Executive Summary
Marketing management involves the oversight of key marketing elements in a way that helps a business attract a larger market share for its products, enhancing both profitability and productivity. This report provides a brief analysis of marketing management as it applies to the selected business firm. It covers the firm’s market positioning, along with its current unique selling proposition. The report also includes a marketing audit, both internal and external, and discusses the firm’s potential for growth. Additionally, this document provides a competitive analysis of the company and its newly launched product, while also defining the role of the marketing mix in promoting this product.
Introduction Marketing Management
Marketing management is defined as the various functions carried out within an organisation to analyse and manage the market processes and operations. This helps the organisation run smoothly. It is designed to build strong relationships between customers and the market. Organisations use marketing management effectively to regulate their functions and meet their objectives. Marketing management also enables organisations to choose the right markets and maximise profits from new market opportunities, helping them achieve their overall goals (Bankvall et al., 2017).
The chosen organisation for this report is Zara, a multinational company that sells a wide range of fashion products, including clothing for children, men, and women. Zara is now expanding its product line with a new range of women’s jackets. This report analyses Zara’s marketing strategies and competitive position in relation to this new product. It will cover the history of Zara and explore the company’s STP (Segmentation, Targeting, and Positioning) approach, as well as conduct internal and external audits. Various models will be used to assess the organisation, and the marketing mix will be thoroughly analysed.
Outline Of Industry, Market Positioning, And Zara’s Unique Selling Method
Zara is a multinational company operating in the fashion industry, offering a wide range of products that appeal to various age groups. These products include clothing for children, men, and women. Currently, Zara is preparing to launch a new range of women’s jackets, which are designed to align with the latest fashion trends. Although this new product line is exclusively for women, Zara’s development team consistently introduces new items based on current fashion trends to attract a wider customer base (Ing et al., 2020). Zara operates with a fixed number of stores worldwide, though the company has the potential for further global expansion.
This report provides a brief overview of Zara’s approach to selling products, focusing on their quality and pricing strategies. Customers generally report high satisfaction with Zara’s products. The company employs a unique selling method to attract attention in the market, particularly through its fashion stores and innovative social media strategies. Zara creates trends by promoting their products on social media, often using hashtags as a key tool for promotion. Below is a discussion of Zara’s approach to Segmentation, Targeting, and Positioning (STP):
STP Approach
STP is a structured communication method that many organisations use to achieve profitability in the market through strategic marketing. In Zara’s case, there are three key stages: segmentation, targeting, and positioning, which are integral to its approach in the fashion industry. This STP strategy helps Zara meet its marketing objectives by addressing the needs and wants of its consumers. In today’s competitive business environment, Zara provides employees with various tools and techniques to help the firm reach its goals in the fashion sector (Luu et al., 2018). The specific functions of Zara’s STP approach are detailed below:
Segmentation: This involves dividing the market into smaller, valuable groups based on an analysis of customer needs and preferences. Segmentation allows the organisation to better meet its objectives and target its desired audience effectively. By breaking down the market into these groups, Zara is able to interact more effectively with customers and offer products that cater to their specific needs. Additionally, this segmentation assists Zara in developing its marketing mix and positioning its products within these segmented markets.
Zara operates in the UK and across the world, where the organisation applies effective marketing strategies to generate profit. There are various approaches to segmentation that Zara utilises, which are discussed below:
Demographic Segmentation: Demographic segmentation focuses on targeting specific groups based on characteristics like gender, age, income, education, and regional factors. In Zara’s case, this type of segmentation is applied to target consumers based on their gender, age, and other demographic factors. Zara targets individuals within the 10 to 50 age group, tailoring their marketing strategies accordingly to meet the needs of these segments.
Psychographic Segmentation: Psychographic segmentation involves dividing the market based on personality traits, values, and lifestyle. In the context of Zara, the company gathers data through surveys and customer information to understand these factors. This segmentation method enables Zara to align its marketing strategies with the personalities and preferences of its customers (Mahlamäki et al., 2019). By using this approach, Zara enhances its ability to meet consumer needs, improving its operations and achieving business goals.
Zara utilises both demographic and psychographic segmentation to meet market demands and address customer needs effectively. This approach helps the company in fulfilling its organisational objectives.
Targeting: Targeting refers to the evaluation of potential market segments to identify and focus on customers with the most promise. It involves assessing the needs and expectations of consumers. In Zara’s case, the company uses targeting to manage its customer base effectively, ensuring that products are designed for those with the highest potential. Several factors are considered when targeting groups of people, some of which are discussed below:
Criteria Size: The market must be large enough to manage targeted customers, so segmentation plays a key role in this. Zara uses appropriate methods to execute their plans and implement them in the marketplace, helping them achieve their objectives (Marcinkowska and Barałkiewicz, 2016). Zara also identifies short-term and long-term market targets, based on their chosen groups, and manages production and product availability accordingly.
