CHAPTER 7: BUSINESS MARKETING

BUSINESS MARKETING

Businesses use marketing to promote their products and get consumers buy them. These consumers are sometimes other businesses or organizations. In this case, companies use business marketing to promote their products. Sometimes the products that are sold through business marketing are intermediate goods and services and other times they are finished, consumer goods. The difference is that these consumer goods are sold in rather large quantities to one buyer for public use. Companies that produce electronic supplies frequently sell their goods and services to individuals that need them for personal  use and to organizations and businesses that need them for other reasons. 

Other businesses, such as apparel retailers, are less inclined to use business marketing. Zara is one of these apparel retailers that does not use business marketing. The type of products that Zara offers are not suited for consumption other than family or personal uses--Its intended costumers are individuals that use its clothes or home goods daily only. 

CHAPTER 8: SEGMENTING AND TARGETING MARKETS

SEGMENTING AND TARGETING MARKETS

In the 1960 numerous companies begun using market segmentation. Until then, most companies would make only one type of product and targeted it to the entire market. This way of distributing the products was not as effective as segmenting markets. Segmenting markets allows companies to produce different types of goods in different amounts and aim them to a specific demographic of consumers. This strategy allows a company to reach a wider scope of preferences and needs, thus increasing the chances of a company to make as much money as they can. 

There are certain bases that must be met in order for a business to have a successful segmentation of consumer markets. The segmentation must be based on variables, single or variable. Single variables tend to be easier because the company has to make only one change and it could be based on group age, gender,ethnicity etc. Multiple-variable segmentation is much more precise and common. Usually it is easier to change more than one thing in the market(e.g. Age and gender). The most used variables that consumer markets use are demographics, psycho-graphics, geography, usage rate etc. 

Multiple-variable segmentation is frequently used by apparel retailers such as Zara. Zara has many stores throughout the world and it appeals to different types of people, so segmenting markets is a must. This company segmented its markets based on geographic and demographic features. The various locations of Zara stores fall into different climate zones, with different market sizes and densities. Based on these differences, the retailer decides the types of products and the amount of products that it needs to make at certain times. Meanwhile, the retailer is also considering the age, gender, ethnicity and finances. They use this to decide how they distribute their products and at what price they will sell them. For example, TRAFA line that has as its intended consumers teenagers is cheaper that the Basic line, which is intended for professionals.  Also, the prices for the same products in Manhattan are different from the ones in Paris etc. 

These factors and many more decide how the markets are segmented. 

CHAPTER 11: DEVELOPING AND MANAGING PRODUCTS

DEVELOPING AND MANAGING PRODUCTS

To be successful and to resist the market for a long time a company needs to constantly meet the consumer's demands. It needs to constantly come up with new products to satisfy its costumers. 

There are different types of "new" products that a company can place in to the market. There are the new-to-the-world products, that are innovative product never seen by the public before. There are new product lines, that may not be completely new to the public but are a new component to a particular line of products. There may be addition or renovations to the product line, which means that there isn't necessarily an actual new product but there are modifications to the existing products. 

Many businesses incorporate all of these components very often, especially high-tech companies that have to do with communication and transportation, such as twitter, apple, Nissan etc. This companies decide what kind of products to make and when to release them based on competition and the changes in the lives of their buyers. And these indicators for new products are not limited to high-tech companies only. They apply to apparel retailer too, such as Zara.

As a fashion imitator Zara doesn't have to worry about setting new trend or trying to figure them out. However, it does need to change the variety of its product lines in order to keep its costumers and to expand its business. One of the strategies that Zara has followed is lowered priced products. Zara offers products similar to the products of famous designer, for a much lower price. Also it, sometimes, adds new products to the existing lines and revises some of the old products to give them a slightly new, different appearance to fit the new trends. So far these strategies have proven to be successful since Zara has survive the market for many years and seems to be constantly growing. 

CHAPTER 18: SOCIAL MEDIA AND MARKETING

SOCIAL MEDIA AND MARKETING

One of the most important asset that many companies have to promote their business is marketing. Traditionally marketing is done through T.V. adds, newspaper adds, posters etc. Lately, marketing is done through social media too. Companies can reach to prospective consumers through mobile marketing, e-mail marketing or online adds etc. This type of marketing has become very successful as social media is very popular among different generations nowadays. However, not every business chose to use social media for marketing, or even marketing at all.

