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Business Planning Assignment ZARA

The document outlines Zara's business planning for opening a new store in Melbourne, Australia. It covers various aspects such as internationalization strategies, global marketing, operational and financial plans, innovative practices, and marketing strategies aimed at attracting customers and building brand loyalty. Zara aims to leverage its strong brand presence and efficient supply chain to succeed in the competitive Australian retail market.

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1 Assignment Studio Business Planning Assignment ZARA
2 Contents Introduction:...................................................................................................................................5 Internationalization.......................................................................................................................6 Global Marketing for ZARA.........................................................................................................6 Definition of Marketing:............................................................................................................8 Value: .........................................................................................................................................8 INNOVATION................................................................................................................................9 One need a lot of ideas from a lot of different places.....................................................9 Move rapidly from design to market. .................................................................................9 Innovate all aspects of the business ...............................................................................10 Prototype and model quickly ............................................................................................10 Get fast feedback ...............................................................................................................10 Flatten the structure ...........................................................................................................10 Strategic goals ............................................................................................................................10 Operational Plan:........................................................................................................................11 Financial Plan .............................................................................................................................12 Forecast Revenue stream.....................................................................................................12 MARKETING STRATEGIES ....................................................................................................14 MARKETING PROGRAM .........................................................................................................14 Marketing Objectives:...............................................................................................................14
3 Short term:.............................................................................................................................14 Long term: ...........................................................................................................................15 Strategy........................................................................................................................................15 Diversification......................................................................................................................15 PENETRATION STRATEGIES............................................................................................15 Product:................................................................................................................................16 Quality: .................................................................................................................................16 PRICING......................................................................................................................................16 PLACE..........................................................................................................................................16 PROMOTIONAL STRATEGY ..................................................................................................17 They aim to:.........................................................................................................................17 Loyalty Program .....................................................................................................................17 Objectives:...........................................................................................................................17 IMPLEMENTATION PLAN .......................................................................................................18 Supply chain and Logistic management.................................................................................19 Conclusion...................................................................................................................................21 Appendix......................................................................................................................................22 Reference List.............................................................................................................................25
4 Executive Summary:
5 Introduction: This initial statement is a plan to disclose the intention of beginning a Zara Store in within a new market (Bhatia, 2000). Zara is an international retail company that deals in clothing and accessories. The company is based in Spain and was founded in 1975. Currently it has several stores in different parts of the world especially Europe and the Middle East where majority of its stores are located. Zara being a successful company within the area of clothing and accessories, it can easily develop a new product and make impressive sales in short time. There are number of brands and the company sales in its stores including the famous pull and bear, and Massimo Dutti (reference required). Each year, the company launches new designs of cloths to keep up with the trend in the fashion industry and to deliver the needs and wants of its customers. The designs are based on both local and worldwide fashion trends. Because the company has established a well known brand in the fashion industry worldwide, opening another store in any new market will not be a big issue for the company. It is for this reason that the company should open a new store in Melbourne Australia to expand its market. Currently, the customers within this particular target market are offered with a variety of attire to choose from, many local and international brands are already available in the market. Considering the fact that Melbourne is such a diverse place, it would be nice to give the dwellers a taste of indigenous fashion and clothing material from other parts of the world (reference required).
6 Internationalization Businesses either small or large are rapidly being globalized because of various reasons, extending a business internationally has now become very much desirable and feasible in today’s rapidly changing business environment (Mead, R (1994)). To make such thing happen successful technology has played a major part in it. Businesses at present need more than just well-made products and well designed services to succeed in the global market. In order to compete and succeed internationally there are number of factors to consider and look in to, most important decisions to make are market selection and complete understanding of the economic, cultural and political environment of these markets. Business managers, Owners, Stake holders and leaders who are associate with Zara needs to be well aware of the challenges they might face if they are willing to enter in to a completely new market, for this purpose top level managers needs to have complete skills of managing functional areas such as marketing and finance, promotions, interdependence of international markets, norms that are part of other cultures and other risks associated to it (Mead, R (1994)). Global Marketing for ZARA Terminologies or phrases like global village and world economy turn out to be popular. Marketing has become a complete subject and marketing has been developed into a systematic plan since the global business existence. Even by companies like Zara it requires proper planning and deep analysis of all the process that is going into operation (FAO 1997)
7 To make a business globalize requires planning, together with careful consideration to global cultural and economical factors as well as likeness in products, price, marketing, promotion, and other internal and external factors. Markets like Melbourne which is culturally very much diversified, people of all backgrounds and cultures are present, the company needs to be very innovative and creative to meet the needs of such customers. There are some external and internal factors that play very crucial role in global marketing and can be a reason of success or downfall of an industry whether developing or established. At first place there is need to comprehend the aspects that could grow into internationalism and globalization (Crawford 1997). Here we are going to demonstrate different factors that are part of external and internal nature and have influence over marketing strategy when going global. There is a hell of difference between national and international business strategies and advertising and marketing plan. A very interesting example to better understand the factor that hinders the global marketing is the language difference, cultural norms and values. This is very common when a European company like Zara launches its project offshore to the Western areas (Crawford 1997). Industry at a Glance: The retail industry of Australia has seen several tough years, with overall cautious consumers spending, lower prices, higher rents and most importantly global financial crises, all playing important roles to driving revenue down by 0.7% (IBIS, 2012) This is where Zara can take advantage, as it’s a well known brand for around the world with exceptional supply chain in practice and selling products at comparatively cheap prices.
