Marketing Performance of Zara in the UK - Essay Example

Marketing: Zara UK Executive Summary The marketing case of Zara is very essential because it reflects on theessential components of marketing that has enabled the business viability. The pattern observed in the market environment of the business defines its success. The business has balanced the market environmental factors to come up with an effective marketing plan. Customers are crucial players in the business because they dictate the entry behaviour that business would approach. The behaviour pattern of customers influences product innovation, distribution as well as product prices. Balancing marketing mix enables the business to deliver its product in the right location within the stipulated time. Firms that demonstrate great consumer satisfaction are able to hold on large market shares because they respond effectively to consumer trends. Introduction Sustainability of an organisation depends on economic viability of the business in relation to customer’s behaviour. Business enterprises that post successful results in the market are able to convince consumers to buy their products as well as reciprocating consumer’s behaviour by providing products, which will satisfy consumer demands. Zara is an apparel company with outlets in famous cities of the world. The organisation traces its root in Spain; however, it has branches in major cities of the world. The concept that this paper intend to discuss is marketing of the company product. Marketing is a crucial element for the business because it dictates the viability of the sustainability of the business. The report will explore various marketing aspects such as customer, market environment, and marketing mix in relation to the strategy of the business. Investigation of the above aspects will enable the report to make recommendation as well as developing future strategies of increasing the performance of the business. The operation of the company in foreign markets is a concern of this paper. The choice of market is very critical to the business performance. However, the knowledge of customer choices helps many enterprises to integrate their markets with respect to consumer behaviour. Zara The firm established its operation in 1975 in Galicia Spain. The firm has stretched its operation to cover large cities in the world. It retails products of textile with a focus on fashion trends that dictate the consumer behaviour in the clothing industry. The profit margin of the organisation has been consistently high, demonstrating that the organisation is economically viable. Currently, the organisation has 2,692 stores across the world (Dutta, 2002:3). The organisation’s aim is to feed the markets with medium quality products at competitive prices. The idea is to ensure that the company products are selling in a highly competitive environment. The organisation relies on consumer trends in designing its products as well as setting the prices of the product. Clothing apparels pose a number of challenges to entrepreneurs because the consumption behaviour changes with fashion trends (Luo, 2008:6). This requirement dictates the marketing strategy of the product. For instance, the organisation has observed that high prices delay stock turn over which eventually reflects on the profit margin of the organisation. Zara’s manufacturing and stocking trend ensures that the customers’ tastes are available in the market at any given time. The idea seems to be influencing the manufacturing trends developed by the firm. Time is a concept that influences product behaviour in most cases. Some product have short expiry period while other have long expiry period. Whatever the case, market response for the company product dictates the manufacturing speed and the profit of the business. For example, Y products in the market may take two months in the market. The two months would be reflecting on the product demand patterns demonstrated by the consumers. However, when the organisation decides to change the prices of the product and observe a change of demand pattern, the business might opt for strategies, which would influence consumption behaviour. Market Environment Market environment is a term that describes sounding conditions that define business relationships with its customers. The concern of an entrepreneur is to identify factors that would contribute to the flourishing of the business product. The market environment of a business has three distinct categories microenvironment, internal environment, and the macro environment. Understanding of marketing environment is very crucial for the business because it relationship that exists between the business and the consumers internally and externally (Dahlen, et.al. 2010:122). Secondly, the need to offer value to the consumers dictates that the business must have a proper knowledge of the marketing environment. The external environment of a business has two areas of concern i.e. macro and microenvironment. Conversely, the internal business environment illustrates internal factors that contribute to consumer business relationship. Zara Micro Environment Microenvironment is the immediate factor that defines the business relationship with the immediate environment (consumers). The firms understanding of the microenvironment must