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ZARA: Smart App Development
The document details a comprehensive analysis of Zara's business model and consumer engagement strategies, including the company's history, market analysis, and competitive positioning. It highlights Zara's unique approach to capturing consumer preferences through quick fashion trends and limited inventory, alongside a proposed virtual closet app to address consumer pain points. The analysis emphasizes Zara's competitive advantages, such as high turnover rates and minimal traditional advertising, while targeting a broad demographic without strict age segmentation.
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ZARA: Smart App Development
- 1. Smart Application Development Sungkyunkwan University Spring2012 JuneHyo Ahn SunHo Lee Chris Lopez
- 2. Contents Background Overview SPA Brand Company Introduction Product Concept Business Analysis Trend & Environment Analysis 3C Analysis SWOT STP Market Analysis Consumer Needs & Wants Segmentation & Target Consumers’ Journey Consumers’ Pain Point New Service Concept
- 3. 1 Background Overview SPA Brand Specialty store retailer of Private label Apparel One Company manages all processes of design, producing, marketing, retailing Quickly understanding consumer’s lifestyle Short-term design improvement ZARA, MIXXO, SPAO, Uniqlo, H&M etc
- 4. 1 Background Overview SPA Brand SPABrand Factors MIS Manufacturing products Design Marketing
- 5. 1 Background Overview Company Introduction Historyof Zara 1963 : founded INDITEX 1975 : opened the 1st ZARA store in Spain 1988 : opened the 1st oversea ZARA store in Portugal 1989 : entered to the Americas in New York 1991 : entered to Asia market opening in Japan 2005 : opened ZARA store in Indonesia
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- 7. 2 Business Analysis Trend &Environment Analysis Consumption Increase rate 09 first 09 second 10 first 10 second Industrial Growth Rate Spain UK Japan Korea In spite of economic depression, SPA Industry has been growing
- 8. 2 Business Analysis Trend &Environment Analysis Company Sales Growth CAGR Shinsegae Int 5,832 32.8% 21.3% Louis Vuitton 4,273 14.8% 21.3% Gucci 2,731 -3.2% 14.3% Prada 1,757 46.9% 45.5% Ferragamo 821 16.6% 11.4% Zegna 330 7.1% 9.5% Dior 304 -4.1% 4.6% Burberry 1,850 16.5% 11.7% Uniqlo 2,260 84.3% 61.7% Zara 1,338 67.4% 57.4% H&M 375 <2010 Sales Analysis of Foreign Capital Companies>
- 9. 2 Business Analysis Trend &Environment Analysis SPA Brand Awareness Awareness SPA Brand Preference Preference
- 10. 2 Business Analysis 3C Analysis Company reasonableprice, products' fast rotation, high awareness of the brand - Method for reducing cost : direct distribution process, few of staff at the store - following the frequent trends change - fashion consciously change - no inventory by reducing exhibit in the store - plenty of stores all over the world with mid-low level of price Customer prefer high quality with low cost level cheap and chic design emotional & impulse buying more than rational purchasing importance of "word of mouth" consumption focused on the trend prefer polished place to shop
- 11. 2 Business Analysis 3C Analysis Competitors TheWorld’s first SPA Company Low & Middle price in U.S Combination QR with SPA Simple, Effectiveness, Durability Benchmarked GAP Low & Middle price in Korea SPA through Becoming lager from 2001 The first SPA in Korea from 2000
- 12. Business Analysis Priced higherthan SPA competitors Limited stock available Emerging highly competitive market Lack of traditional advertising Competitors online stores Limited transmission of virtual closet Threat Greater individualized advertising Lively communication (between consumers and firm) Convenience of one stop shopping (for entire family) Increased point of purchase stimuli Opportunity Strength Broadly defined market Highly responsive vertical organization Flexible supply chain organization Huge variety of styles Styles are closely linked to current trends High quality Weakness SWOT Analysis z 2
- 13. 2 Business Analysis STP Analysis Segmentation Segment1 Segment2 Segment3 AGE Mid-Teen~ Mid-Twenties Mid-Twenties ~ Mid-Thirties Mid-Thirties ~ Forties % 12.7% 23.1% 20.5% ▸Trendy, Impulsive Buying Interest ▸fashion-conscious ▸Utilitarian ▸Price & Design Style Preference Market Share Purchase Channel ▸Casual ▸Casual & Formal ▸Differentiation ▸ 19% ▸ 29.4% (Cheap Price) ▸Luxury Brand ▸Practicality & Quality ▸Formal (Price & Design) ▸Bonded mall & Online mall ▸ Department store & On/off line mall ▸ 30.6% ▸Department store & Outlet
