Marketing Plan BSP6000

“TO INCREASE FOOTFALL IN PHYSICAL STORES POST COVID-19”

Imane Benlimam

20151083

Ethics Number : 2020D0671

BA (Hons) Business & Management Studies with Marketing

2020/2021

Word Count : 7417 words

Marketing Plan BSP6000

Declaration

I declare that this Marketing Plan has not already been accepted in substance for any degree and
is not concurrently submitted in candidature for any degree. It is the result of my own
independent research except where otherwise stated.

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Acknowledgments

I would like to express my intense gratitude and indebtedness to my respected supervisor Dr.
Nicola Williams Burnett for her continual support and guidance throughout the completion of this
Marketing Plan. I further take this opportunity and profound privilege to thank my family for their
constant motivation, support, and encouragement throughout my three years in university.

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TABLE OF CONTENTS
Declaration……………………………………………………………………………………….2
Acknowledgements………………………………………………………………………………3
Contents…………………………………………………………………………………………..4
Abbreviations…………………………………………………………………………………….6
List of Tables……………………………………………………………………………………..7
List of Figures……………………………………………………………………………………8
1.0 Introduction…………………………………………………………………………………..9
1.1 Company background……………………………………………………………………… .9
1.2 Market trends……………………………………………………………………………….10
2.0 Situational analysis…………………………………………………………………………13
2.1 Macro environmental analysis……………………………………………………………...13
2.1.1 Political…………………………………………………………………………………...13
2.1.2 Economic…………………………………………………………………………………13
2.1.3 Social……………………………………………………………………………………..14
2.1.4 Technological…………………………………………………………………………….15
2.1.5 Environmental……………………………………………………………………………15
2.1.6 Legal……………………………………………………………………………………...16
2.2 Micro environmental analysis………………………………………………………………16
2.2.1 Market conditions…………………………………………………………………………16
2.2.2 Competitive analysis……………………………………………………………………...17
2.2.3 Intermediaries, suppliers, and stakeholders………………………………………………18
2.3 Internal analysis………………………………………………………………………….…19
2.3.1 Mission and vision statements, & brand values………………………………………..…19
2.3.2 Financial status……………………………………………………………………………20
2.4 TOWS Analysis…………………………………………………………………………….21
3.0 Objectives…………………………………………………………………..………………22
3.1 Corporate objectives………………………………………………………..………………23
3.1.1 Increasing footfall………………………………………………………………………...23
3.1.2 Increasing brand awareness………………………………………………………………24
3.1.3 Creating experiential space……………………………………………………………….24
3.2 Sales objectives……………………………………………………………………………..25
3.2.1 Increasing sales…………………………………………………………………………...25
3.2.2 Increasing customer retention…………………………………………………………….25
3.2.3 Increasing market share…………………………………………………………………...26
3.3 Communication objectives………………………………………………………………….27

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3.3.1 Increasing customer engagement…………………………………………………………27

4.0 Strategies……………………………………………………………………………………29
4.1 Segmentation………………………………………………………………………………..29
4.2 Targeting……………………………………………………………………………………34
4.3 Positioning…………………………………………………………………………………..36
4.3.1 Current positioning………………………………………………………………………..36
4.3.2 New positioning…………………………………………………………………………..37
4.4 Chosen strategies……………………………………………………………………………38
4.4.1 Customer acquisition, customer retention, and customer loyalty strategy………………..38
4.4.2 Digital marketing strategy………………………………………………………………...40
4.5 Strategy evaluation………………………………………………………………………….41
5.0 Tactics………………………………………………………………………………………41
5.1 Campaign 1 : “Mix, Match, & Piece” ……………………………………………………...43
5.2 Campaign 2 : Exclusive Membership Program…………………………………………….45
5.3 Campaign 3 : PR Re-launch store event……………………………………………………50
6.0 Actions……………………………………………………………………………………...53
6.1 Year 1……………………………………………………………………………………….54
6.2 Year 2 & 3…………………………………………………………………………………..56
7.0 Controls……………………………………………………………………………………..58
7.1 Financial Plan……………………………………………………………………………….58
7.1.1 Year 1……………………………………………………………………………………..59
7.1.2 Year 2……………………………………………………………………………………..60
7.1.3 Year 3……………………………………………………………………………………..62
7.2 KPI’s………………………………………………………………………………………..63
7.3 Contingency plan…………………………………………………………………………...65
8.0 Appendices………………………………………………………………………………….67
8.1 Appendix 1 : Questionnaire results…………………………………………………………67
8.2 Appendix 2 : Macro environmental analysis – PESTLE…………………………………...71
8.2.1 Political…………………………………………………………………………………...71
8.2.2 Economic…………………………………………………………………………………73
8.2.3 Social…………………………………………………………………………….……….77
8.2.4 Technological…………………………………………………………………………….79
8.2.5 Environmental…………………………………………………………………………….81
8.2.6 Legal……………………………………………………………………………………...82
8.3 Appendix 3 : Micro environmental analysis……………………………………………….83
8.3.1 Market competitiveness – Perceptual map……………………………………………….83
8.3.2 Porter’s Five Forces………………………………………………………………………83
8.4 Appendix 4 : Internal analysis……………………………………………………………...86
8.4.1 McKinsey 7S Model……………………………………………………………………...86
8.5 Appendix 5 : SWOT Analysis……………………………………………………………...93
9.0 List of references…………………………………………………………………………...94

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Abbreviations

• UK : United Kingdom

• GDP : Gross Domestic Profit

• STP : Segmentation, targeting, and positioning

• SAF : Sustainability, feasibility, and acceptability

• PR : Public Relations

• B2C : Business to Customers

• RFID : Radio Frequency Identification

• IoT : Internet of Things

• EU : European Union

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List of Tables

Table 1: Contribution of stores’ net sales in annual revenue

Table 2: Customer Engagement on Instagram

Table 3: Number of followers on Facebook

Table 4: Marketing Mix

Table 5: Gantt Chart – Year 1

Table 6: Year 1 Quarterly Goals

Table 7: Gantt Chart – Year 2 & 3

Table 8: Year 2 & 3 Quarterly Goals

Table 9: Financial plan – Year 1

Table 10: Financial plan – Year 2

Table 11: Financial plan – Year 3

Table 12: KPI’s

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List of Figures

Figure 1: Percentage of stores reporting a decrease in footfall because of the effects of the coronavirus pandemic

Figure 2: Stakeholders – Inditex Company

Figure 3: Consolidated income statement – Inditex 2019

Figure 4: TOWS

Figure 5: Age structure of the UK population (projected), 2019

Figure 6: Customer persona 1

Figure 7: Customer persona 2

Figure 8: Instagram Post – Owned Media

Figure 9: Instagram Story – Paid Media

Figure 10: Exclusive Membership Card

Figure 11: Referral system

Figure 12: Differentiated Facebook Post Advertisement

Figure 13: Differentiated Instagram Post Advertisement

Figure 14: Undifferentiated Website Advertisement

Figure 15: Design concept

Figure 16: Implementation of RFID

Figure 17: PR event - Differentiated Instagram & Facebook Advertisement

Figure 18: Monthly GDP – From January 2020 to October 2020

Figure 19: Inflation rate forecast 2019-2024

Figure 20: Percentage of UK population in age band

Figure 21: Forecast ageing UK population

Figure 22: Mobile, Internet, and Social Media usage among total population in the UK

Figure 23: Online content activities

Figure 24: Perceptual Map

Figure 25: The supply chain at Inditex 2019

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1.0 Introduction

1.1 Company background

Founded by Amancio Ortega and his wife Rosalía Mera in 1975, Zara is one of the world’s largest

fashion powerhouse (Our story, n.d.). Since its foundation, the brand was first introduced as a

‘‘fast-fashion’’ retailer featuring menswear, womenswear, kidswear, shoes, accessories, and

beauty products. The legend began when the couple opened a small store first called Zorba in

A Coruña, which was renamed afterwards as Zara because the trademark was already taken.

After 8 years, the business expanded across the biggest cities in Spain and 9 new stores were

opened in the most prestigious shopping districts (Our story, n.d.). In the next few

years, Zara entered global markets starting with Portugal to become international. Today, Zara is

present in more than 96 countries and operates over 2270 stores worldwide (Inditex around the

world, n.d.) (Zara, n.d.). Digitally wise, the company launched its global online store in

2018, within 106 markets in which it did not have stores (Our story, n.d.).

In 1985, Inditex was officially founded by Amancio Ortego, to bring all his eight distinct

brands under one banner, including Pull & Bear, Massimo Dutti, Bershka, Stradivarius, and other

international brands. Today, Inditex became one of the world’s largest fashion retailers with more

than 174,000 employees, and Zara is considered as its flagship (Roll, 2020).

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In today’s digital era, in-store sales still contribute towards annual revenues, particularly in the

apparel market (See 1.2). Therefore, the marketing challenge in hand is to increase footfall in

physical stores after COVID-19.

1.2 Market trends

Coronavirus is an unprecedented crisis that has affected almost all industries, mainly the retail

landscape, through accelerating online penetration and physical stores consolidation (Carroll,

2020). Since the COVID-19 outbreak, appetite for clothing has dropped dramatically, with

consumer spending estimated to have declined by 28%, from £59.3 billion in 2019 down to £42.5

billion in 2020 (Sender, 2020). This unexpected decrease in sales comes from several reasons,

notably people prioritizing necessity products over fashion items because most of clothing

purchases are driven by occasions and events, whereas people are mostly at home due to

government restrictions on social events (Carroll, 2020). Moreover, reduced high street footfall is

another reason witnessing dropped sales volumes (Carroll, 2020).

