Zara Brand Audit: Marketing Mix, Strategy, and Performance Analysis

This report provides a comprehensive brand audit of Zara, a leading international fashion company. It begins with a company history and an overview of Zara's current standing, including its brand value and global presence. The report then delves into Zara's brand positioning, analyzing its vision and mission statements, and its emphasis on innovation, fast fashion, and customer satisfaction. A detailed examination of Zara's business strategy follows, highlighting its market-oriented approach and the role of its headquarters in Arteixo. The core of the report focuses on Zara's marketing mix, including product lines, pricing strategies, distribution channels, and promotional activities. The analysis covers Zara's product offerings, pricing in different markets, store locations, operational processes, and its unique approach to advertising and marketing communications. The report also provides an overview of Zara's financial performance, discussing sales revenues, net incomes, and their fluctuations over the years. The report uses Fashionbi index and Zara's financial reports to analyze Zara's performance, including its digital presence and online shopping initiatives.

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Brand Audit
Brand Inventory
Company history and current standing
Zara is one of the largest international fashion companies that ventures in the world of
fashion with clothes for men, women and children along with accessories, footwear and home-
wear products. It belongs to the Inditex Group, which is the world's largest fashion group, which
owns other fashion brands such as Pull
& Bear, Massimo Dutti, Bershka,
Stradivarius, Oysho, Zara Home,
Lefties and Uterqüe. 1 Amancio Ortega
founded Zara in the year 1975 in Spain
after he decided that he needed to
expand his business. Amancio Ortega
opened the first store in the coastal
town of La Coruña in the northwest of
Spain and today Zara has over 2,000 stores strategically located in leading cities across 88
countries with a creative team which is made up of over 200 professionals.2 The first store
carried low-prices lookalike products of popular, higher-end fashion brands and started gaining
1 http://zarafashion2013.wix.com/zara#!background/c18mg
2 http://www.inditex.com/brands/zara

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popularity and success in the 1980’s.3 It was only in the year 1988 when Amancio Ortega
decided to enter the international market by opening a store in Oporto, Portugal and
Subsequently, new stores popped up in New York (1989) and Paris (1990), the fashion capitals
of the world. 4 Today the headquarters are still located in Arteixo, Spain with multiple offices in
various continents such as Europe, America, Africa, and Asia.
Currently, Zara is one of the world’s biggest brands with a brand value of $10.1 billion
making it the 51 st most valuable brand in the world. 5 The store has a number of brands in all the
world’s upscale locations that adds to its brand image. Zara is a brand that strongly believes in
innovation, Fast fashion, creativity, flexibility, quality design and rapid turnaround hence it has a
highly creative and enthusiastic team of designers. Its strategy is to get as close as possible to
luxury brands but at the same time maintain its mid-range affordable prices.6
According to the digital marketing agency, Fashionbi, Zara’s performance trend for the
year 2014 is as follows:
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3 http://zarafashion2013.wix.com/zara#!background/c18mg
4 http://zarafashion2013.wix.com/zara#!background/c18mg
5 http://www.forbes.com/companies/zara/
6 http://zarafashion2013.wix.com/zara#!brand-identity/c1xbv
7 http://fashionbi.com/brands/zara/index

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The Fashionbi index combines together market, digital, social and financial data into a single
brand performance evaluation framework. This helps us analyze the overall performance of the
brand for the entire year. It can be observed from the graph that the brand goes through constant
ups and downs but it did the best in the month of September and after that it experienced a
downfall.
It is essential to separately analyze the firm’s financial report in order to know how the
firm is doing financially and to ensure the firm’s stable functioning. The following is Zara’s
income statement for the fiscal years 2009 to 2013:
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Zara has experienced unstable sales revenues as well as net incomes over the years, with a
positive growth in the years 2010 and 2012 but a decline in the years 2011 and 2013. The reason
for this is the fierce competition the brand is facing along with the constant fluctuations in the
fashion industry with all the changing fashion trends.
8 http://www.marketwatch.com/investing/stock/zara/financials

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At present Zara is concentrating on moving forward with its successful entry into the
digital world of online shopping. The brand also continues to expand and manage its online
presence with over a million daily visits on the official Zara website and more than 23 million
likes on the Facebook.
Brand Positioning
Brand identity
Zara has a completely well defined identity and the officials are doing a great job in
promoting that image. Zara stands for style, class, innovation, good quality and fast fashion and
we can observe all these qualities in the various aspects associated with the brand.
The brand has clearly defined vision and mission statements that guide the brand to
where it wants to be and how it wants its customers to perceive it. Zara’s vision statement is
“ZARA is committed to satisfying the desires
of our customers. As a result we pledge to
continuously innovate our business to
improve your experience. We promise to
provide new designs made from quality
materials that are affordable.” 9 This clearly
mentions the firm’s importance towards
innovation as well as their customers being
their top priority. Zara also strives to
provide its customers with the best quality and the most affordable prices. Similarly, Zara’s
mission statement, “Through Zara’s business model, we aim to contribute to the sustainable
9 http://zarafashion2013.wix.com/zara#!brand-position/c1q1p

