Category: Zara

Management of Zara: Analytical Essay

1. Introduction of ZARA

Zara belongs to the world largest fashion group and it is also the largest international fashion company. Zara is a Spanish clothing brand which is based in Galicia Amancio.In 1975, Zara is founded by Ortega. There are 2,220 stores in 88 countries where Zara operates. Not only it specialize in clothing but also it produces accessories, shoes, perfumes and others. Zara has a mission statement that they want to give the customers want in faster speed production.

There has a lot of impact on Zara’s store like they are temporarily closed due to the pandemic 2020 but in May, it will try to reopen and start business again. (Kala, K 22018)

2. SWOT analysis of ZARA

Provide a lot in innovation- Modern AI technology are provided with a large investment in Zara. It helps high production efficiency with high speed. And it brings many advantages to its supply chain and including the retail of network. One of Zara’s successes is that it focuses on this a lot.

Less enthusiastic in market- Zara is not as much interested in expanding of marketing and advertising as its competitors.Zara want the customers to buy their products with its taste and never try to persuade with advertisements to buy it. In coming year, Zara might be a focus on advertising and market expansion.

Having many retails channels- Zara expand its retail channel in India which is the largest market in the world and includes others countries. Although it expedition is high in China, Malaysia and Singapore, it still does not have much retails.

Expensive cost of raw materials- Costs of raw materials are raising and Zara has managed to fair in the combing of supply and demand. The more the raw materials are rise, the more expensive the fashion brands will be. This can make a lot of negative impact to the company. . (Pratap, 2019)

3. Ethical Approach

To attract customers for Zara’s band, persuading luxury brand does not need. Most companies expect their goods with high quality and high price to export high indicted groups. Zara is not more expensive than other companies, that’s what Zara success. Zara fixed reasonable prices for all types of customers. Zara pricing strategy is depending not only on price but also for affordable to target customers. To fix the price, Zara never concentrates on the costs of the company but on the consumers’ perception. The broken code and unusable code are counted by daily and they are sold with low prices. Moreover, Zara always pay discount at the end of the year to have each Zara brand in individual whether can afford or not. This is clear that Zara is always fair on customers. (YUCHENPANG, 2016)

4. One CSR approach

Zara’s CSR policy is based on the rules and regulations of manufacturers and suppliers. It is a strategy of whitewashing. It prohibits the forcing of child and labor . They aim that their workers to safety in the workplace, protected with grace and respect, to associate and to have fair wages. The quality control is monitored by the observation of standards. The labor organization has different programs to maintain better practices and industrial a global union that is involved with the respect of rights in their factories. According to an annual report by an external company, the company provides information about suppliers, employees, revenue and countries in which they analyze. Zara is involved in social programs for welfare and invested $48 million in this in last year. And last, working at Zara may create very well organized.

The objective-The main objective is to give the newer designs day on day and try to catch demand and its satisfaction. The other is to expand spread and open more retailers in main cities which are 80% covered of the world. Zara also expands in New York, Portugal, Perris and Sweden with enthusiasm.According to the business model, it aims to supply the sustainable development of society which we concerned. (Givens, L, 2019)

5.4 keys elements

Action- Zara’s appeal corporation of mission and vision statement is instability to be the superb fashion in all over the world. This is still collected till now and it is important in the growth and popularity it has collected so far.

Zara has a goal that is work for through vision statement. Especially, it is in the development of the environment and human growth. The company improved in advance from the development way by using its strategy which has described. It concentrates to make the customers’ perception whatever in high speed. One of the criticisms for Zara is its main price and it still influences the mission and vision statement in the organization.

Tangible resources- In financial, the tangible drivers involve in the main part in Zara.tangible drivers are strong and competitive in nature. The financial performance shows earnings and profits heavily.

Intangible resource- customer loyalty, and awareness of Zara brands are considered to be intangible resources that provide sure amount of two values to it. Because of its flexibility which has modern nature, Zara provides a variety of products like clothing, fashion and latest design.

Implementation

Zara will start to look the monthly reporting and forecasting. In a weekly meeting, the strategic plan is discussed by the regional market leaders. It will analyze the result and do the necessary step in the monthly meeting. Zara is focus on realizing the strategy, eCommerce and social media to promote traffic on zara.com as well as attracting visitors to the online shop.

6. Culture of Zara

To cultivate, power and to have consistency, all organizations should have various types of cultures. By the introduction of fast fashion and retail network, Zara is enthusiastic in creating of different new designs which are between all types of cultures and age’s. Nowadays, Zara played an important role to become an international fashion group. That’s why Zara’s strength which is the priority of customers first. Zara want to know its customers about its culture of company and its coke logo of it’s and they fixed its culture since started open.

