Investigation of the Effectiveness of Customer Relationship Management in Fashion Retail - A Case Study of Zara

This report examines the effectiveness of customer relationship management in fashion retail, using Zara as a case study. It evaluates the strategies implemented by Zara and provides recommendations for other companies struggling with customer retention and sales volumes.

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RESEARCH PROPOSAL TITLE: INVESTIGATION OF THE EFFECTIVENESS OF CUSTOMER
RELATIONSHIP MANAGEMENT IN FASHION RETAIL- “A CASE STUDY OF ZARA”
ABSTRACT
This report had proposed to examine the effectiveness of customer relationship
management in fashion retail where Zara has been chosen as the case study. Zara is one of
the fast fashion retailers based in Galicia and it is the main brand of the Spanish company
Inditex group. Zara is one of the market leaders and had been focused on pulling people in
instead of pushing product out. This research had aimed to examine the customer
relationship management strategies of Zara so that other companies struggling with issues
understand the effectiveness of customer relationship management. The research had
evaluated the past literature on customer relationship management which showed that
most of the companies have been trying to more customer centric but it is essential to
understand the strategy that should is necessary to bring about a change within the
organizational processes. The research had also proposed to use a mixed method analysis
where both quantitative and qualitative data will be collected and analysed. The research
design, data collection methods and data analysis method had been described in detail. The
report had concluded with a Gantt chart that represent the research plan.
INTRODUCTION
This report will propose to evaluate the effectiveness of customer relationship
management in fashion retail. Relationship with their customers is one of the major
elements for a sustainable competitive advantage. Globalization has increased the
competition in the retail market due to the increase in online traffic and smaller companies

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are provided with the opportunity of capitalizing the global opportunities. This means that
apparel retail companies are at war with themselves where they have been using
advertising and promotion to attract new potential consumers. Moreover, retaining the
existing consumers are another aspect where customer relationship management and its
tool play a significant role.
Significance of the research
This research will contribute to understanding the modern customer relationship
management strategies and its effectiveness in improving the sales volumes and customer
retention in fashion retail. The importance of CRM in business context will be highlighted by
evaluating the case study of Zara to provide guidance for other companies struggling with
customer retention and sales volumes. Moreover, the study will also try to find any
loopholes in the strategies implemented by Zara so that management in Zara can be made
aware of these issues.
Research problem
There are various companies in the global industry facing issues in increasing the
satisfaction of their consumers, reduce the operational cost and improve the overall
performance of the business entity. Customer relationship management is one of the most
effective aspect of business which are mainly driven by the consumers in the market. `
Rationale
Zara is one of the fast fashion retailers based in Galicia and it is the main brand of
the Spanish company Inditex group (Zara.com 2019). Zara is one of the market leaders and
have been focused on pulling people in instead of pushing product out. Zara has evolved the
4p of marketing into new 4Es (Experience, Exchange, Evangelism and Every place) (Danziger

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2018). This has put the consumers in the centre and has been able to foster has a highly
engaged workforce that effectively interacts with the consumers. Zara has one of the most
effective CRM strategies and this research would explain the strategies implemented by the
company to retain their existing consumers and acquire new consumers. This research will
facilitate in gaining knowledge regarding the use of customer relationship management
which could be beneficial for professional growth of individuals.
Purpose of the research
The purpose of the research is to critically evaluate the effectiveness of CRM
strategies implemented by Zara to understand the impact of CRM in improving customer
retention and sales volumes of organizations. This will assist in developing guidelines for
other organizations in using customer relationship management and its tools in an effective
way. Moreover, the evaluation of Zara ‘s customer relationship will also provide insights on
the improvements that the organization can made for future competitive advantage.
RESEARCH OBJECTIVE
The main objectives of the research are as follows:
 To examine the way customer relationship management can be used to increase the
effectiveness of fashion retail
 To examine the different elements of customer relationship management
 To recommend suitable customer relationship management strategies for sales
volumes
RESEARCH QUESTION
 How can customer relationship management be used effectively in fashion retail?

