BUSINESS OF FASHION ROCHELLE LAMBOURN 25022366
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ONTENTS
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EXECUTIVE SUMMARY
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CHOSEN BRAND
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HISTORY
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BRAND IDENTITY
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BRAND CONSUMER’S
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BRAND POSITIONING
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COMMUNICATIONS MIX
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PR
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PERSONAL SELLING
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PACKAGING
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LOYALTY SCHEMES
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SOCIAL MEDIA
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BIBLIOGRAPHY
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“Z ara is alway s st riv ing t o m e e t t h e n e e d s of i t s c u st ome rs at the same t ime as helpi n g t o i n for m t h e i r i d e a s, t r e n d s an d t a st e s.�
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EXECUTIVE SUMMARY
The purpose of this report is to analyze and evaluate one of fashions world leading retailers Zara. It will look at some of the key factors of how the brand is positioned amongst its competitors and why its identity differentiates from other labels. Zara prides itself on being positioned in the market of ‘fast fashion’; it transitions catwalk fashion into readyto-wear within very little time offering its consumers luxury fashion at an affordable price. Most retailers create trends for the future, Zara respond to current trends, by doing this it places them high up in the competitive market of fashion. Research has shown that Zara’s strategic approach to fashion is responsible for their continuous strive to expand globally and meet the needs of their consumers.
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CHOSEN BRAND This report will examine Zara one of the largest fashion retailers owned by Amanciao Ortega. Zara’s parent company Inditex was founded in 1963, the companies first store Zara opened in 1975 in La Coruña, Spain and now has over 2000 stores across 88 countries as reported by Inditex. Prior to this Ortega spent twelve years as a textiles maker for Inditex as it went into business as a dressmaker. Inditex also owns other brands such as Massimo Dutti, Bershka and Pull and Bear. Through observation these brands all cater to a different market of consumers, Pull and Bear accommodating to the younger laid back consumer, however Dutti’s consumers want sophistication but also the option to be laid back. Due to Zara’s connection to its consumers the brand supplies customers with near carbon copies of the biggest brands in the fashion industry within three weeks from design according to The Beast File (2011). Zara offers consumers both women and men’s apparel, children’s, shoes and most recently in 2003 Zara Home was created which specializes in designing products for the home and now has 437 stores in 48 markets according to Inditex.
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ZARA’S FIFTH STORE OPENING, OXFORD STREET
Loeb, W (2013) stated “In fiscal 2012 Inditex reported total sales of €15.9 Billion; Zara represented 66% of total sales or €10.5 Billion with 120 stores world-wide”. Due to Inditex’s vast growth it has allowed the company to expand globally, combining store and online sales. According to Inditex’s Interim half year 2015 results from the 1st February 2015 to 31st of July 2015 Zara and Zara Home are the biggest contributors to net sales Zara Home 22% and Zara 18%. As an overall perspective expansion and refurbishments keep Zara stores very current and up to date with consistent consumers wants. Being in a luxury store with great décor allows people to feel like they are shopping in luxury, when in fact they are shopping on the High-street.
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ZARA, KNITWEAR ALL OVER. WOMEN AUTUMN WINTER 2015
Brand Identity
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Brand identity is how an organization wants to be perceived in a certain market; therefore, it is unique due to its identity as stated by Doyle. C (2011). When comparing Zara with its biggest high street competitor H&M, they are completely different in how they communicate their brand. H&M uses designer collaborations and celebrity endorsers to appeal to a younger market of consumers. Zara takes a more reserved approach to connecting their brand with its consumers by creating catwalk inspired fashion at a fast pace. Stated by Inditex the brand is always striving to meet the consumers needs but at the same time helping to introduce their ideas, trends and tastes. Their idea being they want to share the cliche passion for fashion across a wider audience, culture and ages. Zara is very strategic in the way it broadcasts its stores to its clients, recently Inditex has been expanding many of its stores into flagship stores it’s largest to date is situated on one of the most well known shopping streets of Madrid. The retailers neighboring designers include Prada and Manolo Blahnik , Zara wants to be close to luxury brands but at the same time maintain their reasonable prices.