Zara is one of these companies that chose not to use marketing. This company believes that there is better use of their money than marketing. Zara is a fashion imitator, which means that the style of its products is already in style. Unlike the apparel retailers that set the trends, Zara has affordable styles and approximately 700 convenient stores throughout the world. Also, Zara uses the money saved from not advertising to release a new line every two weeks. All of these combined create many loyal consumers, proving that Zara's strategy is working.  

CHAPTER 10: PRODUCTS CONCEPTS

PRODUCT CONCEPTS

Before worrying about  strategies to expand the business, a company must first have abundant  products to sell. When the company has many products available, it reaches more consumers and it begins to orient the managers towards efficient business moves. It allows them to decide which type of goods and services should be produced and which ones should not, and it provides the managers with possible marketing strategies such as advertising, distribution etc. that will guide them into making their business successful. 

The marketing strategies that a company chooses to follow depends on the type of products that that company provides. For example the marketing strategies for industrial products and consumer goods are quite different. The consumer products are much more versatile and appeal to a larger number of people, thus the magnetizing strategies are more numerous.

Consumer goods are classified based on the need of the consumers for them. There are convenience products, which are usually inexpensive and used for basic needs and services. There are shopping products, which are not as inexpensive and common in need as the convenience products. There are many more categories that classify products based on their price and usage. Apparel retail companies usually have shopping products, which are classified in other subcategories within themselves based upon the different marketing strategies used to sell them.

Zara is an example of apparel retail companies that provides shopping goods. The products of Zara are not as basic and inexpensive as convenience products but they are not as particular and expensive as specialty products because Zara is a fashion imitator. Being a vertically integrated business Zara saves a lot of time and money on producing its products. This allows Zara to sell its clothes  in product lines, a group of related items-- approximately every two weeks  there is a new clothing line in every Zara store. Lately, Zara began to produce other items than clothes such as accessories, cosmetic products and home products. All of these products are sold in what is called a  product mix. Usually components of the product mix would require different marketing strategies, but this is not the case of this company. Zara uses the same strategy for all of them: the products are versatile available in every worldwide Zara store at an affordable price--so far it has resulted successful. 

                          

        

CHAPTER 17: PERSONAL SELLING AND SALES MANAGEMENT

PERSONAL SELLING AND SALES MANAGEMENT

Personal selling has been a popular practice among certain kinds of businesses since a long time ago. Companies that launch new services of goods frequently, usually need to use personal selling to make the new product more appealing to the costumer. Personal selling is designed to provide the prospective costumer with reasonable exudes to purchase the product. To achieve this goal, personal consultants sometimes have to show a demonstration of the product or link the product to the lifestyle of the costumer, etc. All of these strategies and more, often provide the company with new and loyal costumers because the company has created a sense of credibility and familiarity. 

However, this kind of service is not needed in every type of businesses. It is necessary for companies that launch luxurious and innovative products, such as private jets, yachts or new technologies, for which the costumer needs a proper demonstration and justification. For other companies that sell simple, everyday products, such as clothes and food, personal selling is not crucial to the business' success. 

Zara is one of the world's largest apparel retailers. It is said to be a "fashion imitator" because rather than attempting to create new fashion trends, it focuses on manufacturing versatile quotidian products based on the already established trends. This strategy allows Zara to have costumers who already know what they want and do not need personal selling to invent reasons for the products purchase.

CHAPTER 16: ADVERTISING, PUBLIC RELATIONS, AND SALES PROMOTION

ADVERTISING, PUBLIC RELATIONS, AND SALES PROMOTION

To successfully reach as many costumers as possible businesses need to promote their products. One tool of promotion, which has resulted the most popular among the business world is advertising. Advertising is typically very expensive. Every year the expenditure of one company  for advertising increases by a significant percentage. Nevertheless, it is still widely used because it often brings about satisfactory results.

However not all companies use advertising to promote their business.

Zara is one of these companies that is successful without using advertising. The money that would be spent on billboards and TV commercials, Zara uses  it on new merchandise and new technology. The new technology enables the retailer to launch new products quickly: there is a new line in each  store every two weeks. The products are appealing to a large variety of people (different genders, styles, ages, cultures etc.). Also the prices are not too high, making them affordable for most of the people. The way in which the product is presented to the public, the time in which it is available, the quality of the product and the convenient locations of the stores are the only way of promotion for Zara. This strategy has been proved to be a very successful, seeing that the net sales are increasing every year. 

