Within the scope of this research, we will analyze Zara’s marketing strategy and see what potential recommendations can be provided to the company to efficiently fulfill its marketing plan. Zara’s clothing chain store is considered one of the most successful global brands in the inexpensive clothing segments. Fast territorial expansion of Zara from Spain’s headquarters was possible due to efficiency of Zara’s marketing strategy, which was backed up by strong managerial capacities and ability to adapt to each new country where the company wanted to claim its presence. Zara is currently positioned as not expensive clothing for younger generation, for those, who cannot spend much money on fashionable clothing and yet want to have nice looking and comfortable outfit.
Efficient segmentation has a lot to do with Zara’s success. “Segmentation divides a heterogeneous marketplace into smaller and more manageable homogenous components.” (Chaston 2001) These smaller market segments can be targeted with more personally relevant positioning strategies that have greater appeal to individuals within the group, which Zara’s marketing directors were especially successful in. In theory, marketers can tailor a unique marketing mix to each segment that can be optimally effective in persuading consumers in the segment to choose their brand or increase brand usage. Thus, the potential benefits of efficient segmentation are substantial, particularly given the fragmented market that exists today, and Zara was able to adapt to turbulent current market conditions in promoting its brand globally.
(Tungate 2005)
Many segmentation approaches, however, are limited in their ability to provide actionable guidance to managers, because segments are ill defined or they exist more in the data than the reality of the marketplace. (Chaston 2001) In extreme cases, segmentation becomes an end unto itself rather than a marketing tool. Inappropriate customer classification can mislead managers into unnecessarily limiting their target market. A segment defined by both behavioral and demographic variables will exclude potential customers who might qualify on behavioral variables alone. Likewise, some segmentation schemes might include low-probability prospects in the same group as high-probability prospects. For example, segmentation based only on psychographic variables or personal characteristics might include both users and nonusers of a category. Further study of such segments, without identifying more refined subgroups, would tend to hide potentially critical differences, such as the barriers that keep people out of the category or the brand franchise. (Randall 2001)
The consumer needs of Zara’s customers in different markets vary greatly, but they have something in common at the same time. The average consumer would look for affordable and comfortable clothing for casual purposes that would not take too much out of his/her purse.
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The consumer profile has been analyzed by Zara’s specialists, and they have used this analysis in order to tailor marketing communication in different countries to reach the target audience. Zara’s marketing campaigns have been known for their simplicity and efficiency, as marketing directors were making best use of the budgets available. (Tungate 2005)
Meaning is the connection consumers make between two adjacent communications levels. (Randall 2001) Each connection or meaning arises from the concepts being linked and the context of their association. For example, when we observe in the context of purchasing financial services that “saves time and effort” is connected with “smart use of money,” we can say that “saves time and effort” is an aspect of financial service that means “smart use of money” for investors paying for professional help in managing their financial resources. (Kotler 2003) Zara’s marketing department has done a great job in creating ‘meanings’ for their products and communicating those meaning to target customer groups.
An important goal of communications is to create or strengthen these types of connections. (Kotler 2003) The connections between adjacent communications elements represent how consumers interpret product knowledge and information at each level of the means-end chain. Zara’s communications strategy guides the creative staff by indicating the connections or meanings that must be made or reinforced in the mind of the consumer. The creative task then becomes one of developing the appropriate visual and verbal cues and contextual setting that will cause the right connections to be made by the target audience.
The competitive advantages of Zara’s clothing are in the value of the product that the company is offering. They catch the customer segment that do not go for high end fashionable clothing but want to have reasonably price wear available at multiple locations. And that is exactly what Zara does with opening new stores both in the countries where it has traditionally been present and in the new international markets. The brand strategy perfectly fits into this concept, as Zara is positioned as reliable provider of comfortable and inexpensive clothing for the younger generation, clothing that is priced pretty much in the same manner in any European country, which is quite popular with the local customer segment, as young people travel a lot and appreciate that the product they get is priced equally in Spain, Germany, Netherlands, or any other European country.
If I was appointed marketing director of Zara, and had the opportunity to guide its international development and new market entry strategy, the following elements of marketing strategy would form cornerstones of my approach:
1) Concentrate on expansion and development of the retail chain in the countries that were hit harder than others during the financial crisis.
The underlying logic here is quite simple: during economic down turns, people tend to switch from more expensive clothing items to less expensive options, and that would be a good time for Zara to achieve greater market share in the new markets;
2) Come up with a new advertising image/symbol/figure that would become the main focus of the advertising campaigns launched in different countries. The campaigns and the utilized media should be quite unified, however, they should also reflect the specifics and local needs of each country where the campaign would be done.
3) Put more emphasis on Internet advertising. Since the primary segment on which Zara is focused is likely to spend a lot of time surfing the Internet, it would be efficient and relatively cheap way to cover significant part of the potential audience.
4) Put more attention to customer service and client retention. No matter how cheap the clothing is, service is the key to increasing sales and building brand loyalty.
As a result of planned marketing activities, I would want to achieve increases both in quantitative and qualitative measures of Zara’s performance and make the company’s shareholders more profitable. Also, I would want to use the additional profits obtained as a result of this plan to expand the chain into countries where Zara did not yet enter, and try to ‘bite off’ market share from local players by adapting the international strategy to local specifics and hiring efficient local managers that would know the specifics of the local market.