International Marketing Strategies of Zara in the Chinese Market

This report provides an in-depth analysis of Zara's international marketing strategies, specifically focusing on its expansion into the Chinese market. The report begins with an executive summary, followed by a country profile of China and an environmental analysis, highlighting the factors that influenced Zara's decision to enter the market. It then delves into Zara's market entry strategies, including the selection of Shanghai, and the advantages of entering the Chinese market, such as improving brand reputation and accessing a large consumer base. The report discusses Zara's marketing mix, including its approach to market segmentation, internationalization, and marketing strategy. It also examines the challenges and disadvantages faced by Zara in the Chinese market and provides recommendations for improvement. The report concludes with a summary of key findings and insights into Zara's international marketing approach in China.

Programme Business Management
Module Code: 3BM060 Module Title: International Marketing
Project Number: Project Title: Individual Report
Date: Indicative Mark:
Date: Indicative Mark:
Agreed Mark:
Assessed
Components
A* A B C D F (fail) F (FAIL) 0 NS
(100-85) (84 - 70) (69 - 60) (59 - 50) (49 - 40) (39 -20) (19 - 1) F (0) 0NS

Knowledge
&
Understan
ding
Outstanding
understandin
g and detailed
knowledge
base.
Outstanding
use of
theory /
concepts,
with
exceptional
interpretation
and
application.
Excellent
understanding
of a wide
range of ideas.
Excellent use
of theory /
concepts, with
excellent
interpretation
and
application.
Very good
understanding
of a range of
ideas. Very
good use of
theory /
concepts, with
very good
interpretation
and application.
Good
understa
nding of
relevant
ideas.
Good
use of
theory /
concepts,
with
good
interpret
ation and
applicati
on.
Fair
understandin
g of a few
relevant
ideas.
Satisfactory
use of
theory /
concepts,
with
adequate
interpretation
and
application.
Subject
knowledge is
poorly
demonstrated
. Limited and
poor use of
theory and
concepts,
with limited
interpretation
and
application,
if any.
Work
submitted is
not
considered to
be a serious
attempt to
meet the
assessed
components
Work
submitted is
judged to be
of no value
Non
submission
Analys
is &
Evalua
tion
Outstanding
ability to
analyse,
evaluate,
compare and
construct
values
Excellent
ability to
analyse,
evaluate,
compare and
construct
values
Accurate
analysis and
very good
evaluation
Good
analysis
and
sound
evaluatio
n
Fair analysis
with some
evaluation
Weak
analysis and
evaluation
Work
submitted is
not
considered to
be a serious
attempt to
meet the
assessed
components
Work
submitted is
judged to be
of no value
Non
submission
Critical
Thinking
Outstanding
thinking,
logical and
creative with
insightful
outcomes
Excellent
thinking,
logical and
creative with
insightful
outcomes
Very good
synthesis of
ideas that are
articulated
clearly
Good
synthesis
of ideas
with
mostly
consisten
t logic
Logical with
some
synthesis of
ideas
Inconsistent
logic and
synthesis
Work
submitted is
not
considered to
be a serious
attempt to
meet the
assessed
Work
submitted is
judged to be
of no value
Non
submission

components
Researc
h &
Enquir
y
Outstanding,
rigorous and
sustained
enquiry with
exceptional
outcomes
Rigorous and
sustained
enquiry with
excellent
outcomes
Accurate and
consistent
enquiry using
appropriate
methods
Consiste
nt
approach
drawing
on a
range of
sources
Relevant
methods of
enquiry with
some
inconsistenci
es
Little
evidence of
research or
understandin
g of
appropriate
approaches
Work
submitted is
not
considered to
be a serious
attempt to
meet the
assessed
components
Work
submitted is
judged to be
of no value
Non
submission
Presentatio
n &
Referencin
g
Completely
correct in-text
and
bibliographic
referencing.
Consistent and
accurate use of
the Harvard
style.
Technically
excellent,
accurate
referencing
and
presentation.
Consistent and
accurate use of
the Harvard
style.
Accurate and
consistent
referencing and
presentation.
Generally
accurate use of
the Harvard
style.
Good
referenci
ng and
consisten
t
approach
to
conventi
ons.
Good
attempt
to use
the
Harvard
style.
Fair
understandin
g of
convention.
Fair attempt
to use the
Harvard
style.
Poor
referencing
and little
understandin
g of
conventions.
Limited /
inaccurate
attempt to
use the
Harvard
style.
Work
submitted is
not
considered to
be a serious
attempt to
meet the
assessed
components.
Absence of
any in-text or
bibliographic
referencing.
Work
submitted is
judged to be
of no value
Non
submission
Communica
tion
Outstanding,
coherent and
logical
structure.
Exceptional
clear and
fluent
Excellent
ability to
communicate
ideas clearly
and
appropriately
Very good ability
to communicate
ideas clearly
Most
Ideas
commun
icated
effective
ly
Ideas are
communicate
d with some
success
Ideas are not
communicate
d effectively
Work
submitted is
not
considered to
be a serious
attempt to
meet the
Work
submitted is
judged to be
of no value
Non
submission