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Figure 1: Percentage of stores reporting a decrease in footfall because of the effects of the coronavirus pandemic

(Retail sales, Great Britain: August 2020, 2020)

As represented in Figure 1, high street footfall decreased by 85.7% compared to 2019 (Retail sales,

Great Britain: August 2020, 2020). This is explained by the fitting rooms that remained closed

following government guidance. In fact, one of the key motivators for visiting stores is trying

clothes on, touching the fabric, or just browsing (Carroll, 2020). Therefore, now that fitting rooms

are closed and the number of customers in-store is limited in order to preserve social distancing,

there are no more key motivators for visiting stores (Carroll, 2020).

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While the global crisis has rapidly reshaped consumers’ behaviors, anxiety around being in contact

with people, visiting stores altogether, and trying on clothes, is becoming an essential factor

resulting in limited high streets footfall and sales growth (Sender, 2020). Also, there has been an

important increase in the number of consumers switching from cash to cards or contactless

payments (Sender, 2020). With that being said, more emphasis is put into those two payment

methods, which may have a slight impact at store level. Therefore, even when stores re-open,

footfall is expected to be significantly impacted in the short-term (Sender, 2020).

It is true that nowadays online shopping for fashion is becoming more common and efficient, and

the shift away from physical stores is creating a longer-lasting legacy (Sender, 2020). However,

the in-store experience still has an important impact on sales growth. According to

reports.mintel.com (2020): “50% of consumers often shop in-store for fashion products after

seeing them online whilst 48% reported they order online after seeing the product in-store. Key

here is that physical stores cannot be replaced by e-commerce by any means.”

Furthermore, Inditex, the parent company of Zara, highlighted in its 2022 Horizon strategy that

online is a big opportunity for growth and that the company was already scaling up its online

operations during the pandemic (Sender, 2020). Nevertheless, it is still a largely store-based

business, with outlets accounting for 86% of revenues in 2019 (Sender, 2020). Therefore, it is

expected that the company is still willing to invest sums in its physical stores through enlarging its

existing stores, opening new ones in other geographical locations.

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Based on this, the challenge for this marketing plan and Zara is to increase footfall to physical

stores after the pandemic.

2.0 Situational Analysis

2.1 Macro environmental analysis

As underlined by Masterson and Pickton (2014), the macro-environmental analysis refers to

external factors that have an impact on the organization such as political, economic, socio cultural,

technological, legal, and environmental. To gain a greater understanding of the macro-

environment facing Zara, this report will use the PESTLE model.

2.1.1 Political

The United Kingdom is a politically stable country where investors would not focus on radical

changes of regimes. Also, as explained in Appendix 2, the Kingdom has a strongly positive aspect

which will make the marketing challenge easier to solve, with the expectation of not having any

political change in the long or short run. However, the Brexit may slightly impact the political and

economic situations in the country, which would affect the retail industry and consequently, the

company. In regards to trade restrictions, the political agreement between the United Kingdom and

the European Union would allow Zara to ship its products worldwide at a low cost and with less

efforts (See 8.2.1.).

2.1.2 Economic

Knowing that the political aspects and the economic situation of any country are deeply

interconnected, economic factors have also the power to change business results. In contrast, the

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political stability may encourage investment and increase the pace of economic

development. According to Appendix 8.2.2., despite the retail industry witnessing a huge hit due

to the impact of COVID-19, it is predicted that the industry recovers in the next few months,

which would be beneficial for Zara. Nevertheless, the UK government is delaying controls on

goods entering the UK from the EU for a further six months due to Covid-19 impact. Meaning that

Zara might face some complications to import its goods to the UK. Additionally, if

the British currency experiences a decline, it means that manufacturing costs will be higher and

therefore, Zara will be obliged to increase its prices in order to cover the costs. Linking back to

consumer spending that has significantly declined by 16.3 % due to UK national lockdown, the

company has less chances to attract customers in case they increase prices (UK lockdown reduces

consumer spending to lowest levels since last spring, 2021) (UK Consumer Spending Report,

2021). However, with predictions that the global economy will revert to its pre-pandemic level in

the next few months, it is more likely that the UK experiences an increase in consumer spending

and exchange rates (Global economy watch: Predictions for 2021, n.d.). (Appendix 8.2.2.)

2.1.3 Social

According to Appendix 8.2.3., the ageing population in the United Kingdom witnesses a growing

number of people aged between 18 and 30 years old. Considering this age band as Zara’s target

audience, the UK is an opportunistic market for the fast-fashion brand (See 3.2.). Also, the shift in

shopping habits has experienced a big surge after easing restrictions in the UK (See 8.2.3.). As a

result, shoppers will gain more confidence and therefore, customer’s tendencies to buy from high

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street stores will tend more likely to increase, particularly now that the vaccination rate has raised

in the UK.

2.1.4 Technological

Following Appendix 8.2.4, the UK has one of the largest technology ecosystems in the world,

meaning that it is built around a strong corporate culture. Therefore, this makes it easier for Zara

to use its technological innovations, notably those in artificial intelligence, the IoT, data centers,

and 5G communications. Furthermore, the social media and internet statistics witness that a large

part of the population is tech-savvy and therefore, Zara could effectively make good use of social

media and internet in its tactics.

2.1.5 Environmental

Among the core environmental footprint of the fast fashion industry that the UK government is

trying to tackle are : scarcity, waste, pollution, and other environmental issues. Thus, several

programs and plans were established in order to protect the environment

and minimize unsustainable resource use (See 8.2.6). Since demand for eco-conscience clothing

is increasing, Zara is minimizing waste and avoiding discounting big amounts of clothing by

reducing their inventory (Zara uncovered: Inside the brand that changed fashion, 2019). Moreover,

Zara is trying to reach zero waste in store by producing all its packaging from recyclable materials

such as plastic and cardboard. However, the brand should implement further environmentally

friendly practices by, for instance, manufacturing its products from organic, recycled, and other

sustainably sourced materials in order to meet the government’s environmental regulations.

Furthermore, Zara must ensure the use of animal-friendly clothing as they still use wool, leather,

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and animal hair and this may mislead to customers boycotting the brand or switching to other

cruelty-free brands. The brand could also promote its sustainability initiatives through ad

campaigns, in order to attract more eco-conscious customers. (Zara uncovered: Inside the brand

that changed fashion, 2019)

2.1.6 Legal

According to Appendix 8.2.6., Zara must ensure that all its products are under quality control

checks before they are delivered to customers. Moreover, Zara must maintain its brand

reputation by ensuring quality standards that they promise to customers otherwise negative

reviews will ruin the brand's reputation and image. Additionally, the fast-fashion brand must set a

retainment plan for its employees due to the job retention scheme closing in April 2021.

2.2 Micro environmental analysis

The micro-environmental analysis will include factors like market conditions, competitive

analysis, structure of intermediaries, stakeholders, and suppliers, which affect the organization’s

performance and decision-making (Monash Business School, 2019).

2.2.1 Market conditions

Based on the research conducted by Statista (2020), the apparel market in the UK has been growing

exponentially over the last years. It is estimated that the market revenue reaches 62.2 billion euros

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in 2021. Furthermore, the UK’s Office for National Statistics announced that the annual

expenditure on clothing have reached 59.3 billion pounds in 2019. This implies that the market is

healthy and will benefit the challenge (Shahbandeh, 2020). With Zara making €19,564 million in

sales in 2019, it is considered as the most profitable company in the Inditex group whose market

share represents 1.5% of the UK market in 2019 (Sender, 2020) (Annual Report 2019, 2019,

p.12).

2.2.2 Competitive analysis

The fast-fashion industry is a fast-moving sector with a high number of competitors, particularly

in the UK market. Therefore, Zara is among a highly competitive market with

fashion brands thriving to obtain the most market share. The brand has mainly 3

direct competitors: Boohoo, M&S, and H&M.

The perceptual map illustrated in Appendix 8.3.1 draws a picture of the competitive landscape

of Zara. The figure represents where the brand stands among its competitors in terms of

two key attributes: quality and price. Based on its positioning, Zara has a big market to capture.

Therefore, it is essential to implement new marketing strategies and tactics to stand out among

competitors in this fast-paced market.

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2.2.3 Intermediaries, suppliers, and stakeholders

Figure 2: Stakeholders – Inditex Company

Source: (Stakeholder Relations | Inditex, 2016)

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Zara is a brand that sells its products directly to customers within its 2270 physical stores and

online website and therefore, have no intermediaries (Annual Report 2019, 2019, p.19).

Furthermore, according to Inditex annual report of 2019, the parent company’s main stakeholders

are employees, customers, suppliers, community, environment, and shareholders (Annual Report

2019, 2019). Regarding its suppliers, the fashion brand has more than 1900 suppliers in over 8000

factories (Our suppliers, n.d.).

2.3 Internal analysis

The following internal analysis is used to understand and assess the capabilities of the organization

as well as its human and financial resources (Baines et al, 2017). Further internal environment

analysis is provided in Appendix 8.4.

2.3.1 Mission and vision statements, & brand values

The mission and vision statements as well as brand values of Zara, have been increasingly essential

to its growth and popularity so far.

Starting with the company’s mission statement, Zara aims to “give customers what they want, and

get it to them faster than anyone else” (Zara Mission Statement 2021, 2020). Such a clear and

concise statement shows that Zara is positioning its customers at the core of the brand’s success

by making customers as the brand’s principal designer. In other words, Zara’s unrelenting focus

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on how fast they can offer distinguished products to customers while responding instinctively to

their changing needs at the right given point in time.

