PROJECT REPORT

ON

Study Of Marketing Strategy Of ZARA

Submitted in the partial fulfillment for the award of Degree of Bachelor in

Business Administration 2016-19

UNDER THE GUIDANCE: SUBMITTED BY:

Ms. Hema mam Neha Arora

FACULTY (Management), CPJCHS ENROLLMENT No

35424201716

BATCH NO. 2016-19

CHANDERPRABHU JAIN COLLEGE OF HIGHER STUDIES & SCHOOL OF LAW

An ISO 9001:2008 Certified Institute (Approved by the Govt of NCT of Delhi
Affiliated to Guru Gobind Singh Indraprastha University, Delhi)
Plot No OCF Sector A-8, Narela New Delhi -40

1|Page
 DECLARATION
This is to certify that Report entitle study of marketing strategy of zara which is submitted by

Neha Arora in partial fulfillment of the requirement for the award of degree BBA(Gen.) to

GGSIP University, Dwarka, Delhi comprises only my original work and due acknowledgement

has been made in the text to all other material used.

Date: Name of Student

Neha Arora

APPROVED BY
Teacher/Guide

2|Page
 CERTIFICATE

This is to certify that Report entitled which is submitted by study of marketing strategy of

ZARA which is submitted by Neha Arora in partial fulfillment of the requirement for the award

of degree BBA(Gen.) to GGSIP University, Dwarka, Delhi is a record of the candidate own work

carried out by him under my/our supervision. The matter embodied in this thesis is original and

has not been submitted for the award of any other degree.

Date: Supervisor Signature

3|Page
 ACKNOWLEDGEMENT

I offer my sincere thanks and humble regards to Chanderprabhu Jain College of Higher
Studies & School of Law, GGSIP University, New Delhi for imparting us very valuable
professional training in BBA.

I pay my gratitude and sincere regards to Ms. Hema mam, my project Guide for
giving me the cream of her knowledge. I am thankful to her as she has been a constant
source of advice, motivation and inspiration. I am also thankful to him for giving her
suggestions and encouragement throughout the project work.

I take the opportunity to express my gratitude and thanks to our computer Lab staff
and library staff for providing me opportunity to utilize their resources for the
completion of the project.

I am also thankful to my family and friends for constantly motivating me to complete

the project and providing me an environment which enhanced my knowledge

Students Signature

4|Page
Executive Summary
Zara is one of the largest international fashion companies. It belongs to Inditex, one of the
worlds largest distribution groups. It has overtaken Gap as the largest apparel retailer in the
world. The main competitive advantage of Zara is its quick response to the customer fashion
trends and producing clothes often with short life spans and Zaras mission mainly focuses on
domestic manufacturing.

In order to sustain its competitive advantage, Zara adopts Just-in-time (JIT) manufacture system
to implement high quality in-house manufacturing and conducts JIT inventory approach to
maintain inventory level. Meanwhile, Zara conduct EOQ model to control setup cost. Moreover,
Zara should make sure its worldwide retail store network running well by conducting JIT
inventory approach, so Zara conducts an inventory distribution process involves a forecasting
demand model and an optimization model to determine weekly shipment quantities from
warehouse to every retail store and solve some problems about inventory coordination among
retail network. Due to the success implementation of its current inventory management strategy,
Zara gains the capabilities that quick response to customer trends and high speed to market,
which is the fundamental factors to Zaras success in the fast-fashion industry.

Industria de Diseo Textil S.A., also known as The Inditex Group, is the worlds leading and
fastest growing fashion producer and retailer, headquartered in Arteixo, Spain. The Inditex
Group is made up of more than 100 companies operating in textile design, manufacturing, and
distribution, and is responsible for producing 840 million garments a year, with eight retail store
formats: Bershka, Massimo Dutti, Oysho, Pull & Bear, Stradivarius, Uterqe, Zara, and Zara
Home. These retail formats collectively occupy 6,009 stores in 86 markets.

Inditex faces competition from companies such as H&M and Benetton, but is set apart by its
unique business model. Inditex controls the entire fashion process as well as retail. In the
variable and fast changing fashion world, Inditex prioritizes time-to-market through vertical
integration,making them the pioneer of fast fashion. Competitors traditionally prioritize
production cost and outsource manufacturing to China. This strategy is cheap but creates a long
supply chain. Inditex, on the other hand, sources more than half of its products from Spain,
Portugal and Morocco, creating a short, manageable, and more responsive supply chain. Despite
the higher costs, in the fashion world the ability to react quickly is key. Other companies must
predict trends, while Inditex can observe and respond. Inditexs computerized inventory system,
state-of-the-art production an warehousing, and a short supply chain cut lead-time to 10-15 days
between design and distribution,compared to the 5-6 month industry average.

5|Page
Zara, Inditexs flagship retail format, generated 66% of the companys overall sales in
2012.
Currently, Europe accounts for 66% of group sales, though sales in Spain accounting for
22% of
revenue have stalled due to the poor economy, causing the company to aggressively seek
new
markets. Inditex has doubled its store count from 3,000 to 6,000 since 2007 as it expanded
its store
space by between 8% and 10% a year. Recently Inditex has opened more than a store a
day, or about500 stores a year. It is reported that this growth rate is to be maintained for
the next three to five years, with an emphasis in Asia.1 Sales also benefited from a global
rollout of online stores, starting with Zara Home in 2007 and each additional retail format
in 2010. Zara is the most prominent online concept currently receiving more than 1.3
million unique visitors per day.2 Though Inditex has yet to provide more information
about online sales, Credit Suisse estimates online purchases will generate over $782.5
million by the end of 2013, almost doubling 2012 levels.3

6|Page
Table of Contents
Student declaration i
Certificate from Guide ...................ii
Acknowledgement ......................................................................................................... .iii
Executive Summary ... iv

CHAPTER- 1: INTRODUCTION
1.1 About the Industry
1.2 About Organization/ Company Profile

CHAPTER 2: Literature Review

Literature Review

CHAPTER 3: RESEARCH METHODOLOGY

3.1Objective of the Research
3.2Survey Design
3.3Type of Research
3.4DataCollection Method
3.4.1Primary Data
3.4.2Secondary Data
3.5Sampling Methods
3.5.1Univerese
3.5.2Sampling Unit
3.5.3Population
3.6Sample size & Design
3.7Research Period
3.8Research Instrument
3.9Instrument for data collection
3.10 Drafting of a questionnaire.
3.11Limitations of the Study

CHAPTER 4: ANALYSIS& INTERPRETATION

4.1 Income Statement
4.2Balance Sheet

CHAPTER- 5: FINDINGS & SUGGESTIONS

5.1 Findings ..
5.2 Suggestions......
CHAPTER- 6: CONCLUSION
BIBLIOGRAPHY
Bibliography

7|Page
INTRODUCTION

Zara is a Spanish clothes and accessories brand, it is the flagship brand of the
Inditex group. Few clothing brands keep up with the latest fashion, are of high
quality and yet, affordable. It is probably the amalgamation of all these
qualities that made Zara, the Spanish clothing brand become the go-to fashion
brand for all.