Difference: This factor looks at the distinction between various segments. Understanding these differences helps organisations measure and evaluate how their strategies should be adapted to each segment. Zara uses this tool to determine the appropriate strategies and functions required to meet the unique needs of different customer groups, ensuring the success of their product offerings.
Positioning: Positioning refers to the process of establishing a product’s place in the market. This is largely influenced by customer interest. When customers repeatedly purchase products from the same organisation and develop loyalty, a strong position for the brand is created in their minds. This image helps the organisation grow rapidly.
In the case of Zara, the company uses a functional positioning strategy, identifying and focusing on the features and activities that align with customer experiences. Additionally, Zara prioritises value propositions that are recognised by fulfilling customer expectations and needs.
From the above points, it can be concluded that by using a proper system to assess current resources and implement functions based on customer needs and expectations, the organisation is better equipped to meet its objectives. This is supported by the company’s structure and framework.
Marketing Management Audit (Internal And External) And Potential For Market Growth
A marketing audit is a comprehensive and systematic evaluation of a business’s marketing environment, both internal and external. It involves analysing the organisation’s objectives, strategies, and principles to identify areas of weakness and opportunity. The marketing audit helps develop an action plan to improve sales and market performance (Maria, 2016). The audit includes several components, such as macro-environment audit, task environment audit, marketing strategy audit, marketing organisation audit, marketing system audit, marketing productivity audit, and market function audit. Through this process, a company can evaluate how well its marketing department is performing and contributing to overall business success.
Internal Audit
An internal audit refers to the evaluation carried out by a team within the organisation. The goal is to provide objective and independent reviews of the company’s systems, operations, and processes (Eckhardt and Bardhi, 2020). Internal audits offer senior leaders insights into risks, controls, and operational effectiveness, ensuring that the company complies with laws and regulations. This can be understood by applying the VRIO model, which is used to analyse the internal operations of Zara.
VRIO Analysis of Zara: VRIO is an analytical tool used to evaluate an organisation’s resources and help it achieve a competitive advantage. VRIO stands for Value, Rareness, Imitability, and Organisation. VRIO is a strategic analysis framework used to evaluate an organisation’s resources and capabilities to determine their potential for providing a sustainable competitive advantage.
Value: Zara does not rely on third parties for product production or design. The company manages all aspects of design, warehousing, distribution, and logistics internally. This approach makes Zara more flexible and faster than its competitors, while also reducing operational costs. The company’s organisational structure promotes efficiency, and every employee is expected to uphold the values and decisions of the organisation (Ouwenga et al., 2017). Zara adapts to changes in consumer preferences quickly, embracing both flexibility and speed as key components of its success.
Rareness: Zara has a unique ability to produce and deliver new items to stores in less than three weeks, compared to the typical six months required by higher-end brands. In a typical season, Zara produces up to 11,000 different items, while competitors usually offer between 2,000 and 4,000. This ability makes Zara’s resources rare and hard to replicate.
Imitability: While many aspects of the fashion industry are imitable, Zara’s business model has proven difficult to copy successfully. Although competitors may try to imitate Zara, they often do so with lower-quality fabrics, which diminishes the overall effectiveness of their replication attempts.
Organisation: According to Zara’s annual reports, the company consistently increases its sales and profits. This is achieved not only through the efforts of top management but also by the commitment of every employee involved in the business processes. Zara’s ability to coordinate its operations is strengthened by a unified decision-making process across the organisation.
External Audit
An external audit focused on marketing examines the external factors that influence marketing and product development strategies (Zhang and Wang, 2019). The external environment can generally be divided into two segments: micro and macro. This analysis is typically conducted using a PESTLE framework.
Political Factors: Zara, a Spanish brand, operates on a global scale. Politically, it is one of the largest companies within the European Union, benefiting from extensive trade agreements.
Economic Factors: Zara takes advantage of low-cost labour while also contributing to high employment rates in Europe. This combination offers positive aspects that enhance the company’s operations.
Sociocultural Factors: Zara is committed to delivering high-quality products to its customers while ensuring the welfare of its workers. This strong brand reputation allows Zara to maintain healthy profit margins for its shareholders.
Technological Factors: With a large customer base, Zara utilises advanced technology to expand its reach. This includes systems that enable many users to access the website simultaneously.
Legal Factors: In the fashion industry, copyright issues can lead to legal disputes. Several brands have claimed copyright infringement against Zara regarding its designs, which can result in penalties for the company.
