Competitive Analysis of Zara and H&M Marketing Strategies

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MARKETING ESSENTIALS
ZARA

Table of Contents
INTRODUCTION............................................................................................................................. 1
LO-1............................................................................................................................................... 2
P-1 THE KEY ROLES AND RESPONSIBILITIES OF THE MARKETING FUNCTION........................2
M1 ANALYZE THE ROLES AND RESPONSIBILITIES OF MARKETING IN THE CONTEXT OF THE
MARKETING ENVIRONMENT......................................................................................................4
P-2 EXPLAIN HOW ROLES AND RESPONSIBILITIES OF MARKETING RELATE TO THE WIDER
ORGANIZATIONAL CONTEXT......................................................................................................6
M-2 SIGNIFICANCE OF INTERRELATIONSHIPS BETWEEN MARKETING AND OTHER
FUNCTIONAL UNITS OF THE ORGANIZATION.............................................................................8
LO-2............................................................................................................................................. 10
P-3/ M-3...................................................................................................................................10
REFERENCES.................................................................................................................................13
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INTRODUCTION
Today, Zara is among the top fashion brand of the world. It started with a small shop in Spain by
Amancio Ortega in 1975 and now Zara has its presence in around 96 countries with more than
2200 stores worldwide (Roll, 2018). Zara has its headquarter in Arteixo, Spain and is a
subsidiary of Inditex which is the world's largest apparel retailer (Owler, 2019). Zara had been
so successful due to its products and marketing strategy. Zara is known for availing the latest
fashion in less time than any of its competitors and views fashion as a perishable commodity
(Zara, 2019).
This assignment will help to understand marketing by explaining its importance in Zara. It will
also define the marketing function along with explaining some key functions of marketing. The
assignment will then explain the roles and responsibility of marketing function in the context of
the marketing environment and how these functions relate to the wider organizational context.
It will further explain the interrelationships between marketing and other functional units of an
organization. Then the assignment will compare the ways in which Zara and H&M apply 7Ps in
their marketing plan along with evaluating different tactics applied by Zara and H&M to achieve
business objectives. In the end, the assignment will explain, produce and evaluate a marketing
plan for Zara to meet its objectives. Altogether the assignment will offer a brief understanding
of marketing in the retail fashion sector.
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LO-1
P-1 THE KEY ROLES AND RESPONSIBILITIES OF THE MARKETING FUNCTION
Marketing
As per Mark Burgess, the process of translating customers need into revenue by earning a profit
is Marketing (Burgess, 2017). Marjorie Clayman defines marketing as a process of brand
building and convincing customers about the superiority of the brand along with cultivating and
maintaining a relationship with peoples (Cohen, 2011). The essence of all the definition of
marketing says that it is a process of attracting and keeping the customers with a company so
that more revenue and profit can be generated.
Importance of marketing for Zara
Though Zara never indulges in much advertisement yet marketing plays a key role in the
success of Zara. Marketing helps Zara in targeting the right customer who has the potential to
buy Zara's products. Marketing also helps Zara in understanding the customers’ response
towards a new product and thus help it from losses of bulk production. Marketing helps Zara in
positioning itself as a provider of the latest trends at minimal prices with a customer-centric
strategy (Bhasin, 2018). Marketing helps in observing the demand of customer’s which can be
converted to profits. Since Zara is a part of fashion industry thus it needs a strong customer-
centric marketing strategy to hold its market share.
Marketing function
Among the key functions which decide the success of an organization, Marketing is the most
important one. The main role of marketing is the identification and sourcing of products which
have good prospects in a market. It then promotes and differentiates the product from other
products in the market. Philip Kotler defines marketing as a function whose purpose is to define
the target market and observing the best way to fulfil the demand of the market to generate
profit (Eser, 2018).
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The key marketing functions
Marketing function itself is a combination of various functions. These functions include market
research, product decisions, pricing, promotions, distribution, sale, market analysis, market
segmentation, positioning, after sales services etc. A better understanding of some of these
functions in Zara will help in understanding the marketing function.