It is the world's largest apparel retailer. The fashion group also owns brands such
as Massimo Dutti, Pull&Bear, Bershka, Stradivarius, Oysho, Zara Home, and
Uterqe. Zara as of 2017 manages up to 20 clothing collections a year.[4]

Zara the brand which is described as possibly the most innovative and devastating
fashion retailer in the world was originally the brainchild of The Inditex Group
owned by Spanish business Tycoon Amancio Ortega.

8|Page
The group is headquartered in A Corua, Galicia, Spain, where the first Zara store
was opened in 1975, the city which saw the Group's early beginnings and which is
now home to its central offices.

This Spanish success story encompasses many different styles, from daily clothes,
to casuals up to formals, thereby providing a complete one stop fashion solution
for women, men and children.

Starting with a single store, today Zara has as many as 1,520 outlets bringing
exclusive fashion to all over the world and churning out annul turnovers of 6,824
millions Euros. Most important of which is to note that 75% of these total earnings
are a part of there international sales.

Zara was known, by industry players, to have an extremely particular business

model, especially given the fast-growing and quick-response industry it acted in,
where most companies outsourced garment manufacture to reduce costs and,
supposedly, enable higher flexibility. Zara, however, as a vertically-integrated
retail chain, controlled all its garment production and outsourced only basic
clothing that could be ordered in advance and easily adapted to future required
styles.

Stores had always been the key to Zaras system: the face of the brand to the world
and its main source of information on what consumers wanted. Built with a
minimalist environment and big windows; stores were comfortable and designed to
create an atmosphere of chaos and excitement24, always located in prime,
highly noticeable locations that were fully-owned by Zara (with a few exceptions
where cultural and political factors could act as obstacles). Stores averaged at a
size of 1,400 square-metres, and were furbished with clear lights, white walls and
ceilings in order to draw all the focus on clothing. Store refurbishment occurred
every 4 years and window displays were changed every month.

9|Page
Marketing Strategy
Meaning:-

The marketing strategy is the means of achieving the corporate objectives.

It gives messages to the stakeholders, or publics.It says:

"This is where we are going", and

"When we will get there", and
"This is our stance"

Marketing Strategies of zara

Handling 7000+ stores across the world and successfully popularising
8 fashion retail brands globally under its umbrella brand architecture
has helped Inditex (parent company of brand ZARA) in becoming one
of the worlds largest fashion retail organisations. Zaras 1st store was
opened on 1975 in beautiful European nation Spain

Segmentation, targeting, positioning in the

Marketing strategy of Zara

Zara uses a mix of demographic, geographic and psychographic

segmentation strategies in order to serve the growing needs of the
customers.

Zara has limited stores across the globe due to which it uses selective
targeting strategies to make their products available in the market.

Usage-based positioning strategies are used by Zara to highlight its

customers centric approach to satisfy the changing fad needs of the
customers around the globe. Zara knows that its customers want new

10 | P a g e
and updated trends and accordingly it targets customers based
exclusively on its designs

Competitive advantage in the Marketing strategy

of Zara-

Strong parent company: Inditex, the parent company of the brand

Zara have a strong portfolio of 8 brands which is helping the company
in nurturing each brand with its experience and strong financial base.

Turnaround time (TAT): In comparison to the other players in the

market Zara makes it new product available to its stores in just two
weeks of launch whereas the average TAT of the industry is 3-6
months.

Stronghold in the parent nation: Zara gets 60% of its sales (2015
data) from the European nation out of which 18 % comes from Spain.

Advertising & store locations: The most important aspect of the

profitability in the retail apparel industry is the location of the stores
and its advertising while in case of Zara all of its stores are
strategically located in the major cities globally and advertising
expenses of Zara is very low as compared to the peer companies in
the industry.

BCG Matrix in the Marketing strategy of Zara

Zara primarily deals in products lines such as clothes & accessories

for Womens, Mens and Kids. Among the 3 line of business of Zara,

Women segment is a star on the BCG Matrix.

11 | P a g e
Mens segment is also star due to high demand of the products yet
tough competition in the market.

Kids section is question mark because there are many brands for kids
which are much more famous.

Kids section is a line of business which is a question mark in the BCG

matrix of Zara. Men and womens segment is driving the growth for
Zara.

Distribution strategy in the Marketing

strategy of Zara
Right from design to distribution to sales of its products through their
2100+ stores around the world, Zara operates all the business and
make the newly designed products available in their stores within the
span of 2 weeks.

Apart from the Zara exclusive stores, many multi-brand retail chains
sell Zaras clothing and accessories items which are helping the
company in penetrating in the leading cities of the nations globally.

The supply chain of Zara is one of the biggest competitive

advantage to the brand because where other retail stores take 21
days to even 2 months to get new designs in the store, Zara gets
it done within 2 weeks. Plus, the stores have these new designs
only for a destined period of time or till stocks last, hence
movement of material is very imporBrand equity of Zara
Valued at $ 10.7 bn (May 2016 data) this fashion industry retail giant
has bagged 53rd position in Forbes list of worlds most valuable
brands.

12 | P a g e
Brand equity of Zara
Valued at $ 10.7 bn (May 2016 data) this fashion industry retail giant
has bagged 53rd position in Forbes list of worlds most valuable
brands.