Through its vision statement, Zara has set future goals that include developing society and

improving the environment. The company clearly stated that its vision statement is “to contribute

to the sustainable development of society and that of the environment with which we

interact.” (Mission Statement, n.d.). As a fashion brand, Zara’s brand values are “beauty, clarity,

functionality, and sustainability” (Zara, n.d.). Hence, the brand acknowledges the importance of

using its brand values as guiding principles its operations while always keeping updated with the

latest trends and market demands.

2.3.2 Financial status

Figure 3 below describes Zara’s parent company, Inditex, financials for 2019. This is detailing the

consolidated income statement, comparing between the fiscal years 2018 and 2019. As illustrated,

the gross profit has increased by 990 millions of euros between 2018 and 2019.

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Figure 3: Consolidated income statement – Inditex 2019

(Inditex - Annual Report 2019, 2019)

2.4 TOWS Analysis

The figure below represents a TOWS matrix extended from the SWOT analysis conducted in

Appendix 8.5.

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Figure 4: TOWS

3.0 Objectives

This section outlines the key objectives of this plan that would contribute to the achievement of

the core objective which is to “increase footfall in Zara stores after COVID-19”.

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3.1 Corporate objectives

3.1.1 Increasing footfall :

This project is mainly based around increasing footfall in Zara’s physical stores.

The first objective would be to increase in-store visits by 3% in the first year, 5% in the second

year, and 8% in the third year.

Furthermore, as mentioned previously in Section 1.2, Zara stores’ sales account for 86% of

revenues in 2019 (Clothing Retailing: Inc Impact of COVID-19 - UK - October 2020, 2020).

Therefore, the objective is to boost the contribution of stores’ net sales in Zara’s revenues

structured as;

Table 1: Contribution of stores’ net sales in annual revenue

Contribution of stores’ net sales in annual revenue

From To

Year 1 86% 89%

Year 2 89% 92%

Year 3 92% 95%

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3.1.2 Increasing brand awareness :

According to Keller (2001): “If people know who you are, they will know what you stand for and

what you’re good at”. Thus, increasing brand awareness of physical stores is crucial to encourage

Gen Z as well as Millennials to come in stores and buy. Still, achieving this objective work hand-

in-hand with other core objectives of this project.

With this plan, brand awareness of physical stores will increase by 20%:

• 10% in the first year

• 6% in the second year

• 4% in the third year

3.1.3 Creating experiential space :

A corporate objective that would go alongside enhancing the company’s image and reputation as

well as attracting more customers to visit physical stores is to create an experiential space in Zara

stores. Therefore, this project consists of revamping 14 stores by enhancing their designs to attract

more audience to visit them as well as spend money.

• First year : 2 stores.

• Second year : 5 stores.

• Third year : 7 stores.

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3.2 Sales objectives

3.2.1 Increasing sales :

Increasing footfall does not necessarily mean to increase sales. However, measuring sales is crucial

to analyze whether in-store visits are generating sales and whether the marketing strategy is

successful or not.

According to BBC (2019), gross profits of Zara reached £9.7 billion for the nine months to the end

of October in 2019 (Profits surge at Zara, 2019). Therefore, the objective is to surge gross

profits from in-store sales as follows.

• 6% in the first year

• 5% in the second year

• 3% in the third year

3.2.2 Increasing customer retention :

Since competition is fierce in the fast-fashion industry within the United Kingdom, fashion

enthusiasts could easily switch from a brand to another in case they notice a decrease in price or

other trendy items displayed on shop windows. Therefore, in order to build customer loyalty and

overcome competition, the objective is to launch a loyalty program.

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To increase customer retention, a membership program will be implemented with the objective to

reach 55,000 members to enroll in the program during the three years. This objective would also

impact sales volume since it will help the business grow and keep profits high.

• First year : 25,000 members

• Second year : 20,000 members

• Third year : 10,000 members

3.2.3 Increasing market share :

While there is an important correlation between market share and sales, another key objective is

to increase market share in the United Kingdom. As Robert D. Buzzell (1970) stated: “as market

share increases, a business is likely to have a higher profit margin.” Therefore, this plan will enable

increasing Zara’s market share in the United Kingdom;

• 0.3% in the first year

• 0.5% in the second year

• 0.7% in the third year

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3.3 Communication objectives

3.3.1 Increasing customer engagement :

As mentioned in Section 1.2. : “50% of consumers often shop in-store for fashion products after

seeing them online whilst 48% reported they order online after seeing the product in-store.”

Therefore, the main communication objective outlined is to improve customer engagement.

With this objective in mind, the plan will achieve primarily an increase of internet interactions on

social media platforms to build a larger digital presence in order to emerge the online and offline

channels and encourage people to visit physical stores. The plan consists of increasing the number

of followers and the average like and comments on Facebook and Instagram based on the target

audience’s media consumption (See 4.1).

• Instagram

Based on an average of more than 14,166 followers per day, 28,835 likes per post, and 169 per

post on Instagram, the purpose is to reach around 4,5 million more followers in 3 years, structured

as follows (ZARA Official, n.d.);

Table 2: Customer Engagement on Instagram

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Customer Engagement on Instagram

From To

Number of Average Average Number of Average likes Average

followers likes comments followers comments

Year 1 44,337,575 28,835 169 46,554,453 30,276 (5%) 177 (5%)

Year 2 46,554,453 30,276 177 47,951,087 31,185 (3%) 184 (4%)

Year 3 47,951,087 31,185 184 48,910,109 31,808 (2%) 188 (2%)

• Facebook

Zara’s profile on Facebook showcases a number of followers exceeding 29,712,904 (Zara - Home,

2021). The aim is to increase it by 10% in a 3-year period.

Table 3: Number of followers on Facebook

Number of followers on Facebook

From To

Year 1 29,712,904 31,198,549 (5%)

Year 2 31,198,549 32,134,506 (3%)

Year 3 32,134,506 32,777,196 (2%)

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In terms of customer engagement on Facebook, the objective is to increase the average likes and

comments by:

• 5% in the first year

• 3% in the second year

• 2% in the third year

4.0 Strategies

This section outlines an analysis of STP process in order to identify all decisions Zara need to

make in order to develop a specific competitive strategic positioning. Through this process, the

organization would be able to define its segments within this market and target a narrow segment

in order to establish a strong competitive positioning (McDonald, 2016).

4.1 Segmentation

Section 4.1 provides an overview of segmentation and details the routes analyzed to divide the

market into different groups of purchasers who might require different products and marketing

mixes. As stated by Kotler et al. (1997): “ Segmentation is dividing a market up into distinct

groups of buyers with different needs, characteristics or behaviours, who might require separate

products of marketing mixes.”

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Figure 5: Age structure of the UK population (projected), 2019

(Duckett, 2019)

As illustrated in Figure 5, Gen Z represents a diminutive size compared to other Generations,

accounting for just 15% of the total UK population. However, it is reported by Duckett (2019) that

Gen Z will become an increasingly attractive audience for businesses and advertisers over the

coming years. Additionally, Millennials account for 26 per cent of the total UK population, which

is a significantly important customer segment to target. Thus, by targeting Gen Z and Gen Y, Zara

would target 41% of the total population in the United Kingdom and since the market is

exponentially growing every year, therefore, the organization would be targeting a highly

attractive market.

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Nevertheless, the retail landscape is constantly changing and Zara will continue to face fierce

competition. By connecting their online and offline distribution channels through their highly

responsive supply chain, their chances of overcoming competition and winning over this audience

will become stronger compared to existing players in the market. With that being said,

by exploiting their strong competitive advantage and maintaining customer’s loyalty, the market

would be highly attractive for Zara.

As a clear guidance for the strategic decisions needed to achieve the objectives outlined in Section

3.0, a buyer profile would be useful. In fact, through breaking down Zara customers into groups

of customers sharing similar characteristics and interests, actionable details would be identified in

order to achieve the key objectives established above (Revella, 2015).

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Figure 6: Customer persona 1

Figure 7: Customer persona 2

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According to reports.mintel (2020): “Zara targets males and females aged between 20 and 30 years

old.” This means that demographically speaking, Zara’s current market include young male and

female Millennials and Generation Z. Regarding Millennials or Generation Y, they are less brand

loyal and could easily switch to other brands due to the speed of internet that emphasized their

flexibility and fashion style. Being Digital Native, this segment want fast and immediate

processing. On the other hand, Gen Z include digital integrators who have integrated and used

technology since their youngest age. However, this segment encompasses savvy individuals who

know what they want and who are passionate about the latest fashion trends and tend more likely

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to become brand loyals. They might have a compulsive and authoritarian personality and they are

achievers and strivers. (Kearns, 2021)

4.2 Targeting

Now that a target audience has been identified, “a communication strategy must be created to reach

and attract them based on their media habits and consumption” (Jackson, 2016). To cluster the two

defined segments with a view to offering differentiated value propositions, a differentiated

marketing strategy will be used. This marketing strategy is considered as more expensive

compared to the undifferentiated approach. Nevertheless, it will enable Zara to master its niche

markets and drive sales to physical stores.

As mentioned previously, Gen Z is the generation of digital integrators and internet has become

the main source of their buying process. Nevertheless, Gen Z still enjoy visiting physical stores.

