Contemporary Marketing Practice - Assignment Example

Analyze and evaluate contemporary marketing practice Contents Contents 2 Introduction 3 Sources of Competitive advantage of Zara 3 Business model of Zara 3 Introduction of new product lines at shorter intervals of time 4 Logistics and Supply chain 4 The use of technology 5 Diversification of the business 6 Creation of value for its customers 6 Contemporary marketing practices used by Zara 7 Conclusion 7 References 9 9 Introduction Zara is a multinational fashion retailing company of Spanish origin. The company is a low cost high fashion retail business which has impressed the consumer groups, investors and analyst groups by delivering consistent service and showing an impressive level of innovativeness in its business management from various aspects. The company reports an increase of around 15% in its turnover every year when other euro zone companies are struggling to keep up with the fluctuating economic situations. Also, the company has been able to flourish in an intensely competitive and fast shifting global high fashion retail industry. As such, the study of the factors which has created the competitive advantages for the company over the years of its operations seems to be a relevant and challenging topic in the arena of contemporary marketing. This report aims at studying the contemporary marketing practices of Zara that has been used by the company for creating a strong position for the company in its industry of operation. For this purpose, the sources of competitive advantage for the company has been identified and studied in depth. Sources of Competitive advantage of Zara Business model of Zara The business model followed by Zara is considered to be highly innovative and unique in nature/ the business model of the high street fashion retailer is built up on the vertical; integrations between the different levels and departments of the business including manufacturing, procurement, delivery and sale of the products. The business model is characterized by a unique flexible structure which helps the business to modify it according to the suitability and needs of the external environment and the business requirements at a particular point of time. The business model of Zara is identified to be one of the key drivers of the competitive advantage of the company. The vertical integrations within the business and with the external partners of the business like the suppliers and distributors and the use of advanced information and communication technology are the two main strengths of the business model of Zara. Additionally, the time factor and the use of the stores of the company as important sources of information make the business and with the external partners of the business like the structure of the company much unique and advanced as compared to the other fashion retailers. Introduction of new product lines at shorter intervals of time The ability of the fashion retailing company to design the products and deliver new lines of products in frequent intervals also acts as a major strategy of the company which enhances the competiveness of the company in its industry of operation. The company introduces its new product lines in every four weeks period of time which is much lesser as compared to the industry standard of average 9 months (Vitzthum, 2001). The ability of the company to design, manufacture and display the new products in the stores within the short period of time enables Zara to remain ahead in the race for fashion and thus keeps it much ahead of its competitors in the business and with the external partners of the business like the. Logistics and Supply chain Zara as a multinational fashion retailer giant boast of one of the most capable and up to date supply chain management and logistics framework in the globe. The company has introduced a number of innovative operations management and supply chain management policies which have not only helped in driving higher sustainability and success for the company but also enhanced the reputation of the company among the global stakeholder groups to a great extent. Zara does not maintain big size warehouses for inventorying its product like its competitors in the industry. Instead, Zara has integrated a just in time manufacturing and distribution system along with lean production systems which has enabled the company to reduce the operational costs to an impressive level and thus helped it to gain competitive advantage in the area of supply chain management and operations management as well. The use of technology Technological advantages have been greatly used by Zara throughput its existence. The company has focused on using integrated information systems throughout the business which connects all its operations and business functions as well as helps to run the business in a highly controlled, streamlined and regulated manner. The store managers of Zara have to provide feedbacks in the systems regarding the requirements of the styles of products and the behaviours of the diversified customer groups. This helps the in house designers of the company to access updated information regarding the exact demand types and levels in the stores and in turn makes them able to get down the designs and patterns of the new products within a short period of time. This also enables the company to reduce the time for the production and display of products in the stores. This acts as the driver of two main types of competitive advantages- one is that the company can have the proper and updated information about the demand patterns and levels in the market and another is that the company can use the available information in the most efficient and value adding manner for improving the response time for the customer requirements (Tokatli, 2007). Diversification of the business Zara does not function in the way the traditional l fashion retailers do. The company has introduced new systems, strategies and techniques to create competitive advantage in its business. The company is perhaps the only fashion retailer that does not employ the segmentation, targeting and positioning format of marketing the products. Zara operates over a wide market and does not constraint the sale of its products to any particular segment of a chosen market. The company manufactures products that cater to the needs of customers of varying lifestyles and segments. The customer groups of Zara include both male and female customers, young and old customers and adults and children as well. Also, the product portfolio of Zara is wider than most of the leading retailers operating in the fashion retail segment which makes the hold of the company much stronger in the respective markets and as such leads to heightened levels of competitive advantage. Creation of value for its customers Zara is an extremely customer oriented company, the strategies and business practices of which are essentially built up by adequately considering the needs and demands of the customers. The company aims at providing its customer groups with the latest fashion trends while maintaining quality and affordability in all types of products that it offers. The image of Zara has been built up as a consumer driven business which puts its global clientele groups as the priorities for the business. The image of Zara is that of a luxury fashion brand which aims at adding extra value to the customers and also strives to create value for the customers at a continuous basis. This acts as a main source of competiveness for Zara as the company has already established a wide group of brand loyal customers across the globe. Zara creates value for the customer groups by innovating and introducing newly developed customized strategies instead of replicating or copying the strategies of other successful fashion retailers. This strategy coupled with the abilities and resources of Zara has helped the company to remain at the leading position in the global apparels and accessories industry for years. Contemporary marketing practices used by Zara The online strategies of Zara are used as another main group of driver for creating a high level of competitive advantage for the business in its global markets. The electronic commerce website of Zara is one of the most popular high street fashion retail websites in the world which experiences a click rate of 22000 per week on an average (Hill, Jones and Schillinh, 2014). This is a hugely impressive click rate and indicates at the high level of popularity of Zara among g the global consumer base. Apart from these, the focus of the company on investing sufficiently towards developing the physical and intellectual resources and capabilities of the business has also added to the competitiveness of the company. The global expansion and growth strategies, product diversification strategies and the use of the winning strategies in the contemporary marketing practices have been the critical drivers of the success and competiveness of Zara from its inception till the current day of its operations. Conclusion The ways in which Zara creates value for its customers are multidimensional and differentiated in nature. The analysis of the sources of competitive advantage of Zara indicates that the company takes the goal of creating competitive advantage very seriously. For this purpose, the company uses an integrated and customized approach in developing the business practices and strategies. It can also be identified that Zara has taken up differentiated approaches with the sole aim of negating competition in the market and has been able to do so to a commendable extent. The contemporary marketing practices of Zara have been identified to be immensely value adding for the company in terms of sustainability, success as well as competitive advantage creation. References Hill, C., Jones, G. & Schillinh, M. 2014. Strategic Management: Theory: An Integrated Approach. Stamford: Cengage Learning. Tokatli, N. 2007. Global sourcing: insights from the global clothing industry - the case of Zara, a fast fashion retailer. Journal of Economic Geography. 44 (1). Vitzthum, C. 2001. Zaras Success Lies in Low-Cost Lines and a Rapid Turnover of Collections. The Wall Street Journal. [Online]. Available at http://interactive.wsj.com/archive/retrieve.cgi?id=SB990141665307806434.djm. [Accessed on 25 March 2015]. Read More