Comparative Analysis: Benetton Group and Zara's Business Models

This literature review critically compares Benetton and Zara, two prominent European companies in the fashion industry. It examines their promotional and management strategies to gain a competitive advantage, highlighting their differing approaches to product pricing, market trends, and operational models. Benetton, known for its classic trends and higher prices, is contrasted with Zara, a fast-fashion leader offering trendy products at reasonable prices. The review analyzes Benetton's struggles with franchise management, its inability to adapt to changing consumer needs, and its declining market share compared to Zara's success in leveraging market opportunities and consumer preferences. The study explores the evolution of both companies, their unique selling propositions, and their responses to market dynamics, emphasizing Zara's innovation and Benetton's strategic missteps. The review concludes by emphasizing the impact of strategy on market sustainability, highlighting how Zara's strategy has enabled it to open stores in 85 countries and become a market leader.

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Literature review
This is a critical comparison between two renowned European companies in the
fashion industry. These two companies are Benneton group and Zara who are the leading
clothes line in Europe. These organizations are rivals and belong to the same market
segments. The variety of products they offer cater to similar type of consumers in the market.
This literature review will compare and analyse the promotional and management strategies
used by the respective for gaining competitive advantage in the market. The products offered
by Benetton are priced high and follow classic trends whereas Zara belongs to the fast
fashion industry. Zara provides the latest market trends to the consumers at a reasonable
price.
According to Vizard, (2013), Benetton group has always been focused on
management of stores and development of products. This policy is applied to all the products
in the product line of the organization under the same brand name which will provide a
chance for better development of the products. The brands in the group has been segregated
and the focus is on the individual growth of each of the brands. This strategy has been
adopted by the organization so that they can compete with the Zara group and is able to gain
competitive advantage in the market. The organization has been the market leader for a lot
time because of their edgy and classy promotional strategies and as it helps to break all the
stereotypes in the society. However, the organization has lost its competitive advantage in the
market due to the emergence of Zara as a fast fashion organization which is providing the
consumers with the latest fashion in the market.
Benetton has been suffering losses in their whole sale department due to the Zara
group of companies. The organization has hired a new head who is an expert in the fashion
industry to make sure that they are able to compete with their rivals Zara and recover from

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the state of loss (Reuters, 2017). The organization is focusing on reducing the amount of loss
in the whole sale market by making use of innovative strategy. The organization was once the
leading fashion brands in the world but it has been unable to compete with the companies
from the fast fashion industry such as Zara. The needs of the consumers in the market has
changed rapidly and the companies like Zara have been able to gain competitive advantage
due to their trendier clothes line.
Benetton is an organization who had introduced franchise system in their early days
but it was unable to operate this franchises in their own stores due to the lack of funding. This
is one of the biggest mistakes made by the organization as they were unable to have any
control over the collection in these stores. The organization was unable to distribute them
merchandize to various countries (Barber, 2012). This weakness was capitalized by Zara who
learned from the mistakes made by Benetton. Moreover, the organization was to unable to
adopt to the changes in the market which is a big reason which caused them to lose their
competitive advantage in the market. The organization has been lagging for the past few
years and they have been failed in launching new products in the market where its rivals were
able to launch new products on a monthly basis. Benetton has been known for their diversity
in their products but they have failed make any improvements in their respective business
models and to understand the needs of the consumers (Alquezar, 2013). The other companies
in the market such as Zara has worked hard to capture majority of the share in the market and
become the market leader in the fashion industry. Benetton owns only 75% of all the stores
while Zara owns all their stores all around the world. The growth of Benetton is the past
decade has been 2% which is very poor when compared to their bitter rival Zara whose
growth rate in the past decade has been 10%.
Benetton and Zara are two companies who have been in the market for a long time
and they have competed in the fast fashion section. The main unique selling proposition for

