Introduction

Uniqlo Co., Ltd. was founded in 1949 in Yamaguchi, Japan but is now a 100% consolidated

subsidiary of Fast Retailing Co., Ltd since 2005, with its headquarters in Tokyo. In November
2010, UNIQLO first reached Malaysias shores in Fahrenheit 88, Kuala Lumpur. At present,
UNIQLO has 39 stores throughout the whole of Malaysia with a majority of its stores in
Kuala Lumpur and the Klang Valley (Uniqlo, n.d.).

Zara was founded in 1974 in Spain by Amancio-Ortega under Inditex, which Ortega owns
approximately 59% of. Zara opened its first Malaysian outlet in MidValley Megamall in 2003,
and at present, it has a total of 10 outlets situated in Kuala-Lumpur and Shah-Alam (Appendix
1).

Zara and Uniqlo are chosen as the offerings of this report due to their established brand
presence in Malaysia. Although both brands appear undistinguishable, a thorough analysis of
their segmentation, targeting, positioning and marketing mix strategies, with consideration of
their environmental forces, indicates notable differences. The two are distinctive in their
segmentation strategies, target market, Unique Selling Proposition (USP) and marketing mix
mechanisms. Due to these differences, the two brands will be affected differently by their
customers.
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Uniqlo
Segmentation and Targeting
Uniqlo targets a wide range of Malaysian consumers with respect to Uniqlos slogan, made
for all. However, its main target market is female and male adults ranging from the age of 18
to 40 who seek for affordable high-quality casual clothing that fits their daily lifestyles
(Fintell & Morimura, 2016). Uniqlo uses differentiated marketing by effectively segmenting
its products based on demographic, psychographic and behavioural variables that reflect its
target market.

Uniqlo designs its products based on gender, age and lifestyle of Malaysians. Uniqlos Work
Smart collection caters to both male and female adults working in white-collared industries
(Appendix 2) while Uniqlo Sport caters to both male and female adults who are active
(Appendix 3). Uniqlo also practices multivariate demographic segmentation by catering to
female Muslim adults with their Modest Wear (Appendix 4) and Hana Tajima Collection
(Appendix 5) besides catering to women who are in their life-cycle stage of pregnancy with
their Maternity Wear collection (Appendix 6).

As consumers differ in behaviour toward brands, Uniqlo segments consumers of different

user-statuses. For instance, Uniqlo targets non-users and potential users through
advertisements on social media platforms such as YouTube (Appendix 7) and Facebook
(Appendix 8). Uniqlo also lures potential and first time users on their online website to make
a purchase by providing free delivery for purchases over RM150 (Appendix 9) and through
promo codes (Appendix 10). For Uniqlos website loyal users, Uniqlo rewards them with e-
member specials online (Appendix 11). Uniqlo caters to the different benefits sought by
consumers by introducing different lines. For example, Uniqlos HEATTECH (Appendix 12)
and AIRism (Appendix 13) line caters to consumers who prefer functionality over design
while its collection such as
its UT Line (Appendix 14) and SPRZNY Line (Appendix 15) caters to consumers who seek
for fun designs.
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Positioning
Uniqlos competitive advantage is its ability to produce innovative clothing while its USP is
its affordable comfortable casual clothing which are made out of high-quality fabric and
developed by advanced technology (Fintell & Morimura, 2016).

Uniqlo does not chase trends but focuses on fashion staples (Dursin, 2013). This allocates
more resources contributing to Uniqlos point of difference it is always a step ahead in
product innovation and quality. Its mass production of similar styles keeps prices low and
make products affordable (Dursin, 2013). The perceptual map below illustrates Uniqlos
position compared to other brands in Malaysias apparel retail industry.
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On the vertical axis, affordability reflects how inexpensive a product is, the more affordable
brand would be able to serve a larger range of consumers. On the horizontal axis, quality
reflects how long-lasting and comfortable the product of a brand is. A brand with higher
quality products would appear more favourable to consumers. Uniqlo is located on the top
right quadrant as it offers high quality products for prices which are more affordable.

In the map, Uniqlos position is relatively close to H&M because they share almost similar
quality and price. To illustrate, a female basic white top is used. UNIQLO is positioned as
more affordable because it charges RM39.90 (Appendix 16) while H&M charges RM49.90
(Appendix 17). UNIQLO is positioned as higher quality because its top contains 90%
exclusive Supima Cotton which provides a silky touch (Appendix 18) while H&Ms top
contains only 60% cotton.