According to Salesfloor : “84 per cent of Gen Z consider visiting stores as a social excursion and

wait to complete a list of wants and needs before purchasing in-store.” Likewise, Millennials still

prefer to shop in-store despite being inundated with digital content. Although Millennials often

rely on advices from their friends during their buying process but 68% of them admitted that they

are strongly influenced by social media content and 84% argued that user-generated content

influences their purchases. Additionally, based on Appendix 1, two-thirds mentioned that they are

comfortable shopping online however they still prefer in-store shopping experience for the instant

gratification of delivery time frame.

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Marketing Plan BSP6000

Therefore, since technology drives Millennials and Gen Z shopping experience, product offering

would be slightly different to both markets and the communication strategy will also be different.

To target Gen Z, it is extremely essential to consider social media as well as other digital-focus

tools to promote the products by emphasizing how it will benefit them instead of telling them how

great it is (Pollicot, 2019). Additionally, using Instagram and Facebook would intensively create

a want and desire for Gen Z like Angela Waterson.

On the other hand, Millennials that are also a tech-savvy audience still consume long-standing

social media platforms like Facebook (Millennial Content Consumption Fact Sheet, 2021).

Furthermore, this audience also seek friends’ advices during their buying process and they could

therefore be highly influenced by consumer-generated content, also referred to as word-of-

mouth (Millennial Content Consumption Fact Sheet, 2021). In all, by combining offline and online

channels, user-generated content would provide a seamless shopping experience across Gen Z and

Millennials and therefore, drive footfall into physical stores (How Each Generation Shops in 2020,

n.d.).

4.3 Positioning

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Marketing Plan BSP6000

Zara takes pride of its large presence in more than 96 markets around the world locating its stores

in the main highstreets near luxurious brands (Zara, n.d.). By this means, Zara seek to be

perceived as a premium brand due to its good quality products and fashionable designs, but with

affordable prices. With that being said, Zara positions itself as an affordable premium brand.

Moreover, the brand embodies the concept of fast-fashion by keeping up with the pace of rapid

changes in fashion and offering new collections twice a week (See 8.4). In addition, despite Zara

adopting a zero advertising policy, it is noticeable through their few ad campaigns that Zara targets

individuals seeking social approval. The appealing messages of their advertisements guide us to

conclude that Zara positions itself as an affordable, but high-quality brand, dedicating its products

to individuals seeking comfortable, fast-fashionable, and affordable clothes from a well-known

brand.

4.3.1 Current positioning

The positioning map below illustrates where Zara is currently operating within the market

compared to key existing players by evaluating two factors, quality and price (Kotler, 1988).

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4.3.2 New positioning

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Marketing Plan BSP6000

According to Appendix 1, the largest part of participants consider the most important feature when

clothes shopping in-store is price. They have also added that what motivates them to purchase

from Zara is quality. Therefore, to avoid the Veblen effect, the price would be unchanged but the

quality will be optimized. With the objectives outlined in Section 3.1.4, Zara will be perceived as

a brand of higher quality and therefore, it will be positioned as illustrated in the positioning map

above.

4.4 Chosen strategies

This section will discuss the strategic decisions selected to achieve this plan’s objectives following

the STP process conducted above. The first chosen strategy is customer acquisition, retention, and

loyalty. The second one is digital marketing strategy.

4.4.1 Customer acquisition, customer retention, and customer loyalty strategy

In today’s competitive apparel market, customers could easily switch from a brand to another

based on how fashionable and affordable are their offerings (Isson and Hwang, 2018). Taking into

consideration that Zara tend more likely to have brand switchers than brand loyals, by adopting

the customer acquisition, retention, and loyalty strategy Zara would be able to retain their most

valuable customers and attract new prospects. As discussed in Appendix 4, one of Zara’s main

weaknesses is poor customer service which may convert into a threat and encourage customers to

switch to competition. Therefore, by applying the customer retention strategy, Zara could use the

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power of Artificial Intelligence to decrease customer service costs and increase customer

satisfaction (Isson and Hwang, 2018).

Furthermore, with today’s evolving socioeconomic conditions, consumers buy products and

services differently due to advances in digital platforms. Zara takes pride of being a brand that

constantly captures all customer interactions to acquire knowledge on their needs, desires, and

buying patterns. This helps the brand to understand why a customer switched to the rivalry and

what should have been done to prevent it. Thus, using segmentation, optimization techniques, and

engaging customers in social media platforms, notably Instagram and Facebook, will help Zara in

predictive analytics to better understand its customers’ needs and what could influence them to

visit stores (Isson and Hwang, 2018).

A positive customer retention strategy is creating additional customer-perceived value without

adding extra costs for the company. This could be done through implementing value-

adding programs like a membership card. The membership program would add value to consumers

during credit acquisition and at redemption. In fact, consumers will receive psychological benefits

like sense of belonging and of being valued which would improve customers’ emotional

attachment to Zara (Buttle and Maklan, 2008). Also, research suggests that club membership

programs are successful at promoting customer retention particularly because the company would

be able to analyze personal details and subsequently understand better its customers and create

personalized offers and services for them (Buttle and Maklan, 2008).

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4.4.2 Digital marketing strategy

In today’s evolving digital marketplace where Gen Z and Millennials rely on digital technology

every day to purchase products and evaluate alternatives, it is crucial for Zara to adopt a digital

marketing strategy to achieve the outlined objectives (See 3.0). By using digital channels, Zara

would be able to connect with a much wider audience while targeting specifically Gen Z and

Millennials within that wider market (Ryan, 2016).

The digital marketing strategy will encompass campaigns

aligning particularly with the communication objectives (See 3.3) in order to drive in-store sales

through the two markets identified in section 4.2. The campaigns will feature differentiated

strategies through different media platforms, which reflect the identified segments’ preferred

forms of communication. These are to include influencer marketing by using endorsements and

product mentions from influencers and celebrities, as well as other forms of social media marketing

such as using Zara’s own Instagram page to promote its products and special offers that apply in-

store only. These campaigns will be targeted towards Gen Z and Millennials based on their reliance

on social media when doing clothes shopping. The campaigns will be established on Instagram

and Facebook, to be the favorite platforms for the two segments.

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4.5 Strategy evaluation

According to the SAF model, the chosen strategies outlined in section 4.4 fall in line with

sustainability, feasibility, and acceptability (Johnson et al., 2019). Adopting digital marketing and

customer acquisition, retention, and loyalty, strategies are suitable for Zara, aligning with the key

opportunities and threats that the business face (See 2.4). Furthermore, the proposed strategies are

acceptable due to their acceptable level of risk and return. The achievement of these to a high level

would undoubtedly meet the expectations of stakeholders. Looking at feasibility, Zara possess

strong resources and capabilities to finance these strategies including financial and human

resources. Therefore, as long as these resources and capabilities are fully exploited, the proposed

strategies would work in practice and be feasible.

5.0 Tactics

This section consolidates the proposed strategies (See 4.4), to bring it together with suitable

tactics in order to achieve the outlined objectives (See 3.0). Based on relevant areas of an

integrated marketing mix, selected P’s, C’s, and E’s will be implemented to support the campaigns

in the achievement of this plan’s defined objectives. These are illustrated in Figure below.

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Table 4: Marketing Mix

4 P’s 4 C’s 4 E’s

(McCarthy, 1960) (Lauterborn, 1990) (Epuran et al, 2015)

Product Consumer Experience

Zara will not only sell a product to its

customers but a pleasing experience. It
will trigger an emotional connection by
solving a particular consumer pain point.

Price Cost Exchange

New club membership program and the

referral system would slightly decrease
Zara prices while still delivering a sense
of exclusivity and belonging to its target
audience.

Promotion Communication Evangelism

Encouraging digital engagement

between Zara and its customers
through different online platforms
would allow interaction on a personal
level that would lead to greater brand
loyalty.

Place Convenience Everyplace

As outlined in Section 2.1., Zara store

will be revamped to create an
experiential space that would attract
more customers like Angela Waterson
and Andrew Smith.

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5.1 Campaign 1 : “Mix, Match, & Piece”

In the development of this advertising campaign, the starting point is to determine specific

objectives that would be achieved through it. In fact, this campaign reflects a number of different

objectives including the corporate and sales objectives contained within the marketing plan, and

particularly communication objectives. The challenge will be promoted through Zara’s owned

media, notably Instagram, Facebook, and website, as well as paid media. It will be implemented

through a differentiated online advertisement, targeting hedonistically oriented Gen Z and

Millennials. The implementation of this campaign aligns with Zara’s marketing departments skill

competencies as well as financial budget.

#MixMatch&Piece Challenge

According to the segmentation analysis conducted in Section 4.1., Instagram is mainly consumed

by Gen Z and Millennials. Therefore, this advertisement will aim to inform Gen Z and

Millennials about the giveaway Zara has to offer under the “Mix, Match, & Piece” campaign. In

this instance, paid, owned, and earned media will be used to promote this campaign using an

undifferentiated advertisement.

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Figure 8: Instagram Post – Owned Media

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Figure 9: Instagram Story – Paid Media

5.2 Campaign 2 : Exclusive Membership Program

This campaign is designed to aid the success of increasing customer retention and in doing so will

also contribute to increasing market share. This paid membership program aims to foster strong

relationships between customers and Zara as well as spread positive word-of—mouth through the

referral system implemented. The latter would then apply to increasing brand awareness, raising

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by 10% in the first year. This campaign will also enable Zara to understand better its customers

and meet their needs and expectations through the information generated throughout the

subscription process as well as the cookies placed on visitors’ browsers to provide customers with

a customized shopping experience. Personal data will be used fairly, lawfully, and transparently,

under the rules of the General Data Protection Regulation. Through this campaign, a link would

be created between online and offline channels by enlarging customer base, acquiring more

downloads of the web application which will drive more sales, and essentially increasing footfall

since members would benefit from the special offers only in-store.

