Zara Case Study

This report explores Zara’s marketing model, and has been compiled from researching past case studies on the internet and current newspaper articles on the company.

All sources can be found in references.

Findings show Zara does not advertise and promote the business in the conventional way, its current marketing budget id 0.3%, compared with an industry average of 3-5%. Yet it is amongst one of the fastest growing companies in the world.

Findings show the 5 key differentiating characteristics to its current marketing concept are product life cycle, store locations, store atmosphere, store window and customer service.

Introduction

Zara in Brief

Zara is a mid -market clothing retail subsidiary of Spanish owned Inditex Group, offering high fashion clothing at mid-range prices. It is one of the world’s two biggest clothing makers (Economist, 2012). Its success is attributed to strong control over operations and vertical integration. Unlike many of its competitors Zara has resisted outsourcing to Asia and China. More than 60% of design and production are located with a close proximity of its huge headquarters in the Coruna region of Spain. This is the main strength of the company and has enabled the company to be highly responsive to customer demands and deliver frequent, fresh fashion.

It has currently 1600 stores across 85 countries, with plans to double to 4000 stores in the next two years, mainly in Asia, specifically China. Sales have quadrupled to 13.8billion Euros since the firm’s initial public offering in 2001. The companies operating profits have been higher and more stable than its competitors (Economist 2012).

Marketing Model

Zara’s Marketing model is as unique and distinctive as all of its other functions. Total revenue expenditure is 0.3%, compared to an industry average of 3-4%. Zara are spending significantly less on advertising than its competitors, therefor it maintains a cost advantage over its customers.

However, cost advantage is not the main aim of the model. The only way Zara customers can find out what’s new in is by going in to a store or on the Zara website. Zara invest heavily instead in creating a high end classy atmosphere and by having new stock arriving twice weekly, making stores appealing and fresh. In effect Zara are training customers to visit stores often as new item are presented more often than its competitors. As well as creating a loyal customer base by doing so.

In stores only small batches of all items are displayed, the more exclusive something is the desirable it becomes, products appeal more the more scarce they are by the very nature of fashion and consumer behaviour. Another key attribute to the success of the Zara business model.

Zara focuses more on store location of shops and their historical