Zara Marketing Plan for FY2023-FY2024

Zara Marketing Plan for FY 2023-FY2024
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1.0 Executive Summary
Known for its stylish, high-quality clothing and accessories, Zara is a well-known name in the fashion industry. Amancio Ortega and Rosalia Mera started it in 1975, and it is currently a part of the Inditex Corporation. The brand's debut store was in A Coruna, Spain, and has since grown to other cities in Spain, Portugal, and abroad, including India where it joined the market in 2010. Today, Zara is well known for bringing the newest fashion trends and has a presence all over the world. In addition to its cutting-edge merchandise, Zara is an environmentally conscious business that only makes items that are 100 percent toxic-free.
While the main marketing strategy will remain the marketing orientation strategy, the proposed marketing plan will seek to enhance Zara’s online presence. Thus, the proposed activities will be mainly informed by digital marketing strategy. To this end, the company will focus on enhancing the digital experience of its customers and increasing Zara’s online presence through collaboration efforts with online influencers. To lower lead time, the company will set up a manufacturing plant in China and establish a distribution centre in the United States. The project budgetary spend for the marketing plan will be US$ 36,300,000.
Table of Contents 1.0 Executive Summary. 2 2. Company Overview.. 4 2.1 Financial Summary. 4 2.2 Mission Statement 4 3.0 Situational Analysis Research. 4 3.1 Marketing Audit 4 3.1.1 The Market Trends. 4 3.1.2 Marketing Mix Research. 6 3.2 Market Research. 8 3.2.1 Competitor Research. 8 3.2.2 Porter 5 Force. 9 3.2.3 SWOT.. 10 4.0 Market Position and the Customer Analysis. 11 4.1 Key Market Segments. 11 4.2 Target Market / Customer Persona. 12 4.3 Positioning. 12 5.0 Objectives. 13 6.0 Strategy. 13 6.1      Market-oriented strategy. 13 6.2      Digital Marketing Strategy. 13 7.0 Tactics. 14 7.1      Focus on the Customer’s digital experience. 14 7.2      Setting up manufacturing or distribution centers in major markets. 14 7.3 Enhance its utilization of data analysis. 15 7.4      Collaboration with reputable online influencers. 15 8.0 Actions. 15 8.1 Timelines of activities. 15 8.2 Budget 16 9.0 Monitoring. 17 9.1 Challenges. 17 9.2 Risks. 17 9.3 Benefits. 18 10.0 Control 18 10.1 Measuring Success. 18 10.2 Evaluation KPIs. 19 10.3 Process Control 20 10.4 Contingency Plan. 20 References. 22
2. Company Overview
2.1 Financial Summary
Zara and Zara Homes recorded an increase in their sales from 2020 to 2021. To this end, the company’s sales increased from 14.234 billion to 19.714 billion, which resulted in an increase in profit before taxes of 965 million in 2020 to 2.838 billion in profit after taxes (Zara, 2022). The company also saw a decline in the number of stores from 2,653 stores in 2020 to 2,489 stores in 2021. Zara and Zara Homes reported total sales of 19.564 billion in 2019 and 18,021 billion in 2018 (Zara, 2022).
2.2 Mission Statement
The mission of the company is to ensure that they provide customers with the fashion items they require as quickly as possible. Zara envisions itself as a sustainable corporate partner that has a responsibility to act as a social and environmental steward.
3.0 Situational Analysis Research
3.1 Marketing Audit
A market audit is a comprehensive analysis of a company's market and competitive environment. The audit will include a market trends analysis, marketing mix analysis
3.1.1 The Market Trends
PESTLE analysis is a tool used to analyse the external environment in which a business operates. It stands for Political, Economic, Social, Technological, Legal, and Environmental factors (Ferell, Hartline, and Hochstein 2021). Here is a brief overview of how each of these factors might affect the fashion retail company, Zara:
Political: Zara operates in many countries around the world, so it is exposed to a range of political risks. For example, changes in trade policies, tariffs, and taxes can affect the cost of importing and exporting goods. Zara may also be affected by changes in labour laws, consumer protection regulations, and other legal frameworks.
Economic: Zara's sales and profitability may be affected by economic conditions such as inflation, exchange rates, and consumer confidence. The company may also be impacted by changes in consumer spending patterns and the overall health of the retail sector.
