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Macro Environment of Zara Essay

Zara is a very big clothing chain from Spain. The chain was founded in 1975 by Mr. Ortega, and it now has more than 1.000 stores in approximately 63 countries – so it is a very big chain. However Zara has its biggest market in Spain, where they have 364 stores in total. They sell fashion clothes of a fairly good quality to reasonable prices – this also means that they have a broad target group, which we believe to be from kids to adults younger than 50, both men and women. Over the years Zara has expanded their product line heavily, so now they also sell accessories, cosmetics, furniture and perfumes

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Zara is one of the most famous and popular high street brands in the world. It is a brand from Spain and it belongs to the Inditex group. Inditex group consist of seven different clothing chains of which Zara is considered as a fast fashion brand which aims at low inventory rule; just in time manufacturing; delivery and sales, flexible structure, low inventory rules and quick response policy.(Castellano, 1993). The first Zara store opened in 1975 in Spain.

On product manufacturing basis, Zara strategizes by manufacturing majority of their clothes in Spain and Portugal unlike many other top brands, which outsource them to Asian counties such as China and India. (Castellano, 2002) One of Zara’s key marketing highlight has been in in zero advertising strategy, it instead markets its product by investing their percentage of revenues in opening new stores.. Zara is known to meet the customer demands and they are flexible in adjusting to the changing demands quickly. They are also variable when it comes to product design; as it keeps changing once in four weeks. (The Economists, 2005)

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Executive Summary

The main goal of this report is to analyze the environment how Zara wil be marketed and launched in India. Analysis shows that the main problem of the product is to in terms of making the target market know the existence of the product in the country and the competition of the current clothing lines available in the market. In order to solve such complexities, the solution is to implement strategic marketing approach in terms of advertisement and promotion to make the target market become aware of the existence of the product in the marketplace. In addition, strategic market planning can also be attributed as a better solution to ensure that the product will be introduced effectively. The only problem that is unsolved is to find a company that will commit to the distribution of the product. With this, it is suggested that the organization must be able to use a more effective market planning and strategy which will enhance the market value of the product.

This paper examines the case of the Spanish clothing retailer Zara’s experience of and plans for further expansion into one of the fastest emerging markets in the world, India. It argues that given the unique distribution and production functions of the retailer that possible problems exist for continued expansion in the US market. The problems associated with this given the characteristics of local markets and pressures from rival operators’ means that a recommendation is made for an adjusted international strategy for the company despite its broad successes elsewhere globally.

Introduction

Globalisation has become an essential element of international marketing principles and it has been argued that one of the keys to success in global markets is the effective development and marketing of standardised products and brands (Douglas & Wind, 1987). Jay (2000) suggests that the development of

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Introduction

The introduction of new technologies and globalisation has permitted consumers to have vast access to fashion and as a result, consumers are getting more sophisticated and demanding and competition between companies became more intense as every company strive to outdo each other to meet consumer’s demands. Zara is one of the example companies that had successfully managed to penetrate the international fashion industry and carve its name in the fashion industry. Zara fashion chain was originally founded in the town of Arteixo in the year 1975 by Amancio Ortega. Zara had helped its parent company, the Spanish firm Inditex, to grow from anonymity and positioned itself as the world third’s biggest fashion retailer, overtaking the US-based Gap Inc and Swedish clothing company, H&M with excellent financial performance ahead of these two rival companies.

After its first store in A Coruna, Spain, proved to be a hit, this giant clothing company intend to seek for more chain stores to be opened abroad and eventually, started their first international expansion in the 1980 through Porto, Portugal. Since then, Zara chains have grown into retailing giants and until today, the company have almost 1000 stores worldwide. Being different and special from other apparel retailers, Zara is a vertically integrated retailer where it plays an important role in controlling the supply-chain, manufacturing, designing, and distribution of its products. According to Mazaira (2003), the company’s structure is consumer oriented and satisfactions of consumer are heavily emphasized. The achievement by Zara was described by Louis Vutton Fashion Director as “possibly the most innovative and distressing retailer in the world’. According to an extraction from an article, the company had also been described as a “Spanish success story” (CNN, 2001). 2.0 Zara’s Strategic Analysis


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