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The role of market orientation on company performance through the

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DOI: 10.1108/02634500310480103

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 Marketing Intelligence & Planning
The role of market orientation on company performance through the development of sustainable
competitive advantage: the Inditex-Zara case
Andrés Mazaira E. González Ruth Avendaño
Article information:
To cite this document:
Andrés Mazaira E. González Ruth Avendaño, (2003),"The role of market orientation on company performance through the
development of sustainable competitive advantage: the Inditex-Zara case", Marketing Intelligence & Planning, Vol. 21 Iss 4
pp. 220 - 229
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 The role of market orientation on company
performance through the development of sustainable
competitive advantage: the Inditex-Zara case
Keywords
Market orientation,
Competitive advantage,
Clothing industry,
Downloaded by UNIVERSIDADE DE VIGO At 01:17 10 November 2016 (PT)
Organizational culture
Abstract
This paper has been developed as
a part of research seeking to verify
the effects of organisational
culture in general, and market
orientation in particular, on the
behaviour and results of
managerial organisations. The
difference with other existing
work on the same subject is that
this work uses the case method to
bring managerial reality into closer
contact with the university
environment. This report contains
the first of the case studies
carried out in the context of this
research, and examines Zara, a
strategic unit in the Inditex group,
which is shown to be a
paradigmatic example of the
development of market orientation
in a company, as a basis for the
company's performance and
competitive advantages.
Marketing Intelligence &
Planning
21/4 [2003] 220-229
# MCB UP Limited
[ISSN 0263-4503]
[DOI 10.1108/02634500310480103]
[ 220 ]
AndreÂs Mazaira
University of Vigo, Oureuse, Spain
E. GonzaÂlez
University of Vigo, Oureuse, Spain
Ruth Avendan Äo
University of Vigo, Oureuse, Spain
A study of business realities is crucial to
bridge the distance between university
studies and the business world and enable the
student to realise that the subjects under
discussion are not abstract, ideal concepts,
but a reflection of reality (Munuera and
RodrõÂguez, 2000, p. 15).
This case study is a reflection of this
intention to bring the two worlds closer
together, and uses the case method as an
approach to the business world.
Although this method is more often used in
teaching than in research, we agree with
literature (Hartley, 1994; Yin, 1994; Bonache,
1999; PeÂrez, 1999; Gummesson, 2000) on its
validity as a research strategy, especially for
the study of organisational culture and its
effects.
The aim of this paper is to apply the case
method to a study of market orientation as a
characteristic culture in managerial
organisations, and the effects of its
implementation on the company's behaviour
and results.
The present paper discusses the influence
of market orientation on managerial
organisations through analysis of the Inditex
group, with emphasis on Zara. Company-
specific literature has been used, including
other case studies on the group, interviews,
press and Internet articles, and reports by
financial analysts[1]. Specific questionnaires
were sent out to members of different
departments of the store chains which
compose the group, and in-depth interviews
were carried out with Mr Fernando
Aguiar[2], a company executive and
university lecturer.
1. The Inditex group and the
clothing sector
Founded 38 years ago, the Inditex group is
now part of a select group of companies
The Emerald Research Register for this journal is available at
http://www.emeraldinsight.com/researchregister
worldwide whose success and personality
have achieved an outstanding position in the
media and in scientific debate in
academia[3].
When the company was launched on the
stock exchange, it published a complete
company information brochure[4] which
defines the main activity of Inditex (the
acronym for Industria de DisenÄo Textil, SA)
and its subsidiaries as the design,
manufacture, distribution and sale of clothes,
footwear and accessories for men, women
and children, including cosmetics and
leather goods. Additionally, some of the
companies in the group carry out different
activities; for instance, construction
activities or estate agency, as a complement
to the Inditex group's main activity. Table I
shows the companies (Spanish and other)
making up the Inditex group.
Inditex is an international fashion
manufacture and distribution group (see
Table II) with five store chains, Zara, Pull &
Bear, Massimo Dutti, Bershka and
Stradivarius. These are managed as separate
strategic business units. On 31 January 2001,
the Inditex group owned 1,080 stores (1,093
including joint ventures), in 33 countries. Of
these 908 (84 per cent of the total number of
stores) are owned by the company, and 172
(16 per cent) were franchised stores.
Turnover in the year 2000 was slightly over
435,000 million pesetas. Profits were over
43,000 million pesetas. Tables II and III show
information on each of the chains.
The world fashion market has changed
considerably over the past few decades.
Fashion products, which used to be an elite
consumption product, are now a mass
consumption market ± embodying what has
been called ``the democratisation process of
fashion''. Fashion products are now bought
by all segments of society, helped by lower
average prices, which have brought about a
The current issue and full text archive of this journal is available at
http://www.emeraldinsight.com/0263-4503.htm
 AndreÂs Mazaira, E. GonzaÂlez
and Ruth Avendan Äo
The role of market orientation
on company performance
through the development of
sustainable competitive
advantage: the Inditex-Zara
case
Marketing Intelligence &
Planning
21/4 [2003] 220-229
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broadening of the target by including a
growing number of consumers in the market.
Consumer tastes over the past few years
have been veering away towards extremes.
Stores offering latest fashions and stores
offering lower priced clothing have taken
market share from general fashion outlets,
such as department stores, which were the
main players up to the mid-1990s.
Today's clothing and accessories industry
is highly competitive, and increased
competitiveness is to be expected over the
next few years. One-brand store chains in
particular have a tendency to competition for
the same customer profile. They must also
compete with local, national and
alone. Stores also compete for the best store
locations and good terms for rent or
purchase. New competitors are also a
constant threat in a sector with very few
entry barriers.
The following trends may be identified as
determinant factors for the sector's future
development:
. De-localisation of textile and clothing
manufacture in Europe and
North America.
. A strong increase in competitive pressure.
. Company growth strategy and forward-
looking integration for clothing
manufacturers.
. Development of distribution chains.

