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Marketing Analysis: Zara Case Study

Zara’s Products

Zara offers a wide variety of products in the fashion industry. The company positions itself as a provider of affordable fashion. Affordable prices are achieved by controlling most of the steps in the supply chain, and hence significantly reducing the costs. Scale economies also play a considerable role in the maintenance of relatively low costs and prices. Nonetheless, the fashion industry is highly competitive, with new players emerging contently. Therefore, even though Zara is a large corporation with extensive international experience, it may be challenging to enter a new market. It may be necessary to consider a number of diverse factors and conduct a comprehensive market analysis. First, it may be beneficial to identify and assess the primary products manufactured and distributed by Zara.

As already mentioned, Zara is targeted at the mid-priced segment of fashion products provided for diverse socioeconomic and age groups. Even though Zara introduces relatively cheap fashion products, its brand image tends to compete with luxury brands (Wang, 2018). Hence Zara’s primary strategy is to provide luxurious products at low prices. The price policy tries to stay in the middle between cheap mass-market brands and widely recognized expensive fashion companies. The ideal Zara customer is a fashion-conscious person who knows the trends and tends to hunt them. Although Zara provides a broad range of products suitable for all ages, it may primarily target young adults between 20 and 40 years. Zara is a very fast fashion company, which means it provides affordable clothing for people who follow the current trends in culture and fashion. The affordability of its products, in conjunction with the ability to keep up with the trends, represents Zara’s competitive advantages.

Indian Market and Buying Behaviors

India is a large country with one of the biggest populations in the world. Hence, it is home to a wide variety of cultural diversities, climate circumstances, languages, and traditions. Such diversity of factors provides numerous opportunities and challenges for new market players. It may be necessary to conduct time-consuming marketing research in order to evaluate the market and the buying behaviors comprehensively (Jiang, 2020). However, there are major trends typical for most Indian areas, which may serve as a basis for further marketing research.

Indian buying behaviors are closely linked with saving money and preferring reasonably priced products to luxury. However, according to some sources, disposable income is increasing, and hence people are able to spend more on fashion in particular (Datta, 2021). Consumer spending is expected to be maintained by the middle class, which may represent the targeted segment for Zara. Moreover, the rise of credit accessibility drives considerable changes in the market’s buying behaviors. Household debt is relatively low in India yet is constantly increasing, providing new buying opportunities for the Indian population. The majority of younger generations are still aimed at traditional values. However, new goals and principles emerge, with more frequent considerations regarding fashion. Money is a significant buying factor that influences consumer behavior maintaining the tendency to seek reasonable prices even in the luxury segment. The above-mentioned aspects of buying behavior may indicate the existence of favorable market conditions for Zara.

Another significant consumer behavior trend is the proliferation of e-commerce and related services. Indian people currently rely on small traditional stores, which represent approximately 90% of the retail market. Nonetheless, even though such stores offer an individual approach, bargaining is a big issue. Emerging digital technologies introduce more reliable payment methods and may gain the trust of consumers. Such reliable mass-market options as Zara may meet the emerging demand for reliable e-commerce options.

Significant Factors

According to the above-mentioned buying behaviors and market tendencies, there is a number of essential factors that should be taken into consideration by Zara in order to successfully enter the Indian fashion market. One of the most significant factors is the increase of e-commerce and particularly the growth of demand for online fashion (Khan & Syed, 2018). Even though the post-COVID world may shift towards the decrease in online shopping, it is still one of the most perspective areas during the current pandemic. Another factor is closely linked to consumer behavior features, as it may offer significant opportunities for such fashion corporations as Zara. Although it may be challenging to compete with local traditional stores at first, the rapidly changing buying behaviors may shift towards more reliable mass-market offers. The significance of tradition and culture tends to decrease, allowing new modern tendencies to emerge. It may be beneficial to initially focus on younger generations, which are most exposed to current fashion trends. Economic expansion and the establishment of a growing middle class create the enabling environment for the development of the fashion industry. People are more and more concerned about relevant trends shifting towards the image of an ideal consumer of Zara’s products.

Macro Environment Aspects

PESTEL Factors

The Indian market reflects the demand of one of the largest populations in the world. Various aspects may differ dramatically depending on the area and the targeted demographic group. Moreover, political and economic factors may change rapidly as the Indian market undergoes significant changes related to globalization processes. It may be necessary to assess as many factors as possible in order to analyze such a large market adequately.