Zara’s logo are fixed on men’s and women’s clothes, shoes and accessories, and also other like perfume. Young people are offered the latest fashion designs by Zara sub-brand TRF. It is clear that Zara has kept its brand culture till now and they really precious on culture. (Martin Roll, 2019)

7. Organizational structure

Unity of command-Zara organizational structure is a heroical flow of sub-level of the department and it is built by systematically. By looking Zara’s organizational structure, the employees know who to report and it is easy to connect with their college. It can improve staff productivity and make easier in work. In Zara, the employees and also the professional designers are interested what the customers want. And they create clothes with the stream of society and ideas to improve their products. Inditex includes in many retail channels and including Zara. There have store managers, local managers and country managers under the superb management of Inditex.They manage the 70,000 international staffs.

Centralization-Zara is deep in quick transportation to stores and it holds on predicting and fast charge. Zara sends twice in a week in fixed days. Trucks leave in time and goods are arrived in a fixed time to stores. When the clothes arrive to the defined place, they put coke logo and fix price. They are ready for sell. The staff which includes in production, distribution, and retailing know-how impact other services of their actions. It also concerns with customers who know the new designs of clothes will arrive in what time. Zara should control distribution and production in all its geographical areas. In this centralized way, it will help Zara to concentrate on all part of its. (TradeGecko, 2018)

Zara uses unique organizational structure. Controlling all its major operations extends Zara’s success. It rejects the strict constitution and consists mainly of three parts of Zara. There are three subsections for men and women and for kids. Communication flows are easy to approach, and international brands should research the needs and choices of people in particular areas before starting a business. It begins a timely visit to the company and brings in new customers and products. In addition, it focuses on what is currently being sold. It’s about design and product and collect customer feedback. If customers are satisfied with the requirements, it does a great job. Therefore, it increases the loss and profit.

8. Leadership theories

Although Oscar Perez is the director of Zara, little is known about the mediums of a person’s leadership style. Zara needs to understand the cultural factors behind leadership when analyzing the effectiveness of leadership styles. Spain according to Indicted and Zara’s steps should be to have a cooperative system to avoid confrontation with the natural process. The founder’s leadership style was considered dictatorial and aligned with the culture of Spain. However, Spanish culture is advanced to avoid uncertainty. Not in line with Zara’s business strategy. Because it is different from its competitors, it distributes fashion products with small products on time. Despite the limitations of Spanish culture, Zara’s leadership may be viewed as beneficial and effective from its growth. The leadership was withdrawn, despite its attractive aspects of leadership, based on theory-based suggestions and constructive criticism. The employment strategy brings up expectations.

Motivation Theories

Zara and index is young hiring creative people; young companies are based on the demographic of employees because of the training and the incentive for innovation. Young employees have expectations in the early stages of their aircraft carrier. Zara manages to achieve the desired rewards and has the effect of having high expectations, such as the company’s performance standards and expectations, as well as the company’s aspirations and growth. Even the benefits of old age are met by aging. Thus’ Herzberg’s two theories can be proven. Times create a challenging work environment that fosters creativity and puts them in charge. The failure rate in Zara is very low. Small losses are significantly counted. NO, it ensures job security. But at the same time, the company recognizes employees’ creativity. Zara and his co-defendants have been able to achieve a dictatorial style of leadership because of family control and top management in the autonomous region.

9. Recommendation of ZARA

For part of designs, Zara needs to collaborate with various designers. As a result, Zara has managed to maintain its competitive advantage to fashion. In production, it should be integrated with any production line around the world. Only then can the new technological advancements be replaced by replacing the old ones. Increasing distribution centers makes Zara faster and more efficient in to retail stores. And advertising is important when competitors are becoming more competitive and the demand is tight. Zara says it has to build its own production center with high-performance and speed key manufacturers.

10. General analysis of ZARA

Now Zara stores are seen in everywhere and their rate is increased in year-by-year. Zara is a fast fashion, fashionista. There has been considerable success in the industry by using effective retail strategies such as QR and innovation. Most players in the fashion industry are predicting future consumer preferences for fashion. In contrast, Zara has had a few designs collections this year. Therefore, Zara has a high stock exchange. This practice is among others, a leader in the Zara fashion industry. But Zara is still trying to grow its brand by expanding its reach and growing its advertising business. If Zara can improve in advertising and expand, the company will continue to lead the retail market.