Competitive analysis of Zara

The fashion clothing retail industry is highly competitive with various
brands such as H & M, Mango, Gucci and many other national and
international brands fighting with each other in the same segment.
However, the designs made by Zara are based on the consumer &
market feedback which they continuously work upon to be more of the
consumer-oriented brand.

Market analysis in the Marketing strategy of

Zara-
The clothing retail industry is highly competitive and the changing
fads, socio-economic and behavioural culture possess a major
challenge for the companies operating in this industry. Back end
integration, high raw material cost and advertising cost are the other
factors that affect the apparel industry companies by and large.

Customer analysis in the Marketing strategy

of Zara
In mens and womens clothing segment customers of Zara are in age
group of 15-40 years. Recently it also launched kids section in their
stores across the world.

13 | P a g e
HISTORY OF ZARA
Amancio Ortega opened the first Zara store in 1975 in downtown A Corua,
Galicia, Spain. Ortega initially named the store Zorba after the classic film
Zorba the Greek, but after learning there was a bar with the same name two
blocks away, they rearranged the letters molded for the sign to 'Zara.' It is
believed the extra 'a' came from an additional set of letters that had been
made for the company.[5][6] The first store featured low-priced lookalike
products of popular, higher-end clothing fashions. Ortega opened additional
stores throughout Spain. During the 1980s, Ortega changed the design,
manufacturing, and distribution process to reduce lead times and react to new
trends in a quicker way, which he called "instant fashions". The
improvements included the use of information technologies and using groups
of designers instead of individuals

14 | P a g e
 scar had been Zaras director for years, witnessing the opening of stores in over
10 new markets6, the continuous expansion of Zaras e-commerce stores (available
in 21 countries by the end of 20137) and the 2012 cutting-edge refurbishment,
design and implementation of Zara stores worldwide. He knew that the stores were
the key to Zaras business model; the millions of euros invested annually in
locating stores and designing each interior carefully explained why Zara needed no
further advertising the stores were the voice of Zaras offer.

Inditex Timeline
1963 -Amancio Ortega, founder of Inditex,
launches a clothing manufacturing
business. Over a decade the business
steadily evolves to a number of owned
textile factories, selling merchandise
across Europe.

1975 Zara is founded with a store in La

Coruas central street
1976 Zaras store network expands to major
Spanish cities after the acceptance and
success of its concept.

15 | P a g e
1985 Inditex is founded as the head of the
corporate Group.
1986 Group manufacturing companies sell all
their output to Zara and lay the
groundwork for a logistics system
capable of addressing expected rapid
growth.
1988 Opening of first international Zara store
in Oporto.
1989-1990 Zara expands to US and France,
opening stores in New York (1989) and
Paris (1990).
1998 Launch of new chain, targeting a
younger female market

2000 Inditexs HQ moves to a new building

in Arteixo, La Corua.
2008 Inditex opens its 4000th store in Tokyo.
2010 Inditex reaches 5000th store, launching
a new eco-efficient Zara store in Rome.
Start of online sales through Zara.com,
available in 16 countries by the end of
the year.
2011 All Inditex chains have online stores.
2012 Refurshibment of Zaras store image
worldwide. Inditex opens its 6000th
store.
2013 Zara opens 1st store in Algeria. Inditex
continues to expan its brands online in
new markets.
2014-2015 Zara introduced the use of RFID
technology in its stores in 2014. In
2015, Zara was ranked 30 on

16 | P a g e
 Interbrand's list of best global brands.

2016 Zara can offer more choices in more

current fashions than many control, it
does have to contend with higher people
costs, of its competitors. It delivers
merchandise to its stores twice a
averaging 17-20 times the costs in Asia.

ZARA Indutsry

1925 stores in 86 countries

Created in 1975
For women, men, youth and infants up to age 50
Accounted for 66.11% of Inditexs sales in 2012
Zara is always striving to meet the needs of its customers at the same time
as helping to inform their ideas, trends and tastes.
Website: www.zara.com

17 | P a g e
Size of the industry In INDIA
Domestic market size of the clothing and fashion industry: 68 billion dollars.

Geographical distribution
Mumbai, Delhi, Kolkata, Bangalore
ZARA MUMBAI - PALLADIUM

18 | P a g e
ZARA NEW DELHI - SELECT CITYWALK

ZARA NEW DELHI - THE PROMENADE

Output per annum

ZARA Inditex made sales of 7.2bn and earnings before taxes, interest, depreciation and
amortisation (EBITDA) of 1.6bn, compared with forecasts of 7.1bn and 1.6bn.

Type:

Clothing - Kids, preteens, teens, men and women

Accessories - Women accessories which includes chains, necklaces, and bracelets

COMPANY PROFILE

Zara Espaa, S.A.

Type Sociedad Annima

Industry Retail

19 | P a g e
 Arteixo, Galicia (Spain)
Founded
(24 May 1974; 43 years ago)

Founder Amancio Ortega

Headquarters Arteixo, Spain

Number of locations 2169 stores [1]

Area served Worldwide

Products Clothing

Revenue US$15.9 billion (2016)[2]

Parent Inditex

Website zara.com

VISION
Our stringent commitment to Global standards of Quality has seen us grow phenomenally over
the last decade, to create a niche of our own, in the highly competitive world markets. ZARA
Textile has been the name of one of the most innovative and leading textile producers. Our
technical perfection, quality standards and innovative impacts are unique. ZARA Textile has
become one of the leading symbol of quality products in the textile industry.

Behind all this success, Directors and their team have a complete vision in thier mind to make
their organization as one of the top ranked company. Following is our vision statement.

20 | P a g e
MISION
ZARA Textile is devoted to achieve consistent improvement in the system of providing
products & services to the customers through On Time Delivery & Enhancing Customers
Satisfaction by means of Quality and Value."

Key Objectives

Zaras aim is to make fashion accessible for all by offering the latest fashion in medium
quality at prices, affordable for everyone. Zaras business model operates on having a
very low turnaround time, and reducing the advertising spend by using its store as the
point of information.

Zaras vertical integration of design, JIT manufacturing system, delivery and sales;
flexible organizational and work structure, management of stocks on as-needed basis;
quick response policy to fashion trends and advanced information technology to support
operations combine to enable quick response to customers changing demands.