Furthermore, according to section 4.1, this campaign will target mainly Millennials who tend more

likely to be brand switchers but whose annual income is relatively high and can afford paying the

membership fees. Interestingly, this membership program would also attract Gen Z like Angela

Waterson who loves fashion and would pay £299 annually to look elegant and rich at discounted

prices and feel the sense of exclusiveness. Therefore, this campaign will be implemented

through three advertisements. These compromises of differentiated and undifferentiated digital

marketing through two differentiated posts and an undifferentiated advertisement, targeting both

segments, Gen Z and Millennials.

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Figure 10 : Exclusive Membership Card

According to Section 8.4.1, one of the main strengths of Zara is limiting the stocks in order to be

perceived an exclusive brand. Therefore, consumers greatly appreciate the feeling of being

exclusive and belonging to a group of exclusive people. By launching the exclusive membership

card, members would feel a sense of affiliation and belonginess.

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Figure 11: Referral system

Figure 12: Differentiated Facebook Post Advertisement

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Figure 13: Differentiated Instagram Post Advertisement

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Figure 14: Undifferentiated Website Advertisement

5.3 Campaign 3 : PR Re-launch Store Event

Due to the extraordinary impact that the internet has had on the retail high street, a key objective

outlined in section 3.1.3 is a refreshed store format, which plans to roll out in 2 stores in the first

year to 7 stores in the third year. Zara will create a more experiential space by taking into

consideration both the emotional and operational aspects.

The campaign will be targeted towards Gen Z and Millennials through the PR event as well as B2C

differentiated digital marketing utilizing owned media platforms Instagram and Facebook to target

existing customers. The media will be selected based on the segments’ social media consumption.

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Paid media will also be utilized particularly by collaborating with influencers who will share

imageries of the re-launch event on their Instagram profiles. In regards to earned media, it will be

gained from the attendance of journalists, designers, and bloggers, spreading word-of-mouth of

the revamped stores. Furthermore, based on the questionnaire’s results (See 8.1), the two first

stores that would revamped in the first year are located in Queen street, Cardiff and Oxford Street,

London.

Figure 15: Design concept

According to Section 1.2, customers are leaning more into contactless payment in order to avoid

contact with humans and due to its practicability. Therefore, contactless payment should be

provided at store level when the revamped stores re-open. Moreover, Appendix 1 witnesses the

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largest percentage of participants consider large queues and crowded stores as factors that might

stop them from buying in-store. The questionnaire shows also that shoppers would feel more

comfortable returning to stores when more hygiene measures are adopted. This means that

shoppers would still be significantly impacted in the short term and therefore, the revamped stores

will include self-checkout and a one-way system in order to respect social distancing and provide

shoppers with an experiential space. Figure 16 provides further details.

Figure 16: Implementation of RFID

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Figure 17: PR event - Differentiated Instagram & Facebook Advertisement

6.0 Actions

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The Gantt charts illustrated below determine detailed tasks that must be completed for each

campaign. The charts demonstrate by who, when, as well as the cost required to achieve the

campaigns outlined in Section 5. (McDonald, 2016)

6.1 Year 1

Table 5: Gantt Chart – Year 1

Task/Milestone Description Assigned to Where ? Cost Months

21-Jun 21-Jul 21-Aug 21- Sept. Q1 21- Oct. 21- Nov. 21-Dec. 2022- Jan. Q2 22-Feb. 22-Mar 22-Apr 22-May Q3
Campaign 1
Planning Committee Zara Marketing Department Internally Salary 1

Contact influencers Zara Marketing Department Internally Salary 1

Create Owned Instagram Post Zara Marketing Department Internally Salary 1

Post Owned Instagram Post Zara Marketing Department Internally Salary 2

Post Paid Instagram Story Influencers Externally £50,000 2

Organize live video on Instagram Zara Marketing Department Internally Salary 1

Announce winner Zara Marketing Department Internally Salary 1

Share picture of winner with the prize Zara Marketing Department Internally Salary 2

Track & analyze campaign results Zara Marketing Department Internally Salary 3

Campaign Report Zara Marketing Department Internally Salary 2

Campaign 2
Planning Committee Zara Marketing Department Internally Salary 1

Design Membership Card Zara Marketing Department Internally Salary 1

Implement Referral System Zara IT Department Internally Salary 1

Contact influencers Zara Marketing Department Internally Salary 1

Create Owned Facebook Post Zara Marketing Department Internally Salary 1

Create Owned Instagram Post Zara Marketing Department Internally Salary 1

Develop website landing page Ad Zara IT Department Internally Salary 1

Post Owned Instagram Post Zara Marketing Department Internally Salary 4

Post Owned Facebook Post Zara Marketing Department Internally Salary 4

Paid Facebook Advertising Facebook Ads/Zara Marketing Department Externally £20,000 4

Influencer Marketing Instagram ads/Influencers Externally £65,000 4

Track & analyze campaign results Zara Marketing Department Internally Salary 3

Campaign Report Zara Marketing Department Internally Salary 2

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Marketing Plan BSP6000

Campaign 3
Planning Committee Zara Marketing Department Internally Salary 1

Develop new store design Zara Design Department Internally Salary 2

Contact suppliers Zara Marketing Department Internally Salary 2

Implement RFID in app Zara IT Department Internally Salary 2

Test the app Zara IT Department Internally Salary 1

Develop event concept Zara Marketing Department Internally Salary 2

Contact onsite event staffing Zara Marketing Department Internally Salary 1

Negotiate with sponsors Zara Marketing Department Internally Salary 1

Set up budget Zara Financial Department Internally Salary 1

Invite attendees Zara Marketing Department Internally Salary 1

Create Owned Instagram Post Zara Marketing Department Internally Salary 2

Create Owned Facebook Post Zara Marketing Department Internally Salary 2

Create a re-launch countdown Zara Marketing Department Internally Salary 2

Event start Zara Marketing Department Internally Salary 1

Post Owned Facebook Post Zara Marketing Department Internally Salary 3

Post Owned Instagram Post Zara Marketing Department Internally Salary 3

Post Paid Instagram Post Instagram Ads/ Zara Marketing Department Externally £60,000 3

Post Paid Facebook Post Facebook Ads/Zara Marketing Department Externally £35,000 3

Influencer Marketing Instagram Ads/Influencers Externally £150,000 3

Press release issued Media Externally £0 2

Track & analyze campaign results Zara Marketing Department Internally Salary 4

Campaign Report Zara Marketing Department Internally Salary 1

Table 6: Year 1 Quarterly Goals

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6.2 Year 2 & 3

Table 7: Gantt Chart – Year 2 & 3

Task/Milestone Description Assigned to Where ? Cost Months

21-Jun 21-Jul 21-Aug 21- Sept. Q1 21- Oct. 21- Nov. 21-Dec. 2022- Jan. Q2 22-Feb. 22-Mar 22-Apr 22-May Q3
Campaign 1
Planning Committee Zara Marketing Department Internally Salary 1

Contact influencers Zara Marketing Department Internally Salary 1

Create Owned Instagram Post Zara Marketing Department Internally Salary 1

Post Owned Instagram Post Zara Marketing Department Internally Salary 2

Post Paid Instagram Story Influencers Externally £50,000 2

Organize live video on Instagram Zara Marketing Department Internally Salary 1

Announce winner Zara Marketing Department Internally Salary 1

Share picture of winner with the prize Zara Marketing Department Internally Salary 2

Track & analyze campaign results Zara Marketing Department Internally Salary 3

Campaign Report Zara Marketing Department Internally Salary 2

Campaign 2
Planning Committee Zara Marketing Department Internally Salary 1

Review Referral System Zara IT Department Internally Salary 1

Contact influencers Zara Marketing Department Internally Salary 1

Create Owned Facebook Post Zara Marketing Department Internally Salary 1

Create Owned Instagram Post Zara Marketing Department Internally Salary 1

Develop website landing page Ad Zara IT Department Internally Salary 1

Post Owned Instagram Post Zara Marketing Department Internally Salary 4

Post Owned Facebook Post Zara Marketing Department Internally Salary 4

Paid Facebook Advertising Facebook Ads/Zara Marketing Department Externally £20,000 4

Influencer Marketing Instagram ads/Influencers Externally £65,000 4

Track & analyze campaign results Zara Marketing Department Internally Salary 3

Campaign Report Zara Marketing Department Internally Salary 2

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Marketing Plan BSP6000

Campaign 3
Planning Committee Zara Marketing Department Internally Salary 1

Develop new store design Zara Design Department Internally Salary 2

Contact suppliers Zara Marketing Department Internally Salary 2

RFID Review Zara IT Department Internally Salary 2

Develop event concept Zara Marketing Department Internally Salary 2

Contact onsite event staffing Zara Marketing Department Internally Salary 1

Negotiate with sponsors Zara Marketing Department Internally Salary 1

Set up budget Zara Financial Department Internally Salary 1

Invite attendees Zara Marketing Department Internally Salary 1

Create Owned Instagram Post Zara Marketing Department Internally Salary 2

Create Owned Facebook Post Zara Marketing Department Internally Salary 2

Create a re-launch countdown Zara Marketing Department Internally Salary 2

Event start Zara Marketing Department Internally Salary 1

Post Owned Facebook Post Zara Marketing Department Internally Salary 3

Post Owned Instagram Post Zara Marketing Department Internally Salary 3

Post Paid Instagram Post Instagram Ads/ Zara Marketing Department Externally £60,000 3

Post Paid Facebook Post Facebook Ads/Zara Marketing Department Externally £35,000 3

Influencer Marketing Instagram Ads/Influencers Externally £150,000 3

Press release issued Media Externally £0 2

Track & analyze campaign results Zara Marketing Department Internally Salary 4

Campaign Report Zara Marketing Department Internally Salary 1

Table 8: Year 2 & 3 Quarterly Goals

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7.0 Controls

This section outlines the control measures that will be used to effectively monitor progress and

control marketing performance as the marketing plan moves along. It will cover a detailed financial

plan, Key Performance Indicators, and a contingency plan.

