A Case Study of Zara

A Case Study of Zara
Zara is a clothing and accessories retailer originating in Arteixo, Galicia in Spain. The company was
established in 1975, and it is the main brand of the Inditex group, one of the world's largest clothing
merchants. Zara’s products include clothing for men, women, juniors and children. According to the
company’s financial report in 2015, there are 2,162 Zara stores located across 88 markets, and in 2015
alone, it opened 77 physical stores and 27 new online stores. Its total sales were 13,628 million euro. The
company is well-known for producing “fast fashion,” meaning that the company can develop products,
manufacture, and distribute them in stores within two weeks, a significantly higher rate than the average
rate of six months for the fashion industry.
In the world of fashion retailing, internationalization and market saturation have made the market become
more fiercely competitive, requiring firms to change its strategies to focus instead on retaining their
current customers, especially in low-growth markets. In order to do so, fashion retailers must utilize
relationship marketing to create stable relationships between the companies and their clients (Marzo‐
Navarro, Pedraja‐Iglesias, & Rivera‐Torres, 2004). Zara is a successful story of using customer
relationship marketing to enhance its brand and keep updated with its customers. In its relationship
marketing strategy, Zara adopts both standardization and adaptation of its marketing mix to achieve the
most effective outcomes. Although standardization is argued to bring great benefits including high sales
volumes, lower costs and more integrated images, in the global market, it is almost impossible to
standardizes all parts of its marketing mix, and a company needs to adapt to some extent (Aggarwal &
Arora, 2013). For example, on one hand, Zara always tries to deliver one consistent message that in its
business strategy, customer is the focal point, i.e. the company concentrates all of its efforts on serving
and satisfying customers. In fact, the company has a policy of spending a minimal amount on advertising,
discounts and gimmicks, and diverting its budget in buying storefronts and managing its customer base
(Thompson, 2012). In choosing their distribution location, in all countries across the globe, Zara
unfailingly has flagship stores at some of the most expensive real estates and locations such as Fifth
Avenue in New York, Calle Serrano in Madrid, Oxford Street in London, Shibuya and Ginza in Tokyo,
etc. On the other hand, Zara also adapts its strategy to serve different customer target segments
differently. Since the ultimate goal of all business activities is to maximize profit, relationship marketing
is likely to remain selective and target certain groups of customers or types of businesses (Sheth, 2002).
Not all customers bring in profit for the company, and in fact, some customers prove to be even more
costly to keep. Hence, there is no one-size-fit-all approach of relationship marketing that guarantees
success for all practitioners.
Zara has created long lasting and mutually beneficial relationships with its customers. The company
efficiently compiles information about its customers based on their purchase and other demographic
characteristics, determines their customers’ likes and dislike, and predicts their future behaviors. After
gathering the customers’ preferences, Zara works with its designers and production teams to quickly
design and produce the desired items and deliver them to stores with the “speed of lightning," long before
its competitors are able to do so. Zara also makes its clothing in limited quantities with many limited
editions and seasonal specials to give the products an exclusive appearance. This technique actually
makes customers become more loyal and visit the stores more often. These customers are also very
effective in spreading the good words and vibes about the company by posting on their social network
sites, which in effect advertises for the company. Thus, the company gains favorable word-of-mouth,
trust, and popularity among their fans. Relational marketing tactics have a statistically significant impact
on customer satisfaction and customer trust. They also lead to higher customer loyalty towards a specific
business (Rizan, Warokka & Listyawati, 2013). Relationship marketing improves the communication and
interaction between the company and its customers; therefore, it also creates and reinforces customers’
positive feelings towards the brand. Hence, in order to compete in the highly competitive market of
retailing, strong customer relationship is the key to success, and companies like Zara should set
improving customer satisfaction and customer loyalty as their priority to convert first-time and normal
customers into loyal customers. In this sense, Zara has achieved some success as evidenced by its strong
sales and positive brand reputation.

A Case Study of Zara

Uploaded by

Copyright:

Available Formats

A Case Study of Zara

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

A Case Study of Zara

Uploaded by

Copyright:

Available Formats

A Case Study of Zara

You might also like