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SWOT , value proposition , internal & external environment , competitors analysis

Published in: Lifestyle
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  1. 1. Brief Exordium Zara is well reputed international fast-fashion company owned by the Spanish fashion group Inditex (Zara, 2012), founded in 1975 The first Zara store was opened in La Coruña by Amancio Ortega Gaona in 1975 An estimated share of Zara in total revenue of group is 80% After 38 years of operation, Zara now has 2,000 stores in 88 countries across Europe, America, Africa, and Asia fashion designing and manufacturing company has been declared most efficient and market responding enterprise in UK’s fashion industry
  2. 2. Present vision & mission  Zara is committed to satisfying the desires of our customers. As a result “we pledge to continuously innovate our business to improve your experience. We promise to provide new designs made from quality materials that are affordable”. "Give customers what they want, and get it to them faster than anyone else.” "Through Zara’s business model, we aim to contribute to the sustainable development of society and that of the environment with which we interact.”
  3. 3. Zara’s Mission Statement AT THE STORE  We save energy.  The eco-friendly store.  We produce less waste, and recycle.  Our commitment extends to all our staff.  An environmentally aware team. WITH THE PRODUCT  We use ecological fabrics.  100 % Organic cotton.
  4. 4. Objectives 1. Save energy, the eco-friendly store: 2. Produce less waste and recycle: 3. Their commitment extends to all their staff, increasing awareness among the team members: 4. Use ecological fabrics, organic cotton: 5. Use biodiesel fuel:
  5. 5. INTERNAL ENVIRONMENT Tangible Resources  Financially, Zara gets strong support from its parent company, Inditex, which has reached revenue of $1.9 billion Euros (Inditex, 2011). Logos and exclusive brands are tangible resources that can help Zara maintain its strong brand identity.
  6. 6. Intangible Resources  Zara has a 200-person professional designer team who constantly update new information on fashion trends for Zara in order for them to continuously pursue the fast fashion market (Inditex, 2011).  In addition, efficient information technology communication systems help Zara to be trendy .  Also, integrated IT systems allow for a strong relationship between Zara’s designers, suppliers, and manufacturing facilities.  Zara has a unique in-store inventory model which gives Zara a competitive advantage on brand image, as they continue to be seen as a company that can rapidly change and keep up with changing fashion trends.  Rapid inventory turnover also brings a sense of freshness and exclusiveness to customers .
  7. 7. Value Proposition Fashionable, affordable clothes Zara’s strategy is to offer cutting edge fashion at affordable prices by following fashion and identifying which styles are “hot”, and quickly getting the latest styles into stores. They can move from identifying a trend to having clothes ready for sale within 30 days (where as most retailers take 4-12 months). This is made possible by controlling almost the whole garment supply chain from design to retail. Large choice of styles Zara produces around 12,000 styles per year (compared to the retail average of 3,000), which means that fresh fashion trends reach the stores quickly.
  8. 8. Scarcity By reducing the manufactured quantity of each style, Zara creates artificial scarcity and lowers the risk of having stock it cannot sell. Scarcity in fashion increases desirability, which means shoppers need to buy quickly as the item may not be available next week. Lower quantities also mean there are not much to be disposed when the season ends; Zara only discounts 18% of its stock in sales, which is half the industry average. Prime locations Zara spends relatively little on advertising (0.3% of revenue) compared with traditional retailers (3-5%), instead they reach their target market by locating their stores in prime town-centre locations.
  9. 9. Integration Strategies Zara applies the Forward Integration. Since Inditex demands a high integration between the headquarters and all branches across the globe, therefore Inditex controls its retailers and distributors all around the world in order to standardize the overall business performance. Internal Environmental strategy
  10. 10. Intensive Strategies As an aggressive expander in global market Zara practices the Market Development strategy in which they are entering new market with Asian-developing countries being their first targets. Countries include China, India, and Indonesia. Due to this almost in every new shopping malls in Jakarta, you can find Zara store in it. Currently Zara is targeting the Asian market, hoping it will generate much profit from this promising market. Zara also applies the Market Penetration strategy, especially in European and American markets. Their techniques of doing this strategy are by improving its online store and increase customer service in all retail stores.
  11. 11. Diversification Strategies To complete its product lines, also as a form of their differentiation, Zara sells accessories to complement their main product which is apparel. This kind of strategy is called the related diversification. Zara also has the unrelated form of diversification which is the Zara Home. Zara Home is a retail store which specializes in home fashion and decoration. Zara Home, similar to Zara, emphasizes exclusivity in all of its products and it is also relatively more expensive than its competitors. Zara Home is available in 55 countries including Indonesia.