21 | P a g e
 Zara Values

Voice: The Trust is committed to speaking truth to power by

enabling the unfiltered voices of peoples real lived experience to
influence those in power
Collaboration: Recognising that we can achieve little on our own, the
Trust works in partnership with others to build movements for change

22 | P a g e
 Engagement: The Trust aims to use the power that having
independent money gives us and to work with all our partners
respectfully in the interests of our shared goals.
Independence: The Trust sees a strong civil society, of which we are
a part and which we will nurture, as a key mechanism for holding the
powerful to account.
Learning: The Trust seeks to learn from all the work we undertake
and support and to share that learning widely to increase impact.
Innovation and evidence: The Trust will work over a sustained
period of time to find and build an evidence base for new solutions to
old problems
Quaker values: The Trust respects its historical roots in Birmingham
and in Quaker values, although now embracing all faiths and none

ZARA Logo

23 | P a g e
ZARA SWOT ANALYSIS, USP &
COMPETITORS

SWOT Analysis of Zara with USP, Competition, STP (Segmentation, Targeting,

Positioning) - Marketing Analysis

24 | P a g e
 Zara
Parent Company Inditex Group

Category Apparel and Accessories

Sector Lifestyle and Retail

Tagline/ Slogan Zara

Zara offers perfect combination of high end, chic clothing at

USP premium prices

Zara STP
Segment Clothes for people with a combination attitude of work and play

People with Medium to high purchasing power who love to look

Target Group glamorous at all times

Positioning Zara offers classy high quality clothes based on consumer trends

Zara SWOT Analysis

1. Zara have more than 2000 stores all over the world
2. Part of one of the most biggest Spanish retailers in the world
3. Zara have a well established brand name worldwide
4. Their supply chain management is extremely low cost as well as
Strengths most of their processes like operations, manufacturing are all

25 | P a g e
 vertically integrated

5. Strong online presence through their own website and other

ecommerce platforms makes Zara a popular brand name.

7. Zara offers extremely trendy, well designed and fast delivery of

new products

8. Apart from clothes, Zara also offers handbags, shows etc

1. Limited marketing and advertising as compared to some other

brands

2, High competition for Zara means limited market share and high
Weaknesses brand switching

1.There are more global markets which Zara can explore

2.They can also enter into segments and expand those areas where
they havent
3.Online marketing and ecommerce is gaining importance which
Opportunities can be tapped by Zara

1. The high end fashion merchandisers can be a major threat to

them
2. Economic downturn can also be a threat to their target segment
3. There is a large amount of consumer switching taking place

4. Fake imitations can decline the sale of Zara products and hurt
Threats business

Competition
1.Chanel

2.Christian Dior

3.Burberry

4.Ralph Lauren
Competitors

26 | P a g e
 5.Prada

6.Gucci

7.Louis Vuitton

8.Hugo Boss

9.Hermes International

10.Versace

11.Valentino S.P.A

TODAYS PRODUCTS OF ZARA

27 | P a g e
Zara includes variety of products under these
categories :
Womens
Mens

WOMENS
1. TOPS

28 | P a g e
 2. TROUSERS

3. BAGS AND HANDBAGS

29 | P a g e
 4. HIGH HEELS

30 | P a g e
 MENS
JEANS

SHOES

31 | P a g e
 SHIRTS

JACKETS

32 | P a g e
 BUSINESS OPERATIONS

2012 2011 2010 2009 2008 2007

EUROPE 1296 1280 1245 1204 1188 1092
AMERICA 219 207 199 188 173 149
ASIA AND 410 343 279 216 159 120
REST OF
THE
WORLD

33 | P a g e
TOTAL 1925 1830 1723 1608 1520 1361

Channel Of Distribution

The prime of object of production is its consumption. The movement of

product from producer to consumer is an important function of marketing. It
is the obligation of the producer to make goods available at right place, at
right time right price and in right quantity. The process of making goods
available to the consumer needs effective channel of distribution. Therefore,
the path taken by the goods in its movement is termed as channel of
distribution. The goods may be sent to the consumer directly or indirectly
through middlemen. The channel of distribution may be classified as:

Selling through direct channels

This is the oldest, shorter and the simple channel of distribution. The
producer sells the product directly without involvement of any middle man.
The sale can be made door to door through salesman, retail stores and direct
mail. Certain industrial and consumer goods such as clothes, shoes, books,
hosiery goods, cosmetics, household appliances, electronic goods etc., may be
sold through direct contact. Perishable goods such as vegetable and fruits can
also be sold directly.

All 1,900 Zara stores received shipments with new items twice a week;
centrally managed in Arteixo and ordered by store managers worldwide. Zara
had, like all Inditex chains, its own Distribution Centre (henceforth DC): a
40,000 square-metre building located in Arteixo paired with smaller facilities
in Southern America. Regardless of origin, all merchandise passed through
Arteixos DC before being shipped to their respective locations. The
warehouse was known as a place to move merchandise and not store it21,
most garments only stayed for some hours and none would stay for more than
three days. 75% of shipments were made by truck to stores across Europe and
arrived typically between 24 and 36 hours after the order. Countries outside
Europe received merchandise 48 hours after ordering, typically by airfreight
or boat.

34 | P a g e
Introduction Of Department
There are many different functional departments all create the prime of object of
production is its consumption. The movement of product from producer to
consumer is an important function of marketing. It is the obligation of the producer
to make goods available at right place, at right time right price and
in right quantity. The process of making goods available to the
consumer needs effective channel of distribution.
Therefore, the path taken by the goods in its
movement is termed as channel of
distribution. The goods may be sent to the
consumer directly or indirectly through
middlemen.

Contrarily to the rest of the industry, Zara opted to keep around half of its
merchandise production in-house under the operations of 20 fully-owned factories.
Inditex purchased undyed garments from countries such as Italy, Turkey, India and
China with the help of two purchasing offices, one in Barcelona and another in
Hong Kong. Fabrics, and non-core items, were purchased as a finished product in
small quantities through frequent orders, allowing Zara to quickly react to
consumer demand by manufacturing and distributing at a high speed to stores (a
new item could be in store shelves only 3 weeks after its need was detected).
Moreover, outsourced production came as no obstacle for Zaras quick response
system: 80% of all outsourced manufacturing was done in Europe and 20% came
from Asia and low-wage countries, where only the less fashionable and basic items
were ordered.

