Analyzing Zara's Market Position: Application of Porter’s Five Forces

This report provides an analysis of Zara's market position using Porter's Five Forces model, which includes an examination of the threat of new entrants, the threat of substitute products, the bargaining power of suppliers, the bargaining power of customers, and the rivalry among existing competitors. The analysis indicates that the bargaining power of suppliers is low due to the nature of the fashion industry, while the bargaining power of customers is moderate. The threat of substitute products is high due to the presence of numerous competitors like H&M and Prada. The report concludes that Porter’s Five Forces is a valuable tool for organizations to evaluate their competitive environment and improve their market position.

ZARA COMPANY
INTRODUCTION
Porter’s Five Forces is defined as
marketing method which is used by
companies in order to evaluate their
market position through analysing their
competitive environment.
Porter’s Five Forces
This marketing models contains five
components that are explained in
terms of Zara:
• Threat of New Entrants
• Threat of Substitute Products
• Bargaining Power of Suppliers
• Bargaining Power of Customers
• Rivalry among existing
competitors
Threat of New Entrants
From the above report it has been
evaluated that Porter’s Five Forces is
defined as an approach by which
organisation could examine their
competitive environment and improve
market positon.
CONCLUSION
This factor of Porter’s Five Forces
assists company in determining
influence that could be caused by new
players in the same industrial as
existing companies. In context to
Zara, as the company operates its
business operations in fashion
industry where factors such as
product differentiation, brand
establishment and economies of scale
are considered as major barriers for
new entrants.
Bargaining Power of Suppliers
This is another vertical force of
marketing model which determines
how much power retail suppliers
possess which could help them in
enhancing cost while doing business
with companies. In terms of Zara, the
bargaining power of suppliers is low
as in fashion industry.
Threat of Substitute Products
This factor of marketing approach is
used to identify impacts caused by
presence of secondary commodities
on performance of original products.
In terms of selected company, there
are various other organisations such
as H&M, Channel, Prada and many
more which offers quality products
along with following new trends
which increases the threat of
secondary commodities for Zara.
Bargaining Power of Customers
This force of marketing model
identifies impacts caused due to
changing behavior and needs of
customers for companies. In context
to respective organisation the
bargaining power of customers is
moderate.
Rivalry among existing competitors
This is another force component of
Porter’s Five Forces which helps
companies in determining their
market position among present rivals
in the same industrial sector.
REFERENCES
• Zhang, Q., 2021. Developing
segments with high-profit margins–
the Case of Gap Inc. in the United
States. Journal of Asia-Pacific and
European Business, 1(01).
• Suaria, S., 2018. Business plan of
Clothie: an innovative platform to
shop for local fashion (Doctoral
dissertation).