7.1 Financial Plan

The financial plan detailed below indicates a calculation of the costs and potential profit minus

expenditure for the three years. The plan does not include staff salaries as no additional hiring will

be taken into consideration. With that being said, organizational costs of the marketing, IT, and

design departments will be unchanged. Nevertheless, the estimated budget is subject to change

based on several factors such as which campaign brings the best results measured by incremental

sales. Additionally, the estimated yearly income have been acquired from the net income of Zara

in 2020 (Inditex Group: worldwide net income 2020, by brand, 2020).

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7.1.1 Year 1

Table 9: Financial plan – Year 1

Year 1
Campaign 1
Activities Estimated budget (£)
Planning Committee 0
Contacting influencers 0
Owned Instagram Post 0
Influencer Marketing 200,000
Winner Announcement - Live on Instagram 0
Winner Post 0
Campaign Results Analysis 0
Campaign Report 0
Campaign 2
Planning Committee 0
Membership Card 1,500
Referral System 15,000
Contacting influencers 0
Owned Facebook Post 0
Owned Instagram Post 0
Owned Website Ad 0

Facebook Advertising 100,000

Instagram Advertising 200,000
Influencer Marketing 300,000
Campaign results analysis 0
Campaign Report 0

Campaign 3
Planning Committee 0
Design concept 0
Technology 100,000
App testing 0
Onsite event staffing 0

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Sponsoring 0
COVID-19 compliance & safety precautions 0
Inviting attendees 0
Re-launch countdown 0
Owned Facebook Post 0
Owned Instagram Post 0
Facebook Advertising 85,000
Instagram Advertising 200,000
Influencer Marketing 300,000
Press release 0
Campaign results analysis 0
Campaign Report 0
Total 1,501,500

Year 1
Estimated Yearly Income (£) Estimated Expenditure (£) Estimated Potential Profit (£)
£12,05 billion £1,501,500 £ 12,048,498,500

7.1.2 Year 2

Table 10: Financial plan – Year 2

Year 2
Campaign 1
Activities Estimated budget (£)
Planning Committee 0
Contacting influencers 0
Owned Instagram Post 0
Influencer Marketing 200,000
Winner Announcement - Live on Instagram 0
Winner Post 0

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Campaign Results Analysis 0

Campaign Report 0
Campaign 2
Planning Committee 0
Membership Card 3,000
Referral System 15,000
Contacting influencers 0
Owned Facebook Post 0
Owned Instagram Post 0
Owned Website Ad 0

Facebook Advertising 100,000

Instagram Advertising 200,000
Influencer Marketing 300,000
Campaign results analysis 0
Campaign Report 0

Campaign 3
Technology 150,000
App testing 0
Owned Facebook Post 0
Owned Instagram Post 0
Facebook Advertising 85,000
Instagram Advertising 200,000
Influencer Marketing 300,000
Campaign results analysis 0
Campaign Report 0
Total 1,553,000

Year 2
Estimated Yearly Income (£) Estimated Expenditure (£) Estimated Potential Profit (£)
£12,291 billion £1,553,000 £ 12,289,447,000

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7.1.3 Year 3

Table 11: Financial plan – Year 3

Year 3
Campaign 1
Activities Estimated budget (£)
Planning Committee 0
Contacting influencers 0
Owned Instagram Post 0
Influencer Marketing 150,000
Winner Announcement - Live on Instagram 0
Winner Post 0
Campaign Results Analysis 0
Campaign Report 0
Campaign 2
Planning Committee 0
Membership Card 3,750
Referral System 15,000
Contacting influencers 0
Owned Facebook Post 0
Owned Instagram Post 0
Owned Website Ad 0

Facebook Advertising 85,000

Instagram Advertising 190,000
Influencer Marketing 200,000
Campaign results analysis 0
Campaign Report 0

Campaign 3
Technology 200,000
App testing 0

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Owned Facebook Post 0

Owned Instagram Post 0
Facebook Advertising 80,000
Instagram Advertising 190,000
Influencer Marketing 200,000
Campaign results analysis 0
Campaign Report 0
Total 1,313,750

Year 3
Estimated Yearly Income (£) Estimated Expenditure (£) Estimated Potential Profit (£)
£12,659 billion £1,313,750 £ 12,657,686,250

7.2 KPI’s

The Key Performance Indicators outlined in the following part will enable the organization to

understand and measure the performance of Zara in order to make critical adjustments in the

execution to achieve the strategic decisions (See Section 4.0.). (Parmenter, 2010)

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Table 12: KPI’s

Objectives Targets Activities KPI’s

Footfall Year 1: 3% • Owned & Paid Media • Real time footfall

Year 2: 5% Advertisements traffic
Year 3: 8% • Influencer Marketing • Online to offline
• “Mix, Match, & engagement
Piece” Challenge • Lead flow
• Store Revamp
• PR Event

Brand awareness Year 1: 4% • Owned & Paid • Website traffic

Year 2: 6% Media Advertisements • Impressions
Year 3: 10% • Influencer Marketing • Earned media
• “Mix, Match, & • Visits and visitors
Piece” Challenge (online and offline)
• PR Event • Click Through Rates
(CTR)
Creating experiential Year 1: 2 stores • Owned & Paid Media • Number
space Year 2: 5 stores Advertisements of people who visited store
Year 3: 7 stores • Influencer Marketing after re-launch
• Store Revamp announcement
• PR Event • Interactions with press
releases
• Click Through Rates
(CTR)
• Customer reviews

Sales • Year 1: 3% • Owned & Paid Media • Sales Growth

• Year 2: 5% Advertisements • Return rate
• Year 3: 6% • Influencer Marketing • Conversion rate
• “Mix, Match, & • Lead flow
Piece” Challenge
• Store Revamp
• PR Event

Customer Retention • Year 1: 10,000 • Owned & Paid Media • Repeat purchase ratio
members Advertisements • Customer Retention
• Year 2: 20,000 • Influencer Marketing Rate (Membership
members • Membership program program)
• Year 3: 25,000 • Referral system • Coupon Redemption
members Rates (Referral system)
• Conversion rate

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• Customer reviews

Market share • Year 1: 0.3% • Owned & Paid Media • Total sales
• Year 2: 0.5% Advertisements • Annual revenue
• Year 3: 0.7% • Influencer Marketing • Gross Profit Margin
• Membership program

Customer Engagement Year 1: 5% • Owned & Paid • Impressions

Year 2: 2% Media Advertisements • Reach
Year 3: 3% • Influencer Marketing • Likes, comments,
• “Mix, Match, & shares, hashtags, and
Piece” Challenge mentions
• Click Through Rates
(CTR)
• Return Users
Frequency
• Dwell time
• Customer reviews

Considering that Zara adopts a zero advertising policy, it is essential to measure whether using

promotional activities is effective and attracts more customers. Therefore, to monitor the

promotional effectiveness, two KPI’s will be used :

• Rich media display time : to track how long their advertisement is holding the attention

of potential customers

• Baseline sales : making a comparison with baseline sales vs the level of sales that would

have been achieved without the marketing activity

7.3 Contingency plan

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Contingency plan involves a course of actions that a business need to take in response

to unpredicted scenarios (McDonald, 2016). In the light of higher unpredicted success, ensuring

that Zara could deal with immensely increased footfall is crucial. Increased footfall would result

in long queues and therefore, customers might be impatient and leave. To prevent this

happening, IT department will regularly ensure self-service checkout as well as cash tills for

traditional checkout are working efficiently. Store assistants will also be available to facilitate the

shopper’s journey and speed up the process to allow other customers in for a minimum waiting

time. Moreover, since unoccupied time feels longer than occupied time for customers queuing,

distracting activities will be offered in the queue environment in order to make the queue seem

faster.

In the event of unpredicted crisis, technological breakdown or stoppage may occur, which may

paralyze subscriptions or purchases. In this case, a contingency budget must be set aside in order

to cover any unexpected technological costs by implementing technical and procedural

contingency systems. Having a contingency budget on reserve will ensure smooth running of

technological systems and business continuity. Regarding any risk exposure to stores aesthetic,

stores will be permanently in touch with the talented creative and visual display team. This allows

constantly perceiving changes of taste of the customers and understanding their needs.

Additionally, the revamped stores will respect sustainability standards by using renewable energy

in the facilities.

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8.0 Appendices

8.1 Appendix 1: Questionnaire Results

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8.2 Appendix 2: Macro environmental analysis – PESTLE

8.2.1 Political

• Political stability : The United Kingdom is considered as a constitutional monarchy based

on parliamentary democracy (UNITED KINGDOM: ECONOMIC AND POLITICAL

OUTLINE, 2021). The unitary state is headed by the Queen and usually controlled by a

Prime Minister to serve a five-year term, which has all executive powers. Regarding

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legislative power, the United Kingdom has a parliament made up of the House of Lords

and House of Commons. All that means, the stability of the kingdom would enable

investors to not focus on radical changes of regimes. This is also reinforced by the findings

from theglobaleconomy.com (nd.), it is highlighted that the latest political stability index

value from 2019 is 0.52, while the world average is -0.05 points.