8 Industry revenue is forecast to grow by 1.2% per annum to reach $12.9 billion in 2016- 17 (IBIS, 2012), which can be considered as a good positive sign for brands like Zara. Definition of Marketing: The procedure of building enduring interactions through planning, undertaking, and handling the comprehension, price, marketing, and promoting and consortium of ideas, products or services to create reasonable return that match specific and company demands and goals (Carter n.d.) Marketing has a particular environment that is comprises of various factors and has affect on the company’s assessment and verdicts. These factors are internal as well as external and require keen observation and consideration while making any policy to carry on a project. Internal (5M) External Money Micro Macro (Pestel) Management Customers Political Manpower Competitors Environmental Machinery Suppliers Socio-cultural Material (raw) Public Technological Ecological Legal Value: The value of the store will be based on its clients, associates and ideologies. The clients are the most important value for the Melbourne Zara store. It is the clients who will
9 ensure that a culture of buying cloths and clothing materials from the store and all its future franchises is built (Graebner, 2005). This will be achieved by ensuring that the services offered by Zara must be of high quality. Zara Clothing Store is going to be a large retail store, which is designed to provide middle class income earners with fashion styled merchandise from Spain. The store will carry designer and quality clothes, which will give access and convenience to men to wear modern and fashionable clothes. Zara Clothing Store will be located in the Chadstone shopping centre, one of the most busiest malls in Melbourne Australia. The mission of the project is to provide customers with high quality and fashionable clothing and offering superior customer service throughout and always remembering each customer may be a source of referral business to the company. INNOVATION One need a lot of ideas from a lot of different places. The Zara design team based in Europe consists of 350 people and they are charged with generating and delivering 18,000 new product designs a year – in other words, 360 a week, which is by far the most design by any brand. Designers at Zara do get inspire from books, magazines and other sources but their main differentiation is that they take feedback from their customers and follow it, Our customers tell us what they like and don’t like. We attend shows and talks about fashion to get ideas. It is an ongoing process. Move rapidly from design to market. At Zara the initial idea origination to the store shelf takes less than four weeks; they move far faster than their other competitors in the local and international markets. They want to create waves and be ahead of the wave. In addition, they put their products into 5,500 stores from Brisbane to Lisbon at just about the same time. This is one of many areas where Zara is not only creative but at the same time meet the demands of customers in a completely different way.
10 Innovate all aspects of the business. Innovation at Zara does not apply only to products but even to the whole process. The company has used creative approaches to streamline and optimize manufacturing, supply chain management, data tracking, inventory management, store layout and staff operations worldwide. Prototype and model quickly. Designs and ideas are tested rapidly, before they introduced in the market, at Zara’s headquarters in Arteixo La Coruna, Spain there are mock shops and 25 full-size shop windows with differing displays and lighting. Get fast feedback. Store staff use wireless communications to relay information every day back to the firm’s Spanish headquarters about sales and inventories, from all around the world. Fast information about what is selling and what is not enables the group to respond to the public mood and to quickly supply more of the most popular designs to where they are needed. Even the customers feedback and suggestions are taken seriously and if needed appropriate actions are taken. But even the top selling fashions are discontinued after four weeks. Zara deliberately kills them in an act of creative destruction. Flatten the structure. Traditional fashion companies have hierarchical management structures with many big egos getting involved in every decision. On the other hand, company like Zara has a flat structure with designers empowered to make fast decisions. Strategic goals
11  Creating a highly innovative and unique products and services that will give Zara an edge from its competitors.  Providing good quality of products and services to all clienteles in order to create a customer base and brand the store.  Providing the perfect environment to all our associates in order to retain them and get the best skills out of them.  Controlling the cost of operation to ensure the organization meets its target profit margin. The elements of operation that will be emphasized in order to meet this goal include: accounts receivable and accounts payable, order taking, receiving, purchase, and storage.  The average target sales for this first fiscal year is $800,000; achieved by keeping the labor within small range of the total sales and which would translate to a higher gross margin Operational Plan: General operating hours and personnel Days Timings Monday 9:00 am – 5:30 pm Tuesday 9:00 am – 5:30 pm Wednesday 9:00 am – 5:30 pm Thursday 9:00 am – 9:00 pm Friday 9:00 am – 9:00 pm Saturday 9:00 am – 5:00 pm
12 Sunday 10:00 am – 5:00 pm The starting work force will consist of Store manager, two assistant managers (one for each floor), Mentors (who will help assistant managers) sales personnel, supervisor, account officers, IT personnel and the top management. Selection for appointment of the each member of staff will follow through evaluation criteria in order to select the most qualified candidates (Wheelright & Clark, 1992). The lower rank employees will work in shifts in order to observe the requirements of the labor laws. Financial Plan Validation of Key Assumption: The financial forecast of the company will be modeled using CAPM (Capital Asset Price Modelling) which consist of the real operating cost in both Australia and its base market. The key variables have been validated through research and the experience gained by the founders in establishing the business so far around the world. ForecastRevenuestream The overall business package provided by Zara will be based on following streams: The following method will be used to set up promotion budget. Since Zara will be new in market; therefore, methods used must be innovative and going to use price skimming strategy. Therefore, this is how the budget has to be divided:
13  Personal media that requires space over the internet and a website. It requires a negligible cost.  Non personal media requires most of the cost. The budget can be divided in following way:  50% of the money has to be invested on advertising and broadcasting expenses. The commercials can be of medium budget, where the company can show the difference between before and after effects of using our product or personal character execution strategy  25% of the expenses are for designing and publishing advertisements on Sunday newspapers and other magazines  5% will be used for Social Media, which has become a very powerful media nowadays  The rest of the amount will be spent on direct selling. The right people with the right set of skills will be hired according to the remaining budget This means that the major cost will be used on media and publications. The costs for the rest of the communication mediums are very minor. Advertising 80% Direct Selling 15% Sales Promotions 5%
14 MARKETING STRATEGIES Some of the strategies that will be employed towards marketing include: direct marketing, advertising, promotion, and person to person marketing. A budget for implementing an effective marketing strategy within the first one year is $ 50,000. MARKETING PROGRAM Marketing Objectives: Before the details of a marketing plan can be developed, objectives for the plan must be stated (charles, 2008) The business function of marketing is important to Zara as it is a strategy in which is implemented in order to achieve the business goals and promote the product. Zara consider it as the heart of the success of their business mainly because of the reasons that it include the promotion, product and the price of the good and may also have control over operational areas such as finances and employees. Zara should work on different marketing objectives which can be categorized under short term objectives and long term objectives. Short term:  Attract more customers  More awareness of Zara products in the local Australian market  To be on the top  To deliver the right and positive image of the company  To be the first choice for its customers
15 Long term:  To be the market leader  To open more and more branches all around Australia  To associate and partnership with other companies, only if possible  To offer more competitive and high quality products Strategy Diversification Zara is known for its great designs and products that they provide to their customers. Zara will include a variety of products in its store, like perfumes, handbags, and also will target people of all age. PENETRATION STRATEGIES Before entering any country a company like Zara should and must decide on its strategy on how to enter that particular country. According to Doole and Lowe (2001) company objectives and expectations, size and financial resources, existing foreign market involvement, skills, abilities and attitudes of management, the nature and power of the competition, the nature of the product or service itself and the timing of the move relative to competitors should be considered, as this will definitely play a key role in it. Since Zara is a well known brand in the world fashion industry, the company won’t have to work hard to penetrate in the market. Soon after their launch they will get a good response from the market and from the very first year company will start making its profit.
