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Marketing Report on Zara
This report aims to explore Zara’s marketing environment and its marketing responses to that environment. To develop your knowledge of external marketing analysis further, please take a look at our free marketing guides.
Zara’s macro-environment can be analysed by looking at 3 factors that provide the opportunities and threats to the company. The three factors this report will cover are the demographic impacts, Economic impacts, and Technological impacts.
This is the study of the human population in terms of their age. Race, gender. Size. Location and occupation. The trends include; the growth of the population, changing age, the structure od the households, the diversity in the population, and pressures for migration. One of the demographic factors that can have an impact on Zara is the population growth in the UK. According to ons, the UK has seen a population growth of approximately 392,000 people since 2016. The impact this will have on Zara is that it will mean there will be a greater demand for their products, as well as a greater supply. If there is an equal proportion of demand and supply for Zara, then it would mean that they would have to be indifferent about growing or shrinking.
Consumer spending power and their spending patterns (Kotler et al). One of the economic factors that Zara should consider is the impact of Brexit. According to Rosy Cherrington, there is a possibility that the products at Zara could get more “expensive”. This will prove to be a challenge to Zara as it will mean that the have problem commercially and reaching a wider marketplace.
The technological impact is basically the forces that create new technologies, creating new product and market opportunities (Kotler et al). The factors that Zara will need to consider are; the increased regulation of technology and increase pace of which technology is changing and improving. To overcome these factors Zara will need to adapt to the environment of the market as it is an uncontrollable element. They must also create strategies to avoid threats and take full advantage of every opportunity that comes their way. Additionally, to be more proactive, they will need to take aggressive action to have an impact on the public, and forces in the macroenvironment. They can also hold media events that can help shape the public option and perception about them as a brand. Hence increasing their brand awareness providing them with the opportunity to increase their sales and profits.
The Target Customer
Zara’s main target customers are 18-year olds to 35-year-old adults. According to Zara retailer their consumers are classed as middle-class individuals in society. The gender varies from men and women as Zara tend to be quite open to both genders, especially through their advertisement, as they use models from both genders. Zara tend to keep their styles “hot” according to Arif Harbott which in turn helps them to target their young set of customers. This allows to be able to attain the interest of their customers as well as continuing to compete with the nearest competitors like forever21 and H&M. They segment their product line by women’s (60%), men’s (25%) and children (15%). what does a typical customer of Zara look like? The typical “Zara customer” is a young fashion hungry individual that are always looking for the latest trend to wear. These types of customer will be someone from today generation that tends to use various social media platforms such as Facebook, twitter and Instagram.
Product and Price
LOW This perceptual map shows how I think Zara and its competitors stands in terms of their price and quality. About Zara, they produce relatively good quality items, without the premium price. This is evident on their website as the price range is approximately £20-£50. They also offer discounts on a regular basis which appeals to their chosen target market; young women and men ranging from 18-30 years old. According to yuchenpang, Zara’s prices are about ¼ of other brand prices, mainly because of their young target customers. High Fashion High
Low This perceptual map illustrates how I rank Zara and its competitors in terms of selling fashionable clothes and items. In my perspective, I believe that Zara is ranked highest among these other retail companies as they tend to target those who are mainly in their 20’s. By doing this, it is very important that they sell clothes that are trending, to appeal to them.