35 | P a g e
There are many different departments involved with ZARA

Marketing and Sales

Finance

Administration and IT support

Operations

Research and Development

Human Resources

Cutomer Services

1. MARKETING AND SALES

Zara is known as the Coca Cola of fashion. Such is the craze of this brand
among the fashion enthusiasts. One of the major strength of the company
is that it is able to respond very quickly to the changing needs of the
customers.

The company does not outsource its manufacturing process, making it fully
in control of the products it produces. Its unique selling preposition is to
create the latest trends. In most cases, new styles are normally available
on the sales stores within two weeks, four weeks maximum. If a product is
not selling in the stores, it is immediately pulled from the stores.

However, when it comes to India, it has a few problems to sort out,

prominent among those being the lack of seasonal variations in their range.
Secondly, it needs to tackle and cope up with the cultural needs of the local
people which is a big challenge and Zara is working to reach out local
people by coming up with designs that integrate modernism with local
traditions.

36 | P a g e
 2. FINANCE

This is where Zara, with its highly responsive supply chain, excels. Although the
companys flexible supply chain means its price points are slightly higher than its
competitors, it allows it to be the most responsive to chabegan as a small Spanish
clothing company, founded by Amancio Ortega in 1975, has transformed into a
global business and market leader. Boasting over 6,000 stores, it has a presence in
nearly 88 countries, with total net income rising to 2.5bn ($2.8bn) in 2014 nging
fashion trends.

3. ADMINISTRATION AND IT SUPPORT

Administration and IT support department have been keeping things clean, taking
orders, ensuring all material is of a good quality. Zara was, curiously, a late
bloomer in the online business. Having had a website since 2010, the brand only
began to sell online almost one year later. The brands managers had always been
hesitant in entering the online realm but with the increasing user activity on the
internet, and due to Zaras high reliance on word-of-mouth, they believed that
creating an online site would help increase channels for consumers pre-purchase
interaction.

4. OPERATIONS

Operations management is in regard to all operations within the

organization related activities including managing purchases,
inventory control, quality control, storage and logistics. A great
deal of focus is on efficiency and effectiveness of such processes.
An example of successful operations management in retail sector
is obvious in Zara business model which is elaborated and
discussed here by a team of MBA Strathclyde students.
From one shop in La Corua, the Zara empire has expanded to
more 50 countries. While other giants in the business squeeze
their profit margins by manufacturing in bulk and lowering prices,
Zara understood that most of the customers are willing to pay for
clothes if they feel they are getting exclusive and fashionable
clothes.
37 | P a g e
 5. RESEARCH AND DEVELOPMENT

Zara is a spanish chain store in Inditex group, one of the worlds biggest retail store
in the world who are also owners of zara home. Zara is a fast industry bt its unique
business model is based on innovation and flexibilty. they design and distribute a
garment to the market in just 15 days. they always have new products but in
limited supply. the customer feels there is an 'exclusitivity', since only a few items
are on display even though stores are planned spacious; they feel they have to buy
it because they wont find it again. Zara's designer create approximately 40,000 new
design annually in which 10,000 are produced. these design resemble lateset
couture creations of classic piece.

6. Human Resources
One of the key roles of this department is the ability to keep everyone happy; they
are concerned with the welfare of the staff, people whom come in contact with the
company and welfare of the business by following employment laws and ensuring
health and safety. When you have happy staff you have motivated staff and this
helps to achieve the objectives. HR is also responsible for all training that has to be
taken to ensure the company are up to date with the way the company functions
and that all health and safety is being met.

7. Customer Service
About 75 million people, or one-third of the total Internet population, buy
goods online to be shipped to them over the course of a quarter. Of those, about
one-third make 1 transaction and half make 1-2 transactions. About a quarter
make 3-5 purchases, and the other quarter make 6 or more. Zara provide vast
customer service 24/7 as they treat customer satisfaction as an major factor.

38 | P a g e
 LITERATURE REVIEW

Zaras innovations in IT, supply chain management and merchandising has pushed
it to become one of the most recognizable names in the world. The brand has set
the industrys norms and become a miraculous exception in the world of fashion.
However, in the beginning of 2013 the brand faces severe pressure in its sales due
to the ever-changing dynamics of its industry, the economic constraints set by the
European recession and the force of its competitors, specifically the Swedish
fashion retailer H&M. Unlike its competition, Zara had never pursued an intensive
advertising-based strategy, focusing more on consumers demands and their
experience with the brand in its points of sale.

Relevant talking points:

What Zara represents i.e. consumers perception of the brand. Students may
lean toward the following:
Style
Quality
Good price-quality ratio
Clean, simple image
The Zara Way, interesting discussion topics could be:
Zaras design-to-manufacturing system
Store operations

For the Zara brand, a possible positioning statement could be:

Zara is a clothing and accessories fashion brand (frame of reference)
For men, women and children (target audience)
That brings the most fashionable and trendy clothing at affordable prices (point
of difference)
Because they know where their items come from and guarantee the best
quality. (reason to believe)

39 | P a g e
 Research Methodology
Research methodology, selected in view of the research objectives, pros
and cons as well as details on its use will form part of this chapter. We will
also outline the research method used, information collection procedures,
information sources, and how this information will be analyzed in light of the
research objectives
This chapter presents how the image developed by a brand, corporate or
stand-alone over-the-years impacts consumers behaviour, specifically
answering the question concerning factors customers look for in a brand,
prior to purchase in the apparel industry. Based on these factors, we can
narrow down the facets available with these two companies and how they
succeed / fail in the overall strategy to attract or carry along positive
consumer behaviour, in influencing their sales

Objective of the Research

The purpose of this research is to describe on a specific way
how Zara can address the expenditure on global online sales
by providing a customer friendly shop portal, which allows
an easy ordering process and an cost-effective shipping and
return method.
The key of this strategy is based on every single customer
who had a satisfied experience by purchasing fashion online
and who wants to repeat online shopping.
Furthermore, its not all about increasing the economical
profit; moreover to create an added value of Zaras brand as
an intangible asset.