Social: Zara's target market is fashion-conscious consumers, so changes in social trends and consumer preferences can have a big impact on the company. For example, if there is a shift towards sustainable and ethical fashion, Zara may need to adapt its products and sourcing practices to meet these changing consumer demands
Technological: Zara's business model relies on fast fashion, which means it needs to be able to quickly design, manufacture, and distribute new products. Technological advancements in areas such as supply chain management, e-commerce, and digital marketing can help Zara to achieve this. However, the company may also face risks from technological disruptions, such as the rise of online marketplaces and the use of artificial intelligence in fashion design.
Legal: Zara must comply with a range of legal requirements, such as consumer protection laws, health and safety regulations, and labour laws. The company may also be impacted by intellectual property laws, particularly when it comes to protecting its brand and designs.
Environmental: Zara has faced criticism for its environmental impact, including the use of unsustainable materials and practices in its supply chain. The company may be affected by regulatory changes related to sustainability and by consumer demand for more environmentally friendly products.
3.1.2 Marketing Mix Research
The 7Ps of marketing are seven elements that are considered to be crucial in the marketing mix of a product or service. These elements as they apply to Zara are as follows:
Product: Zara has established itself as a leading luxury brand that offers products for children, men, and women. Some of the products that the company offers include jeans, skirts, trousers, tops, shoes, bags, accessories, knitwear, and T-shirts. Zara offers both formal and casual wear for their clients, allowing the customer to pick from different styles (Aftab et al. 2018). Every year, the company launches 10,000 designs that appeal to fashionable people as well as resonate with the mass market (Aftab et al. 2018). Notably, the company collaborates with local teams to ensure that the produced products are fashionable and designed to meet the needs of their customers. The company’s product strategy incorporate sustainability in the sense that it strives to minimize waste production. The security tags and hangers used in its products are recycled.
Physical evidence: The Company’s packaging strategy is based on sustainability. To this end, Zara packages its products in recyclable packages. Notably, the labelling of the packages is distinct making it easy for the customers to identify them.
Pricing: Zara’s pricing strategies are based on providing fashionable and trendy products at low prices. Compared to other local and global fashion lines, Zara offers the lowest prices. The company has lowered spend on the sourcing of raw materials and spent minimally on promotion. Zara sets its prices based on the country of operation. Consequently, the price tags are done at its local stores to allow the company to offer a price that is ideal for customers in every respective market. To facilitate low pricing, Zara’s production budget is informed by the set target price and makes it easy for the company to earn a fixed profit margin for its offerings (Mo 2015).
Positioning: The Company positions itself as a supplier of high-quality fast fashion items at competitive prices. To this end, the targeted customers can effectively purchase fashionable and trendy clothes at pocket-friendly prices.
Place: Zara manages to achieve significant reach in roughly 90 countries with more than 2200 stores in various locations as well as through its online stores. The Company also sees its products sold on several online retail shopping platforms. Zara is a vertically integrated company, with the distribution strategy playing a key role in allowing the company to place its products in a location where target customers can easily access them. The supply chain allows Zara to launch products in the market within the shortest time possible (Jin et al. 2012). To this end, managers in various stores send orders to headquarters as informed by customer preference, who transfer them to the manufacturing hub. The majority of the Zara stores are owned by the company as opposed to franchises. The approach makes it easy for Zara to offer an intact shopping experience. Zara stores are located in posh areas and are designed by the company’s decoration teams to achieve a spacious and modern look.
Promotion: Zara has one of the lowest spends in advertising within the industry. Zara does not spend on television advertisements but has flashy outdoor advertisements that are easy to spot and mainly used to advertise the latest trends. Majorly, the company relies on social media as well as the word of mouth as opposed to expensive marketing tools to promote its products. To this end, the company has a massive social media reach. Notably, the company does not place logos on its products and focuses on opening new stores and decorating new stores. The company holds that its display windows provide sufficient promotion of its products.
People: The employees at Zara play a key role in complementing the company’s marketing efforts. Zara’s marketers are trained in how to persuade customers but are also respectful when selling products to customers. The Company has also set up a customer department where customers can ensure that their issues are easily resolved. In addition, Zara has people who work with suppliers to make sure that the quality of the final product is maintained.