• Trade Restrictions : While the United Kingdom has signed a trade deal with the European

Union, it would not be easy to import raw materials and export finished goods as before the

Brexit happening. With that being said, the political agreement between the United

Kingdom and the EU would have a significant impact on Zara shipping worldwide with

less effort and a low cost.

• Taxation policy : Any profitable business in the UK must address the taxation policies,

which covers corporation tax, capital gains tax, construction industry scheme and

VAT. (Browse: Business tax - GOV.UK, n.d.)

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8.2.2. Economic

• Economic growth & GDP

Figure 18: Monthly GDP – From January 2020 to October 2020

Source: (GDP monthly estimate, UK - Office for National Statistics, 2020)

COVID-19 pandemic has severely impacted the economic situation in the United Kingdom, as

illustrated in the figure below. Nevertheless, the monthly GDP increased by 0.4% in October 2020,

which is 23.4 % higher compared to April 2020 October (GDP monthly estimate, UK - Office for

National Statistics, 2020). Results from ons.gov.uk (2020) show that the production sector grew

by 1.3% in October 2020. All this means that the retail industry was hurt by the pandemic in the

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previous month, but it is expected to have increased in the next months, which would be beneficial

for this sector.

• Labor market : Data from ons.gov.uk (2021) shows that, due to the recent COVID-19

restrictions, the predicted UK unemployment rate was 5%, which is 1.2% higher than the

previous year. Also, the immigration issues with Brexit have contributed to the increase of

the labor cost. Consequently, consumer spending will be affected since the disposable

income would be affected as well.

• Disposable income : The provisional estimate of median disposable income has reached

£30,800 in the Fiscal Year End 2020, which is higher by 2.3% compared to the FYE

2019 (Average household income, UK - Office for National Statistics, 2020).

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• Inflation rate :

Figure 19: Inflation rate forecast 2019-2024

Source: (UK inflation rate forecast 2019-2024, 2021)

As in the figure above, the inflation rate of the Consumer Price Index has reached 0.8 % in 2020

and is expected to reach 1.2% in 2021.

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• Customs issues : In response to Brexit impact, international trade has been dramatically

affected. Considering Zara as a Spanish brand that manufactures its products in Spain,

Portugal, Morocco and Turkey, products imported from any country outside the UK is

subject to check duties and customs procedures. Knowing that tariffs and taxes on goods

crossing the border with the EU has been removed, Zara could transport its manufactured

goods without paying customs fees or other tax costs. However, the company will face

many new bureaucracies such as customs declarations, rules of origin checks, and product

safety certificates. Additionally, the UK government is delaying controls on goods entering

the UK from the EU for a further six months due to Covid-19 impact. (Brexit: Are the

borders ready?, 2021).

• Exchange rate : In comparison to the Euro, the British Pound dropped by a percent since

the two countries announced a post-Brexit free trade partnership. In contrast, it is

forecasted that the British Pound exchange rate will recover to 1.16% over the next

months (Howes, 2021).

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8.2.3 Social

• Demographics :

Figure 20: Percentage of UK population in age band

Source: (UK population pyramid interactive, n.d.)

The interactive population pyramid in the figure above represents demographics in the United

Kingdom.

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Figure 21: Forecast ageing UK population

Research shows a growing number of people aged between 18 and 30 years old in the UK. Due to

this being Zara’s target audience, it means that there are more growth opportunities for the

company.

• Shopping habits

Regarding shopping habits, UK customers shifted their spending to essential products, which has

negatively influenced clothing retails with spend declining by 36.8% and 25% respectively.

However, during these unprecedented times, online retail spends increase by 73.2 %, whereas

face-to-face shopping was down by 24.2 % (UK Consumer Spending Report | Barclays Corporate,

2021). Based on a research done by Top UK Consumer Trends (2021) about shopping habits, 19.9

% of participants answered ‘more likely’ to shop from local high street stores whereas 37.4 %

prefer online shopping. Nevertheless, retail-week.com (2021) reported that shoppers gained

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confidence and footfall witnessed a big surge across all retail destinations, notably shopping

centers with a 12% rise.

8.2.4 Technological

• National Quantum Technologies Program : With the UK being the world’s leader in

quantum technologies, the country keeps investing billions of pounds to break the barriers

almost in every field. In 2019, they have invested £1billion in the National Quantum

Technologies Program, which outstrips the U.S and China (£1 billion investment makes UK

a frontrunner in quantum technologies, 2019). This makes the UK in a good position for

foreign investment.

• Social media & internet

Figure 22: Mobile, Internet, and Social Media usage among total population in the UK

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Based on the figure, 96% of the UK population are using internet and 77.9% are actively using

social media. As a result, Zara may make good use of internet in the promotion of the

challenge (Digital 2021: The evolution of the digital landscape in the UK, 2021).

Figure 23: Online content activities

The figure represents the percentage of internet users aged between 16 and 64 years old who

consume different kind of content via the internet each month. Based on the findings of the

research, 89.4% of the participants watch online videos and 61.8% listen to music streaming

services, while 37.3% listen to online radio stations. This is of high importance for the marketing

challenge, to be aware of media consumptions that are affecting high street buying in order to

promote the challenge effectively (Digital 2021: The evolution of the digital landscape in the UK,

2021).

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8.2.5 Environmental

• Net-zero carbon emissions : The UK government have set strong regulations to protect

the environment in the 25 Year Environment Plan. In 2019, they have introduced the Bill to

Parliament to uphold environmental standards by minimizing the biggest environmental issues

in the country, such as waste, resource efficiency, air quality, and biodiversity. (30 January

2020: Environment Bill 2020 policy statement, 2020)

• Packaging producer responsibilities

The UK urges packaging producers to minimize the volume of packages and reduce the amount

of packaging waste that goes to landfill in order to tackle the source of plastics and pollution. In

addition, the government encourages the production of recyclable packaging. (Packaging waste:

producer responsibilities, 2014)

• Fur prohibition

Considering fur as a sustainable material hitting the environmental stewardship, the UK was one

of the first countries to ban the production or import of animal fur or skins to the territory, in

2000 (O'Carroll, 2020).

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8.2.6 Legal

• Data Protection Act 2018 : The UK government have set out the Data Protection Act 2018

to monitor how customers’ personal data is used by businesses and organizations. To stick to

the government's rules, any business should follow strict regulations such as ensuring data is

used fairly and transparently, kept for no longer than is necessary, and other data protection

principles. (Data protection, n.d.)

• Job retention scheme : Following the job retention scheme that was implemented by the

government to support businesses at the start of covid-19, the scheme will close at the end of

April 2021. This means that Zara should set a retainment plan for its employees without the

government support. (Legislation Changes For 2021 – What Can We Expect?, n.d.)

• The Consumer Rights Act 2015 : The Consumer Rights Act 2015 establishes contracts

that covers key consumer rights for the Sale of Goods Act, Unfair Terms in Consumer

Contracts Regulations, as well as the Supply of Goods and Services Act (Consumer Rights Act

2015, 2015).

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8.3 Appendix 3: Micro environmental analysis

8.3.1 Market competitiveness

Figure 24: Perceptual Map

8.3.2 Porter’s Five Forces

The following Porter’s Five Forces model draws on five factors that help to determine how

competitive the UK market is, and consequently, how profitable it may be for Zara (Drummond

and Ensor, 2005).

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• Barriers to entry: High

When introducing a brand such as Zara to the UK, capital requirements including costing factors

should be considered. Firstly, new entrants should consider the location costs that are relatively

high as stores should be in the main high streets of the UK to compete with big brands like Zara.

In addition, other costing factors include manufacturing, design, inventory, material, marketing,

labor, and other costs. Therefore, to introduce a big clothing brand that could potentially be

competing with Zara, capital requirements would be considerably high, which could deter new

competitors from entering the market. Therefore, it can be concluded that barriers to entry are high

for new entrants.

• Bargaining Power of Buyers: High

According to Statista (2018), statistics show that the number of clothing stores in the UK have

reached 11,582 stores in 2018. In comparison with previous years, the number is exponentially

increasing every year, which is therefore estimated to keep growing. In other words, the UK market

consists of a considerable number of global clothing brands to choose from, which makes the

switching cost high for buyers. Thus, the bargaining power of buyers is high.

• Bargaining Power of Suppliers: Low

In days of globalization, there is unlimited number of suppliers, particularly in

the apparel industry, which strengthens their power to set prices over the firms. As for Zara, the

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company is collaborating with more than 1900 suppliers in over 8000 factories under licensed

contracts (Our suppliers, n.d.). Despite Zara having established a stable relationship with its

suppliers who has knowledge of its standards of quality and safety, the company could at any time

breach the contract and switch to other suppliers. Therefore, the bargaining power of suppliers is

low.

• Bargaining power of substitutes: Low

In the fast-fashion industry, there are only few to substitute clothes with. Buyers could get their

clothes tailored depending on their tastes and choice of fabrics, colors, and designs. However, this

may be expensive compared to the value for money and creative designs that Zara constantly

offers. Another disadvantage is that Zara offers ready to wear, whereas a tailor takes more time to

design clothes. Additionally, buyers could switch to substitutes that are low-priced and low-quality

products. Hence, there is a low threat that customers switch to substitutes, which means that there

is a low bargaining power of substitutes.