11. Reference List

1. Kala, K. (2018, December 24). FASHION HISTORY- ZARA – Kalyani Kala – Medium. Retrieved June 15, 2020, from Medium: https://medium.com/@kalyanii8927/fashion-history-zara-19ac531d9ab1
2. YUCHENPANG. (2016, May 2). Zara’s secret to success retail – its pricing strategy | T1 2016 … Retrieved June 16, 2020, from Deakin Business School: https://mpk732t12016clusterb.wordpress.com/2016/05/02/zaras-secret-to-success-retail-its-pricing-strategy/
3. Gimenez, L. (2019, August 15). (PDF) Evaluating business ethics and CSR: Case Zara. Retrieved June 16, 2020, from ResearchGate: https://www.researchgate.net/publication/335193056_Evaluating_business_ethics_and_CS
4. UK ESSAYS. (2016, 12 5). Zara clothing – UK Essays. Retrieved June 16, 2020, from UK ESSAYS: https://www.ukessays.com/essays/management/zara-clothing.php
5. SlideShare. (2016, March 15). Business model of zara – SlideShare. Retrieved June 16, 2020, from SlideShare: https://www.slideshare.net/KanikaVerma19/business-model-of-zara
6. MartinRoll. (2019, December). The Secret of Zara’s Success: A Culture of Customer Co … Retrieved June 16, 2020, from MatinRoll: https://martinroll.com/resources/articles/strategy/the-secret-of-zaras-success-a-culture-of-customer-co-creation/
7. TradeGecko. (2018, June 25). Zara supply chain analysis – the secret behind Zara’s retail … Retrieved June 18, 2020, from TradeGecko: https://www.tradegecko.com/blog/supply-chain-management/zara-supply-chain-its-secret-to-retail
8. ACADEMIA. (n.d.). (PDF) ZARA final report | sejun lee – Academia.edu. Retrieved June 16, 2020, from ACADEMIA: https://www.academia.edu/7908873/ZARA_final_report

Marketing Strategy of Zara and Its 9P’s: Analytical Essay

Zara is the most popular Spanish costume brand that uses a unique advertising method to fulfill its business objectives. Zara is known as Spain’s best-realized style brand. The organization was started in 1963 by Amancio Ortia Gaona. After 50 years, it has transformed into the fastest growing brand in the world and the maker of Spanish design dress. As of now, there are around 2000 stores in 77 countries, Ireland has 10 major stores and the number is probably going to grow sooner rather than later. (Wikipedia contributor)

Product

Zara is known as a brand of fashion. Zara has a huge fan base among fashion enthusiasts. A major strong point of the company is that it is able to react to customers’ requirement very often. Zara products have repos in the markets and have already raised the benchmark with the latest and upgrade trends. Thiers products are not attractive, but they focus on that they are classier and trendy.

It does not stop her process of manufacturing, making her fully in control of the commodity she produces. Its distinctive sales preposition is to design the latest trends and fashions. Most scenarios new trends and styles are typically available at sales stores within a maximum of one to four weeks. If an item is not sold in stores, it is immediately removed from the store.

However, when it comes to Ireland it has a few issues to fix. Ireland being now days centre of several nationality people and in Ireland they need to come with their best design and fashion. Second it needs to tackle and cope up with the traditional and latest need of the local customers which is a big challenge and Zara is working to reach out local people by coming up with new trends and design that can attract people with age and size. (bhasin, 2019)

Figure 2 Clothing Collection

Pricing

Zara has the concept of making its products available to its customers at affordable prices, it has been found that its prices are much cheaper for the customers. However, we know that we are talking about specific customers who would compare Zara to Tommy Hilfiger, Hugo Boss and H&M. Zara has two different types of stores, some are affordable and some are its premium stores. Although primarily Zara has a special pricing strategy. Pricing is made possible by increasing development and training costs.

Zara costs in Ireland will be somewhat higher for Spain than in other countries, due to higher rates of VAT on most clothing here. Zara has 600 shops, which still hope to add 10 percent less cost than the UK worldwide.

This is hard to believe but the fact is that Zara comes out with a minimum of 500 or more new designs every month. These designs, along with brands like Zara, help them price their products according to their desire and choice as the latest trend is a bit expensive. However, Zara’s management is quite smart as pricing is quite competitive in brands such as H&M, Tommy Hillgear, River ISLAND, Hugo Boss, DEISEL, H&M and US Polo as well as in other parts of the world. (Bhasin, 2019) (The Irish Times, 2003)

Promotion

Zara is well known for its brand promotion as it has its own unique policy of marketing known as ‘marketing with zero investment’. Rather, the company uses the money it used to open new stores. The important thing about Zara is that it has created differences for consumers, which is to understand oneself from others in market competition. In general, its core marketing strategy is based on exclusivity, experience, contrast and affordability.

