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Sustainability of Competitive Advantage of Zara’s Retail Mix
Added on -2019-09-22
Zara has gained the competitive advantage by offering good quality products at reasonable price along with offering the products that are frequently being refreshed. The production processes are seen to take place in the Spain headquarter therefore providing the time required for the outsourcing manufacturing. The main highlight of pricing strategy of Zara is that they tweak the cost leadership based pricing to gain maximum profits by increasing prices in some countries where customers are willing to pay more.
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2.Sustainability of competitive advantage of Zara’s retail mixThe company has gained the competitive advantage by offering good quality products atreasonable price along with offering the products that are frequently being refreshed. In order tofollow that Zara has been adopting the cost leadership strategy. This ensures that all thecustomers are coming to store frequently. Zara spends only 0.3 percent of their revenue onmarketing. Further the elegantly designed stores helps in attracting maximum customers. Furtherthe company does not even indulge itself in the large scale marketing therefore high quality andword-of-mouth is highly important to the organization’s success. This has helped in enhancingthe customer loyalty. The production processes are seen to take place in the Spain headquartertherefore providing the time required for the outsourcing manufacturing. The company breaksdown the tasks of their employees into various steps and levels and offers fresh products withhigh speed in product, short lead period, less advertising cost etc. This helps in indicating thesustainability of competitive advantage of Zara which is seen dependent on the company’sability for churning out new products at short lead times. Therefore, the customers are exposed to various products under specific product range. Further,Zara has also been offering specific product lines catering to the needs of their customers andtheir related segment. As per the retail mix of Zara where the store formats is the weakestelement of the Zara as Zara has been utilizing the various formats in the stores even when allthese stores were termed as specialty stores. But such store formats are not being standardized byZara and is considered to be one of the few aspects of the various retail mix which is not
standardised in Zara. The company is further seen to reduce its cost by standardizing variousformat of the stores. The production cost of Zara has been reduced by streamlining their production. The company is seen to use effective human resource management practices for managing the workforce of the company in an effective manner along with reducing the costs using the adopting the automation in the supply chain of organization. . The main highlight of pricing strategy of Zara is that they tweak the cost leadership based pricing to gain maximum profits by increasing prices in some countries where customers are willing to pay more. For example, the prices of Zara products in France and UK tend to be comparatively higher than that in other European countries such Spain and Portugal, notes Zhou et al. (2015). This indicates that Zara utilises a pricing strategy in which the prices are varied in atarget market with respect to the demand for the product.
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