“How did Zara Capture the Chinese Market?”
Damak Donia 杜宁
Marketing Management
What is Marketing Management?
Overview Zara
Zara’s Success: Its Business Model
Marketing environment:
China Marketing Environment
Market Attractiveness
Learning from Competitors: H&M and Esprit in China
SWOT Analysis:Threats and Opportunities
Key Success Factors to enter the Market
Strategic Recommendations
Business, logistic and marketing strategy
What is Marketing Management?
Marketing management is the
art and science
of choosing target markets
and getting, keeping, and growing
customers through
creating, delivering, and communicating
superior customer value.
From choosing target markets and building profitable relationships with them?????
Questions to ask:
What customers will we serve?
What is our target market?
How can we best serve these customers?
What is our value proposition?
Target Marketing
Market Segmentation:
Divide the market into segments of customers
Value and Satisfaction
Expectation
Performance
10
8
Expectation
Performance
8
10
If performance is lower than expectations, satisfaction is low.
If performance is higher than expectations, satisfaction is high.
Business
The world’s fastest growing fashion retailer of Spanish Brand
Ranks among the three “global winners” with Gap and H&M
Compelling mix of fashion, price and quality
First store in 1975. Today 536 stores within 30 countries worldwide
199 openings in 2009
Financials
Sales: € Bn in 2008
International sales 60% of total turnover
Overview
Business Model
Supply
Whereas most retailers designed 60% at start season, Zara designed 15% Dump unpopular product line
Deliver fashion “when the customer desires”
Twice a week delivery schedule
Demand
No advertising or promotions
10,000 new items at highly competitive price
South America: 30 stores
Africa: 41 stores
Asia - Oceania: 7 stores
Europe: 407 stores
North America: 47 stores
Around the world
The industry Environment
The Natural Environment
Free access to natural
resources for textile clothing
Demographic Structure
billion people
% literacy rate
Skilled labour available
English speakers Exist
Social Structure
around 8 national languages
Country of two speeds: urban vs. rural
‘New’ middle class with purchasing
Cultural shift in urban areas
Technology
Easy access
Financial benefits
Chinese Economy
GNP per capita $ 5890
GDP growth of %
Industry/service economy
Government & Politics
Deregulation of most sectors
New textile policy
Stable communist country
Marketing Environment: China case
Market attractiveness
Demand
Industry
Estimated GDP growth
of 6-7% in fashion industry
Undersupply for
branded fashion products
Target markets
30% potential customers
for branded fashion products
60% estimated for 2010
Supply
Design
World class design schools
Production
High innovation potential
for manufacturing
procedures
High productivity potential
Cheap and skilled labour
force
High investment in
technology
Distribution
High investment in
customer delight’ malls
Learning from Competitors:
H&M and Esprit in China
Clothing, fragrances, sunglasses and home textile
Introduced watches and accessory (departure from its global tradition)
luxury brand
High Prices
Shopping mall and shopping aria
Advertisement in the streets and in the metro stations
Want to be known as a provider of quality Product
Esprit
casual, formal and party wear
three collections per year
Brand extensions: bags, caps, sunglasses, wallets and fragrances
Premium price
Strong control on promotions
International option at high quality / price ratio
international format in major cities (large shopping malls)
Focus on metros and modern cities
Strong support on printed media (adapting to Chinese culture)
H&M
Product
Price
Place
Promotion
SWOT analysis: Threats and Opportunities
Huge untapped market
Changing lifestyle and clothing preferences
Demand outstrips supply!!
Cheap labour and opportunities for local sourcing
High productivity potential
Opportunities
Low entry barriers
Customer bargaining power
Unpredictability of consumer behaviour
Product quality
Traditionalism
Threats
Key Success Factors
Value
Latest fashion with Chinese touch
Best Prices
Product quality
Variety
Cost/Speed
Local sourcing of raw material
Vertical Integration of supply chain
Fast time-to-customer
Mass customization
Low process costs
Strategic Recommendations to Capture the Chinese Market
Business Strategy
Goal
Fast growth in China
How
Implement Zara business model
Introduce European supply chain system with fine tuning to suit the Chinese market
Customise the marketing mix
COMPANY
COMPE-
TITOR
CUSTOMER
COST/ SPEED
VALUE/
SPEED
VALUE /
SPEED
Logistics Strategy
Localise and implement just-in-time and ‘quick response times’ to demand
Modernising the supply chain with the use of information technology
Forge strong relationships with ‘value chain partners’ (suppliers and delivery co)
Marketing Strategy
Product
Introduce the occidental range of clothes for men and women
Introduce a small section of Chinese clothes designed by ‘upcoming Chinese designers’ through mass customisation
Introduce cotton clothes for the summer and woollen/synthetic one for the winter collections
Price
Use penetration pricing (20% lower than Esprit)
Stay away from the promotion by ‘sale’ paradigm of H&M
Promotion
Promotion targeted at increasing awareness about Zara and the concept of ‘Fashion at great value’
Use of print and television media
Tie up with colleges to sponsor their festivals to increase awareness and ‘catch them young’
Place
Set up factory in the Factories area
Find at least more then 5 stores in the big cities.
Open Zara stores in the most shopping avenue and big malls.
Marketing Strategy
Thank You For Your Attention
