Zara - The Fast Fashion Retailer - Case Study Example

Zara - The Fast Fashion Retailer 1.0 Introduction One difficulty that retailers have in today’s competitive business environment is the ability to use promotion effectively to build a stronger brand. Competitors regularly use ongoing promotions, of differing varieties, as a means of differentiating their business from other fashion retailers. When consumers are being inundated by different promotional materials and advertisements from competing retailers, consumers begin to realise their many buying options and it becomes more difficult to maintain brand loyalty with existing customers. This idea of defecting from one brand to another appears to be a genuine reality for many fashion retailers which makes integrated marketing communications (IMC) all that more important. IMC might be defined as utilising aspects of the promotion mix in a way that is effective and brings higher brand recall or loyalty to different consumer segments. In a best case scenario, IMC “reflects the ability of the customer to associate the brand with its product or service category or use, or to make some comparison with competitors” (Schultz and Schultz, 2004, p.18). The main objective of integrated marketing communications is to provide a series of promotional messages which are interdependent on one another to build brand recognition and higher customer interest over that of competing retailers. This paper creates a visual and written representation of IMC and applies this model to Zara, the fast-fashion retailer. 2.0 An integrated marketing communications model “Self-esteem is an important motivational drive for consumption involving both the acceptance and rejection of symbolic goods” (Banister and Hogg, 2004, p.850). Fashion merchandise is definitely categorised as symbolic goods as they represent different cultural beliefs and work as a means of consumers to identify with not only themselves, but with others in society as well. This is why integrated marketing communications are important for the retail industry as promotion can be customised which helps consumers to further find positive identity with their fashions, their social customs and the retail organisation which provided this merchandise. The components of IMC work together to consistently send the same message to consumer demographic groups. IMC represents an integration: combining business values with consumer values in a way that provides value to desired consumer demographics. “Developing this integration can be difficult, primarily because it demands an outside-in view…an understanding of consumer behaviour is then used as primary input into the strategic marketing plan” (Chandra, Cheek and Rai, 1999, p.2). What is meant by the outside-in view is that no successful IMC campaign can be achieved without having practical knowledge of what drives consumer behaviours and motivations at the macro level. IMC provides opportunities to gather this information to create an effective promotional campaign. 2.1 Public relations Retail or other business organisations require effective use of public relations in order to create relationship marketing with their investors and other key stakeholders (Nickels, McHugh and McHugh, 2005). Part of a successful promotional mix is recognising opportunities to use public relations materials, such as the press release or direct media contact, to enhance business image. Spotlighting certain internal improvements or new fashion designs on a routine basis is part of public relations in the IMC campaign. 2.2 Guerrilla marketing (Street marketing) This type of marketing is often an in-your-face promotion using representatives of the business in the consumers’ real-world living and professional environments to exploit the brand’s benefits. From a cost perspective, it “fields against the big-bucks/deep-pockets marketing bullies” (Cronk, 2002, p.1). This means that it is a low-cost, yet effective part of an integrated marketing communications strategy. These activities can include a variety of promotions such as using visible signs, publicity stunts with actors, on-street giveaways, and other promotions which deliver a brand message in an unorthodox method. 2.3 Direct Mail The current economic environment is creating a great deal of risk to many high-end retailers. Christian Lacroix, as one example, recently declared bankruptcy amid falling consumer interest and reduced sales created by the economy (The Economist, 2009). High volumes of competing retailer/designer business failures give companies opportunities to use direct mailing to reach their consumer demographics to improve response time. Dutta (2003) offers that the first step when assessing marketing direction is to choose an area that is important in saving costs or improving sales. Direct mailing information can provide consumers with up-to-date business and fashion information and can have certain discount incentives attached. During difficult economic periods, this type of incentive should be considered in the integrated promotion mix. 2.4 Trade show The trade show format provides opportunities to not only give the brand or fashions more visibility, it allows for opportunities to strengthen relationships with staff members. “Exhibiting is a powerful extension of your company’s marketing strategy and your people are the backbone of your company” (Friedmann, 2007, p.2). Employees have a genuine need for belonging within their working organisations and this need must be fulfilled before they can be superior contributors to business (or personal) objectives (Morris and Maisto, 2005). The trade show environment can allow for employees to become more important in the selling process and work more interactively with clients who will be seeking fashion advice from sales experts. Giving employees this sense of belonging will only strengthen their motivation to provide excellence in product and service delivery. 