BRANDING PROJECT

COMMUNICATION AND MEDIA

ZARA by Gunnlaugur Arnar Elíasson,

Sandra Ósk Kristbjarnardóttir
and
Clara Sofia Escobar Lopez
BRANDING PROJECT COMMUNICATION AND MEDIA

COMPANY OVERVIEW

Zara is a Spanish chain store of Inditex Group, one of the world’s

biggest retail store in the world, who are also owners of brands like
Massimo Dutti, Pull and Bear, Oysho, Zara Home, Uterque, Stradivarius
and Bershka. Founded by Amancio Ortega, he first opened a Zara store
in 1975 in downtown A Coruña, Spain, where it’s still home to it’s
headquarters today.

At the beginning Zara sold low price clothes that resemble designs
from the couture designers. Then he changed the design,
manufacturing and distribution so he could make clothes quicker, and
that way react to trends faster. This strategy proved so successful that
between 1976-1984 Zara extended its network and opened stores all
over Spain. In 1988 they opened their first international store in
Oporto, Portugal, and have been ever since expanding their stores. In
2007 Zara’s shop number 1000 was open and in December 2008 they
opened their first Eco-efficient store in Athens, Greece. On 17th
December 2009 an application for mobiles came out and it wasn’t
until last year on the September 2nd 2010 that merchandise became
available online. Today there are 1688 stores in the largest cities in
over 70 countries in Europe, Asia, Africa and America.

What is the key to Zara’s success is that it has a quick constant

exchange of information. All is managed in one design and production
centre in Coruña, where there is 3 spacious halls, one for women, one
for men and one for children; it’s much more expensive but they can
work more efficiently.
BRANDING PROJECT COMMUNICATION AND MEDIA

COMPANY IMAGE

Zara is a fast industry but it’s unique business model is based on

innovation and flexibility. They design and distribute a garment to
market in just fifteen days. They have always-new products but in
limited supply. The costumer feels there is an “exclusivity”, since only
few items are on display even thought stores are spacious; they feel
they have to buy it because they won’t find it again.

Zara’s designers create approximately 40,000 new designs annually of

which 10,000 are produced. These designs resemble latest couture
creations or classic pieces. They are giving the costumer the same
products made with less expensive fabrics and lower prices. Their
production is massive, of each design they normally make 5 – 6
colours and 5 – 7 sizes.

They also care about the environment, animals and workers. Two years
ago they demanded their Bangladesh jeans supplier to close their
factory and built a new one with better conditions for their workers
after they found about the poor conditions in which they where
working.

As well, Zara stores are eco-friendly, is against fur and they use
ecological fabrics, organic cotton and PVC-free footwear.

Mr.Ortega transmits the values of the company which are freedom,

perfectionism, responsibility, rapidness, flexibility and respect to
others to his Zara team.
BRANDING PROJECT COMMUNICATION AND MEDIA

VALUE DRIVERS

Increase net margin on operation and their market capitalization and

increase customer loyalty and brand recognition. Zara’s business
model provides great value to shareholders and makes them different
from their competitors.

MARKETING POSITION / COMPETITION

Right now Zara is well positioned in

the market globally. They produce
women, men and children articles.
They are giving the costumer quick
choices regarding fashion.
Comparing quality against price,
Zara sells a good quality for it’s
value, plus current fashion trends.

At more or less their same level of

quality vs price, their main
competitors are the other high street
fashion brands, such as Mango (also
from Spain), Top Shop and H&M.

H&M differs from Zara because they

outsource all of their production,
spend more money on advertising,
and is price-oriented. The key
similarities for comparison between
Zara and H&M are that they are
European based companies, are
fashion forward at lower price
retailers, and have a strong
international expansion strategy.

STOCK MARKET INFORMATION

Inditex, whose other brands include youth label Bershka and the
upmarket Massimo dutti, posted a net profit of 1.18 billion euros (1.52
billion dollars) during the first nine months of 2010, a 42 percent
jump over the same time in the previous year.  
BRANDING PROJECT COMMUNICATION AND MEDIA

NUMBER AND LOCATION OF STORES

Their first store was opened in Spain, then Portugal, USA, France and
the rest of the world.

They had 1,688 stores by the end of October 2010, in 77 countries all
around the world and counting.

They are opening stores all the time because they prefer to invest in
expansion better than in advertisement.

For 2011 Inditex is planning on opening their first store in Australia

and South Africa. They are also expanding the number of Zara stores
available in the Asian market.

