Zara as One of the Worlds Best Selling Fashion Brands - Essay Example

Name xxxxxxxxxxxxxxxxxxxxxxxxxxxx Institution xxxxxxxxxxxxxxxxxxxxxxxxxxx Course xxxxxxxxxxxxxxxxxxxxxxxxxxxx Date ZARA’ S SUCCESS IN MARKETING STRATEGIES AND OPERATIONS MANAGEMNT Introduction Zara has become one of the world’s best selling fashion brands. Zara, an affiliate of Inditex is undoubtedly a success story in the fashion industry. The company has established over 5000 stores around the world; America, Europe and Middle East. Zara’s success is based on its marketing strategies and its approaches to operations management. The company’s success provides some instructive lessons about creating and sustaining a breakthrough marketing strategy. The intriguing thing about Zara is that has identified things that matter to customers and differentiated itself from its rivals by performing its operations and marketing differently. It is this factor that has made difficult for competitors to imitate Zara. Zara’s achievements in marketing, in supply chain and operation management have enabled it to develop sustainable positioning and competitive differentiation (MarketLine 2008). This essay will demonstrate how Zara has managed to achieve a, unrivaled level of uniqueness in the market by use of superior marketing strategies and operations management techniques. The essay will discuss ways in which Zara’s marketing strategies have contributed to its success. To enhance the argument, Zara’s success will be compared with two competitors in the fashion industry: H&M and Uniqlo. The essay will further analyze the success of Zara using several theories or frameworks in marketing. Zara’s success story Through a clear vision and focus, Zara has tapped fully into the full potential of the fashion industry. It has incredibly reduced the conventional supply chain response from 5-7 months to 2-2.5 months. The customers of Zara only wait for a week to get the next new fashion and not a season. Frequent and small shipments keep inventories in the stores fresh and stores. Customers are compelled to visit the store frequently to buy the latest fashion before it is gone. Zara ensures that their stores are replenished twice weekly. On average, a customer visits a Zara’s shop 17 times a year. This is considerably high in comparison to the three times consumers visit Zara’s competitors (Tiplady 2006). As the image of the company, Zara’s retail managers use a word-of-mouth to get feedback and information concerning customer wants and preferences. This is quite contrary with the use of electronic methods to collect data; the method used by Zara’s competitors. This approach enables Zara to identify lines that are not performing, remove them and quickly replace with popular items. Quick replenishment of merchandise eliminates the need of significant debt, reduces inventories and generates cash (Capell 2008). The success of an organization is often restricted by poor communication. Zara invested heavily in information technology during its initial years. The company has an in-house IT system that is effective and easy. Suppliers and vendors of Zara report that concerns are addressed quickly and people are easily accessible. It has ensured maximum internal communication by housing on one floor, the merchandisers, the pattern makers, designers and everyone involved in completing the products. Zara owns ninety percent of all the global stores, the rest are joint ventures or franchises. Unlike other clothing retailers spending about 3-4% of sales on advertisements, Zara uses just 0.3% on advertising. This amount basically goes into reinforce its clothing brand identity. Managing notorious barriers along the supply chain is critical to speed. The dyeing and fit processes are quite crucial in the supply process. To manage this, Zara has invested largely in a dye and finishing plant. Another troublesome process is sewing. Zara subcontracts the process of sewing although it carried out the bulk of cutting itself. To ensure, consistent flow of work and quick turnaround, Zara outsources 60% of the manufacturing processes. Zara views its suppliers and contractors as part of the company and has established solid relationships with them. Rather than using a group of designers, Zara has creative teams who are responsible for developing design collections. Creative teams comprise of product development personnel, sourcing specialists and designers. Zara has traditionally employed younger designers and equipped them with the skills to make quick decisions. At Zara decision making is encouraged wrong decisions are not severely attacked. Failure rates in terms of the production process were reported to be 1% which is considerably low compared to the industry’s average of 10% (Capell 2008). Zara’s marketing strategies are superior. Zara strategically locates its stores in productive areas in each city they target. The stores are in high traffic and population areas where they can easily draw the attention of customers. Additionally, Zara understands the importance of creating recognition and for this reason it has opened stores near other high clothing retailers in prestigious districts. Zara has also utilized modern technological advancements and has developed an IPhone app and a website that enables customers to access information about new collections (Tiplady 2006). H & M H & M is a Sweden-based clothing retailer also involved in designing, manufacturing and retailing of clothes and accessories just like Zara. The company has about 1345 retail outlets in 24 countries around the continent. H & M is one of Zara’s greatest competitors. H&M focuses on local culture and individual influencers to position itself on the international market. The company mainstream marketing strategy is the mobile marketing campaign. Consumers receive mobile banners and SMS coupons. The main marketing objective of this marketing approach is to promote the latest seasonal fashions and encourage membership of the H&M club (Butcher 2009). H&M does not own a factory. Their clothes and accessories are bought and from 700 independent suppliers around the world with the primary suppliers being Europe and Asia. The H&M production office deals with the practical aspects while the buying department deals with the range. The company hires employees from the local areas where the production offices are located. The lead time varies from a couple of weeks to several months. H&M believes that short lead time is