address the following issues while relating them to the consumers: the organisation objectives and organisation structure. The decision that the organisation takes influences the marketing strategy of the firm (Luo, 2008:8). Thus, coordination between various components of the business is essential to yield the desired result. Porter’s theory of competitive advantage posits that the management choices define the organisation success. Porter observed that forces within the market, which include competitors, would necessitate the firm to generate generic strategies to counter the challenges posed by the forces. Zara’s products (material) supply trends is the driving force towards its success. “The organisation deals with products with short life span.” (Dutta, 2002:1)The CEO observed that organisation’s product determines the success of the business in the market. While arguing his point he noted that the perish ability of the clothing apparel lies on the fact that they are out of fashion. Sparked with this information, the company has adopted a strategy of manufacturing medium sized products and sending them into the market when the fashion is live. The firm has adopted transportation of small quantity into the market in order to erase any delays that result from shipping processes. Supply of goods dictates customer satisfaction. Many customers in the clothing industry like buying the latest fashion in the market. This attribute means that the business would fail to please its customers when bit delays in supplying the demanded product in the market. Zara is not conducting its activities in a monopolistic market; however, it has competitors, which includes Gap Inc that has been operating before the inception of Zara (Dutta, 2002:6). Competition is very important in the market because it promote product innovation, competitive pricing as well as creating a range of choices. While consumers argue that competitors of the organisation create a variety of choices, the firm observes competitors of a threat to the organisation goods because they tend to influence the market share of the business. This notion has created an environment innovative in the business, where it can manipulate its activities to increase its viability. Ideally, the customers of the business are a reflection of the business viability. Zara has devised the following strategy to deal with its competitors. First, Zara produces medium quality products, which satisfy the fashion need of the consumers at affordable prices (Luo, 2008:12). The pricing strategy of the firm enables it meet the needs of old people as well as young people. Studies on the product trends of the firm indicated that Zara sells its product to the old age because of the competitive prices, while selling to the young due to the fashion. The above trend is strategic method of handling competitors who bring high quality product at high prices thus discouraging the consumers. The consequence of the above, the firm will fail to sell fashionable products because it has not completed the existing fashion. Zara has demonstrated continuous product branding as a move to counter the effects of its competitors. Dahlen, et.al. (2010:123) posits branding define the identity of the product in the eyes of the consumer. Marketers of the firm’s product show concern in creating value for the product they present. Studies show that competitors of the Zara such as Gap Inc conduct product branding after a long period (Lincoln and Thomassen, 2009:125). There strategy, favours Zara’s brand because many consumers demonstrate interest to new brands in the market. Research on the fashion trends states that latest fashions would attract high sales as opposed to the pre-existing brands (Dutta, 2002:7). Psychological influences are a consideration that organisations must observe while generating a new brand. For instance, the cultural inclination is very vital when branding because it would create psychological influence to the consumers of the product. Macro Environment Macro environment factors are crucial to business viability. These factors include demography, natural forces, culture, politics, natural forces, and technology. The consideration that a business would give to these factors would influence the market share of the business product. Zara operates in 62 countries across the globe. The population that it serves his quite large owing to the number of outlets it has. Demography within its operation area has proved vital because it dictates location of the business outlets, gender it serves, age, and the occupation of the population (Lincoln and Thomassen, 2009:122). Zara has segmented its market according to age brackets, geographical location and population size. Market segmentation is process of assigning a given product to a given market. For instance, Zara uses the location, occupation, and size to assign its product in a given market. Consumption increases with increase of population (Lincoln and Thomassen, 2009:122). This attribute make population a vital factor of consideration when segmenting the market. Element of age within the population is another factor that influence product consumption. In Zara’s case, age is a factor that shapes consumption of the product. It means that Zara as to consider a large population with the targeted