METHODS OF TRADING

The stores are company

owned, unless the countries
regulations say otherwise
and in these cases they
franchise the store.

The business model they

have, avoids the main fixed
costs associated with
international expansion
because they don’t have
distribution centres per
country and they don’t
advertise when entering a
new market.

They have in-store

shopping and launched
their online store last year.
They have a web page
where you can browse their
catalogue, lookbook and all
the new garments that are
arriving every week. It also
has a Store locator with
directions and maps. All
this information is also
available in their application
BRANDING PROJECT COMMUNICATION AND MEDIA

for iPhone and iPad.

Zara online sales began just for France, UK, Italy, Germany, Portugal
and Spain, then Austria, Ireland, Belgium, the Netherlands and
Luxembourg. They have a strong commercial proposition and have
had a satisfactory customer reception since they went on-line. They
are planning to open online shopping for Japan, South Korea and
Canada this year.

TARGET CUSTOMER DEMOGRAPHICS

In their company profile presentation, Inditex has an age target for

Zara that goes from 0 years to 40+ years because they produce
clothing for every age.
Zara’s main target is women, and their primary age group is between
25 to 40. They are looking for the women that likes to be fashionable
but at a low cost. The everyday woman that wants to go well dressed
to work. They are supervisors, junior managers, and skilled manual
workers. They work near busy streets, that’s why the majority of the
stores are around this areas. They can be single, or recently married,
no children yet. They browse the store every week or every two weeks
to see what has arrived new.
BRANDING PROJECT COMMUNICATION AND MEDIA

The secondary target customer for Zara could be man in the same age
range, 25 to 40. Classic men that like fashion but that are not going to
the extremes. They want to be well dress to work and in their leisure
time.

TARGET CUSTOMER PSYCHOGRAPHICS

Zara’s customer spends their weekdays busy in the office or in their

workspace and likes to hang out with their worker friends or with
other couples on the weekends. They are classic but understand about
fashion and don’t want to take it to far. They like comfort and good
fitting but don’t care that much about quality because they can wear
what is new at a low cost.

TARGET CUSTOMER BUYING BEHAVIOUR

Zara’s customers are early majority. They love fashion, they are aware
of fashion but they are more conservative in their dressing. Zara has
been characterized for having the latest trends on their collections,
many times criticised for doing garments similar to other top European
designers.
BRANDING PROJECT COMMUNICATION AND MEDIA

PLACE

• LOCATION

Their shops are always situated in a prime location, in the middle of

the most commercial streets in Barcelona, that way they can attract
their prime costumer into the store. Zara's target market is comprised
of urban, fashion-conscious consumers who shop frequently for the
latest trends.

Normally Zara It’s easy to reach by the metro, bus or walking. On

weekdays the stores are packed with people that come for shopping,
and also from the people that are just passing by in their way to work
or study. On the weekends it gets really busy with people not only
from Barcelona but also from the surroundings that comes for
window-shopping, shopping and just to hang around for the day.

The store locations are always located at prestigious, high-traffic

locales.    The stores are designed with wide-open spaces and well-
defined layouts to insure customers enjoy their shopping experience
at Zara.

Particularly Passeig de Gracia with Arago shop is very important for

Zara because it gives her a little more of prestigious and also catches
costumers that have a little more economic capacity in their shopping
around Passeig de Gracia.

• STORE DESIGN

The stores are huge, with big window displays. They are always very
modern and very well organized.

Zara has always characterized because they don’t advertise so their

windows are really important. They always have an amazing display to
make the costumers come in, and you can notice they spend a lot of
money in it. You just have to walk by to see their ultimate collections
and be tempted to come in.

The doors of the store are big to let in and out the large quantities of
shoppers that come daily to the store. They are placed in all the corner
of the to streets so it is accessible really easy.

As soon as you get in you get a good vibe, it is kind of a boutique, but
huge. The inside always goes with the window display. It looks
luxurious.
BRANDING PROJECT COMMUNICATION AND MEDIA

The lighting is yellow, comfortable, it invites you to stay and look

around. The colour of the store are classy, they use brown and beige
tones. They play music not so loud and melodies that are singed and
that are relaxing.

The store materials are shiny silver metal, glass and glossy wood. They
have mirrors everywhere so people can try on things if they are in a
hurry. The dressing rooms are easy to find and they use curtains and
have good space inside for trying outfits.

• METHODS OF MERCHANDISING AND DISPLAY

You can find mannequins that support the windows display

everywhere showing the costumer how they can combine the different
garments and showing what they have available.

