Brand Analysis of the Flagship Store Zara - Case Study Example

The Zara brand Brand analysis Background Zara is one of the most conspicuous brands in the world. In 1975, Amancio Ortega and hiswife, Rosalia Mera founded the flagship chain store (Zara, 2014). It has thereby grown into the world’s largest apparel retailer as based on their unique and strategic marketing strategies. Currently, Zara has almost 2000 stores worldwide and remains an exceptional brand of the larger Inditex group. Ortega’s initial ideas about his first store have become the inherent brand of Zara apparel. In the first store, Ortega featured low-priced clothes that imitated the higher-end clothing. In the 1980’s, Ortega began changing designs that reacted to new trends in a fast way. In this sense, the clothing company has insisted on fast fashion as a way of capturing its market. Fashion enthusiasts and stakeholders use the term, fast fashion, to refer to trends that move from the catwalk into real-time productions in order to satisfy contemporary fascinations. In this realm, it is satisfactory to analyze Zara as a brand that strategizes on fast fashion. The brand relies on its unique marketing strategies, but not on innovation in production as a means of penetrating and maintaining its target market. Zara mostly markets for middle and high-income countries, and this explains why it only locates in 5 African countries. In spite of its relatively lower prices, most developing countries would still consider such a brand as costly. Production and distribution In its high velocity format, production usually takes place in small batches. It is essential to highlight that the Zara entity exploits the science of vertical integration. In this method, Zara owns a significant number of steps in its supply chain. This regards designing, manufacturing, and distribution. In this sense, the company establishes a business model that allows manipulation of stages to suit the needs of each other. An integrated model allows the right quantity of products to be distributed to the right market at the right time. It also ensures that distribution does not overwhelm production thereby giving production the capacity for effective and efficient work. This model allows for direct distribution of products from the central store in Spain to efficiently located stores twice a week. This eliminates the need for warehouses and huge inventories thereby eliminating supply chain backlog. More essentially, Zara has developed the capacity to invent a design and have it transmitted to stores within two to four weeks. It also restocks and modifies its products within a span of two weeks. This is in contrast with traditional industry models that involve cyclic periods of almost six months for designing and additional months for manufacturing and distribution. Such an intimately knitted supply chain keeps the customers on toes as they attain surprises each time they visit the store. The brand emphasizes on scarcity in its production and distribution. In turn, Zara crafts a sense of exclusivity in its products through minimal production for each distinct style. In turn, Zara creates a feeling of scarcity hence influencing desirability for its apparel. This also lowers the cases of unclear stocks that are usually sold through hefty discounts. This explains why Zara uses a slight discount of 18 percent during season ends rather than the industry average of 36 percent. The value of Zara products heightens as consumers feel that they have to rush to buy the minimal products in stores. In the end, this creates a climate of opportunity as Zara endlessly sells its products at competitive prices throughout the year. Consumer base Zara relies on the brand of fast fashion. This risky strategy requires that the company quickly customizes designs from the catwalk and delivers the same to target consumer base. This suggests that consumers of Zara fashion brands are a fashion-conscious group that are keen on trends. In addition, they are keen on details and distinctions that set them apart from their peers. This consumer group, however, does not mind the mass customization of products that are still unique. This occurs given the Zara group quickly changes its designs and introduces creative shifts that set the clothes apart from the raw designs in catwalk. In addition, such groups do not worry about mass-customized products because they are able to mix different types of clothing from different fashion houses. A customer, for instance, would buy shoes only from Zara and t-shirts from other fashion houses. It is crucial to highlight that Zara, however, does not discriminate the market it sells its products. Most fashion-marketing analysts concur that Zara sells to a wide base of consumers comprising females, males, the young, and the older consumers. In spite of this concurrence, Zara’s playfulness and adventurousness in their designers favor the younger consumers who experiment with numerous styles. This might put off the older consumers that have created distinct types of styles. Europe and other middle-income places, however, have a great capacity for individuality in expression. This allows a sizeable number of the older individuals in such places to experiment with its style. Since Zara does not discriminate on their market base, they sell across different segments of market. Furthermore, apart from their sensitivity to trends, this segment is also highly sensitive to prices. In the end, they want high-end clothes