  12. 12. Defensive Strategies Zara has no defensive strategy because the company is in good condition, not in any kind of loss , failure or danger. Therefore, it does not need any defensive strategy at the moment.
  13. 13. External (Industry) Environment
  14. 14. CONSUMER SEGMENTATION DEMOGRAPHIC PSYCHOGRAPHIC Education: Well educated Age group: 18-40 Income Group: Middle income Gender: Men and women Attitude: Liberal Social Class: Middle and High class Lifestyle: General GEOGRAPHIC BEHAVIOURAL Weather conditions: Humid region, tropical region, cold region Countries: Western, Middle East and Asian Loyal customers: Most of them Rate of usage: Maximum Occasion: Formal and informal
  15. 15. COMPETITIVE ANALYSIS ZARA MANGO H&M PRODUCT Male, Female, Kids Male, Female, Kids Male, Female, Kids PRICE High priced High priced Mid priced PLACE 7 retail outlets, only in town 4 departmental stores, 8 retail outlets, Both town and neighbourhood 2 retail outlets, only in town PROMOTION Website, Facebook, Store location Website, Facebook, Print advertisement, Website, Facebook, Print advertisement
  16. 16. Community (PESTLE) 1. Political Factor An organization must consider issues such as how stable the political environment and what policies created by the government that influences them especially when entering the new market. 2. Economical Factor The economical condition have been fluctuating in last few years because of the economic growth, inflation, exchange rates and taxation charges. However Zara still successful in getting into market share by opening it new stores all over the world. It is shown in the financial statement that the number of new stores are increasing.
  17. 17. 3. Social factor Regarding a social media trend, it’s a must for Zara to establish social media relationship to satisfy customer demands due to change in generation choices. It is one of Zara strength to provide social contact to the customer by newsletter, Facebook, twitter or a customer account. 4. Technology Factor Because the advancement of the technology factor. Zara established an e-commerce strategy by launching its online shop at or an application which can be download from smartphone for online shopping.
  18. 18. 5. Legal Factor As Zara is an international brand they need to identify and fulfill all laws that govern the international market. Plagiarism also one of important aspect that has to be avoid by Zara. 6. Enviromental Factor Zara has make sure that the products and even the material in the store are created from environment friendly material. For example the plastic bag is certified by Programme for the Endorsement of Forest Certification (PEFC) which guarantee that it comes from sustainably and responsibly managed forest and does not come from areas undergoing desertification or deforestation.
  19. 19. Customer Segmentation • Zara seems to have a wide range of target market from kids to teenager to women and men which the typical of the customer is a person that wants fashionable, trendy and unique outfits at affordable prices. Aside from that, the customer may belong to any social stratum as Zara caters a wide range of tastes. • The market segmentation strategy employed by the brand is based on demographic and psychographic variables like gender, age, generation, lifestyle and social aspirations. • Zara situates its stores in high profile locations and provide customers with a turnover time of 4-5 weeks. This along with the brand identity, the clothes and the accessories collection and the limited production run, attracts the target market to Zara stores.
  20. 20. Competition • Key factors behind Zara success: 1. The location of its stores which is located in a high profile location. 2. The human resources which is receive special training called Jeune and Salta projects. 3. The product that rapidly changes without relying on the old product which creates the mindset of people “buy now or you never see it again”. 4. Diversification into different segmentation which is cosmetics and accessories.
  21. 21. Strengths • Global outreach (68 countries) • Minimalistic store image • Fast changing collection • Caters to multiple market segments (Male, Female, Children) • Brand loyalty • Innovation Weaknesses • Limited stocks • Lack of marketing • Lack of e-commerce across countries of operation Opportunities • Online market • Opening more stores/increasing customer base in cities with higher GDP SO Strategies  Create larger buzz by increasing marketing efforts across various platforms  Create designs to suit varied tastes of different cities  Create larger pool of innovative products in cosmetics, innerwear WO Strategies  Re-launch highly popular products  Provide customer friendly and creative e-commerce to create excitement and customer loyalty Threats • Fierce competition (H&M, Uniqlo, Chanel, LV) • Possible imitation of goods • Economic Slowdown • Exchange rate fluctuation • Change of customer preference (local versus online shopping) ST Strategies  Maintain current pool of customers through effective loyalty programmes (eg. Members-only sale)  Attract new customers and provide additional reasons for current customers to remain loyal by providing the option of WT Strategies  Create the option of online shopping in every country of operation  Advertise across various platforms to draw customers  Have a logo to attribute a sense of identity to the brand SWOT ANALYSIS FOR ZARA