40 | P a g e
PREPARING THE RESARCH DESION

Research Design
Young Designers (26 average) draw the design sketches then
discuss it with market specials and planning & procurement staff.
Designs inspiration is copied from different sources (trade fairs,
catwalks, magazines) from all around the world. It is worth to
mention that out of 40,000 designs only 10,000 are approved.
This illustrates the flexibility of ideas generation and on the other
hand the huge number of designs reflects the ability to meet
almost all the fashion requirements by customers of all ages (up
to 55).
ZARA business is organized around processes not functions, to
close the information loop. All team is involved in all processes.
This method minimizes the time as decision is conducted in one
room, and in direct proximity to the information.

41 | P a g e
RESEARCH PLAN
ZARA is a member of the INDITEX group, a Spanish group. ZARA
have established its stores all over the world, Europe, America, the
Middle East, Asia Pacific and among its 5000+ stores (from the
INDITEX group), Hong gong 8ZARA stores from the whole wide world.
Zara offers the latest trends in international fashion in an environment
of thought-out design. Its stores located in the main commercial areas
of cities across the Europe, America and Asia, offer fashion inspired in
the tastes, wishes and lifestyles of today's men and women. Zaras
clothing has identified a significant underserved segment within it.
Zaras clothing is uniquely positioned to serve this segment of the
market because of its fast paced fashion ideas, its latest technology,
its efficient business strategies and its affordable prices.
Due to the growing of the clothing industry and the enormous unmet
need in the clothing market we see the long-term exppotential of Zara
throughout the world. We are visionaries who see Zara as an extreme
financial launch. By achieving its sales targets, Zara will position itself
for exceptional profitability and self-funded growth.
ZARAs Plan is to maintain and develop its position in the market by
giving well in time response to changing trends in consumer tastes
through creating new designs that are suitable for all customers at an
affordable price.
Zara constantly updates its range. The company takes its inspiration
from the catwalks, targeting the fickle, fashionable young, one of the
riskiest parts of the clothing market. Unusually for a clothes retailer,
Zara designs all its own clothes, makes most of them in Spain and
distributes all of them itself.

42 | P a g e
LIMITATIONS OF THE STUDY

Zara excels by targeting technology investment at the points in its value chain
where it will have the most significant impact, making sure that every dollar spend
on tech has a payoff

The facilities move about 2.5 million items a week, with no item staying in-house
for more than 72 hours. Ceiling-mounted racks and customized sorting machines
patterned on equipment used by overnight parcel services whisk items from
factories to staging areas for each store. Clothes are ironed in advanced, packed on
hangers, with security and price tags affixed.

Would you advise WalMart or Target to move in the direction of Zaras Fast
Fashion approach to manufacturing, distributing, and selling clothing? Why or
why not? If so, what specific tactics should they adopt? How disruptive would
this be to their business? Why? If not, are there parts of the Zara approach they
should learn FROM?

or a small fashion startup founded by four recent CMU grads that sells mass-
customized clothing online.

43 | P a g e
SECONDARY DATA

The secondary data is mainly concerned with raw data and published
summaries (Saunders et al. 2007). Secondary data used in this study, mainly
from books in the university library and academic weekly online through
keyword search, such as differences in marketing strategy in order to gather
more material, the researchers ZARA in china , brand loyalty to obtain
more comprehensive data, and compare the data obtained from multiple web
pages to determine the authenticity of the information about ZARA business
model, sales conditions. In addition, ZARAs official website is also important
way to market data. Particularly, Saunders et al (2007) argued that when
researcher conducted a qualitative research in an organization, secondary
source would facilitate a triangulate finding depended on the primary data
collected. If two or more sources explained a phenomenon as well as it would
conclude that the information is reliable (Stokes, 2000).

Fututre Strategy
Zara is the meaning of "instant fashion". Instead of creating demand for
new trends and using fashion shows- Zara uses another method. They
study the demands of the actual customers in their stores and then delivers
that design at very high speeds. They saves tons of money on their delivery
methods(you can find in the article link). I would say they are very much
ahead of the fashion market in terms of production and sales.Zara is the #1
most profitable out of 8 other companies in the Inditex Group. Their
production cycles are much faster than H&M! In 1 year Zara launches
11,000 new items compared to 2,000-4,000 from H&M!

44 | P a g e
This all sounds like Zara is doing just fine, right? Yes, that is right but they
want to do even better! Over the next 4 years the brand plans to double in
size opening over 4,000 new shops! They plan this expansion to mostly
start out in Europe before pushing anywhere else. They have already
opened a new distribution center to get the ball rolling with expansion
plans!

I believe this will be a great successful for Zara and they are profitable
enough now I think they should grow. That is 1,000 stores every year
for 4 years. That is an extreme goal and even if they make half of it,
they will still be successful. You can view much more information
from this article, just click on the link below

Segmentation
Zaras segmentation of customers who are most appreciated is on
a demographic point of view, a female women up to 35 years of
age, who prioritize fashion as lifestyle, who earns up to $60k per
year and graduated school. Furthermore, on psychographic
45 | P a g e
aspect Zaras customers are ambitions and want to demonstrate
it by fancy trends, have dreams in life and want to look as a V.I.P

Targeting:
One of the target markets will be China, currently 3.2% visitors by country for
Zara.com and based on the GDP growth in Asia, it will increase. The market
target defined by the visitors from China has to achieve 8% by end of 2013.

By considering the google.com and facebook.com as the major up- and

downstream on zara.com page, it presents a more specific online target market
from search engine or social media. On one hand, the upstream visitors from
Google and Facebook have to achieve 10% and on the other hand, the
downstream to H&M of 2% has to be reduced to 1.5% by end of 2013.

