Consumer Brand Loyalty Impact on ZARA's Sales and Profitability

This report critically analyzes consumer brand loyalty in the context of ZARA, a leading fashion retailer. It begins by introducing the concept of brand loyalty and its significance in the competitive retail market, particularly focusing on ZARA's brand image and the importance of maintaining consumer satisfaction. The report then examines the impact of brand loyalty on ZARA's sales and profitability, highlighting how loyal consumers contribute significantly to revenue. It delves into factors that managers at ZARA must consider to maintain brand loyalty, such as convenience, expectations, personal relationships, and rewards. The literature review explores brand loyalty's dimensions, including brand loyalists and repeat purchasers, and suggests ways ZARA can improve its brand loyalty through customer-centric strategies, including marketing, promotional events, and personalized services. The report also discusses research objectives, questions, and methodology to provide a comprehensive understanding of the subject matter.

Business and
Management Dissertation

Table of Contents
TITLE:.............................................................................................................................................1
1.0 INTRODUCTION.....................................................................................................................1
1.1 Identify a specific researchable topic area............................................................................1
1.2 Establish the importance of the problem...............................................................................2
1.3 Aim of the research project...................................................................................................2
2.0 Research Objectives and Research Question(s).........................................................................2
Research Objectives....................................................................................................................3
Research questions......................................................................................................................3
3.0 Literature Review.......................................................................................................................3
The concept of brand loyalty.......................................................................................................3
The impact of brand loyalty on sales and profitability of ZARA...............................................4
The factors which has to be considered by managers of ZARA for maintain its brand loyalty. 5
Recommend the ways through which brand loyalty of ZARA can improved............................5
4.0 Methodology..............................................................................................................................6
4.1 Research Design, Research approach and Research Type....................................................6
4.2 Rationale...............................................................................................................................9
5.0 Access to Data and Research Ethics..........................................................................................9
6.0 Limitations.................................................................................................................................9
REFERENCES..............................................................................................................................11

TITLE:
“A critical analysis of consumer's brand loyalty on sales and profitability of business
enterprise.” A case on ZARA.
1.0 INTRODUCTION
Brand loyalty refers to understand the tendency of consumer's preferences to buy product
and avail services on regular basis. Brand loyalty is important because it helps to compete with
other parties in industry. In order to make good brand image, it is important that consumers are
ready to buy their products (Alhaddi, 2015). Consumers are the main asset for growth and
development of business. So it is important to keep them satisfied in order to get success in
industry. When consumers are ready to purchase product frequently, then it is important to
regular improve quality and features of products.
This research is based on ZARA which is one of the leading brand in in fashion industry.
ZARA is Spanish Fashion retailer in Arteixo Spain. Its parent company is Inditex. ZARA has
good brand image because this provides god quality products within affordable prices. This
organisation has good employees strategy through which work force is satisfied and they give
their best to deal with consumers.
1.1 Identify a specific researchable topic area
Research is conducted on brand loyalty. This is the topic which is important because
these days, there is much competition in retail sector, so in order to achieve competitive
advantage, it is important to create brand loyalty. Brand loyalty is the topic which helps to get
success in industry with easy growth and development. Hence importance of this topic is to
understand impact of consumer's brand loyalty on business sales and profitability. With this
topic, it is easy for researcher to understand policies with which long term relations can be
maintained with consumers.
As there are many organisations which are dealing in fashion retail sector such as Marks
and Spencer, Charles, etc. Hence there is competition in market. For instance: as compared to
competitors, dresses of ZARA are expensive, then consumers may shift to other brand. This has
image on consumer brand loyalty and sales of association in negative manner (Basile and Faraci,
2015). When operations are not performed in ethical and reliable manner, then this affects brand
image in negative manner. These days, marketing is the best tool through which feature of
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product and services can be launched in society. Hence advertisement not not manipulating
actual product and services. These days, there is use of social media sites for advertising in new
and innovative manner.