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 How does customer relationship management affect the sales volumes in clothing
industry?
LITERATURE REVIEW
As stated by Stathopoulou and Balabanis (2016), market saturation, increase in
market competitiveness and globalization have made retailers look for suitable options to
gain competitive advantage in the market by effective management of customer relations.
Companies have started this trend where they have been seeking to gain competitive
advantage through better customer relationship management. Wang, Cavusoglu and Deng
(2016) opined that companies have considered consumer relation as a means of improving
value of the customers which in turn is expected to increase value of the enterprise. There
has been a significant shift in organizational thinking which has made the organizations in
becoming customer centric and develop strategies around this. Kim and Kim (2014) states
that modern organizations are challenged the changes in the organization culture among
various retailers due to the customer centric which makes it necessary for the consumers to
make changes to their organizational processes, customer related metrics and systems.
There have been significant changes in the organizational processes and systems
that are related to information and data management in order to adjust to the customer-
centric approach of retailing. Chang and Fan (2017) states that data mining and
warehousing are being discussed at different levels within organization which shows the
shift in data-based decision making. Customer relationship management has facilitated in
addressing to the change in the wants and needs of the consumers by using analytical tools.
This is expected to increase the spending on customer relationship management in most of
the retail companies in the next few years. Dabija, Szentesi and Pop (2014) states collecting

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information about all the consumers facilitates in segregating the different consumer
segments so that effective strategies are developed to attend these segments. Organizations
using CRM to segment their consumers develop strategies that suits the needs of each of
the segments. Khodakarami and Chan (2014) studied the impact of customer relationship
management and initiatives on a business entity which showed that it improves the
knowledge of the firm regarding the consumers and in turn improves the satisfaction level
of the consumers.
Dabija, Szentesi and Pop (2014) states that even though the importance of customer
relationship management has increased significantly but the majority of the organizations
focus on pushing their products out instead of pulling the consumers. This means that even
though companies are using customer relationship management but majority of the
companies lack innovation in developing new strategies to hold on to the existing
consumers. Kim and Kim (2014) states that customer relationship management is the most
effective way of managing the consumers. This facilitates in addressing the individual needs
of the consumer based on the collected data. Therefore, companies spend lesser resources
in reaching out to the consumers. Moreover, () states that customer relationship
management not only retains existing consumers but also examines potential consumers by
identifying their needs.
The relevance of customer relationship management is very high as it is one of the
main sources of providing competitive advantage in the modern business environment.
Customer centric approach is the key and consumers are looking for an overall experience
which can be portrayed through the journey map.

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METHOD
Research design
This research will follow the Saunders research onion to develop the framework,
instruments and assumption essential to fulfil the objective of the research (Saunders
et al.
2015). The research methods are chosen based on the goals of a research and in this
research the major goals are description of the phenomenon, predicting from one variable
to another variable and establishing the casual relationship between customer relationship
management and customer retention and productivity. In this study, a mixed method
design will be implemented to overcome the limitations of a single research design (Carins,
Rundle-Thiele and Fidock 2016). This will consist of using both quantitative and qualitative
methods to explain the phenomenon.
Research philosophy deal with the process of knowledge development by creating
frameworks, assumptions and methods (Saunders
et al. 2015). Assumptions are made in
every stage of a research, knowingly or unknowingly. They can ontological, epistemological
and axiological which consists of various types of assumptions. Research philosophies can be
divided into four types, pragmatism, positivism, realism and interpretivism (Mayer 2015). In
this research, pragmatism has been chosen as the research as it facilitates in conducting
both qualitative and quantitative analysis. Pragmatism emphasises on the research question
and develops methods based on the question. Pragmatism suggest that multiple realities
can exists where there are multiple ways of solving an issue (Mayer 2015). Pragmatism
accepts method if feasible actions support them. In this research, pragmatism will assist in
developing an experimental research design by using mixed method analysis.