16 The Marketing Mix is the combination of marketing strategies employed to achieve the goals of the Marketing Plan (Kalb, 1995) Product: Zara products takes into consideration all of these factors that all come together to increase the appeal of fashion products to its target market. Quality: The quality of Zara products are high that are constantly managed, the raw material used in the product are of good quality. PRICING Zara offers affordable prices for all its products which can easily be afford by all its customers as they all can easily be afforded. Besides the average income of people in Australia is normally high, as result majority of the people can afford to spend $40 to $300 on its products. Zara use the cost plus margin method of calculating the price of their products. This means calculating the total cost of production and adding a percentage (margin) for profit. This includes taking into account rent, wages and prices of supplies. PLACE Places plays a significant role in the marketing of any product or service either locally or internationally. Before opening any outlet it is very important that Zara should and must take into consideration the aspect of the location that they are willing to open in the near future. Some important aspect about location can be termed as: The visibility of the location, Is the location is easily accessible? Is it in some mall or main road?
17 PROMOTIONAL STRATEGY Promotional strategies are normally viewed as the way one communicates with their target market (Stephen, 2003) Zara will use a number of promotional strategies in order to inform non-existing customers about their new products, to keep the loyalty of their regular customers and to highlight how great affordable their products are. They aim to: - Build positive relationships in the community with other businesses. - Increase sales - Drive traffic into store - Tailor an offer to local community Loyalty Program Objectives:  Encourage and reward customer loyalty  To increase traffic in stores
18 IMPLEMENTATION PLAN Media Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Print Y Y Y Radio Y Y Y Y TV Y Y Y Y Outdoors Y Y Y Y Y Events Y Y Y Y Y Y Y Y PR -------------------------------------------------------------------------------------------------- Online -----------------------------------------------------------------------------------------------
19 Supply chain and Logistic management In order to increase its capital base, the company needs to have an IPO after a specific period of operation. An IPO is an equity stocks issue that is offered when a company first initiates public trading of its shares. The valuation process for new private companies occurs in two phases. The first phase is the pricing evaluation. The objective of this phase is to determine the initial offering price for shares in the newly public company. The second phase is the market evaluation. The results of this phase reflect the actual worth of the new company based on the market’s response to the company’s IPO (Lodato, 2008). Supply chain is one of the key strengths at Zara, which must be managed well in order to avoid the bullwhip effect in the supply chain process which occurs as the demand order variability in the supply chain process is magnified as the company moves up the supply chain. This bullwhip effect could cause inefficiencies in the operation process which could create graver consequences to the company. However, this could easily be remedied once its cause/s is/are identified which includes any of the following: demand forecast updating, order batching, price fluctuation, or rationing and shortage gaming. The supply chain management process encounters different problems and issues in its operation. These issues cover the whole process from the strategic to the operational level. Among the issues in the supply chain management process include network planning, inventory control, supply contracts, distribution strategies, supply chain integration, strategic partnering, outsourcing, procurement strategies, and product design (Kotler & Fernando, 2003).
20 Other issues concerning the process include network planning, supply chain integration, strategic partnering, IT, Decision Support System, and training. Aside from the internal issues surrounding the SCM process, there are also issues connected to the different practices of SCM in different countries. For examples, the supply chain management practice in Asia is considered to be more fragmented and less competitive than its practice in United States and in Europe. Using value stream mapping, it will study on the challenges and problems encountered by SCM in a global context. This value stream uses all the necessary steps involved in the supply chain process with the use of two streams or flow. These streams are the flow of products and the flow of information. In that study, the three key elements in a supply chain (process, people, and technology) are highlighted. Aside from that, the concepts of logistics, inventory, and the customer’s needs must be given focus in the creation of their corporate goals and programs. The main challenge of supply chain management, is to keep up with the global demands of their customers, competitors, and vendors. They are essential forces now as they gain power to dictate and take control of the operation of a business in contrast to the trend before their suppliers have the ability to dictate the process of shipping and accepting orders. In terms of the demand and supply trends within the industry, Schwarz has listed some of the issues and challenges that companies face pertain to supply chain management. On the demand side, there are the issues of uneven growth, fragmentation, accelerated volatility, and the importance of aftermarket (reference required). These are the issues deal with the customers and the industry in general. This affects their ability and capacity to purchase materials and products. On the supply side, the challenges that
21 they are faced with differentiated outsourcing, low-cost country outsourcing, risk management, and transparency/accountability. These issues must be monitored well and solved so that firms would be able to avoid further problems and graver issues in the future. Conclusion Zara is an international retail company that deals in clothing and accessories. The company is based in Spain and was founded in 1975. Currently it has several stores in different parts of the world especially Europe and the Middle East where the bulk of its stores are located. Zara being a successful company within the area of clothing and accessories, it can easily develop a new product and make impressive sales in short time. There a number of brands and the company sales in its stores including the famous pull and bear, and Massimo Dutti. Each year, the company launches new designs of cloths to keep up with the trend in the fashion industry. The designs are based on both local and worldwide fashion trends. It is essential for the company to make accurate forecasts of the demand and supply figures in order to maximize the process. Thus, a company must regularly monitor the supply and demand for their products and make the most out of those products. An automobile company could not possibly manufacture products more than the demand in the market since this could cause some problems in warehousing. Thus, the logistical distribution process of a company must be closely monitored.