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rand consumers
According to Dillon. S (2011), “Defining the target market is essential to running a successful fashion business” without conducted research a company may waste money and time trying to communicate to the wrong group of consumers. Information collated in one of Zara’s stores on Oxford Street showed that the layout of the store is dependent on the ideal consumer of the brand. In one particular store the apparel was sectioned onto different floors, upstairs garments appealed to a teenage consumer (early twenties), while the lower floor appealed to early thirties/late forties. As a brand Zara’s research and feedback relies on the current consumer. Alluring to a range of ages it allows the retailer to expand its market to a wider range and be more creative with its target consumers. Dillon, S. (2011) States “Fashion begins and ends with the consumer; the primary task is to satisfy the consumer and their needs”. Zara does this by catering for both ends of the spectrum of its customers, the pricing point of the store is a little above budget for the consumer that enjoys inexpensive fashion, but for a luxury shopper it’s a steal. By Zara’s employees turning out 40,000 designs a day this allows its consumers to have fast fashion, garments being made in house ensures luxury clothing at an affordable price. According to Chandler and Munday (2011) this is called vertical integration, a manufacturer has integrated management therefore they control the production stages within the company, by Zara using this strategy it improves the efficiency of the company and reduces costs.
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ZARA’S CHRISTMAS WINDOW DISPLAY, OXFORD STREET.
H&M, OXFORD STREET.
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rand Positioning
A brands positioning refers to why its target consumers buy from that particular brand instead of an alternative as stated by Chandler and Munday (2011). Zara’s unique selling point is its fast roll-over of products and strong branding. Stores supply a low quantity of one item which puts buyers under pressure, if they don’t buy it they’re afraid they will miss out. This gives the customer the impression they are shopping designer, but in reality they are on the high street. These small differences are what matter to consumers. According to an informant the store receives deliveries twice a week, this compels consumers to enter the store frequently. It is important that within the supply chain designs are sent to the head distribution centers, to allow the deliveries to take place. The Sales, Design and manufacturing team’s job after production is to suit their product range to its customer profile for each store worldwide. They are always in close coordination which allows the company to respond to changing market trends so regularly.
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IMAGE FROM, ZARA.COM
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ommunications Mix
Communication is key in order for a brand to be successful, communications mix refers to various elements that constitute to their market according to Fill, C. (2013). For most fashion brands advertising is a key element of firstly attracting the targeted consumer to its apparel. Advertising and sales expert E. St Elmo Lewis (1898) pioneered AIDA which is effectively stands for Attention, Interest, Desire and Action. The model proves that within advertising the four elements are crucial for convincing a brands target consumer to buy their product. Many of Zara’s competitors use this thought process when directing there advertising at their targeted audience. However, Inditex hardly uses direct advertising as an effective way of connecting with its consumer. The company invests its money in the history, attractiveness and location of its stores and also focus’s more on the production of its apparel. Unlike most of Zara’s competitors the company found differences that mattered to its customers and put them to use in their supply chain, this has made it difficult for competitors to imitate the positioning of the brand.
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SCREENSHOT OF ZARA.COM.
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ublic realtions
Public relations is one component of a companies affairs activities, the goal is to track public attitudes and identify issues that may create public concern as stated by Hartline and Ferrell (2011). Zara does not involve itself with public relations for example events, celebrity endorsement or sponsorship unlike many of it’s competitors. To some this may be a weakness of theirs, as they rely heavily on their location and window displays to promote themselves. Zara’s online presence is dedicated to updating its customers with new campaigns by using an editorial based style; the editorials are also sent via email once the consumer has subscribed to a newsletter. By following this method, it proposes products and pricing in line with their consumer’s expectations. Again this has a professional impression of a successful brand, which is what society wants.
