GO-TO Marketing strategy overview Yana Nadezhdina (EMBA 2022-2024) Target customer segments (1/1) Demographic Age 18-40 years (Millennials and Gen Z) Gender Male/Female/other Psychographic Lifestyle Active Interests Fashion, tech savvy Income The middle class Interests Concerns: value their unique identity 88countries Engagement: Zara target audience is vocal, 7100 stores 1 loyal and highly connected to the brand on social media Geographic Behavioral 30 mln 53mln 4mln Customers value (1/1) What the customer needs? VALUE == Benefits _ Costs Fast-changing wardrobe with the very latest fashion (guarantees individuality) • • • • • You can edit text here Edit text here Affordable You can edit textprice here Edit text here edit text(many here shops EYou asy can to find/buy Average quality (one season clothes) There are cheaper brands nearby, online) Clothing recycling scheme 21 GO-TO MARKET Presentation How does Zara create value for A Culture of Customer(1/2) Co-creation: does not try to become a trendsetter, customers? but creates what the client settled Fast-Fashion (stay trendy) A wide variety of collections: new items are released every 4-6 weeks Zara's clients always want to be fashionable, so they need a fast-changing wardrobe. Zara came up with a fast-fashion model: Zara produces more than 15 collections a year (vs 4-6 from competitors), produces more than 11 thousand different items, production cycle 2-4 weeks (vs competitors – 10-30 weeks). Customer Co-creation Zara’s unrelenting focus on the customer In 2015, a lady named Miko walked into a Zara store in Tokyo and asked the store assistant for a pink scarf, but the store did not have any pink scarves. The same happened almost simultaneously for Michelle in Toronto, Elaine in San Francisco, and Giselle in Frankfurt, who all walked into Zara stores and asked for pink scarves. 7 days later, more than 7,000 Zara stores globally started selling pink scarves. 500,000 pink scarves were dispatched – to be exact. They sold out in 3 days. 3 4 GO-TO MARKET Presentation How does Zara create value for customers? (2/2) Reasonable price Value for money Zara is not the cheapest brand, but the prices are affordable for most people. Given the wide variety of collections, you can buy something fashionable, fast and not expensive Stay close to consumer Zara shops are everywhere There are always new collections and sizes in stores. An extensive network of stores (88 countries, 2100 stores) allows Zara always to stay close to the consumer. 4 5 GO-TO MARKET Presentation Key factors impacting on Zara ability to create value for its customers (1/1) 01 Shorter lead times More styles Shorter lead times allow Zara to ensure that its stores stock clothes that customers want at that time Rather than producing more quantities per style, Zara produces more styles, roughly 12,000 a year 03 Flexibility and cheap Pay attention to the clients needs: Zara’s able to quickly create cheap new collections for the needs of customers 5 02 04 Super-efficient supply chain The shipping of new products to stores twice a week. After products are designed, they take around 10 to 15 days to reach the stores. Zara's marketing strategy effectiveness and the future of the brand (1/2) Zara 4P Marketing Brief overview before Covid • Сculture of excessive consumption. The company's strategy before COVID was to sell as many clothes as possible at affordable prices. For this purpose, Zara produced many different collections annually. The quality was average, the price was low. As a result, a typical Zara buyer was a person who liked to buy a lot of clothes, wear them for several months/no longer than one season, therefore throw it away and buy new items. Word of mouth. Almost no money was spent on marketing. Focused on offline stores and word of mouth. • Covid challenges – new reality • Online shopping was not developed. With its primarily offline shopping, Zara has been hard hit by global store closures amid the COVID-19 crisis. Sales falling 44% year-on-year in Q1 2020 and the company reporting a net loss of USD 482 million. Also Zara woke up late to the potential of mobile commerce and needs to catch up fast with competitors 6 7 GO-TO MARKET Presentation • Positioning Young customers – millennials basically. The target audience wants affordable, yet trendy fashion Place 7000 stores across the globe Product One season clothes (fast-fashion strategy) Price Affordable, a price-sensitive customer base Price is not a privilege anymore. Offering the latest fashion lines at affordable prices continues to be a strategic advantage for Zara, but cannot be the only one. Competition is increasing (Mango cut prices. H&M, Mango, Gap,Topshop are all fighting for a share of the fast fashion market). Also with the rise of e- and m-commerce, the number of indirect competitors has mushroomed. Zara's marketing strategy effectiveness and the future of the Porter’s Five Forces Analysis – New Post-Covid Zara marketing strategy brand (2/2) Challenges Threat of New Entrants Threat of Substitutes Bargaining Power of Customers • Rise of e- and mcommerce (Farfetch, Spring), new rivals: entry barriers have decreased • Current competitors ((Mango, H&M, Mango, Gap,Topshop) began to produce similar clothes, increase the number of collections • Due to the pandemic and the crisis, buyers may start cutting costs. At the same time, competition is growing. The power of buyers might grow • Launching a new digital strategy: online communities, social media, mobile commerce • Shift the focus from price to quality Opportunities 7 8 GO-TO MARKET Presentation • Zara can focus on innovation and differentiation (improve the quality of clothes) Bargaining Power of Suppliers • Bargaining power of suppliers is low (outsources, majority of its production comes from India, Bangladesh, Spain, Morocco, Portugal) • Zara purchase raw materials from its suppliers at a low cost Competitive Rivalry • Current competitors ((Mango, H&M, Mango, Gap,Topshop) are all fighting for a share of the fast fashion market: they reduce prices, increase the number of collections • Building sustainability brand (clothing recycling, eco-friendly materials) • Increase brand loyalty what zara should do to survive in the green metaverse? 01 Environment and sustainability: how should Zara change her long-term strategy to increase profit and not destroy the planet? Zara's main strategy is fast fashion: to produce a large number of cheap clothes, Zara’s aimed at excessive consumption. Only 1% of the clothing produced in the world can be recycled. The environment and sustainability trend is developing in the world, reducing consumption in quantitative terms in favor of durable and recyclable products. First of all, environmental protection laws can be adopted in developed countries (Europe is Zara's key market). What should Zara do in the long run? Will it be able to radically change the strategy? How? 02 How to improve quality, reduce inventory and stay profitable? Even before the pandemic, there was a problem that the market is very oversaturated — with products, volumes. Sales were falling, stocks were growing. Covid has increased the problem 8 9 GO-TO MARKET Presentation 03 How to build a new digital strategy if you are hopelessly behind? 04 Is it necessary to relocate supply chains on local markets under conditions of deglobalization? It will lead to increase costs. How remain profitable?
