock-off” clothing based on designers whose creations have just been seen on the runway. This enhances Zara’s reputation as trendy and modern unlike Gap who concentrates more on basics in apparel. Zara’s prices are generally lower in Spain and higher in France because the French are willing to pay more for fashion. Zara’s fashions are priced as luxury items in the United States and in Japan. Zara targets mostly fashionable younger people who watch style trends.
Zara sources about 50% of its garments from thirds parties. Unlike usual retail supply chains, Zara outsources from inside of Europe for its garments and uses a small portion of Asia and around the worlds, which mainly focuses on basics. The others 50% of items are manufactured in-house using Inditex related fabrics and dyes. This in-house manufacturing gives Zara the advantage to create entire new lines in just a couple of weeks and allows them to be responsive to the market, by either stopping production of certain items that are not succeeding or by remaking popular collections. This gives Zara the advantage of a higher turnover rate compared to Gap and H&M. Part of Zara’s strategy is to look scarce to the customer so they feel compelled to buy an item now rather than later. They also encourage a feeling of exclusivity about clothing items.
Zara may have an issue when in competition at an increased scale in international markets because many companies are using...
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