CHAPTER 14: MARKETING CHANNELS AND RETAILING

MARKETING CHANNELS AND RETAILING

Many businesses, in order to succeed, need to collaborate with others. Often, one company does not have all of the resources needed for its final products. Through marketing channels this problem is sold. Channel members of different types of businesses negotiate with each other, sell and buy products and services and finally complete their product. However, this is not the case for every type of business. Zara, for example, does not need to collaborate with many other companies.

Zara is a vertically integrated retailer. In the 1980s, Zara started to design, manufacture and distribute its own products. This strategy enables Zara to have its product available to its costumers all over the wold in just a few days.

CHAPTER 6: CONSUMER DECISION MAKING

CONSUMER DECISION MAKING

  The key to success of any business is their ability to understand their consumers. This is a very complicated process that marketing managers must deal with frequently. This is even more complicated for multinational companies like Zara. 

Being present in more than 60 countries world wide, Zara deals with understanding the needs and wants of its consumers constantly. Many of the countries in which Zara is present are very different from each other, so evidently their wants and needs are also very different.  For example the needs and wants of the costumers from Brazil are very different from those in Sweden. Costumers in Brazil may need short shorts and sandals at any time of the year--due to the hot weather--and they want boots just for fashion. The ones in Sweden may have the opposite station from the Brazilians: they need boots in autumn and winter--due to the cold weather--and they might want shorts for a fashion statements. Besides the effect of the climate on the wants and needs of the costumers, Zara's marketing managers must understand the cultural factors, too. They must be able to understand the similarities and the differences of the costumers from strict cultures and liberal cultures.

In order for the Zara's marketing managers to understand all of these various needs and wants they need to constantly be in touch with the clientele. They must conduct several surveys per each season in each individual region where there are established stores. In addition they must decide how realistic the costumers wants are. They must decide if making an extravagant product that many costumers seem to want is efficient: maybe it costs a lot to make that product, but the costumers may not pay a lot of money to purchase that products, thus the company will waste resources on a product that will not be as successful as anticipated. 

CHAPTER 5: DEVELOPING OF GLOBAL VISION

DEVELOPING OF GLOBAL VISION

International commerce is an important factor in today's world economy. Many countries value this type of commerce because  their GDP depends on it. Countries like the United States, however, take a different stand. many people are hesitant to world trade and globalization. One of the things they fear is job outsourcing.This might be a bit of a negative effect to one country but it is beneficial to the other ones as well as to the companies themselves.

Zara, being an international company, has to deal with world trade and globalization in regular bases. There might be job outsourcing in Spain, but in the other seventy countries many millions of jobs have become available. Also,new technologies that Zara has, are available to these new countries, and although it may seem as if the new advanced technology would reduce the number of jobs available it is quite the opposite. With the help of the new technology more products can be produced in less time, which would mean that new markets would have to be open, thus more people in distribution and retail would have to be hired.

Multinational companies, like Zara have many other benefits. Zara is present in 73 countries, which means that the company would have to pay taxes to each of their government improving their internal economy. Also, though global marketing standardization they can offer the same type of products to many different countries. However, Zara is not succeeding through this strategy. It is succeeding doing the opposite: it has succeeded through variation. Zara offers a variety of products that satisfy the wants of all ages and of all cultures in which this company exists (also known as multidomestic strategy).

Chapter 4: THE MARKETING ENVIRONMENT

THE MARKETING ENVIRONMENT 

To plan a successful future for their business, marketing managers must know the external environment in which they are working. There are many factors that play key roles in the marketing environment such as social factors, demographic factors, economics factors etc..The managers should be well aware of these changing factors in order to decide what products need to be produced, to where they should be distributed and at what price should they be available to the buyers. 

Being an international company, Zara has to deal with social factors frequently. To appeal to each of the different groups of buyer from all around the world Zara has a very diverse collection. The clothes distributed to the countries in which the stores of Zara are already established (or will be) are in accordance with the culture of that country. For example in the countries with heavy religions influence, women's clothes are far more reserved than the ones with weak religious influence. This strategy exists in much smaller scales too. The stores that are close to high schools or colleges tend to have more casual clothes than the ones near offices and firms. 