1. Product Placement- A team at Zara spot the designs on fashion shows and selects a
potential design. This design is then tested in the market before any bulk production to
avoid losses. Based on the result of the test the marketing team then decides the
suitability of the product (Gök and Hacioglu, 2010).
2. Market Analysis and Research: Zara operates in the dynamic fashion industry and thus
it needs a team to understand a market before forecasting any new trend. This analysis
helps Zara in understanding the probable response from the market which can be used
for its benefits (Donnelly et al., 2012).
3. Pricing: Zara is known for providing the latest designer wears at fair prices. This function
of Zara helps it to understand the competitive prices and setting its prices at the lowest
possible (Li et al., 2013).
4. Distribution: Zara has more than 2200 stores to distribute its products. Inditex, the
parent company of Zara has very efficient supply chain systems which can available
products anywhere in the world in less than 48 hours. This gives Zara competitive
advantage by reducing cost and speedily delivery (Gök and Hacioglu, 2010).
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M1 ANALYZE THE ROLES AND RESPONSIBILITIES OF MARKETING IN THE
CONTEXT OF THE MARKETING ENVIRONMENT
Decision making in a business can be affected by several factors and forces. Such forces
together form the external environment of a business. These forces can also affect the
functioning of business and are of five main types:
1. The Political and Regulatory Environment: This part constitutes of all the rules, policies
and regulations of the government. Businesses have to strictly follow the rules and
guidelines of the government and regulatory bodies to conduct business in a country
(Spence, 2012). Failing to which might attract consequences like penalties or even ban
and prohibition of a company to conduct business. Marketing helps to understand and
follow the rules of government to properly conduct business and also maintain good
relationships with concerned authorities.
2. The Economic Environment: This part consists of the economic factors like inflation,
unemployment, per capita income, taxation etc. Such factors have an effect on the
behaviour of the customers and thus every company has to keep a close look at the
performance of an economy to align their plans (Jaén and Liñán, 2013). Marketing helps
in ensuring the availability of the right goods based on the economic condition of a
place.
3. The Competitive Environment: This part consists of competitors, their products, pricing,
promotion etc. Marketing plays a big role in understanding the competitive forces and
formulating a plan to deal with them (Craig and Campbell, 2012). Marketing department
is responsible to ensure the superiority of the brand in the market segment they are
dealing to successfully exploit and hold the market.
4. The Technological Environment: Technology plays a key role in deciding the
competitiveness of a company. The marketing department has to make sure that
competitive technology is available with the company which can give it cost advantages
to product superiority.
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5. The Social and Cultural Environment: This part consists of the social values and cultural
beliefs of a place. Marketing plays a key role in ensuring that a product is not offensive
to any segment of the society and matches with the popular beliefs of the people. This
builds an amicable relationship between a company and an organisation and ensures
products and company’s acceptability in a society (Craig and Campbell, 2012).
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P-2 EXPLAIN HOW ROLES AND RESPONSIBILITIES OF MARKETING RELATE TO
THE WIDER ORGANIZATIONAL CONTEXT
Marketing is very important for Zara to position itself in the market and avail the right products
as per the needs of the market (Kohan and Danziger, 2018). Marketing of Zara do not believe
much on advertising but on the mouth of word publicity by providing stylish and quality
products at the right prices. Marketing at Zara also involves market research which helps it to
predict the response of the market before entering any market or before launch of a new
product. The marketing department also ensures that Zara has a strong presence in every
segment including E-commerce, Kid’s apparel, Men’s and Women’s apparels, shoes etc.
Zara is the subsidiary of Inditex and works very closely with its parent company. All the goods
sold at Zara are produced by Inditex though designing and product selection is done by a team
specially assigned for all the brands of Inditex (Zara, 2019). Zara has many organizational
functions like finance, HR, Marketing, Customer service etc. and all these functions works very
closely with marketing to ensure the success of Zara.
Relation between Marketing and Finance
A good relationship between marketing and Finance ensure availability of funds for all the
marketing activities which ultimately helps in generating profit and bring returns to the finance
department (Meunier-FitzHugh and Lane, 2013).
Relation between Marketing and HR
A good relationship between marketing and the Human resource department ensures
availability of enough employees for the activities of the organization including marketing
activities which improves the brand name of Zara and thus more people pay interest in working
at Zara for long-time.
