SWOT , value proposition , internal & external environment , competitors analysis

1. Brief Exordium
Zara is well reputed international fast-fashion
company owned by the Spanish fashion group
Inditex (Zara, 2012), founded in 1975
The first Zara store was opened in La Coruña by
Amancio Ortega Gaona in 1975
An estimated share of Zara in total revenue of
group is 80%
After 38 years of operation, Zara now has 2,000
stores in 88 countries across Europe, America,
Africa, and Asia
fashion designing and manufacturing company has
been declared most efficient and market responding
enterprise in UK’s fashion industry

2. Present vision & mission
 Zara is committed to satisfying the desires of our
customers. As a result “we pledge to continuously
innovate our business to improve your experience. We
promise to provide new designs made from quality
materials that are affordable”.
"Give customers what they want, and get it to them
faster than anyone else.”
"Through Zara’s business model, we aim to
contribute to the sustainable development of society
and that of the environment with which we interact.”

3. Zara’s Mission Statement
AT THE STORE
 We save energy.
 The eco-friendly store.
 We produce less waste, and recycle.
 Our commitment extends to all our staff.
 An environmentally aware team.
WITH THE PRODUCT
 We use ecological fabrics.
 100 % Organic cotton.

4. Objectives
1. Save energy, the eco-friendly store:
2. Produce less waste and recycle:
3. Their commitment extends to all their
staff, increasing awareness among the
team members:
4. Use ecological fabrics, organic cotton:
5. Use biodiesel fuel:

5. INTERNAL ENVIRONMENT
Tangible Resources
 Financially, Zara gets strong support from its parent company,
Inditex, which has reached revenue of $1.9 billion Euros (Inditex,
2011). Logos and exclusive brands are tangible resources that can
help Zara maintain its strong brand identity.

6. Intangible Resources
 Zara has a 200-person professional designer team who
constantly update new information on fashion trends for
Zara in order for them to continuously pursue the fast
fashion market (Inditex, 2011).
 In addition, efficient information technology communication
systems help Zara to be trendy .
 Also, integrated IT systems allow for a strong relationship
between Zara’s designers, suppliers, and manufacturing
facilities.
 Zara has a unique in-store inventory model which gives Zara
a competitive advantage on brand image, as they continue to
be seen as a company that can rapidly change and keep up
with changing fashion trends.
 Rapid inventory turnover also brings a sense of freshness and
exclusiveness to customers .

7. Value Proposition
Fashionable, affordable clothes
Zara’s strategy is to offer cutting edge fashion at affordable prices
by following fashion and identifying which styles are “hot”, and
quickly getting the latest styles into stores. They can move from
identifying a trend to having clothes ready for sale within 30 days
(where as most retailers take 4-12 months). This is made possible
by controlling almost the whole garment supply chain from
design to retail.
Large choice of styles
Zara produces around 12,000 styles per year (compared to the
retail average of 3,000), which means that fresh fashion trends
reach the stores quickly.

8. Scarcity
By reducing the manufactured quantity of each style, Zara creates
artificial scarcity and lowers the risk of having stock it cannot sell.
Scarcity in fashion increases desirability, which means shoppers
need to buy quickly as the item may not be available next week.
Lower quantities also mean there are not much to be disposed
when the season ends; Zara only discounts 18% of its stock in
sales, which is half the industry average.
Prime locations
Zara spends relatively little on advertising (0.3% of revenue)
compared with traditional retailers (3-5%), instead they reach
their target market by locating their stores in prime town-centre
locations.

9. Integration Strategies
Zara applies the Forward Integration. Since Inditex
demands a high integration between the
headquarters and all branches across the globe,
therefore Inditex controls its retailers and
distributors all around the world in order to
standardize the overall business performance.
Internal Environmental
strategy

10. Intensive Strategies
As an aggressive expander in global market Zara
practices the Market Development strategy in which they
are entering new market with Asian-developing countries
being their first targets. Countries include China, India,
and Indonesia. Due to this almost in every new shopping
malls in Jakarta, you can find Zara store in it. Currently
Zara is targeting the Asian market, hoping it will
generate much profit from this promising market. Zara
also applies the Market Penetration strategy, especially in
European and American markets. Their techniques of
doing this strategy are by improving its online store and
increase customer service in all retail stores.

11. Diversification Strategies
To complete its product lines, also as a form of their
differentiation, Zara sells accessories to complement their main
product which is apparel. This kind of strategy is called the
related diversification. Zara also has the unrelated form of
diversification which is the Zara Home. Zara Home is a retail
store which specializes in home fashion and decoration. Zara
Home, similar to Zara, emphasizes exclusivity in all of its
products and it is also relatively more expensive than its
competitors. Zara Home is available in 55 countries including
Indonesia.