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the companies in this market is that they provide the consumers with the latest trendy
products at a reasonable price. However, Benetton has not been able to keep up the latest
trends and the prices they offer are higher than the other companies in the market. The quality
of the product offered in Zara is lower than the quality of the products offered in Benetton
(Kite, 2012). That is the reason that Benetton is providing the product at a price which is
higher than Zara but the trend in the market has changed and people focus on the design more
than the quality of the product. The brands offered by Benetton will have to be fashionable
and trendy if they want to compete with their main rival Zara. The operational environment
for the companies is similar but Benetton has not been able to capitalize on the market
opportunities. The design of the products sold by the organization is very important in the
fashion industry which Benetton has unable to maintain so that is the reason for their failure
in the market.
Zara is a bright example who has been able to capitalize on the market situation as
they are able to bring in the latest trendy clothes and designs in to the market at a price which
is reasonable. The organization has been imitating the new trends in the market for a long
time which has helped them to gain a competitive advantage in the market (Hansen, 2012).
This strategy has helped the organization to open up stores in 85 countries. Zara has been
able to mitigate the needs of the consumers by making changes to the organizational
products. This is the very reason that they are able to gain popularity in the market and
expand their share in the market.
So as to follow Benetton's gathering improvement and discover the foundations for its
decrease from the design world, one must have the capacity to see how and where everything
began. In the 1980s it turned into the main design big shot on the planet with its retail shops
everywhere throughout the world. Its rivals were route beneath them as far as deals and sort
of materials (Emerald Insight, 2015). Benetton's kept on picking up its prevalence through its

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methods for promoting and the capacity to differently pull in various individuals in the word.
Benetton's however did not go out on a limb of experimenting with new tends and in the
1990s its opponent Zara brand began to rise intently and with time it began turning into a fast
fashion and it surpassed Benetton's and stayed on top till now.
The character of Zara is of high degree when compared to the competitors in the
market. The organization has made use of innovation in the business model which has helped
them to gain competitive advantage in the market. the organization has been focused mainly
on the European clients because of the consumer taste and style (Palladino, 2010). The
biggest difference between Zara and Benetton is that Zara uses joint ventures in their imports
and exports where Benetton is mainly focused on the material of the clothes. Zara is catering
to all classes of customers where Benetton is only focused on premium class of consumers.
This shows that how strategy is important to maintain sustainability in the market.

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Reference
A, Palladino (2010). Zara and Benetton’s: Comparisons of two business models.
Retrieved on September 9, 2017
https://upcommons.UPC.edu/bitstream/handle/2009.1/9620/67041.pdf?
sequence=1&isAllowed=y
Bright Kite (2012). Compare and contrast the supply chain management Approaches
take by H&M, Benetton’s and Zara. Retrieved September 9, 2017
https://brightkite.com/essay-on/compare-and-contrast-the-supply-chain-
management-approches-take-by-h-m-benetton-zara/
Emerald Insight (2015). Fast fashion goes global: Benetton’s changing strategy.
Retrieved September 9 2017 www.emeraldinsight.com/doi/abs/10.11081/SD-09-
2015-0131?journalCode=sd
Maelle Alquezar (2013). Why Benetton’s has failed to boost its popularity. Retrieved
September 9, 2017 www.wolfestone.co.uk/blog/why-benetton-has-failed-to-boost-
its-popularity/
Reuters (2017). Italy’s Benetton’s group of names new boss to help revive brand.
Retrieved September 9
2017.www.reuters.com/article/benetton-management/italys-benetton-group-
names-new-boss-to-help-revive-brand-id-US16N1H002F
Sarah Vizard (2013). Benetton aims to restructure for clearer differentiation between
brands in restructure. Retrieved September 9 2017.
https://www.marketingweek.com/2013/11/29/benetton-aims-for-clearer-
differentiation-between-brands-in-restructure/

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Suzy Hansen (2012). How Zara grew into the world’s largest fashion retailer. Retrieved
September 9 2017. www.nytimes.com/2012/11/11/magazine/how-zara-grew-into-
the-worlds-largest-fashion-retailer.html
Tony Barber (2012). Benetton’s tactics miss the big picture. Retrieved September 9 2017.
https://www.ft.com/content/4533f712-8466-11e1-a3c5-00144feab49a