The fundamentals of marketing include the core concept, which is included in the marketing strategy. The core process of marketing includes four things: Price, product, place and promotion. The entire idea is based on business activity which includes selling, promoting, advertisement and research. This essay aims to illustrate the process and stage of marketing of Zara. The objective is to determine the segmentation target position highlighting the marketing mix of the company. SWOT analysis has been used to understand the competitive force towards maximization of profitability. This helps in understanding the competitiveness of the business and identification of strength for further expansion.
ZARA is a Spanish apparel company which specializes in fast fashion. It was established in 1975 and now has over 2,270 stores worldwide and present in the U.K., US, France, UAE, Brazil and more. The company manages over 20 collections a year and is recognized to be the world's largest apparel retailer ("Zara - inditex.com", 2021). It has stores for men, women and children’s clothing. The products are supplied as per the latest customers trends. The majority of customers of the company range from 18 to 30. The headquarters of the company is located in the Municipality of Arteixo, Spain.
Discussing the process and stage of marketing
The process of marketing undergoes a number of stages, starting from the Seed stage to the maturity stage. There are a total of five stages in the process of marketing. Each stage required proper analysis of the market, trends, customer likes and dislikes. The company in the initial stages faced lots of ups and downs, but with the help of a proper selection of methods, it is standing strong and has a lot of opportunity for the expansion process.
Stage 1 is called the development stage, where the business idea is developed and tested to find if the idea will make a difference. As per Bauer (2021), in early 2000, the company opened its first store in Singapore and Japan. Here, the company focused on customer value, which helps determine the position sector, and the communication is made in regards to understanding the buying choice of the customers.
Stage 2 is called the start-up stage, where the business finishes the development of products and moves forward towards tweaking the products. Zara established itself under Inditex, and the initial investment was barely anything, but the company had a vision of creating a change in the clothing line of the customers. The initial manufacturing of clothing line-up was successful in Spain and slowly gained a lot of attention from the public.
Stage 3 is called the growth stage, where the company generates revenue. During the beginning of 2000, Zara started to expand into other countries like Mexico, France, Sweden and many more. It was known to be producing high-quality products and was appreciated by the community (Hosen, 2020). It is through a perfect selection of methods that have made Zara build up its massive business empire, which is making the company earn over 21 million USD on a yearly basis.
Stage 4 is called the expansion stage, where the company receives a lot of investments and grows at an exponential rate. It was during early 2005 Zara received investment from the public offering and Inditex group. It made its way towards more expansion and over 7,000 stores over the world (Jones and Sherman 2019).
Stage 5 is called the maturity stage, where a company is successful in the expansion process, and the business reaches on top of the industry. Zara has become a successful clothing line up; today it is worth over 18.4 billion USD ("Zara - inditex.com", 2021). Every day the company is serving millions of customers with its clothing line up.
Understanding the role of the marketing environment
Marketing environment refers to the combination of internal and external factors which affects the business while establishing a good relationship with the customers. In order to understand the role of the marketing environment, PESTLE analysis has been used. Pestle analysis is a framework that is used in tracking the environment in which the company is operating.
Political factor deals with the law and order that Zara must follow while operating its business out of the European Union. According to Su (2020), the entire European trade agreement is in favour of the company as it makes it easier for the company to import raw materials and sell them to the entire world with little effort for relatively low costs. The free-trade policy of the E.U. is beneficial for the company.
Highlighting the economic policy since Spain has the highest unemployment rate in Europe, it is making the company get cheap labour. People have a misconception that products offered by Zara are expensive as the company sells relatively affordable clothing products to the customers.
The socio-cultural factor states that Zara is a fashionable brand for most shoppers. The company delivers high-quality products to its customers. The strong brand of the company allows it to enjoy high-profit margins. As per Aftab et al. (2018), online shopping trends play a vital role in the e-commerce business. The company has got an opportunity to connect to customers over the globe via online platforms.
The technological factor states that Zara is among those brands that uses technology in the expansion process. It has got both audience and the money to get the most out of the data usage. This helps the company have a better appeal and reach to the customers; with the help of a successful data analysis process, the company can become a powerful business ("Zara - inditex.com", 2021).
Legal facts state that the company faces copyright issues because the company is required to operate within the bounds of the law. The designs made by the company often face copyright issues from Balenciaga and Adidas (Jiang, 2020).
Highlighting the environmental factor, the fast trend of fashion is termed to be wasteful, as the products are designed to last for years. The rapid change in trends leads to a shift to the style of clothing which the customer prefers. This is because Zara is required to regularly update the stocks as per the trends, and most of the time, thousands of stocks get cancelled due to change in fashion.
