Zara's Internationalisation - Advantage and Disadvantage of Zara's Multi-Brand Strategy - Case Study Example

Contents

Introduction3

Zara's Internationalisation4

Introduction4

Brand Internationalization5

Conclusion and Recommendation10

Competitive Strategy of the Big Three World Market Leaders11

Introduction11

Competitive Strategy11

Conclusion and Recommendation13

Advantage and Disadvantage of Zara's Multi-Brand Store Strategy14

Introduction14

Advantages 15

Disadvantages 17

The Tata and Zara Collaboration18

Conclusion19

Recommendation 19

Zara Case Study

• Introduction

Zara is a Spanish accessories and clothing worldwide retailer that was founded by Amancio Ortega and Rosalia Mera in 1975. It is headquartered in La Coruna, Arteixo, Galicia in Spain’s north-west, and is the core brand of the larger Inditex Group. Inditex is currently the world’s biggest apparel retailer, providing a vivid picture of what the Zara brand means to the renowned fashion group (Inditex: Brands – Zara). Armancio Ortega, a Spanish entrepreneur, is the owner and main shareholder of the Inditex Group that also comprises of other global brands such as Oysho, Pull & Bear, Zara Home, Massimo Dutti, Bershka, Strandivarious, and Uterque. Inditex was founded in 1963, starting its progressive journey in the textiles industry. By 1975, the enterprise began in earnest, its venture into dressmaking and also moved in into its first headquarters in GOA (Inditex: Brands – Zara).

The Zara brand opened its premier store in La Coruna, Spain, a step taken by Ortega after working for 12 years as a textile maker. Zara’s initial approach towards fashion and design as per this store’s setting was more of low-priced look-alike popular products that imitated higher-end fashion designs. Through subsequent improvement in textile manufacture, Ortega was able to open additional stores in various parts of Spain as well as expanding internationally (About Us: Our History). Key to the successful expansion process was Ortega’s dynamic change to the brand’s overall design, manufacturing aspect, and subsequent distribution processes. The aim was to reduce overall lead times whilst also reacting to prevailing and potential novel trends in the most optimal and timely manner possible (About Us: Our History).

It is this creativity that is synonymous with the term ‘instant fashions’ where improvement entailed use of prevailing IT capacity and groups of designers as opposed to one individual per clothing item. Kwan (2011) states that it is through utilization and leverage on this strategic advantages that has enabled the brand to successfully compete. Informative is that current estimates portray that the brand requires only two weeks to be able to comprehensively develop a new product and distribute them to its diverse stores (Kwan, 2011). This advantage cannot be ignored, as it goes against the conventional ‘two-month’ time frame (industry average) required. In the contemporary era, Zara’s fashion approach continues being a success, influential in driving further expansion, driving production in its garment factories such as those situated in Samlor and GOA (About Us: Our History).

The report aims at presenting an analysis of Zara’s internationalisation from its humble beginnings to the contemporary global presence it enjoys. In addition, it will delve on the competitive strategy implemented by the ‘Big Three’ world market leaders. In addition, focus will be placed on discussing the advantages and disadvantages of Zara's multi- brand store strategy, ending with provision of recommendations and conclusion of Tata and Zara’s collaboration.

• Zara's Internationalisation
• Introduction

In economic terms, internationalisation refers to the organizational process of substantially increasing enterprise involvement/ participation in global markets. Susman (2007) conveys that this is mainly through enhancing overall availability of brand products and/ or services to the larger international arena, as opposed to the traditional local settings. It regards the designing of products/ services in such a manner that they are able to meet the needs, requirements, and specifications of diverse customer-groupings spread out across the globe. As a process, it entails elements of product/ service adaptation in order to comprehensively cater to the diverse global consumer markets. A key aspect is that products and/ services that are internationalized necessarily means that they often have to be ‘localized’ in order to fit the specific needs and requirements of each population market segment (Susman, 2007).