46 | P a g e
Positioning:
ZARA SWOT analysis ZARA is the main success factor of Inditex's growth and plays the
leading role of the group's sales and profit. For this reason, we will go into details with the regard
to ZARAs success factors or rather its strategic advantages, before we start to analyse ZARAs
issues concerning its supply chain and its possible opportunities and threats in the future. ZARA
is not has not only a different market positioning as to its direct competitors (see figure 1.1) but
also has a unique business model which is one of the worlds most successful. ZARA is
positioned more fashionable compare to its competitors but surprisingly with a relatively low
price behaviour. Unlike H&M or GAP chasing low production costs by outsourcing its complete

47 | P a g e
production, ZARA produces nearly half its merchandise in-house. Rather than utilize its factorys
capacities to maximize their output, the company leaves some capacity left on purpose. Instead
of take the benefits of economies of scale, the retail giant does manufacturing and distributing in
small batches. Not relying on extern service providers, ZARA manages design, distributing and
logistic operations by itself. It leaves even empty shelves in its retail shops allows occasional
stock-outs and waives the advertising completely. In short, ZARAs business model defies the
past and current conventional practised supply chain operations. Even because of that some of
Zara's practices concerning its supply chain activities seem to be questionable. 1.1 Strategic
advantages (Strength) As already mentioned, Zaras strategy seems first to be a disadvantage
regarding to their competitors. Zaras most interesting and at the same similar successful
competitor is H&M. Both companies are European based, are leading fashion retails in the
middle-low price segment and have a strong and global expansion strategy

Possibilities for failure (Threats) European production facilities Like Zaras direct competition,
the company has some threats for failures what can stop its future growth. If the European
common currency becomes stronger concerning the US dollar, the production costs will increase
generally for European manufacturers and thus Zaras production costs. The increased costs will
and must be covered by the customers what may decrease Zaras sales because the new prices
will be too high for a typical Zaras customer. Another fact threatens Zaras success is the quota
elimination under the World Trade Organization agreement in 2005 on textiles and clothing
expiring. Retailers using the outsource strategy will benefit from greater access to cheaper
production opportunities. Zara will have its difficulties to counter a high euro impact and its
competition lower prices for merchandise. Direct competition Zara's largest threat is of course its
direct competition, especially when entering new global markets. Due to Zaras broad field of
merchandise offering almost every retailer can be a threat especially when offering only one
certain category of products. Very quick and effective due to international expansion, allowing
the company to gain successfully sales outside Sweden is Zaras most threatening competitor
H&M.

48 | P a g e
4 Ps of ZARA :

Product:
Zaras position in the affordable fashion industry clearly states its not a luxury
brand. The target customers are eager to purchase fancy fashion while still
sensitive to the prices. They want to be different and unique. The most important

49 | P a g e
thing is (instead of more quantities per style) that Zara produces more quantities
of styles. Zara will also consider new product and develop features such as a
product line for a charity or VIP presents in its collection

Price:
Zara is providing fashion for people with a lower income, therefore the prices
are very reasonably that everybody can afford it. Cost effectively influences also
the supply chain management which requires a fast decision making process.

Place:
The constant flow of updated data mitigates the so-called bullwhip effectthe
tendency of supply chains to amplify small disturbances. A small change in retail
orders, for example, can result in wide fluctuations of factory orders after it's
transmitted through wholesalers and distributors. In an industry that traditionally
allows retailers to change a maximum of 20 percent of their orders once the
season has started, Zara lets them adjust 40 to 50 percent. In this way, Zara
avoids costly overproduction and the subsequent sales and discounting prevalent in
the industry. However, it will not allow having all products online. The decision
making process, of which products will be distributed online, needs to be defined
up front. The supply chain has to evaluate the stock availability by forecasting
sales and consider the needed production capacity.
Another important point is the shipment process to the customers and the return
handling process. As a high priority, the shipment costs have to be above a
minimum ordering volume free and the return guarantee has to be customer
friendly oriented. An additional service for express (24 hours) delivery, which will
be charged correspondently, must be installed in addition.

Promotion:
In the competitive clothing industry, Zara has successfully built a worldwide
famous brand by a unique management system of design, production and supply
chains. The fast fashion concept and operation allow Zara to always provide the
most fashionable clothes to their customers and the always renewing collections
definitely help build a brand loyalty.
Zara is focussing on internet online marketing opportunities such as e-commerce
strategy and social media to promote traffic on Zara.com as well as attracting
visitors to the online shop. From the original focus on the central European

50 | P a g e
market Zara is expanding to the Asian market.
.

PRODUCT LIFE CYCLE OF ZARA

The problem of optimally purchasing new products is common

to many companies and industries. This thesis describes how
this challenge was addressed at Zara, a leading retailer in the
"fast fashion" industry. This thesis discusses the development of
a methodology to optimize the purchasing process for seasonal,
short life-cycle articles. The methodology includes a process to
develop a point forecast of demand of new articles, the top-
down forecast at the color and size level and an optimization
module to produce recommendations to define the optimal
quantity to purchase and the optimal origin to source from. This
thesis is the first phase of a two phases purchasing optimization
process. The focus of this thesis is: a) the outline of an enhanced
purchasing methodology b) the development of the most
important input in the system: a point forecast of demand at the
article, color, and size level, and c) the development of an IT
prototype to automatically manage the purchasing methodology.
The second phase of the purchasing optimization process

51 | P a g e
 focuses on the optimization module. The optimization module is
beyond the reach of this thesis.

ANALYSIS AND INTERPRETATION

INCOME STATEMENT :
Regarding the financial objectives we defined merely the sales as a key
performance indicator because of the low-budget investments of online sales
compared to the expensive flagship stores.
The financial objectives are based on the first half year of 2012 on global level
and presented a positive trend in sales of +17% compared to 2011. Our
estimated share on online sales was in the first half year of 2011 approx. 5% and
rose in the first half year of 2012 to approx. 6%.

INDITEX SALES 1H2012 1H2011 %

52 | P a g e
( MILLIONS EUROES) CHANGE12/11
SALES (PRESS 7239 6209 +17%
RELEASE)
ONLINE 434 310 +40%
SALES(ESTIMATED)

FINDINGS AND SUGGESTION

FINDINGS :

53 | P a g e
We provided an interesting read regarding Zaras main business
strategies and the challenges it faces to sustain its
competitiveness and success in the next years.
In conclusion, we found an example of how companies,
regardless of industry, do not always follow strategies that are
academically taught. We found out that zara has a wide product
range on street fashion for the fashion street.
Zara is a way a fashion could be described it includes integrated
strategies and the development of departmental at even basic
material is of best found quality.

