Global Marketing 10.

2024

Marketing Channels
of ZARA
A discussion and analysis

nhóm 11 -
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I & II.
Introduction of the company and its
international activities.

& Sketch the supply chain for the

company from raw materials to end-user
purchase.
1
INTRODUCTION

Introduction International Activities

Localized Strategies: Adapts campaigns to suit local cultures

and preferences, with targeted promotions.
Zara is a global fashion retailer based in
Spain and is part of the Inditex Group, Minimal Advertising: Focuses on high-visibility store locations
founded by Amancio Ortega in 1974 over traditional ads.
Digital Marketing: Strong online presence with country-specific
Known for its innovative "fast fashion" e-commerce and social media engagement.
approach, Zara rapidly brings runway-
inspired trends to market at affordable Integrated Channels: Combines online and offline shopping
prices. experiences with seamless digital options.
Visual Merchandising: Consistent store design globally, with
The brand operates over 2,000 stores localized visual displays.
across 96 countries and has a strong
digital presence, allowing it to adapt Sustainability Focus: Markets eco-friendly products through
the Join Life collection.
quickly to changing consumer
preferences worldwide. Quick-Response Product Launches: Regularly updates
products to reflect global trends and customer feedback.
 ZARA ANALYSIS
2
SUPPLY CHAIN FROM RAW MATERIALS
At the very first stage, ZARA buys fabric in
various colors and patterns.

The 2nd step is by the suppliers, suppliers are

located near ZARA’s factories, which allows
ZARA to order raw materials on a need basis.

In terms of manufacture, clothes are

manufactured, ironed, and packed on hangers.
Security measures are taken, with price tags
affixed during the production stage.

Overnight trucks are used to deliver products to

European stores. For other countries, airfreight
is used to ensure rapid delivery.

The finished products reach consumers either

The image illustrates ZARA's
through ZARA's own stores or via online sales
supply chain and highlights
channels, ensuring efficient distribution to the
its operational efficiency
end customer.
III.
What factors does the company need to
consider when designing its marketing
channel for a selected product?
 DESIGNING MARKETING CHANNEL
3
FACTORS THAT NEED TO PUT IN CONSIDERATION

COST CAPITAL CONTROL

ZARA minimizes costs by ZARA maintains high control

High capital investment in stores
owning a large part of its supply over pricing and customer
and logistics ensures full control
chain, balancing efficiency with experience by owning most of
over distribution.
speed. its retail and online channels.

COVERAGE PRODUCT-CHANNEL CONTINUITY

FIT

ZARA uses selective coverage, Fast product turnover is Long-term customer

placing stores in major urban supported by channels that can relationships are built through
areas, while expanding reach quickly respond to changing consistent branding and reliable
through online platforms. fashion trends. online/offline services.
 DESIGNING MARKETING CHANNEL
3
FACTORS THAT NEED TO PUT IN CONSIDERATION

CUSTOMER DISTRIBUTION
CULTURE
COMPETITION
CHARACTERISTICS

ZARA caters to fashion-

forward, urban customers, ZARA adapts to local shopping Speed-to-market is critical,
prioritizing quick access to new preferences, combining physical allowing ZARA to stay ahead by
trends in prime locations and and online experiences. offering refreshed collections
online. faster than competitors.

COMPANY OBJECTIVES COMMUNICATION

ZARA focuses on fast product ZARA uses its channels for

movement, quick response to direct customer interaction,
trends, and direct customer adapting its offerings based on
engagement. real-time feedback.
IV.
Discuss the complexities the company
faces when designing channels in other
countries.
4
COMPLEXITIES ENVIRONMENTAL

ENVIRONMENTAL COMPLEXITIES

Cultural differences and Government regulations and

Consumer behavior Legal issues

Zara’s fast-fashion model relies on quickly Different countries have varying regulations.
delivering trendy items that match local Distribution, licensing, import/export rules,
consumer demands. taxes, quotas and tariffs, labor laws, and
environmental standards
⇒ Zara must adapt its product offerings to
meet local expectations without deviating too Importing textiles and clothing significantly
much from its global brand image. affect Zara's ability to move products across
borders efficiently.
The preferred shopping channels differ
across cultures. In some countries, physical Tariffs, quotas, and other trade barriers may
retail shopping is a major social activity increase costs or complicate distribution.