The clothes are separated by brand.

The layout of the store displays clothes against the wall in a very
particular way with some clothes hanging and accessories on the
bottom and in the top. They alternate a lot of their clothing with shoes
so the people want them even thought they where there just to buy
clothes. The garments are displayed in racks all around the floor
mixed with tables that have clothes folded on top. Their hangers are
of metal and wood or the combination of both.

The clothes are display by theme nor by trend or by colour. They look
for clothes that can make a good combination and place them
together. They have a section of formal clothes, other with more lay
back clothing. They combine pants, blouses, t-shirts, tops, shoes and
jackets in each section. The clothing is really well display making it
easy to reach. The shops are comfortable to walk and to shop.

PRODUCT

• BRAND

Zara has 5 brands:

1. Zara Woman, that it is a brand a little more formal. For women
at their work or for women that go out but they like their looks
to be more serious. They also have clothes that go with the
trends and that are fabulous.
2. Zara Basic (woman), it is a brand that has all the basics.
3. Zara TRF, for younger women, it has the trendy clothes for
young girls who love to be up to fashion.
BRANDING PROJECT COMMUNICATION AND MEDIA

4. Zara Men, with all the clothes for men. Both casual and formal.
5. Zara kids

• PRODUCT MIX

In Zara they sell almost everything. Jeans, blouses, skirts, trousers,

jackets, knitwear, coats, t-shirts, shorts, shirts, sunglasses, shoes,
scarf, belts, hats, handbags, leggings, head accessories.

As part of this corporate concept, the stores try to hold very low levels
of inventory, often having their entire inventory out on display, in
order to sell out and make room for the next wave of fashion.

• MAIN FASHION TREND

Zara's global strategy is to offer cutting edge fashion at affordable

prices by identifying which styles are "hot" at fashion shows and
moving simulations into production even before the original designer
can.
They always have the latest trends. You can find the trendiest pieces
mixed with the basics.

• SIZE AND QUALITY

Zara has sizes that go from the XS to the XL. Their quality is good; all
their clothes are made in Europe with the exception of some pieces
and jeans. They are well known for promoting better quality for the
workers and they where involve with the improvement of installations
in the fabrics that made their garments in Bangladesh.

• PRICES

Zara's pricing is lower than its competitors, but profit margins are
higher due to direct efficiencies gained from a shortened, vertically
integrated, supply chain.

Zara's global target market is a young, educated one that likes fashion
and is sensitive to fashion, but is price-conscious.

Zara is a brand that it is really well positioned. They give to their

costumer high fashion at low prices. Their quality it is in a good price
for the value.

They use the psychology of prices by ending their price tags in .99.
• Jackets from 139 to 49.99
• Outwear from 49.99 to 39.99
BRANDING PROJECT COMMUNICATION AND MEDIA

• Knitwear from 19.99 to 14.99

• Dresses from 119 to 25.99
• Skirts from 39.99 to 29.99
• Trousers from 35.99 to 19.99
• Shirts from 39.99 to 19.99
• T-shirts from 25.99 to 9.99
• Shoes from 79.99 to 29.99

PROMOTIONAL ACTIVITIES

• ADVERTISING

Zara doesn’t advertise. Zara's advertising expenses are minimal (avg.

0.3% of revenue) compared with 3% to 4% for other specialty retailers.

These helps lower expenses and preserve strong profit margins. Zara
prefers to invests more money in renovating its storefronts and buying
prime real estate for store locations where it gets all the promotion
that it needs as visibility marketing.

They just use posters in their windows whenever they are in sale with
just a small word that reads sale and post it on Facebook and online.
BRANDING PROJECT COMMUNICATION AND MEDIA

• SALES PROMOTION

Zara uses the same sales period as the other brands, but Zara stock
it’s low, and it is always being renewed, so the sales aren’t that
important. Recently they have been posting on Facebook and on their
web page whenever they have sales.

• P.R.

They get a lot of publicity from the fact they don’t advertise and
because they are helping the people in the industries.

Zara also has a Facebook page where they currently have 7’818.477
people who “Like” them or follow them. They post videos, photos of
new arrivals, making of the photos for the lookbook and catalogue,
invitations to new stores opening events, sales information, new
countries with online shopping available, etc.

This way they are getting into the social network trend and reaching
new and old costumers, strengthening their core values which are to
Increase customer loyalty and brand recognition.