Economic factors play a very important role too. probably the most important. People usually seek fashionable designer clothes that do not cost much and when they find a company that meets those condition they become loyal to it. Zara has created its loyal buyer by offering precisely that: they have fashionable clothes of excellent quality in affordable prices. Like the variety of clothes according to the different cultures, the prices also vary according to the economic status of that region/country. However, the difference between prices in different countries is not very significant: the prices tend to be less than $250 (the same amount converted in other currencies for other countries).

Chapter 3: ETHICS AND SOCIAL RESPONSIBILITY

ETHICS AND SOCIAL RESPONSIBILITY

Being a large company that is expanded worldwide has its benefits but it has also some issues, especially related to ethics.Most of the Zara stores and factories are company-owned. But, geographically it is almost impossible for the company to supervise all of these stores and factories, therefore often ethical issues concerning human rights, arise. 

An example of this is the Brasil case in August 16, 2011. A Liga, a Brazilian TV show denounced Zara for  Slave labor. Apparently, Bolivians were brought to Brasil illegally and they were locked in an apartment where they sowed clothes for 12-14 hours a day without food or warm water to shower. They were also payed extremely low wages (1 USD per finished dress, while the dress was sold for at least 70 USD). The Regional Superintendency of Labour and Employment of Sao Paolo, closed this factory on August 17, 2011. 

"In a statement, Zara's representatives sad that the accusations of slave labour made against the retailer represent a 'serious breach in accordance with the Code of Conduct for External Manufactures and Workshops of Inditex.' They also countered that all the factories responsible for unauthorized outsourcing have been asked to regularize immediately the situation of the workers involved. 'The Inditex group, along with Brazil's Ministry of work, will strengthen the supervision of the production system of all its suppliers in the country  to ensure that such cases do not occur again." (www.forbe.com).

Mostly, however, Zara has strong policies regarding its workers (at least the ones who work in store). A employee's information is strictly confidential and they are protected within the store: if one employee has a problem with someone outside, that person is banned from the store in which the employee works. Also, Usually Zara tends to start paying its workers above the minimal wage. 

Chapter 2: Strategic Planning for Competitive advantage

STRATEGIC PLANNING

The Fashion Industry is one of the most competitive business areas today. To survive, a company must use several strategic planning methods.

Zara is one of the few companies that use a unique combination of these strategies to have a greater, steadier competitive advantage. Unlike most companies, Zara does not use advertising to gain new costumers.

One strategy that Zara started using a few years ago is diversification. Initially, Zara started as a clothing line only for women. A few years ago, in 2007, Zara started releasing a clothing line for men and later one for children. The lines for men and for women are separated into two categories each. For a more sophisticated and mature look is the women's section and the men's line; for a casual look there is the basic line and for a more playful and young look there is the trafa line. This way the company reaches out to a large variety of buyers. Also, to make sure that the costumers buy the new products as soon as possible, Zara only releases a limited amount per each store. The stores, usually are very spacious, so the contrast between the stores and the amount of products in it make the buyers believe that the new collection is almost finished so they need to purchase as soon as possible before everything is gone for good.

Another strategy that Zara uses is market development. Using the money saved from not advertising, and the abundant amount of products, Zara has the necessary means to expand its business worldwide. In 1975 Zara existed only in Spain. In the 1980 and 1990 it expanded in Portugal, Mexico, Greece, Belgium, France, United States and Sweden. Currently, it is present in over 73 countries.

Another strategy that has helped Zara survive in this competitive business is the fact that Zara is a vertically integrated retailer. It controls most of the steps of the production: designing, manufacturing and distributing. This approach allows the company's self-containment throughout the stages of materials, manufacture, product completion and distribution to all of its stores with locations around the world, in a very short period of time.

Esmeralda Kokici: Zara (Chapter 1)

Zara España, S.A.

ZARA is a clothing company foundet in 1975 in spain by Armanicia ortega and Rosalia Mera. It owns brands such as Massimo Dutti, Breshka, Uterque etc.

This company has resulted successful through the years although it does not advertise at all. ZARA does not promote its products on TV, billboards etc, but the quality and the variety and the affordable prices of the products and the convenient locations of the stores through the world have made this company known and loved by its loyal costumers. 

ZARA is a vertically integrated retailer, so it has the means to produce and distribute its product quickly and this is yet another reason why ZARA has survived the competitive market for this long.