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development of society and that of the environment with which we interacts” explains another
important aspect that Zara participates in which is Corporate Social Responsibility. 10 The brand
stresses on sustainable and environment friendly ways of functioning by using energy efficient
lights in their stores and making the stores eco-friendly shops, producing less waste, recycling,
using ecological fabric, organic cotton and having an environmentally aware team. 11
Apart from this Zara aims to get as close as possible to luxury brands but at the same time
maintain the mid-range affordable prices that it offers. Although Zara’s apparel may be
comparatively less expensive compared to luxury designer goods, Zara has never abandoned the
quality and comfort of its
final products.
Zara also tries to
relate its identity with that
of its customers, which
helps the customers to
better, relate and accept
the product. Zara’s
customers, help to give shape to the ideas and constantly changing demands emerging in the
fashion industry, direct Zara’s strategic fast fashion. The relationship with its customers is an
important channel of information that reflects shoppers’ reactions, desires and demands – its
secret to success lies in feedback given from a wide range of people from different cultures and
generations.12
10 http://zarafashion2013.wix.com/zara#!brand-position/c1q1p
11 http://www.zara.com/us/en/company/our-mission-statement-c18001.html
12 http://zarafashion2013.wix.com/zara#!brand-identity/c1xbv

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Business Strategy
As mentioned earlier Zara gives first priority to its customers and fulfilling their
constantly changing needs. Hence, Zara has adopted the ‘Market-oriented Strategy’, which
means they make modifications in their products depending on the needs and wants of their
consumers. Zara’s headquarters in Arteixo, which is know as the Cube, introduced the idea of
fast fashion around two decades ago. They then developed a developed, efficient and highly
secretive market research study
that helps them understand the
demands of their customers. Zara
delivers new products twice each
week to all its stores around the
world. This adds up to more
than 10,000 new designs each year
and it takes the company only 10 to
15 days to go from the design stage
to the sales floor. 13 This has
brought a revolution in the world of fashion and gives Zara a competitive advantage over the
other brands in the same industry.
Marketing Mix
Zara’s marketing mix is based on its market-oriented business strategy. Thus all the
aspects of its marketing mix are customer oriented and fast moving. To understand this at a
deeper level all the aspects as studied in detail as follows:
13 http://www.forbes.com/sites/gregpetro/2012/10/25/the-future-of-fashion-retailing-the-zara-approach-part-2-of-3/

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 Product:
Zara has four main product lines: women clothing, men clothing, children clothing (Zara
Kids) and accessories. Zara offers formal
and casual clothing, shoes and accessories
like handbags, jewelry, perfumes and
many more for all women, men and
children. Women’s clothing is the most
prominent product among all the Zara
products and accounts for almost 60% of
he brand’s revenue.14
Zara prides itself on ‘fast moving fashion’ with new designs restocked in limited quantity
every two weeks at every store around the world. The brand is able to offer around 12 different
collections every year compared to its competitors who can only offer around 3 to 4 collections
each year.15 They do not hesitate to take
the unsold products back in order to
reshelf them with the new products thus
making Zara’s product life cycle and shelf
life short. In order to avoid wastage they
only produce a limited quantity of each
type of product. This encourages
consumers to frequently visit the stores
14 http://fashionvore.files.wordpress.com/2013/10/zara-report.pdf
15 http://fashionvore.files.wordpress.com/2013/10/zara-report.pdf

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for new designs and to snap up interesting outfits on the spot in order to guarantee themselves a
piece as well as stay in fashion. This offers the customers with a sense of exclusivity and helps
them stay up to date with fashion.
Recently the brand is venturing into home-
ware through ‘Zara Home’ in order to extend its
brand. Zara Home offers all the household
necessities like bed sheets, couches, towels and
other household accessories. But this line is still
developing and it is not as established as the other products. Zara is entering a new market with
this product but it still aims on maintaining the same brand strategy and image as Zara fashion.
 Price:
Zara believes in offering its customers with high fashion at a low cost. Although if Zara’s
prices are compared to those offered by other fashion brands like H&M or Forever 21, Zara
products are comparatively more expensive but they are much cheaper than the luxury brands
like Mark Jacobs or Armani Exchange. Hence, Zara falls in the mid-price range but the reason
why they are more appealing to the customers is, they are able to offer the same quality as the
luxury brands at a price that is lower than the price offered by the luxury brands.
Prices range from $79.90 to $539.00 for both Womenswear and Menswear while the Kids
segment has coats starting from $65.00 and these prices can start from $30 during a sale.16
Although it is observed that Zara sells its products at different prices in various countries and
earns a high markup prices as follows:
16 http://zarafashion2013.wix.com/zara#!business-strategies/c17c8

