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Zara supply chain management case study
Zara marketing mix
Zara supply chain management case study
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Delivering Sources of Value (channels) To what extent does the organisation use multiple channels to deliver sources of value (can be product/service related, process related or communication related) to its customers? Zara offers many sources of value to their customers, with heavy focus on the social and hedonic benefits of their product lines. Customer value is hard to define, and thus have many different ways of understanding from person to person. Generally, values may refer to: low price, receiving what you want, quality to price, and comparing what is received to what is sacrificed (Zeithaml 1988). Zara appeals to these ideologies of value through a variety of activities. These include: Affordable prices for the latest and most trendy fashion – ‘Fast fashion’ Zara offers high fashion products which are comparable to competitors such as Raoul and Marc Jacobs, but at a more affordable rate. For example, prices start at $30 during sales peaking at over $500 for the uppermost fashion range. This allows Zara to effectively tackle its target market of individuals who are young, sensitive to prices, and motivated by new and upcoming fashion trends. Basically, Zara’s competitive advantage is because they make use of mass customization. The combination of the low volumes and high efficiency lowers the costs and fastens the production procedure. On the other hand, this aggressive approach of Zara is very risky. Despite considering themselves customer oriented, they actually do not have a lot of interaction with their customers. Moreover, the method of avoiding the segmentation of behavioural and age factors creates the opportunity for Zara to penetrate a wider range of markets. Providing a formidable quality in clothing for pric... ... middle of paper ... ... Mango e.g. Miranda Kerr and collaborations with renowned designers at H&M e.g. Karl Lagerfeld (head designer and creative director of Chanel). Two areas that Zara has completely steered clear from yet, have not hindered their success, allowing them to build a strong brand identity through its stores, which are its main touchpoints. This allows them to get up close and personal with its customers, building a strong relationship and connecting on not only an emotional level but a psychological level as well, facilitating in customer retention and development. . Recommendations I would recommend Zara to design some marketing mechanisms to try to activate the knowledge and labor of consumers. This will not only lead to higher commitment of the consumer, but it also enhances the value for the consumer. Both consumers as firms will benefit of this new strategy.
Pelton, L. E., Strutton, D. & Lumpkin, J. R. 2002, Marketing channels: a relationship management approach. McGraw-Hill Irwin: Boston, p. 387.
Customer Value is a very important factor to all businesses let along business that supply products or services to the public. Value is relative to each individual customer but many researchers have found a simple way of defining customer value. Customer value equal the result produced for the customer plus process quality divided by the price to the customer plus the costs of acquiring the product (McMurrian & Matulich, 2016). The customer must purchase the product or service and experience it for the company to be able to benefit from the feedback. The four mechanisms within customer value, the results, process quality, price and customer access cost, are all very important for a company to understand in order to fully understand customer value.
Soman,D & Marand, S (2009). Managing Customer Value: One Stage at a Time.: World Scientific Publishing. p9-14.
The aim of these collections is the attempt to de-emphasize biological differences between genders. And with the absence of gender markings, clothes are devoid of sexuality. We could take David Robert Jones, known as David Bowie, who was an English singer and actor, as an example; looking back his androgynous appearance seemed very radical but today he is still an icon of how two genders can exist in one personality. Bowie expressed his personality and identity not only through the way of living, but also through the way of dressing. Jo B. Paoletti, professor of American Studies at the University of Maryland in College Park, where she teaches courses related to everyday life, including fashion, claims “Fashion, you see, is in the mind. You have to think differently before you can dress differently. By changing their clothes, people risk changing their whole lives and they are frightened. “(2015: 68) This quote one more time proves the idea which goes through ages- there is a great importance of fashion in expressing one’s status, beliefs and sexuality. A lot of famous designers around the world create unisex or hybrid clothes in 2016, for instance such company as Burberry, with a chief creative officer, Christopher Baily, has presented spring/summer collection of androgynous clothing. The fact that one of the most influential fashion developers creates such clothes shows the popularity of gender- neutral dressing at present. Another example of gender- neutral collection that I would like to give is Zara. Zara is a Spanish clothing and accessories retailer based in Arteixo, Galicia. The company was founded in 1975 by Amancio Ortega and Rosalía Mera. Its main aim from the day of establishment has been to reach out for so-called ‘common-people’, who cannot afford designers’ clothes, but wish to dress fashionably. So, in March of 2016 the brand has introduced a range of
The business model that sets Zara apart from other clothing retailers is how rapidly the company changes stocks and releases new product lineups. The company averages 12-16 collections annually which equates to more than one lineup a month. Due to stock being limited and the rapid production Zara brings forth, their items are viewed as exclusive promoting further business. Their customers are happy knowing that their specific article of clothing is more “rare” due to only having an average of a two-week window to purchase the clothing. The company specifically targets current trends and has them in the store within 30 days. This maintains the brand’s uniqueness and relativity in fashion.