Here, the report aims at presenting how Zara as a brand and Inditex as an enterprise have expanded into the global market, leveraging on various aspects that continue to further enhance its global appeal. Focus will be placed on the organization’s business model, in order to better understand the brand’s unique strategic placement in the global fashion industry.

• Brand Internationalization

From the very beginning, Ortega guided Zara’s branding and approach to design and manufacture was different from the norm. As opposed to the traditional western fashion enterprises which usually send (outsource) various clothing designs to independent factories, in states like India and the PRC; Ortega preferred to maintain his enterprise at home in La Coruna, Spain (Kwan, 2011). Despite the advantages of outsourcing like cheaper labor costs, better government incentives, and other economies of scale advantages gained, the brand took a different strategy. As Hansen (2012) expresses, Brands at Inditex usually make and supply their clothing designs (from local factories in Spain and Portugal) as per the prevailing consumer uptake thus reducing the presence of extra/ leftover stock. Importantly, it is through the store managers postings and sales output that Zara manages its out-flowing stock (Hansen, 2012).

Uniquely, the strategy undertaken at Zara is one where there is little if any form of advertisement, as per the brand’s zero-advertising policy. Instead, as Hansen (2012) further explains, the expenditure that would have been incurred through various advertisement engagements is effectively transferred to set expansion programs such as the opening up of new stores. Informative is that Inditex places greater importance on store ambience, availability of desired clothing fashion based on prevailing trends, good customer experience and interaction as its primary competitive drivers instead (Hansen, 2012). Its stores act as the enterprise’s preferred points of sale, in addition to influencing both the design and speed elements of production. Thus, the store outlets provide the beginning and end of the enterprise’s business cycle.

Zara, as the flagship chain of the Inditex Group, encompasses various design forms, from suits and dresses for festivities, daily clothes, informal and formal clothes, as well as various fashions for both men and women. It is further able to capture a diverse, global population through its attractive product pricing, with the average selling price range for most of its products ranging between €15 and €20 (Inditex: Brands – Zara). The brand’s business cycle is therefore aligned with prevailing customer judgments concerning novel designs. In addition, the strategy is able to leverage on information collected by its staff members during travel to various fashion capitals of the world. Furthermore, focus is also placed on what is fashionable in the streets, based upon localized contexts that are considered in subsequent future production endeavors (About Us: Our History).

Critical fashion and design information is further gained through browsing of publications, as well as making visits to various venues that are frequented by potential customer populations (Hansen, 2012). Zara’s logistic framework, founded on software designed by its own teams, ensures that the time frame between order receiving and subsequent delivery of goods to store outlets is minimized. Zara’s and by proxy the Group’s multi-brand strategy and extension strategy such as (Zara Home – from the flagship Zara brand), has enabled Inditex to successfully manage its multi-brand portfolio. The Inditex Group as the parent corporation is therefore quite robust, possessing wide-scale capacity (required economies of scale) to target various customer segments in more effective ways possible (About Us: Our History).

The distinction of its brands notwithstanding, the gains realized have been impressive over the years. It is notable however, that two major drawbacks are recognized in this strategy: the overall cost-expenditure incurred in maintaining these diverse brands and the potential risk of cannibalization of its distinct product brands (Vincent, 2013). In relation to the latter, the corporation mitigates the effects through unique brand differentiation, mainly through store presentation, retail image, product array, and target markets. Principally, Zara stores are its main avenues towards enhanced customer interaction, as well as largest employment uptake; representing an estimated 89% of Group’s employee force (Hansen, 2012).

A look at existing internationalization theoretical framework reveals core aspects present in Zara (Inditex) gradual global expansion and market penetration. Notably, the most dominant of theories is the Uppsala internationalization theory, which is applicable to the study analysis of Zara. It is founded on the perception that the growth and development of the international organization continuous providing key learning experiences (Welch & Luostarinen, 1999). Accordingly, based on Nordic scholarship, the theory was formulated based on a sequential set of phases/ stages involved in the overall internationalisation process of an organization. The ideal is that enterprises increase their general commitment to global/ international operations through subsequent acquisition of experiential knowledge (Eugenio, 2012).