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Zara earns an average mark up of 38.85% in the Unites States whereas it earns an average mark
up of 97.49%. This indicates that in spite of such high mark ups the customers still choose to
shop at Zara, which ensures customer loyalty and helps the firm earn enough profits.
As a whole, Zara successfully provides high fashion and high quality products at an
affordable cost, making its customers’ purchases value-worthy.
 Place
Zara has over 2,000 stores that are mainly located at prime retail areas like Ion Orchard,
Orchard Road, Times Square, George Street London and others where human traffic is high.
Apart from retail stores Zara also has an online store, which increases accessibility to its
customers, allowing them to make purchases conveniently on the go. Zara offers shipping in all
the 88 countries in which it currently operates.
 Process
Zara is a vertically integrated retailer, which means that it designs, manufactures and
distributes the products itself. 18 Though this strategy is usually considered to cause a number of
problems it seems to work with Zara as people in every stage of production are highly trained,
17 http://zaraforwarding.com/spain/zara-prices-worldwide-comparative-spain-is-the-cheaper/
18 http://www.marketing91.com/marketing-mix-zara/

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motivated and stand for the brand’s values.
As every stage of production is completely
operated by Zara, it secures the brands
secrets like its research methods, fabrics used
etc. The teams work simultaneously on
different types of clothing designs, building
and refining previously available styles as
well as new ones. Its demand based
production or Just-in-time (JIT) production reduces the amount of inventory available, lowering
Zara’s storage cost, which makes Zara's outstanding lead-time unbeatable by any brand in the
industry at the moment.19 Furthermore, Zara eliminated the traditional design process, where
design and development overrides fabric procurement causing the designers to work with the
available fabric, allowing for faster fashion.20
 Promotion (Advertising/Marketing Communications)
In spite of being one of the world’s largest and most well-known fashion brands Zara
doesn’t not believe in advertising its brand. Zara uses 0.3% of sales revenue on advertising,
minimal when compared to its competitors (3-4% of sales revenue). 21 Zara does not believe in
traditional mass-media marketing strategies that is why we never see television or radio
advertisements. The brand markets by having stores in prime retail locations so a number of
people are reminded about the store. The stores are made to look upmarket and elegant which
makes the atmosphere welcoming and grand for the customers. Also the brand makes sure the
customers have a power-full store experience by providing the best services thus enabling the
19 http://zarafashion2013.wix.com/zara#!business-strategies/c17c8
20 http://zarafashion2013.wix.com/zara#!business-strategies/c17c8
21 http://zarafashion2013.wix.com/zara#!business-strategies/c17c8

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store staff to understand the customers and their needs. This leads to word of mouth which
means the pleased and satisfied customers themselves market about the products to their
acquaintances by telling them about the excellent services, store atmosphere and product quality.
Zara highly depends on word of mouth advertising. A promotional strategy Zara practices is
sales and clearances. Most of the Zara stores worldwide have seasonal sales that encourage
consumers to shop. The striking thing about Zara is that it has found differences that matter to
the consumers and used that to differentiate itself from the rest of the competition. In other
words, its key marketing strategy is based on exclusivity, experience, differentiation and
affordability.22
Although recently it has been observed that Zara has been actively working on its
websites as well as social media.
Zara’s official website
(www.zara.com) is used for online
shopping as well as to showcase to
the customers the brand’s new
collections through sections like
‘Lookbook’ and ‘Pictures’. Zara’s
Facebook page currently has over 23
million likes and its twitter page has around 626 thousand followers. According to a study
carried out by ‘Marketing Mag’, a marketing website, each Facebook fan is worth an average of
$174 and Zara’s Facebook fans are worth the highest ($405.54). This means that Zara has a good
and trustworthy relationship with its customers through social media sites and they play a vital
22 http://www.marketing91.com/marketing-mix-zara/

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role in the brands sales and profits. Zara’s main competitor H&M has a much lower fan value of
$306.08, giving Zara an added advantage on social media.
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In order to maintain its online presence and to constantly build growing and trustworthy
relationships with the customers Zara has to post meaningful and attractive post as well as
pictures. The following wordle summarizes Zara’s overall Internet content from its main website
and social media pages:
23 http://www.marketingmag.com.au/tags/zara/#.VI46f5N4pls