Zara uses several strategies to help their business to grow. According to cheshnotes, the marketing strategies used by Zara are; market penetration. Market development, and product development. Market development: Product development: Market penetration What is Ansoff’s matrix Ansoff’s matrix is a communication tool that can be utilised to see possible growth strategies for a chosen business. There is four market growth in this method which is, Market penetration, market development, product development and diversification. The growth that I will be choosing will be market development? How can market development help grow your business Market development can help grow Zara by enabling them to use their existing and continue to expand their products on an international scale. Additionally, this can also help Zara to access other markets that it currently can’t reach. For instance, being able to attract people of other culture and age group. what is the marketing mix? The marketing mix is a combination of elements which are; product, place, price and promotion. With these elements all used appropriately, it can benefit the business in serving the needs of the customers, while generating a good amount of income. How will the marketing mix help Zara to grow? In relation to Zara, the marketing mix can be of great help in helping the business to grow and expand into another global market. This marketing strategy can help to know if the original product that they are selling are meeting the needs of the customer. This is imperative as they will be able to have a clear grasp of what type of product they selling and know what makes it unique in comparison with other similar product before making it successful. Secondly, understanding how to price your product is a very important decision to make. making small changes to price can easily have an influence un the direction ZARA goes in. if Zara decided to increase their prices, it could lead to sales dropping, with a decrease in price meaning their market share could decrease. However, being able to evaluate their pricing strategy, they will be able to make the right dictions in term of timing it at the right time or offering new features or benefits to any decision they take on pricing. This method can help them to justify any price changes they decided without having to worry too much. The third component of the marketing mix is a promotion. Promotion looks at the various ways that marketing agencies can demonstrate relevant information and distinguish products and services to consumers. The different element in promotion include; social media (i.e. Twitter, Instagram, Facebook) video marketing, Tv advertising, celebrity endorsement and so on. Being able to understand how each way of promotion work can really Help Zara maximise their return investment. Lastly, place refers to the location in which you decide to market your product. This is about being able to advertise your product at the right time, place and time to fully gain the attention of your target market. Because Zara is an online retailer, they could advertise their brands in social media platforms like Instagram and Twitter to reach to individuals in their target market, as well as advertising products at the right time like Christmas, Easter and at the beginning of school terms.
What is the buyer behaviour model? The buyer behaviour is generally the behaviour of the final consumer. The buyer behaviour model/stimulus-response model consists of these stages; marketing and other stimuli, buyer’s black box, and buyer response. Marketing and other stimuli This stage is generally when is first stimulated through the advertisement packaging and so on. At this stage, the location of the shop which can either be online or in real like ASOS and JD can help attract or push him/her away. If the location is in the suspicious area there is more of chance that the customer will look away. Within the how the product looks can help entice the customer forcing them to decide whether purchasing the item or not. The way the product/service look from the outside is a really important factor at this stage. How the company promotes the item can be a deciding factor, as this can help grab the attention of the customer in an instant. Using techniques like celebrity endorsement or adding gift and trials. The price of the product is important as it can help the customer to decide if they want to purchase the item or not. If the price is affordable there is more of a chance of buying it, if the price is at a premium there is a slim chance. The buyer’s black box This is when stimulation from the first stage reaches the buyer's sensory perception of what the product is and what he/thinks it does. The place that this product or service is can either help or hinder the buyer from purchasing a product/service. This depends if the company target market reflects the location, they are in. the promotion factor is very important as many buyers currently are enticed by celebrities. If the company is selling a product like an aftershave and have a picture of David Beckham, there is more of a chance of individuals buying that product rather than the item with no celebrity on it. The product factor is essential at this stage as potential could be thinking, how will I use it, what other sizes are available, how is it different than other product. The pricing of the product is important as customers will look at how much they will benefit from this or if there another shop selling the same item at a cheaper price. The buyer’s response This stage is when there is a response from the buyer if he/she like the product or the service. At this stage if the customer like the place of the shop that will boost the chance of them deciding to take the product or not. This can also have decided whether they would want to come back. How this shop and the product and services they sell is promoted is also a factor as popularity can really help in making the business grow. If the product they want is promoted with someone like David Beckham, there is more of a chance that someone who is a fan will come back. If the product itself is neatly packaged with no sign of damage, the customer will likely decide to come back. The pricing that the company price their product and services on will be deciding factor as to whether he/she will buy it. How does the 4ps described in task 4 maps relate to the consumer buyer behaviour model?
https://www.huffingtonpost.co.uk/entry/will-brexit-make-clothes-more-expensive_uk_576d2677e4b0232d331dd971 https://sites.google.com/site/zararetailer/fashion-target-market https://harbott.com/analysing-zaras-business-model-6ee755699a70 https://www.cheshnotes.com/2017/08/zara-generic-and-intensive-growth-strategies/ https://www.forbes.com/companies/zara/ Kotler et al., 2008, p.197 Kotler et al, 2008, p208 Smalltownmarketing.com. (2018). How Pricing Affects Your Business by Tom Egelhoff - Small Town Marketing. [online] Available at: http://www.smalltownmarketing.com/product_pricing.html [Accessed 11 Mar. 2018]. https://mpk732t12016clusterb.wordpress.com/2016/05/02/zaras-secret-to-success-retail-its-pricing-strategy/ https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/bulletins/annualmidyearpopulationestimates/mid2017
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