Founded by Armancio Ortega, the first Zara shop was opened in downtown Coruna in Spain in 1975. With this brand, he wanted to create stylish clothing inspired by the great fashion houses but at affordable prices. The brand proved to very successful and led to the creation of the company Inditex to run it. The Zara subsidiary of the Inditex Group represents 66% of its activity. In 1988, Zara extended its operations aboard and opened its first non-Spanish store in Oporto, Portugal. In 1990, the brand crossed the borders into France. Today, there has over 1,450 Zara shops worldwide and the brand is present in 77 countries.
Currently, Inditex is the head of several brands (Bershka, Pull and Bear, Massimo Dutti, Stradivarius, Oysho, Utoquai) operating on the same principle: fashion for all. In 2009, the brand recorded sales worth 7,077 million euros worldwide, with France accounting for 605 million euros; this country remains the second largest market of the Spanish brand. Regarding the Inditex group, it has 4,607 stores worldwide and operates in 74 countries. It employs over 92,000 people. In 2009, its sales were estimated at 11,084 million euros, an increase of 8% from a year earlier and net income was 1,314 million euros. Last year, 68% of its sales were generated from outside Spain.
The Inditex fashion philosophy is "creativity and quality design together with a rapid response to market demands". Despite these positive results, some concerns are beginning to appear, hence the following problem: How can one resist competition in the textile sector in a context of globalization? In the first part, we will conduct the internal analysis along with the external analysis of Zara.
[...] Placing oneself in the midst of the core marketing strategizing action for a big company such as Zara was a highly beneficial experience. Although theorizing and formulating medium term strategies was educational, I remain apprehensive as to how much of this theoretical exercise can be translated into practice. Formulating this marketing plan showed me the veritable responsibility a marketing manager takes upon himself and how his actions are responsible for turning around the transforming the fortunes of a company. Conclusion Zara has been successful beyond all expectations since its creation in 1975. [...]
[...] To achieve this objective, Zara will have to encourage consumers to spend more than usual. The specific objective is to increase purchases from existing customers by 25%. For example, a customer who purchases clothing worth £300 annually from Zara should be encouraged to spend £375 by the end of the next 12 months. To accomplish this, Zara can use several tactics: The Spanish company can launch a loyalty card that will allow customers to gain membership and earn points representing discount levels. [...]
[...] - Fourth, it must strategically plan the integration of the new product line in the existing economic model External Marketing Audit 2.1 Macroenvironment PESTEL analysis Zara has a highly efficient logistics system based on software which it developed itself, owing to which, the time between placing an order by the distribution centers and the delivery of goods is on average 24 hours for stores in Europe and 48 to 72 hours for stores in other parts of the world. This low response time constitutes a major competitive advantage that allows the brand to distinguish itself from its competitors. [...]
[...] The marketing plan may be designed to save or protect existing products instead of developing new ones to meet opportunities.' (Wisner pg71) From this matrix, Zara can adopt four different strategies depending on the situation it faces. Strengths Weakness Vertical integration of its Centralized distribution system business has made Zara 12 times faster than its competitors Single distribution platform Produce trendy clothes for all sizes including small and big sizes Euro-centric model International presence (77 countries) Inability to acquire economies of Minimum advertising expenses scale Selected locations (only in big cities) Has control over its entire production Is very competitive adaptability of resources according to its environment Opportunities Threats Responding to current industry Global competitor trends Needs to increase brand value Invasion of low-priced brands from Saturated industry Asia. [...]
[...] Undeniably, Zara uses the marketing of scarcity due to frequent renewals of the offer; when the customer enters Zara, they are obliged to purchase the product which catches their fancy as they know that the particular product will not be renewed. Although Zara seems to have built a strong base for itself, it still has its own set of weaknesses compared to its competitors. Zara has opted for a strategy of local production; it does not relocate its production plants. [...]
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