In short, the company relies primarily on people advertising more people than what they do. The products focus and attract the 18-40’s people and generation who love fashion and new trends. This is because this category of group is the most conscious fashion than any other group. In particular, the market segment is primarily composed of women (65%), men (25%) and children (15%), all of whom are fashion savvy, love new fashion, and in the premium and middleclass category See the market fall. (Bhasin, 2019)

The Zara commitment is clearly visible, they pay attention to every detail of their product, infrastructure and showroom. The class and elegance with which the product is endorsed and the way their employees are prepared one by one is worked out according to a plan in that order. Each store manager has free access to talk to their department and manufacturing unit in Spain about marketing and improvement strategies so that they know what is required and needs to be updated.

They design small and regular product shipments to keep their inventory scarce and fresh; Attractive customers buy instantly and regularly visit showrooms and outlets to see what’s new in the trend. Online shopping, bar coding, and computer enabled purchases are all measures designed to increase the number of sales and make it a global brand. (market study ) Figure 3 Sale Promotion

Place

Zara is very different and the things that make it a stand out brand is the fact that it is a vertically integrated retailer. Zara self-manufactures, manufactures and assigns products. This strategy seems to work for it as it has managed to establish itself as the largest Spanish fashion store globally. Zara has a presence in more than 30 different countries including Ireland and is rapidly expanding. Zara will get more stores in Ireland as its increasing demand.

Approximately, 90% of Zara’s stores are owned by themselves and the remaining 10% are franchise joint ventures. This means that customers get the same eco-experience when entering Zara’s outlets, whether it has stores in London, New York, Paris, Rio de Janeiro, New Delhi, Dublin, etc.: the store is spacious, bright, modern and mostly Shiny and mirror wall.

It faces many problems related to the place of rent. Every shop and mall owner in Ireland is willing to give free space to Zara, which shows the amount of popularity of the brand in cities, urban areas, and shows that Zara has come as a brand by now. (zara.com, 2019)

Figure 4 Showroom in Dublin

People

Zara focuses on the ability of its customers to announce the brand, making the brand experience substantial and the exchange valuable. Zara pulls customers out of marketing rather than promoting them as brand influencers to improve operations, services, products and encourage them to expand throughout the world.

There is a huge market in Ireland, mainly in the city of Dublin, Zara, Dublin city if there are people of many nationalities and the main customers bringing the latest trend to Zara take precedence.

According to Cohan ‘Zara has 2 to 3 times more customers than traditional women’s apparel, which shows a high dedication to the brand,’ these devotees become promoters of the brand, who talk about the brand with their systems Provide enthusiasm. For example, Zara. There are 25 million Facebook followers, 16 million on Instagram and over one million in Twitter followers which is huge for any brand. (Bhasin, 2019)

It has a deeply advanced information base, which takes into account super-proficient investigations of selling and being told through web-based networking media stages. This information is used to help different parts of the business, from the contribution of the item to the upgrade. ‘Two-Path Correspondence between Client and Zara, Considering Continuous Improvement of Items and Administration,’.

Figure 5 Cara Delevingne wearing ZARA

Physical evedencde

Zara has developed special favourable conditions with her 4Es to deal with advertising by focusing on partnerships, business, evangelism, and each spot methodology for the client, rather than the old-fashioned, value, advancement and spot idea focused on the brand. ‘As the brand ethos is inserted into the customers’ minds, the customer transforms into a brand observer’.

In 2016, administration operators reacted to more than 17 million customer requests, Cohen found. ‘Zara really responds to customer criticism as its most important brand advantage to improve its items and administration.’ (Bhasin, 2019)

Zara is centered around its own family with corporate activities on decent diversity, relationships, equal opportunities, work-life parity and expert improvement. Zara encouraged employees working in a different way to attract employees who were exceptionally attracted to engagement with customers. In addition, more than 60% of the Inditex workforce is 30 or more young, with the brand’s objective market thus far.

‘The result is that customers and organizations work together toward that goal, which Zara Client as Chief Customer Officer turns into criticism of all parts of the business,’ said Kohan. This is in a general sense unpredictable arrangement compared to brands that use 4P’s way of dealing with advertising work. Today the customer, not the organization, orders. Zara involves the client wisely in the basic leadership process. That is Zara contrast.

Process

Zara uses the JIT (just in time) production process unit, Zara has also been heavily influenced by using JIT generation strategies. Zara completes incredibly quick trades by making every item in small quantities. The new designs can land in stores within 15-days, meaning that Zara can react to its customer request by creating greater quantities of its famous items and ignoring less prominent items. Senior supervisors regularly gather information and current patterns and send it back to the head office where the data is scrutinized by his driving originators, who update to the point, which enhances Zara’s costume. Zara completes incredibly quick business by delivering small quantities of each item. Zara owns about 50% of clothing in Spain, Turkey and North Africa, which means Zara can ship clothes anywhere in the world within 48 hours. Zara gets amazingly fast turnover by producing every product in small quantities. Zara has opened its first technology-driven method which is the Store and Collect Store in London and plans new stores to open in major cities, with mirrors that embed technology to help customers make the right and desirable choices is. (wilding, 2016) (Quinlan, 2019).