at affordable prices. SWOT Analysis Zara scores heavily in the SWOT analysis. This is because it has unique strengths and innumerable opportunities. In terms of strengths, Zara capitalizes on strategic locations. It favors upscale locations favored by the luxury brands’ consumers. In the end, it uses this leverage to offer the same type of goods that customers attain at similar stores, but offer them at lower prices. This does not mean that Zara compromises on quality to sell more products. Instead, it offers an attractive price that favors fast movement of goods. Besides, in designing its high quality products, the brand respects the general preferences of consumer base. The customers help accord shape and ideas to ever-altering demands in the fashion industry. This is unlike fashion houses that impose new and eccentric styles on consumers. Such a strategy improves the likelihood of a customer buying a certain trend. Additionally, Zara has enabled a global outreach system that makes the entity market its apparel across the world. In a new age of globalization, it is essential for companies to engineer international appeals that make products easily gain trust in new markets. This offers considerable benefits to the Zara brand since the entity is known even in countries that does not possess its stores. In the end, it favors market penetration. Moreover, the failure in one market is compensated for by a success in another market. In case of unfavorable political scenarios and financial crisis in one country, the fashion house may attain success in another country. Furthermore, Zara has a seamless distribution strategy that creates the right size of stock for the market (Tungate, 2012). The distribution system is so integrated that the brand sells almost all the products it makes. Zara faces numerous opportunities in the market. To begin with, they are facing a trendy consumer base that is price sensitive. Such a consumer base requires sophistication at affordable prices. In most cases, they are urbane and classy youth who are aware of contemporary trends, but they lack the income to buy the high-end clothes. This consumer group prefers clothes with a street twist thereby requiring exquisite designs even in formal clothes. Zara has the opportunity to satisfy the needs of this surging market segment. Zara exists in the most appropriate era in a world that is increasingly showing preference for image and beauty. This, especially, manifests in the male consumer segment that is increasingly showing emphasis on their looks and impression. Besides, the new generation has the urge to explore previously forbidden realms of style. Zara cares for such a crowd because it takes care of details that instill uniqueness and individuality in consumers. An increasing number of older fashion loving people, who can experiment with chic styles, is a huge opportunity for the Zara entity. Besides, a growing Asian market promises a significant opportunity for the company. In countries such as China, a surging group of middle-income earners forms a market for luxury goods. High-income directly leads towards a higher number of purchases. Besides, it initiates the knack to buy products that a customer deems as worthy. Zara directly fits into this market because it provides high-end products that reflect a need for a customer standing out of the rest of the population. It is essential to note, however, that Asia comprises a genuinely fashion loving community that is well aware of international brands. This group of consumers pays attention to clothes that are well branded such as Zara. It manifests sophistication to dress in clothes that similarly sells in the Western market. Furthermore, clothes made from other countries are a considerable attraction to the young Asian consumers. The brand, however, have weaknesses that risks the survival of their brand in the market. To begin with, Zara has limited investment in marketing. This is because they rely on their loyal consumers for their continuous sale. Such a strategy ignores the reality of contemporary businesses. In the recent age, companies, instead of investing in efficient production strategy, have discovered that marketing is almost the sole strategy for brand survival. This is because brands require continuous exposure to the sight of consumers. This is also appropriate because customers are highly informed of the market. Highly informed customers can easily switch to new and other brands on new awareness. For instance, Coca Cola, although a huge brand recognizes that aggressive advertising creates a new outlook of the company. Although the company does not change the original taste of its drinks, it constantly makes new adverts and alters the outlook and packaging of its bottles. Besides, the spontaneity of the Zara brand, although profitable, has the potential of creating inconsistency and destroying the loyal customer base. Most companies with formidable brands have insisted on retaining certain elements about them that transcend generations. This helps a company forge a luxurious and unreachable brand that consumers perceive as connoting distinctiveness. For instance, the Rolls Royce brand has created this distinctiveness through their bespoke traditional style of making vehicles. In turn, consumers perceive the brand as an inimitable phenomenon. Moreover, the brand closely tags with that of its competitors. In spite of Zara’s attempts at satisfying the high-end market, their products are not sufficiently