Zara was established in the year 1975 by the two major founders of the organization Amancio Ortega and Rosalia Mera as a family business operator in the city of Spain. They have designed to create a lookalike product of other brands in a low-priced strategy. The business strategy was highly appreciated and gained immense customer response within the Spanish community. Later they expanded the business operation in different parts of the world with the introduction of the ‘fast fashion’ strategy. The sale of the brand was enhanced and the market capitalization also increased sharply.
The report highlights the marketing strategy of Zara. It highlights the position of Zara in the market of fashion industry and the various opportunities and threats available to them to expand its overall operation. Further, the STP strategy of Zara has also highlights which will evaluate the targeted customer and their current position in the market. The 4P marketing strategy has also been evaluated in this report. Towards the end, further recommendations have also been provided which will help the organization to attract new customers and strengthen its position in the market.
Fig: 1 (Introduction of Zara)
(Source: Luz et al., 2021)
Zara’s positioning in the market
The company highly targets the young and new generations. They have also designed their approach in a modern and charming manner towards the fashion industry. They have understood the requirement of the customer that they want trendy but fashionable items to wear. Thus, Zara sharply provides the latest, fashionable and trendy design with a low budget strategy (Luz et al., 2021). The fabric used in the clothing items are also of explicit quality and can be used easily for one season.
Comparing to the other competitors in the market, Zara provides a larger variety of designs and styles with more than 450 million products in a year. They have a design for each season and it is even faster. Typically, women used to change their outfit design more often than men and thus Zara changes their collection every two weeks.
With the immense understanding of the customer preference and providing them with a new and outlook fashion strategy, Zara has successfully positioned itself in the market with the help of stylish and fashionable design that changed frequently within a fortnight.
Fig: 2 (Zara’s positioning)
(Source: Shen et al., 2021)
Environmental Analysis of Zara
Zara is a leading fashion industry in Spain and is dominating the market of Spain and other parts of the world. It is important to analyse the working conditions, surroundings of the industry, competitive advantage and various other influencing factors that will impact the business environment in the long run (Shen et al., 2021). The section will also highlight the various opportunities and threats available to the organization in the present scenario.
Zara has expanded their business operation in different parts of the world. They have also understood the importance to conduct an intense environment for the expansion of the business operation and setting goals for the decision-making process for the future of the organization (Tseng et al., 2021). Therefore, a PESTLE analysis has been presented below:
Political factor: The political factor is mainly composed of the government officials who form the political conditions of the country. The government of a country plays an important role in the functioning of the organization in order to create policies for the expansion and overall governing of the business. Zara needs political support from other countries of the world to expand its business operation.
Economic factor: From the very beginning of the business, Zara has opted for the use of single currency only. Thus, the various fluctuation in the business environment and the world economy has not affected Zara in any of the recession (Frantz-Murphy, 2021). They are opting to deal in only single currency only i.e., dollar. Even the market and political condition of Spain is also very stable which helps the organization to successfully establish its business and operate independently.
Environmental factor: Zara has faced a lot of social influence in Spain and is successfully operating its business in Spain. The rich and heritage style of Spain with full of artistic colour and the tourist environment has helped the company to attract new and influencing customers with satisfying design and excellent quality materials. Zara also promises to change their design every time when the visitor visits the stores and is also away from any cultural roots.
Technology: The Spanish retail company is updated with technology. Whereas the competitors are introducing technology in the manufacturing and sales enhancement, Zara is moving towards an eco-friendly drive. They have simplified their manufacturing process to divide the work into a simpler arrangement where the machines works and the final assembly is done separately by the workers.
Legal factor: The government of Spain has formulated new rules to promote the industrial development of the country. They have also safeguarded the business transaction and the logistic support with their rules to provide support to the business organization to expand with open transaction method and full support to the employees working in the organization.
Environmental factor: The environmental factor consists of customer, competitor as well as the internal factor that works together to formulate their business environment. The business growth and expansion process of Zara has been supported by favourable events it is also important for Zara to take new initiatives to enhance their overseas operation and formulate a new strategy for growth and expansion (Pei et al., 2021).
Zara is known for its fresh design and latest fashions which attracts the attention of the customer. The company always create an extensive design for their customer within a period of two weeks. They do not invest in the advertisement, yet the company has become one of the powerful retail brands of business throughout the world.