22 Because the company has built itself a brand well known within the worldwide market, begin a store in a local market that it has not explored would be appropriate. It is for this reason that the company should open a store in New York to expand its production and sales. Currently, the customers within this particular target market are not offered a variety of attire to choose from. Considering the fact that New York is such a diverse place, it would be nice to give the dwellers a taste of indigenous fashion and clothing material from other parts of the world. The total amount of money that shall be needed to start the new store for its first year will be $ 300,000. This amount includes $200,000 for startup capital and $100,000 for operations reserves. In order to locate the target market, the store will be sited in upstate New York which is also close to one of the up market residential areas. This will ensure a 24/7 work flow during working days, weekends and holidays. To be more specific, the store will be located near a business mall in New York with a continuous streaming of shoppers and people in general (Clow and Baack, 2007). This is the clothing store of this kind in this location as most of the clothing stores in New York do sell exotic clothing (Cook, 2000). Appendix The role played by SCM in decreasing the inventories, gaining better services, diminishing costs with inventory turns. Thus, keeping a good SCM must be observed at all times by the firms (reference required). This is considered as one of the biggest advantages of SCM as short term objectives in terms of increasing the firm’s productivity and decreasing inventory and reducing the process’ lead time occur usually.
23 Distribution management or transportation management is a decisive part of international logistics and supply chain management. Based on the National Council of Physical Distribution Management (NCPDM), physical distribution is a broad range of activities which pertains to the efficient movement of the finished goods and products from the end of the production line to the consumer. These activities include freight transportation, warehousing, material handling, protective packaging, inventory control, plant and warehouse site selection, order processing, market forecasting, and customer service. Strategic distribution is a competitive advantage that accrues generally from the configuration of a distribution network (who, what, where, when) and, more specifically, from the selection of partners (i.e. middlemen) who intermediate between the company and the customer by performing necessary fulfilment and service activities. Distribution also plays a major role in marketing and selling products to the end customers. This is a major activity which affects the mode in which the consumers receive the products that are manufactured and produced by a firm. The medium in which products are delivered to the consumers are called distribution or marketing channels (reference required). This is a set of interdependent organizations which are involved in the process of making a product or service available for use or consumption by the consumer or business user. The marketing channels are important for a company for two reasons: (1) it affects every other marketing decisions, (2) it often involves long-term commitments to other firms involving business-to-business relations and are not as easy or as flexible to change as other marketing mix decisions (reference required).
24 Logistics has been defined in several ways. It may also pertain to different things and can be associated with different aspects such as the military, civil organizations, among others. This process includes the planning and control of material flows and related information in organizations, both public and in private sectors. In simpler terms, it pertains to the process of delivering the right materials at the right time in order to complete the production process. It is the supply chain process that plans, implements, and controls the flow of goods or can also pertain to the management of inventory, in rest or in motion. Among these definitions given to logistics, the most popular is the one which describes logistics as a process consisting of the seven R's: having the (1) right product, in the (2) right quantity and the (3) right condition, at the (4) right place, at the (5) right time, for the (6) right customer, at the (7) right price. The most formal definition given for logistics was provided by the Council of Logistics Management defining logistics as the process of planning, implementing, and controlling the efficient, cost-effective flow, and storage of raw materials, in- process inventory, finished goods, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.
25 Reference List Bhatia, T. K. 2000. Advertising in Rural India: Language, Marketing Communication, and Consumerism. Tokyo: Tokyo Press Clow, K. E., & Baack, D. 2007. Integrated Advertising, Promotion, and Marketing Communications. Boston: Pearson Education. Cook, G. 2000. The Discourse of Advertising. London: Routledge. Graebner, L. 2005. Measuring effectiveness of marketing is complex, vital task. Retrieved 6 24, 2011, from Biz journals: http://www.bizjournals.com/sanjose/stories/2005/04/04/focus2.html Wheelright, S., & Clark, K. (1992). Revolutionizing Product Development . New York: Pearson. Lodato, M. W. (2008). Management of New Product Launches and Other Marketing Projects. Boston: Pearson. Kotler, P., & Fernando, T. d. (2003). Lateral marketing: new techniques for finding breakthrough ideas. Boston : Pearson. Rice, J. (2006, March 16). Maslow and Marketing. Retrieved June 15, 2011, from Marketing interactions: http://marketinginteractions.typepad.com/marketing_interactions/2006/03/maslow_and_ mark.html Russell, D. (2010). Successful Marketing with Maslow. Retrieved June 15, 2011, from ABC articles directory: http://www.abcarticledirectory.com/Article/Successful-Marketing- with-Maslow/125442 US Census Bureau. (2009). Ohio. Retrieved 6 15, 2011, from American fact finder: http://factfinder.census.gov/servlet/ACSSAFFFacts?_event=Search&geo_id=&_geoCon text=&_street=&_county=&_cityTown=&_state=04000US39&_zip=&_lang=en&_sse=on &pctxt=fph&pgsl=010
26 Doole, I., and Lowe, R. (2001) International Marketing Strategy. 3rd Edition, Bedford Row, London, Thomson. Mead, R (1994), “International Management: Cross Cultural Dimensions”, Oxford: Blackwell Business, p. 7. Crawford, I.M 1997, ‘Marketing and Agribusiness texts’ , Agriculture and consumer protection, FAO press, Africa FAO Corporate Document Repository 1997, ‘Global agricultural marketing management’, Marketing and Agribusiness texts, Agriculture and consumer protection, Introduction to Global Marketing, 10 November 2011, < http://www.fao.org/docrep/W5973E/w5973e02.htm>. Charles. L, Joseph. H, Carl. M, 2008, 'Essentials of Marketing' - Page 37 Kalb. S, 1995, 'Nuts & Bolts of Marketing', 2nd Edition, Copyright K & A press. Stephen. H, 2003, 'Starting your own Business', Copyright Mc-Graw Hill

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Business Planning Assignment ZARA

  • 1.
