Marketing Zara

CASE STUDY: ZARA

1. Which theory is the best representative of Zara’s internationalization?

The Uppsala internationalization model.

Zara built up experience in Spain. They focused on and expanded within the domestic market before moving to foreign markets. Portugal was the first country for the international expansion of Zara because it has a familiar market due to its geographical and cultural proximity to Spain. They gained international market experience and knowledge and realized that it would have to adjust its business model to suit the new international markets.

During the next stages they identified the countries with less geographical and psychic distance to open up new stores. Due to this experiences on the international market, they became more confident to expand to countries with huge differences. They adept themselves to local markets all over the world with some local solutions and adjustments to the largely homogeneous products. They didn’t actually go to the foreign manufacturing plants but at least they’ve outsourced some products on cost effective propose.

1. Which of the three will be the future winner with regard to global retailing in the fashion world?

Zara is having the more possibilities of becoming the World leader in the fashion industry.

• Growth rate, net profit, number of employees, global stores and number of brands is bigger for Zara.
• Way of advertising with opening stores will increase the awareness because there products are immediately available.
• They are expanding way faster than the other 2 companies
• They have most control on the process due to their business model of high degree of vertical integration.
• Their main strength is the differentiation. Having 8 brands in different product types, they will increase brand awareness and attract more customers in the end.

1. What are the advantages and disadvantages of Zara’s multi –brand store strategy?

Advantages:

• A lot of brands = a lot of choices for the customers. You can reach a lot of different types of customers.
• Customers can buy a lot of different products from one brand/ company.

Disadvantages:

• Not every product will get the same amount of attention from the customer. So there is a possibility that some nice products won’t be a success.
• There will be superior brands who receive more attention.
• Innovation: you have to keep every brand updated. Every brand needs the same efforts in innovation.

1. How successful do you think Zara has been in meeting the risk of cannibalization as a consequence of the multi-brand strategy?

They are very successful in it because they differentiate their brands according to the product categories, target markets, store presentation and retail image. A certain brand is specialized only for a certain product line. They also open stores for a brand based on demand and popularity, so this will avoid brand collapsing of a store in one area.

1. What are the advantages and disadvantages of going into a joint venture with Tata in India?

Advantages:

• Tata will help Zara with their experiences of the local market. The market in India is a very important one because of the big amount of inhabitants. But it’s a very difficult market to enter.
• They can use the brand reputation and the big customer base of Tata. It’s a good for their promotion to be linked with a brand as Tata that is already very well known in India. The people in India will trust Zara more because they trust Tata.
• Zara can use the big amount of resources of Tata (labor, land, machinery, brand name). So they don’t need to invest in opening new stores or hiring new people by its own.

Disadvantages:

• The actions of Tata will influence the image of Zara in India because they represent Zara in India. So they have to take care about the brand image.
• It will be hard to make the brand name “Zara” famous. They are reaching the customers through the name “Tata” so it will be difficult to make the customers used to the brand name “Zara”.
• Profits are shared.
• Making decisions can be difficult and may take some time. Zara can’t decide on their own.