Zara Case Study Analysis Essay Sample
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Introduction of TOPIC
Zara is a successful retail clothing company that expanded over the years due to its elaborate supply chain and excellent product mix strategy. The company established in 1963 opened its first store in 1975, in La Coruna. By 1989, the company had ninety-eight retail shops and production facilitates distributed around Spain. This followed international expansion where the company opened several other stores around the world. The company has a huge expansion around the world, making it the largest and most lucrative Unit of Inditex SA, manufacturer and distributor of Spanish clothes with over one thousand three hundred stores located around Europe, Asia, America, the Middle East and Pacific region. This brief overview highlights the strategic issues underpinning Zara’s buying decisions and the company’s product mix strategy. 2. Strategic Issues Underpinning the Buying Decisions at Zara Buying decisions are the series of options a consumer makes before purchasing a product (Stahlberg 2012, p.3).
The customer chooses where to buy the product, the model, the brand, when to buy, amount to spend and what payment method to use. The company or marketers try to influence consumers’ buying decisions through supply of sufficient information (Stahlberg 2012, p.3). Zara develops a production cycle that is distinct from fashion sectors principles. The company’s design team operate throughout the season studying every current trend in the market. The design team do so through assessing how clubbers dress, and clothes worn in major television series. These strategies help the company in producing stream of new products that keeps customers flocking in the company to see and purchase the new products. The company also offers its quality clothes at moderate prices. The high-velocity operation employed by the company keeps customers queuing up in long lines at Zara’s stores, particularly on delivery days. The popularity of the company and its quality, current and affordable designs generates bottom-line and tangible results besides admiration of the company by the fashion world. The company buying decisions are strengthened by the nature of the company’s product. Zara provides fashionable products that meet the present fashion trends and consumer taste and preferences. The company is keen in offering tastes that varies by region, country and from one store to another. The company offers products with brief product life cycle.
It produces products that remain fashionable for a brief period. The company introduces ten thousand new designs into its various stores annually. The steady store refreshment attracts new buyers besides guaranteeing the return of old buyers. The company changes the manner in which people do their shopping in the sense that when customers notice a product that they like in the store, they understand that the product will only be available for four weeks. This motivates customers to buy the products instantaneously thereby creating a considerable shopping velocity. The company also offers products with uncertain demand. The mixture of fashionable, regional deviation of feel and trend, and short product life cycle implies that the product is indecisive. Moreover, the company influences customers buying decisions through provision of products with comparatively high margins. The company provides consumers with products, although, not luxurious, but have an advanced margin end of fashion industry.
Another aspect that strengthens buying decisions at Zara is the disposition of the company’s markets. Evidently, the company has a considerable number of loyal customers. It also holds the potential to attract more customers through its design specification. The specifications include design centres on fabric, colour, style and product finish. Zara sells fashionable clothes designed to achieve fashion trends and local customers’ taste. The issue of fashion durability is not a crucial aspect for the company because the company’s aim is to provide clothes that remain fashionable for comparatively restrained period after which new fashion replaces the old ones. Zara provides products with design exclusivity. Consumers require products with brief life cycle because a few people only wear such products. The delivery speed of the company’s products also enhances its buying decisions. For fashionable products with a brief life cycle and uncertain demand, delivery speed is paramount. The delivery entails quick placement of products into the company’s stores as well as replenishing the inventory when needed. The delivery of the company is also reliable.
Zara designs, produces and distributes its products quickly
and through reliable delivery channels. The company’s deliveries get into their respective stores
While clients get concern of fashionable products as opposed to where to buy, Zara brand name helps in getting consumers in its various stores across the world. However, the buying decisions are influenced by design specification, design exclusivity, delivery speed, delivery reliability and pricing. 3. Zara’s Product Mix Strategy: Advantages and Disadvantages A product is the fundamental competing tool in the hands of marketers (Ferrell 2008, p.188). The intention of other components of marketing mix is to strengthen the position of the product in the market. A product holds combination of physical attributes and bundle of satisfactions that consumers hopes to achieve from it. A group of products performing similar functions and practically close in appearance refers to a product line, while all products marketed by a company constitute of its product mix. A product mix strategy entails decisions concerning to the product mix, and breadth and depth of the product line (Ferrell 2008, p.188). A productive mix strategy entails assessing existing product for market share and market growth. Zara employs a practical product mix strategy that directs its resources towards profit maximisation. Through its product systems, the company designs new styles founded on client’s input from store managers and research on modern fashion trends.