1.2 Establish the importance of the problem
In case of ZARA, there is issue in brand image of organisation because they are
consistent to their policies. This affects performance of overall organisation as compared to other
enterprises in industry. Brand image of ZARA is not good in current years. This is because of
change in trends and managers of ZARA are not able to plan these changes properly. They are
not accepting change in trend which is biggest issue of drop of sales (Batkovskiy and et. al.,
2016).
Sales of ZARA is not dropped down by one third in 2016. sales gets down by £58.3
millions to £39.2 millions. As per research, it is identified that they are paying dividend of £30.5
million which is low as compared to £47 million in 2016. This is the issue faced by ZARA in
current year, so there is reduction in their consumers. But sales is increased by 13% to £602.7
million. This issue affects performance of ZARA in industry because employees, shareholders,
etc. may withdrawal their consent to perform activities. With reduction in profits, employees
may get dissatisfied and they do not want to continue with ZARA. Same with shareholders, if
share value is going down, then this affects performance of overall company (Zara's UK profits
drop sharply despite record sales, 2019).
With conducting this research, it is easy to plan ways through which sales can be
improved. As role of ,angers is important to maintain and improve brand image. With increasing
brand image, it is easy to improve brand loyalty. So this topic is best and reliable as per current
siltation of ZARA and market trends.
1.3 Aim of the research project
“A critical analysis of consumer's brand loyalty on sales and profitability of business
enterprise.” A case on ZARA.
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2.0 Research Objectives and Research Question(s)
Research has some objectives which are the framework for conducting research. These
are the benchmarks which has to be followed. While conducting this research, these aspects has
to be considered. This is relevant for getting authentic outcome as recommendations and
conclusions. Research objectives for conducting this research is:
Research Objectives
 To understand the concept of brand loyalty.
 To analyse the impact of brand loyalty on sales and profitability of ZARA.
 To determine the factors which has to be considered by managers of ZARA for maintain
its brand loyalty.
 Recommend the ways through which brand loyalty of ZARA can improved.
Research questions
 Do you understand the concept of brand loyalty?
 What is the impact of brand loyalty on sales and profitability of ZARA?
 What are the factors which has to be considered by managers of ZARA for maintain its
brand loyalty?
 What are the ways through which brand loyalty of ZARA can improved?
3.0 Literature Review
The concept of brand loyalty
Brand is the logo, trademark of any organisation which they earn by providing best
product or services to consumers. In order to make good brand image in industry, it is important
to consider demand of consumers. Brand loyalty refers to the consumer's perception regarding
availing services from specific brand. As per Manmohan Joshi consumer behaviour is main
concept which emphasise on increasing sales when consumers are aware. Brand loyalty is core
asset which These days organisations are using latest technologies for satisfying consumers and
providing them best services. This has direct impact on sales and revenues of ZARA. In brand
loyalty involvement of consumers is crucial (Bell, Bryman and Harley, 2018).
According to Jayson DeMers, there are two types of brand loyalty i.e. Brand loyalists and
Repeat purchase. Brand loyalists are some consumers who prefers to purchase products on
regular basis and loyal towards their brand. They does not get diluted in case other brand is
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providing at lower cost. While there are some consumers who purchase same brand but have
optimal use experience. Under brand loyalty of ZARA, there is impact of personality,
relatability, loyalty program, etc. It is important for managers of ZARA to provide complete and
relevant information about product and services. As these days there is much competition in
retail fashion store, so it is important to consider changes in demand of consumers. This has
direct relation
The impact of brand loyalty on sales and profitability of ZARA
ZARA has good brand image because they target high class people. They prefer to serve
best quality services. In fashion industry, there are different brands so in order to compete with
them, there is requirement of proper planning. According to Lisa Furgison, brand loyalty can
drive sales because consumers who are loyal visit store on frequent basis. As per research, it is
clear that out of total sales 20% is because of loyal consumers, but this 20% consumers assist in
80% revenues of organisation. Brand loyal consumers have direct impact on sales and profits of
ZARA. It is important for managers to keep them satisfied with use of different strategies. For
loyal consumers, there is no requirement of marketing and promotional techniques. Good deals,
phenomenal customer experience, shared values, etc. are some positive results which ZARA can
achieve by performing business operations in best and relevant manner (Brannen, Piekkari and
Tietze, 2017).