Environmental Factors: The fashion industry often generates significant waste. Zara aims to recycle this waste, creating new clothing lines to meet consumer needs.
Competitive Analysis
Competitive analysis involves identifying the key strengths and weaknesses of competing companies. This process helps a business assess its strategies and policies to enhance sales (Bell and Rochford, 2016). The goal of this analysis is to assist management in developing policies that consider existing competition. It provides essential information that helps the management capture a market full of demanding customers while reducing the threat of substitution for the company’s products or services, ultimately enabling growth opportunities (Harrison, 2021).
In relation to Zara, the company is currently focusing on promoting its newly launched women’s jackets. These jackets are designed to be attractive, keeping current market trends in mind, and they are easy to wash while remaining resistant to bleaching. Zara has introduced these jackets using innovative promotional methods, making them available at a range of prices from budget to luxury.
The timing for this product launch is particularly strategic, as the winter season provides an ideal opportunity for promotion. The jackets feature a round neck with an attached cap, designed with health care techniques to address concerns related to the COVID-19 pandemic, adding to their uniqueness. Zara employs two main tools for its competitive analysis, including:
Porter’s Five Forces Model
The external environment significantly influences a firm’s strategy and policies. Regardless of the size of their operations, companies must adapt to the business cycle and its challenges. To remain competitive, organisations should formulate flexible policies that can accommodate necessary changes in their external environment (Burns and Dewhurst, eds., 2016).
Competitive Rivalry: This force examines the number and strength of competitors within the industry. For Zara, the company has developed strategies to promote its women’s jackets. Management has chosen to use innovative techniques to showcase these unique products to customers around the globe.
Supplier Power: This refers to the influence that suppliers of raw materials have over the prices of products. In Zara’s case, supplier power is relatively strong because the company relies heavily on a single supplier, fostering a good relationship that benefits both parties.
Buyer Power: This indicates the influence that customers have in affecting product prices. For Zara, buyer power is moderate. Although the company offers fashionable products, the limited stock available sometimes makes it difficult to fully meet customer demand.
Threat of Substitution: This force highlights the likelihood that customers might switch to alternative products that offer similar quality at lower prices. Zara faces a high threat of substitution due to its focus on fashion, which requires constant attention to this risk when launching new products.
Threat of New Entry: This refers to the risk posed by new companies entering the market with new products. While Zara is a well-established brand, the threat of new entrants could temporarily affect sales. However, the company’s strong brand image should help it maintain long-term customer loyalty.
SWOT Analysis of Zara
A SWOT analysis evaluates a company’s strengths, weaknesses, opportunities, and threats. For Zara to operate effectively and remain a preferred brand among customers over time, it needs to use its resources optimally and develop strategies that consider its competition (Huber, Bugmann, and Lafond, 2018). This analysis helps management make informed decisions and aligns with the company’s objectives. The SWOT analysis for Zara’s launch of the women’s jacket is as follows:
Strengths: Zara is known for offering unique designs, which is a significant strength. The diverse range of products attracts various customers, catering to budgets from low to luxury, including party wear, office wear, and options for both children and adults. The company has a strong presence in international markets, with an established brand name. This reputation will help promote the new women’s jackets, as customer trust in the brand is already well-established.
Weaknesses: Zara does not invest heavily in advertising for its products and services. While advertising can increase production costs, its potential to significantly boost sales and turnover cannot be ignored. The management has recognised this weakness and aims to address it without raising product prices.
Internal disputes within the organisation hinder proper coordination between various departments.
Opportunities: Zara is an emerging brand in the e-commerce space. Given the current pandemic situation, the company has the chance to capture online market platforms by making informed decisions. The introduction of the new women’s jackets presents an opportunity to strengthen market presence and customer engagement.
Threats: The complexity of managing a vast market can pose challenges for Zara, especially in the production and supply departments. Meeting the demands of numerous customers requires significant attention. Competition remains a constant threat to any business. The presence of top competitors like Chanel, Christian Dior, Burberry, Gucci, and Prada complicates marketing efforts for new product launches. However, Zara plans to take necessary actions to counter competitor strategies and ensure increased sales. By understanding these elements, Zara can effectively position itself in the market and leverage its strengths while addressing weaknesses and threats.
MARKETING MIX (4P’S)
The marketing mix encompasses various tactics used by a company’s management to enhance sales of its products or services. This approach helps an organisation maintain a strong brand image in the marketplace, and by providing quality services, marketers can foster customer loyalty. The marketing mix is a tool that assists marketers in promoting products or services effectively within a specific market (Karpenko and Filyppova, 2016). For Zara, management has decided to promote its newly introduced women’s jackets based on an analysis of current marketing trends. The marketing mix consists of the 4P’s: product, price, place, and promotion.