In the map, Cotton On is positioned away from UNIQLO. This is as both brands are more
different in terms of affordability and quality. Using the same illustration, a top from Cotton
on costs RM59 (Appendix 19) while UNIQLO charges RM39.90 for something similar.
Quality wise, Cotton On was silent on the materials used but its infamous reputation for poor
quality, as seen in the online review (Appendix 20), acts as a basis of judgement. Based on
this, Uniqlo offers a less for more value proposition as compared to Cotton On.

Marketing Mix
Product
Uniqlos core product is to cover consumers body parts besides keeping them sheltered from
any physical harm, satisfying consumers safety need. Uniqlos actual product is its
established brand name which originated from two words, unique and clothing. Uniqlos
actual product also consists of its affordability, comfortability, high-quality, functionality and
innovation (Uniqlo, n.d.). Uniqlos augmented products includes the free delivery for online
purchases over RM150 (Appendix 21), its after-sales jean length alteration and product
exchange services (Appendix 22), and its mobile applications. In particular, UNIQLO MY
which provides special offers and updates on Uniqlos products (Appendix 23). This allows
customers to receive added services to support Uniqlos offerings.

4
Price
Uniqlo uses psychological pricing strategy through reference pricing by selling a T-shirt at
RM59.90 instead RM60 because customers will perceive the price to belong in the RM50
category and not RM60 (Appendix 24). This leads to a possible purchase as customers
perceive prices to be lower. Promotional pricing strategy is also used as Uniqlo offers a
weekly online and in-store markdown on specific products to boost sales temporarily
(Inagaki, 2016). For example, the Ponte dress currently costs RM79.90 instead of the original
RM129.90 (Appendix 25). Uniqlo uses a low-price strategy while maintaining its quality
(Yui, & Huang, 2016). In 2016, Uniqlo reduced its 2014 prices due to declining sales as
consumers felt that the higher prices failed to justify product value (Nikkei Asian Review,
2016). Hence, it can be identified that Uniqlo uses value-based pricing as they consider
customers value perceptions and set prices to match them.

Promotion
Uniqlo advertises certain collections to promote new products in Malaysia. For instance,
Uniqlo hired Yuna as the face of Hana Tajimas Hijab collection in 2016 to increase its brand
awareness (Appendix 26). Uniqlo also promotes its products on its Facebook (Appendix 27)
and Instagram page (Appendix 28) as it can reach a wider audience through the internet.
Weekly sale promotions are conducted in Uniqlo on specific products (Financial Times,
2016), acting as a temporary incentive to increase purchases (Appendix 29). Uniqlo
emphasises on its public relations and aims to build a good corporate image through its
Corporate Social Responsibility (CSR) projects such as Uniqlo Recycle (Appendix 30) and its
Worker Empowerment projects (Appendix 31) while minimising its environmental impact
(Appendix 32). This helps Uniqlo improve relationships with its public while maintaining
good publicity.

5
Place
Uniqlo practices selective distribution because its outlets are only located in shopping malls
within Malaysias prime areas (Appendix 33). Prime locations are packed with Uniqlos
segment of working adults and they have a high traffic of consumers, which can improve
Uniqlos brand awareness and sales. Reflecting its slogan, made for all, Uniqlos online
store allows anyone anywhere in Malaysia with internet accessibility to purchase their goods,
Uniqlo does not have its own manufacturing site but it still coordinates production with
partner factories to produce products which will be delivered to external warehouses. The
products will either be sent to consumers who placed orders online through Uniqlos website
or delivered to Uniqlo stores worldwide where the clothes will be displayed and sold to
customers (Appendix 34).

Microenvironment
Public
Citizen-action publics affect Uniqlo. In 2015, Students and Scholars against Corporate
Misbehaviour (SACOM) investigated two of Uniqlos major suppliers in China and found
garment workers to be working under sweatshop practices (War on Want, 2015). This resulted
in Uniqlo pledging to eliminate sweatshop practices (Yui, 2015). It is important for Uniqlo to
maintain a good relationship with citizen-action publics because they can hinder Uniqlo from
achieving their goals. For instance, Malaysian ethical consumers would avoid Uniqlos
products to prevent negative association with the brand.

Besides that, the media public also affects Uniqlo because it either creates a desire or
disinclination to consumers towards Uniqlos products. With the rise of social media,
consumers are able to obtain information about Uniqlo more efficiently. Instagram posts
promoting Uniqlo from online personalities, such as Jared Lee, can increase Uniqlos brand
awareness and influence followers to purchase Uniqlos products (Appendix 35) while bad
reviews could prevent sales.