Spring, inspired by Zara’s innovation, will likewise include a simple installment framework that works via Bluetooth and store partners will pass along cell phones to help customers in any capacity. The Zara Westfield Stratford Spring Up will similarly include an item proposal framework, which uses RFID innovation. Customers will have the option to examine something to get more data about it, not to understand the various decisions to plan and consolidate with different pieces of clothing. The spring opening arrives as Zara is expected to almost double the size of its current lead in the Dublin store. The revamped Leader Store will be the first Zara store to uncover a ‘radical new store idea’ that spots innovation at the core of its plan to transform the client shopping background. It will include four areas as a committed area for women, men, children to gather on web order.

Partners

Zara has various partners and alliances around the world collaborating with new channels to innovate. Zara latest project is collaborating with schools. Zara is collaborating with schools such as The Royal Academy of Antwerp, Parson School in New York, Ensaid in Paris and Kingston University in London. All the clothes from previous seasons, with which the students created new garments combining their own design and vision. And Zara caters to those who shop in the name of designer. Zara has collaborated with the company Sesame Street and is growing to manufacture children like the Zara Grover Backpack.

Zara have share a relationship with British Red Cross as charity partners. Most of Zara’s stores have clothing collection points, where customers can donate clothing that is no longer needed and these clothes are sent to the British Red Cross Society. Zara also has social media partners such as Instagram, Facebook, Twitter, Pintrest, YouTube. (Coscarelli, 2017) (Turka, 2018) (Red Cross Society, 2011)

Positioning

Zara has a very strong market position in Ireland. Zara is not just an alternative market position as its immediate rivals yet have a special plan of action that is one of the universes that is best. Zara makes almost a large portion of its product in-house. As opposed to using the capabilities of its factory to expand its produce, the organization intentionally leaves some limits left. Instead of taking advantages of economies of scale, retail vastness builds and conveys in small groups. External experts tend to look at configurations, independent of any other and strategic tasks, not based on organizations. Zara technology first seems to be a hindrance in relation to its rivals. Zara is the most intriguing and equivalent comparatively effective contender, H&M. These two organizations are European-based, running design retail in low-value pieces at the centre and have a solid and worldwide development technology. Zara maintains its position in Ireland and the segment of people are loyal customers of the brand and it expands over time. (z, 2015)

References

1. Zara – Zara marketing mix and 4 Ps of Zara brand. [online] Marketing91.com. Available at: https://www.marketing91.com/marketing-mix-zara/ [Accessed 7 Oct. 2019].
2. Coscarelli, A. (2017). Did You Spot This New Section On Zara’s Website? [online] Refinery29.com. Available at: https://www.refinery29.com/en-us/2017/08/166092/zara-new-2017-collection-shape-the-invisible [Accessed 14 Oct. 2019].
3. Quinlan, R. (2019). Retail must evolve if it is to survive and thrive. [online] The Irish Times. Available at: https://www.irishtimes.com/business/commercial-property/retail-must-evolve-if-it-is-to-survive-and-thrive-1.4045264 [Accessed 16 Oct. 2019].
4. red cross society (2017). Zara partnership | British Red Cross. [online] BRC Site name. Available at: https://www.redcross.org.uk/get-involved/partner-with-us/our-partners/zara.
5. The Irish Times (2003). Dublin in “fashion heaven” as Zara opens doors. [online] The Irish Times. Available at: https://www.irishtimes.com/news/dublin-in-fashion-heaven-as-zara-opens-doors-1.510548 [Accessed 12 Oct. 2019].
6. turka, alison (2018). “Sesame Street” Teamed Up With Zara For Adorable Merch & Me Want It All. [online] Elite Daily. Available at: https://www.elitedaily.com/p/sesame-street-x-zara-collaboration-exists-me-want-it-all-8223561 [Accessed 17 Oct. 2019].
7. wilding, richard (2016). The Secret Behind Zara and Uniqlo’s Supply Chain Models. [online] Theleadershipnetwork.com. Available at: https://theleadershipnetwork.com/article/zara-uniqlo-supply-chain [Accessed 16 Oct. 2019].
8. ‌z, anon (2015). Analysis of Zara’s market position. Available at: http://www.markedbyteachers.com/university-degree/business-and-administrative-studies/analysis-of-zara-s-market-position-zara-is-the-main-success-factor-of-inditex-s-growth-and-plays-the-leading-role-of-the-group-s-sales-and-profit-for-this-reason-we-will-go-into-details.html [Accessed 17 Oct. 2019].
9. ‌zara.com (2019). Zara Locations & Hours near me in Ireland. [online] Localmint. Available at: https://www.localmint.com/ie/zara [Accessed 15 Oct. 2019].