• Rivalry among existing competitors: Medium

Considering Zara as a clothing brand competing in the fast-fashion industry, the number of

competitors in the UK market is relatively high. According to Statista (2018), statistics witness

that the number of clothing stores in the UK have reached 11,582 stores in 2018. However, Zara

has a strong competitive advantage over its existing competitors. With its highly responsive supply

chain and innovative designers, Zara is rapidly moving with the trend in this fast-paced

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environment by offering new collections every two weeks with high-quality

fashionable designs at affordable prices. Therefore, despite the strongly competitive market that

Zara is competing in, the brand has strengthened its position within the UK by using its unique

strategies. All this means that the rivalry among existing competitors is medium as there are only

few competitors who have similar competitive advantage.

8.4 Appendix 4: Internal analysis

8.4.1 McKinsey 7S Model

McKinsey 7S model is defined as a tool to assess a company’s internal environment

by analyzing seven key elements: strategy, structure, systems, shared values, style, staff, and skills

(McKinsey 7S Model, n.d.).

• Strategy

Vertical Integration: Zara is a vertically integrated company that achieves its growth through

diversification (Zara's Business Operations and Strategy: How and Why They Worked, 2020).

This vertical integration allows Zara to have enough control over fluid communication

between stages of its product cycle in order to design, manufacture, and distribute new

collections within two weeks of the original design first appearing on catwalks. Compared to

most retailers, the production of new collections in the fashion industry takes up to six months,

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and therefore, Zara has a distinct advantage in its speed to market (Zara's Business Operations

and Strategy: How and Why They Worked, 2020).

As a result of this centralized order fulfillment, Zara maintains efficient workflows. According

to Felipe Caro: “The secret to Zara’s success has been centralization. They can make decisions

in a very coordinated manner.” (Zara supply chain analysis - The secret behind Zara's retail

success, 2018)

Logistics & supply chain:

Figure 25: The supply chain at Inditex 2019

(Annual Report 2019, 2019)

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Zara leverages its speed to market into its own logistics and supply chain. While clothing retailers

rely heavily on low-cost manufacturing from Asian countries, Zara run its manufacturing

operations for most of its products in Europe where costs are high (Zara's Business Operations and

Strategy: How and Why They Worked, 2020). In fact, Zara is maintaining manufacturing activities

close to management centers and localized in regions where the company generates the most sales.

According to toughnickel.com (2020), it is witnessed that Zara’s sales in Europe has reached 66%,

Asia with 20%, and America with 14%. Therefore, by manufacturing at European countries, Zara

saves the cost of booking factory space abroad and transporting costs back to its largest market.

Thus, Zara takes pride of its vertical integration and streamlined supply chain management which

allows the company to manipulate designs and create new ones faster than its rivals.

Low-inventory strategy: Zara’s success relies heavily on its in-house production strategy. In fact,

the fast-fashion brand keeps an amount of its production in-house and reserves 85% of capacity

for in-season amendments (Zara's Business Operations and Strategy: How and Why They Worked,

2020). Zara has put in place inventory optimization models in order to determine the exact quantity

that should be delivered to its retailers twice every week (Zara's Business Operations and Strategy:

How and Why They Worked, 2020). Limiting the stocks goes toward Zara’s brand image of being

exclusive. Furthermore, manufacturing products in Europe allows Zara to rapidly adapt to dynamic

demand for various in-season styles, which is linked closely to the brand’s lightning-fast product

replacement. Therefore, this business strategy encourages customers to purchase from Zara at full

price and in a timely manner because the sense of exclusiveness exudes, and designs are frequently

adjusted to the new must-haves on the street.

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In all, its cross-functional operations strategy emerged with its vertically integrated supply chain

allows Zara to maintain mass production under push control. As a result, this leads to well-

managed inventories and more profitability, which creates value for shareholders in the short and

long run. Zara is a brand that literally embodies the concept of fast-fashion, particularly through

its rockstar-level logistics and supply chain.

• Structure

Zara has a well-organized structure that comprises a hierarchical flow of subordination of

functional departments. The Chairman of Inditex Group, is Amancio Ortega Gaona and Pablo Isla

Alvarez is the First Deputy Chairman and CEO (Our Board, n.d.). Under the top management of

its parent company Inditex, Zara employs some smaller managers who manage more than 70,000

international staffs with over 200 professional designers (Inditex annual report 2014, 2014). Thus,

Zara’s employees know who to report to and communications between departments and colleagues

is implicit. In fact, by integrating logistics, design, sales, and creation within companies

internationally instead of separating outsourcing techniques, Zara developed a flexible approach

which lead to an effective form of communication between its central hub of operations in Spain

and its global network of retail stores (Zara supply chain analysis - the secret behind Zara's retail

success, 2018). This allows Zara’s professionals to track performance and sales at a timely

manner.

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• Shared values

According to its official website, Zara has remained faithful to is core values over the years: beauty,

clarity, functionality, and sustainability (Zara, n.d.) (See 2.3.1.). By being a customer-centric

business and responding instinctively to customers’ changing needs by reacting to constant

feedback received across Zara’s womenswear, menswear, and kidswear collections, in order to

adjust their styles and designs in the right place and at the right moment (Zara, n.d.). Furthermore,

one of the fundamental values that the company was built on is an entrepreneurial culture. In fact,

Zara promotes two thirds of its store managers from young people and the company does not fear

giving important responsibilities to young talents since the culture encourages risk-taking and fast

implementation (The Secret of Zara’s Success: A Culture of Customer Co-creation, 2020).

• Style

Zara is deploying a highly customer-focused management style whereby the company seeks to

meet customers’ expectations by identifying and understanding their needs, then transforming

them into product offerings (Mullins, 1985). To achieve this objective, Zara encourages heavily

its store managers to analyze customers’ behaviors. In fact, by promoting an intrapreneurial

culture, Zara is adopting a transformational leadership and management styles (Mullins, 1985).

Additionally, their customer-focused approach also applies to employees as Zara provides training

programs in order to encourage growth and development opportunities. Furthermore, Zara defines

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its leadership values by teamwork, open communications, and self-imposed high-standards leading

to a clear direction (Mullins, 1985).

Moreover, following Zara’s management hierarchy, the highest decisions are taken by the

company’s Board of Directors which is headed by the CEO of the Inditex Group, Pablo Isla. The

duties of the Board of Directors include taking relevant administrative and managerial decisions,

delegating the management of the day-to-day business, as well as evaluating the competencies of

senior management (Board of Directors, 2015). Thereby, identifiable goals set out by the Board of

Directors is crucial for the management of Zara and the maximization of the company’s value. In

a nutshell, Zara is adopting an effective leadership and management styles that correlate with the

strategies used within their business model.

• Skills

According to an interview with Belén Quirós, the Human Resources representative of Zara in the

United States : “Zara is looking for talents with creativity, flexibility, initiative, enthusiasm,

commitment, and passion for fashion.” (Wood Rudulph, 2015). He also added that the company

needs people easily adaptable to changes with strong sense of “customer orientation, teamwork,

communication skills, and above all, common sense in everything they do.” (Wood Rudulph,

2015). Furthermore, the main skills that Zara is looking for based on most of their job descriptions

include enthusiasm, communication and interpersonal skills, strong initiative, work under

pressure, teamwork, flexibility, and strong initiative (Offer - Inditex Careers, n.d.).

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• Staff

Zara has more than 162,450 employees worldwide, and according to the company, their focus is

to grow their internal talent by creating a work-life balance whereby their employees can voice

their opinions, and constantly learn new things (Our employees, n.d.). In turn, Zara created a

document titled “Code of Conduct and Responsible Practices” to set out rules for the staff to follow

in order to achieve the peak of their performance (Our employees, n.d.). Based on the feedback of

a vast number of Zara employees, among advantages of working at Zara are good salaries, friendly

co-workers, and opportunities for growth (Zara Reviews, 2021). In contrast, employees pinpointed

some key cons which include chaotic stores, high workload, and poor work-life balance (Zara

Reviews, 2021). To conclude, Zara’s employee strategy is in coherence with their employees’

views since they are eager to learn more about the fashion industry as well as their performance.

On average, Zara employees rated the company at 2.9 out of 5 stars in Glassdoor (Zara Reviews,

2021).

• System

Zara uses Information System to monitor customer preferences and sales (Vaish, n.d.). Information

System is also used to facilitate communication between stores and the headquarter in

La Coruña in order to determine the level of stocks (Vaish, n.d.). Based on the Annual Report for

Stakeholders (2007), Zara implement also Store Management Terminal at every store for

communication fluidity purposes. Additionally, Zara equipped their stores with Personal Digital

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Assistants and Point-of-sales software to gather customer input and transfer it directly to the

headquarter in order to analyze it and adjust designs that meet the real-time needs of market’s

demand (Vaish, n.d.). Furthermore, software like C-Design and Corel Draw Graphics Suite are

also used by the Design Department to create collections efficiently (Vaish, n.d.).

8.5 Appendix 5: SWOT Analysis

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Hanbury, M., 2018. Zara has a fleet of secret stores where it masters its shop design and plots
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the-pilot-stores-do-not-look-too-dissimilar-to-a-typical-zara-store-you-might-find-in-a-mall-but-
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Howes, G., 2021. Struggling Pound Sterling Forecast to Gain in 2021. [online] Pound Sterling
Live - Today's British Pound Exchange Rates and News. Available at:
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