Vital experiential knowledge is gained through conduct of business activities, learning from both success and failures, as experiences of organizational growth. Acquired knowledge is perceived as a core aspect in the internationalisation process, with firms usually starting operations in their home markets (geographically close markets). This is applicable in Zara’s case (the Inditex Group) in relation to early founding and enterprise venture. Initial focus was in the home (Spain) market as their testing ground, with limited export activities in the culturally similar state of Portugal. As Welch and Loustarinen (1988) express, internationalization process involves two activities, inward and outward processes. In Spain, the ‘inward’ internationalization process was evident, as Zara placed greater focus on dominating the home market.

From the experience gained, the psychic distance from other foreign markets is gradually reduced. Kwan (2011) further conveys that it is evident that through subsequent maturity of the ‘home market’ Inditex (Zara) gained the confidence to explore other ‘similar markets’, giving reference to the ‘outward’ internalization process. These are markets where information flows to and from the market arena optimally, with limited inhibiting factors. Greater cultural proximity (closer inter-cultural interaction) means less foreignness and easier uptake of availed products. Portugal proved to be the ideal pilot-test ground based on its attractiveness and familiarity as a market to that of Spain (Kwan, 2011). Furthermore, lower labor costs also provided an incentive for the Group to also launch a number of factories, a core element of its international supply chain system.

The next phase undertaken is that of gradual ‘pilot-test’ expansion which mainly entails export via independent business representatives. Inditex also realized that it needed to adapt its prevailing business model to suit the existing dynamism within global markets. France, as one of the world’s leading fashion capitals, was next in line in the expansion process, providing an ideal ground on which to test market reactions to their entry. Further expansion was to Mexico, which possessed similar cultural similarity to Spain (little psychic distance) despite the geographical distance (Kwan, 2011). The Inditex Group’s gradual expansion has been successful based on effective use of initially ethnocentric orientation, and subsequently geocentric orientation in consideration of prevailing market distinctions.

Entry to new markets provided distinct contexts that required Zara’s adaptation to prevailing contexts. Accordingly, despite selling a largely homogenous product range, it became acceptable to make localized adjustments based upon prevailing market diversity. The pattern for Zara’s expansion strategy is the ‘oil stain’ that entails dominating one location strongly and subsequently spreading across the nation/ region. The flagship store is strategically located with the purpose of learning the market and acquiring critical expertise (Hansen, 2012). Zara’s strategic entry into a market is based on either the hierarchical or the intermediate mode. The hierarchical mode is the most applicable in European areas and other culturally similar regions of expansion with intermediate utilized more in those areas where the psychic distance is significant.

The subsequent phases of internationalization are accordingly related to the sequential, systematic development where the brand has been able to enhance its sales through subsidiaries and eventually by way of own manufacturing/ production capacity abroad. It is notable that the connection(s) between ‘outward’ and ‘inward’ internationalization processes can be either indirect or direct (Jones & Coviello, 2005). In the case of Zara (Inditex Group), indirect relationships are more evident an example being the diverse joint ventures and franchising engaged. Here, the cooperative strategy entails a combination of Zara’s global fashion expertise with prevailing technical expertise and facility capacity of local companies. Examples of joint ventures include the one with Tata (India) and Otto Versand in Germany. Franchising is more prominent in high-risk markets (wide psychic distance), low-sales (small) markets (Inditex: Brands – Zara).