Business Model Canvas for Zara: Analytical Essay

Description of Zara’s Business Model Canvas

Zara is one of the most popular and successful clothing brands in the world. It was the first brand of the Spanish parent company Inditex, which was founded in 1963. Inditex is now one of the world’s biggest clothing retailers owning several other brands alongside Zara. (Inditex, 2019) Besides Zara’s great success with their physical Brick-and-Mortar Stores, the company is now also massively expanding into the e-commerce sector with Zara online being available in more than 200 markets across the world. (Cockar, 2019)

This success didn’t just arise out of nowhere. Zara has a clear and entrepreneurial approach when it comes to it’s Business Model. In order to get a better understanding of Zara’s operations and values, it makes sense to break down their model into the 9 elements as seen in the table above. The following description will help to understand the relationships and details of these elements and maybe reveal some room for improvement. Numerous different information sources like desk research, in-store observation and peer feedback contribute to the reliability of this report.

Customer Segments

The first question a company should ask itself is “Who do we want to serve with our product or service?”. Therefore, it makes sense to take a look at Zara’s Customer Segments considering the four types of segmentation, namely geographic, demographic, psychographic and behavioural.

Geographic: Zara targets mainly cosmopolitan cities in developed countries, where fashion plays a big role. Zara’s largest customer group lies in Europe, nonetheless the brand has become very global over the past years and serves customers all around the world. (Keller, 2012)

Demographic: Zara’s demographic target group is mainly young to middle-aged. Zara offers products for Men, Women and even children. However, Women make up the biggest segment.

Psychographic: The Customers who shop at Zara are looking for trendy fashion for an affordable price. These two aspects are the reason for Zara’s popularity among students and young working professionals. Moreover, Zara offers clothing for a more “grown-up” or “classy” look.

Behavioural: Zara tries to make the customer come to the store more often by offering a limited number of products from one line for a specific time. This concept of scarcity and low prices attracts customers to the physical and online stores on a regular and frequent basis. In fact, Zara’s Customers visit their stores double as often as other clothing retailers. (Danziger, 2018)

Summing up these four elements, it is clear to say that the pain of these customers is the need for up-to-date fashion, at an affordable price and with easy accessibility.

Value Propositions

The Customer Segments of Zara already give an indication of what the Value Proposition could look like. First of all, Zara offers fashionable and new clothing every week. Inditex’ huge designer team and the importance of customer preferences make it possible for Zara to be up-to-date with the latest trends and attract large numbers of young, fashion-aware consumers.

This fast change of fashion at Zara, also known as Fast Fashion, brings us to the second point of their Value Proposition, which is scarcity. Zara does this by producing many new and different styles but keeping the production quantity per item relatively low. (Weinswig, 2017)

The attributes of the Value Proposition mentioned so far sound more like a luxury clothing brand. So, what made Zara so popular and successful among all kinds of customer groups, especially students and average-income customers? The answer is ‘Low Prices’ and ‘Accessibility’. Keeping the prices at a fairly affordable level and offering a choice between online store and physical stores in city centres make it more likely for customers to overcome their hesitation and make a purchase.

Channels

[bookmark: _Toc10591025]When it comes to Zara’s Channels, there needs to be a distinction made between the Channels which generate direct revenue and the Channels that serve brand popularity and brand development. The Channels which create Revenue are basically the physical Brick-and-Mortar Stores, as well as their Online Stores. These are the channels where an actual purchase can take place, therefore, Zara focuses to make these means as intuitive and attractive as possible.

Social Media belong to the other Category of Channels. With Social Media Zara doesn’t gain any direct revenue, but it surely manages to create and capture customer value. Zara’s Instagram Account with more than 33 Million followers clearly shows that they know how to advertise themselves and connect with millennials. (Instagram, 2019)

Moreover, Zara also presents its newest designs at fashion shows and in campaigns. These are great ways to advertise the new clothing lines in a noble way compared to ordinary methods like TV commercials or ads on the internet. In fact, Zara only spends about 0.3 % of their sales on advertising, which is clearly lower than the spending’s of Zara’s competitors. (Nazir, 2019) This shows that Zara’s existing Channels are sufficient and successful and that putting the Customer first pays off.