Customers
It is important for Uniqlo to understand what customers value (Vargo and Lusch, 2004) and
come up with products that satisfies them. Being in the Malaysian apparel industry, Uniqlo
faces a threat of substitutes from competing brands like H&M while new entrants, such as
Tabao, an online e-commerce site, threatens Uniqlos position with its much lower prices.
Uniqlos customers have high bargaining power due to the presence of substitutes. To
consistently remain attractive to consumers, Uniqlo differentiates itself by having a
competitive advantage of high-functionality and quality at affordable prices. This draws
customers to Uniqlo.

Zara

Segmentation and Targeting

Zara targets demographic, psychographic and geographic segmentations (Bhasin,-2017). Zara

market comprises of 60%-women, 25%-men and more recently, children fashion which makes
15% of the market segment (Arif, 2011).
Zara targets the middle to high income trend followers aging 18 to 40 year olds who wish to
be trendsetters (Mok, n.d.). This creates demographic options for Zaras customers who
democratize fashion (The-Zaras Brand Strategy Marketing Essay, 2013). With fashion treated
as lifestyle, this value falls under psychographic technique which targets audiences who want
to be perceived as the V.I.P wearing Zaras stylish up-to-date clothing while remaining price
sensitive (Keller, 2012). In Appendix36, there are 10 Malaysian branches that solely belong to
the Kuala-Lumpur and Shah-Alam areas due to geographic competitiveness. This acts as their
exclusive method of connecting to customers instead of conventional advertising.

Positioning

Zara aims to provide a unique value proposition where they ensure customers are able to look
trendy as well as purchasing lower priced merchandise (The Zaras Brand Strategy Marketing
Essay, 2013).
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Being a fast fashion industry, Zara falls under the fourth quadrant on the perceptual map
(Hensen, 2012). This is due to their consistent inventory turnover where new designs are
released twice a week based on buyers constant change in fashion demand (Berfield &
Baigorri, 2013). Thus, enabling them to sell cheaper because they possess ownership of their
manufacturing which allows superior control over the inventories (Makori, n.d.) which results
in less factors affecting their pricing

Bershka vs Zara:

Bershka retails cheaper because it targets the younger market (Bershka, n.d.) who are more
price sensitive; whereas Zara targets the more financially stable age group. Fashion related,
Bershka and Zara are equally trendy as they belong to the same parent company, Inditex
(Inditex, 2015) which have the same goals, striving in producing low-priced trendy clothing.

Gap vs Zara:

Gap does not possess a high fashion turnover unlike Zara because they lack a unique supply
chain. Gaps absence of manufacturing ownership forces them to bear the cost of
transportation and manufacturing expense into their pricing methods. Thus, the lengthier
product turnover for Gap because of outsourcing measures (Ahmed, 2014) which prevents
them from competing with Zaras superior control and turnover rate.

Marketing Mix
Product
Zaras apparel strategy enables customers to conceal their birthday-suits with fashionable
outfits that bolsters self-esteem by feeling trendy with a sense of exclusiveness.

Zara caters to men, women and children apparel (Appendix37). Zaras trademark is an
example of a simple yet successful business. According to Zara Logo (n.d.), the black
background represents elegance, style and excellence of the brand.

Zara provides accessible services to customers by having their own application and online
store with services of exchange or refunds of item(s) purchased and different payment
methods (Appendix38). Zara ensures that customers ever changing demands are satisfied by

9
continuously providing the latest fashion trend via their abovementioned offerings to their
target customers.

Price

Ortega believes everyone is entitled to constantly look fashionable which positions Zara in the
middle-high income trend followers.

Low Price Strategy: Zara implements this strategy because they offer high fashion clothing at
reasonable prices globally (Zara Marketing Mix, n.d.). Zara can achieve this due to their
supply chain management being able to save on storage, transportation, and advertising costs.
This allows them to allocate funds into each departments without compromising their pricing
strategies (Shankar, Versoza, Mittias & Sia, 2009).

Customer Driven Strategy: Zara believes their efforts in producing stylish clothing at
reasonable prices would enable them to gain customers loyalty. As Zara overlooks
conventional advertising, it ensures buyers feel a sense of exclusiveness by wearing their
apparel due to the limitation of inventory quantities (Lu, 2014), making each piece of clothing
personal/unique. Moreover, they value their customers dynamic changing fashion demands
by ensuring constant new selections, responding to their customers demands (Inditex, n.d.).

Market-Based Pricing Strategy: According to Shankar, Versoza, Mittias and Sia (2009), Zara
takes advantage of the customers willingness to purchase their products at whatever price
rate. For example, appendix 39 shows a jacket in Japan cost JPY10990, and the same jacket in
Malaysia cost approximately RM23 cheaper after currency conversion, indicating that Zaras
product pricing is country specific (Zara Marketing Mix, n.d.). Subsequently, this means Zara
uses demand-oriented methods in product pricing based on a regions volume of demand.