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ersonal selling
As stated by Hartline and Ferrell (2011) “Personal selling is paid personal communication that attempts to inform customers about products and persuade them to purchase those products”. It is not known by many that in 1993 Inditex opened a retail outlet store for Zara in Spain called ‘Lefties’. The store was opened in the hope that redesigning stores and increasing their numbers would raise its profile. It was voiced in an article by Alexander, E. (2014) that by Inditex closing down some of Zara’s stores and reopening them into flagship stores that the number of Lefties have been steadily increasing over the past two years. Yet they were told there was no intention of the label opening stores in the UK at present. Because Zara do not create new trends they rely on their products to imitate well established trends this allows them to attract customers who know what they want. These consumers do not need inventive reasons for the products to be purchased. Zara’s personal selling point is one to one feedback this involves the company’s retail managers providing word-of-mouth, feedback on what the customer’s wants and preferences are on the products Zara is producing. By Inditex employing young designers they provide an advantage by being able to make quick decisions, decision making is vital in the industry with regards to the customer’s feedback. If stocks in current stores are not right for the target consumers it is important that the stores must have replenishments of new designs quickly. With Zara designers being in-house this means that new stock can be sourced rapidly. It is often said that the consumers control Zara because the constant feedback fuels the innovation for design.
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ackaging
The sales promotion will look at how and where Zara make their sales, this is an important focus for the retailer as consumers tend to make purchasing decisions here. Packaging is an important part of developing the product, its benefits, its differentiation and its image stated by Hartline and Ferrell (2011). According to Zara’s business model they aim to contribute to the development of the environment and society, which we interact with. One of the objectives the retailers follow in store is to produce less waste and recycle more, hangers and alarms are processed into other plastic products along with the cardboard and plastic used for packaging. Chairman and CEO of Inditex Pablo Isla announced that in 2016 all of Zara’s garments in store will use RFID tags. RFID stands for radio frequency identification; it is a system that uses the device for tracking and identification. By introducing this system into Zara’s packaging it will allow the brands production process to be even quicker, the chip is implanted into the tags to ensure that all items are tracked individually. Once the sale is made the chip is then deactivated.
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oyalty schemes
One of the main objectives of sales promotion includes the brands loyalty to its target consumers. Zara is a prime example of having the customer in control, as stated by Zara “The customer is at the heart of our unique business model, which includes design, production, distribution and sales through our extensive retail network”. Every store has its target customer from this they build a customer profile, customers seek their own personal style when they enter the stores. Zara’s job is to make the experience for the consumer as comfortable and productive as it possibly can be. It is essential the employees know their customers inside out. Everything is done to satisfy the consumer; by introducing the customer at the forefront of the brand it has allowed the design team to listen to the customer’s preferences and requests. After the collections have been designed and created the sales team then adapts the merchandise so it is suited to the target market of their store. This proves that the consumer is the heart of Zara; the company is dependent on constant customer feedback. By following this strategy, it makes it very hard for opponents to follow in their footsteps.
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IMAGE FROM, ZARA.COM.
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ocial media
Social media is now one of the most popular forms of society being up to date with what’s going on in the world around us and Zara have taken advantage of this free advertising. To this date they have Facebook, Pinterest, Instagram, Twitter and a YouTube channel. From this Zara created a website called ‘Zara People’ according to DiMauro, V the website allowed people to upload photographs of themselves and other people wearing Zara’s garments. The best are then selected and then used on their website as a merchandising strategy. Although the company infrequently engages on social media they have built a large online following around themselves. It is important for Zara to embrace new technology as a means of communicating to its customers; however, they have proved that in order to be a successful brand traditional techniques are not always necessary.
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ibliography
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(Alexander. E, 2014) VOGUE, Did you know about the Zara outlet store? [Online] Available from: http://www.vogue.co.uk/ news/2014/03/19/zara-outlet-store-rebranded-to-rival-primark [Accessed 7th November 2015]
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(E. St Elmo Lewis 1898) Fundamentals of Fashion Management Dillon. S. (2011) [Fashion Communication, Forms of Advertising p.104 4.7] Lausanne Switzerland: AVA publishing SA. [Accessed: 4th November 2015]
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(Inditex). Zara Home [Online] Available from: https://www.inditex.com/en/brands/zara_home [Accessed: 31st October 2015].
