Brief Discussion of Zaras Statics |Report

INTERNATIONAL
MARKETING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Question 1: Assessing a theory which represents the Zara's (Inditex's) internationalization.1
Question 2: Evaluating the competitive strategy of the three world market leaders..............2
Question 3: The advantages and disadvantages of Zara's multi-brand store Strategies.........4
Question 4: 'Risk of Cannibalization' as a consequence of the multi-brand strategy.............6
Question 5: Advantages and Dis-advantages of going into a Joint Venture with Tata in India
................................................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
International marketing is the multinational process of planning and executing the
concept of, pricing, promotion and distribution of goods and services to create an exchangeable
method that satisfy individual and organizational objectives. However, it is commonly expressed
that a business cannot just concentrate on domestic market, they have to cover the international
market also. If they want to be competitive, here, in this report, there is a brief discussion of
Zara's tactics, theories and strategies for international marketing (Terpstra, Foley and Sarathy,
2012). Zara (Inditex) is a Spanish clothing retailer based in Arteixo and Galicia, in 1975. Zara's
1,830 retail stores are in 82 countries which is owned by Amancio Ortega a Spanish
businessperson.
Question 1: Assessing a theory which represents the Zara's (Inditex's) internationalization
The internationalization practice of Zara states that they have to follow the steps by the
manner of gaining experience from the domestic market before moving to the foreign. Zara
started its international operations by starting business in culturally and geographically close
countries, further moving gradually to culturally distant countries such as Spain (Berthon and
et.al., 2012).
Uppsala model would be best to represent the Zara's internationalization. Zara expanded
into foreign market after getting exposure from the domestic market. Its (Inditex's)
internationalization theory, that led it to the stage where it operats1,830 stores in 82 countries
(Smith and Zook, 2011). Following are the key factors that can be specified by the mentioned
activities of uppsala model in Zara's internationalization theory of marketing:
Setting the Price as per the market Situation: As mentioned in the Uppsala
Internationalization model, at the beginning of the business, Zara set the price of its
product as per the market situation and not on the basis of actual cost. Market
demand and supply indicates the customer preferences, taste and choice in the
clothing line etc. As per the trading activity of Zara product is available in the stores
until the customer buys it and it would be removed from the store after a week.
Market forces like accessibility of subsidiaries, income level of the customer, product
quality etc. that defines the market trend and on the basis of these trends the price of
the product would be set by the company (Gilligan and Hird, 2012). Considering all
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the situations of the market, Zara generally sets the price for its product which
satisfies the customers at their best. Expanding the Stores and allocating new opportunities: Further as per the stages of
Uppsala model theory, the revenue earned from all the stores is allocated for expansion of
the outlet stores in the overseas, and also on the logistics i.e. where to purchase raw
materials, best supply chain etc. Although, Zara do not invest much on advertising,
irrespective to this it spends on expanding the stores in overseas. Similar to this it opened
its first flagship store in Australia (Fletcher and Crawford, 2013). The company focuses
over discovering new opportunities in the local market of the overseas areas is by based
on knowing the customer preference, their choices, fashion style trending in that market
and competition. In order to enhance the reputation and accessing the customer, the
clothing company multiply its stores in that particular market and expands itself in that
country. Rising the number of outlet stores, attracts a large number of its customer, and
generate income and profits (Rathmann, 2011).
 Techniques used by Zara: The methods of expanding the business in the international
market through joint ventures and providing franchising service to the local market
people in the overseas, according to the Uppsala model act as a useful technique of
generating more revenue from the international market. This successful technique of
adjusting the pricing of the products by price discrimination in different markets, results
maximization in sales and profits to the company (Paliwoda and Thomas, 2013). The
strategy of 'Oil Stain' (influence strongly in one place, then spread across the grounds of
the country, like an oil stains) is the activity of Zara's international expansion, developing
and increasing experience to function locally and then continue to other regions.
Question 2: Evaluating the competitive strategy of the three world market leaders
The three main world market leaders in fashion retailing are:
1. Zara (Inditex) from Spain
2. Gap Inc. from United States
3. H&M (Hennes & Mauritz) from Sweden
Following are the competitive strategy used by them:
 Competitive strategy of Zara: It is evaluated that the competitive strategy of Zara focuses
on the concept of, Amancio Ortega (the founder of Inditex), offering the latest fashion in
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