Marketing Strategy and Plan: Zara's Retail Success

This report provides a comprehensive analysis of Zara's marketing strategy, examining its performance, market position, and key strategies. It delves into Zara's marketing mix, including product, price, promotion, and place, and how these elements contribute to its success in the fashion retail industry. The report analyzes Zara's segmentation, targeting, and positioning strategies, highlighting how the brand caters to specific customer segments and maintains its brand image. It also explores Zara's promotional strategies, including its minimal spending on advertising and its emphasis on shop windows and online marketing. Furthermore, the report examines the marketing environment through PEST and Porter's analyses, assessing the political, economic, social, and technological factors affecting Zara's operations and evaluating the competitive forces within the industry. The report also includes a SWOT analysis to evaluate the brand's strengths, weaknesses, opportunities, and threats. Finally, the report discusses the marketing mix crucial for the company and provides recommendations for future growth.

Running head: MARKETING STRATEGY AND PLAN
Marketing Strategy and Plan
Name of the Student
Name of the University
Author note

1
MARKETING STRATEGY AND PLAN
Executive Summary
The aim of the paper is to analyze the marketing strategy use by one of the biggest fashion-
retailing brand Zara. Zara is one of the largest fashion retail brands that have been growing its
market share all over the world. The company is also entering the online sector to offer its
products and increase its market share. However, the marketing strategy that the company follow
in some of its marketing mix variable, required to be changed due to increasing competition in
fashion industry. Thus, it should change its pricing and promotional strategy particularly to
capture more market share.

2
MARKETING STRATEGY AND PLAN
Table of Contents
Introduction......................................................................................................................................2
Justification for the Choice..............................................................................................................2
Marketing Concepts.........................................................................................................................4
Segmentation and Targeting........................................................................................................5
Positioning...................................................................................................................................6
Promotional Strategy...................................................................................................................6
Analyzing the Marketing Environment...........................................................................................7
Pest Analysis................................................................................................................................7
Porter’s Analysis..........................................................................................................................8
Strength and weakness of Zara......................................................................................................10
Marketing Mix for Superior Performance.....................................................................................10
Marketing Mix Crucial for the Company......................................................................................11
Conclusion.....................................................................................................................................13
References......................................................................................................................................14

3
MARKETING STRATEGY AND PLAN
Introduction
Zara is a well-known clothing and accessories brand operating all over the world. the
brand was launched in 1975 by Amancio Ortega and Rosalia Mera. Since then it has grew its
presence in almost all the countries and offer as the largest retail of apparel. The company started
expanding its business in the international market in the year 1988 through Portugal and then it
slowly entered United States, France and other countries. The company also went online in 2010
in which it opened its own online boutique to offer its product though online source. Such
approach and initiative has helped the company to be the most successful apparel retail owners
(Zara 2017). The paper discusses about the factors that let Zara to be the major focus company of
this assignment along with analyzing its performance and strategies over the years. The report
also analyses the marketing mix strategy, which has helped in good performance of the brand,
and factors that will help the company in long-term growth.
Justification for the Choice
Zara is one of a name in the retail industry because of its expansion, strategy and
connection with the customers. Since the day, it has introduced itself in the market it has grown
to every possible market with its exceptional strategy. The brand has gained a name and
recognition by itself by the innovation and continuous initiative that it puts. The company has
recent revenue of $17.2 billion, which has helped them to build their strategies successfully. The
brand has been able to put a hold in the retail industry in the past 43 years of operations and own
a total of 2200 stores worldwide. With a brand value of $11.3 billion, the brand has always
known for its development of new products and offering it for sale within few days (Zara 2017).
This shows the exceptional maintenance it carries out in its manufacturing and operations units.

4
MARKETING STRATEGY AND PLAN
The company has grown exceptionally in 2015 by opening 65 new stores in existing as well as
new locations and 50 new Zara Home in various new locations (inditex 2016). The biggest
markets of Zara after its hometown Spain are China, France, Italy and Japan.
2015 2016
11,400,000
11,600,000
11,800,000
12,000,000
12,200,000
12,400,000
12,600,000
12,800,000
13,000,000
13,200,000
13,400,000
Gross Profit
Gross Profit
Figure1- gross profit of Inditex (Parent Company of Zara)
Source: (inditex 2016)
2015 2016
19,500,000
20,000,000
20,500,000
21,000,000
21,500,000
22,000,000
22,500,000
23,000,000
23,500,000
24,000,000
Net Sales
Net Sales