Customer Relationships

Zara tries to bring together their Value Proposition and their Customer Segments through excellent Customer Relationships. One of the concepts is called Customer Co-Creation. What is meant by that, is that Zara puts in enormous effort to research the desired needs and wants of their customers and the trends of the market. When a customer asks in-store about a certain product which isn’t offered by Zara yet, this will most likely be noted and considered. The same principle applies to their social media channels. After some time, these requests are evaluated and within few weeks the most desired products could already be found on the shelves. (Russell, 2019)

Customer Co-Creation is a fast-growing trend in the clothing retail industry, which means that Zara needs to reinvent their ways of gaining customer insights nonstop. Please make sure to have a look down below at Point 3 “Improvements for Zara’s Business Model” where I present an innovative way to create and especially capture customer value.

Revenue Streams

Zara’s source of income is the generation of transaction revenues from the sale of assets, clothing and other fashion items to be specific. This source is made up of two different streams, the sales in their physical Brick-and-Mortar stores, and the sales resulting from Zara’s e-commerce activity.

Zara focuses on a market-oriented Low Pricing strategy, which attracts new and different customers, but at the same time manages to create an experience which bonds many fashion enthusiasts with the brand. About 80% of sales in the retail industry come from the most loyal customers. Zara takes this into consideration and targets their loyal customers, who are more likely to spend more, thanks to the stronger connection to the brand value. (Danziger, 2018)

Zara offers their customers several ways of paying. In-store, customers have the option to pay by cash, credit or debit card, but also new services like Apple Pay are supported. When shopping in Zara’s online store, the customer has the choice out of 8 different payment methods which are credit or debit card, online payment services like PayPal or Zara gift- and member cards. (Zara, 2019)

Key Resources

Generally, when it comes to Key Resources, there is a distinction between four different types of resources. These resources are either physical, intellectual, human or financial, and depending on the company, there is a focus on mainly one or two of these types. For Zara however, each of these resource types plays an important role in the whole business model.

Lets start off with the physical resources. As the name implies, these resources are physical assets owned by the company. In Zara’s case, this applies to their Brick-and-Mortar stores, their logistics and their material supplies. Due to Zara’s “Fast Fashion” model, there is constant movement in their supply chain, which requires permanent and intense use of these assets. (Graafland, 2018)

Secondly, Zara heavily relies on their intellectual resources. These consist of customer feedback and data, the creativity of their designers and the partnerships with different social media influencers and bloggers. Since the customer is the highest priority for Zara, there is a need for constant research and adaptation with the aid of these resources.

With more than 2200 physical stores in more than 95 countries across the globe, Zara does clearly also rely on human resources. (Forbes, 2019) This kind of resource ranges from Zara’s huge design team, through managers, up to simple employees, which are needed in Zara’s day to day operations.

Last but not least, the financial resource is also of great importance for Zara. The constant and fast-paced innovation and production processes demand permanent revenues in order to continue smoothly. Moreover, the parent company INDITEX is on the stock exchange and ensures financial support for their strongest brand. (Bloomberg, 2019)

Key Activities

The main Activity of Zara is to produce new fashionable clothing on a regular basis for their highly demanding customers. However, this process is more complex than it sounds. There is few important Key Activities which are required for the model to work smoothly.

First of all, Zara is doing a great part in researching their customers’ preferences and adapting their product lines and designs accordingly. This Activity contributes tremendously to Zara’s brand development and creates superior customer value, which makes Zara stand out compared to other Retailers. (Weinswig, 2017)

After information about customers is gathered, there needs to be action. The permanent iteration of new designs and production requires efficiency and effectiveness. Zara does this by keeping proper track of all the supply chains and by ensuring good communication between all of the stakeholders.

Finally, Zara needs to bring the Value to the customer and generate sales. This happens through the given Channels mentioned in 2.3. In this step or activity, Zara can observe what works well and what works less well regarding the buying behaviour of their customers, which closes the circle back to the first mentioned activity, customer research.

Key Partnerships

As a global company operating on many levels, it is obvious that Zara has many partnerships to take care of. In the following I would like to mention some of the Key Partnerships. However, in reality Partnerships are far more widespread and complex.

First to mention are the Designers and the Suppliers which work for Zara. These partnerships enable Zara to produce and develop their products on a high level, especially regarding the fact that Zara practices the model of Fast Fashion.

Another kind of partnership exists with Fashion Houses, Malls and Franchise Owners. These partnerships are essential for Zara’s physical store presence. As mentioned earlier, Zara has more than 2200 physical stores around the world, which means this is probably the largest part of the Key Partnership Element.