⇒ Zara needs to adjust the balance between Some countries impose limits on foreign
brick-and-mortar stores and online channels ownership of local distribution networks
4
COMPLEXITIES ENVIRONMENTAL

ENVIRONMENTAL COMPLEXITIES

Logistics and infrastructure

Economic variability
challenges

Zara needs to consider the level of Local infrastructure, including roads, ports,
economic development, the income levels warehouses, and transportation networks.
of consumers, and the purchasing power of
the currency Poor infrastructure can lead to delays,
increased costs, or inefficiencies in the supply
Operates in both developed and developing
chain.
markets, where purchasing power varies
greatly. This affects pricing strategies and
the design of its distribution channels Zara’s production is closely linked to its
distribution model, as it relies on fast
Exchange rate volatility can affect profit turnaround times. Countries far from its main
margins, pricing strategies, and distribution manufacturing hubs challenges in getting
costs products to market quickly.
4
COMPLEXITIES CHANNEL

CHANNEL COMPLEXITIES

Direct vs. Indirect

Omni-channel integration
distribution

Zara’s omni-channel strategy requires strong

Local laws or market conditions may
require Zara to partner with franchisees, integration between its physical stores and its
licensees, or distributors. online platforms (e-commerce, click-and-
collect, and in-store returns)
This introduces complexities in maintaining
consistent service standards, store The level of digital infrastructure, logistics
aesthetics, and overall brand identity. capability, and consumer readiness for omni-
channel services varies significantly.
Ensuring that these partners uphold the
company’s strict standards and align with Ensuring real-time synchronization of inventory
its operational pace can be challenging. across both online and physical stores is a key
component of Zara’s models, which is the thing
that not every countries can offfer.
V.
Discuss the concepts of horizontal and
vertical conflict as they relate to the
company.
 CONCEPT OF
5
HORIZONTAL AND VERTICAL CONFLICT
5
HORIZONTAL CONFLICTS

A disagreement or competition between two partners at the same level of the chain.
Can arise between different retail stores, franchisees, or distributors selling the same product within a market.

Between Zara physical stores Between franchisees or

and online-platforms corporate-owned stores

Between franchises: competition between

Zara has thousands of stores globally, and franchisees located in the same market. For
competition between these stores could instance, they might experience tension over
arise if they target overlapping customer
overlapping customer bases, marketing efforts, or
segments in close geographical proximity.
local sales promotions.
A horizontal conflict between its physical
Between franchisees and corporate-owned
stores and its e-commerce platform.
stores competition over the same customer base.
if online prices are more competitive due to Franchisees may feel that corporate-owned
promotions, creating tension between store stores receive better support in terms of
managers and the e-commerce division. inventory management, marketing campaigns,
and promotional resources.
5
VERTICAL CONFLICTS

A disagreement or discord between different levels of the same chain, typically between a manufacturer,
wholesaler, distributor, and retailer.
Arises when these parties, despite being part of the same distribution channel, have conflicting goals, interests,
or actions.

Between Zara and its suppliers Between Zara and franchisees Between Zara and
logistics providers

Zara relies on its suppliers to Zara relies heavily on efficient

Zara uses franchisees instead
quickly produce and deliver logistics to ensure fast delivery
of owning stores.
clothing. of new products to stores and
customers
maintains strict control over
Suppliers might feel that Zara brand image, pricing, and store
prioritizes speed over quality, If logistics providers can’t
layouts across all its stores.
while Zara may think suppliers meet tight shipping deadlines, it
Franchisees may want more
aren't meeting its high can disrupt product delivery
autonomy to adapt to local
standards. and store inventory.
market conditions
To stay agile and control costs, Unique logistical challenges,
Franchisees rely on Zara for a
Zara may change or diversify such as transportation and
steady supply of new products.
its suppliers. customs regulations.
VI.
How does the company add value for the
customer through major logistic
functions?
 HOW DOES THE COMPANY ADD VALUE
6
THROUGH MAJOR LOGISTIC FUNCTIONS

SPEED AND RESPONSIVENESS CONVENIENCE AND SATISFACTION

Rapid Product Turnover: New Seamless Shopping Experience: Zara's
designs are shipped to stores efficient logistics system ensures that
within 2-3 weeks of creation products are readily available in stores
Just-in-Time Inventory: Zara
maintains minimal inventory levels
S C when customers want
Easy Returns and Exchanges: Zara's
in its stores and warehouses, hassle-free return and exchange policy
relying on a just-in-time approach provides customers with peace of mind

PRODUCT AVAILABILITY SUSTAINABILITY AND ETHICS

Wide Range of Choices: Customer P S Reduced Environmental Impact: Zara's
focus on speed and efficiency reduces
can find the perfect items to suit
their individual tastes and styles. the need for excessive transportation
Limited Edition Release: Zara's and storage
strategy of frequent product drops
and limited edition releases creates
a sense of urgency and exclusivity
6
VALUE LOGISTIC FUNCTIONS

