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.