Market Research Assignment Nour Almoala_MKT4101_2023

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ZARA x Market research assignment Nour Al-Moala 1- Define the research problem or objective for the product or service chosen for your potential marketing plan product. What information do you need to create your marketing plan? Zara is one of the biggest international fast-fashion companies existing, belonging to Inditex, one of the world’s largest distribution groups. Their objective, with the customer being at the heart of their business model, includes designing, producing, distributing, and selling through their retail network to satisfy their customer base. (Our Strategy, 2022) The research problem at hand is the growing concerns and upsets of fashion consumers, activists, and public officials due to fast fashion’s impacts on the environment. Society is, more than ever, engaged in reprimanding industrial polluters and the textile throwaway culture that fast-fashion companies, for example ZARA, have perfected. ZARA is therefore increasingly receiving backlash for the waste they produce, their promotion for over-production and over-buying and their heavy environmental footprint caused by their operation. (Davis, 2023) With customers being ZARA’s main priority, to not only maintain but grow their customer base, they must adjust. By conducting research, they can collect and analyse data that gives them insights to develop and implement effective eco-friendly strategies that resonate with their customers and align with sustainability goals. Some information that is needed to create a marketing plan would be the following: • Data on ZARA's environmental footprint, including carbon emissions, water usage, and waste generation. • Customer opinions on eco-friendly fashion and sustainability initiatives. • Information on the environmental impact of various materials and manufacturing processes. • Preferences for recyclable materials. • Emerging eco-friendly technologies and practices. • Frequency and volume of purchases related to sustainable fashion. • Analysis of how ZARA's competitors are implementing eco-friendly practices. • Niches in the market of sustainable fashion. • Budget allocation and cost projections for eco-friendly initiatives. • Opinions from stakeholders on the feasibility of implementing eco-friendly initiatives. 2- Can this be found through secondary research? Design your secondary research plan. This information can certainly be found through secondary research. The following shows the secondary research found and a brief overview of the information it provides regarding this marketing plan: •What is the frequency and volume of purchases related to sustainable fashion. https://www.shopify.com/ca/enterprise/ecommerce-fashion-industry

The above article released by Shopify provides good insight regarding purchasing behaviour for sustainable fashion. It explains that reselling (second-hand purchasing) is becoming a global phenomenon growing 24% in market valuation from 2021 to 2022 and is expected to continue growing rapidly. It also reveals that globally 42% of purchases are eco-friendly and sustainable products. (Keenan, 2022) • Data on ZARA's current environmental footprint, including carbon emissions, water usage, and waste generation. https://www.newswire.ca/news-releases/major-fashion-brands-increase-emissions-in-2022- 869267309.html https://www.globaldata.com/data-insights/retail-amp-wholesale/inditex-water-consumption- 2096529/ https://www.businessinsider.com/fast-fashion-christmas-shopping-clothes-returns-shein-zara- waste-mountain-2022-12 The first source amongst the three that were found is a news report that explains "Inditex (Zara), reported manufacturing emissions of close to 10 million tons CO2e—the equivalent of more than 2 million gas-powered cars on the road per company." (Major Fashion Brands Increase Emissions in 2022, 2022) It is important to keep in mind that the information is also up to date recording last year's activity. The second source, a data report, gives insight into Inditex’s total water consumption which was 1,886.9 thousand cubic meters of water in 2021 which increased by 13.5% from 2020. (Inditex: Water Consumption in 2021, 2021) The last source is a discourse that gives details that 25% of returned products to retailers end up in the waste stream causing a great amount of pollution. (Allon, 2022) • Analysis of how ZARA's competitors are implementing eco-friendly practices. https://sustainabilitymag.com/articles/top-10-sustainable-clothing-companies This magazine entry reveals some top-performing sustainable clothing companies. They mention Whimsy+ Row who use a waitlist system to get an idea of the exact quantity of each product needed. This avoids overproduction/ underproduction. They also mention Reformation who invested in green building infrastructure as well as technology called RefScale which tracks carbon and water footprint that is then made into a report and distributed to consumers. (Buchholz, 2023) • Information on the environmental impact of various materials and manufacturing processes used in fast fashion. • Emerging eco-friendly technologies and practices. https://www.businessinsider.com/fast-fashion-christmas-shopping-clothes-returns-shein-zara- waste-mountain-2022-12 https://www.forbes.com/uk/advisor/business-energy/green-business-energy/ The same discourse presented above had information about materials and energy used for production. A graph presented revealed the extraction of silk caused a great amount of gas emissions and used large amounts of water while fabric like US cotton and Tencel comparably use very little amounts. (Allon, 2022) Furthermore, in another article renewable energy ideas are