Unfortunately, India may be politically unstable as the political environment depends on the government’s policies and politicians’ interests. Such a large country implies the existence of opposing political parties, which increases political tension and provides an explosive potential for rapid changes. Although the political environment may represent a number of potential risks, its current state is relatively stable. There is a well-developed taxation system regulated by the Union Government. Moreover, foreign trade policies are fairly flexible and may suit a wide variety of transnational corporations.

Legal frameworks may be represented by the foreign direct investment policy. The policy regulates the entry process conducted by foreign companies and introduces a number of strict restrictions for certain sectors. However, these sectors are usually linked with non-banking financial organizations, insurance, or the real estate industry. Therefore, they do not affect the fashion industry and may not impact Zara. Indian employment laws are not too stringent and, in most cases, are straightforward, yet distinct states may have minor legislative differences, which should be considered by foreign companies. There are also strict anti-trust regulations that prohibit combinations and anti-competitive agreements. In addition, India faces a number of environmental problems, and hence there are entities which regulate waste control and disposal. Recycling is another significant issue that is controlled and promoted by the authorities. Overall, Indian legislation follows the same principles as the rest of the world.

Demographic and Social Factors

Indian population is young as the recent birth explosions shifted the median age to lower numbers. According to some sources, the median age in India is approximately 26 years (Kaur, 2020). Such demographic changes may be beneficial in terms of Zara. As mentioned before, even though Zara’s products are targeted at various social and age groups, its primary focus is aimed at young people. New generations tend to be more fashion-conscious and hence represent the majority of Zara’s audience. Moreover, Indian society tends to stray from traditions, which influence buying behaviors. Globalization has a considerable influence on Indian culture, which tends to adopt western life values and principles (Roy et al., 2016). Consequently, more and more people want to buy high-quality, fashionable clothing, yet the majority of citizens are not ready to spend large amounts of money. Zara’s fundamental principle of balancing between being luxurious and reasonably priced may be particularly effective in terms of the Indian market.

Economic Changes

The introduction of the industrial reform policies positively influenced the Indian economy. During the last three decades, India has shown significant economic growth and stability. However, the current pandemic delivered a considerable blow to the global economy in general and to the Indian economy particularly. Even though COVID-related restrictions significantly prevented international business relationships and had a negative impact on domestic organizations, they forced corporations and people to overview their perception of the digital economy. Such digital changes led to increased credit availability and higher demand for reliable online shopping. Furthermore, the challenges caused by the pandemic provoked a number of government initiatives, which are designed to improve the investment climate. Despite the fact that COVID had a negative impact on the economy, it may be fair to say that it is now recovering. Citizen income grows, and the market volume increases, providing numerous opportunities for foreign organizations which offer high-quality products.

Technological Influence

Indian market is not yet digitalized as, in most cases, consumers rely on traditional stores and small businesses. Nonetheless, such an approach leads to high prices and low reliability. It may be necessary to know the seller personally in order to get a reasonable price. With the introduction of E-commerce, the buying paradigm began to transform. Even though most of the market is still held by small local stores, the e-commerce market is growing rapidly. Some sources estimate an increase in the e-commerce market by $200 billion annually (Agarwal, 2020). Moreover, the recent pandemic forced the development and distribution of e-commerce, attracting more customers to online shopping than ever.

Another significant technological aspect is the growth of accessibility to digital devices such as smartphones. Smartphone shipments reached approximately 150 million in India, allowing a large number of people to use digital services and particularly e-commerce (Jindal et al., 2019). Big companies, including Amazon, were able to enter the Indian market and maintain their positions successfully. Zara may serve as an example of a highly digitalized corporation. Even though it offers both online and “offline” shopping, it significantly relies on orders placed through the website. Hence, the increase in digital literacy and accessibility to technology may serve as favorable circumstances for Zara. However, it may be critical to acknowledge the specifics of the Indian market and focus on customer experiences in physical stores during the first years of market entry.

Product Differentiation

Strategies Analysis

The fashion industry is highly competitive, and the trends may change rapidly. In most cases, fashion products are already diversified to their limits. Fashion companies try to surprise customers with new unique products, yet it may not always be possible. Fashion trends tend to repeat themselves once in a few years due to the impossibility of diversifying the form factor of such products any further. The principles of planned obsolescence may cause the issue. Fashion companies try to push the trends forward constantly in order to force people who are following these trends to buy new products.

However, even though it may not be possible to differentiate the product itself noticeably, it may be beneficial to introduce a unique approach to fashion in general. Zara’s product differentiation principles focus on a unique pricing policy and quality control. Zara provides luxurious experiences for fashion lovers at an affordable price. The “Fast Fashion” supply chain model allows Zara to keep up with trends and produce high-quality products while staying in the mass-market segment. In addition, the whole supply chain is in Zara’s control, and hence Zara has the ability to quickly adapt to fashion trends and deliver new products in less than two weeks. At the same time, the economy of scale and use of international suppliers allows Zara to introduce low prices without significant losses in quality.

