Zara is a very powerful brand and important in overseas market segments as America, Asia, European countries and Africa. Zara needs 2 weeks to design a fresh product also to generate stores by reaching costumers tastes, and opponents need 6-8weeks. Competitive advantage of Zara is because didn't transfer all production to low priced countries, but stored most of them in Spain and Portugal where pay are lower than Western Europe. With this, it reduces shipping and delivery costs, and has more versatility to answer the consumer's demands for services in quick way because of location than its competition that contain factories in low priced countries. Regarding to a statement by Louis Vuitton Zara is "Possibly the most impressive and devastating shop on earth". The business applied "Instant Fashion" in order to meet costumer's demands by new designs and new movements in creation and circulation, also by keeping prices low. Zara used band of designers rather than individuals in comparison to GAP, H&M as well as others. Zara's stores are company managed, and it is vertically integrated retailer. It can designs, creation and distribution alone and handles everything. In comparison to competitors it doesn't promote its designs via fashion shows, but is providing them direct to costumers through the stores to comprehend their need, that is why the company doesn't do advertising. Another benefit is that the business has one of the highest numbers of products on the planet that produces annually 11. 000 and its key opponents 2000-4000. The company keep low inventory in stock because each new product is supposed to be sold within 10 days and nights, if not is substituted after 14 days. By this gauge the company keeps low priced of inventory. Every store in Spain is supposed to be been to on average three times each year, but Zara 17 times. Zara this season will get into Australian market. The company has a primary concept in it to aid its international logistics system and online advertising where come back and exchange is equivalent to the store system. Also in a few location people can purchase Zara products by Ipod device, I Phone program. Zara model have more flexibility in development sales, and stock management and its store's managers report back again every day to designers in La Coruna for offers which shows a nice coordination between departments to be able to meet costumer's needs. Zara is part of Spanish group Inditex is widened worldwide in 77 countries with 5000 stores. Net Income was increased by 42% for the first 9 months of 2010 and talk about price 57. 60 euro. The company has Strong marriage between wholesalers, stores, management and costumers. Also, the use of the highest quality of materials for clothing. Zara earnings for 2009 was 7. 071 billion Euros and operating income is 15% greater than H&M and Distance, but working capital is the lowest.
Weaknesses
Zara is one of the major clothing retailers on the planet and this could leave it fragile in some areas because of the huge span of control. The business is global but has occurrence in 77 countries. Zara's greatest advantage sits in its capability to provide the most interesting cutting-edge items, without risk. Normally the greater cutting edge the style, the greatest the chance. Clothes do not always last long. Zara has a reputation for new design product development and imagination, but exists the chance that their technology may falter as time passes. Costs of doing business with Albanian stores as the Zara is found in La Coruna Spain. Although ZARA has an effective business model it also have some weaknesses which could limit its scalability and ambitious progress.
Inditex over reliance on ZARA
ZARA constitutes around 80% of Inditex business (8 companies) this means failing in ZARA can put the whole group at a risk.
Advertisement is becoming an important part of the business and it demonstrates directly to the sales. Zara's in-store advertisement model may well not work going forward.
Opportunities
Merge with Inditex group has generated more possibilities to purchase emerging markets.
Zara stores are situated in 77 countries and are lot of opportunities to get and expanding the marketplace as in India and China. Albania is a nice opportunity for the company to open up stores because people like high fashion brands. New location and stores provide company opportunities to exploit market development.
Grow into new markets/consumer segments Albanian Consumer Taste
Albanian consumer view ZARA as elegant house. If ZARA must increase in Albanian it needs to address specifically the Albanian needs and perception of fashion.
Threats
The biggest dangers are its competitors as H&M, Space and Benetton and new entries in market that are looking to recapitalize their gains in new market segments as Albanian. Growing production cost because of labor and raw materials. As economic crisis is striking again costumers are trended to spend less.
Imitation of company's logo by people that don't have permission to use it.
- Upsurge in Euro Rate
An increase in Euro rate will boost the consumer selling price, consequently Zara will lose price edge against relative competitors outsourcing in Albanian lek.
With year-on-year sales increasing at around 25% over the last 5 years, it is becoming one of the world's speediest growing stores.
Zara strategy is growth through diversification with both horizontal and vertical integration. Zara copies fashion by adapting couture design.
Although ZARA has a successful business design it likewise have some weaknesses that could limit its scalability and ambitious growth. - Inditex over dependence on ZARA
Zara's business model is based on ever before changing fashion. For countries like Albania, where people are less fashion frontward, it could be an issue for Zara to preserve its occurrence.
Situational Research (TOWS)
Weaknesses and Dangers (WTH)
The weaknesses of Zara is usually to be part of Inditex group which includes 8 companies this means failure of one of these can put Zara at a risk too. A proper strategy for the company is the fact that to conquer weaknesses and developed them into advantages. Because you see from the chart the way shows the strength- opportunity position (so). The strategy is to lessen the competitive threat by expanding in market adaptable new designs in order to meet costumer's personal preferences.
