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Zara: The Product-Oriented Strategy
Introduction
Zara is one of the most recent successful fast fashion company brands globally. It emerged in Spain and has spread globally, with over 10,000 stores distributed. The fashion companys origin is traced to early 1963. Its emergence was majorly associated with the dressmaking business. Currently, the business has a strategic focus on offering a higher number of quality products to its customers. Recently, fast fashion companies have adopted a competitive strategy to attain their companys vision. Zaras mission is to ensure maximum production and a regular supply of clothing needs to customers. For instance, Zara has incorporated a voluminous distribution approach to attain its vision. Zara has established a customer-centric approach to avail products closer to their customers actions which have enabled the effective achievement of the companys mission of producing 10,000 prices a year. Further, Zara has objectively aimed to make the production chain sustainable to meet the rising customers demands; to achieve this, it has adopted a continuous improvement approach to its supply chain and production systems (Oliveira-Dias et al., 2020). Comparatively, the highlighted aspects have been pivotal to Zaras profitability which is also the fundamental element of its objectives.
External Analysis
Being the best-selling fast fashion brand, Zara was subsequently met with a list of external factors implicated by the PESTEL analysis below. Firstly, Zaras political environment is majorly associated with the European trade agreement. Being a Spanish brand Zara company is privileged to enjoy all benefits that include operating outside the European Union. Under the external economic environment, Zaras company is positively associated with a low labor cost. Technologically, Zara Company has adopted the use of big data to expand its reach. As the global most popular fashion reseller, the company boasts of its huge database and adequate funds to attain necessary data to improve operations. Zaras company is negatively impacted by its legal environment, particularly on aspects of copyrights.
Strategically, the competitors of Zara have limited influence, particularly on the product. Being a component of stiff competition, Zaras focus will lie on product improvement and effective pricing strategies to continue being the market leader ((Mahardika & Wayansantika, 2021). Zara holds the largest segment of the global market; hence the influence of the competitors will relatively be limited on a comparative basis. Further, continuous improvement in design and trends with the help of big data analysis will place Zara ahead of its competitors.
Internal Analysis
Based on strategic capabilities, Zara companies boast vast financial resources which have highly enhanced data collection as a strategy to improve the customer experience and satisfaction (Johnson et al., 2019). The company has a dedicated staff whose target is to improve and renew customer satisfaction consistently. Below is the best-stipulated SWOT matrix adopted by the Zara Company.
Table 1. SWOT analysis
A SWOT analysis on Zara implicated the existence of significant strengths as increased customer loyalty to the companys brand; the loyalty highly enhances profitability. The companys major weakness is the ever-changing trends that limit its ability to optimize the sales of particular brands. Further, competition poses a critical threat to the operability of the business (Lynch, 2015). Additionally, high prevalent legalities such as copywriting act as Zaras threats that limit the companys ability to replicate the external best-selling brand without evasion of copyrights. Also, competitors pose critical threats that restrict the companys ability to optimize sales in the market. Finally, the company boasts of existing growth opportunities. For instance, Zaras market supremacy and loyal customers highly enhance the companys ability to penetrate the markets and succeed globally.
Strategic Option
Zara Company has adopted a product-oriented strategy to mainstream its operation. The strategy aims to incorporate promotional approaches and sales improvement. For instance, the companys primary focus is on producing numerous types of items, which is evidenced in the ability to generate between 2000-4000 unique types of clothing every year. Zara in 2020 reached a $254 million profit from the business (Heuritech Solutions, 2020). Further, the company has adopted a vertical integration management level whose focus is mainly on product design production, management, distribution, and shipment (Dess et al., 2020). Zara has adopted the following Ansoff matrix to mainstream its objectives as a future growth strategy.
Table 2. Zara Ansoff matrix
According to the above Ansoff matrix, Zara focused on first market penetration. The company primarily focused on increasing its ability to enter new markets, motivated by the desire to gain control of the global market to enhance profitability (Forbes, 2019). Secondly, the company focused on product development as its primary strategy. It adopted product-oriented strategies to actively enhance the development of newer product lines while improving the already existing ones through innovation. Zara Company had a strong belief in consistency and growth in vital areas, including the companys products.
Moreover, market development has become a significant concern and instrumental for Zaras company growth. Under this, the company argued that sustainability of the external markets was only possible through radical development and improvement of the market development. Therefore, the company focused on continuous improvement of markets to instate sustainability globally. Finally, on diversification, Zara Company adopted an unrelated diversification strategy which spearheaded the attainment of growth in both products ranges and the entire business growth. In this, the company ventured into home décor diversification to increase the range of products it was dealing with. Conclusively, the Ansoff matrix was instrumental as it intimated and sped up the companys growth and diversification, which highly marked its success.