creative and unique. They rely on trends and concepts from catwalk that become quickly popular. In this sense, they are second-hand consumers of other people’s concepts. As consumers become more fashion-conscious, the survival of such a brand is threatened because other fashion-savvy customers are able to think ahead of the company. This, especially, is risky for consumers that aggressively seek uniqueness and high street fashion. Significant research has reported the indifference that customers possess between the Zara’s brand and those of H&M and Mango. This indicates a close association between these brands. Most of such brands rely on fast-fading trends for their sale (Tungate, 2012)s. In addition, the brand faces fierce competition from fashion houses such as H&M. Brands such as H&M also capitalizes on fast fashion and they possess a huge share of the market that Zara targets. In aggressive competition, a brand is able to capitalize on mild but perceivable loopholes of a rival in capturing a larger share of the market. The brand also faces notable threats. To begin with, the fashion industry openness creates a considerable capacity for new fashion houses. The new fashion houses may create new trends and patent them for monopolies. In addition, it is crucial to note that fashion faces a highly spontaneous market that does not promise eventual loyalty. When emerging companies realize the weaknesses of existing brands, they can capitalize on such loopholes to defeat existing fashion houses. Besides, emerging consumers are highly likely to utilize products that represent contemporary attitudes and preferences. The brand also faces the threat of desertion to creative individuals. Fashion majorly depends on creative productions rather than marketing. For instance, Zara uses a group of creative individuals who constantly churn our new designs. This group of creative individuals is able to observe the market and accurately predict apparel that is in tandem with aspirations and attitudes of a given generation. These creative people, therefore, invest in psychology and unmatched insight in placing a brand on the limelight. Creative people, however, prefer considerable freedom in their work. This independence accords them mobility to migrate to other fashion houses in case of better opportunities and better working conditions. The possibility of transferring one’s ideas to rival fashion houses, therefore, threatens the survival of the Zara brand. Furthermore, the loss of creative people jeopardizes a fashion house’s ability to consistently create new designs. Increased scrutiny on issues of corporate responsibility creates significant risks. Recent health and environmental watch groups have sued the Zara group for producing clothing that is toxic to human life. This relates to using dangerous chemicals in making and stitching clothes. Besides, most stakeholders have expressed concern over a supposedly poor labor conditions in the company. This happens as workers are overworked and underpaid in spite of huge profits by the company. Companies with poor corporate responsibility lose loyalty from the public because individuals are growing conscious about their entitlements and are increasingly becoming mindful of other people’s problems. Besides, the brand faces possible uncertain economic times. The recent world recession shook the luxury market, as consumers grew wary of their spending on high-end products. The increasing inter-connectedness of the world that globalization induces means that economic and financial problems in one part of the world unleashes economic problems in other countries. Industry analysis The fashion industry is an ever-evolving entity. In the new age, consumers are increasingly minding their image. This has influenced increased attention to clothes even among men. In turn, the fashion industry continuously experiences new players that strive to compete with existing brands. In the recent age, the rise of blogging and street fashion has dislodged fashion from the catwalk realm (Tungate, 2012). Most designers, therefore, turn to the streets for inspiration since such people are edgy and fashion-forward. Notably, the bespoke segment is strongly growing. This segment caters for fashion-savvy consumers who emphasize on exhibition of individuality through image. The bespoke vogue might unsettle the mass customizing brands such as Zara as they attend to customers individually and create hand-woven clothing that makes a given customer stand out. In spite of this fact, the mass customization market is a still a huge trend as they directly satisfy current customers’ needs. Conclusion In spite of its weaknesses and threats, Zara is a formidable brand. This is demonstrable from its growth over decades. The brand uses the marketing strategy of offering high-end clothing at low prices. Its target is a fashion-savvy consumer base that prefers trendy clothes at affordable prices. The Zara brand oozes sophistication as it creates new designs that reflect contemporary preferences. In addition, the brand has a global appeal that emanates from its numerous locations in the world. It is essential for the entity to engage a formidable team of creative individuals that will sustain the brand. Reference Tungate, M. (2012). Fashion brands: branding style from Armani to Zara. London, UK: Kogan Page Ltd. Zara (2014). Zara history. Zara. Retrieved from http://www.zara.com/us/en/sale-c643504.html#utm_referrer=http%3A%2F%2Fwww.zara.com%2F. Read More