ZARA Business

1

• Smart Application Development

• Sungkyunkwan University
• Spring 2012
• JuneHyo Ahn
• SunHo Lee
• Chris Lopez

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Contents

• Background Overview
• SPA Brand
• Company Introduction
• Product Concept
• Business Analysis
• Trend Environment Analysis
• 3C Analysis
• SWOT
• STP
• Market Analysis
• Consumer Needs Wants
• Segmentation Target
• Consumers Journey
• Consumers Pain Point
• New Service Concept

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1
Background Overview
SPA Brand

• Specialty store retailer of Private label
  Apparel
• One Company manages all processes of design,
  producing, marketing, retailing
• Quickly understanding consumers lifestyle
• Short-term design improvement
• ZARA, MIXXO, SPAO, Uniqlo, HM etc

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1
Background Overview
SPA Brand
SPA Brand Factors
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1
Background Overview
Company Introduction
History of Zara
1963 founded INDITEX 1975 opened the 1st
ZARA store in Spain 1988 opened the 1st
oversea ZARA store in Portugal 1989 entered to
the Americas in New York 1991 entered to Asia
market opening in Japan 2005 opened ZARA store
in Indonesia
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1
Background Overview
Product
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2
Business Analysis
Trend Environment Analysis
In spite of economic depression, SPA Industry has
been growing
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2
Business Analysis
Trend Environment Analysis
Company Sales Growth CAGR
Shinsegae Int 5,832 32.8 21.3
Louis Vuitton 4,273 14.8 21.3
Gucci 2,731 -3.2 14.3
Prada 1,757 46.9 45.5
Ferragamo 821 16.6 11.4
Zegna 330 7.1 9.5
Dior 304 -4.1 4.6
Burberry 1,850 16.5 11.7
Uniqlo 2,260 84.3 61.7
Zara 1,338 67.4 57.4
HM 375
lt2010 Sales Analysis of Foreign Capital Companiesgt
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2
Business Analysis
Trend Environment Analysis
SPA Brand Awareness
SPA Brand Preference
Awareness Preference
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2
Business Analysis
3C Analysis
Company
reasonable price, products' fast rotation, high
awareness of the brand - Method for reducing cost
direct distribution process, few of staff at
the store - following the frequent trends
change - fashion consciously change - no
inventory by reducing exhibit in the store -
plenty of stores all over the world with mid-low
level of price
Customer

• prefer high quality with low cost level
• cheap and chic design
• emotional impulse buying more than rational
  purchasing
• importance of "word of mouth"
• consumption focused on the trend
• prefer polished place to shop

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2
Business Analysis
3C Analysis
Competitors

• The Worlds first SPA Company
• Low Middle price in U.S

• Combination QR with SPA
• Simple, Effectiveness, Durability

• Benchmarked GAP
• Low Middle price in Korea

• SPA through Becoming lager from 2001

• The first SPA in Korea from 2000

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2
Business Analysis
SWOT Analysis
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2
Business Analysis
STP Analysis
Segmentation
Segment1 Segment2 Segment3
AGE Mid-Teen Mid-Twenties Mid-Twenties Mid-Thirties Mid-Thirties Forties
12.7 23.1 20.5
Interest ?fashion-conscious ?Trendy, Impulsive Buying ?Utilitarian ?Price Design ?Luxury Brand ?Practicality Quality
Style Preference ?Casual ?Casual Formal ?Differentiation ?Formal
Market Share ? 19 (Cheap Price) ? 29.4 (Price Design) ? 30.6
Purchase Channel ?Bonded mall Online mall ?Department store On/off line mall ?Department store Outlet
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2
Business Analysis
STP Analysis
Targeting
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2
Business Analysis
STP Analysis
Positioning
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2
Business Analysis
STP Analysis
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3
Market Analysis
Customer Needs Wants
Rochas Clothing and Fashion Indicators Climate moral conventions health Age appearance, activities to execute, comfort durability price physical adequacy welfare balance ease-of-care fashion versatility beauty elegance body exposure brand detachment sensuality attraction to particular clothes color personal style taste boldness
Maslows Human Needs Physiological Safety Social Esteem Self Actualizing
Flugels Motivation for Clothing Protection Modesty Decoration
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3
Market Analysis
Segmentation Target

• Zara does not define their market by strictly
  segmenting ages or lifestyles
• Allows them a strong competitive advantage over
  traditional retailers through a much broader
  market
• 0 40 age range
• Five Clothing Brands
• Zara Woman, Zara Basic (for women), Zara TRF (for
  younger women), Zara Men and Zara Kids
• Product line 60 Women, 25 Men and 15 Kids
• Target Consumer
• Young, Price Conscious and highly sensitive to
  latest fashion trends
• Average shopper comes to the store 17 visits/year
  versus industry standard of 3 visits/year
• Increased visits due to very high turnover of
  clothing offered
• Zara offers 12,000 styles/year versus industry
  standard of 3,000/year

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3
Market Analysis
Customers Journey

• Store location
• Always located in high traffic, iconic areas that
  impart a prestigious air to Zara
• Unique external and internal architecture
• Lack of advertising
• Zara does not use traditional advertising
• Only 0.3 of revenue
• Window displays are the first thing to greet
  potential customers
• Meticulously designed to be artistic and
  attention grabbing, while highlighting the newest
  designs
• In-store design
• Stores are designed to seem airy and light
• Music is played at a muted volume
• High turnover of styles removes need for large
  storage spaces
• Inventories are small, creating a high demand for
  limited pieces
• Highly trained staff

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3
Market Analysis
Customers Journey
Window Display Ex
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3
Market Analysis
Customers Journey
Zara Interior Design
Rome
New Delhi
New York
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3
Market Analysis
Consumer Pain Point

• Limited runs of clothing
• Zara focuses on high turnover fashion with very
  limited inventories available
• Consumers may not be able to purchase desired
  pieces
• Lack of advertising
• Zara uses physical stores and large window
  displays to showcase new designs
• If consumers do not physically visit the store it
  is difficult to keep abreast of new styles
• Pricing
• While Zara is marketed as affordable designer
  fashion, some consumers may feel it compares
  unfavorable to more utilitarian fashion such as
  SPAO or Uniqlo

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4
New Service Concept
Service Concept
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4
New Service Concept
Steps to Use
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4
New Service Concept
Consumer Decision Making Process
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4
New Service Concept
App Design
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4
New Service Concept
App Design
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3
Market Analysis
Consumer Pain Point
Pain Point Solutions

• Limited runs of clothing
• Virtual closet app highlights upcoming styles
• Informs consumer of sold out items and offers
  alternative suggestions
• Lack of advertising
• Virtual closet app offers individualized
  advertising at minimum cost to Zara
• Pricing
• Virtual closet app advertises sales, as well as
  showcasing designer level of clothing

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Q A
Thank You