international department stores, individual . Increased market participation for

shops or boutiques, markets, and companies ``killers''.
operating sales by catalogue or on the . Growing internationalisation.
Internet. Competition does not affect sales . A strong commitment to flexibility.

Table I
Companies (Spanish and other nationalities) in the Inditex group, 31 January 2001
Spanish Other nationalities
Raw materials and Comditel, Samlor, Trisko, Nikole, Choolet, Sircio, Zintura,
manufacture Fioos, Hampton, Tempe, Denllo, Stear, Glencare, Yeroli
Logistics Zara LogõÂstica, Massimo dutti LogõÂstica, Pull & Bear
LogõÂstica, Bershka LogõÂstica
Sales Zara EspanÄa, Kiddy's Class EspanÄa, Bretto's BRT EspanÄa, Zara USA, Zara Argentina, Zara Venezuela, Zara UK, Zara
Grupo Massimodutti, Pull & Bear EspanÄa, Bershka BSK Deutschland, Zara Canada, Zara Norge, Zara Danmark, Zara
EspanÄa, Stradivarius EspanÄa, Oysho EspanÄa Sverige, Zara Belgique, Zara Asia, Zara OÈsterreich Clothing,
Zara Hellas, Zara Japan, Zara Luxembourg, Zara Nederland,
Zara Fance, Zara Chile, Zara Mexico, Zara Uruguay, Zara
Portugal, Zara Brasil, Zara Suisse, Za Giyim Ithalat Ihracat
Ve Ticaret, Kiddy's Class Portugal, Massimo Duti
Deutschland, Massimo Dutti Hellas, Pull & Bear Portugal,
Pull & Bear Hellas, Bershka Portugal, Bershka Mexico,
Bershka BSK Venezuela, Bershka Hellas, Stradivarius Hellas,
Stradivarius Portugal
Complementary Goainvest, Inditex, Zara SA (EspnÄola), Inditex CogeneracioÂn Zara SA (Argentina), Zara Holding, Zara Merken, Zara
activities and Aie, Lefties EspanÄa Vastgoed, Zara Financien, Zara Vastgoed Hellas, Zara
inactive companies Mexico, Vastgoed France, Zara Italia, Zara Nipon, Zara
France InmobilieÁre, Zara Vastgoed Ferreol, Vastgoed,
General Leclerc, Vastgoed Nancy, Zalapa, Vastgoed Asia,
Invercarpo, Robustae SGPS, Massimo Dutti Holding, Zara
Italia, Jose Maria Arrojo Aldegunde, Motorgal