• Conclusion and Recommendation

In this regard, positive gains are accrued through the Corporation’s (Inditex Group) highly dynamic business model. The model is designed with the capacity to continuously adapt to prevailing customer needs and requirements. As the flagship chain of the Inditex Group, Zara encompasses various design forms, from suits and dresses for festivities, daily clothes, informal and formal clothes, as well as various fashions for both men and women. It is therefore able to capture a diverse, global population through its attractive product-pricing model. Zara’s core competencies are in its ability to not only recognize, but also assimilate existing dynamism in the fashion industry. It is therefore able to rapidly design novel models, quickly responding to consumer wants and needs.

Zara utilizes its business model’s flexibility to effectively adapt to diverse changes experienced in the fashion world. Its quick reactive element enables it to provide new product to its stores within the shortest time possible. Indeed, critical to its global competitiveness are two strategic elements: its short time-frame (production to distribution) and capacity (economies of scale) to quickly and in a precise manner provide products in line with current customer trends and fashion desires. Of note, the strategy undertaken at Zara means that there is little if any form of advertisement, as per the brand’s zero-advertising policy. With zero policy on advertisement, it comes as no surprise that Inditex strongly focuses on store appeal/ presentation, retail image, product array, and target market diversity.

However, Zara needs to continuously focus its two main drawbacks: the overall cost-expenditure incurred in maintaining these diverse brands that may at times result in internal competition and the potential risk of cannibalization of its distinct product brands. In relation to the latter, the corporation mitigates the effects through unique brand differentiation, mainly by way of store presentation, retail image, product array, and target markets. Accordingly, more financial support, expert input, and advancement of existing IT and techno-structure needs to be considerably interlinked to the overlying corporate growth strategy. Concerning human resource development, entity management requires to further develop existing capacity regarding the training and internal workforce vertical ascend (reward and promotion) as critical strategic inputs.

• Competitive Strategy of the Big Three World Market Leaders
• Introduction

The global success of Inditex has primarily been through its flagship brand – Zara. Contributing to more than half of the corporation’s overall income generation vis-à-vis operational expenditures, Zara is well placed globally. Zara’s major global competitors are H&M (Vasteras, Sweden) and Gap, Inc. (San Francisco, CA, the U.S.A). Gap Inc. has five core brands, having been founded in 1969 by Donald and Doris F. Fisher. The brands are Old Navy, Athelta, Piperlime, banana republic, and Gap banner. Just like in the case of Zara, family influence is quite evident with the Fisher family remaining deeply involved in the enterprise (Gap Inc: About). H&M on the other hand was founded in 1947, the oldest of the three ‘fast fashion’ enterprises, by Erling Persson. Initially focused on women’s clothing (as Hennes), H&M was formed after acquisition of a Stockholm store (Mauritz Widforss). From then, Persson expanded into menswear, appropriately abbreviating his new enterprise into H&M. Unlike Zara and Gap, Inc, H&M mainly outsources is clothing from Bangladesh and Turkey (H&M: Facts about H&M).

• Competitive Strategy

Based on the Inditex Group’s successful utilization of its geo-centric internalization strategy that is aligned to prevailing local contexts, the Zara brand is able to not only maintain its global appeal, but further venture into new markets. Its business model is unique, being vertically integrated, thus unlike other apparel retailers, the brand controls a majority of the phases involved in its supply chain. It therefore designs, produces/ manufactures and subsequently distributes (logistics and warehousing) its own products. Zara’s strategic focus is placed on better understanding prevailing fashion trends – what consumer populations want/ require (About Us: Our History). Once this step is considered, the next phase is that of delivering the fashionable trends based on localized contexts of the diverse target markets.

H&M is also uniquely placed, founded on its partial vertical integration business and production model. Like Zara, H&M leverages its product supply chain, right from design and production, to distribution and sales. Notably, its production is outsourced to Bangladesh and Turkey, evidently based upon various aspects such as cheaper labor costs and raw materials, as well as better government incentives amongst other economies of scale advantages (H&M: Facts about H&M). Unlike Zara, H&M spends a sizeable amount on advertisement and marketing (newspaper, magazine and outdoor advertising, online platform and through catalogues), an estimated 4% of total turnover. This strategy augments its extensive supply chain network (across Europe), aiming to gradually expand whist intensifying overall sales volumes in its existing stores (H&M: Facts about H&M). It is perhaps the reason why it has the least number of employees and stores, as compared to the other two market leaders.