As per Tina Young, there are three steps through which positive impact of brand loyalty
can be achieved. They are discussed as under-
Awareness- This is the first step in which awareness about product such as clothes, etc.
are created by consumers. This is relevant because this frames base of all activities through
which consumers become permanent. It is responsibility of marketing department to conduct
marketing activities in interesting manner. Promotional events, advertisements, etc. helps to
create awareness about product and services.
Preference- After awareness among people., they prefer to purchase specific product.
This preference will remain same until, ZARA is serving product according to consumer demand
and budget. There is difference in dresses as per occasion, geographical background, etc. hence it
is responsibility of managers to alter stock accordingly. This makes consumers satisfied and they
become permanent consumers.
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Insistence- As per this step, when consumers are satisfied then they insist others as well
to purchase from specific brand. For instance: a consumer is satisfied with quality of products,
price, promotional strategies, services, etc. of Zara then he/ she insist their relatives, friends, etc.
to be part of ZARA. This is self promotion which is best technique of improving sales and
profits.
Hence from the above discussion, it is clear that improving sales and profits are best
techniques through which sales and profits can be enhanced. There is vital role of marketing
department to attract and creates awareness among consumers (Cassell, 2015).
The factors which has to be considered by managers of ZARA for maintain its brand loyalty
There are different factors which has to be considered by managers of ZARA in order to
maintain same brand loyalty. In current market, growth of organisation is possible in case of
good brand image and awareness of consumers. As per Michael Houlihan & Bonnie Harvey
some factors which affects brand loyalty are discussed as under-
Convenience- Convenience of consumers must prime factor which has to be considered
by managers of ZARA for brand loyal consumers. There must be easy check in, check out, fast
billing system, etc. for regular consumers.
Expectations- Expectation of loyal consumers are more because they feel familiar with
brand. It is important to provide best services to met out expectations of consumers. Expectations
related to price, quality of products, discounts, etc. must be considered by managers of ZARA
for brand loyal services.
Personal relationship- Personal relationship with consumers plays vital role in getting
positive outcome. When consumer is regularly visiting outlet of ZARA, then they must be
treated well. This makes brand image of ZARA more strong and consumers feels comfortable
under this brand.
Rewards- Rewards to regular consumers helps to maintain long term relations with
consumers. Membership card, personalised message, discount offers, recognition, etc. are some
benefits which provides satisfaction to consumers (Chang, Srirama, and Buyya, 2017).
From the above discussion, it is identified with considering these aspects, it is easy to
make long term relations with consumers. Hence this has direct positive impact on sales and
profits. Managers of ZARA are responsible to provide best services and improve brand loyalty.
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Recommend the ways through which brand loyalty of ZARA can improved
Brand loyalty in current days plays crucial role ingrowth and development of association.
It is important and significant to make changes in operations to get positive outcome. According
to Lisa Furgison, there are some recommendations which helps to maintain and improve brand
loyalty among customers. Some of them are discussed as under-
 Customers must beat priority of managers of ZARA. This helps them to make feel
satisfied and core component for organisation. These days, there is use of social media
sites for interaction with consumers. So there must be timely revert to their comments
and provide satisfactory replies (Chang and Lin, 2015).
 There must be an platform where grievances, positive negative feedbacks, etc. must be
considered. This is the way through which improvements as per demand of consumers
can be analysed. This helps ZARA to expand in market and earn good amount of profits
and sales.
4.0 Methodology
Research is the method through which information ad data is collected and gathered on
some specific and relevant topic. Hence this is conducted in best manner using different tools
and techniques. In order to understand tools and methods required to conduct research. This
framework is known as research methodology which could be understood as “Research Onion”.
Research onion contains information about methods such as research approach, research method,
design, source of data, etc. used to conduct research.
