Allee Lizama BUAD 448 Marketing Strategy Professor Dawn EdmistonStrausser October 6th, 2014 `
Customer Buying Behavior: ZARA Case Study Introduction: Based on currently available technologies, I recommend that brands use Customer Relationship Measurement systems in order to measure customer behavior and strategically tailor their offerings, merchandising strategies, and communications to their findings in the immediate future. Background: Consumer and organizational buying behavior plays an essential role in how firm’s market to their customers. Firm’s must raise awareness, interest, and desire for their product in order to give it a competitive advantage over substitutes in the market. Equally important, once a consumer buys a product, the firm must satisfy the consumer in order to create brand loyalty (Mooradian, 2012, p.85). Consumer’s decide what they are going to buy through a logical process: problem recognition, information search, evaluation of alternatives, purchasing, and postpurchasing processes. However, individual interests, situational factors, social and cultural trends, and marketing actions work together to effect the perception of the consumer (Mooradian, 2012, p.92). In order to better understand consumer behavior, I have divided the process into three categories: researching the target market, understanding the zeitgeist, and using customer relationship measurement systems to collect data on how the target market is reacting to the current marketing mix. Zara is a worldwide fastfashion retailer owned by Inditex. Like many fastfashion brands, they understand the ideology of their target market and track current and emerging trends in fashion and culture. What makes Zara unique is their customer relationship management system and its application. Zara is equipped with a locationbased mobile tracking system that lets them know how often consumer’s spend in the store, how often they enter, and other details about their experience. Zara also equips its sales personnel with handheld organizers “where fashion trends can be punched in, as well as customers comments and orders” (Sandoval, 2011), allowing the employees to give insight on trends. Finally, Zara captures sales trends at the register in order to better understand what products, fits, colors, and styles are popular. All of this data is consolidated immediately, with designers adjusting the product line, increasing production of popular styles, and designing new pieces that will arrive in stores within two weeks (Unknown, 2011). Zara can react this quickly because of their verticallyintegrated supply chain, with more than half of their production in their Spanish factory(Unknown, 2014). Thus, Zara creates a competitive advantage by capturing microtrends before competitors, creating lines filled with the most desirable items, and using economics of scarcity to keep their items fresh and relevant. Recommendation: Customerrelated metrics create data that allows marketers to better understand their customers behaviors and reactions to their current marketing mix. Marketers have access to data about store traffic, time spent browsing, repeat visits, and product sales trends. This data can be translated into systems that analyze and react to the customer environment, thereby increasing customer interest, desire, and ultimately satisfaction.The more effectively a firm can respond, the better it will be able to stay ahead of competitors on micro and emerging trends. This competitive advantage inherently breeds repeat purchasing and customer loyalty, which drives sales and revenue. Basis for Recommendation: Not only is Zara able to analyze information through their CRM systems and tailor their offerings, but it is able to do it more quickly and efficiently than competitors. As a result, Zara sells more than 85% of their products at fullretail value, as they never have time to become outofdate (Bliss, 2011). Zara has risen to the status as the largestfashion retailer in the world with a cultlike following, and saw profits exceed 1.932 billion euros in 2013 (Zara.com, 2014). Discussion: Although customerrelated metrics are essential to every firm’s strategy, how they implement the results will vary widely depending on the market environment of its products. Some firms will need to react more quickly than others to create a competitive advantage. Additionally, there are privacy concerns involved in some of the collection processes. Therefore, firms must remain transparent about their collection methodology, invest in high cybersecurity for private information, and highlight the merits of reactive product lines to customers.