5
MARKETING STRATEGY AND PLAN
Figure2- Net Sales of Inditex (Parent Company of Zara)
Source: (inditex 2016)
The above figure shows the performance of Zara in the last two years that has
continuously increased the net sales and gross profit of its parent company Inditex. The brand
has offered a tough competition to other retail chain in various countries with its strong sales and
profit growth.
Zara is not just a name; it is a symbol of fashion in the retail industry. The company also
maintains a strong online market and recently took some initiatives in which it wanted to expand
its market coverage through online offering. An online store that has been started by the brand
has expanded in various locations in the world within a short period. The brand has also taken
various technology innovations since the time it has been in business (Burgen 2017). In 2014
Zara introduced RFID chips in its stores through which it could detect the location of its products
in the store. The chip is removed once the customer has purchased it and can be reused for
further use. Moreover, the company has also maintained a customer base covering wide range of
culture, age and geographic boundaries (Fortune 2017). This is due to the product that it has
manufactured and the fashion image it offers according to the country. Thus, it can be seen that
the company has achieved superior performance and a brand value with its continuous initiative
in various places.
Marketing Concepts
Marketing concepts shows the achievement and potentials of the company by analyzing
its strategies such as segmentation, positioning and promotional initiatives.

6
MARKETING STRATEGY AND PLAN
Segmentation and Targeting
Segmentation is one of the crucial strategies of any fashion and retail brand as it helps
them to design the type of product it will launch in the market. Segmentation and targeting helps
the brand to offer a streamline picture of the type of customers it wants to design the product that
will also give an image to the brand. Zara maintains a mix segmentation strategy such as
demographic, geographic as well as psychographic segmentation. Based on this segmentation the
company targets each type of customers accordingly (Forbes 2017).
In demographic segmentation, the brand mainly targets the young adults between the age
range of 20 to 30 years of age that are just maturing and would love to dress up as a matured
person. This is because the brand is known to manufacture much classy and basic casual with
some ranges of formal attires for the customers. Thus, the look of the brand is designed to give a
classy and formal look. The clothing offered by the brand mainly reflects fast fashion with
various kinds of chinos, khaki and others (Forbes 2017).
Geographic segmentation is done by the brand as it has expanded its reach to many
countries and the living styles of the people in these countries are very different from each other.
This made the company to design its product by segmenting its market based on the demand and
fashion trends in these countries. For example, in India it focuses more on traditional and less
trendy attires compared to US market.
Lastly, Zara also follows psychographic segmentation in which it targets the customers
having a love for classy and fashionable dresses. Moreover, it also offers its products at high
prices and targets the niche market that loves to maintain high quality dresses in their wardrobe

7
MARKETING STRATEGY AND PLAN
as a symbol of their status. These customers will love to buy their products irrespective of the
prices (Sheth and Sisodia 2015).
Thus, the brand follows such strategy so that it can target the customers efficiently and
set its further strategies effectively. Depending on the type of strategy the company also designs
its marketing strategy so that it can target the right customers at right place. Zara carry out online
marketing strategy so that it can target the young and rich customers efficiently.
Positioning
Zara has positioned itself as one of the most fashionable international brand operating in
almost all the countries and having huge customer base. The company has also followed used
based strategy to position itself as a customer centric brand. This is because the brand has always
followed customer satisfaction as their main aim and accordingly modified their products and
marketing initiatives from time to time (Baker 2014). Zara is well aware that the type of fashion
industry in which it exists, it is necessary that it satisfy the changing needs o the customers. this
made the company to focus on innovation instead of manufacturing a brand new product. The
motive of Zara has always been to modify the products offered by other brands that the
customers demand so that it can easily trace the customers. Moreover, it always maintained a
good amount of stocks of clothes (Forbes 2017). Thus, positioning of Zara has always been
about innovation, which made it the world’s biggest fashion retailer.
Promotional Strategy
Among promotional strategy, it is seen that Zara spends the least amount in their
promotional activities compared to other fashion brands and this has led to their success. The
brand only spends 0.3 percent of its sales on promoting its product compared to other brands that

