Marketing assignment on Zara Fashion Companies

Chapter 1

Introduction

Zara is considered as one of the greatest global fashion companies. This belongs to the Inditex as one of the greatest groups of distribution in world. Its specific model of the business is consumer –based and comprises the distribution, manufacture and selling of the products with the help of extensive system of group owned retailers. It has been examined that designers of Zara are continuously tracking the preferences of customer and placing the orders with the external and internal suppliers. The 3 product lines of Zara for men, women and children had the creative team comprising of sourcing specialists, designers and personnel for product development. It is viewed that in year 2001, Zara operated approximately 507 stores in different countries throughout the world, comprising Spain with around 488, 400 square meter of the selling region and using 1050 million capital of the Company out of which the network of the store is responsible for around 80%(Dessain, Mcafee & Sjoman, 2004).The culture of Zara believes in fast fashion. The devise team of the Zara has skills to produce the clothes according to the needs of the consumer at the current moment (Peter, Heywood & Kliger, 2002). They search current famous trends and ask from consumers what they actually want as compared to predicting future trends. Moreover, Zara launches and produces approximately 10, 000 new designs yearly. On the other side, the Company maintains the innovative, updated and corporate website where basic information is given about the Company in regards to store outlets, collection and product catalogue (www.zara.com.).

SWOT AnalysisStrengths

The Company offers strategy of cost leadership with the aim to maintain the efficiency and reduction of the cost on the products.
Quick delivery of new design, products and trends
The Company utilizes centralized system of the distribution
The Company is required to enhance on its development and research process.
Zara must launch online market for shopping because in current time electronic shopping is convenient and easier for users.
The Global and Local competitors of the fashion industry
Fluctuation in rates of exchange
Product cannibalism
Inadequate Vertical Integration

Weakness

Opportunity

Threats

Findings – Chapter 2

Historical or Past Context

It has been evaluated that Zara was established in year 1975 by Rosalia Mera and Ortega. In the end of year 2001, Zara operated approximately 507 stores throughout the world comprising Spain (Dessain, Mcafee & Sjoman, 2004).

Factors for the growthCustomers are getting more educated and have higher demands and aspirations

Consumers want unique and stylish clothes for increasing their self respect.
Designers of Zara continuously tracked preferences of the customer and executed orders with the external and internal suppliers.
The small cycle time minimized intensity of working capital and facilitated constant manufacturing of the new merchandise.

It has been evaluated that under Castellano and Ortega, Zara worked nationally in 1980s by diversifying in adjoining markets. The Company reached the Capital Spanish in year 1985 and operated stores throughout all cities of Spanish with approximately 100000 inhabitants. In 1990, Inditex initiated to attach with another retail chains with the help of internal development and acquisition. On 23 May of 2011, Inditex went public and listed on the stock market of the Spanish. At the starting of year 2002, Inditex started 6 separate chains such as Zara, Pull & Bear, Stradivarius, Oysho, Bershka and Massimo Dutti (Dessain, Mcafee & Sjoman, 2004).

In 1981, British Company had started and offering footwear, accessories, clothing and products of home and gave competition to Zara.

In 1947, one more competitor had also cum with the name of H & M which owns approximately 70 businesses in around 50 cities.

PESTEL Analysis

Political Factor

The political factor considers to the policy of the government for involvement in the legal and economy aspects (PESTEL Analysis of the macro-environment, 2010). Zara is required to understand the system of trade for importing the products and goods in different countries.

Rioting in region of England, 2011.
Top shop was shut down throughout London because of rioting. In simple words, closing of shops means losing something on the trading house.

Economical Factor

The economic factor comprises changes in the taxation, rates of interest, inflation economic growth and rates of exchange (PESTEL Analysis of the macro-environment, 2010). In current time, to compete well with the Competitors, the Company must aware of duties, tariffs and GST. They are related upon categorization of the valuation, goods and origin of the country.

In 2008, shops were closed because of the recession.
Import and transportation cost is impacted by the weak pound
Overseas competitors

Social Factor – This factor is very important because alterations in the social trends may affect the demand for the products of Zara and the willingness and availability of the people to work. The Company is required to work as per the current trend and fashion and fulfil the demand of the customer because of the changes in choices of the generation.

Celebrity endorsement
Sizes of clothing – 6-16
Maternity range, baby range and Tall range
Discount & concessions.