12. Defensive Strategies
Zara has no defensive strategy
because the company is in good
condition, not in any kind of loss ,
failure or danger. Therefore, it does
not need any defensive strategy at the
moment.

13. External
(Industry)
Environment

14. CONSUMER SEGMENTATION
DEMOGRAPHIC PSYCHOGRAPHIC
Education: Well educated
Age group: 18-40
Income Group: Middle income
Gender: Men and women
Attitude: Liberal
Social Class: Middle and High class
Lifestyle: General
GEOGRAPHIC BEHAVIOURAL
Weather conditions: Humid region, tropical
region, cold region
Countries: Western, Middle East and Asian
Loyal customers: Most of them
Rate of usage: Maximum
Occasion: Formal and informal

15. COMPETITIVE ANALYSIS
ZARA MANGO H&M
PRODUCT Male, Female,
Kids
Male, Female, Kids Male, Female,
Kids
PRICE High priced High priced Mid priced
PLACE 7 retail outlets,
only in town
4 departmental
stores,
8 retail outlets,
Both town and
neighbourhood
2 retail outlets,
only in town
PROMOTION Website,
Facebook,
Store location
Website,
Facebook,
Print
advertisement,
Website,
Facebook,
Print
advertisement

16. Community (PESTLE)
1. Political Factor
An organization must consider issues such as how stable the
political environment and what policies created by the government
that influences them especially when entering the new market.
2. Economical Factor
The economical condition have been fluctuating in last few years
because of the economic growth, inflation, exchange rates and
taxation charges. However Zara still successful in getting into
market share by opening it new stores all over the world. It is
shown in the financial statement that the number of new stores are
increasing.

18. 3. Social factor
Regarding a social media trend, it’s a must for Zara to establish
social media relationship to satisfy customer demands due to
change in generation choices. It is one of Zara strength to provide
social contact to the customer by newsletter, Facebook, twitter or a
customer account.
4. Technology Factor
Because the advancement of the technology factor. Zara
established an e-commerce strategy by launching its online shop
at Zara.com or an application which can be download from
smartphone for online shopping.

19. 5. Legal Factor
As Zara is an international brand they need to identify and
fulfill all laws that govern the international market. Plagiarism
also one of important aspect that has to be avoid by Zara.
6. Enviromental Factor
Zara has make sure that the products and even the material in
the store are created from environment friendly material. For
example the plastic bag is certified by Programme for the
Endorsement of Forest Certification (PEFC) which guarantee
that it comes from sustainably and responsibly managed
forest and does not come from areas undergoing
desertification or deforestation.

20. Customer Segmentation
• Zara seems to have a wide range of target market from kids to
teenager to women and men which the typical of the customer is a
person that wants fashionable, trendy and unique outfits at
affordable prices. Aside from that, the customer may belong to any
social stratum as Zara caters a wide range of tastes.
• The market segmentation strategy employed by the brand is based
on demographic and psychographic variables like gender, age,
generation, lifestyle and social aspirations.
• Zara situates its stores in high profile locations and provide
customers with a turnover time of 4-5 weeks. This along with the
brand identity, the clothes and the accessories collection and the
limited production run, attracts the target market to Zara stores.

21. Competition
• Key factors behind Zara success:
1. The location of its stores which is located in a high
profile location.
2. The human resources which is receive special
training called Jeune and Salta projects.
3. The product that rapidly changes without relying
on the old product which creates the mindset of
people “buy now or you never see it again”.
4. Diversification into different segmentation which is
cosmetics and accessories.

22. Strengths
• Global outreach (68 countries)
• Minimalistic store image
• Fast changing collection
• Caters to multiple market
segments (Male, Female,
Children)
• Brand loyalty
• Innovation
Weaknesses
• Limited stocks
• Lack of marketing
• Lack of e-commerce across
countries of operation
Opportunities
• Online market
• Opening more stores/increasing
customer base in cities with
higher GDP
SO Strategies
 Create larger buzz by
increasing marketing efforts
across various platforms
 Create designs to suit varied
tastes of different cities
 Create larger pool of innovative
products in cosmetics,
innerwear
WO Strategies
 Re-launch highly popular
products
 Provide customer friendly and
creative e-commerce to create
excitement and customer
loyalty
Threats
• Fierce competition (H&M,
Uniqlo, Chanel, LV)
• Possible imitation of goods
• Economic Slowdown
• Exchange rate fluctuation
• Change of customer preference
(local versus online shopping)
ST Strategies
 Maintain current pool of
customers through effective
loyalty programmes (eg.
Members-only sale)
 Attract new customers and
provide additional reasons for
current customers to remain
loyal by providing the option of
WT Strategies
 Create the option of online
shopping in every country of
operation
 Advertise across various
platforms to draw customers
 Have a logo to attribute a sense
of identity to the brand
SWOT ANALYSIS FOR ZARA