Differentiation Suggestions

Zara is an economic giant that considers a large number of distinct strategies daily. As the corporation is huge, the cost of a mistake may be enormous. Therefore, a thorough analysis may be required in order to introduce product differentiation strategies with reasonable risks and potential benefits. Nevertheless, there are some suggestions which may serve as a basis for further marketing research and analysis.

Current differentiation strategies implemented by Zara may serve as a prime example of broad strategies. It may be beneficial to develop focused differentiation strategies to divide the market into segments and provide specific, most relevant products (Aisyah, 2020). As Zara is a transnational company, it needs to take a number of cultural aspects into consideration. Taking these considerations further and providing unique product lines depending on the targeted region may become an effective differentiation strategy. Diverse areas represent distinct cultural and traditional aspects, which may correlate with fashion. Providing high-quality tradition-related clothing may become a considerable competitive advantage.

Marketing Communication Mix

A marketing communication mix is a set of concrete methods and techniques utilized by the company in order to communicate with its audience. As mentioned before, the fashion industry is one of the most competitive industries, with a number of well-established market players and numerous small businesses emerging. Hence, introducing effective customer communication via relevant means of communication may be vitally important in terms of staying competitive. Furthermore, marketing communication mix priorities may differ dramatically depending on the features of a particular market and targeted audience. For example, younger generations tend to use digital devices more frequently. Consequently, internet marketing may be applied to the target consumers of Zara more effectively. By contrast, people in rural areas often rely on small shops, and hence personal selling may be implemented in such markets. It may be critical to conduct a comprehensive market analysis in order to develop an efficient marketing communication mix.

Advertising

Advertising may be viewed as a fundamental element of the modern marketing communication mix. Even though it may be beneficial to adjust the elements in accordance with the features of the targeted market, it may be reliable to implement advertising regardless of the market environment. Advertising is a comprehensive communication method which fulfills several essential functions. It is usually conducted with the help of a declared communicator through a wide variety of communication platforms (Lamb et al., 2019). Advertising may introduce the product image and, more importantly, make the brand more recognizable. Even though Zara’s strategy is to reduce advertising costs as much as possible, it may be necessary to utilize advertising in new markets. Zara provides high-quality products and hence has high customer loyalty. However, it is vital to attract the customer to make the initial purchase.

Zara may utilize advertising as a preliminary element of the marketing communication mix. It is necessary to introduce the brand and obtain the initial base of buyers. Afterward, it may be possible to reduce advertising costs and focus on other communication elements. There are numerous types of media that may be used as advertisement platforms. Nevertheless, some types of media may not be suitable for Zara, and some may not be effective in India. Therefore, it is critical to utilize the most appropriate communication channels, such as prints. Such electronic types of media as TV channels, Radio, and even the internet may be used with high efficiency. Zara is primarily targeted at younger generations, which represent the majority of Indian internet users. Shop panels, bus and train panels, display units, and malls may also serve as effective spots for advertisement placement.

Sales Promotion

Sales promotion is another broadly utilized strategy that is designed to increase revenue. There is a wide variety of techniques that may contribute to the achievement of sales promotion goals. It may be particularly effective in terms of the Indian market due to specific buying behaviors. As already mentioned, Indian people tend to save money and search for the most attractive deals. Hence, sales promotions, which provide discounts or free items, may be highly effective. These techniques are introduced in order to sell a higher quantity of products than usual (Juska, 2017). Some long-term methods may include declaring sale targets for the staff to improve service and increase revenue.

Additional quantity for the same price may represent one of the most effective sales promotion strategies in terms of India. Decreasing the price may be equally effective. Indian people tend to bargain in the local markets; consequently, such promotions may serve as a regulated alternative to bargaining. Introducing special offers and various gifts may be highly beneficial. Such an approach may not only increase buying rates of loyal customers but also attract new people. Gift coupons were also proven to be highly effective in India. Introducing unique gifts for loyal customers should also be considered.

Personal Selling

As mentioned before, personal selling is a common technique in India. Most people shop in local traditional stores with familiar sellers and products. Individual approach and reliability are the key elements that make up the competitive advantage. Although there is a number of personal selling techniques, most of them are not suitable for such large corporations as Zara. For example, door-to-door selling may be highly effective in India, yet it may not be implemented by Zara due to brand policies and legal issues. Street vending or the use of roadside stalls is not suitable for Zara either. However, there are some personal selling techniques that are broadly implemented by transnational corporations and should be utilized by Zara.