presented such as wind power and its benefits, solar energy and hydroelectric power which would be possible to implement with a company's financial investments to reduce their environmental footprint. (Wait, 2023) 3- Do you feel any primary data is required? If so, what and what type of study would you suggest? If not, why not? Primary Data would be crucial for Zara’s market research. When analyzing the initial information needed to create the marketing plan, some required information sticks out and proves to need efforts of primary data to be as accurate and personalized to ZARA’s stakeholders and the company itself. Here are the information prompts and the appropriate primary data methods to use to obtain the data: • Opinions from stakeholders on the feasibility of implementing eco-friendly initiatives. • Customer opinions on eco-friendly fashion and sustainability initiatives. • Preferences for sustainable/ recyclable materials This information can be collected using surveys and questionnaires distributed to ZARA stakeholder groups. • Analysis of how ZARA's competitors are implementing eco-friendly practices. Information to conduct the analysis can be obtained from interviews with current or former employees of competitors to provide valuable insights into their practices, and strategies. Another method would be to assign undercover researchers or individuals to pose as customers and interact with the competitors. This allows for an opportunity to evaluate and note internal practices of sustainability. Lastly, this can also be done with social media monitoring of competitors' accounts and websites for publicly available information. • Niches in the market of sustainable fashion. Using focus groups of experts/ participants interested in sustainable fashion allows exploration of what is already being offered in terms of sustainable fashion and what is yet unfulfilled. Furthermore, analysis of emerging trends in related industries, such as technology and science, allows for innovative thinking of how this can be applied to the industry of sustainable fashion. • Budget allocation and cost projections for eco-friendly initiatives. To better understand the financial implications, interviews with employees responsible for finances and budgeting of a sustainable fashion brand would provide realistic expectations. Additionally, a cost analysis can be performed for eco-friendly initiatives by collecting supplier quotes and calculations based on initial costs and expected operations. 4- What is the unique selling proposition of your product or service? Zara’s distinctive feature that keeps their large customer base returning for more is their ownership (through Inditex) of their supply chain. This allows them to accommodate all the latest trends with its rapid product turnover. Furthermore, their trendy clothing comes with a reasonable price point. To review, they provide duplicates of designer/ high end fashion trends in a quick time frame and with a

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cheaper price point, all of which are some of the most important attributes to accommodate their target market. (Parietti, 2022) 5- Who is your target market? Why did you choose it? Why are segmentation, targeting, and positioning ( STP) crucial for identifying and evaluating market opportunities for your product or service ? STP is crucial for identifying and evaluating market opportunities for ZARA as it allows them to understand and connect with the market, identify the wants and needs and accommodate to them appropriately resulting in increasing consumer consumption, obtaining new consumers for current products, offering new products to current consumers, or entering an entirely new market. Through segmentation, Zara can divide the market into manageable groups with similar characteristics and make their strategy personal to the most profitable market segment, their target market. This division of the market helps them analyze the different options and make informed decisions about which market opportunities to pursue for the best outcome. Lastly with positioning, as Zara understands their target audiences' values at this point, they can align with these values for customers to perceive the company as unique and resonate with the business. This ultimately gives Zara a competitive advantage as they use positioning to communicate their USP. (Grewal, Levy & Lichti 2023) After analyzing the values and offerings of Zara, it is apparent that ZARA's target market are individuals between the ages of 18- 40 (Gen Z and millennials) from medium-income families. The age range chosen are the biggest consumers of fashion; 17.8% of consumers are 18 to 24, 31% are 25 to 34 and 17.2% are 35 to 44. (Schreckengost, 2022) Regarding the income segmentation, this is due to the prices set by Zara. Their prices, although they are on the cheaper side, are not the cheapest options of fast fashion, which is what low-income families would value most. Furthermore, the target market would include the strivers psychographic segmentation as these are the specific people who are interested in the latest fashion trends and are impulsive consumers. (Grewal, Levy & Lichti 2023)

References: 1. Allon, G. (2022). The fashion industry’s dirtiest secret. Business Insider . https://www.businessinsider.com/fast-fashion-christmas-shopping-clothes-returns-shein-zara-waste- mountain-2022-12 2. Buchholz, L. (2023). Top 10 sustainable clothing Companies 2023. Sustainability Magazine . https://sustainabilitymag.com/articles/top-10-sustainable-clothing-companies 3. Davis, J. (2023). How might we see fashion change in 2023? Harper’s BAZAAR. https://www.harpersbazaar.com/uk/fashion/fashion-news/a42555201/trustrace-sustainability- predictions/ 4. Grewal, D., Levy, M., & Lichti, S. (2023). Marketing (6th ed.). McGraw Hill Canada. https://quickframe.com/blog/audience-demographics-fashion-industry/ 5. Inditex: Water consumption in 2021 . (2021). GlobalData. https://www.globaldata.com/data-insights/retail-amp-wholesale/inditex-water-consumption-2096529/ 6. Keenan, M. (2022). The State of the Ecommerce Fashion Industry: Statistics, Trends & Strategies to Use in 2023 . Shopify Plus. https://www.shopify.com/ca/enterprise/ecommerce-fashion-industry 7. Major Fashion Brands Increase Emissions in 2022 . (2022). CISION. https://www.newswire.ca/news- releases/major-fashion-brands-increase-emissions-in-2022-869267309.html 8. Our strategy . (2022). Inditex. https://static.inditex.com/annual_report_2022/pdf/STRATEGY.pdf 9. Parietti, M. (2022). H&M vs. Zara vs. Uniqlo: What's the difference? Investopedia. https://www.investopedia.com/articles/markets/120215/hm-vs-zara-vs-uniqlo-comparing-business- models.asp#toc-zara 10. Schreckengost, J. (2022). Who’s Your Audience? Audience Demographics for the Fashion Industry - QuickFrame . QuickFrame. https://quickframe.com/blog/audience-demographics-fashion-industry/ 11. Wait, R. (2023). Green Business Energy – What You Need To Know. Forbes Advisor UK. https://www.forbes.com/uk/advisor/business-energy/green-business-energy/

Market Research Assignment Nour Almoala_MKT4101_2023

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