Weaknesses Opportunities (WO)
Another weakness of Zara is bringing up production costs in Spain and Portugal with advantages of Euro in 2002. Products became more costly for export. To get over this Zara began to invest internationally and new mergers in order to keep prices down as its opponents. If Zara enters in Albanian markets, it doesn't have experience with Albanian laws and their culture for clothing but could conquer those obstacles by creating franchise with local companions.
Strengths Threats (ST)
One of the greatest threats to Zara is the continuing an understanding of the Euro against other currencies this implies higher prices for the customer and less competitive posture. To reduce hazards of competition and exchange rate Zara has generated factories in North Africa and emerging markets. Overall economy that started in 2008 but still goes on has obliged costumers to invest less on clothing items, and the company must bring new designs with affordable prices to be able to handle this example.
Strengths Opportunities (SO)
In order to be always a successful dealer Zara has to build on its strengths and to take benefit of opportunities by using its R&D. It brings in market each year 11. 000 new products more than its opponents and this visible by its progress rate by 25% each year. In order to keep that development rate Zara is making an investment its gains to buy new real house location, technologies also to open new crops in low costs countries.
Internal strengths
1) Strong R&d and designers.
2) Strong sales and global network.
3) Efficient products.
Internal Weaknesses
1) Strong reliance in European countries.
2) Rising costs in Spain because of Euro.
3) No experience with Albanian laws.
External opportunities-O
1) Growing market needs for fashion.
2) Will open new stores in Australia in 2011.
3) Low costs products to deal the competition.
SO- Strategies
1) To develop and produce new designs with different prices.
2) Going global by using its R&D and capital.
3) Increase efficiency by using new technology in development.
WO- Strategies
1) To build up existing products for different price model.
2) To cope with growing costs in Spain and Portugal because they build new plant life and stores in appearing markets.
3) To stay in touch with new solutions.
Threats-T
1) Exchange rate risk, devaluation of euro in relation to other currencies.
2) Competition from H&M, Distance, Benetton act.
3)Monetary crisis
ST-Strategies
1) To reduce the result of exchange rate by building crops in countries beyond your euro area.
2) Meet competition with advanced designs.
3) Bring new designs in market with lower prices.
WT-strategies
1) Overcome weaknesses by causing them talents.
2) Reduce risk of competition by growing flexible products.
3) Engage in joint operation with other firms.
TOWS Matrix for Zara
Marketing Strategy
Zara marketing strategy for Albanian market includes the use of targeted print advertising advertising and direct advertising to Tirana and Durres area. The business will also use a site to keep costumers touching new designs and also to sell products online. In order to be successful as a fresh Zara store in Albanian market we have to beef up our romance with corporate headquarters. We have to position ourselves as a differentiated service provider of the best quality of clothing in Albania market. The principal goal of the marketing attempts will be to communicate this to existing and potential prospects.
Target Markets
The potential prospects for Zara are:
Albanian costumers of Zara products: General market trends suggests that there are around 50% of populations which can be trended by fashion. All products for our franchise that would be able to deal with the levels of Zara's shipments and are in their marketplace.
Inditex group wholesalers: This market will serve as a protection for our import business. By maintaining relationships with Spanish wholesalers we've an alternative solution market with founded distribution channels.
Zara specialty: As Zara goes towards maximum capacity they plan to become more aggressively target this audience. This should eventually reduce deals with wholesalers and record their value-added costs as revenue.
Positioning
Zara will position as the high end quality fashion distributor in Albanian market. Zara is only going to sell the best quality of designs and recognizing that fashion is a commodity. The business will leverage their competitive corners to achieve the desired placement.
Our competitive border originates from the advantage of having established relationships with Zara, and Inditex group. Our franchise has received affirmation of the demand for his or her product in the form of requests from Zara for bigger product shipments.
Our designs will be superior as a result of bigger average size of the Zara products 11. 000 annually and good deal and shipment cost will be less because Albanian market is too close from Spain.
Strategies
The single target is to put Zara inside our market as the premier popular field. The online marketing strategy will seek to first create customer awareness regarding the products offered, develop the customer platform, and work toward building customer devotion.
The message our store seeks to speak is our name is synonymous with the highest quality Zara designs available in Albanian market. This message will be communicated through a number of methods. The first method would be the use of printed sales materials. The materials will detail most of the various products that Zara offers.
Another method of communication is through the introduction of strategic interactions with clients and sellers of your (Zara) products. We recognize that developing close, communicative connections with our costumers is vital to maintaining a high quality, sustainable business. Our franchise will also use advertising, located in industry journals to increase brand awareness.
The use of the website allows differing people around Albania to view a lot of information regarding Zara's products in our store, their production methods, and other information.
Marketing Mix
Marketing combine is made up of the following methods to pricing and circulation, advertising and campaign and costumer's service. Charges- Our costs scheme is based on per product costs.
Distribution- The product can be sent out throughout the Tirana and Durres area.
Advertising and Campaign- A number of different methods will be utilized for advertising and campaign.
Customer Service- Obsessive customer service is our goal.