Table II
International presence of Inditex stores
Own stores Franchises Joint ventures Stores in Spain Total stores Countries
Zara 410 27 12 220 449 29
Pull & Bear 199 30 ± 165 229 11
Massimo Dutti 119 78 1 137 198 13
Bershka 102 2 ± 83 104 4
Stradivarius 65 35 ± 87 13 7
Inditex group 908 172 13 692 1,093 33
Source: Inditex (2001)

[ 221 ]
 AndreÂs Mazaira, E. GonzaÂlez Table III
and Ruth Avendan Äo Target audience, positioning and weight of Inditex stores
The role of market orientation
on company performance Target audience age Positioning Per cent sales
through the development of
sustainable competitive Zara Women (58%) ± Men (22%) Quality: medium-high 78.2
advantage: the Inditex-Zara
case ± Children (20%) Price: medium-low
Marketing Intelligence &
Age 0-45/50 Several product lines
Planning Pull & Bear Women ± Men Quality: medium-high 6.6
21/4 [2003] 220-229
Age 14-28 Price: medium-low
Sports, leisure, fresh air
Massimo Dutti Women (50.8%) ± Men (49.2%) Quality: medium-high 7.0
Age 24-45 Formal-informal designer wear
Bershka Women Quality: medium 5.2
Age 13-23 Price: medium-low
Latest trends ± informal wear
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Stradivarius Women Quality: medium 2.8

Age 15-27 Price: medium-low
Latest trends
Constant rotation
Source: Research team, Inditex Information

. Low fidelity levels. ``One-brand
wardrobes'' no longer exist, and
companies seek to increase their share in
customer wardrobes.
Table IV shows details of some of Inditex's
main competitors.
2. From marketing orientation to
market orientation
The market-orientation construct originated
in marketing orientation, which was
developed in the 1950s on the basis of the
assumption that:
. . . creating a satisfied customer is the only
valid definition of a business purpose
(Drucker, 1954).
Market orientation has been one of the most
attractive research topics in marketing and
management research during the past
decade. It focuses on superior skills in
creating customer satisfaction with positive
impact on company profitability. Market
orientation is inter-functional, and requires
co-ordinated behaviour across the
organisation ± hence the expression ``market
orientation'' instead of ``marketing
orientation''.
Three main approaches have been used to
define market orientation:
1 Cultural approach. This perspective
considers market orientation to be a
characteristic organisational culture[5].
Narver and Slater (1990) argue it is
``organisational culture that effectively

Table IV
Zara's competitors
Source Year Sales (millions pesetas) No. of stores No. of countries
Companies which distribute fashion and other products
El Corte IngleÂs 1 1999 1,630.000 474 1
Carrefour 2 2000 6,256.114 1,898 21
Fashion companies
Gap 2 2000 2,152.475 3,676 5
C&A 2 1999 831.930 444 10
HM 2 2000 663.706 682 14
Inditex 3 2000 435.049 1,093 33
Benetton 2 1999 329.444 7,000 120
Cortefiel 3 2000 112.237 567 8
Mango 1 2000 128.949 511 49
Adolfo DomõÂnguez 3 2000 16.155 186 11
Source: Inditex
Notes: (1) Analysts' estimation, (2) corporate Web page, (3) company accounts

[ 222 ]
 AndreÂs Mazaira, E. GonzaÂlez
and Ruth Avendan Äo
The role of market orientation
on company performance
through the development of
sustainable competitive
advantage: the Inditex-Zara
case
Marketing Intelligence &
Planning
21/4 [2003] 220-229
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and efficiently creates behaviours'' in the
organisation for creation of superior
customer value (Narver and Slater, 1990).
Market orientation is: ``the culture that (1)
places the highest priority on the
profitable creation and maintenance of
superior customer value while
considering the interests of other
stakeholders; and (2) provides norms for
behavior regarding the organisational
development and responsiveness to
market information'' (Slater and Narver,
1995, p. 67). Market orientation's key
feature is held to be a commitment from
all members of the organisation to
continuous creation of added value for the
customer (Narver et al., 1998). Leading
and, specifically, the Zara chain, how far the
group's marketing strategies and tactics are
different from competitors', and what causes
these differences.
There is strong media focus on the fact that
Zara does not have a formalised marketing
department, keeps its advertising budget to a
minimum, and centres corporate success on
production and logistics strategy. The
inference is that marketing in Zara is
non-existent.
However, the Zara organisation clearly
states: ``Our customers are the basis and the
reason of our group's existence''. Close
attention is paid to continuous information
on customer needs and wants, and these are