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Research approach consists of two aspects, collection of data and reasoning. There
are two types of approaches in research and they are inductive and deductive approach.
The distinction between inductive and deductive approach is conducted based on the
relevance of hypothesis in the research (Sekaran and Bougie 2016). The deductive approach
is preferable in quantitative studies and inductive approach is preferable in case of
qualitative studies. Deductive approach is used for testing of hypothesis which validates the
theories discussed in the literature review section. On the contrary, the inductive approach
is used for developing new paradigms and generalisations. In this given research, both
inductive and deductive approach will be used which will assist in performing a mixed
method analysis.
Research design has been defined as the overall plan of performing the research. on
the contrary, some define it as the method of choosing between the qualitative and
quantitative analysis. There are types of research designs and they are explanatory,
exploratory and descriptive research design. Exploratory research design only explores data
without any specific purpose of providing a conclusion (Meyers, Gamst and Guarino 2016).
Exploratory research designs are flexible and there can be change in direction of the
research based on the data. On the other hand, descriptive research design is used to
describe a phenomenon and is structured where there is a fixed conclusion to it. In this
research, explanatory research design will be used to provide explanation of the
phenomenon and establish the relationship between the dependent and the independent
variable. This will facilitate in conducting a cross sectional study where the data will be
collected once over a period of time (Nuttin 2014). This research will use sequential
explanatory as the research design where the findings of the quantitative analysis will be

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validated using qualitative analysis. This means that the initially the quantitative analysis will
be performed and then the qualitative analysis will be performed.
Data collection
There are two types of data collection, one is primary and another is secondary data
collection. In this given research, primary data collection method will be used to collect
through surveys and interviews questionnaires (Palinkas
et al. 2015). The quantitative data
will be collected through surveys which will consists of close ended questions. The survey
questionnaire will consist of nominal data and ordinal data so scale measurements are
possible and will be based on Likert scale. The close ended questions assist in generating
significant results. On the other hand, the qualitative data will be collected through semi-
structured interviews which will consist of open-ended questions. This will facilitate in
deriving in depth answers to the research objectives.
Data analysis
The quantitative data collected will be analysed using statistical tools such as SPSS
(statistical package for social sciences). The data collected will be represented in frequency
tables and graphs. Inferential statistics will be used to generate the descriptive analysis
which will consist of mean, median, mode, standard deviation and variance. Inferential
statistics will be used to generate correlation matrix and regression analysis (Quinlan
et al.
2019). The correlation matrix will be generated by using Pearson’s Correlation method to
examine the degree and nature of relationship between the variables. Regression analysis
will be used to develop a model consisting of predictors and dependent variables which will
be able to explain the characteristics of the dependent variable using the independent
variables. On the other hand, qualitative data will be analysed using coding which is method

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of selecting keywords and phrases based on the patterns in the answers (St. Pierre and
Jackson 2014). This will be performed in two stages where initially open coding will be used
to identify the patterns and draw keywords and phrases. The next step is axial coding where
these phrases will be linked to existing theories to form tentative hypothesis. The data
collected from the qualitative analysis will validate the accuracy of the results from the
quantitative analysis.
Ethical consideration
This research will follow all the ethical guidelines prescribed by the code of conduct.
The research will take three cardinal sins into account which are plagiarism, fabrication and
falsification. None of the data will be falsified to achieve the research objective (Quinlan
et
al. 2019). The data will not be manipulated to change the output of the research. Similarly,
the research will consist of proper citations so that all the authors are credited. The research
will also adhere to the data protection act of 1998 and maintain the privacy of the
respondents. The privacy of the respondents will be maintained by keeping anonymity of
the personal data. Informed consent will be used to make sure that respondents are fully
aware of the purpose of the research and participate voluntarily. It will also be
communicated that the participants are willing to leave the survey and interview at any
point of time. Moreover, the research will not use offensive or discriminatory language
which will offend the participants.
Validity and reliability
Reliability is the ability of the research to replicate the results using similar methods
but different data sets. It measures the precision of the data and the instruments in the
research (Noble and Smith 2015). Cronbach’s alpha is a method of measuring scale

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reliability and will be used in this research (Bonett and Wright 2015). It will be used to check
the internal consistency among the items and if the value is greater than 0.7 then the
internal consistency will be considered acceptable. On the other hand, pilot testing will be
used to check whether the questionnaire is drawing relevant answers or not. Validity check
the suitability of the instruments used in the research and in this research construct validity
will be used.
Resource requirement
The research will use peer reviewed journals and articles to analyse past literature.
This will require access to various libraries for obtaining authentic data. The research will
also require SPSS tool for performing statistical analysis. The research will provide free gift
cards to the participants to ensure their participation.

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Time plan

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