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.