The Fashion Industry - Zara - Coursework Example

Fashion Industry Table of Contents Introduction 3 Marketing Environment 3 PEEST Analysis 3 Porter’s Five Forces 5 Marketing and Communication Model 7 Effect of Digital era on Zara 9 References 12 Introduction The fashion industry faces a lot of competition due to the large number of rivals and wide variety of options provided by each one of them to their consumers. In this respect, Zara is one of the largest Apparel makers and have made a name in this industry due to their innovative fashion and affordable cost. However, Zara also faces a lot of competition from its rivals like H&M and GAP. This report will look into the marketing environment of Zara and also look into the strategies applied by them. Further into the discussion, we also look into the effect of online shopping on Zara and how they are catering to this issue. In this context, we have considered Europe as our region of study. Marketing Environment PEEST Analysis Political factors The fashion industry is greatly effectually by the political variable that’s are present in different nations. According to Holmquist (2003), there is certain liberty when it comes to the quantity of material import related to the fashion industry. This is a positive approach for them, especially in the Euro zone. Zara creates very good social connections and is also involved in CSR activities that has helped Zara a good brand name in the global political environment. Environmental factors The government is involved in the changes that affects the environment at large. The fashion industry is rapidly changing with the several trends that keeps on changing from a day to day basis. However, they also involve a lot of environmental wastage (Allen, 2013). According to Allen (2013), that the per capita income or in other words the GDP is also an important decision making factor for the fashion industry. UK in this case, has a strong GDP and that is why all the companies are concentrating on entering the UK market. However, there are different market where many people also prefer to buy cheap apparels (Hoque, 2004). Economical factors The economy of Europe is rising gradually and that is why the future is bright for the fashion and retail industry especially because the rise in the disposable income in the general public, gives them the opportunity to buy the fashionable clothes to stay with the current trend of the market (Bonacich, 2011). From the point of view of the currency, the Euro is also strong as compared to the dollar in the US market thus they do not need to worry about the economic front (Arieff, 2010). Socio-Cultural factors The fashion industry is hugely effected due to the social elements present in the European Countries (Howe, 2003). Let us discuss it from the point of view of different age groups. The youngsters have the habit of buying clothes that are from the current trend and very fashionable so that they get attention from the others. But, they are also stuck with a limited budget and can only afford the clothes with the help of their pocket money. So for them, the trend would essentially be stuck to the garments like cheap and chic would be appropriate. According to Kluyver (2010), the market of Europe and Asia is growing and has a huge potential for the fashion industry. Technological Factors With the advancements in the technology, the internet has become the new shopping zone for the consumers. They can easily check and buy their clothes online without having to pay extra and also receiving the doorstep delivery of their items (Doyle. 2012). Thus, most of the organizations are transforming they network framework to link it with the online retail stores for easier delivery of the clothes (Bonacich, 2011). Since technology is constantly upgrading with new innovations being done everyday, it is advised that the fashion retailers also keep themselves updates and put the stress on the use of technology to streamline their process of the selling and connecting with the consumers in a much better manner. (Bhagwt, 2011) Porter’s Five Forces Threat of new entrants According to Mohring (2009), it is very difficult for the new players to enter the market of fashion and apparel. The main reason behind this statement is the high level of competition between the major players in the market. Thus, the market is getting saturated and difficult the new players. Most of the companies have already gained a majority of the market share and the market requires a lot of investment for an initial set up of an apparel company (Doyle, 2012) (Bonacich, 2011). Threat of substitutes As per Gardetti and Torres (2013) most of the players in the fashion industry have a market strategy of targeting the niche segment of consumers. This mainly possible due to the fact that each of these apparel brands has their own style and fashion line which exclusive to themselves. Apart from this, they also have an affordable clothing line for the general public who have an interest in the brand. Hence, based on this style of the strategy, the threat of substitutes is low for the companies because it requires a lot of investment to set up a brand of designer clothes. Bargaining power of customers With the increasing competition in the fashion industry, the market is becoming saturated with the presence of major players and therefore it is becoming hyper-competitive. Moreover, with the presence of internet, the customers can gain the required knowledge with regards to the present collection of apparels and choose among them based on their own preferences. So, it is not easy to fool the consumers and they are increasingly becoming conscious and want the best options at the best available price (Moore, 2009). This is influencing the players to come up with the best possible line up for their customers. Based on this idea, the bargaining power of the buyers is fairly moderate in this industry. Bargaining power of Suppliers The supplies of the raw material in the fashion industry depend heavily on the buyers because there cannot sell their supplies to any other company or industry. According to Watts (2012), Zara gets