H&M also leverages on its ‘single format’ one brand store strategy, primarily as a measure against not only increased overhead brought about by many stores, but more so the potential consequence of some of its product ranges experiencing unwarranted levels of brand cannibalization. By concentrating of international sales, H&M has been able to leverage prevailing fashion trends and limited psychic distance (with target markets) towards increasing its overall sales volumes and general growth (H&M: Facts about H&M). Accordingly, by focusing on its ethnocentric orientation, H&M has ensured that it leverages on existing cultural (limited psychic distance) similarity in its target markets.

Gap, Inc., based in CA, the U.S.A also shares similar characteristics to H&M, also leveraging on its vertical corporate integration. Accordingly, it also has control over most of its supply chain capacity, from design to distribution and sales. Notably, it outsources its production, with products availed through its five brand store strategy. In addition, it also spends some considerable capital on advertising and product marketing from advertisement (outdoor and print) to an online presence (Gap Inc: About). Through its online shopping capacity, Gap is able to leverage on the prevailing electronic commerce available in its home (American market) and other culturally similar markets where its stores enjoy considerable success and customer following. Gap places focus placed on various markets through utilization a mix of both ethnocentric (European states) and geocentric (other nations with higher psychic distance) orientation in its internationalization strategy (Gap Inc: About).

• Conclusion and Recommendation

Gap just like H&M, does not possess the key ‘time-frame’ advantage enjoyed by Zara, which enables the latter reduce the overall period between design and production, and eventual product distribution. Accordingly, H&M and Gap need to further enhance their capacities in this regard, perhaps by trying to better advantage on their outsourcing capacities. The three market leaders are uniquely placed, each distinct in the strategic measures undertaken to continuously enhance their global market presence and general competitiveness. With its ‘zero-policy’ on advertisements, Zara (Inditex) remains the global leader, mainly leveraging on its own capacity to produce and manufacture its own products (control of entire supply chain aspect). A notable area of consideration would be some increment in general levels of marketing and advertisement.

H&M would be positively influenced in the event of utilizing a mixed approach to its internationalization prospects, utilizing both ethnocentric (strong markets) and geocentric orientation (weak/ low-sales markets with greater psychic distance) in order to better its chances against the dominance of Zara. Crucial in this regard is its enhancement of its production/ manufacturing capacity vis-à-vis limiting overall period from product design to distribution. The same is applicable to Gap, whose outsourcing element is perhaps a key reason why it is unable to effectively rival Zara in the ‘fast fashions’ sector. Another reason, which is limiting Gap’s global expansion, is its concentration on the local American market. Accordingly, it is recommended that its international focus needs not be limited to strategic markets based on its ethnocentric orientation approach.

• Advantage and Disadvantage of Zara's Multi-Brand Store Strategy
• Introduction

The Zara brand ignites various customer feelings regarding their dreams and hopes of looking fashionable on a budget. As Kwan (2011) further states, the brand has and continues keeping up with latest fashion fads and trends. Through its dynamic design range, minus the pricy tags, it is able to avail dynamic fashion through its multi-brand store strategy. Furthermore, even for those unable to access such clothing, the brand promises various choice clothing designs and stylish staples such as classic shoes, white shirts, and tailored jackets amongst others (Kwan, 2011). Zara, the Inditex Group’s biggest and oldest brand, aptly portrays the corporate growth and vitality achieved through time, a pioneer amongst other ‘fast fashion’ enterprises. Hansen (2012) also states that Zara as a brand is uniquely placed amongst these ‘fast fashion’ sector players.