Zara’s Product Strategy: This refers to the tangible items sold by the company for which customers pay. The product strategy, combined with the marketing mix, aims to promote various products that meet the needs and wants of valuable customers. Since resources are limited, it is essential to use them efficiently, and this tool helps the firm carry out its promotional activities effectively. Zara is a leading fashion brand operating in 147 countries (Zhang and Yang, 2017).
The company offers a wide range of luxury products, including jeans, trousers, tops, skirts, and more. Management has decided to promote women’s jackets by analysing the current seasonal demand for the product. The marketing department will use innovative techniques to promote these jackets and ensure that the company’s resources are utilised effectively.
Zara’s Pricing Strategy: This refers to the value assigned to the various products offered by the company. Pricing is influenced by factors such as production costs, sales activities, market demand, promotional efforts, and government policies. The pricing strategy, as part of the marketing mix, helps management make informed decisions regarding product pricing. It is crucial for a business to set the right prices, as even a slight increase can affect customer demand.
Zara’s management has adopted various methods to evaluate the external business environment, maintaining a price range that covers both budget and luxury markets to capture a broad spectrum of demand (Trinh and Nguyen, 2019). The current season is an ideal time to promote the women’s jackets, and the marketing mix will help the team seize this opportunity effectively, contributing to the company’s growth and enhancing its international market presence.
Zara’s Place and Distribution Strategy: This refers to where the company’s products will be available for sale to customers. It is essential for a business to identify the right distribution points through thorough market research. The place strategy within the marketing mix helps management plan and execute distribution activities related to its products. For the women’s jackets, Zara will display its products in various retail stores while also targeting the online market through digital marketing techniques.
The company operates in 147 countries with approximately 6,500 outlets worldwide. To manage this extensive network and cater to millions of customers, Zara’s management has implemented effective promotional techniques alongside a robust distribution system aimed at maximising profits.
Zara’s Promotional Mix: This encompasses all activities undertaken to promote the company’s products and services to customers. The promotional mix is a crucial aspect of marketing principles that aids management in formulating effective plans. In relation to Zara, the marketing department oversees all aspects of the promotional mix, which helps improve the availability of products to consumers.
This contributes to achieving the desired sales targets and ultimately boosts overall sales. The marketing department has adopted various innovative techniques to promote the newly launched women’s jackets in the marketplace. It has been determined by the team that now is the optimal time to enhance this product range. Significant financial resources are being invested in promotional activities.
The above marketing mix tools have enabled Zara’s management to increase sales of the newly launched women’s jackets. This approach has proven effective in helping the workforce achieve its goals. It has also guided management in setting the right price for products, supporting the company’s tagline that “quality lasts forever in the minds of people, but price is forgotten” (Salem et al., 2019). This strategy has helped maintain a strong brand image among customers worldwide, enhancing the living standards of potential product consumers. Overall, these tools assist the company in bridging the gap between its external environment and the policies formed within the organisation.
Conclusion
From the report above, it is clear that many factors influence the growth of a business organisation. It discusses various marketing mix tools that help the company convey its business activities efficiently. This report also highlights the role of competition in shaping the policies of the chosen company and conducts several analyses to evaluate the external environment of the business firm. Overall, these insights demonstrate how interconnected these elements are in driving the success and sustainability of the organisation.
Marketing Limitations
Market Saturation: In highly competitive sectors, products can quickly become saturated, making it difficult for brands like Zara to stand out. This can lead to reduced sales and limited market share.
Changing Consumer Preferences: Rapid shifts in consumer tastes and preferences can challenge marketing strategies. If Zara fails to adapt quickly, it may lose relevance in the market.
Economic Factors: Economic downturns can affect consumer spending power, leading to decreased sales. Zara’s pricing strategy, while flexible, may still struggle in tough economic times.
Dependence on Trends: Zara’s fast-fashion model relies heavily on trends, which can be unpredictable. If a trend fades quickly, it can leave excess inventory that negatively impacts profits.
Limited Advertising: Zara traditionally spends less on advertising compared to competitors. This can limit brand visibility and customer awareness, especially in new markets.
Supply Chain Vulnerabilities: Disruptions in the supply chain, such as those caused by global events or natural disasters, can impact product availability and timely marketing campaigns.
Sustainability Concerns: Increasing awareness around sustainability can pose challenges for fast fashion brands. Zara may face criticism over environmental impact, which can affect its brand image.
Digital Competition: As online shopping grows, Zara faces increased competition from digital-only brands. If it does not enhance its online presence, it risks losing customers to more agile competitors.
These limitations require ongoing assessment and strategic adjustments to ensure the brand remains competitive and relevant in the ever-changing market landscape.
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