almost 50% of their raw materials and resources from the associate companies in the Inditex Group. Therefore they are dependant on the external suppliers. Thus, based on this assumption, the bargaining power of the suppliers is considerably low in this industry. Rivalry among competitors There is intense competition among the major players in this industry (Vatia, 2008). There each of these companies is a threat to one another. The major competitors in this industry are (Zara, H&M and GAP) (Tuttle, 2011). Each of these companies has their unique line of clothes and their business strategy is designed exclusively to cater to the competition in the industry. So, based on this analysis, the rivalry among the competitors in this industry is fairly high. Marketing and Communication Model Inside Inditex Group is Zara, the brand that creates the best advantages of all and has something which draws in a lot of consideration: the complete unlucky deficiency of routine promoting. Why doesnt Zara depend on this marketing instrument that has been so fruitful for different brands? How does Zara vary from other fashion marks in the gathering, for example, Massimo Dutti that uses publicizing? How was Zara ready to accomplish such notoriety among youngsters without showing any logos or brand names that make it unmistakable and looked for after? The answer maybe can be found in the communication model of the gathering, one which creates advertisement intra and ventures commercial additional in each one stage. The same way that plans of action exist, we can likewise say that communication models exist. Each one organization chooses which model to embrace, and as an issue of that choice, they focus the particular capacities and limits of their communications division (Paul, 2003). Customarily, two communication procedures are regularly honed in associations, the pyramid model and the horizontal model (Kasper and Kellerman, 1997). The pyramid model reflects a restricted stream of data. In this model communication is seen just "as an issue" that guarantees the productivity of the organization. Communication is not display at the managerial level in the same route as whatever remains of the executives choices. The absence of formal communication channels may deliver emotions of shakiness, and consequently, workers on this level will attempt to make and decipher their communication devices. The managerial group set on the targets and courses of action of chiefs in different offices, and these moderate pioneers speak with the individuals on their groups, who head every division. The regulatory faculty and the specialists, who dont oversee others, routinely correspond with their quick chiefs, and their assumptions are normally not contemplated by those in high positions in view of the nonappearance of inner techniques that take into consideration contribution in the business targets (Jones, 2008). In the horizontal model communication compares to an administrative responsibility from the official level. The Board of Directors is in charge of the key communication messages on all levels. Through a Stakeholder approach, all the individuals intrigued by the organization are contemplating beginning with the shareholders and representatives and including the customers, suppliers, wholesalers, broad communications, credit establishments, neighbourhood groups, and non-lucrative associations and affiliations. The horizontal methodology permits anybody inside the organization the chance to offer important data, and their notion is considered (Steyn and Puth, 2000). Inditex chose to join the second communication model which is simpler to practice than it shows up. Partially, this is because of the workforce of the organization that becomes exponentially consistently, in view of a planned choice not to make a complex hierarchical graph with a vast measure of errands and individuals to oversee. This eventually brings about weakening obligations and influences the flexibility of the organization. In Inditex each store supervisor is in charge of a Specialty unit like a little to medium estimated business of around 100 workers. They concentrate on the customer and the item obliges that the gathering is always re-creating itself to abstain from falling into outdated nature. On account of this, it is important to encourage communication, however much as could be expected, keeping up an immediate line of communication between the store chief and different purposes of contact, for example, the configuration group, a salesman in charge of the zone and the window planners. One case could be that the ZARA communication executive is constantly accessible promptly when a worldwide columnist calls. The last objective eventually is to make a communication lattice for this reason. One of the primary focuses of the Communication Team, made out of 15 individuals, is to wipe out communication hindrances (Jham, 2014). Effect of Digital era on Zara The whole idea of shopping has changed with the evolution of the internet and the increase in the ease of accessibility to the web services. In this context, another trend that has become popular in the last few years with the idea of online shopping. Consumers nowadays do not prefer to go down to the stores and buy the goods rather, they are comfortable to check out the clothes online and order them accordingly. This digital trend has effected the existence of physical stores and many organisations are even shifting towards setting up online retail stores. In this context Zara has also been affected and they have taken suitable measure to cater to this issue and stay in the competition (Hines and Bruce, 2012). As Zara has a worldwide vicinity in numerous nations of the World, it is currently necessary for Zara to receive an internet marketing strategy to rival its rivals, catch and hold more market impart and build benefits in this exceedingly aggressive environment where each client is completely educated and outfitted with data about the market. There are very few organizations which are running without any marketing at this time of communication and technology. In the event that a few