Bibliography

Arnold, D., DAndrea, G. (2003). Zara. Harvard Business

School
Baykal, J., & Delagarde, M. (2011). Differentiation Strategies
in the Fashion Industry.
54 | P a g e
Bhardwaj, V., & Fairhurst, A. (2010). Fast fashion: Response
to Changes in the Fashion Industry. The International Review
of Retail, Distribution and Consumer Research, 20(1), 165173.
Doi: 10.1080/09593960903498300
Borden, N. H. (1964). The Concept of the Marketing Mix.
Bruce, M., & Daly, L. (2006). Buyer Behaviour for Fast
Fashion. Journal of Fashion Marketing and Management,
10(3), 329344. Doi: 10.1108/13612020610679303
Cachon, G. P., & Swinney, R. (2011). The Value of Fast
Fashion: Quick Response, Enhanced Design, and Strategic
Consumer Behavior. Management Science, 57(4), 778795.
Cheng, R., Hines, T., & Grime, I. (2008). Desired and
Perceived Identities of Fashion Retailers. European Journal of
Marketing, 42(5/6), 682701. Doi:
10.1108/03090560810862589
Comstock, B., Gulati, R., Liguori, S. (2010). Unleashing the
Power of Marketing. Harvard Business Review
Cuc, S., & Tripa, S. (2007). Strategy and Sustainable
Competitive Advantage The case of Zara Fashion Chain.
Dopico, L. G. (2005). Zara- Inditex and the Growth of Fast
Fashion.
Dutta, D. (2002). The Speed of Fashion.
Dutta, D. (2003). The Speed of Fashion Part II.
Fredriksson, C. (2011). Retail and Fashion A Happy
Marriage? The Making of a Fashion Industry Research Design.
Culture Unbound: Journal of Current Cultural Research, 3, 43
54. Doi:10.3384/cu.2000.1525.11343
Gabrielli, V., Baghi, I., & Codeluppi, V. (2013). Consumption
Practices of Fast Fashion Products: a Consumer-based
Approach. Journal of Fashion Marketing and Management,
17(2), 206224. Doi: 10.1108/JFMM-10-2011-0076
55 | P a g e
Ghemawat, P., Nueno, J. (2006). Zara: Fast Fashion. Harvard
Business School
Ginman, C., Lundell, C., & Turek, C. (2010). Luxury of the
Masses: a Study of the H&M Luxury Collaborations with Focus
on the Images of the Luxury Designer Brands. Zara: Marketing
in Fast Fashion | Carolina Ortigo de Oliveira | 1461
22

56 | P a g e
Harvard Business School. (1998). Writing Cases and Teaching
Notes.
Hayes, S. G., & Jones, N. (2006). Fast fashion: a financial
snapshot. Journal of Fashion Marketing and Management,
10(3), 282300. Doi: 10.1108/13612020610679277
Honeyman, K., & Godley, A. (2003). Doing Business with
Fashion.
Joy, A., Sherry, J. F., Venkatesh, A., Wang, J., & Chan, R.
(2012). Fast Fashion, Sustainability, and the Ethical Appeal of
Luxury Brands. Fashion Theory: The Journal of Dress, Body &
Culture, 16(3), 273296. Doi:
10.2752/175174112X13340749707123
Keller, A. A. (2012). Zara Marketing Audit. University of
Applied Sciences Zurich.
Kotler, P., Keller, K.L., Brady, M., Goodman, M. & Hansen, T.
(2012). Chapter 18: Managing Process, People and Physical
Evidence at the Consumer Interface. In Marketing
Management, 2nd Edition, Pearson, pp. 736-769.
Levitt, T. (1980). Marketing Success through Differentiation -
of Anything. Harvard Business Review.
Lopez, C., & Fan, Y. (2009). Internationalisation of the
Spanish fashion brand Zara. Journal of Fashion Marketing and
Management, 13(2), 279296. Doi:
10.1108/13612020910957770
Lovelock, C., Wirtz, J. (2011). Part Two Applying the 4Ps of
Marketing to Services & Part Three: Managing the Consumer
Interface. In Services Marketing. People, Technology, Strategy,
Global Edition, Pearson, pp. 102-330.
Lynn, H., Bennett, S., & Joines, H. (n.d.). H&M vs. Zara
Comparing Marketing Strategies.

57 | P a g e
Mazaira, A., Gonzlez, E., & Avendao, R. (2003). The Role
of Market Orientation on Company Performance through the
Development of Sustainable Competitive Avantage: the Inditex-
Zara case. Marketing Intelligence & Planning, 21(4), 220229.
Doi: 10.1108/02634500310480103
Mcafee, A., Dessain, V., Sjman, A. (2007). Zara: IT for Fast
Fashion. Harvard Business School
Miller, K. (2013). Hedonic customer responses to fast fashion
and replicas. Journal of Fashion Marketing and Management,
17(2), 160174. Doi: 10.1108/JFMM-10-2011-0072
Pearson, A. (2011). The Story of Zara the Speeding Bullet.
The Strategists Choice, 13. Zara: Marketing in Fast Fashion |
Carolina Ortigo de Oliveira | 1461
23

58 | P a g e
Persson, M. (2007). Extreme Business-Models in the Clothing
Industry - A Case Study of H & M and ZARA.
Prada, M., & Sander, J. (2009). From Prada to Zara: Is the
global recession out of fashion? Strategic Direction, 25(3), 9
11. Doi: 10.1108/02580540910936305
Roberts, M. J. (2012). Developing a Teaching Case.
Rodriguez-donaire, S., Casi, E., & Carbonell, X. (n.d.). Mango
Group: Growth and Internationalisation.
Royo-Vela, M., & Casamassima, P. (2011). The Influence of
Belonging to Virtual Brand Communities on Consumers
Affective Commitment, Satisfaction and Word-of-mouth
Advertising: The ZARA case. Online Information Review,
35(4), 517542. Doi: 10.1108/14684521111161918
Rust, R. T. (2010). Rethinking marketing. Doi:
10.1037/e641332009-010
Soloaga, P. D., & Monjo, M. (2010). Zara: The Company
Where Everything Communicates

59 | P a g e