1a: Zara’s ability to manage some of the manufacturing in-house and distribute only what is absolutely necessary to outside manufacturers gives them a unique amount of flexibility and control over cost and quality. Their competitors are primarily outsourcing the production, so that control over price is lost.
Value has different aspects which include company values; which relates to new innovations, job growth, reducing costs, as well as long term production and so forth. Value must meet customers’ needs which they benefit from the product or service.
Problem Recognition is the first step in the consumer decision making purchase. When customer passes through this step, it moves to the second step which is known as information search. Zara focuses on this step. When customers starts collecting information to know about a particular brand or various alternatives available in the market. As per the customers of Zara, various factors can influence their decision to choose Zara. Some of the factors that can influence the decision of its customers are products, brand image and brand identity, coming up with new products every two to three weeks and ambience of Zara stores and outlets. The decision factors differs from a person to person are unique for every person. Zara has to focus on factors like brand image, brand identity, products, ambience of its stores, so that it can influence the consumer’s decision and attract more customers to choose Zara. (Vaxjo, K. 2011)
The fundamental business strategy of Zara is very simple which is linking customer demand to manufacturing, and liking manufacturing to distribution. Zara has been running their business in fashion industry which is susceptible to seasons and quick changing customer tastes. Zara has been approached to and considered their business as a perishable commodity business just like a fresh baked cake or bread to be consumed quickly.
Weinstein, A. (2012). Superior customer value: strategies for winning and retaining customers (3rd ed.). Boca Raton, FL: CRC Press.
Contrary to must companies, Zara delivers new products twice a week to all their companies around the world. The made this possible because they control manufacturing closer than must companies, they act as both the supplier and the retailer. Instead of outsourcing to Asia or countries that production is cheaper, they have 14 highly automated Spain factories that create the foundation of their products. Then, these unfinished products are sent to their more than 300 small network partners in Portugal and Galicia to handle the rest of the process. By, not outsourcing the have the benefit of making any changes to their products depending on customer’s preferences; they have the ability to react quickly, designing new styles and getting them to the stores while the trend is still peaking. So it can be said, that supply chain management is the key to Zara success.
Segmentation: Some of the important bases for segmenting consumer markets are Demographic, Geographic, benefits, Psychographic and Usage rate segmentation. Geographic segmentation is the priority of Zara. It is a global brand and its supply chain management is very much perfect. It helps Zara in getting the latest trends into stores in three weeks’ time based on consumer preferences. It’s a Spanish brand, so it would a better option for Zara to open more store in European countries. Consumers would be more interested in making their decision towards preferring Zara. It has dived its segment on the basis of gender where more preference is for women and less preference for men. It can be seen that in any Zara store there are two floor for women and 1 floor or a part of a floor for men products. For example, the store in Leeds. It focuses on women age group up to 35 years who is more concerned about having a fashionable life style. As per the psychographic segmentation, Zara consumers are more ambitious and are attracted towards fancy and trendy products. It makes products that give...
Miuccia Prada once said that “What you wear is how you present yourself to the world, especially today, when human contacts are so quick. Fashion is instant language”. Miuccia Prada and the Prada brand have grown from humble beginnings making quality leather goods to a public traded company with a current market capitalization of over $26 billion (USD) . With the development of Prada as one of the world’s premier luxury brands it provides an excellent case study to examine how strategy paved the way for the success of the Prada brand. First, an examination of Prada’s strategic positioning against luxury brand rivals Louis Vuitton Hennessey Moet (LVHM) and Kering (Gucci). The acquisition history of Prada will be reviewed, where some preliminary conclusions can be made about what has been contributing factors to both the successes and failures. Then finally, an evaluation of what the future holds for Prada and the sustainability of its competitive advantage.
With the rise of the economy, consumers have become more and more knowledgeable on selecting their favourable product as a result the organization cannot focus on what it sells but on the side focus on what the customer wants to buy.
Customer Value is important to my company. My Company knows who purchase their goods and services and why these consumers view our offerings as having the highest value to them.