not always the best since it should be a balance of price and quality. H&M operates with two collections per year; during autumn and during spring. The aim of having only two seasons is to find suppliers to order the products (MarketLine 2009). Uniqlo Uniqlo is a Japanese fashion retailer and a consolidated subsidiary of Fast Retailing Co. Ltd. The company offers high quality and fashionable clothing and accessories at reasonable prices. Uniqlo has continually seized the opportunity to establish its brands domestically and internationally. It combines all facets of business from design of products to the final process of sales through the 790 stores around the world. Uniqlo envisions itself as the world’s leading supplier of casual wear and targets profitability growth and high sales. The strategies the company intends to deploy so as to achieve this goal include prioritizing customer needs, sourcing for the cheapest marketing and manufacturing schedules and using low cost management (Yamaguchi and Yoshida 2002). Research and development is a key value in Uniqlo with the company having established several R&D centers where latest fashions are being constantly researched. Products are launched once a year. Uniqlo procures materials directly from manufacturers so as to negotiate the best prices. In Uniqlo, the merchandisers are responsible for regulating volumes of products for each season. Each season, Uniqlo carries out promotional campaigns for its core products. The promotion is normally focused on the unique qualities of the products and is normally done on TV and other media. They also offer online sales to other countries such as Taiwan, Hing Kong and China (Chan et al 2013). Analysis of Zara marketing strategies The first strategy that Zara uses is the market penetration strategy. It encourages its customers to buy more. Zara realized a weakness among its competitors (H&M and Uniqlo) which is launching or introducing products seasonally. Zara ensure that there are new arrivals every week which keeps their customers in high anticipation. Zara’s customers keep visiting their nearest Zara store to check for the latest styles (MarketLine 2008). The other strategy utilized by Zara is control of the supply chain system. Zara solely controls its entire supply chain process from designing and production to international distribution. Zara produces more than half of its products and makes 40% of its own fabrics. Zara does not totally rely on slow-moving suppliers. New designs are sent to all Zara’s manufacturing centers in real time which also transport finished products directly to the retail outlets. This eliminates the need for warehouses, reduces inventories and saves time. According to Capell (2008), Zara effectively uses vertical integration which makes processes more efficient, faster and flexible in comparison to its international competitors such as H&M and Uniqlo. Zara also utilizes the market development strategy. This is first demonstrated by the way it identified potential user groups in their target areas. For example, people know that GAP is for college students and highschoolers. Zara, on the other hand, is known as the unique, classic and timeless fashion company. The second way that Zara use market development strategy is the way it considers selling in new locations in new markets. Zara is Inditex’s fastest growing division. Due to its expansion in many parts of the world, Zara is able to turn its inventory twice as fast as its competitors. In Europe, for instance, Zara’s turnover is 50% higher than major competitors in the region (Tiplady 2006). The fourth strategy used by Zara is the product development strategy. Tiplady (2006) states that, products managers should consider developing new products on a continuous basis. One of Zara’s core businesses is to develop new products as quickly as possible. The company has established enough capacity for such developments right from concept to distribution. Zara positions itself as “affordable fashion” which clearly shows that it is not a luxury brand. It targets a great number of people who are eager to purchase good quality clothes but are sensitive to price. The most interesting thing that Zara produces more styles instead of more quantities contrary to what is done by majority of its competitors. The last strategy used by Zara is the diversification strategy. According to Capell (2008), diversification occurs when opportunities are found outside the present business environment. A good opportunity is when a company combines its business strengths and its attractiveness to increase its success. Zara develops new products which have marketing and technological synergies with existing products. Conclusion Zara is undoubtedly a success story in the fashion industry. It has overtaken many of its equals in the industry and its success seems to be skyrocketing. Zara’s success is attributed to its unique marketing strategy and approaches to operations management. Zara’s supply is elaborate which ensures that products reach their clients in a timely manner with minimal expenses incurred. Zara differentiates itself from its competitors by providing new designs and fashions to its customers every month of the year. The company spend enormous amount to time and resources in researching for possible future trends that will fulfill all their customer’s needs. Zara has set itself for further growth in future as it has solidly established its brand and image. References MarketLine, 2008, July 8, Zara company profile. Retrieved on 28th March 2015 from http://www.marketlineinfo.com/. MarketLine, 2009, April 17, H&M company profile. Retrieved on 28th March 2015 from http://www.marketlineinfo.com/ Tiplady, R 2006, Zara: Taking the Lead in Fast-Fashion. Business Week Online Capell, K 2008, Zara Thrives By Breaking All the Rules. BusinessWeek, (4104), 066. Chan, J, Frendy, G, Nakagawa, S et al 2013, Uniqlo Co. Ltd, Global management, Vol. 1, no. 1, pp. 1-38. Yamaguchi, T and Yoshida, H 2002, Fast retailing: an analysis of FDI and supply management in fashion retailing. United Kingdom: Henley Business School. Butcher, D 2009 January 23, Retail giant h&m runs multifaceted mobile marketing Campaign . Retrieved on 29th March 2015 from http://www.mobilemarketer.com/cms/news/advertising/2506.html Anderson, S 200, The internalization of the firm from an entrepreneurial perspective, International studies of management and organization, Vol, 30,no. 1, pp. 63-92. Read More