ZARA SWOT and Competitor Analysis

In this age of advanced media and technology, where customers are flooded with marketing messages all the time, it is very hard for the businesses to progress efficiently without marketing and especially internet marketing due to quick adoption of internet and use of computer and others related devices. With a nominal investment on the website and web based marketing, lots of new markets and customers can be attracted through this marketing technique.

The retail industry is generally a very dynamic, fast changing sector. It constitutes one of the main sectors in the economy, in terms of transactions and turnover; as a result, it is a highly competitive and sophisticated industry.

As Zara has an international presence in many countries of the World, it is now compulsory for Zara to adopt an online marketing strategy to compete with its competitors, capture and retain more market share and increase profits in this highly competitive environment where every customer is fully informed and equipped with information about the market.

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Digital marketing is very fast growing and cheap solution to reach maximum customers without any boundaries. Through customised digital marketing where you can convey your message only to potential customers and lots of new customers can be attracted by using different techniques.

Today’s economy is forcing everyone to search for the best deals they can find. Usually these deals are found on the internet. Digital marketing helps a company to increase its exposure to consumers who are actively seeking your product or service, making it much more effective than other forms of advertising. Increasing your company’s exposure through digital marketing is the equivalent of McDonald’s only showing you a Big Mac commercial when you are hungry It is targeted, effective, and relevant.

Online marketing has many advantages for businesses as well as customers, but on the other hand there are some problems which are related to internet marketing and use of technology and its popularity among your target market.

While using online marketing, you do not cut back your company’s marketing budget during this economy; instead, focus on spending your marketing budget more effectively by investing in a highly targeted digital marketing campaign.

In-fact, this is the best time for businesses to review their marketing strategies and bring internet marketing into focus because of increasing costs of marketing on traditional medias which do not guarantee that you are actually targeting your potential customers.

Situation Analysis

There are not many businesses which are running without any marketing in this age of communication and technology. If some business is doing good without marketing it dose not mean that the business has captured maximum market and there are no more opportunities to grow. If some business is already doing well, it can do better by launching a marketing campaign and can get more market share.

If someone owns a business in today’s marketplace, it is not easy to run a business without marketing and not enough to run an advertisement in the local newspaper to maximize the exposure of business. In fact, it is not even enough to run a television commercial on a local broadcasting station because the best marketing tools at anyone’s disposal have quickly become those associated with online marketing.

In fact, if someone starts to explore marketing business via the internet he will quickly find that instead of reaching just a few consumers, he will now have the unique ability to reach both the millions of customers from a global approach and a more specified group of customers that are closer to him as well, a broader appeal than his business may have had previously. He can use social media as a marketplace, and also have a targeted market.

Of course, before actually getting the benefits of a wider consumer base there is a need to attract them to the website which is where online marketing tools come into play. Products and services need to be presented in a clear and visually appealing way on the website. The website is a company’s “store” on the internet, the products must be easy to find, priced properly for the market, and delivery methods clearly outlined. Adding a blog element to the website provides fresh content, photos, and innovations to customers, as well as satisfying the search engine criteria for active use and renewal. This also helps search engine placement.

Other popular ways to help a business market its website include social media outlets like Facebook, Buzz and Twitter, link building and other search engine optimization tactics, or by using the Google tools like Google Local to increase the online exposure.

With the help of all these tools and techniques, where we can promote our website through online marketing, there are some issues related to online presence. Online security is the main concern of the customers who are interested to buy online and want some sort of security that the information they are providing for transaction is safe and will not be misused in future. This matter can be resolved by getting some online security verification certificates and putting them on the website.

Other online marketing concerns may be the annoying banner ads on the websites where you are advertising, viral marketing, too much information about the product on the main page which is not necessarily required by every customer, product search problems on the website. On the other hand before launching digital marketing campaign we should be very clear about our customers that do they use internet frequently and do they have proper training and skills to surf the internet easily.

As far as Zara is concerned the main target market is people who like fashion and keep themselves updated with latest trends in clothing, so this type of people use internet very frequently to keep them update and interact with the community online most of the time.

2.1- Market Summary

By keeping in view the current market trends and situation analysis our plan is to launch an online marketing campaign. Europe, America, Australia and Asia are our main target markets and there is an increasing trend of use of interne in the countries of these continents.

We can see the growth rate of internet use and its penetration in last ten years in different regions of the world. With the help of these figures we can easily understand the importance and reach of internet marketing.