  • 2.
    2 Contents Introduction:...................................................................................................................................5 Internationalization.......................................................................................................................6 Global Marketing forZARA.........................................................................................................6 Definition of Marketing:............................................................................................................8 Value: .........................................................................................................................................8 INNOVATION................................................................................................................................9 One need a lot of ideas from a lot of different places.....................................................9 Move rapidly from design to market. .................................................................................9 Innovate all aspects of the business ...............................................................................10 Prototype and model quickly ............................................................................................10 Get fast feedback ...............................................................................................................10 Flatten the structure ...........................................................................................................10 Strategic goals ............................................................................................................................10 Operational Plan:........................................................................................................................11 Financial Plan .............................................................................................................................12 Forecast Revenue stream.....................................................................................................12 MARKETING STRATEGIES ....................................................................................................14 MARKETING PROGRAM .........................................................................................................14 Marketing Objectives:...............................................................................................................14
  • 3.
    3 Short term:.............................................................................................................................14 Long term:...........................................................................................................................15 Strategy........................................................................................................................................15 Diversification......................................................................................................................15 PENETRATION STRATEGIES............................................................................................15 Product:................................................................................................................................16 Quality: .................................................................................................................................16 PRICING......................................................................................................................................16 PLACE..........................................................................................................................................16 PROMOTIONAL STRATEGY ..................................................................................................17 They aim to:.........................................................................................................................17 Loyalty Program .....................................................................................................................17 Objectives:...........................................................................................................................17 IMPLEMENTATION PLAN .......................................................................................................18 Supply chain and Logistic management.................................................................................19 Conclusion...................................................................................................................................21 Appendix......................................................................................................................................22 Reference List.............................................................................................................................25
  • 4.
  • 5.
    5 Introduction: This initial statementis a plan to disclose the intention of beginning a Zara Store in within a new market (Bhatia, 2000). Zara is an international retail company that deals in clothing and accessories. The company is based in Spain and was founded in 1975. Currently it has several stores in different parts of the world especially Europe and the Middle East where majority of its stores are located. Zara being a successful company within the area of clothing and accessories, it can easily develop a new product and make impressive sales in short time. There are number of brands and the company sales in its stores including the famous pull and bear, and Massimo Dutti (reference required). Each year, the company launches new designs of cloths to keep up with the trend in the fashion industry and to deliver the needs and wants of its customers. The designs are based on both local and worldwide fashion trends. Because the company has established a well known brand in the fashion industry worldwide, opening another store in any new market will not be a big issue for the company. It is for this reason that the company should open a new store in Melbourne Australia to expand its market. Currently, the customers within this particular target market are offered with a variety of attire to choose from, many local and international brands are already available in the market. Considering the fact that Melbourne is such a diverse place, it would be nice to give the dwellers a taste of indigenous fashion and clothing material from other parts of the world (reference required).
  • 6.
    6 Internationalization Businesses either smallor large are rapidly being globalized because of various reasons, extending a business internationally has now become very much desirable and feasible in today’s rapidly changing business environment (Mead, R (1994)). To make such thing happen successful technology has played a major part in it. Businesses at present need more than just well-made products and well designed services to succeed in the global market. In order to compete and succeed internationally there are number of factors to consider and look in to, most important decisions to make are market selection and complete understanding of the economic, cultural and political environment of these markets. Business managers, Owners, Stake holders and leaders who are associate with Zara needs to be well aware of the challenges they might face if they are willing to enter in to a completely new market, for this purpose top level managers needs to have complete skills of managing functional areas such as marketing and finance, promotions, interdependence of international markets, norms that are part of other cultures and other risks associated to it (Mead, R (1994)). Global Marketing for ZARA Terminologies or phrases like global village and world economy turn out to be popular. Marketing has become a complete subject and marketing has been developed into a systematic plan since the global business existence. Even by companies like Zara it requires proper planning and deep analysis of all the process that is going into operation (FAO 1997)
  • 7.
    7 To make abusiness globalize requires planning, together with careful consideration to global cultural and economical factors as well as likeness in products, price, marketing, promotion, and other internal and external factors. Markets like Melbourne which is culturally very much diversified, people of all backgrounds and cultures are present, the company needs to be very innovative and creative to meet the needs of such customers. There are some external and internal factors that play very crucial role in global marketing and can be a reason of success or downfall of an industry whether developing or established. At first place there is need to comprehend the aspects that could grow into internationalism and globalization (Crawford 1997). Here we are going to demonstrate different factors that are part of external and internal nature and have influence over marketing strategy when going global. There is a hell of difference between national and international business strategies and advertising and marketing plan. A very interesting example to better understand the factor that hinders the global marketing is the language difference, cultural norms and values. This is very common when a European company like Zara launches its project offshore to the Western areas (Crawford 1997). Industry at a Glance: The retail industry of Australia has seen several tough years, with overall cautious consumers spending, lower prices, higher rents and most importantly global financial crises, all playing important roles to driving revenue down by 0.7% (IBIS, 2012) This is where Zara can take advantage, as it’s a well known brand for around the world with exceptional supply chain in practice and selling products at comparatively cheap prices.
  • 8.