answered with clear market segmentation

from this definition, Narver and Slater
describe market orientation as a one-
dimensional concept, encompassing three
behavioural components: customer
orientation, competitor orientation, inter-
functional co-ordination.
2 Behavioural approach. This approach
focuses on market orientation as a
measure of organisational behaviour
(Norburn et al., 1990). Key features of
market orientation are: ``(1) an expanded
focus on market rather than customer
intelligence, (2) an emphasis on a specific
form of inter-functional coordination with
respect to market intelligence and (3) a
focus on activities related to intelligence
processing rather than the effect of these
activities'' (Kohli et al., 1993, p. 468).
3 A third type of approach is a synthesis of
the above. Day (1994) holds market
orientation to be a superior[6] ability for
understanding and satisfying consumers.
Its key features are identified as first, an
organisational culture that puts the
customer's interest first; second, the
ability of the organisation to generate,
disseminate and act on information about
customers and competitors; and third, the
co-ordinated application of
interfunctional resources to the creation
of superior customer value.
This last approach describes market
orientation in a business setting as a
company culture[7] seeking to achieve
superior value for the customer (when set
against value offered by competitors)
through co-ordinated behaviour across all
sections of the organisation.
3. Inditex and Zara: a paradigmatic
example of market orientation
We will now discuss what marketing's role
has been in the evolution of the Inditex group
and product differentiation. Specific sets of
behaviour across the entire company are
designed to answer customers' needs in an
agile and permanent manner. This paper will
seek to show that marketing permeates
Inditex and Zara and is a determinant factor
for its success[8].
Zara's success is a direct result of market
orientation. Its implementation of the
marketing concept and marketing
philosophy go deeper than the functional
view of marketing embodied in the
marketing orientation.
Perhaps better than any other existing
Spanish company, Zara shows the step from
marketing orientation to market orientation.
Marketing orientation is an internal
company orientation and is shown by the
importance of the marketing department and
the use of marketing tools. Zara goes a step
further and shows successful
implementation of a market orientation, as a
business philosophy which focuses attention
on customers and competitors and
determines the working of the entire
organisation.
This paper will centre on the following
three points:
1 Market orientation is shown to exist in
Inditex-Zara.
2 This orientation is shown to determine
development of its competitive advantage.
3 Competitive advantage is implemented
through certain sets of behaviours which
are determined by the market orientation.
3.1 Organisational culture in Inditex/Zara
Using the literature on the subject as a basis
for observation, a series of values, beliefs and
clear determinant basic organisational rules
are to be observed in Inditex/Zara, which
show the implementation of market
orientation.
[ 223 ]
 AndreÂs Mazaira, E. GonzaÂlez
and Ruth Avendan Äo
The role of market orientation
on company performance
through the development of
sustainable competitive
advantage: the Inditex-Zara
case
Marketing Intelligence &
Planning
21/4 [2003] 220-229
Downloaded by UNIVERSIDADE DE VIGO At 01:17 10 November 2016 (PT)
[ 224 ]
(i) The Inditex group and Zara have a group
of values or basic beliefs which determine
the organisation's focus towards
satisfaction of consumer needs
A market-oriented organisation requires
customer satisfaction to be its reference
point. Customer satisfaction implies
continuous, in-depth understanding of
customer needs. Narver and Slater (1990)[9]
point out how this understanding is
necessary to identify existing and potential
customers and focus on their present and
future needs, and what perceptions will lead
customers to feel satisfaction today and in
the future. Deshpande et al. (1993) identify
market orientation as a set of beliefs which
put customer interests first, in order to
develop a long-term profitable business.
In Inditex, values and rules which put
customer satisfaction first are present in the
company's definition of its business model:
Customer orientation. The customer is our
inspiration and customer service is our goal.
Production shall be adapted to customer
demand through supply chain control. Our