Order Processing

Warehousing

Inventory Management

Transportation

Material Handling

Packaging

Customer Service
 MACRO MARKET ANALYSIS
1
COMPETITION

Real-time Inventory Visibility: Zara's advanced IT systems provide real-time

visibility into inventory levels across its global network.
Efficient Order Routing: Zara's logistics network is optimized to route orders
to the nearest distribution center or store
Order Processing
Automated Order Processing: Zara's order processing system is highly
automated
Integration with Supply Chain: Zara's order processing system is tightly
integrated with its supply chain

Centralized Distribution Centers: distribution centers that

serve as hubs for storing and distributing products to stores
Warehousing and customers.
Cross-Docking: incoming shipments are immediately
transferred to outgoing trucks for delivery
 MACRO MARKET ANALYSIS
1
COMPETITION

Just-in-Time (JIT) Inventory: Zara follows a JIT inventory strategy, holding

minimal stock in stores and replenishing inventory frequently from its
Inventory Management distribution centers
Demand Forecasting: Zara's sophisticated demand forecasting models help
anticipate customer preferences and optimize inventory levels.

Own Transportation Fleet: Zara owns a significant portion of its

transportation fleet, giving it greater control over delivery
Transportation schedules and costs.
Multimodal Transportation: Zara utilizes a combination of
transportation modes

Efficient Product Sorting and Packaging: Zara's

Material Handling material handling processes ensure that products
are sorted and packaged correctly
 MACRO MARKET ANALYSIS
1
COMPETITION

Recyclable Materials: The company uses a high percentage of recyclable

materials
Sustainable Sourcing: Zara sources its packaging materials from suppliers
Packaging
who adhere to sustainable practices
Protective Packaging: Zara uses appropriate packaging materials to protect
products during shipping and prevent damage.

Easy Returns and Exchanges: Zara offers hassle-free returns

and exchanges policies
Online Order Tracking: Zara's online platform allows
customers to track their orders in real-time
Customer Service
Customer loyalty program: Offers loyalty programs and
discounts to repeated customers
Social Media Engagement: Zara actively engages with
customers on social media platforms,
 ZARA HOME MARKET
7
SPAIN

Dense Networks of Stores

Integration with Inditex Group
Zara maintains a significant
presence in Spain, with As a subsidiary of Inditex, Zara benefits from
numerous stores strategically synergies with other brands within the group,
located in major cities and such as Pull&Bear and Massimo Dutti.
shopping centers

Strong Supplier Relationships

Zara has cultivated strong relationships

with suppliers in Spain, ensuring a reliable
and efficient supply chain

Customer-Centric Approach

Efficient Logistics The company continuously monitors

consumer trends and preferences to adapt
its product offerings and store layouts
Zara's distribution centers in Spain are well- accordingly.
equipped to handle the frequent shipments
of new products from its manufacturing
facilities
 A RAPID GROWING MARKET
7
CHINA

Aggressive Store Expansion Localization Efforts

Zara has rapidly expanded its store Zara has made significant efforts to
network in China, opening localize its product offerings and
numerous outlets in major cities marketing campaigns
and shopping malls

Strong Online Presence

The company's
website and Strategic Partnerships
mobile app offer
a seamless Zara has formed partnerships with
shopping Chinese e-commerce giants like
experience, Alibaba and JD.com
 COMPARATIVE ANALYSIS
7
SIMILARITIES

VERTICAL INTEGRATION FAST FASHION MODEL EMPHASIS ON

PHYSICAL STORES

Zara maintains control over a Zara's core business model, Zara has a substantial network
significant portion of its supply based on frequent product of physical stores, serving as a
chain, from design to turnover and quick response to key touchpoint for customers
manufacturing and distribution fashion trends,

E-COMMERCE CUSTOMER-CENTRIC
INTEGRATION APPROACH

In both markets, Zara

Zara has invested in strong prioritizes understanding and
online platforms in both Spain meeting customer preferences.
and China. This involves market research,
data analysis, and product
customization
 COMPARATIVE ANALYSIS
7
DIFFERENCES

MARKET MATURITY

SPAIN CHINA

As Zara's home market, Spain has a more The Chinese market is relatively newer for Zara,
mature retail landscape with established characterized by rapid growth, increasing
consumer preferences and a higher level of consumer spending, and a diverse range of
brand awareness. competitors.
 COMPARATIVE ANALYSIS
7
DIFFERENCES

CULTURAL NUANCES

SPAIN CHINA

Spanish culture emphasizes social interactions Chinese consumers often prioritize convenience,
and leisurely shopping experiences. Zara's efficiency, and value. Zara's stores in China may be
stores in Spain often reflect these cultural designed to accommodate larger crowds and
preferences with a focus on ambiance and offer more streamlined shopping experiences.
customer service.
 COMPARATIVE ANALYSIS
7
DIFFERENCES