communicatio
n
assessed
components

ZARA in China
Table of Contents
Executive summary....................................................................................................................4
Country profile..................................................................................................................................5
Environmental analysis.....................................................................................................................7
Disadvantages of marketing strategy: Continue to retain use of foreign models outside of
store to retain international image. However, use Chinese models instore to allow customers
to see how the clothing designs will look on them...................................................................12
Conclusion................................................................................................................................12

Executive summary
The report is based on an international clothing brand Zara. The firm wants to expand
its business in China and this will require several strategies and plans including market
segmentation, marketing mix, positioning, internationalisation and marketing strategy. This
will help to determine market of China and also position of Zara in order to establish business
in China.

INTRODUCTION
International marketing can be defined as the application of principles of marketing
for satisfying the wants and need of people residing across national boundaries. It can also
refer to as performance of business activities designed to plan, price, promote, and direct the
flow of a company’s goods and services to customers in more than one country. International
marketing is simply the application of marketing principles to more than one country”, it is
also about creating awareness about company’s products and services to the global market.
In this competitive global marketplace, organizations of all sizes including Zara will
want to establish successfully their operations in multiple foreign markets; this is especially
market with huge potential and growth opportunities like China, since this will help to
provide much economic benefits including opportunities for market diversification and
growth. The purpose of this report is to evaluate and review the international marketing
strategies including their marketing mix used by Zara when they entered the Shanghai, China
in the year 2006.
About Zara
Zara SA is successful Spanish fast fashion retailer firm founded in 1975 by Amancio
Ortega and Rosalia Mera. The fashion retailer provides luxury clothing and other accessories
for men, women and kids. Initially, Zara expanded its domestic market during the 1980s after
opening the first store in La Coruna. The international expansion came later in 1988, when
Zara opened its first cross border store in Oporto, Portugal. Currently, Zara international
presence is in over five continents with over 1,700 stores located worldwide. The brand
image is highly standardized and the firm is now more focused on fashion trends (Inditex nd).
Country profile
China is considered by many retailers and businesses as one of the most important
market, of which has a huge sale potential. Chinese market is one of the greatest
opportunities for Zara, which can help not only drive international brand presence and growth
for Zara, but most importantly increase revenue, which is crucial for any business. Zara’s
decision to enter into the Chinese market is largely due to its huge population size of more
than 1.3 billion at that point of time in 2006, and also witnessing the strong growth and rising
disposable income of the Chinese’s working population (CISION PR Newswire 2017).
Why China was selected

For a start, Shanghai was chosen since the city is often associated with fashion in
China due to the affluence of the well-educated and savvy population; furthermore, Shanghai
is considered a metropolitan city with a good influx of international profile, western exposure
and the population huge appetite of for foreign goods, products and services; and consumers
spending power are expected to rise in the future. However, entering Shanghai, China is not
easy since there are plenty of competition in China from other global brands including Uniqlo
and H&M (Surugiu and Surugiu 2015).
China is one of the most attractive locations in the world and also grown to become
the strongest economic powerhouse (Griffith and Zhao 2015). The legal system is also
improving and three main draws / reasons of establishing business in China, for example,
beside the size of the market, growth potential, it is also partly about the low operating cost.
The benefits for Zara to enter China have immense benefits such as:
Improving business reputation and global presence: Business will be able to improve
its reputation by going global and providing market offerings to totally different people.
Potential business partners will also think high when they know about international presence
of brand. Zara can easily expand its market to China.
New revenue potential: Global expansion in China will help Zara to access much
larger base for customers. Successful expansion will deliver higher revenues for firm and also
new customers. Globalization could be an effective strategy in order to take revenues to
higher levels. China economy experiences positive and strong economic growth. The GDP
rate shows that each citizen adds more values to society (Sousa and Tan 2015). In this case,
purchasing power of customers is increasing which can be good for Zara.
Young and Savvy consumers: Furthermore, it can be said that Chinese population’s
demographics are also changing. Age distribution fluctuates and population growth alters
cultural values and social trends. Other factors such as education, lifestyle, religion and
emigration can affect the decision making of Zara. What is also notable in China is the huge
size of technology savvy young generation of Chinese consumer; almost 420 million internet
users in China, and these are all potential consumers that are likely to shop online at ZARA
website and online shop. In context of ZARA, business entity has made proactive plan for
expanding business in china. Before making a plan for business expansion marketing team in
ZARA has executed market research for developing the understanding about china market.
Execution of Market research tactics has assisted an organization in exploring various