Technology Factor – It is very clear that technology has become innovative and advanced in the current world. Bar coding, computer related designs and online shopping are sort of improvements to the business (Zeithaml & Bitner, 2003). In, fact technology may minimize the costs and enhance the quality. These developments may benefit the consumers of Zara and the organization through effective source of the technology.

Applications on phones, like blackberries and android phones.
Interactive maps
I Pads used inside few Top shops

Environmental factor

It has been examined that Earthquake in region of Japan impacted several factories to be destroyed, comprising Honda, Nestle and heavy industries. The earthquake happened on 11 March 2011 around 14.46pm.

Legal Factor

Media fascination from the copyright issues
Top shop is purchased by Arcadia
It is viewed that Top shop has fair section of online in which range of dresses varies from £40-£60.

Chapter 3

Current and future influence of the Trends

It is viewed that the Zara Company moves towards greater comfort, design and quality. The Company believes in manufacturing of sustainable products with the help of fair fabrics and recycled materials.

Refinement
Reality

In, fact creative teams worked on the products and goods for the recent season by making constant variation, diversifying on the successful items of product and constant in-season formation and development and choosing the product mix and fabrics which could be the foundation for the initial collection (Gereffi, 1999). The basic concept of the Zara is to keep production, design and production process which shall enable Zara to react promptly to shifts in demands of consumers. Zara believes in three fundamental components such as concept, value drivers and capabilities. Zara may provide choices in more recent fashions as compared to the competitors. It produces merchandise to the stores almost twice a week. Fresh produce and moving in accordance with the fashion trend are just accurate for creating the smell of the success. In, fact markets of the Western European moved to Euro in starting of year 2002, and simplified its tags of prices for listing the prices in domestic markets so that the specific garment can be sold (Peter, Heywood, & Kliger, 2002). The devise team of the Zara has skills to produce the clothes according to the needs of the consumer at the current moment. They search current famous trends and ask from consumers what they actually want as compared to predicting future trends. Moreover, Zara launches and produces approximately 10, 000 new designs yearly. On the other side, in terms of the communication tools, the Company maintains the innovative, updated and corporate website where basic information is given about the Company in regards to store outlets, collection and product catalogue and any other information is also posted. It can be said that products, style and culture of the Zara reflect the business and consumer needs.

(Image 2)

Competition

The unique approach to the marketing and advertising is the extra factor throughout their model of business which adds to its success. The main feature of the Zara is to offer items of latest fashion at affordable prices which ultimately affects the choices of customers and comes under the sociological factor.

The major concern faced by the company is the global expansion and its scope. The Zara Company thinks it is required to diversify globally. The Company is also faced with the diseconomies of the scale. To resolve this issue, Zara has started center of second distribution.

It has been examined that production cost and strategic partnerships offer competitive advantage to the business strategies of Zara in relation to competitors (Australian Bureau of Statistics, 2010). Zara does not utilize Asian outsourcing as its competitors are following. In, fact communication and information protocols are entirely distinct in relation to its competitors. This example highlights the feature of economical factor of PESTEL analysis because strategic partnerships and cost of the production offers competitive advantage to the business of Zara.

Zara’s different approach to the development of the product is influential to its success. This example highlights the feature of technological advancement in products of Zara in order to sustain the competition (Smith, J 2007). With the help of technology, Zara is able to deliver large orders of the stock on time in comparison to the competitors.

Chapter 4

Conclusions and Recommendations

Recommendations

It is advisable to Zara to keep its sustainable growth and development for seeking innovative opportunities in an apparel market.

Zara must develop the centre of central distribution for decreasing the logistics to deliver the fashionable products in the faster manner.
Zara should offer specialized goods for several geographic locations throughout the similar city.
The Company is required to work as per the current trend and fashion and fulfils the demand of the customer
The Company must continue to innovate themselves to remain creative and fresh in the Fashion Industry.

Conclusion

At last, it can be concluded that Zara has potential for the sustainable growth because of its capability and competitive advantage to experience the challenges of fashion industry. The Company maintains its income elevated and has unique and strong model of the business and has several opportunities for the diversification in the apparel industry. It has been viewed that Inditex is developing new procedures for the diversification. The basic concept of the Zara is to keep production, design and production process which shall enable Zara to react promptly to shifts in demands of consumers. It is advisable to the Company that they should continue to innovate and re-invent themselves to remain fresh and creative in the fashion and apparel industry. In current time, numerous companies are viewing to Zara as new standard of the industry for how to operate the retail business.

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