Fig: 3 (PESTLE of Zara)
(Source: Pei et al., 2021)
Opportunities for Zara
E-commerce store: Zara can take the advantage of online purchasing trends. They can make their clothing items available on their website for purchase for a large group of audience (Adeswari, 2021). The e-commerce store will hike the sale of the product and enhance its overall business operation.
Backing up the flagship design: It is one of the top traits of the business to retain their top-selling products which customers can purchase whenever they enter the shop. Zara must have to retain certain products which will enhance their sale and create a brand identity.
Expanding potential market: It is important for the company to raise the potential demand of the customer. Zara is one of the popular brands in the world and its growth potential is also expanding (Collins. 2021). It is important for the company to grow the potential market with capitalization approach and status symbol design that customer loves to wear in their extensive party wear style.
Threats for Zara
Lower advertisement of product: The Company do not market their product in any advertisement platform. They always keep rotating their design every fortnight which makes it difficult to post anything in the advertisement (Hadavand et al., 2021). They will have to come up with a certain suggestion which will help them to reflect their design and demand in their market to attract more customers.
Competition: Zara is not the only designer in the market with an extensive range of products but it also has some other competitors that have come up with an extensive design and superior marketing strategy (Díez et al., 2021). Brands such as Mango, Vero Moda, H&M and others have provided huge competition in the market and has led to a saturation in the profit margin and extensive design.
Reach: Zara also needs to increase the reach of the customer to their store. They can also represent their designer collection in the Asian market for display which will help them to attract new customers (Meredith, 2021). The missing volume of Zara will increase tremendously and the need for penetration will enhance the overall marketing strategy.
STP Analysis of Zara
The STP analysis is using by Zara in their corporation which stands for segmentation, targeting and positioning. It is s three-step method that permits for the increment of a special and actionable process of marketing (Badv et al., 2021). The main motto of the corporation by using this strategy is to section their consumers. After that, they have to create a target on that sectioned consumers as per their choices and habits and along with it, they have to position adjustments in the brand and marketing strategy to quarter their wants and anticipation.
The only reason that this segmentation-targeting-positioning method is very fruitful is that it collapses the boundary of the market which were in a smaller portion. This strategy makes the process very easy and also grow the special approach for reaching and also motivating the possible consumers (Moreira et al., 2021). Zara is very focused on their consumer's tastes and preferences and for this, they are using this generic marketing strategy and not using any appealing method which is not effective for their consumers. The description of the STP process is as follows-
Segmentation- This method is for the recognition of distinguishing and common qualities amongst the people of the market. They will permit the corporation to increase more applicable and engage with the market operation. If the corporation will engage with their consumers and will know the exact demand of their consumers (Mohan and Valada, 2021). Then this will be more profitable for the corporation along with it, it will create a huge impact on consumers as well, as the corporation is thinking for their needs. In this way, the corporation will be able to create the exact product for their grown-up by which the satisfaction level will be kore and by this, the corporation will also be able to create a good revenue in the market.
Targeting- The next stage is to look at the section which is to be taken to recognize the best chance to grow the business. First of all the corporation have to see at the size of the section whether it will be fitted in their strategy or not. After all, the opportunity of marketing has to be larger enough to run a huge campaign. Otherwise, the effort will be worthless. The next process is to see the significance of the marketers who set the section aside (Winters et al., 2021). This will be the core part of STP marketing. Zara has to make sure about the opportunity from a fiscal basis. The revenue or the profit which is to be expected by the corporation has to exceed the additional marketing limits which are needed to execute the further plan of the corporation. Lastly, the corporation has to look at the sections which are accessible for the corporation. The corporation has to keep in their mind about the age, gender, section while marketing their product for the consumers. So that everyone will be satisfied with their products
Positioning- This step will help the corporation to meet up the needs and requirements of the consumers. The corporation is already having data about the needs and types of products that people ant for Zara. So the corporation has to keep this in their mind along with the taste and preference of their consumers of all the different ages. The corporation has to focus on its quality and price as well (Malhi et al., 2021). As everyone will not be able to buy Zara products, so the corporation has to think for them as well be offering some discounts to them. Now Zara is everywhere in the world. So the corporation has to satisfy all types of consumers. For this, they first have to do the survey by which they will know about the exact want of consumers.
The corporation is using the best material for the products by which the price of the final product will be a bit higher. If the corporation will think about this as well then definitely they will manage their price for the normal people. Some people are habituated to use the good products with good quality so they can prefer this corporation.