• Advantages 

The success of Zara and other ‘fast fashion’ enterprises is based on their optimal capacity in imitating prevailing ‘high-end’ fashion and design, subsequently speeding their distribution to various store outlets. All Inditex brands follow and are guided by the Zara template which is founded on availing trendy, decently made but inexpensive product ranges which are sold in “beautiful high-end-looking” store outlets (Hansen, 2012). It is perhaps this strategic end-objective that has propelled the brand’s global uptake, with Inditex now having over 5,900 stores globally (85 nations). Spain remains a key market arena as portrayed through the brand’s approximate 2,000 stores, with Europe hosting another 4,400 stores. In addition, it has a presence in the PRC with an approximate 290 stores, whilst in the U.S.A it has an estimated 50 outlets (Hansen, 2012).

Consideration is given to prevailing diversity, especially in those markets having greater psychic (culturally dissimilar markets) distance. Zara has been able to successfully ensure that its geocentric internalization strategy is aligned to prevailing local contexts. The Zara business model is unique in that it is vertically integrated (Inditex: Brands – Zara). Unlike other apparel retailers, the brand controls a majority of the phases involved in the enterprise’s supply chain. It therefore designs, produces/ manufactures and subsequently distributes (logistics and warehousing) its own products. Zara’s strategic focus is placed on better understanding prevailing fashion trends – what consumer populations want/ require. Once this step is considered, the next phase is that of delivering the fashionable trends based on localized contexts of the diverse target markets (Kwan, 2011).

As a brand, Zara’s core competencies are in its ability to not only recognize, but further assimilate the prevailing dynamism witnessed in the fashion industry. The result is that it is able to rapidly design novel models, responding to consumer wants and needs in a timely fashion. Zara utilizes its business model’s flexibility to effectively adapt to diverse changes experienced in the fashion world, mostly influenced by seasonal trends and patterns. Its quick reactive element enables it to provide new product to its stores within the shortest time possible, a core factor of its global success (Inditex: Brands – Zara). Indeed, key to its global competitiveness are two elements: its short time-frame (production to distribution) and capacity (economies of scale) to quickly and precisely provide products in line with prevailing customer trends and desires.

The Zara brand is unique in the sense that Ortega’s approach to manufacturing was different from conventional corporate engagements Brands at Inditex usually make and supply their clothing designs (from local factories in Spain and Portugal) as per the prevailing consumer uptake thus reducing the presence of extra/ leftover stock. Informative is that Inditex places greater importance on store ambience, availability of desired clothing fashion based on prevailing trends, good customer experience and interaction as its primary competitive drivers instead (Hansen, 2012). Its stores act as the enterprise’s preferred points of sale, in addition to influencing both the design and speed elements of production. Thus, the store outlets provide the beginning and end of the enterprise’s business cycle.

It is further able to capture a diverse, global population through its attractive product pricing, with the average selling price range for most of its products ranging between €15 and €20. The brand’s business cycle is therefore aligned with prevailing customer judgments concerning novel designs. In addition, the strategy is able to leverage on information collected by its staff members during travel to various fashion capitals of the world. Zara’s logistic framework, founded on software designed by its own teams, ensures that the period between order receiving and subsequent delivery of goods to store outlets is minimized (Inditex: Brands – Zara). Thus, it is able to effectively adapt to prevailing fashion trends and cycles, based upon seasonal customer requirements and desires.

• Disadvantages 

The global success of Inditex, founded on its flagship Zara brand remains undisputable in the contemporary era. As portrayed, Zara continues providing the ‘one-stop’ shop for various customer markets wanting to purchase dynamic design/ fashion without pricy tags. Its economies of scale and other strategic advantages means that the brand is able to provide various fashion is a timely manner, based on its strategic design capacity, speed of production and efficient logistics/ distribution to store outlets (About Us: Our History). It is notable however, that two major drawbacks are recognized in this strategy: the overall cost-expenditure incurred in maintaining these diverse brands and the potential risk of cannibalization of its distinct product brands.