Outsourcing has been the vital strategy that Zara has adopted to execute its operations. The desire to enhance design was attributed to incorporating outsourced technical expertise. Efficacy of the staff handling and management strategies is evident in the companys ability to roll out the production satiety, which aims at offering a higher number of available products than the competitors (Mintzberg & Quinn, 2003). Zaras generic strategy of cost leadership is much more effective as it stimulates the pricing strategies adopted by the company. The adopted cost leadership strategy has placed Zara ahead of its major competitors (Moya & Camacho, 2021). Nevertheless, Zara highly engages in product differentiation in its production line; such measure has effectively enabled the company to abide by the legal formalities. Differentiation strategies have also been applied in the pricing of the products; equitably, the company has gained continued loyalty from the customers from its specialized prices, which are pocket friendly and well embraced by the customers (Porter, 2004). Mover, Zaras primary focus has been on products and customer satisfaction; such has enabled the business to streamline all the production actions to benefit the customers. Such has directly resulted in tremendous sales across the globe. Recently, the companys strategic focus has shifted to inline trends. Such has insisted the fully operational global scale marketing. Such actions have increased the agreement of the companys products globally.
Similarly, the adoption of digitalized marketing platforms has improved the companys sales to a broader market, an implication of unimaginable success for the company. Therefore, the adopted cost leadership stage has stimulated continuous growth and improvement of the companys ability to roll out newer products with a higher acceptability degree on the target customers. Further, strategy has enabled the business to record tremendous growth and expansion through its higher market penetration ability.
Strategy Selection & Justification
Zara Company has adopted a strategy to accelerate and broaden its digitalized transformation strategy effectively. The strategys primary focus has been to boost online and store platforms actively. This strategy has been implemented to purposefully enhance the use of the online platform to initiate sales of the company products. Also, Zara Company has incorporated technology to digitalize its operation following a recent shift in the marketing structures. Recently, the occurrence of post-pandemic has contributed to a shift in business ideology. Numerous companies have shifted its operation to the newer platform from which customers can access the product and investors can access the business portfolio. Also, Zara Company, just like other companies, has shifted to technology marketing, resulting in online platforms accessible through the internet. The shift in sales approach from the traditional approach to modernized digitalized platforms has significantly impacted the operation of Zara Company.
As a result, the company has prioritized online services as part of its 2022-2023 plan. Following the post-pandemic and recovery, online platforms to sell products have been encouraged to minimize physical interaction. Such actions have further pivoted Zaras desire to adopt the new technology-driven selling platform to exercise sales. This approach is instrumental as it has broadened the digitalization of the companys selling concepts and improvement in operational storage such as marketing (Frank, 2021). As a future growth goal, the company has highly invested in digitalization to smoothen the selling and ability of the products to reach global coverage on online platforms. The adoption of digitalized and online platforms has been embraced due to the increased flexibility associated with the same. Feasibility analysis indicated that online platforms provide a reliable user experience. Therefore, the evaluation of the adopted strategy indicated a positive ideological shift that would stimulate rapid growth and improved user experience.
Furthermore, Zara has adopted a highly suitable strategy that entails advances and continuous incorporation of technological innovation in the design. Such has resulted in highly acceptable brands, which are also justified by the customers choices (Wenjing, 2021). As a result, the strategy has been feasible in the companys overall objective. With adequate materials, technology, finances, and market, the company is motivated to increase its production following the newer technology to engulf its competitors. Amplification of the products and continuous quality improvement has been critical for already realized success and the future success of Zara Company. As a result, technology adoption and increased invention are considered the most reliable strategic options for Zara Company.
Conclusion
Finally, Zara has firmly maintained its market influence, in the global constant, since its establishment; the company has highly engaged in the growth and development-oriented targets. For instance, the company has a customer-focused strategy that aims the provision a wide variety of products to meet the diverging customers needs. The production storage and processes have been in harmony towards attaining desirable customer experiences. The external and internal environmental analysis have pointed out critical successes and failures, so the company and the most notable was a success associated with brand loyalty. Such has been the driving force of the success attained within the business. Despite the copyright limitation and the threats from competitors and entrants firms, the company has adopted a more digitalized strategy to improve its operation. Arguably, the adopted strategy is instrumental as it would drive massive profit inflow and further the companys leadership role globally. Zara Company has enriched its secret strategy to success. As evident in the future strategy, the companys focus on technology merged with increased innovation would replicate tremendous outcomes, which will send its sales skyrocketing across. Also, diversification remains to be the most effective growth strategy in which technology would have a significant impact on Zaras company.
References
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Lynch, R. (2015). Strategic management (7th ed.). Pearson.
Mahardika, I. P. D., & Wayansantika, I. (2021). Strategies for creating competitive advantage through product development, design and quality (case study on the ZARA brand in Badung Regency). American Journal of Humanities and Social Sciences Research (AJHSSR), 5(1), 279-282.
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Moya, S., & Camacho, M. (2021). Developing a framework for mobile learning adoption and sustainable development. Technology, Knowledge and Learning, 1-18.
Oliveira-Dias, D., Maqueira, J. M., & Moyano-Fuentes, J. (2022). The link between information and digital technologies of industry 4.0 and agile supply chain: Mapping current research and establishing new research avenues. Computers & Industrial Engineering, 108000.
Porter, M. (2004). Competitive advantage: Creating and sustaining superior performance. Free Press.
Wenjing, Z. (2021). Analysis on the operating condition of the foreign fast fashion company in China. In 2021 The 6th International Conference on E-business and Mobile Commerce (pp. 88-92).
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