own and our suppliers' production will be
able to focus on trend changes happening
inside each season (Inditex).
(ii) Inditex and Zara's customer orientation
is understood as a tendency to generate
value for customers which is superior to
what competitor companies are able to
achieve. All departments in the
organisation have a strong commitment to
this principle
In the field work, all interviewees from the
Inditex organisation answered the question:
``How far do you consider that offering the
customer a higher value than our
competitors is a source of competitive
advantage for a company?'' with ``totally'', the
highest level on the seven-point Likert scale
used.
Narver and Slater show that an
organisation adopts this behaviour when it
focuses on the need to create greater value
for consumers. Day and Wensley (1988) argue
that to do this the company must develop the
capacity to generate value on any point of the
complete buyer's value chain, and act
accordingly. A market-oriented organisation
should be cognisant of the total value chain of
its company, and act on its whole extent.
Inditex/Zara's concern with continuous
analysis of its value chain has led the
organisation to focus on control over the
greatest possible number of links. Zara has
established control over the total length of
the production process, from inception of a
product design to sale. This is a crucial issue
in the group's strategy and the main feature
of its differentiation from its competitors (see
Figure 1 and Figure 2).
A customer-oriented culture has led Zara
to become an integrated retailer, with control
over the entire production process, from
design to sale. Development of a product from
initial design stage to sale is set out in
Figure 2 and shows precisely how the Zara
model is organised. In other Inditex store
chains, the group's presence in the
production process is weighted differently, as
Figure 3 shows.
Seeking to generate value for the customer,
the company has developed its own business
concept, which the group calls the Zara
Concept. The Zara Concept implies a change
in how the business and the product are
considered. Fashion products such as
clothing, accessories and footwear have
traditionally been considered a durable
consumption article. Inditex-Zara considers
fashion to be a non-durable product, with a
sell-by period between three and four weeks.
This principle permeates the whole
organisation and is constantly pointed out as
a key factor for success[10].
With this as a key point in the organisation
of Zara's value chain, time becomes an
essential factor in Zara's processes. Every
effort is made to reduce the time which
elapses between product design and
availability for sale. Thus, Zara prolongs the
duration of the production cycle for each
season. On average, 85 per cent of goods are
manufactured during the season when they
are to be sold, after the company has proved
acceptance by the market. This policy also
affects purchasing, production and logistics
policies, and the behaviour of the entire
organisation. Thus, market orientation
drives creation of specific sets of behaviour
which, in turn, create value for the
organisation.
3.2 Generating sustainable competitive
advantage through the basic values and
rules developed in Inditex-Zara
Figure 4 shows how Zara prolongs the
season's production cycle over a greater
duration than the textile industry standard.
This originates Zara's sustainable
competitive advantage, which materialises in
the company's capacity for continuous
adaptation of its offering to consumer tastes,
with short-term adaptation to changing
trends.
This competitive advantage implies:
. Stores are stocked with new articles
several times a week. Customers perceive
this and visit Zara stores continuously
during the season.
 AndreÂs Mazaira, E. GonzaÂlez Figure 1
and Ruth Avendan Äo Value chain for clothing manufacture and distribution companies
The role of market orientation
on company performance
through the development of
sustainable competitive
advantage: the Inditex-Zara
case
Marketing Intelligence &
Planning
21/4 [2003] 220-229
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Figure 2
Flow chart across value chain

[ 225 ]
 AndreÂs Mazaira, E. GonzaÂlez Figure 3
and Ruth Avendan Äo The production process in other Inditex chains
The role of market orientation
on company performance
through the development of
sustainable competitive
advantage: the Inditex-Zara
case
Marketing Intelligence &
Planning
21/4 [2003] 220-229
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Figure 4
Complete seasonal cycle

