Zara's Supply Chain Methods Case Study Example | Topics and Well Written Essays - 1750 words

Zara's Supply Chain Methods - Case Study Example The USP can be identified using the business model of Zara and by understanding its competitive edge over other players in the market. The case also aims at developing a strategic analysis of the market conditions, communication, branding and the competition faced by Zara. Zara does not advertise as much as its competitors. Its average advertising spend is 0.3% while 3-4% is the standard industry spend. This gives them a strategic cost advantage against their competitors. This also makes their expansion strategies more economical. The main alternative to advertising used by Zara is its store layouts and displays. Zara has a team of around 200 people exclusively working on acquiring global prime real-estate locations. They are also responsible for frequent refurbishing of the stores and creative window displaying. There is a testing facility in their headquarters where different layouts are tested and the best is selected for various stores at different locations. The peculiar business model of Zara helps them in reducing their advertising store by giving them alternative options to attract customers. This is by influencing the buying behaviors of customers. Zara updates its collection twice every week. So a usual customer of Zara knows that new styles will be awaiting them every week, making them want to pay another visit very soon. Also, if a customer does not find anything interesting to buy, he knows that he will get more choices in the coming week. New styles in Zara are added very frequently, but are not replenished. This creates a scarcity and the customers of Zara pay frequent visits to the stores so that they don't miss out on certain styles. Zara, because of its unique branding has got itself a cult image through the years. Each Zara store is redesigned every 5 years to keep up with the current fashion. Zara targets a broad range of customers and do not define their target market by age and lifestyle like traditional retailers. They target people of all age group who are educated and are sensitive to fashion and react to changes in fashion. As fashion is more globalized in recent times, Zara offers standardized fashion wear. Also, their pricing strategy is different. Outside of Spain, and particularly in the UK, it is based on more premium prices. Partly to compensate for higher distribution and rental costs, prices can be up to 40 per cent higher. Zara's positioning as an aspiration brand in the UK has the added benefit of giving the perception of clear water between itself and mass-market fast-fashion rivals such as New Look or H&M. STRATEGIC ANALYSIS USING ANSOFF'S MATRIX Market Penetration Strategy Through its unique business model, Zara encourages its existing customers to buy more. Every new style reaches the store shelves from design table in about two weeks. This fast-fashion methodology helps in remaining updated to the latest trends and makes the customers visit the stores more often. This quick inventory turnover is due to its vertically integrated supply chain and its total control over its system. Market Development Strategy Zara identifies potential segments in the market as a first step in their market development. By giving equal importance to all such segments, Zara