Fig: 4 (STP of Zara)
(Source: Malhi et al., 2021)
Marketing Mix of Zara
The Marketing mix process of Zara has examines the brand with their framework of the marketing mix in which 4ps are indulged which stands for Product, Price, Place and Promotion. There are many more strategies are there like promotion planning, the approach of pricing etc. These strategies also helped the corporation to establish itself as a strong name in the market (Kova? et al., 2021). These strategies helped Zara to create a good brand in the market by which they can achieve their goal in a short time. The description of the 4ps are as follows-
Product- Zara is a good brand that is leading the world in fashion and luxury labels. Zara created products for men, women and children. The corporation offers jeans, tops, trousers, skirts, T-shirts, shoes, bags and other accessories. All these are the products which are offered by the corporation to the society (Cross, 2021). It is like a one-stop solution for all the people where they can buy formals or casuals. Zara offers many styles of clothes to their people. The corporation produces at least 10,000 new designs every year. The products of Zara are like a hit end fashionistas with masses. The corporation is much focused on the modern designs also ensures it to keeps it refreshing their products to their consumers.
Price- The products of Zara is very high in fashion and gives tough competition to others. Along with it, the corporation offers low price products to their targeted consumers. In their international stores as well, Zara offers the same products everywhere. The corporation follows the strategy of low pricing so that everyone can buy their products. The corporation does not believe on spending bulk of money in advertising, instead of it, they believe to invest in to buy good raw material. The brand prefers the high quality of products at a low price. Zara sets the market-based prices to their products so that they can give tough competition to their opposition. With the help of this strategy, they can create good revenue.
Place- Zara is having their store across the world. They are having their stores in 90 countries with more than 2200 outlets. The corporation also uses the online platform for its sale of products. All these things can cover the place of the marketing mix and also the distribution process of the brand. It is a vertical combined corporation. The supply chain of Zara is what offers them inexpensive recompenses (Goldrick-Rab, 2021). The corporation uses its unique mode of business to bring new designs of products and fashion to the market in a very short time if possible. The manager of the store send the product’s orders to the headquarter twice a week and is based on their amount of sales’ information of the store and their preference. Almost all the stores of Zara are owned by them and are not franchise. The stores of Zara are in posh places and are very spacious and modern with excellent lightings and design.
Promotion- Zara barely spends their money on advertising. Even their owner will never give an interview on any channel. The corporation is not engaged with any campaign. That is the reason that no advertisement will be seen on television (Hackley and Hackley, 2021). Although, their outdoor advertising is very eye-catching and they focus on the fashion trend which youth prefers the most. The corporation prefers mouth advertising and uses social media for its products. The societal reach of Zara is very excellent. The corporation is having 30 million followers on Facebook and 45 million on Instagram page. The very interesting fact of the corporation is, they never put any logo on their products (Luquis and Pérez, 2021). The corporation prefers to spend most of the profit on the opening of new stores in new places. The corporation loves to spend its revenue on real estate and the decor of the stores. The corporation is very passionate about their new launches by which they create a good profit.
Fig: 5 (Marketing Mix of Zara)
(Source: Luquis and Pérez, 2021)
Recommendation of Zara
To offer the strategic recommendation which will be offered by Zara with maintainable inexpensive benefits. There are some of the strategies which bring to the South African market is inclusive of many strategies which are recommended to the corporation. The E-Commerce, active wear, their sustainability creativity ‘Closing the loop’ and ‘Join Life’ is like an interactive fitting room with the planned features. The description of the recommendation are as follows-
E-commerce- The websites of E-commerce is the core part of their planning which is brought to the South African market. Although, Zara is having twenty-seven online stores out of ninety-three in the market in which they are operated. The online store is a great platform to expand the business. This platform is very helpful for people who live alone or working. The people who are super busy in their life and want to buy some clothes, usually these people use online platform. For this, they will prefer branded places so that they can get good products.
Activewear- The Corporation is very much concerned for their people’s lifestyle. The people are now very focused on their health and wellness by which the demand for athletic wear is been increases. These types of clothes are not available in South Africa that is why sports apparel is been increased by 6% alone in last year. It is been seen that sportswear will reach up to R70 billion in the year 2021. Zara will create a huge revenue if they will go with these recommendations.