age. The population size for a country or a state may be large, but consists of the untargeted population (Dahlen, et.al. 2010:123). The trend may force the business to create brands that meet the requirement of the above population. Location of the business outlet is crucial for the growth of the firm because the business location must promote the existence of the business (Dahlen, et.al. 2010:132). Zara has identified large cities as the most viable positions for the firm’s business. Potentiality of the consumers to buy is a factor that dictates choice of business location. Shoppers in large cities demonstrate high trends of shopping as opposed to shoppers in the other town. Concentration of business within the city is viable especially in the case of Zara because it depend on occupation. Occupation of a population is very critical to the buying trend of the consumers. For instance, city shoppers demonstrate quick response to fashion trends as opposed to other country dwellers. Transportation of the product to the business location dictates the expansion of the business. Zara has demonstrated that does not intend to introduce its business in locations, which are far from the company manufacturing outlets because of the risks associated with expiry of the product. Fashion trend is a crucial factor that the firm cannot afford to forget. Technology within the environment is a crucial factor because it defines business efficiency (Barnes and Lea-Greenwood, 2006:56). Zara has invested in modern technology especially internet market. Many consumers are able to identify with the product of the firm from the internet. The investment has enabled the firm to spend little money in advertisement. The current technological advancement in the market demands quick response because it would influence marketability of the business (Barnes and Lea-Greenwood, 2006). For example, modern manufacturing machines do not only increase workout put (production capacity) of the company, but also increases the quality of the service. Customers usually look at very small things especially in a competitive market. It is wise for the firm to use methods that would promote the quality of the product. Customers of the business Customers are very essential for the growth or sustainability of the business. Continuity of the business depends on the customers’ response to the business products (Schermerhorn, 2010:4). Supply chain recognises consumers as the determinant factor that controls the rate of production (manufacturing). Zara’s approach to customers needs is unique in the sense that the firm can retain and enlarge its market. The market share of the business depends on the customer size. Various customers demonstrate different behaviour to products depending on satisfaction. Zara’s customer includes young people and old people. The above groups have different consumption characteristics. Studies conducted on Zara’s customers indicated that young people buy Zara’s product because of the fashion that it offers in the market while the old buy product of the company because the prices of the products are friendly to their pockets (Schermerhorn, 2010:5). Since the product consumption trends depend on customers of the business, it is important to acknowledge customer satisfaction. Customer satisfaction refers to a situation where the business offers the right quantity and quality demanded by the customers at prices, which are affordable (Barnes and Lea-Greenwood, 2006:76). Studies indicate that Zara’s knowledge of customer taste has enabled it to develop products that offer the demanded tastes. For example, age 15 to 20 demand products, which are fashionable because of the activeness of the age. The behaviour of this customer age is different from the behaviour demonstrated by old people because the age tends to respond fast to fashion. This means that Zara has to respond fast by bringing into the market the new fashion. Research on customer satisfaction is essential for the business growth because it dictate innovations, which the business must take (Barnes and Lea-Greenwood, 2006:86). For instant Zara continuously rebrand its products. The idea is to create product value identity, which acts as a device for competition. Delivering the quality demanded by the customers is very critical to the business because consumers can promote or taint the products of a company. Analysts have been able to demonstrate that unsatisfied customers will not only quit using the business product, but also will present similar problems to other consumers (Davila, et.al. 2007:156). When one follows the chain it would be evident that a single customer who has complained of unsatisfactory services or product would influence more customers of the business. Identification of the customers need would enable the business to compete because it would be offering value to the customers. Marketing Mix Zara has established its operation by considering marketing mix. The relevance of Zara’s product in the market depends on the marketing mix. Considerations such as product, price, promotion, and place are very critical to the business. Zara’s prices are affordable to many consumers because they feel they are able to buy from the stores. Pricing strategy of the firm has enabled it to control a large market share across