3.0 Applying IMC model to Zara Zara is known as a fast fashion retailer, meaning that the business is able to replenish its stores twice monthly, which is a business practice that is unparalleled in the fashion industry (Sull and Turconi, 2008). Zara is consistently benchmarked for their innovative and efficient supply chain and are able to provide fashion merchandise to their desired target audience, “a young, educated one that likes fashion and is sensitive to fashion” (Craig, Jones and Nieto, 2004, p.5). Zara relies on effective promotion in order to build higher consumer interest. The IMC model for Zara will include public relations, guerrilla marketing, direct mailing and trade shows. The following diagram illustrates the level of importance of each interdependent function of the integrated marketing communications campaign. The appropriate budget for each function is built on the percentage of importance for each IMC function: Zara is currently using strategic short-term sponsorships with companies like MTV for on-air promotion of different Zara fashion brands (Clarke, 2009). However, MTV is a rather trend-oriented company and the long-term success of partnering with the music video icon is not predictable. The desired target market of this company is the younger consumer, between approximately 16 and 30, and this market is known to be unpredictable and difficult to understand in relation to certain social and recreational trends. This requires a need to alter the existing promotion tools being used by the company and replace them with the new IMC campaign. Zara renews its inventory twice monthly, something other competing retailers have been unable to accomplish, helping it to increase market share (Jones and Kirby, 2002). However, the company does not promote these internal accomplishments and reinforce how well the business is able to outperform leading competitors in areas of replenishment and fast fashion. This again supports the need to adjust the IMC focus of this retailer. Much to Zara’s advantage, they are able to avoid heavy end-of-season discounting and are able to sell approximately 80 percent of their merchandise at the full price (Grichnik, Winkler and Rothfeder, 2008). This is something other retailers have been unable to accomplish, with discounting a regular business function on, sometimes, half of their in-stock merchandise. This marketing success should also be exploited in IMC literature to give the company a stronger brand image with their desired demographics. 3.1 Direct mailings The business will improve its sales if direct mailings are used to reach more clients. The business is just now launching its online sales divisions (Weaver, 2009) and can benefit from the exposure that direct mail will offer. The company will print its online information on this promotional literature and will offer discount incentives if the client explores the website and makes a purchase. These direct mailings will also describe internal activities and accomplishment of both the business brand and the staff, therefore giving consumers a window into what drives the human factors of fashion delivery. 3.2 Guerrilla Marketing Zara will send representatives into different professional and commercial districts with different Zara merchandise. Using a spontaneous, in-your-face advertising will link humour with the Zara brand name and also expose youth (or other niche groups) to Zara fabrics and styles. Various product giveaways will also be included in this aspect of the IMC to show customers that Zara is modern and also fits in with buyer lifestyles. “Sometimes it pays to be the public face of the company” (Owen, 2009, p.12). Guerrilla marketing gives customers an opportunity to interact with actual staff at the company, giving them more interaction and a forum to ask questions about the fashion company. Giveaways of merchandise act as incentive to respond to the street marketing concept. 3.3 Trade Shows Zara will coordinate its own trade show, utilising rental space in an operating district to spotlight different fashion merchandise. Various vendor booths with staff professionals or outsourced fashion expertise will allow consumers to have a hands-on experience with Zara merchandise. This forum will provide browsers with low-cost appetizers as a means to lure consumers to attend the trade show. One major competitor, Benetton, is now losing market share consistently to Zara. Zara’s sales are four times that of Benetton’s (The Economist, p.88). The theme of this trade show will be Watch Them Flop, which spotlights how Zara has managed competitive success over other retailers. Showing how Zara manages to thrive while others fail will reinforce that Zara is a strong brand and can provide significant value to its consumer groups. 3.4 Public relations Zara will utilise press releases twice monthly, highlighting different internal and external successes or business developments. These releases can be coordinated with the Associated Press or other news agencies. Offering dedicated information about the real-time activities and accomplishments at Zara, in advertising mediums which are relevant to the buying audience, will bring more brand recognition to consumers. Zara does not purchase a great deal of its merchandise from Asia, while other competitors make more than half of their purchases there (Black, 2009). Zara should be focusing on their competitive strengths by making their supply chain known and use language which is meaningful to youth buyers. 4.0 Budget Trade shows are not inexpensive, however they provide opportunities to reach customers in a way that cannot be done in-store; a more personalised activity. These costs are expected to be compensated for with increased consumer sales volumes. The budget for this total IMC campaign is as follows: 1. Direct Mail £750,000 2. Guerrilla marketing (including giveaway contests): £600,000 3. Trade Shows £500,000 4. Public relations: £250,000 TOTAL BUDGET: £2.1 million These costs include the cost of labour for public relations, labour and materials for guerrilla marketing (including needed permits), ongoing publication of direct mailing literature over a 12 month period, and the cost of renting space for trade shows including associated food/beverage and labour costs. The direct mailings must include considerable text and visual images which offer emotional reaction from consumers, therefore not inexpensive. This IMC campaign has a one year duration period. The end goal is to achieve higher consumer interest and higher sales volumes by reaching consumers in a new promotional method that delivers value. The public relations materials and direct mail will be ongoing throughout the campaign. The guerrilla marketing and trade shows will be scheduled and coordinated to occur bi-monthly in different operating regions which can best benefit from more brand exposure for Zara. It is expected that this IMC campaign, and its many components, will provide long-term brand recognition in desired demographic groups. 