3.2 Market Research
3.2.1 Competitor Research
Zara competes with several retailers in the fast fashion market, which is characterized by frequent new product releases and quick turnaround times between design, production, and distribution. The main competitors include:
* H&M: A Swedish fast fashion retailer with a global presence.
* Uniqlo: A Japanese fast fashion retailer is known for its affordable and high-quality clothing.
* Gap: An American clothing and accessories retailer with a wide range of products for men, women, and children.
* Forever 21: A fast fashion retailer based in the United States that offers a wide range of trendy and affordable clothing and accessories.
* Mango: A Spanish fashion retailer that offers a range of trendy and fashionable clothing and accessories.
* Topshop: A British fashion retailer that offers a range of clothing, shoes, and accessories for women.
3.2.2 Porter 5 Force
Porter's Five Forces is a framework for analysing the competitive forces in an industry. Here is how you might apply this framework to the fashion retail company Zara:
The threat of new entrants: The fashion retail industry has a relatively low barrier to entry, as it does not require significant capital investment or specialized expertise. However, Zara has established a strong brand and reputation in the market, which may deter new entrants.
Bargaining power of buyers: Zara's customers have a moderate level of bargaining power, as many alternative retailers are offering similar products. However, Zara's fast fashion business model allows it to quickly respond to changing consumer preferences, which may give the company an advantage over its competitors.
The threat of substitutes: The fashion retail industry has a moderate threat of substitutes, as consumers have many options for purchasing clothing and accessories. However, Zara's products are differentiated by their trendy designs and fast turnaround times, which may make them less susceptible to substitution.
Bargaining power of suppliers: Zara sources its products from a global network of suppliers, which gives it some bargaining power. However, the company may face risks from changes in the cost or availability of raw materials and supplier disputes.
Rivalry among existing competitors: The fashion retail industry is highly competitive, with many retailers vying for market share. Zara competes with a range of fast fashion and traditional retailers, including H&M, Uniqlo, and Gap.
3.2.3 SWOT
Strengths: The Company has several key strengths that have enabled it to establish itself as the global leader in fast fashion.
* The company has an established brand name that allows it to easily market its products without investing in promotions.
* Zara offers fashionable clothes at affordable prices
* The company has a wide audience reach as it has multiple stores located in many countries in the world
* Zara has streamlined its supply chain to allow for the fast delivery of new clothes to its target customers
* The pursuit of a cost leadership strategy allows Zara to position itself as a reliable option for its target customers
Weaknesses: Despite the various strengths, the company has several weaknesses that it should address
* The reliance on a centralized distribution system exposes Zara to lowered supply flexibility, elevated logistical costs, and longer routes
* Zara does not invest in advertising
* The company has a weak online presence as it tends to heavily rely on the revenues generated from its physical stores.
* Zara uses only one manufacturing and distribution centre in the world.
Opportunities: There are several opportunities that Zara can leverage to enhance its position as the global leader.
* Zara can leverage the increasing opportunities available in the online space to grow its sales.
* The company can increase its sales by increasing its global penetration to available fast fashion markets in various countries.
* Zara can leverage the growing apparel markets in Asia to drive its sales significantly.
Threats: While adjusting itself to take advantage of potential opportunities, Zara has to consider several potential threats in the economy.
* Zara has to take into account the potential influence of fluctuation in exchange rates on its sales performance
* The company’s sales are likely to be negatively affected by the ongoing economic recession that may dent customers’ purchasing ability.
* Zara’s sales are likely to be negatively affected by competition from other local and global fashion lines
* The high number of stores being located in Spain and Europe is likely to affect the sales of the company given that the region faces declining customer purchasing power.
4.0 Market Position and the Customer Analysis
4.1 Key Market Segments
The main type of market segmentation in play concerning Zara is undifferentiated segmentation. To this end, Zara does not consider the known differences in the various market segments it serves and instead provides a universal proposition for the whole market. To this end, the company focuses on meeting the needs of its existing customer base by producing products that meet the common needs of its clients at a general level. The use of undifferentiated segmentation allows Zara to use mass distribution and mass distribution to reach a significant portion of its customers (Shabir and AlBishri 2021). Nonetheless, the company segments its products into three categories. The company produces footwear, accessories, and...