Most of the market shareholders are now using internet marketing strategy and increasing their market share by giving information about the new products and designs, product offerings and offering buying online facility, business policies related to environment and customers through e-marketing.

There are 383 million users of internet in China only and we can target them without spending lots of money on retails outlets all over China. Same is the case with Japan and India where we do not need to open stores in all the cities. We can open our stores in main cities and market our product through internet to other areas where we can find our customers and target them.

This is the strategy adopted by most of the successful businesses like Clark, they do not keep all the stock on their out lets and promote their website by asking customers to use their website to see the full range of the products in different categories.

2.2 SWOT Analysis

ZARA has 1,608 stores (including 213 ZARA kids’ stores) in 74 countries, with the company’s international growth currently offsetting the economic downturn in the domestic Spanish market.

ZARA has a very strong brand image and the number of outlets can be increased with the time and growth. Comparatively high product price is a weakness but we have opportunity to explore markets where we can find customers who want to buy high quality products. Entry of new competitors and non availability of sufficient raw material can be a threat in future.

2.2.1- (S)trengths

• ZARA has a very strong market Image due to quality, style and availability of products.
• Product/ Brand Image is also very high because of very high quality, reliable products for children, women and men.
• Strong financial position of ZARA is also our strength which will help us to invest adequately to get favorable results.
• Due to strong market position there is availability of finance from other financial institutions like banks.
• ZARA can benefit in saving the cost from existing infrastructure of suppliers.
• Vast network and store on different main locations all over the UK, Europe and other regions of the World is also our strength.
• At this time we have availability of suppliers who can provide us required raw material on good prices and we can build good relations with them for future when the competition will be higher.
• Online availability of our full catalogue is also our strength and customers can see, choose and make a final decision by just sitting home.

2.2.2- (W)eaknesses

• High product price is a weakness but we can not compromise on quality and customer services.
• Due to no marketing strategy and planning the rate of getting market share is very low.
• Proper management and implementation of the new system can take time.

2.2.3- (O)pportunities

• New market search is the next step after capturing our existing market we can go to US and central Asian markets more deeply.
• More innovation, improved quality and value added products for our customers.
• Adoption of new technology will help us to lower the cost of our products.
• Research and development department can be made more efficient and strong for product improvement and availability of the products.
• Improved and more focused customers service.
• Continuous training of the staff and labor for cost effective production.
• Strive to exceed the customer’s expectations through quality, innovation and customers services.
• Increase in promotional activities through online marketing to get maximum market share.
• Building relations and long term contracts with the suppliers will be beneficial for future buying.

2.2.4- (T)hreats

• Entry of new competitors is a threat for our product which can be avoided by building stronger product image in the mind of customer.
• Unavailability of sufficient raw material because of high number of customers for raw material in the market.
• In the near future there will be high price of raw material due to increased demand.
• Availability of raw material in future is another threat and can be managed by involving maximum number of suppliers in the beginning with small quantity orders to all the suppliers. Order quantity can be increased in future as per demand.
• Low buying power of the customers in existing markets is also a threat and can be managed by searching new markets.

2.3- Competition

At this stage if we compare the top high street stores in the UK, most of them, i.e. John Lewis, New Look, Debenhams, M&S, next, Bhs, H&M, asos, peacocks and topshop are the main stores which are focusing on online presence and are among the top list stores on search engines in fashion and clothing search results.

Because Zara is not in putting any effort for online marketing, that is why we do not find it in search results.

John Lewis: The retailer has adopted Omniture SearchCenter to optimize paid search marketing.  This combination of products enabled John Lewis Direct to optimize customer preferences throughout the entire acquisition to conversion cycle.

John Lewis Direct is a compelling example of a traditional retailer making a success of its online strategy. Millions of customers visit the award-winning John Lewis web site each month and the site has grown consistently at above market rates since its inception in 2001.  In 2008 online sales were up by 24% to £327m.

New Look: The famous and one of the favorite store of ladies for fashion clothing New Look has also understood and adopted the online marketing strategy by putting sponsored links on top search engines, using social websites for close contact with customers and launched their website in 2007. Since the eCommerce launch in December 2007, New Look website has continued to exceed expectations with nearly one million average weekly visitors in March 2009. This is a threefold increase on the same time last year, with average order value continuing to grow.

The new web platform is giving customers increased access to the full product range and provides multi-channel capability, enabling customers to order in store for delivery at home.