REGULATORY ENVIRONMENT

SPAIN CHINA

The regulatory environment in Spain is The Chinese regulatory landscape can be more
relatively stable and well-established, complex and subject to changes. Zara must
providing a predictable framework for navigate various regulations related to import-
businesses. export, e-commerce, and consumer protection.
 COMPARATIVE ANALYSIS
7
DIFFERENCES

COMPETITIVE LANDSCAPE

SPAIN CHINA

The Spanish fashion market is competitive, but The Chinese market is highly competitive, with a
Zara has a strong market presence and brand mix of domestic and international brands vying for
recognition. market share. Zara must differentiate itself to
stand out in this crowded landscape.
Thank
you!!
 COMPANY COMPETITIVE ADVANTAGE
3
COMPANY VALUE CHAIN

Firm Infrastructure Japanese Port Collaboration

M
Human Resource
Cultural Training + Local Talent Utilization

ar
Management

gin
Technology Development Environmental Technologie + Safety Innovations

Procurement

Inbound Operations Marketing & Service

logistics sales Personalized cruise
Develop a local Appeal sense of

M
Adapt itineraries, special
supply chain that Outbound aesthetics and

ar
entertainment events for Japanese

g
leverages Japan's options to cater logistics luxury holidays,language-

in
famous seafood to Japanese incorporating specific tours.
and agricultural preference elements of
products Japanese culture
 COMPANY COMPETITIVE ADVANTAGE
3
FIT OF COMPANY --> HEDGEHOG 3 CIRCLES

The company’s profitability stems from

premium pricing, driven by its ability to offer
What brings you personalized, high-end experiences.
profit?
High-end, luxury
cruises Bhaya’s passion for immersive cultural
experiences resonates with Japan’s demand for
authentic, senior-friendly, and sustainable
What you passionate
tourism.
about?
What you do best?
Immersive Cultural By focusing on these three core areas, Bhaya
Excellence in Luxury
Experiences
Eco-Tourism can cultivate a sustainable competitive
advantage in Japan.
 COMPANY COMPETITIVE ADVANTAGE
3
RELATIVE COMPETITIVE ADVANTAGE COMPARED WITH COMPETITORS
IN THE MARKET

Company strategic level:

Product Development Strategy
High-quality service helps differentiate Bhaya from
competitors, attracting discerning travelers seeking
premium experiences.

to focus on the key driver:

QUALITY OF SERVICE

Directly impacts customer satisfaction and loyalty.

Personalized and consistent service enhances the
experience, leading to positive word-of-mouth and
repeat business.
 FIT OF COMPANY OFFERING WITH MARKET
4
DEDUCTED SWOT

STRENGTHS WEAKNESSES
Distinctive Southeast Asian Cultural Low Brand Recognition
INTERNAL

Offerings Resource Constraints for Market Entry:

Reputation for Excellence in High costs associated with localizing
Hospitality
High customer retention S W and setting up operations could limit
rapid expansion.
Advanced Environmental Initiatives Adaptation to Local Preferences:
Potential risk of cultural misalignment in
service offerings.
OPPORTUNITIES
THREATS
Growing Luxury and Eco-Tourism
O T
EXTERNAL

Markets: increasing trend towards Japan hosts major cruise operators with
luxury travel combined with competitive services.
sustainability in Japan. Economic uncertainties may affect
Technological integration: Digital travel spending,
platforms enhance booking and Strict laws could lead to fines for non-
onboard experiences. compliance.
6
RECOMMENDATION Company-country fit

Marketing Segmentation Marketing Positioning Marketing Targeting

Demographic Segmentation: Gen Z (ages 18-26): Promoting

Luxury and Sustainability:
affluent families, young eco-friendly cruises, adventure
Establishing itself as a premium
couples, and retirees trips.
cruise provider committed to
eco-friendly practices.
Geographic Segmentation: Millennials and Gen X (ages 27-
Focusing on urban centers 50): Offering personalized
Cultural Relevance: Integrating
(Tokyo, Osaka and tourist- luxury cruises that feature
traditional Japanese elements.
heavy regions) cultural experiences
Service Excellence: high-
Psychographic Segmentation: Senior travelers (ages 50-80):
quality, personalized service.
Catering to eco-conscious Offer wellness retreats and
travelers. focused activities like
meditation and nature walks.
 References
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GlobeNewswire. (2023). “Japan's outbound tourism market, 2019-2025”: Breakdown by. https://www.globenewswire.com/news-
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Huang, Y., & Hsu, C. (2021). “Interpretation of cruise industry in a two-sided market context: An exploration on Japan”. Tourism
Economics, 27(3), 465-482. https://doi.org/10.1177/1354816620964461

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Statista. (2023). “Cruises in Japan - statistics & facts”. Retrieved from https://www.statista.com/outlook/mmo/travel-
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