Place

Inditexs website suggests Zara is now operating in over 93 countries with an aggregate of
2,213 stores worldwide. Their manufacturing hub, headquarters and logistic centres are based
in Arteixo, Spain (Inditex, n.d.).

10

Strategy Location: Zara strives for geocentric orientation due to culture differences by each
respective country while adopting a certain resolution which differs from home market
approaches (Karakusheva, n.d.). Examples include sizing measurements of clothing in Asian
markets, and seasonal/climatic differences. Zara has presence in 10 Malaysian outlets situated
in prime locations (Appendix36), with aim to achieve direct communication strategy with
customers (Fan & Lopez, 2009). To demonstrate how Zara tactically locates their stores, Zara
in One-Utama (OU) will be discussed.

Thorough observation suggests (Appendix40), Zara strategically aligns themselves with other
high-end brands to be perceived as a luxurious brand. OUs Zara is located on Ground Floor
where there is higher customer traffic. The moment people enter the mall, they would be
strolling around, in the case of the new-wing called Highstreet, existing high-end brands like
Armani-Exchange, Tommy-Hilfiger, Calvin-Klein coexist with Zara as well.
Distribution-Strategy: Zara handles their supply chain management dominantly by being a
vertically integrated retailer (Adam, n.d.). Inditexs 2015 annual report shows Zaras
manufacturing plants are scattered around the Americas, Europe, Asia, and Africa. As
products are manufactured, they will be transported to the headquarters for quality control
inspections before global distribution. Therefore, by having high control it enables them to
produce products efficiently (Appendix41). From preliminary design to point of sale, Zara
achieves this within two weeks, provided they have their talented designers identifying the
customers constant changing demands (Mozzhukhina, 2015). Using this system, Zara
responds by providing the latest fashion trend in short time.

Promotion

Zara prioritizes their customers by aiming to build long-lasting relationships in order to

capture customers loyalty by satisfying the needs and wants of their target customers through
providing exclusiveness and affordability (Bhasin, 2016).

Zara achieves this by ensuring customers can experience remarkable shopping through
impressive customer in-store service and store ambience, such as excellent lighting, white

11
walls, big window displays, etc. Window dressing plays a huge role in Zaras advertising
appearance, as this implements an idea-oriented strategy (Shankar, Versoza, Mittias & Sia,
2009) for customers desiring to visualize the clothing offered. This entices them to browse
through products and possibly purchase spontaneously due to affordable pricing and the fact
that display items would be replaced due to high turnover. Zara succeeds in this as they
typically customize their stores with big window displays enabling them to exhibit designs on
their mannequins outfits with new trendy styles (Zara Shop Report, 2014).

Zara delivers accessibility to customers demands by providing online browsing/shopping

through their application and website (Appendix42). Word-of-mouth is an influential driver
that affects customer behaviour therefore Zara provides superior customer service by meeting
the demands of their target market (Bernard, 2011), as positive reviews and feedback achieves
an increase in sales. By having a unique supply chain system, it has gained brand and
customer loyalty that is highly necessary to stay competitive. Zara also controls their
inventory by having limited stocks for respective collections, as they want customers to feel
exclusive and different from each other with less replicas.

Microenvironment

Competitors

As competition is a microenvironment force, Zaras fast-paced fashion industry has to

compete with other brands like H&M and Uniqlo in order to be a distinctive brand. As shown
in Appendix 43, these competitors have their presence dispersed around Malaysia compared
to Zara, which gives them advantages of convenience by having more number of stores with
larger areas covered. Therefore, Zara should take action by opening more outlets in Malaysia
to compete, while increasing their understanding of their target customers. Despite their weak
presence in Malaysia, they still hold competitive advantage over other retailers as to
differentiating themselves by providing trendy regular turnover clothing at reasonable price
(Kracklauer, Mills & Seifert, 2012).

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Customers

Customer plays an important role in Zaras fundamental marketing because of their

changing fashion demands. It is important to understand which designs bring ultimate
satisfaction to the customer, because once satisfaction captured will ensure loyalty is also
captured. (Levine, 2003). By consistently hitting the customers preferences, sales figures
would increase due to good customer services. Together with positive word-of-mouth
recommendations, good feedback and reviews would favourably increase the brands image

13
Comparison

Zara and Uniqlo may both target 18 to 40 year olds Malaysian male and female adults but
Zaras target market places an emphasis on trendsetters while Uniqlos target market generally
emphasises on individuals who look for high-quality casual styles. As Uniqlos target market
is more general, Uniqlo has a broader market segment as compared to Zara. Uniqlo segments
Malaysian consumers based on their lifestyles, life-cycle stages and religion while Zaras
segment mainly includes individuals who treat fashion as a lifestyle.