Concerning overall cost-expenditure of maintaining the multi-brand store strategy, principally through its unique store outlets, Zara’s vibrant sales volumes are able to adequately cater for such eventualities (Kwan, 2011). It is evident that the brand’s consistency in opening up new stores is aligned to its increased sales volumes vis-à-vis unique targeting of customer-categories and markets in general. In relation to the brand product cannibalization, the corporation mitigates the effects through unique brand differentiation, mainly through store presentation, retail image, product array, and target markets (Inditex: Brands – Zara).

Brand product cannibalization remains the core issue of concern, given the brand’s unique placement as a ‘fast fashion’ enterprise. The availing of new products may at times ‘eat into’ the sales volumes of associated product ranges, subsequently decreasing their overall uptake. A vital avenue through which cannibalization can be effectively avoided is by way of not closely identifying the new products with already established product ranges (Johanson & Associates, 1994). Zara is able to lessen the impact of these negative effects through its strategic focus on unveiling fashionable, yet affordable product ranges based upon prevailing trends. In addition, its utility of information concerning existing consumer uptake greatly aids in reducing the presence of extra/ leftover stock.

Its stores function as the enterprise’s preferred points of sale, in addition to influencing both the design and speed elements of production (Kwan, 2011). Thus, the store outlets provide the beginning and end of the enterprise’s business cycle. It is further able to capture a diverse, global population through its attractive product pricing. The brand’s business cycle is therefore aligned with existing customer judgments concerning novel designs. The strategy is able to leverage on information collected by its staff members with Zara’s logistic framework, ensuring that the time frame between order receiving and subsequent delivery of goods to store outlets is minimized (Hansen, 2012).

• The Tata and Zara Collaboration

Zara’s joint venture with the Tata Group is an example of expansion strategy that is based on geocentric orientation, given that the Indian market presents significant psychic distance. More so, this joint venture expresses the presence of the indirect ‘outward’ internationalization relationship. Under such contexts, the cooperative strategy entails a combination of Zara’s global fashion expertise with prevailing technical expertise and facility capacity of local companies. Accordingly, joint ventures and franchising are more prominent in high-risk markets (wide psychic distance) and low-sales (small) markets (Madhavi, 2014). A core determinant factor in the alliance is founded on Tata’s prevailing economies of scale (in India). With a long history of experience and expertise, as well as being one of the biggest conglomerates in the populous and highly-lucrative market means that Tata is well placed as the ideal sales subsidiary choice (Inditex: Brands – Zara).

• Conclusion

Zara’s entry into the Indian market is perceived not only as a strategic move, but also one based on information gathered concerning potential ‘projected’ market growth. India’s population itself provides an opportune market where Zara may penetrate based on its ‘oil stain’ strategy. In establishing a flagship store and subsequently penetrating the rest of the market based on expertise, experience and competitiveness gained, Zara can be able to further leverage on the nation’s hugely successful global GDP growth rate. With ten of its urban populations considered as mega-cities (urban/ metropolitan areas with more than three million residents), India’s cities are optimally placed as core areas where Zara can ‘pilot-test’ its future entry into the larger Middle East and South Asian markets.

• Recommendation 

Based upon the Tata Group’s national appeal in India, Zara needs to consider leveraging on existing advertising and marketing capacity of Tata, despite its ‘zero-advertisement’ policy. This is achievable through minimal brand marketing through collaborative advertisement and branding initiatives. One such avenue is through store-location within or near associated Tata store outlets, based upon Tata’s marketing strategy and distribution capacity. Another way would be through collaboratively engaging with the conglomerate in terms of promotional offers whenever consumers buy Tata products, as a way of enhancing customer relations. Importantly, Zara needs to continuously encourage the Indian joint ventures to independently work towards entrenching the brand’s appeal in the highly lucrative Indian consumer market.