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(Zara masters the art of retail)| The Beast File (2011). YouTube Video added by Hungry Beast [online]: https://www.youtube.com/ watch?v=qhCM0F81vEg [Accessed: 31st October 2015]. [Accessed 31st October 2015]
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Brand Identity – definition and concept (no date) MSG study guide [Online] Available from: http://www.managementstudyguide. com/brand-identity.htm [Accessed 10th November 2015]
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Brand project: Zara (2013) Available from: https://cci13.wordpress.com/2013/12/16/brand-project-zara/ [Accessed 3rd November 2015]
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Chandler, D & Munday, R (2011) A dictionary of media and communication, Vertical Integration. Oxford University Press [Accessed 12th November 2015]
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Chandler, D. and Munday, R. (2011) A dictionary of media and communication. 1st edn. Brand Positioning. Oxford: Oxford University Press [Accessed 14th November 2015]
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Dillon, S. (2011) The Fundamentals of fashion management. [The fashion consumer 4.2] Lausanne, Switzerland: AVA Publishing SA. [Accessed: 4th November 2015]
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DiMauro, V. (no date) Fashion and social media: Power to the people or to the publisher? [Online] Available from: www.leadernetworks.com/2011/10/fashion-social-media-power-to-people-or.html [Accessed 7th November 2015]
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Doyle. C (2011) A Dictionary of marketing. 3rd edn. Brand Identity. Oxford University Press [Accessed 10th November 2015]
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Fill, C. (2013) Marketing Communications: Brands, experiences and participation. 6th edn. Part 4. The Marketing communications mix. United Kingdom: Pearson Education [Accessed 7th November 2015]
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Flagship stores: Login.lcproxy.shu.ac.uk (no date) Available from: http://www.wgsn.com.lcproxy.shu.ac.uk/content/board_viewer/#/142854/page/1[accessed 2nd November 2015]
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Gallery detail (no date) Inditex . Media, manufacturing. Video. [Online] Available from: https://www.inditex.com/en/media/multimedia_gallery/detail?articleId=116561
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Hartline, M. & Ferrell, O.C. (2011) Marketing Strategy. 5th edn. Public Relations p. 304. United States: South-Western Cengage Learning [Accessed 14th November 2015]
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Hartline, M. & Ferrell, O.C. (2011) Marketing Strategy. 5th edn. Personal Selling and Sales Management. P. 308. United States: South-Western Cengage Learning [Accessed 14th November 2015]
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Hartline, M. & Ferrell, O.C. (2011) Marketing Strategy. 5th edn. Packaging and Labelling p. 207. United States: South-Western Cengage Learning [Accessed 14th November 2015]
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Inditex (no date) Brands, Zara [online] Available from: http://www.inditex.com/en/brands/zara [Accessed: 4th November, 2015].
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Inditex (no date) Suppliers [Online] Available from: https://www.inditex.com/en/sustainability/suppliers [Accessed 31st October 2015]
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Interim 1H2015 results presentation (2015) Available from: https://www.inditex.com/documents/10279/189898/INDITEX+1H2015+Results. pdf/5a3b2c18-3bb4-492b-9659-11c03f5bd664 [Accessed 31st October 2015]
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Loeb, W. (2013) Zara’s secret to success: The new science of retailing. Magazine article [online] (October 14th, 2013) Available from: http:// www.forbes.com/sites/walterloeb/2013/10/14/zaras-secret-to-success-the-new-science-of-retailing-a-must-read/ [Accessed: 31st October, 2015].
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Our History (no date) Available from: https://www.inditex.com/en/our_group/our_history
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Zara vs H&M – who’s in the lead? @EDITD compares the apparel retail strategies (2014) Available from: https://edited.com/blog/2014/04/ zara-vs-hm-whos-in-the-global-lead/ [accessed 2nd November 2015]
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ZARA, Company [Online] Available from: http://www.zara.com/uk/en/company-c11112.html [Accessed 10th November 2015]
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p. 5 Quotation from ZARA, [Online] Available from: http://www.zara.com/uk/
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p. 16 advertisement from ZARA, [Online] Available from: http://www.zara.com/uk/
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