4.1 Research Design, Research approach and Research Type
Research design is the method in which research is presented. There are three types of
research design i.e. descriptive, exploratory, experimental. In this research descriptive research
design is used because this is the method which contains all the information in clear and concise
form (Donnelly, 2017).
Research approach is the technique which is used to perform research by covering all the
aspects. There are two types of research approaches: deductive and inductive. In this research
deductive approach is used because this is the best method which suits with all other approaches.
There are two types of research: qualitative and quantitative. In this research, qualitative
method is used. This method is scientific for observation of gathered information in numerical
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terms. This method is more reliable and authentic because it covers reason behind some specific
view of respondents. In this method information is represented in graphical and chart form.
Research is authentic and reliable when data is collected from reliable and authentic
sources. There are two methods of collecting data i.e. primary and secondary source. Primary
sources refers to the method in which researcher collects information on their own from
respondents. In this method, information is new and as per research topic because researcher
collects it through personal interview, questionnaire, etc. So this method gives complete and
authentic information. While secondary method is the way through which use of online sources,
books, journals, etc. are considered. This information is collected from some one else and used
by researcher which is relevant to research topic. In this research information is collected with
secondary source. This helps to get overall description of research topic (Easterby-Smith, Thorpe
and Jackson, 2015).
Research philosophy is the way through which research is presented in best manner.
There are three types of research philosophy i.e. pragmatist, positivist, interprevisit philosophy.
In this research, pragmatist philosophy is used because this is the way in which different
prospects are covered. While conducting this research, information about factors to be consider
to maintain same image in industry is analysed. So this helps to get correct and relevant
information.
Time is important while conducting research. There are different activities such as
introduction, setting aims and objectives, literature review, etc. are conducted. In order to give
some specific time to each activity Gantt Chart is used. Gantt Chart is the framework which
shows research activity with their respective time this also helps to understand synchronisation
of research activity which helps to complete it on time.
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Sampling is the method through number of individuals are selected for collecting
information information related to research topic. Sampling is important because it is not
possible to collect information from whole population. There are two method of sampling i.e.
random and non random sampling. Random sampling is best because there are equal possibilities
of being selected. So respondents are selected on frequently basis. Information from such
respondents are fee from biasness.
4.2 Rationale
Secondary methods of research is used to collect information. Aims and objectives of this
research is achieved because information is collected in best and reliable manner. Proper check
of information is done, authentic and update books journals are used to get best outcome
(Eskerod, Huemann and Ringhofer, 2015). Research Paradigm is framework which helps to
perform research activities by considering essential elements. Recommendations and conclusions
are given on the basis of secondary data.
Research considered no other method to collect information and this is the method which
is reliable and authentic because it covers view of authors. In this research, impact of consumer's
loyalty on sales and profits is analysed. Hence this is the way through which
5.0 Access to Data and Research Ethics
As these days, consumer's brand loyalty is main concept for providing growth to
organisation. Hence there are many articles which is not authentic for research purpose. This is
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the major implication researcher faced while collecting information. In order to deal with this
implication, researcher use different sources such as books, journals, magazines, newspaper, etc.
for gathering and recording information.
There is ethical implication of leakage of information collected by research. This affects
data collection process of researcher. In order to overcome with these issues, techniques are used
to keep information confidential. Collected data is used for research purpose only. So this helps
to overcome with ethical implications of conducting research. Information is stored in written
computerised form so it is easy to advertise it to readers (Inkinen, Kianto and Vanhala, 2015).
6.0 Limitations
There are some limitations which affects research in negative manner. Information is
collected from only secondary sources, so this is time and cost consuming process. This affects
data collection results of research. In order to get information from authentic source, research
feels like wastage of time. Secondary source gives old information which is no relevant in
current environment. So this does not give authentic and reliable outcomes. With using deductive
approach, all the aspects have to be considered. There are some data which does not give impact
on outcome of research but still researcher has to consider it. This dilutes concentration from
core elements (Juusola, Kettunen and Alajoutsijärvi, 2015).
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