One of the most common and the most effective personal selling techniques is shop counter sales. The methods imply that it may be necessary to provide as much information as possible regarding the available products in order to increase the probability of a purchase. In many cases, customers may not conduct a purchase due to insufficient information regarding existing products. Hence it may be beneficial to arrange the products and the shop space in specific ways which attract passing customers to enter the shop. Moreover, putting as many products on display as possible is also critical. Sales assistants play a considerable role in the implementation of personal selling. The staff should receive sufficient training in order to be able to provide the customer with the necessary product-related information and increase the probability of a purchase. Individual approach is highly appreciated by Indian consumers and requires thorough consideration.

Internet Marketing

With the development of technology, the internet is becoming familiar to most consumers worldwide. It may be particularly relevant in terms of Indian populations. Various studies have shown that the accessibility to digital devices is increasing rapidly in India (Khan & Syed, 2018). Therefore internet marketing or E-commerce is becoming one of the most promising directions in India. E-commerce may utilize a wide variety of techniques and methods conducted via digital devices. It may focus on placing advertisements on the internet and using social media in order to increase brand recognition. Internet marketing also implies the use of digital technologies in order to maintain core activities and improve shopping experiences (Krizanova et al., 2019). Zara is primarily targeted at young people who tend to be the major users of digital technologies. The use of internet marketing may become a critical competitive advantage for Zara. It is also highly effective due to the pandemic restrictions. Even though the post-COVID world may rely on digital technologies less, the current pandemic introduced a new global paradigm, which made business activity and internet marketing inseparable.

Event Marketing

Event marketing or sponsorship marketing is an essential part of modern advertising strategies and brand development techniques. India has a rich culture and age-old traditions, which are closely linked with various festivals and celebrations. The main events are Independence day, Republic Day, and Gandhi Jayanti. These national celebrations play a significant role in the lives of all Indian citizens, and hence Zara’s participation in these events may be highly beneficial. Organizing distinct celebration-related events may considerably contribute to the increase of brand recognition. Moreover, people may associate Zara’s products with these bright events, which in return may improve the general attitude to the brand. However, there are also some potential challenges that require consideration. These celebrations are closely linked with important traditions and cultural aspects, which may be sacred to the majority of people. Therefore, wrongful interpretation of cultural values or inappropriate approaches to event management may cause public outcries. It may be vital to hire specialists with broad knowledge of local culture in order to implement event marketing successfully. Another less risky method is to sponsor various sports, arts, individuals, and activities. Such actions may make the brand more recognizable and improve its image in the minds of consumers.

Reference List

Agarwal, K., 2020. A Study on Investor Buying Behavior and Financial Literacy in Urban India.

Aisyah, R.A., 2020. The effect of differentiation strategy on competitive advantage. Advances in Business, Management and Entrepreneurship, pp.56–59.

Datta, K.L., 2021. Growth and Development Planning in India.

Jiang, S., 2020. A Comparative Analysis of Chinese and British Consumers’ Consumption Behaviours and Attitudes Toward Fast-Fashion Brand as Zara and H&M. Asian Journal of Social Science Studies, 5(2), p.17.

Jindal, N., Thakur, K. & Sharma, T., 2019. Digital India, Challenges, Solutions and its Impact on Society. International Journal of Environment, Ecology, Family and Urban Studies, 9(2), pp.83–90.

Juska, J.M., 2017. Sales Promotion Strategies. Integrated Marketing Communication, pp.161–183.

Kaur, R., 2020. Gender and Demography in Asia (India and China). Oxford Research Encyclopedia of Asian History.

Khan, A. & Syed, A.A., 2018. Determinants of online consumer behavior towards e-tailing in India. International Journal of Enterprise Network Management, 9(3/4), p.455.

Krizanova, A. et al., 2019. The Effectiveness of Marketing Communication and Importance of Its Evaluation in an Online Environment. Sustainability, 11(24), p.7016.

Lamb, C.W. et al., 2019. Marketing, Cape Town, South Africa: Oxford University Press Southern Africa (Pty) Limited.

Roy, S., Sethuraman, R. & Saran, R., 2016. The effect of demographic and personality characteristics on fashion shopping proneness. International Journal of Retail & Distribution Management, 44(4), pp.426–447.

Wang, Y., An Exploratory Study of Brand Strategy in Fast Fashion Brand – Using Zara as an Example. Proceedings of the 3rd International Conference on Contemporary Education, Social Sciences and Humanities (ICCESSH 2018).

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