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Zara Internationalisation

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Mohammadtaghi Abedian

Brief of article" internationalisation of the Spanish fashion brand Zara ",   Lopez, C., & Fan ,Y., (2009),Internationalisation of the Spanish fashion brand Zara. Journal of Fashion Marketing and Management ,13(2),279-296

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BUMKT 6922 Marketing In International Environment International Marketing Watch  Internationalisation of theSpanish fashion brand ZaraSOURCE:  Lopez, C., & Fan ,Y., (2009),Internationalisation of the Spanish fashion brand Zara. Journal of Fashion Marketing and Management ,13(2),279-296 MOHAMMAD TAGHI ABEDIAN (STUDENT NO. :30064405)  1
About ZaraEstablished in 1975, Zara is the flagship of Inditex (Industria del Disen˜o Textil, SA), a holding company located in Galicia (Northwest Spain). Across 62 countries worldwide by the end of January 2006. In addition to Zara, which accounted for 66 percent of the group’s turnover in 2005, Inditex owns seven other clothing chains: (1) Kiddy’s Class (children’s fashion); (2) Pull and Bear (youth casual clothes); (3) Massimo Dutti (quality and conventional fashion); (4) Bershka (avant-garde clothing); (5) Stradivarius (trendy garments for young women); (6) Oysho (undergarment chain); and (7) Zara Home (household textiles).2
Internationalization of ZaraMotivation Push factors Push factors are those that encourage the organisation to search for international opportunities. i.e.: Spain joined the EU, economies of scale, globalisationPull factorsPull factors involve attractive conditions in the host marketi.e: Maturity of Market, change in consumer behavior, low growth opportunitiesMarket selection Zara behaviour in selecting its overseas markets for internationalisation is discussed in three phases: Reluctance and trial (1975-1988), which is experience acquiring phase and started with opening the first abroad store in Portugal ,Captious expansion(1989-1996) that during this phase Zara added one or two similar socio-economic countries per year to its markets, and finally Aggressive expansion(1997-2005) that during this phase Zara practiced global expansion in many countries regardless of socioeconomic similarities.Entry options Own subsidiaries:the most expensive mode of entry for high growth potential and low business risk countries i.e. EUJoint ventures :large and competitive markets i.e. Japan Franchising :franchising for high risk countries i.e. Saudi Arabia.3
Internationalization of ZaraInternational Marketing strategies At the first stages Zara followed ethnocentric strategy ,by encountering unexpected difficulties in some countries due to cultural differences Zara changed its international marketing strategy to geocentric strategy .Branding considerations Zara was a local brand that changed itself to a global brand in less than 30 years and ranked as 73 rd brand in the list of the world’s 100 top brands 2006 by interbrand. The point is by declining linking its products to its origin Zara convinced its customers in international markets regarding its higher prices. 4
Personal evaluationZara is controlling whole of its production chain. In the article the main reasons for Zara’s vertical integration discussed as more flexibility and fast supply . In my opinion the cost is another issue that should be discussed and it should be clarified how Zara is doing trade-off between cost and time In different markets to add value to its customers and increase its profit.5

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Zara Internationalisation

  • 1. BUMKT 6922 Marketing In International Environment International Marketing Watch  Internationalisation of theSpanish fashion brand ZaraSOURCE:  Lopez, C., & Fan ,Y., (2009),Internationalisation of the Spanish fashion brand Zara. Journal of Fashion Marketing and Management ,13(2),279-296 MOHAMMAD TAGHI ABEDIAN (STUDENT NO. :30064405)  1
  • 2. About ZaraEstablished in 1975, Zara is the flagship of Inditex (Industria del Disen˜o Textil, SA), a holding company located in Galicia (Northwest Spain). Across 62 countries worldwide by the end of January 2006. In addition to Zara, which accounted for 66 percent of the group’s turnover in 2005, Inditex owns seven other clothing chains: (1) Kiddy’s Class (children’s fashion); (2) Pull and Bear (youth casual clothes); (3) Massimo Dutti (quality and conventional fashion); (4) Bershka (avant-garde clothing); (5) Stradivarius (trendy garments for young women); (6) Oysho (undergarment chain); and (7) Zara Home (household textiles).2
  • 3. Internationalization of ZaraMotivation Push factors Push factors are those that encourage the organisation to search for international opportunities. i.e.: Spain joined the EU, economies of scale, globalisationPull factorsPull factors involve attractive conditions in the host marketi.e: Maturity of Market, change in consumer behavior, low growth opportunitiesMarket selection Zara behaviour in selecting its overseas markets for internationalisation is discussed in three phases: Reluctance and trial (1975-1988), which is experience acquiring phase and started with opening the first abroad store in Portugal ,Captious expansion(1989-1996) that during this phase Zara added one or two similar socio-economic countries per year to its markets, and finally Aggressive expansion(1997-2005) that during this phase Zara practiced global expansion in many countries regardless of socioeconomic similarities.Entry options Own subsidiaries:the most expensive mode of entry for high growth potential and low business risk countries i.e. EUJoint ventures :large and competitive markets i.e. Japan Franchising :franchising for high risk countries i.e. Saudi Arabia.3
  • 4. Internationalization of ZaraInternational Marketing strategies At the first stages Zara followed ethnocentric strategy ,by encountering unexpected difficulties in some countries due to cultural differences Zara changed its international marketing strategy to geocentric strategy .Branding considerations Zara was a local brand that changed itself to a global brand in less than 30 years and ranked as 73 rd brand in the list of the world’s 100 top brands 2006 by interbrand. The point is by declining linking its products to its origin Zara convinced its customers in international markets regarding its higher prices. 4
  • 5. Personal evaluationZara is controlling whole of its production chain. In the article the main reasons for Zara’s vertical integration discussed as more flexibility and fast supply . In my opinion the cost is another issue that should be discussed and it should be clarified how Zara is doing trade-off between cost and time In different markets to add value to its customers and increase its profit.5