    8 Industry revenue isforecast to grow by 1.2% per annum to reach $12.9 billion in 2016- 17 (IBIS, 2012), which can be considered as a good positive sign for brands like Zara. Definition of Marketing: The procedure of building enduring interactions through planning, undertaking, and handling the comprehension, price, marketing, and promoting and consortium of ideas, products or services to create reasonable return that match specific and company demands and goals (Carter n.d.) Marketing has a particular environment that is comprises of various factors and has affect on the company’s assessment and verdicts. These factors are internal as well as external and require keen observation and consideration while making any policy to carry on a project. Internal (5M) External Money Micro Macro (Pestel) Management Customers Political Manpower Competitors Environmental Machinery Suppliers Socio-cultural Material (raw) Public Technological Ecological Legal Value: The value of the store will be based on its clients, associates and ideologies. The clients are the most important value for the Melbourne Zara store. It is the clients who will
  • 9.
    9 ensure that aculture of buying cloths and clothing materials from the store and all its future franchises is built (Graebner, 2005). This will be achieved by ensuring that the services offered by Zara must be of high quality. Zara Clothing Store is going to be a large retail store, which is designed to provide middle class income earners with fashion styled merchandise from Spain. The store will carry designer and quality clothes, which will give access and convenience to men to wear modern and fashionable clothes. Zara Clothing Store will be located in the Chadstone shopping centre, one of the most busiest malls in Melbourne Australia. The mission of the project is to provide customers with high quality and fashionable clothing and offering superior customer service throughout and always remembering each customer may be a source of referral business to the company. INNOVATION One need a lot of ideas from a lot of different places. The Zara design team based in Europe consists of 350 people and they are charged with generating and delivering 18,000 new product designs a year – in other words, 360 a week, which is by far the most design by any brand. Designers at Zara do get inspire from books, magazines and other sources but their main differentiation is that they take feedback from their customers and follow it, Our customers tell us what they like and don’t like. We attend shows and talks about fashion to get ideas. It is an ongoing process. Move rapidly from design to market. At Zara the initial idea origination to the store shelf takes less than four weeks; they move far faster than their other competitors in the local and international markets. They want to create waves and be ahead of the wave. In addition, they put their products into 5,500 stores from Brisbane to Lisbon at just about the same time. This is one of many areas where Zara is not only creative but at the same time meet the demands of customers in a completely different way.
  • 10.
    10 Innovate all aspectsof the business. Innovation at Zara does not apply only to products but even to the whole process. The company has used creative approaches to streamline and optimize manufacturing, supply chain management, data tracking, inventory management, store layout and staff operations worldwide. Prototype and model quickly. Designs and ideas are tested rapidly, before they introduced in the market, at Zara’s headquarters in Arteixo La Coruna, Spain there are mock shops and 25 full-size shop windows with differing displays and lighting. Get fast feedback. Store staff use wireless communications to relay information every day back to the firm’s Spanish headquarters about sales and inventories, from all around the world. Fast information about what is selling and what is not enables the group to respond to the public mood and to quickly supply more of the most popular designs to where they are needed. Even the customers feedback and suggestions are taken seriously and if needed appropriate actions are taken. But even the top selling fashions are discontinued after four weeks. Zara deliberately kills them in an act of creative destruction. Flatten the structure. Traditional fashion companies have hierarchical management structures with many big egos getting involved in every decision. On the other hand, company like Zara has a flat structure with designers empowered to make fast decisions. Strategic goals
  • 11.
    11  Creating ahighly innovative and unique products and services that will give Zara an edge from its competitors.  Providing good quality of products and services to all clienteles in order to create a customer base and brand the store.  Providing the perfect environment to all our associates in order to retain them and get the best skills out of them.  Controlling the cost of operation to ensure the organization meets its target profit margin. The elements of operation that will be emphasized in order to meet this goal include: accounts receivable and accounts payable, order taking, receiving, purchase, and storage.  The average target sales for this first fiscal year is $800,000; achieved by keeping the labor within small range of the total sales and which would translate to a higher gross margin Operational Plan: General operating hours and personnel Days Timings Monday 9:00 am – 5:30 pm Tuesday 9:00 am – 5:30 pm Wednesday 9:00 am – 5:30 pm Thursday 9:00 am – 9:00 pm Friday 9:00 am – 9:00 pm Saturday 9:00 am – 5:00 pm
  • 12.
    12 Sunday 10:00 am– 5:00 pm The starting work force will consist of Store manager, two assistant managers (one for each floor), Mentors (who will help assistant managers) sales personnel, supervisor, account officers, IT personnel and the top management. Selection for appointment of the each member of staff will follow through evaluation criteria in order to select the most qualified candidates (Wheelright & Clark, 1992). The lower rank employees will work in shifts in order to observe the requirements of the labor laws. Financial Plan Validation of Key Assumption: The financial forecast of the company will be modeled using CAPM (Capital Asset Price Modelling) which consist of the real operating cost in both Australia and its base market. The key variables have been validated through research and the experience gained by the founders in establishing the business so far around the world. ForecastRevenuestream The overall business package provided by Zara will be based on following streams: The following method will be used to set up promotion budget. Since Zara will be new in market; therefore, methods used must be innovative and going to use price skimming strategy. Therefore, this is how the budget has to be divided:
  • 13.
    13  Personal mediathat requires space over the internet and a website. It requires a negligible cost.  Non personal media requires most of the cost. The budget can be divided in following way:  50% of the money has to be invested on advertising and broadcasting expenses. The commercials can be of medium budget, where the company can show the difference between before and after effects of using our product or personal character execution strategy  25% of the expenses are for designing and publishing advertisements on Sunday newspapers and other magazines  5% will be used for Social Media, which has become a very powerful media nowadays  The rest of the amount will be spent on direct selling. The right people with the right set of skills will be hired according to the remaining budget This means that the major cost will be used on media and publications. The costs for the rest of the communication mediums are very minor. Advertising 80% Direct Selling 15% Sales Promotions 5%
  • 14.