businesses are doing great without marketing it doesnt imply that the business has caught the greatest market and there are no more chances to develop. On the off chance that a few businesses are now doing great, it can improve by propelling a marketing fight and can get more market offer (Jones and Hayes, 2007). In the event that somebody claims a business in todays marketplace, it is not simple to run a business without marketing and insufficient to run a notice in the neighbourhood daily paper to amplify the introduction of business. Indeed, it is not by any means enough to run a TV plug on a neighbourhood TV station in light of the fact that the best marketing apparatuses available to anybody have rapidly turned into those connected with internet marketing. Actually, in the event that somebody begins to investigate marketing business by means of the web, he or she will rapidly find that as opposed to arriving at simply a couple of buyers, he will now have the novel capacity to reach both the a great many clients from a worldwide methodology and a more tagged gathering of clients that are closer to him too, and most importantly he will have the opportunity of gaining more consumers for his company. He can utilize social media as an issue, furthermore, have a targeted market. Obviously, before really getting the profits of a more extensive buyer base there is a need to draw in them to the site which is the place web marketing instruments becoming possibly the most important factor. Items and administrations need to be displayed in an acceptable and outwardly engaging route on the site. The site is an organizations "store" on the web, the items must be not difficult to discover, evaluated legitimately in the market, and conveyance routines plainly illustrated. Adding an online journal component to the site gives new substance, photographs, and advancements to clients, and also fulfilling the internet searcher’s criteria for dynamic utilization and replenishment. This additionally helps the internet searcher’s situation (Perrey, Spillecke and Armstrong, 2011). Other options for marketing involve the extensive use of social media marketing with the help of the websites like Facebook, Twitter, Pinterest, etc. This has become very popular especially with the introduction of smartphones because everyone has access to social media websites. Zara has a target market of the high end customers since they have a niche product line. With the assistance of web marketing it will be simpler for Zara to pass on data about new outlines and fashion to its target markets in distinctive parts of the World in no time on the grounds that Zaras target market comprises of the individuals who use web often and redesign themselves with most recent fashion trends. Zaras ladies accumulation is separated into three classifications: Zara Basic, Zara Women and the lively Trafaluc speaking to market portions for ladies who search for a more formal style, more youthful ladies for a more casual style and more youthful ladies and youngsters while menswear incorporated Mens Line at Zara, a club wear brand named Zara Sport and 100Zara and Zara basics which is for the general mass who cannot afford their expensive range of clothes. In this sense the overall population from all age gatherings can be seen as potential clients targeted by particular sub-brands of Zara. A second vital variable in characterizing segmentation is focused around psychographic qualities, for example, way of life, as a standout amongst the most well known and fruitful European brands Zara in its current market targeted individuals who were particularly keen on European styles at reasonable value levels (KAOBNS, 2012).Based on this idea Zara has got a good online presence as everyone has access to the internet and with the increase in disposable income, it is easier for them to get their customers through online marketing. References Allen, L. (2013). The global economic crisis. London: Reaktion Books. Arieff, A., (2010). Global Economic Crisis. Darby: DIANE Publishing. Bhagwt, S., (2011). IT for Fast Fashion. University of Houston-Victoria. 1 (1), 1-19. Bonacich, J., (2011), Revolving. Stamford: Cengage Learning. Doyle.M. (2012). Informational externalities, strategic delay, and optimal investment subsidies. IDEAS. 43 (3), 941-966. Gardetti, M. and Torres, A. (2013). Sustainability in fashion and textiles. Sheffield: Greenleaf Pub. Hines, T. and Bruce, M. (2012). Fashion Marketing. Hoboken: Taylor and Francis. Holmquist, J. (2003). They chose Minnesota. St. Paul: Minnesota Historical Society Press. Hoque, S. (2004). Global trade liberalization. Frankfurt am Main: Peter Lang. Howe, S., (2002), Retailing in the European Union. London: Routledge Jham, V. (2014). Cases on Consumer-Centric Marketing Management. Hershey, PA: IGI Global. Jones, P. (2008). Communicating strategy. Aldershot: Gower. Jones, R. and Hayes, S. (2007). Fashion online. [Bradford, England]: Emerald. KAOBNS, (2012). Zara Marketing Strategy. [online] Welcome. Available at: http://internetmarketingkao.wordpress.com/2012/10/18/zara-marketing-strategy/ [Accessed 5 Dec. 2014]. Kasper, G. and Kellerman, E. (1997). Communication strategies. London: Longman. Kluyver, C., (2010). Fundamentals of Global Strategy. New York: Business Expert Press. Mohring, D., (2009), Strategic Management. New Delhi: Tata McGraw-Hill Education. Moore, G., (2009), Crossing the Chasm. New York: HapperCollins Mullins, J. and Komisar, R. (2009). Getting to plan B. Boston, Mass.: Harvard Business Press. Paul, D. (2003). Communication strategies. Australia: Thomson Learning. Perrey, J., Spillecke, D. and Armstrong, B. (2011). Retail marketing and branding. Chichester, West Sussex, U.K.: Wiley. Steyn, B. and Puth, G. (2000). Corporate communication strategy. Sandton: Heinemann. Tuttle, B. (2011). High Quality, Low Price: The Consumer Quest for ‘Cheap Premium’ Brands. [Online] Available at: http://business.time.com/2011/05/02/high-quality-low-price-the-consumer-quest-forcheap-premium-brands/ . [Accessed on 12th December, 2014] Watts, D., (2012), Everything is Obvious. New York: Crown Publishing Group. . Read More