business opportunities, this strategy has helped an enterprise in gaining competitive
advantage. In addition to this, market research has assisted Zara in developing the
understanding about the market situations and has helped firm in adjusting to new business
environment. Proactive marketing initiatives taken by Zara before launching the product into
the market include marketing manager in an enterprise has created websites for promoting
brand, products and services at international level. An effective as well as continuous
communication has been facilitated by marketing team with customers, this strategy has
enabled business entity to develop understanding about customers needs. Lot of market
research is executed by an organization. Training has been provided to staff members of Zara
related to customer service, marketing and sales.
Market Entry strategies
The firm has vertically integrated retail which are unique from others. This means that
Zara designs, manufactures and distributes products and services itself effectively. The
approach is working because it has managed itself by establishing one of the leading brands
for fashion in Spain. The expansion is ongoing along with operations in 30 different nations.
90% of the stores are owned by Zara itself and rest 10% are in joint venture with franchises.
In addition, to this Zara has adopted the low cost or cost leadership pricing strategy
which has provided firm an ease in entering into new market. Business entity can also enter
into new market by developing innovative products, as this strategy will assist an
organization in attracting customers. It is required by manager in an enterprise to conduct
market research before planning to enter into new market, as this strategy will assist business
entity in addressing the risk associated with expanding business in particular region. In
addition to this , Zara can form strategic partnership with other organization operating
business in same industry, as this strategy will help an organization in gaining the
competitive advantage. It also will aid firm in reducing the various types of risk. In addition
to this, various types of marketing strategies which can be adopted by Zara for entering into
new market are Exporting, Joint venture , merger. Etc. Among the various marketing
strategy joint venture is considered to be an effective technique which can be used by Zara
for entering into new market, as this will assist firm in increasing competitive strength. It will
also enable business entity to share risk and business resources. Franchising is considered to
be technique which can be implemented for rapid expansion of business.

Internationalization
Zara's international strategy is defined by a combination of cost leadership and
differentiated strategies (Carmen L. & Ying F. 2009). However, it is necessary to consider,
for example, when selecting the Chinese market, taking into account the labor costs and
productivity of raw materials, distribution costs and transportation costs, other considerations
are the characteristics or behavior of consumers and per capita income. In terms of marketing
methods, considerations include 4Ps that inherit Chinese consumers and the business
environment. Market entry considerations include two macroeconomic factors, including
taxation, political conditions and export tariffs, and micro-ecological factors, including local
competitors, demand, and location stores. Government and local producer protection issues
are other considerations.
From 2007 to 2012, the number of Zara stores in China increased by 60% annually,
compared to only 3% in the UK. In the process of seeking international expansion, Zara takes
a pragmatic approach to each market and chooses the best entry model. It uses a variety of
methods, including forming joint ventures, franchising and operating its own subsidiaries,
based on what it considers to be the best approach for each new market (Mirela M. & Vita V.
2015).
Marketing Mix for ZARA
Product (Adaptation or Standardization)?
Zara is famous for offering luxury fashion labels. Business entity offers products for
men, women and children. It also renders wide variety and range of goods such as tops,
trousers, jeans, shoes, bags etc. Business entity offers formals and casuals clothes to
customers. Designer Clothes offered by Zara are available in all sizes. Manager in Zara has
set some quality standards which are to be followed by employees while manufacturing
goods. Products offered by Zara has unique label which helps firm in differentiating their
goods from that of its competitors. In addition to this, products offered by Zara are adaptable
by customers as the clothes are trendy and are of good quality. Considering the
environmental issues Zara gives product in paper bags. Business entity is offering stylish
clothes for Chinese customers. Customer-oriented product. The product’s quality isn’t
spectacular but it looks alright on the first few wears. Zara design products for satisfying the
temporary need of clothing by customers.