    14 MARKETING STRATEGIES Some ofthe strategies that will be employed towards marketing include: direct marketing, advertising, promotion, and person to person marketing. A budget for implementing an effective marketing strategy within the first one year is $ 50,000. MARKETING PROGRAM Marketing Objectives: Before the details of a marketing plan can be developed, objectives for the plan must be stated (charles, 2008) The business function of marketing is important to Zara as it is a strategy in which is implemented in order to achieve the business goals and promote the product. Zara consider it as the heart of the success of their business mainly because of the reasons that it include the promotion, product and the price of the good and may also have control over operational areas such as finances and employees. Zara should work on different marketing objectives which can be categorized under short term objectives and long term objectives. Short term:  Attract more customers  More awareness of Zara products in the local Australian market  To be on the top  To deliver the right and positive image of the company  To be the first choice for its customers
  • 15.
    15 Long term:  Tobe the market leader  To open more and more branches all around Australia  To associate and partnership with other companies, only if possible  To offer more competitive and high quality products Strategy Diversification Zara is known for its great designs and products that they provide to their customers. Zara will include a variety of products in its store, like perfumes, handbags, and also will target people of all age. PENETRATION STRATEGIES Before entering any country a company like Zara should and must decide on its strategy on how to enter that particular country. According to Doole and Lowe (2001) company objectives and expectations, size and financial resources, existing foreign market involvement, skills, abilities and attitudes of management, the nature and power of the competition, the nature of the product or service itself and the timing of the move relative to competitors should be considered, as this will definitely play a key role in it. Since Zara is a well known brand in the world fashion industry, the company won’t have to work hard to penetrate in the market. Soon after their launch they will get a good response from the market and from the very first year company will start making its profit.
  • 16.
    16 The Marketing Mixis the combination of marketing strategies employed to achieve the goals of the Marketing Plan (Kalb, 1995) Product: Zara products takes into consideration all of these factors that all come together to increase the appeal of fashion products to its target market. Quality: The quality of Zara products are high that are constantly managed, the raw material used in the product are of good quality. PRICING Zara offers affordable prices for all its products which can easily be afford by all its customers as they all can easily be afforded. Besides the average income of people in Australia is normally high, as result majority of the people can afford to spend $40 to $300 on its products. Zara use the cost plus margin method of calculating the price of their products. This means calculating the total cost of production and adding a percentage (margin) for profit. This includes taking into account rent, wages and prices of supplies. PLACE Places plays a significant role in the marketing of any product or service either locally or internationally. Before opening any outlet it is very important that Zara should and must take into consideration the aspect of the location that they are willing to open in the near future. Some important aspect about location can be termed as: The visibility of the location, Is the location is easily accessible? Is it in some mall or main road?
  • 17.
    17 PROMOTIONAL STRATEGY Promotional strategiesare normally viewed as the way one communicates with their target market (Stephen, 2003) Zara will use a number of promotional strategies in order to inform non-existing customers about their new products, to keep the loyalty of their regular customers and to highlight how great affordable their products are. They aim to: - Build positive relationships in the community with other businesses. - Increase sales - Drive traffic into store - Tailor an offer to local community Loyalty Program Objectives:  Encourage and reward customer loyalty  To increase traffic in stores
  • 18.
    18 IMPLEMENTATION PLAN Media JanFeb Mar Apr May June July Aug Sept Oct Nov Dec Print Y Y Y Radio Y Y Y Y TV Y Y Y Y Outdoors Y Y Y Y Y Events Y Y Y Y Y Y Y Y PR -------------------------------------------------------------------------------------------------- Online -----------------------------------------------------------------------------------------------
  • 19.
    19 Supply chain andLogistic management In order to increase its capital base, the company needs to have an IPO after a specific period of operation. An IPO is an equity stocks issue that is offered when a company first initiates public trading of its shares. The valuation process for new private companies occurs in two phases. The first phase is the pricing evaluation. The objective of this phase is to determine the initial offering price for shares in the newly public company. The second phase is the market evaluation. The results of this phase reflect the actual worth of the new company based on the market’s response to the company’s IPO (Lodato, 2008). Supply chain is one of the key strengths at Zara, which must be managed well in order to avoid the bullwhip effect in the supply chain process which occurs as the demand order variability in the supply chain process is magnified as the company moves up the supply chain. This bullwhip effect could cause inefficiencies in the operation process which could create graver consequences to the company. However, this could easily be remedied once its cause/s is/are identified which includes any of the following: demand forecast updating, order batching, price fluctuation, or rationing and shortage gaming. The supply chain management process encounters different problems and issues in its operation. These issues cover the whole process from the strategic to the operational level. Among the issues in the supply chain management process include network planning, inventory control, supply contracts, distribution strategies, supply chain integration, strategic partnering, outsourcing, procurement strategies, and product design (Kotler & Fernando, 2003).
  • 20.
    20 Other issues concerningthe process include network planning, supply chain integration, strategic partnering, IT, Decision Support System, and training. Aside from the internal issues surrounding the SCM process, there are also issues connected to the different practices of SCM in different countries. For examples, the supply chain management practice in Asia is considered to be more fragmented and less competitive than its practice in United States and in Europe. Using value stream mapping, it will study on the challenges and problems encountered by SCM in a global context. This value stream uses all the necessary steps involved in the supply chain process with the use of two streams or flow. These streams are the flow of products and the flow of information. In that study, the three key elements in a supply chain (process, people, and technology) are highlighted. Aside from that, the concepts of logistics, inventory, and the customer’s needs must be given focus in the creation of their corporate goals and programs. The main challenge of supply chain management, is to keep up with the global demands of their customers, competitors, and vendors. They are essential forces now as they gain power to dictate and take control of the operation of a business in contrast to the trend before their suppliers have the ability to dictate the process of shipping and accepting orders. In terms of the demand and supply trends within the industry, Schwarz has listed some of the issues and challenges that companies face pertain to supply chain management. On the demand side, there are the issues of uneven growth, fragmentation, accelerated volatility, and the importance of aftermarket (reference required). These are the issues deal with the customers and the industry in general. This affects their ability and capacity to purchase materials and products. On the supply side, the challenges that
  • 21.