Although both brands occupy consumers minds as leaders in the apparel industry, the USP
differs for both. Zaras USP provides consumers with trendy off-the-runway looks at lower
prices while Uniqlos is its ability to sell high quality clothing at affordable prices. Due to
their differences, both brands have different product designs and marketing communications.
It is also important to note the difference between Zaras brand image of affordable luxury
(The Atlantic, 2012) and Uniqlos image of casual simple wear.

Uniqlo and Zara offer clothing apparels for all individuals. However, the biggest difference
between both brands is that Uniqlo offers customers comfort over fashion while Zara offers
fashion over comfort. Uniqlo produces clothes that are more functional and basic in style
while Zara focuses on current in-trend designs. Uniqlos motto is subtractive designs,
whereby clothes are designed to its simplest form to prevent from running out of style
(Nokura, 2014). Zara, on the other hand, creates fashionable clothing according to customers
preference to ensure customer satisfaction. Zaras products emphasise more on being fashion-
conscious and is usually classified by customers to be a seductress because most of their
clothes have sensual and creative characteristics (Crisell, 2016). It is identified that both
brands belong at different ends on the spectrum of clothing styles. Zara is funky while Uniqlo
is conservative. Consumers will never find an off-shoulder top in Uniqlo (Appendix 44) but
will find an abundance of them in Zara (Appendix 45).

Zara and Uniqlos stores may both locate in similar locations but the in-store experience for
both differs as it is a projection of their respective identities. As Uniqlo strives to radiate joy
to consumers through its clothing (Uniqlo, 2016), its stores worldwide are designed to
represent energy, movement and happiness (PlayNetwork, n.d.). This can be seen with its
organised

14
colourful clothes display which creates warm and happy atmosphere, making consumers feel
at home (Appendix 46). Besides that, Uniqlos online website is colourful, easy to use and is
organised systematically (Appendix 47).

Zaras in-store environment reflects elegance with its clean and minimalistic interior
(Appendix 48). The usage of bare walls and the right lighting is emphasised to ensure their
products take the centre stage. Zaras extensive mirror placement reflects an up-scale walk-in
wardrobe, creating an intimate environment for its shoppers, stimulating them to assemble
outfits based on the readily-available clothing (The Guardian, 2013). Zara places an emphasis
on window displays of its stores to communicate the brand image to consumers (Erco, n.d.).
Zaras online website is very minimalistic, bare and vogue, reflecting a high-end fashion
magazine (Appendix 49). The differences on both brands online website and in-store
environments reflect their respective brand image and the type of customers they want to
attract. Uniqlos friendly environment attracts more family-oriented while Zaras sophisticated
environment attracts more fashion-forward individuals.

Although both brands have high market presence in Malaysia, it can be identified that Uniqlo
allocates more resources on promotions compared to Zara. Uniqlo is active in building its
public relations, conducting weekly sales promotion and hiring brand ambassadors to promote
their products (Appendix 50). On the other hand, Zaras sets no budgets on advertisements
(The Atlantic, 2012), has lesser sales promotion and does not engage as much in CSR. This
occurs as Uniqlo is relatively younger in Malaysia as compared to Zara, therefore would have
a lower brand presence among consumers. As Zara was established longer, it already has a
mass following, requiring only word-of-mouth advertising to promote new products
(Huffington Post, 2016). Uniqlo, who only appeared in Malaysia 2010 (Fast Retailing, n.d.),
has to gradually increase its brand awareness and acceptance through promotions while
slowly building their fan base.
 15

Both brands may use similar pricing strategies to maintain their affordability but Zara has a
larger price range because it has a larger product variety as compared to Uniqlos limited
styles. For example, the price of an off-shoulder dress from Zara currently ranges from
RM89.90 (Appendix 51) to RM599.90 (Appendix 52). At any one time, Zara may offer about
over 500 styles of dresses (Appendix 53) while Uniqlo only offers lesser than 100 styles,
based on observations.

Uniqlo and Zara are both affected by Malaysian customers. However, they approach
customers demands distinctively. Uniqlo takes more proactive measures and tries to cater to
everyone through its extensive segmentation. For instance, Uniqlo caters to Muslim females,
pregnant mothers, and working adults. Contrastingly, Zaras approach is solely on maintaining
its mission of delivering fast-fashion products to customers. Besides that, it can be observed
that based on its focus on promotions, Uniqlo strives to gain customers in a more aggressive
manner as compared to Zara.

(3836 words)
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