the globe (Davila, et.al. 2007:156). The company has considered factors such as perish ability in designing the product of the products. High prices influence buying pattern by reducing the demand of the product, whereas low prices reduces the profit margin of the business. The pricing strategy developed by Zara offers competitive options for the consumers to buy the products. Pricing has also influenced the quality of the products that the firm introduces in the market because high quality products fetch high prices in market (Davila, et.al. 2007:156). The firm has settled on medium quality product, which has competitive prices as well as fashionable to the consumers. The consideration taken by the firm has proved effective because the firm has been able to retain its customers. Place is a factor that the firm cannot afford to ignore. Consumer’s satisfaction depends on the availability of the product at the right time. It means that the business must arrange for product transportation within the specified time. The distribution strategy adopted Zara has erased all factors that would contribute to product delay (Pahl and Mohring, 2009:146). The firm has adopted transportation of business products in small batches in order to meet the strict market deadline. A long distribution channel may influence the arrival of the products in the market at the right time. Another aspect of place that the business has observed is the choice of right product. The firm has integrated its market to comply with the demand pattern of the consumer (Dutta, 2002:9). Products that the firm sells in China differ with products that it sells in the United Kingdom. The knowledge of cultural diversity of the consumers ensures that the business avails the right product to the market. Place has also influenced the location of the company factories. The firm has created factories next to its stores to avoid shipping delays that other competitors face. The promotion of business product creates awareness in the market (Schermerhorn and Schermerhorn, 2011:46). However, Zara spends very little cost in promoting the business. The firm uses internet technology to promote its products across the globe. Promotion of business products using media is very expensive, thus influencing the profit margin of the business. The advent of the internet technology has enabled the business to promote the business products as well as identifying consumers’ demands. Zara’s competitors such H&M and Gap Inc uses much money in promotion. Conclusion Marketing involves persuading consumers to buy a given product in the market. The approach taken by a firm in marketing its product would influence its market share. The knowledge of the market environment is very crucial to the business because it defines the relationship of the business and the customers. Zara market environment consist of macro and micro factors. The macro environment factors consist of attributes which influence the external operation of the business. Factors such as politics, economic status of the society, culture and demography among other factors are crucial for the business success. Zara has integrated its market to suite the demand characteristics of its consumers. The firm has concentrated its outlets in the major cities in response to high population and consumer ability to purchase the products. The product design serves the interest of the consumers who are in young age. Consumer behaviour is a factor that has influenced the distribution of the company stores and pricing strategy of the business. The strategy largely seeks to offer the latest fashion at affordable rates. Other aspect of marketing mix includes promotion, product and place. The firm has balanced these factors in relation to consumer behaviour thereby creating a good business customer relationship. Recommendation Zara should continue with its product branding (orientation) strategy because it increases viability of the business. The firm should conduct further research on consumer behaviour because it influences product orientation and consumer satisfaction. Bibliography Barnes, L. and Lea-Greenwood, G. 2006. Fast Fashion. West Yorkshire: Emerald Group Publishing. Dahlen, M. et.al. 2010. Marketing Communications: A Brand Narrative Approach. New Jersey: John Wiley & Sons. pp122-126. Davila, T. et.al. 2007. The Creative Enterprise: Strategy. Westport :Greenwood Publishing Group. Davila, T. et.al. 2007. The Creative Enterprise: Strategy. Westport: Greenwood Publishing Group. Dutta, D. 2002. Third Eyesight. Available from: http://thirdeyesight.in/articles/ImagesFashion_Zara_Part_I.pdf [Accessed on 2 May 2012]. Lincoln, K. and Thomassen, L. 2009. How to Succeed at Retail: Winning Case Studies and Strategies for Retailers and Brands. London: Kogan Page Publishers. Luo, D. 2008. How to manage a brand to be strong: a study of Zara. Available from: http://edissertations.nottingham.ac.uk/1918/1/Disseration.pdf [Accessed on 2 May 2012]. Pahl, N. and Mohring, W. 2009.Successful Business Models in the Fashion Retail Industry: Strategic Audit of H&M Compared to ZARA. Munich: GRIN Verlag. Schermerhorn, R. J. 2010. Management. New Jersey: John Wiley & Sons. pp4-8. Schermerhorn, R. J. and Schermerhorn, R, J. 2011. Introduction to Management. New Jersey: John Wiley & Sons. pp4-8 Read More