8
MARKETING STRATEGY AND PLAN
invests 3.5 percent of their revenue. However, it do carry out promotional strategy ny
maintaining a shop windows through which customers can be attracted easily by just looking at
their unique collection. The retail brand started its online marketing due to its international
presence in 88 countries (Forbes 2017). This led the company to carry out online marketing.
Online marketing is increasing day by day and is used by most of the competitors. This makes t
necessary for Zara to carry out online strategy. For this purpose, the company started it online
marketing channel through its website in 2010. The online marketing of the brand is mainly
through its website. It does not follow any other social media strategy (Baker 2014). However,
the marketing through online website marketing has helped the company to fight competition
from other retailers. Since the introduction of online selling, the brand has been able to expand
its online sales by 42 percent (Mail Online 2017).
Analyzing the Marketing Environment
Pest Analysis
Political
Political scenario of any country has a lot of effect on the brand’s operation within that region.
Political scenario such as instability, war and others effect people badly making them lose a lot
of their resources. This in turn will affect the brand, as the customers will not be able to demand
their products due to high price. Moreover, it will also influence the operation of the brand
within that region due to unavailability of various resources. Zara being a fashion retail company
will be affected by political instability in a region, as it will be difficult for them carry out their
operations and led to wastage of their resources (Gupta 2013).
Economic

9
MARKETING STRATEGY AND PLAN
Economic factors such as GDP, interest rate, employment rate, literacy rate and others
help the brand to decide the type of pricing strategy it will follow in a region. It is important that
Zara analyze the economic condition of the country efficiently before strategizing its pricing
level in that region. This requires the brand to set competitive price in low-income level
countries and premium pricing in countries having high GDP (Sheth and Sisodia 2015).
Social
Social and cultural trend is yet another crucial factor that the brand requires to analyze
before entering a country because the living style and culture of a place helps the company to
decide their revenue. Zara will benefit by maximizing its sales in a country having preference for
classy and elegant western wear. The society should be modern to accept the products of (Zara
Arrieta et al. 2017).
Technological
Technological innovation and level in a country will help the company to reduce the cost
of production. Moreover, it would help them to modify their distribution system by incorporating
information system (Sheth and Sisodia 2015).
Porter’s Analysis
Bargaining power of suppliers
Zara belong to the retail industry and is one of the largest fashion retailers in the world.
Suppliers of the retail industry mainly supply things to big brands like Zara, Marks and Spenser
and others. Thus, the bargaining power of suppliers is low because the suppliers do not want to
lose their market share to these big brands (Gupta 2013).

10
MARKETING STRATEGY AND PLAN
Bargaining power of the buyers
Buyers on the other hand have moderate bargaining power because of low switching cost
and preference for the brands. Due to low switching cost customers can easily switch to any
other brand. However, there are customers that prefer only one brand and love to stick to one
brand at any cost.
Threat from substitutes
Fashion retail industry faces rare to negligible threat from substitute, as there is no such
substitute of clothes. Thus, the effect of this force is not seen in the fashion retail industry (Gupta
2013).
Industry rivalry
Competitive rivalry is high in this industry due to large number of similar firms and
brands operating in the industry. There are large number of retail company selling similar kinds
of western dresses and thus offers huge threat. Thus, the industry face huge rivalry within the
industry.
Threat of new entrants
Threat to new entrants is low in this industry because the companies entering in this
industry would require a lot of investment on infrastructure, manufacturing and other sectors.
Thus, it is not possible for a newly made fashion company to take up huge investment at initial
stage of the operation. This makes the threat to new entrant low for fashion retail industry (Gupta
2013).

11
MARKETING STRATEGY AND PLAN
Strength and weakness of Zara
Strengths Weaknesses
 Zara can gain market share in the
industry due to low or negligible
amount of new entrant
 The fashion retail industry in which
Zara exists has very less chance to
fall due to low substitute.
 The company will face huge
competition from the other company
operating in the same industry
 It is challenging for the company to
meet the need and desire of the buyers
Table 1: Strength and Weakness of Zara
Sources: (Gupta 2013)
Marketing Mix for Superior Performance
Price
The brand has always followed premium-pricing strategy to offer its products to the
customer. However, this strategy has been maintained by the company to portray itself as a status
symbol for its customer. Thus, premium-pricing strategy of the brand has proved to be successful
and allowed them to perform good because most of the customers of the brand are rich. Thus,
they demand Zara’s product as a status symbol (Huang and Sarigöllü 2014).
Product
Zara is one of the brands in the fashion industry for which the consumers are crazy. This
is because of its products and style options it offers to the customers. The company has its own
manufacturing process and controls every category of clothes that it produces. The wide range of