- 14. 2 Business Analysis STP Analysis Targeting ▸Mid-Twenties ~ Mid-Thirties ▸Trendy, Impulsive Buying ▸Utilitarian ▸Price & Design Marketing Mix Segment 2 ▸Casual & Formal ▸Differentiation ▸ 29.4% (Price & Design) ▸Department store & On/off line mall
- 15. 2 Business Analysis STP Analysis Positioning Zaracreates Customer Value with Trendy Items, Reasonable Price Design Differentiation Reasonable Price Customer Value Fast Trend
- 16. 2 Business Analysis STP Analysis HighPrice TIME MINE Codez combine Casual DKNY SYSTEM ZARA Mango Leshop Soup, On&on Top shop Roem FOREVER21 Low Price Formal
- 17. 3 Market Analysis Customer Needs& Wants Rocha’s Clothing and Fashion Indicators Climate; moral conventions; health Age appearance, activities to execute, comfort; durability; price physical adequacy; welfare; balance; easeof-care; fashion; versatility beauty; elegance; body exposure; brand; detachment; sensuality attraction to particular clothes; color; personal style; taste; boldness Maslow’s Human Needs Physiological Safety Social Esteem Self Actualizing Flugel’s Motivation for Clothing Protection Modesty Decoration
- 18. 3 Market Analysis Segmentation &Target Zara does not define their market by strictly segmenting ages or lifestyles Allows them a strong competitive advantage over traditional retailers through a much broader market 0 – 40+ age range Five Clothing Brands Zara Woman, Zara Basic (for women), Zara TRF (for younger women), Zara Men and Zara Kids Product line 60% Women, 25% Men and 15% Kids Target Consumer Young, Price Conscious and highly sensitive to latest fashion trends Average shopper comes to the store 17 visits/year versus industry standard of 3 visits/year •Increased visits due to very high turnover of clothing offered •Zara offers 12,000 styles/year versus industry standard of 3,000/year
- 19. 3 Market Analysis Customer’s Journey Storelocation Always located in high traffic, iconic areas that impart a prestigious air to Zara •Unique external and internal architecture Lack of advertising Zara does not use traditional advertising •Only 0.3% of revenue •Window displays are the first thing to greet potential customers •Meticulously designed to be artistic and attention grabbing, while highlighting the newest designs In-store design Stores are designed to seem airy and light •Music is played at a muted volume High turnover of styles removes need for large storage spaces •Inventories are small, creating a high demand for limited pieces Highly trained staff
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- 21. 3 Market Analysis Customer’s Journey ZaraInterior Design Rome New York New Delhi
- 22. 3 Market Analysis Consumer PainPoint Limited runs of clothing Zara focuses on high turnover fashion with very limited inventories available •Consumers may not be able to purchase desired pieces Lack of advertising Zara uses physical stores and large window displays to showcase new designs •If consumers do not physically visit the store it is difficult to keep abreast of new styles Pricing While Zara is marketed as affordable designer fashion, some consumers may feel it compares unfavorable to more utilitarian fashion such as SPAO or Uniqlo
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- 24. 4 New Service Concept Stepsto Use 1. Download the App 2. Scan and list-up clothes 3. Search for near by store 4. Visit the store 5. Pop-up : shopping guide advertisement promotions 6. Scan codes : suggest matching items to the possession 7. Purchase 8. Individualized advertisements Customer feed-back 9. Use the App : auto coordination
- 25. 4 New Service Concept ConsumerDecision Making Process 2. 1. Need recognition I. II. III. IV. V. Information search 3. Evaluation of alternatives 4. Purchase decision 5. Postpurchase behavior Encouraging them to find ‘need recognition’ easily by sending individualized advertisement Helping them to find new arrival items / near by stores / auto matching to possession Compare to each items at the virtual store on the app Make them visit the store and purchase with either pop-up coupon when they get in or shopping guide book When they get back to home, they will receive information of related items / Also send any query or feed back to the firm
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- 28. 3 Market Analysis Consumer PainPoint Pain Point Solutions Limited runs of clothing Virtual closet app highlights upcoming styles •Informs consumer of sold out items and offers alternative suggestions Lack of advertising Virtual closet app offers individualized advertising at minimum cost to Zara Pricing Virtual closet app advertises sales, as well as showcasing designer level of clothing
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