Furthermore, there is a relatively new type of partnership, which Is extremely useful, if not even essential nowadays. It Is the partnership with Bloggers and Influencers on Social Media. With these partnerships, Zara has the chance to reach their young and digital audience. Recent collaboration between Zara and Singer Patricia Manfield shows how effective this Partnership is. As a result, Zara’s Instagram posts have been reaching over 120.000 likes. (Instagram, 2019)

Cost Structure

A Cost Structure of a company can be either value-driven, cost-driven or a combination of both. Value-driven means that the company is willing to increase costs in order to create a more valuable product for the customer. This structure will in most cases also require higher prices for the products. Cost-driven on the other hand, is when a company tries to reduce costs to a minimum, in order to offer products to the customer at a low price.

Zara’s cost structure is a combination of both of the mentioned types. The value-drive can be seen in the high frequency and quality at which Zara delivers new clothing for their customers. At the same time, the relatively low prices clearly show that Zara also applies the cost-driven structure to some extent.

Another fact to mention is that Zara has both an economy of scope and of scale. Economy of scope means that Zara produces a variety of different and new products on a regular basis and the costs stay relatively equal. Economy of scale describes the fact that Zara is already a big global company, which means it can produce larger amounts of their products and in this way reduce their costs.

Improvements for Zara’s Business Model

Initially I had two ideas for improvements for Zara’s Business Model. The first idea that I am going to describe appears to be implemented in some selected Zara stores already. The whole concept of Fast Fashion made me think about all of the clothing that is being produced and bought by customers every day. Even Zara Founder Amancino Ortega sees clothing as a perishable commodity. (Roll, 2018) But where do these clothes end up? My idea was to find a sustainable way to turn the life of Zara clothing into a more circular economy. I was gladly surprised to find out that Zara already offers this service in form of recycling boxes in their stores or even as a pick-up service at home for people living in Spain. These clothes are then being sorted and donated to non-profit organizations or recycled into new fabrics for new products. (Zara, 2019)

The other idea aims to improve the Elements ‘Value Proposition’ and ‘Customer Relationships’ of the Business Model Canvas. In my Sales Presentation in class, which was about this idea, I called it a ‘Revolution of Customer Co-Creation’. The idea is to create short surveys about style and product preferences, which can be conducted both in Zara’s physical stores as well as in their Online Shop. For the surveys in the physical stores I suggest using feedback devices or tablet stands. In order to attract customers to this method of sharing their opinions, there needs to be an instant reward for filling in the survey. This can be done by offering a 5% discount coupon as a reward. This coupon should only be valid on the same day, on one purchase and only one coupon at a time.

The questions of the survey could be divided in three categories:

• Which outfit looks the best? with pictures, choice of 1 out of 4 looks.
• Which item would you like to see on our shelves again? choice of 1 out of 4 products which have been popular in the past, but which aren’t available anymore due to Zara’s Fast Fashion and Scarcity model.
• Which new product would you like to see in our stores in the future? choice of 1 out of 4 products which are completely new and haven’t been in stores yet.

Obviously, these are just suggested broad categories which could be specified further on. Besides receiving the 5% discount code at the end of the survey, the customer could also have the option to fill in some sort of contact details like an email address or phone number, in order to get notified once a preferred chosen product hits the stores.

As we can see, this improvement offers benefits for both Zara and their Customers.

Benefits for the customers:

• Ability to influence trends and predict products
• Ability to bring back popular, sold out products from the past
• Being notified when a desired product arrives at stores
• 5% discount for the same day

Benefits for Zara:

• Extensive Customer Insights and Data Collection
• Increased Customer Curiosity and Brand Attraction
• Increased Customer Activity and Loyalty
• Applicable for both physical and online stores

As we can see this idea could clearly benefit Zara and improve many parts of it’s Business Model. As Customer Co-Creation is becoming one of the hottest topics right now, Zara should consider ideas like this one and try to turn the customer into their most valuable advisor.

Reflection on received Feedback

My classmate Yassine Leenen was so kind to give me feedback on this report and also on the observation report which we had to do in this Block. The feedback is divided into four parts. The first part is the feedback on the visualization of the Business Model Canvas. According to Yassine, my BMC has a clear and easily understandable visualization. The improvement point is to use more pictures in order to make it even more visual. I agree with Yassine, but I decided not to add pictures because I didn’t want the BMC to become too overfilled.

The second part is about the description of the BMC. Yassine perceived it as succinct and well-researched, with the tip to describe the BMC more in the introduction, instead of the company itself. I disagree on that point, because it is good to get information about the company in general first and the BMC parts are described in detail for each element throughout the main body.

Yassine found no fault for part three of the feedback sheet, which was about the observation. He thought it was well-researched and written clearly.

The fourth part of the feedback is about the overall layout of the report. Yassine liked the clear sections and the fact that I worked up to required formal standards. His improvement for the layout concerns the element of customer segments. After reading this improvement, I added a clause in that Paragraph (starting from “namely”), in order to make the subsequent segmentation clearer.

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