[ 226 ]
 AndreÂs Mazaira, E. GonzaÂlez . New market trends are brought into the
and Ruth Avendan Äo stores in an agile, continuous manner.
The role of market orientation
on company performance The organisation has full, almost
through the development of immediate capacity to answer the market.
sustainable competitive This is an essential factor in a changing
advantage: the Inditex-Zara
case sector. Agility is such that from product
Marketing Intelligence & design to sale, only two weeks elapse for
Planning repeat orders or slight changes, and five
21/4 [2003] 220-229 weeks for new products.
. Stores are permanently stocked with
successful products, even in the sales
period.
. Risk in interpretation of fashion
tendencies is noticeably lessened. So is the
risk of accumulating stocks of failed
products. Risk products are produced
in-house.
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. Purchasing late in the season has
favourable effects on costs, as suppliers
are anxious to sell off materials before the
end of the season.
Further, continuous change in the stores'
products achieves a scarcity-opportunity
feeling. In the words of a company executive
(see Herreros, 2000):
Customers who enter a Zara store and see
something they like, know they have to buy it
straight away, because it probably won't be
there next week.
This competitive advantage is hard to copy
by competitors, because its success is not
simply a technical issue. It originates in the
company's strong identification with the
values of market orientation and the Zara
business concept.
3.3. Behaviours in Zara which derive from
its characteristic organisational culture
and allow competitive advantage to be
sustained
The presence of a clear market orientation
has been confirmed in the Inditex group and
Zara. Now, we will examine how specific sets
of behaviour in the company are affected by
this orientation. This discussion will centre
on four points:
1 collection, dissemination and response to
market information;
2 production;
3 product line strategies; and
4 price policy.
Collecting information
Interviews in the group show that great
importance is attached to obtaining market
information. Two main sources of
information have been observed. Information
on market trends is collated by members of
the design team. The team works on several
sources of inspiration and information, such
as trade fairs, fashion shows, books,
observation of styles worn by opinion leaders
or on successful television serials,
competitors' stores, stores in other trend-
driven sectors, museums, and travel to
fashion-sensitive areas, where presence in
clubs, fashion centres, universities or
markets is encouraged.
The second and most important source of
information comes from Zara's own stores
and is based on Zara's integrated retailer
process and the organisation's capability to
reduce the time between design and sale.
``Product-shop teams'' are able to receive
continuous information from stores
worldwide. Each day, they check products'
success and examine the trends suggested by
the store managers. This information is
immediately transmitted to the purchase
department, the design department (which
works on three seasons simultaneously) and
the production department. All three
departments organise their work as a
response to this continuous customer
feedback.
Another important source of information
are orders placed by store managers through
their ``Cassiopeia'', an instrument
specifically created for placing orders and
continuous collection of market information
in the Inditex group. Stores place orders
twice weekly, selecting products from an
offer they are sent beforehand. Production
plans are made up from orders. Logistics
centres serve small volumes to ensure store
managers are not able to stock up on
best-selling products.
So, information is captured daily and
perfected twice a week. It is disseminated
throughout the organisation and brings forth
immediate response. If a product is
unsuccessful, it is immediately taken off the
market. Behaviour in this area is clearly
market oriented.
On average, Zara places 10,000 different
articles on the market each year (10,744 in
1999, 9,845 in 2000).
Production
The Inditex group owns 20 production
companies. These are specialised according
to garment type, e.g. one shoe company, two
children's clothing manufacturer, one shirt
Table V
Internal versus external production
Companies in the External production
group (per cent) (per cent)
1998 53 47
1999 50 50
2000 44 56
Source: Inditex (per cent over sales out figures)
[ 227 ]
 AndreÂs Mazaira, E. GonzaÂlez
and Ruth Avendan Äo
The role of market orientation
on company performance
through the development of
sustainable competitive
advantage: the Inditex-Zara
case
Marketing Intelligence &
Planning
21/4 [2003] 220-229
Downloaded by UNIVERSIDADE DE VIGO At 01:17 10 November 2016 (PT)
[ 228 ]
Table VI
External production according to country of origin
Spain Portugal Other EU
(per cent) (per cent) (per cent)
1999 25 24
2000 20 22