Zara sources its fabrics from global suppliers, and these fabrics are cut into different styles through in-house, capital-intensive and by electronic machines. The fabrics are dyed through small in-house units with the local workshops performing the ultimate sewing and assembly. The centre of distribution located in Spain distributes the products to the company’s stores twice a week. The un-dyed and uncut fabric is held in inventory, and it remains undedicated with colours and styles. The company’s distribution system comprises of store managers who selects the form and quantity of products through computers. The company capitalises on in-house production and distribution systems. Zara makes its own fabrics and produces over 60 percent of its fashionable designs. All the production process apart from sewing is done by the company. The production system functions without finished products inventory. Fabric is held in the inventory and products inventory are held in stores. The company integrates its production, marketing information systems and distribution. Each of its stores remains electronically connected to the head office.
This allows the head office to evaluate sales and guarantee quick adoption to customer’s desires and needs. The company assesses its value chain and ensures control of its many sections. It focuses on lowering time between design and sale. The design team assess the current fashion trend to ensure constant production of new products within a short period of time, and at moderate prices, Supply Chain Management is a critical aspect in the fashion industry. It entails the procedure from collection of raw materials, production, distribution and consumption (Hugos 2011, p.17). SCM requires physical product, time, form, space and product functions. Zara employs an Agile Supply Chain that helps it identify and confine business prospects faster compared to its competitors.
The companies supply chain is flexible and demand driven. Information system promotes the company’s supply chain through enhancing information visibility. The company ensures fabrics, which it considers as it raw materials is always available prior to start of the season. The fabric are uncoloured, an aspect that makes colour changes more flexible. The company outsources heavy labour activities while in-house team does designing and computer-enhanced cuts. The company produces more than half of its own products as opposed to depending on slow-moving suppliers. The company makes 40 percent of its products and produces 60 percent of its merchandise in house, an aspect that makes maintain a competitive edge. Advantages
* Cost effectiveness and profit maximisation
* Minimises inventory
* Keeping un-dyed fabric helps in keeping lead-times briefs besides guaranteeing fabric use in line with demand * Efficient production and a balance between outsourcing and in-house task instigates minimum lead times and expands the company’s market share * Excess stock holding and forecasting risks are put at minimal * The company’s supply chains help in upholding a competitive edge in the fashion industry. * Integration of information system, distribution and production enable production and design teams to react swift to shifting needs of customers. * The supply chain helps the company in designing right products besides introduction of new products * The supply chain facilitates management of uncertainty and swift production of new products * The product mix strategy replenishes the present inventory quickly * The product mix helps in keeping fabric inventory low, and minimising markdowns Disadvantages
* The product mix strategy employed by Zaka requires heavy time and resources in investment. The strategy also needs considerable research. 4. Conclusion
The swift expansion implies that Zara is the fastest developing retail business across the world besides its capacity to export effectively its formula internationally. Moreover, the company offers upmarket shopping with contemporary designs that reflects present fashion trends. The success of the company is based on effective customer satisfaction through feasible buying decisions and excellent product mix strategy. The company supports its supply chain management through performing over 40 percent of its production. It distributes its products through its major distribution centre in Spain, twice a week. Stores place their orders electronically and receive them through the company’s local supply system.
Ferrell, O 2008. Marketing strategy. New York: Cengage Learning.
Hugos, M 2011. Essentials of supply chain management. London: John Wiley & Sons.
Stahlberg, M 2012. Shopper marketing: how to increase purchase decisions at the point of sale. Texas: Kogan Page Publishers, Apr 28, 2012.
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