STRENGTHS AND WEAKNESSES

STRENGTHS
• Amazing locations.
• Beautiful windows display.
• Well displayed inside the store. Boutique style.
• Great range of sizes.
• Give the ultimate trends at a budget and quickly.
• They use their money in opening new stores.
• They get free advertisement helping the people in Bangladesh.
• They bring new items twice a week.
• By focusing on shorter response times, the company ensures
that its stores are able to carry clothes that the consumers want
at that time.
• Offers its customers a unique mix of affordability, exclusivity
and differentiation.
• The company keeps its operating income elevated, has a strong
and unique business model, and has various opportunities for
expansion in the retail industry.
BRANDING PROJECT COMMUNICATION AND MEDIA

• They have developed a very successful vertically integrated

company which can design, manufacture, and distribute
garments to retail stores in just two weeks.
• By owning its in-house production, Zara is able to be flexible in
the variety, amount, and frequency of the new styles they
produce
• Not advertising makes the costumer go by the store to check
out what they have new and knowing that they don’t have the
same every week this make the costumer buy it immediately.
• The Zara costumer goes more than 17 times per year to the
store.
• Having little stock makes it more “exclusive”.
• Zara stores have men’s, women’s and kids clothing, shoes and
accessories.
• Great variety of colours and sizes.
• Design and produce products really quickly (only 2 weeks).
• Supply their stores twice a week with new products.
• Accessible prices for every one.
• Up to the trends.
• 50% of the products Zara sells are manufactured in Spain, so
they give a lot of work to people in their country.
• They have an environmental and animal welfare policy.
• They tune with the customer.
• Make the customer feel they are buying exclusivity.
• They care about the workers of their suppliers
• It’s a well-known brand around the world; the people recognize
it and buy there.
• They know the product.

WEAKNESSES
• There is a lot of competition around their locations.
• Sometimes it’s not easy to find the displays from the windows
inside the store.
• After certain time of the day the store gets really messy and it is
difficult to find the garments you are looking for.
• By not advertising they are missing people that don’t like going
to the store just to see what is new.
• They have little stock available and when you go you cant find
your size.
• Zara only has one manufacturing plant and distribution centre in
the world, which can be a huge weakness and threat, if
something goes wrong.
• Not good quality can’t be worn for long.
BRANDING PROJECT COMMUNICATION AND MEDIA

• A lot of waste in their massive production because all their stuff

can’t be sell unless they have sells all the time.
• They use designs from other designers.
• Monopoly markets with low cost clothes, affecting smaller
brands.

SUITABILITY OF MARKETING MIX

Zara take a faster approach at producing clothing items that

customers want at the present moment. They find current popular
trends and ask consumers what they want and need instead of
predicting future trends and spending the average of 5-8 months to
develop a collection for a season like other brands do.

The one thing that makes Zara different is the designs that make it to
Zara store racks are low in quantity, which cause items to sell out
faster. Keeping store inventory low and clothing in demand is key to
Zara. Also the styles on store racks are changed every week in order to
keep people wanting to come back to see what is new, which in turn
keeps customers buying.  

Another major advantage that makes Zara strong in its market is that
it targets the young fashionable consumers who are always looking for
the latest hip trends and the older consumer who is looking for a
bargain plus a good quality clothing item.

BIBLIOGRAPHY
• Zara (clothing), Wikipedia.
• www.zara.com
• Zara’s secret for fast fashion by Kasra Ferdows, 21 February
2005, Harvard business review.
• Zara is launching online shopping – it’s about time! By Bee
Shyuan, 17 September 2009, on-line article.
• Fashion novelties of Zara and Zara Home, 12 December 2009.
• Improving working conditions in Bangladesh garment factory, 20
January 2010, BBC radio.
• www.inditex.es
• Inditex company profile
• http://www.facebook.com/#!/Zara
• http://icheersapp.com/ipad/lifestyle-ipad/zara-shopping-
online.html
BRANDING PROJECT COMMUNICATION AND MEDIA

• http://www.bbc.co.uk/news/business-11155437 - Web page

news
• http://www.inditex.es/en/press/press_releases/extend/
00000800 -Web page news
• http://news.yahoo.com/s/afp/20110110/bs_afp/
spainretailfashiontextilecompanyearningsinditexzara - Stock
market information on Zara news
• http://www.modernights.com/shop/zaraclothing/ - Article
• <http://www.123HelpMe.com/view.asp?id=97642> "Zara’s
Business Model, Information and Communication Technologies,
and Competitive Analysis."