manufacturer, one company specialising in
men's trousers and jackets.
Other items are produced externally. In the
words of an Inditex executive:
The decision whether to externalise or to
produce in the group depends on cost,
delivery date, returns [. . .] We attempt to
maintain a competitive feeling between all
our suppliers, including our own factories
[. . .] In general, our own factories take on
products with greater specificity and greater
risk.
As shown in Figure 4, in-house production
originates competitive advantage by
lengthening the seasonal production cycle
and increasing the production rate at the end
of the season.
The increase in external production over
the past few years is due to a trend in favour
of basic products with lower added value (see
Table V).
For in-house production, cut (which is
labour-intensive) is outsourced to external
sewing companies, mainly located in Spain
and Portugal (see Table VI).
Strict time limits are set out for the
production process and force it to adapt to
market needs. Zara's role as an integrated
retailer entails total control over the
production process to ensure it is driven by
customer needs and wants. Production costs
are tailored to respond to customer needs and
strict time limits are adhered to in order to
ensure an agile response to market trends.
Product strategies
One of Inditex's distinctive qualities is its
focus on market segmentation through
specific store chains which seek to adapt to
market needs. Figure 2 shows how Zara's
store chains centre on specific targets, with
different offerings which are tailored to each
segment's needs and wants.
New markets were opened up in 2001 with
the birth of a new chain of high-street stores,
``Oysho'', with product categories such as
underwear, evening wear, swimwear,
accesories and cosmetics at medium-high
quality and medium-low prices. The chain is
to operate on an international scale, mainly
in Europe.
International expansion policy has also
achieved an agreement for introducing Zara
into Finland.
Rest of Europe Asia Other
(per cent) (per cent) (per cent)
9 11 23 8
5 15 29 9
Pricing policy
Zara's system for price fixing is different
from the usual sector system. The clothing
industry commonly uses a traditional cost
plus margin pricing system. Zara uses a
market-oriented target pricing system. The
sales department identifies the price
consumers are ready to pay and the price of
similar products in other accessible
competitor stores, and establishes a target
price for each article accordingly. To achieve
this price, materials and suppliers are found
to manufacture the product with the desired
price and margins. The information is given
to the company purchasing department, who
are in charge of margin control.
The Zara case is, as conclusion, a
paradigmatic example, reflecting how a
market-oriented culture, constructed from a
clear target customer definition and an
original market concept, generates
sustainable competitive advantages and sets
of market-oriented behaviours, and keep
these up over time.
Notes
1 The Inditex group attracted analysts'
attention on its recent launch on the Spanish
stock exchange.
2 We would like to thank Mr Aguiar for his
invaluable help in carrying out this research.
3 Case books including a ``Zara case'' are
increasingly frequent (see DuraÂn, 1996; Lois
et al., 2000; Munuera and RodrõÂguez, 2000).
4 A document containing exhaustive
information on the sector and the company.
5 Organisational culture as a dynamic
aggregate of assumptions, values and
mechanisms, the significance of which is
understood by the organisation's members.
6 Superior to competition.
7 Culture as a set of rules, values, attitudes and
belief which determine the way organisations
perceive reality and the way they act. Culture
is a substantial determinant factor for the
company's behaviour in its context.
8 Hooley et al. (1990, p. 22) reflect this concept of
marketing when they argue that marketing
should not be perceived as an exclusive
departmentalised function, but as a
philosophy which is able to guide the entire
organisation. A visit to Inditex's buildings or
an interview with Zara executives show
``Marketing is Zara and Zara is marketing'', in
the sense used by McKenna (1989).
 AndreÂs Mazaira, E. GonzaÂlez 9 Narver and Slater include all activity directed
and Ruth Avendan Äo towards the acquisition of information about
The role of market orientation customers and competition in the target
on company performance
through the development of market, and its spread across the
sustainable competitive organisation, as indicators of customer
advantage: the Inditex-Zara orientation and competitor orientation.
case
10 See, for instance, VaÂzquez (2000) or the
Marketing Intelligence & interview with J.M. Castellanos on ExpansioÂn,
Planning
21/4 [2003] 220-229 26 July 2001, available at:
www.expansiondirecto.com/edicion/noticia/
0,2458,14530,0.html
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[ 229 ]
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