    21 they are facedwith differentiated outsourcing, low-cost country outsourcing, risk management, and transparency/accountability. These issues must be monitored well and solved so that firms would be able to avoid further problems and graver issues in the future. Conclusion Zara is an international retail company that deals in clothing and accessories. The company is based in Spain and was founded in 1975. Currently it has several stores in different parts of the world especially Europe and the Middle East where the bulk of its stores are located. Zara being a successful company within the area of clothing and accessories, it can easily develop a new product and make impressive sales in short time. There a number of brands and the company sales in its stores including the famous pull and bear, and Massimo Dutti. Each year, the company launches new designs of cloths to keep up with the trend in the fashion industry. The designs are based on both local and worldwide fashion trends. It is essential for the company to make accurate forecasts of the demand and supply figures in order to maximize the process. Thus, a company must regularly monitor the supply and demand for their products and make the most out of those products. An automobile company could not possibly manufacture products more than the demand in the market since this could cause some problems in warehousing. Thus, the logistical distribution process of a company must be closely monitored.
  • 22.
    22 Because the companyhas built itself a brand well known within the worldwide market, begin a store in a local market that it has not explored would be appropriate. It is for this reason that the company should open a store in New York to expand its production and sales. Currently, the customers within this particular target market are not offered a variety of attire to choose from. Considering the fact that New York is such a diverse place, it would be nice to give the dwellers a taste of indigenous fashion and clothing material from other parts of the world. The total amount of money that shall be needed to start the new store for its first year will be $ 300,000. This amount includes $200,000 for startup capital and $100,000 for operations reserves. In order to locate the target market, the store will be sited in upstate New York which is also close to one of the up market residential areas. This will ensure a 24/7 work flow during working days, weekends and holidays. To be more specific, the store will be located near a business mall in New York with a continuous streaming of shoppers and people in general (Clow and Baack, 2007). This is the clothing store of this kind in this location as most of the clothing stores in New York do sell exotic clothing (Cook, 2000). Appendix The role played by SCM in decreasing the inventories, gaining better services, diminishing costs with inventory turns. Thus, keeping a good SCM must be observed at all times by the firms (reference required). This is considered as one of the biggest advantages of SCM as short term objectives in terms of increasing the firm’s productivity and decreasing inventory and reducing the process’ lead time occur usually.
  • 23.
    23 Distribution management ortransportation management is a decisive part of international logistics and supply chain management. Based on the National Council of Physical Distribution Management (NCPDM), physical distribution is a broad range of activities which pertains to the efficient movement of the finished goods and products from the end of the production line to the consumer. These activities include freight transportation, warehousing, material handling, protective packaging, inventory control, plant and warehouse site selection, order processing, market forecasting, and customer service. Strategic distribution is a competitive advantage that accrues generally from the configuration of a distribution network (who, what, where, when) and, more specifically, from the selection of partners (i.e. middlemen) who intermediate between the company and the customer by performing necessary fulfilment and service activities. Distribution also plays a major role in marketing and selling products to the end customers. This is a major activity which affects the mode in which the consumers receive the products that are manufactured and produced by a firm. The medium in which products are delivered to the consumers are called distribution or marketing channels (reference required). This is a set of interdependent organizations which are involved in the process of making a product or service available for use or consumption by the consumer or business user. The marketing channels are important for a company for two reasons: (1) it affects every other marketing decisions, (2) it often involves long-term commitments to other firms involving business-to-business relations and are not as easy or as flexible to change as other marketing mix decisions (reference required).
  • 24.
    24 Logistics has beendefined in several ways. It may also pertain to different things and can be associated with different aspects such as the military, civil organizations, among others. This process includes the planning and control of material flows and related information in organizations, both public and in private sectors. In simpler terms, it pertains to the process of delivering the right materials at the right time in order to complete the production process. It is the supply chain process that plans, implements, and controls the flow of goods or can also pertain to the management of inventory, in rest or in motion. Among these definitions given to logistics, the most popular is the one which describes logistics as a process consisting of the seven R's: having the (1) right product, in the (2) right quantity and the (3) right condition, at the (4) right place, at the (5) right time, for the (6) right customer, at the (7) right price. The most formal definition given for logistics was provided by the Council of Logistics Management defining logistics as the process of planning, implementing, and controlling the efficient, cost-effective flow, and storage of raw materials, in- process inventory, finished goods, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.
  • 25.
    25 Reference List Bhatia, T.K. 2000. Advertising in Rural India: Language, Marketing Communication, and Consumerism. Tokyo: Tokyo Press Clow, K. E., & Baack, D. 2007. Integrated Advertising, Promotion, and Marketing Communications. Boston: Pearson Education. Cook, G. 2000. The Discourse of Advertising. London: Routledge. Graebner, L. 2005. Measuring effectiveness of marketing is complex, vital task. Retrieved 6 24, 2011, from Biz journals: http://www.bizjournals.com/sanjose/stories/2005/04/04/focus2.html Wheelright, S., & Clark, K. (1992). Revolutionizing Product Development . New York: Pearson. Lodato, M. W. (2008). Management of New Product Launches and Other Marketing Projects. Boston: Pearson. Kotler, P., & Fernando, T. d. (2003). Lateral marketing: new techniques for finding breakthrough ideas. Boston : Pearson. Rice, J. (2006, March 16). Maslow and Marketing. Retrieved June 15, 2011, from Marketing interactions: http://marketinginteractions.typepad.com/marketing_interactions/2006/03/maslow_and_ mark.html Russell, D. (2010). Successful Marketing with Maslow. Retrieved June 15, 2011, from ABC articles directory: http://www.abcarticledirectory.com/Article/Successful-Marketing- with-Maslow/125442 US Census Bureau. (2009). Ohio. Retrieved 6 15, 2011, from American fact finder: http://factfinder.census.gov/servlet/ACSSAFFFacts?_event=Search&geo_id=&_geoCon text=&_street=&_county=&_cityTown=&_state=04000US39&_zip=&_lang=en&_sse=on &pctxt=fph&pgsl=010
  • 26.
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