Zara, the Spanish Inditex Group subsidiary, started its international expansion in 1988 in Holland where the first overseas store was opened. Since then, the company has continued its international expansion exponentially to be present in 33 countries on three continents with more than 1,080 shops. In 2002 alone, 150 stores were added in nine countries. From 1995 to 1999, the turnover rate of Zara was 24%.
What is the secret behind Zara's success? Well it's an innovative and atypical concept allowing it to offer fashion at affordable rates with collections that are constantly changing due to just-in-time supply. Its main competitors do not have such flexibility and responsiveness, in fact, their collections remain constant throughout the year.
However, in a context of rapid globalization, one wonders if the distinctive concept of "design on demand" should not be questioned. In addition, to ensure its concept, organization of Zara is based on vertical integration, which could pose logistical problems due to distance but also due to the specific macro-economic and cultural characteristics of different countries.
Also, the company is faced with particular geographic issues related to its internationalization, i.e., the climatic differences between northern and southern hemisphere which induces a significant bias in the selection of its range. For the moment, Zara has not differentiated its collections according to the position of the country in relation to the equator.
After briefly analyzing the models of success of the organization, the priorities and key objectives will be established, then its characteristics of international branding will be defined.
Tags: Just-in-time supply, Zara marketing strategy, Zara strategic positioning
[...] However, Zara, despite its flexibility in the distribution, suffers from a strong euro crisis and higher costs of transport. Zara also has a low awareness of the Americans which is due to low advertising expenditure. Recommendations The American continent is an interesting segment both in terms of volume from the point of view of growth; in fact, the growth prospects in South America with an increase in potential customers. In addition, the U.S. market is interesting even if the country is about to be stormed by the main competitor of the firm, H & M. [...]
[...] Also, to position themselves in relation to products in the countries under the equator, the centers of production and distribution in these countries could enable the company to develop its collections according to different climates. It also will permit to reduce costs relative to bonds logistics. Zara may well meet its growth target while maintaining its commitment to truly meet the needs of its customers by allocating its production functions and information in every continent. The company can better understand the different expectations of its customers and provide them more value. [...]
[...] Let us evaluate now what are the benefits of Zara from the competition. The company, through its business model, does not necessarily benefit from economies of scale from its competitors. However, the organization benefits from optimizing their marketing expenditure, in fact, its information system has to be effectively treated to respond to the expectations and preferences of its customers. Zara's competitive advantage is characterized by its products, which follow fashion at relatively low price (thanks to a production just-in-time); through its marketing information system it collects and provides process information efficiently. [...]
[...] The brand identity is almost exclusively represented by the general public through its designs. Adapting to cultural differences Zara is characterized by the total freedom given to managers about the changes in the design of products in stores. Zara stores' highlight is its excellent locations where one leaves much space for customers as well as products, with its minimalist style that is reminiscent of luxury houses. It has the advantage of being able to replicate abroad. The brand perception internally is equivalent to almost the perception consumers have in knowing the brand. [...]
[...] Thus, Zara is a brand that offers trendy products for a relatively low price making sure that the entire city wears the fashion. On this point, unlike competitors like H & Zara has the advantage of continuously renewing its range which allows non-uniform clothing for its customers. The market is targeted for women, men and children of all ages and upper middle class. Analysis - attractive markets compared to the competitive advantages of Zara Markets that appear to be the most attractive ones may be based on the characteristics of the component populations, income, psychographics etc . [...]
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