In March 2009 New Look acquired the www.newlook.com domain name and is appraising the potential to utilise this with a mainland European transactional website. This will provide marketing synergies with their international store roll-out to strengthen the brand and offer to customers.

Debenhams: Debenhams is also promoting its website through search engine optimization, different blogs and social websites. Most popular websites are D Blog, Face Book, Twitter, Flicker and You Tube. Store is also encouraging Debenhams website visitors to visit these social websites and leave feedback.

The Marketing Innovation Group (MIG) launched Debenhams’ Megaday iBrochure, in 2009, in conjunction with their September New Season Spectacular Sale. This tactical iBrochure mirrored the paper brochure that was available in store and was used to drive online sales and raise awareness.

Marks and Spencer: M&S has pioneered online video with ‘M&S TV’ (marksandspencer.com/tv), a great example of v-commerce in practice, and proof positive that compelling online video increases sales. Marks and Spencer is known for its innovative online approach, the retailer was keen to find ways of growing its online business while retaining the customers already visiting the site. In addition to enhancing the experience, the channel had to ultimately drive sales.

M&S TV is a collection of over 500 films divided into 12 channels. Each channel focuses on a particular company theme or business vertical, be it womenswear, menswear, or home. To maintain brand consistency, the channels are managed by a central commissioning team consisting of staff from both M&S and Adjust Your Set. This team also plans future content and measures the consumer response.

Engagement levels are constantly measured and regular refinements are made in order to improve the quality of the editorial and the rates of conversion. If viewers drop off before the end of video or certain links are not being clicked, then further changes are made.

Keeping in view the above information Zara has a very big market to capture and this is the best time to develop and implement the new marketing strategy to enhance the market share in near future.

2.4- Product Offerings

Zara offers an exclusive coordinated collection of stylish clothes, shoes and accessories for women. Collections for men, children and the home quickly followed. Zara’s clothes are styled by the in-house design team to offer consistency of style, quality and value for money with a contemporary fashion edge.

2.5- Distribution

Zara has a very strong network of retail stores in the UK, Europe, America, Asia, and Africa for the distribution of its products all over the World. Other than retail stores we have also introduced a fully functional website with our latest products, designs and offerings.

The online store is also contributing successfully for the distribution of the products to the customers.

3.0 Marketing Strategy

3.1- Objectives

Challenging but achievable objective has been set for next three years. Because of the overall condition of the economy which is not that good, result in the first year can be a bit slow.

First-year Objective: In the first year we will maximize the awareness about the brand and availability of the product. We have already launched a page on facebook.com and more than 3,676,000 people like that page from all over the World. Website will be promoted through other major social networking websites, blogs, emails and in-store advertisement. Search engine optimization and data updating process will be performed more efficiently to keep the website at the top in search results on different search engines. Secure online selling will also be introduced in first year which will help to improve the growth rate. The growth rate will be increased from 6% of 2009 to 10% at the end of first year.

Second-year Objective: In the second year we shall be doing well and will be on the first page of most popular search engines. In the second year more focus will be on introduction of innovative technology, make over and use of latest web technology to attract the visitors. The estimated growth rate in second year is expected to rise by 7% due to opening in new markets of Australia and Africa. Online selling will be offered to Australian customers in this year.

Third-year Objective: Third year, 2012 – 2013, will be a year of revival for world economy, hopefully and we shall capture the market by 25%. For Europe aggressive marketing strategy will be adopted to get maximum market share. Online selling will be launched in major Asian countries to facilitate our valuable customers and to maximize market share.

3.2- Target Markets

Target market of Zara is middle to high class men; woman and children who like to update themselves with latest fashion and style and want higher quality clothing on reasonable prices. With the help of online marketing it will be easier for Zara to convey information about new designs and fashion to its target markets in different parts of the World within no time because Zara’s target market consists of the people who use internet frequently and update themselves with latest fashion. Zara’s women collection is divided into three categories: Zara Women, Zara Basic and the sporty Trafaluc representing market segments for women who look for a more formal style, younger women for a more informal style and younger women and teenagers while menswear included Men’s Line at Zara, Zara Basics, its club-wear brand 100Zara and Zara Sport. In this sense the general public from all age groups can be seen as potential customers targeted by specific sub-brands of Zara. A second important variable in defining segmentation is based on psychographic characteristics such as lifestyle, as one of the most famous and successful European brands Zara in its existing market targeted people who were especially interested in European styles at affordable price levels.