5.0 Ethical considerations The only ethical consideration in this new IMC campaign is to consider the competitive rights of other businesses. When spotlighting competitor failures in the trade show environment, the names of failed retailers must be obscured for reasons of business liability. Employees involved in the trade show must be trained in this area. 6.0 References Banister, E. and Hogg, M. 2004. Negative symbolic consumption and consumers’ dive for self-esteem: The case of the fashion industry. European Journal of Marketing, 38(7), p.850. Black, M. 2009. Fast fashion slows down, Business Europe, 49(5), p.7. Chandra, A., Cheek, R., and Rai, U. 1999. Advertising sensitivity and integrated marketing communications in the international environment. Accessed November 6 2009 from http://www.sbaer.uca.edu/research/sma/1999/28.pdf Clarke, Chritine. 2009. I want my MTV…again. Boards, Ontario. August, p.20. Cronk, P. 2002. The Guerrilla Marketers’ 10-Round Ammo Clip. Riger Knowledge Base. http://www.riger.com/know_base/marketing/guerilla.html Dutta, D. 2003. Retail @ the speed of fashion – Part II. Accessed November 5 2009 from http://www.philau.edu/SBA/News/ZaraReport.pdf Friedmann, S. 2007. Effective budgeting for trade shows. Accessed November 6 2009 from http://articles.directorym.com/Effective_Budgeting_For_Trade_Shows-a934044.html Grichnik, K., Winkler, C. and Rothfeder, J. 2008. Make or Break: How Manufacturers Can Leap from Decline to Revitalization. New York: McGraw-Hill Professional. Jones, T. and Kirby, S. 2002. Taking ideas to market: ExpressExec Innovation. Oxford: Capstone Publishing Ltd. Morris, M. and Maisto, A. 2005. Psychology – An Introduction. 12th ed. Pearson Prentice Hall. Nickels, J., McHugh, W. and McHugh, S. 2005. Understanding Business, 7th ed. McGraw Hill Irwin. Owen, G. 2009. It takes all kinds to make it to the top. Financial Times, London. 20 August, p.12. Schultz, D. and Schultz, H. 2004. IMC, the Next Generation: Five Steps for Delivering Value and Measuring Returns Using Marketing Communication, McGraw-Hill Professional, 2004. Sull, D. and Turconi, S. 2008. Fast Fashion Lessons, Business Strategy Review, Oxford. 19(2), p.4. The Economist. 2007. Business: New colours at Benetton; Face value. London, 385(8553), p.88. The Economist. 2009. Business: End of season, the bankruptcy of Christian Lacroix. 392(8639), p.66. Weaver, C. 2009. Eurofirst moves beyond 1,000 level. Financial Times, London. 17 September, p.30. Appendix 1: Method and Sample A small scale primary study was developed in order to find out what consumers in youth markets actually felt about Zara and its fashions. In order to find out what drives youth attitudes, the researcher constructed an interview and took the interview into a youth-driven fashion environment. The sample consisted of the opinions of five different youths, each aged between 17 and 25. The interviews were closed ended and brief. Youth consumers were asked questions about their preferences in fashion, their thoughts about Zara and other competitors, and also their thoughts about retail promotions. Appendix 2: The interview questions 1. On a rating scale of one through 10, tell me how familiar you are with the clothing company Zara. 2. What factors do you believe make a fashion merchandise item quality? 3. What is your favourite retail store to shop at….and why? 4. What kind of promotions do you find most effective at getting your attention in retail? Appendix 3: Findings Taking averages of responses, Zara scored a 6.75 in terms of youth consumer familiarity with Zara. This does not necessarily look positive for Zara who attempts to differentiate from competitors. A higher recognition score was expected. The factors most identified which make a merchandise item quality were price and fabric texture. Favourite retail shops were completely mixed, with none of the respondents indicating Zara as their favourite location. Several of the favourite retailers consisted of little-known area boutiques and salons, therefore giving this question little in terms of meaningful or useful responses. Promotions which were most effective in gaining attention included discounts and also catalogue advertising, which was an unexpected research result. All five respondents indicated catalogues even when they were not prompted toward this being an option to select from. Appendix 4: Discussion of findings 1. Zara does not have a strong brand awareness in consumer groups, based on the data received from this small sample, who is their desired demographic audience. 2. Zara should consider exploiting areas of fabric texture and pricing when creating promotional incentives in the new IMC campaign. These factors directly drive consumer decision making in the youth group markets. 3. If consumers are not choosing Zara as their favourite, heavier concentration of promotion is required. Coupled with a rather low scoring on awareness of the company’s brand name, this represents too much of a consumer-oriented risk for Zara which needs exploration. 4. The business might consider launching catalogues at a future date if they motivate consumers to make purchases. This will not be included in the current IMC recommendations. The current budget calls for IMC components which can reach consumers in real-time environments, rather than focusing on impersonal selling aspects such as printed catalogues or the online environment. If the response to direct marketing literature is heavy, catalogues should be considered in future IMC campaigns. Read More