Relation between Marketing and Customer service
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The interrelationship between marketing and customer service helps in attracting the
customers and ensuring their satisfaction by follow up and guidance which helps in gaining loyal
customers for Zara.
Relation between Marketing and Purchasing and Production
Purchasing and production department ensures the quality of the products which the
marketing department promotes. Both Marketing and Production department work integrally
in designing the product and packaging of the product to ensure good appearance and features
of the product. A good quality product helps in ensuring satisfaction which saves marketing
efforts from going to waste (Craig and Campbell, 2012).
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M-2 SIGNIFICANCE OF INTERRELATIONSHIPS BETWEEN MARKETING AND OTHER
FUNCTIONAL UNITS OF THE ORGANIZATION
Process of Marketing
Marketing is a four-step process which helps in observing the opportunities and selecting the
target to pitch the product along with a combination of 7Ps of marketing mix. It also involves
managing the efforts to ensure achievement of business objectives.
1. Analyzing marketing opportunities: Analyzing the opportunities in the market is the
primary step in marketing process. In this step marketing needs great support from
research department as it can conduct various surveys and researches to deliver the
necessary insight into the market which can help in observing the opportunity (Ahmed,
2014).
2. Selecting the target market: After observing a marketing opportunity, the next process
of selecting the right target market which can not only accept the product or the
company but also have good prospects in the future. The right selection of market can
bring profits but a wrong selection of market can bring huge losses and wastage of
resources and efforts (Pratap, 2018). In making such decisions finance and HR
department helps the marketing department by observing the complications in the
marketing along with understanding the available resources which company can spare
in the new product.
3. Developing Marketing Mix: Marketing mix is a combination of 4 key decisions like the
product to be sold, price of the product, availability and channel of distribution of the
product and promotional activities for a product. Defining the answers of these four key
question help in formulating a strategy for a product. In this stage, all the functions of
the organization help marketing department like finance department will help in availing
the necessary funds for the promotion, production and establishing distribution along
with suggesting the necessary returns which company expect from such expenses. HR
department helps in deciding and availing enough skilled human resources to ensure the
success of the new product (Ahmed, 2014). Production department helps in
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understanding the capacity of the company along with presenting the necessary
resources needed for the production of the new product.
4. Managing the marketing effort: This step usually comes after the launch of the product.
This step ensures controlling of the activities from deviating from the course of
increasing the sale and customer satisfaction from a product. Customer service
department plays a key role in this step as it avails the feedback from the customer to
help in understanding the issues and grievances of the customers which can help in
enhancing customer’s satisfaction. (Pratap, 2018).
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LO-2
P-3/ M-3
Business Objectives
There are five types of business objectives. First, are Economic objectives; this includes the
objectives of profits along with others with the objectives which lead to profit like increasing
customer base, optimum utilization of resources and innovations etc. The second type of
objectives is social objectives; this includes providing quality goods to the society along with
adopting fair trade practices and contributing towards social welfare (Chand, 2019).
The third type is Human objectives; this involves employees’ economic wellbeing along with
psychological and social satisfaction which ensures employees development. The fourth type is
national objectives; this includes the creation of employment for the country, paying taxes to
serve the nation, helping the nation to become self-sufficient and promoting social justice. The
fifth type of objectives is Global objectives; this includes improving efforts of Globalization,
Improve the standard of living globally and decreasing disparities among nations.
All these objectives are very important for Zara since it is present globally and have long-term,
goals (Pratap, 2018). Aim of Zara is to improve their contribution towards the sustainable
development of its society and environment with its present business model (Zara, 2019).
Marketing Mix and its application in Zara and H&M
The marketing mix is the combination of 7 Ps of marketing, which are the product, price, place,
promotion, people, process, physical evidence. All of them play a key role in formulating a
marketing plan for any organization:
1. Product: This element of the marketing mix is to decide the right product for the
market. Every company aims to have a diversified portfolio of products to offer the
customers. A good product strategy is built on the needs and desires of the target
market. Zara and H&M both deals in fast-changing fashion thus they have to keep
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