3.3- Positioning

Zara is a high fashion concept offering apparel, footwear and accessories for women, men and children, from newborns to adults aged 45. Zara stores offer a unique blend of fashion, quality and price offered in attractive stores in prime locations on premier commercial streets and in main shopping centres. The in-house design and production capabilities enable us to offer fresh designs at out Zara stores twice a week throughout the year.

3.4- Marketing Mix

3.4.1- Product

Zara has a tradition to launch its products in a short time of two weeks and full change in clothing item every month. The product is of very high quality and we will give a full guarantee of color, stitching, stuff, cloth quality and material used to our valuable customers. No metals shall be used for the product packing and recycled material will be used for packing of our products.

3.4.2- Pricing

Zara maintained its long standing practice of providing customers with certainty over pricing. Zara has adopted a competitive pricing strategy to gain and retain customers. Competitive pricing is the most suitable for Zara because of its presence globally. This pricing strategy helps Zara to attract more customers on the high street fashion stores.

3.4.3- Distribution

Zara has a very strong distribution setup which is very helpful to make available the product all over the retail chain.

In my point of view Zara should start its production locally instead of producing in Spain and then deliver the products to stores all over the World because this change in strategy will help to reduce the cost of production. We do not need to bring raw material from other countries to Spain first and send finished items back to the same countries. By setting up local production houses we can also build good relationship with our suppliers, local community by offering jobs to local people, and our customers.

3.4.4- Marketing Communications

Promotional activity at high street will continue aggressively and with in-store display, through online marketing and our website.

For online marketing communication the first step is to update the website and its contents at the back of website like key words, key phrases and mata tags so that the search engines can find our website quickly and easily whenever anyone search for items we are dealing with. An interactive website is most appropriate idea in the current marketing situation. With the help of cookies we will gather lots of data about our customers and their preferences. Email marketing will also help us to generate more profit by attracting more customers to our website.

As it is discussed earlier different social website pages like facebook, twitter, youtube, and flicker etc. are the main source of communication with customers these days. We will also communicate with our existing and potential customers by setting up different blogs and through our own website.

Paid advertisements on most popular search engines like google, bing, yahoo, aol etc. is another option so that we can come at the top of search results in very short time.

3.5- Marketing Research

Through different marketing research techniques like web analysis and online feed back from our valuable customers we will keep upgrading our product and system and will analyze and evaluate our existing strategy. Web analytical tools will also be helpful to get information about website visitors and their style of search and required products.

Customer’s complaints and record of customer services department is also very helpful to improve the product and product delivery system.

4.0 Financial Matters

In the first year by keeping the objective of 10% growth rate in view the projected sale for Zara in the first year is €11,750 million.

Currently Zara’s share in total group sale is 63.8% (2009). The total sale of the group in 2009 was €11,084 Million.

Results for the Year Ended January 2009:

* Group revenues (in thousands of Euros): 11,083,514

* Group operating profit EBITDA (in thousands of Euros): 2,374,189

* Earnings per share (in Euro cents): 211.4

15 million is estimated expense for first year marketing including salaries of marketing staff. For online marketing, most of the work, like making profiles on different social websites, tagging, adding key words and meta tags on the back of website, can be done through qualified staff of the company who will be responsible for the updating and maintenance of the website. So, for that there is no need to pay extra money to any third party.

To advertise through search engines we will pay a nominal amount per year to major search engines and they will promote our website.

Pay per click is another option which is also offered by most of the websites where we advertise.

5.0 Controls

5.1- Implementation

Zara as a market leader in fashion wear always focus on product quality and customer services. Our more than 92,000 staff members are always ready to improve the system and implement new strategies. With the help of internal and external controls the top management will be in a better position to evaluate the performance and upgrade the system accordingly.

We are always in a process to improve our products and services and we are always open to hear from our customers.

Zara already continues to improve customer service and with the introduction of new service of online shopping we are facilitating our customers to buy anytime with their convenience.

5.2- Marketing organization

International Marketing

Director

GM Marketing for Rest of the Countries

GM Marketing Europe & UK

Sr. Manager Marketing

Manager Advertising

Advertising Analyst

Manager Promotion

Promotion Analyst

Manager Sales

Market Research Analyst

Manager Advertising

Advertising Analyst

Manager Promotion

Promotion Analyst

Manager Sales