Situation analysis model
The SWOT analysis is a business analysis tool used to understand a company's internal aspects. Here, the SWOT analysis has been done on ZARA to identify the company's strengths, weaknesses, opportunities, and threats.
1. The company identifies the trends and focuses on designing and selling clothes as per the needs of the customers. The active management system of Zara helps in keeping the supply chain up in the running (Duoyan, 2021).
2. There are over 700 highly skilled designers who analyze the trends and design clothes. The entire team creates over 50,000 creatives a year. The entire team takes time of three weeks in the designing process,
3. the company has a well designed online website that has over a million visits a month. Inditex has invested over 3 billion USD in boosting up the online sale of the products.
1. The rapid change in the fashion game is making it difficult for designing new products for the customers. The entire process of designing to production required time, and the treads are very quick to maximize sales.
2. Zara is facing difficulty in expansion to Asia-Pacific and the U.S. as there are only 99 stores in the U.S., which counts for just 4% of the total number of ships the company has opened.
3. The company did face many legal charges regarding the treatment of workers in Myanmar (Duoyan, 2021). The company required more credits as there lies a massive gap in regards to the creation of a code of conduct.
1. The company’s most of machinery of is automated and parcel as it deploys the latest tech for improvement in the manufacturing process. This helps in making improvement in the rapid delivery cycle. It delivers the trends from start to finish within a span of two to three weeks.
2. It is supporting consumerism as the resale value of the company is over 28 billion USD today, and there is a high chance of growth to 64 billion in a span of five years (Duoyan, 2021).
3. influence marketing is termed to be an effective strategy that helps in the promotion of the brand. Research says that 60 micro influences have been able to engage over 8 million people.
1. The rise in competition from other fashion brands like Gucci and china’s fashion giant Shein is making it difficult for Zara to expand more in the Asian market.
2. The price war is making the company is face issues that are leading to vulnerability to imitators. The rise in the price war is leeching off Zara’s product line.
3. The government regulation is making it difficult to operate during the lockdown period. In Spain, there are a total of 13 factories, while the Spanish government is allowing the company to operate only three factories in the lockdown period.
Determining segmentation targeting position
Segmentation targeting position helps in the identification of the targeted group which Zara aims at selling its products. In regards to segmentation, the brand differentiates its products one in every season. The company launches new products on a span of every two weeks, and this reflects the fashion brand in regards to the customer taste. Feiglová (2019) stated that the product line up consists of 58% of women's wear, 20% of children's wear, and 22% of men's wear. The target range of the customers is from 0 to 45 years of age. Zara has a proper analysis of the market as it knows that a woman in her teenage living in a large city during her thirties reaches for luxury products. Regarding positioning, the company offers high-quality products that reflect the fashion code as the customers are provided with more desire to purchase sensible prices at an affordable price.
Highlighting the application of 4 Ps of the marketing mix in the context of Zara
Product, place, price and promotion are included in the 4 Ps of the marketing mix. It includes the four key elements that help in brand promotion, adding unique value and helps in standing out of competition in the market.
In regards to the product strategy, Zara is leading in the sale of luxurious products, and its collection includes women, men, and children. The company offers high-quality T-shirts, shoes, bags, tops, skirts, trousers, jeans and other accessories (Feiglová, 2019). The company launches over 10,000 new design on a yearly basis. The products of the company are hit with high-end fashionistas. In order to provide the best fashion trends, Zara teams up with local talent.
The pricing strategy of Zara is unique as it has both low price and high price clothing for the customers. It mainly follows the low pricing strategy and does not spend lots of money in the advertisement process. The company follows the rule of country-specific pricing strategy, and the company makes a market-based pricing strategy to set the target price of customers.
Highlighting the place strategy, the company has an enormous reach in over 88 countries. There are a total of 6500 outlets. In addition to this, the company also sells products in online retail stores (Feiglová, 2019). The company's supply chain provides a competitive advantage in bringing up and distributing new products to its customers.
The company barely spends on the promotion of the brand. Zara is famous for behaving like a press-shy (Hosen, 2020). The company never gets itself involved in flashy campaigns. In addition to this, the advertisement of Zara is not visible on television. The company promotes itself via social media, and it has over 2.5 million followers on Facebook and a little over 15 million followers on Instagram.
From the above study, it can be concluded that Zara is a well-established fashion company that serves a million customers on a monthly basis. In the initial establishment, the company did face a lot of trouble due to competition from a cheap clothing company, but the vision for making a change in the fashion industry helps the company grow at an exponential rate. Today, it earns over a billion dollar revenue and employs over a hundred thousand people in the company. Zara has successfully created a valuable brand worth over 16 billion USD.
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