Women’s: Zara's range of products has better fabrics and a more "feminine" cut, and
Zara is a must-have for fashion accessories and fashionable young women. Lightweight
clothing, flowing skirts, apron pants, pleated culottes, soft- structured blazer and silky top.
Zara found a delicate cherry blossom pattern on a green silk dress, and basically used a
kimono-style styling in Zara, and found oriental watercolor prints on slender pants and
chiffon tops (Inditex n,d). Zara has develops the products according to the preference of
buyers. In addition to this, religion, social factors, culture are conduced by Zara before
planning to launch its products into Chinese market.
Men’s: Zara produces a range of lightweight cotton tops and paisley print shirts with
comfortable cotton twill shorts, short linen pants and linen blazers. The collection features
Asian styles such as robes, beads and ties to provide hippie bohemian details (Inditex n,d).
Kid’s: Zara Kids offers a unique and refined collection for children. Zara Kids is a
great place to shop, it can find fun, unique, quality clothes, reasonably priced kids (Inditex
n,d).
The craze of this brand is increasing day by day and people liking clothing and other
materials offered by brand. One of the major strength of the firm is responds to changes
according to the needs of customers very quickly and effectively. Considering the qulaity
issues , Zara does not prefer to outsource its operational activities.The method of unique
selling preposition is also used to create the latest trends effectively (Czinkota and Ursic
2015). New styles are available within stores in two or four-week maximum. The product
which is not at all preferred by buyers is directly pulled out. Zara is trying to sort out some
issues in China like the firm is coping up with cultural and local people needs which is a huge
challenge for firm. Adaption of product refers to differentiation, customisation or localisation.
It is a strategy of catering various needs of customers in different countries. Continual
changes will help Zara to foster it's experimentally and flexibility.
In addition to this, Zara management is also able to involve global products in the
belief of same products to be sold across market without any modification. The concept is
now become meaningful because of the trend by multinational businesses to increase
economies of scale. Product standardisation includes customer preferences, government and
trade restrictions. Thus, Zara is able towards product adaption and standardisation in China.
Marketing Communication and Promotion Strategies

Given that Zara’s products offered in China are different compared to its other
counterparts, advertising strategy was also accordingly different to match the unique
consumers taste and preferences inherent in the market. Analyzing the website, its landing
page was seen to be filled with loud colors, presenting a stark contrast against its generic
pages in other countries which featured dark and minimalist tones.
Focusing on seasonal promotions, we see that there is a lack of consistency across the
group level where Zara China featured an 11.11 promotion in November 2018 while this was
not apparent in other websites. In these differences, we can consider that singles day (11.11)
is a non-official holiday that originated from China and is widely accorded as one of the
largest e-commerce sales. In 2017, Alibaba’s Single’s day sale amassed USD $25bn (Channel
News Asia 2017), paling in comparison to the Black Friday sale which registered $7.9bn of
sales (American Marketing Association 2017). This supports the significance in the singles
day in the chinese as well as global retail landscape, motivating Zara China to capitalize in
this landmark festivity through promotions.
Zara has its own online Shopping App in China: Even its online fashion store, is also
catered to the market it operates in. Take for example, when customers download the online
shopping apps, it allows the customers to select the location (e.g. country they reside in) so
that customers can view products designs and accessories catered specifically towards their
need. Such customization allows the customers to develop a sense of being treated as
valuable customers whom voices are heard and needs answered. Zara also selling its products
by online shopping site TMall, which leading Zara sales revenue slightly increasing in China.
Zara advertises on the homepage with Chinese models on sites other than China, in
order to prove that Zara has opened up the Asian market. But Zara keeps the Caucasian
advertised on the internal pages in order to maintain its international brand status. Zara uses
international models to advertise on the front page of the Chinese website to reflect its
international brand, which attached to the trend of European and American fashions that are
increasingly improving in China.
Price (International Pricing Strategy)
Analyzing the price variations across the globe
China: men’s jeans: 259 RMB, 59.9 USD (259 RMB convert to USD is 37.46)
China: woman’s dress: 399 RMB, 99 USD (399RMB convert to USD is 57.7)