product and placement assignment

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Carleton University *

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MKT4101

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Marketing

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Feb 20, 2024

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docx

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Marketing plan - Identify where your market plan product is on the product lifecycle. Explain why you have placed it there. What are the implications for your team’s marketing plan? It is important to note that as my team is considering ZARA the brand for our marketing plan, the product lifecycle concept is a simplification of ZARA’S journey and may not perfectly fit every aspect of their company's operations such as every product line and segment. Companies within the dynamic fashion market continually evolve alongside changing trends and consumer preferences, which induces the movement through the product life cycle on a regular basis. Belonging to Inditex, one of the world’s largest distribution groups, Zara holds the position of being amongst the biggest international fast- fashion companies to exist. (Daniel, 2023) Looking at statistics from FY2023, ZARA’s fast fashion offering would be sitting between the growth and maturity phases of the lifecycle. The reason is that they have established a strong, internationally recognized brand and offering since their start in 1975. They were some of the first in their game, offering copycats of high-end products for a cheaper price. They have built a significant and extensive presence in the fashion market securing the interest and loyalty of a significant number of their target market. Furthermore, ZARA is currently experiencing a stable amount of sales growth and maintaining a consistent market share. This is consistent with a company that would find itself between the growth and maturity stages. Combining the characteristics of the two stages, it is possible to say that an offering that would be described by the two stages would be an offering rising toward the peak of its sales and profits. In the first half (H1) of the fiscal year (FY) 2023 ZARA’s net income was $2.68 billion. This represents a rapid increase of 40.1% in net income compared to the same period in FY22. Similarly, we witnessed a rise in sales in the H1 FY23 period, with sales revenue being $17.8 billion, an increase of 13.5% from H1 FY22. (Singsit, 2023 ) Referring to the fashion market’s product life cycle illustration (Grewal, Levy & Lichti 2023), rapidly rising sales put the offering at its peak of sales. Thus, we can attribute the high growth percentage in sales and profit to ZARA’s peak which will lead to a decline in the following periods should efforts to extend the offerings lifecycle not occur. Furthermore, by analyzing the competitive pressure of the fashion retail industry it is revealed that it is a highly competitive and dynamic sector that is constantly evolving. There is an increase in competitors on a regular basis. This environment of a rising number of competitors in an industry that continues to become more and more saturated involves characteristics of both the growth stage and the maturity stage of the life cycle. (Grewal, Levy & Lichti 2023) There are many participants vying for market share meaning Zara faces fierce competition from other established fashion brands and fast fashion retailers. Yet, ZARA’s market share in the US fast fashion market is 17%, the second most significant amount in 2022. (Daniel, 2023) Their strong performance in the saturated market shows that their offering is in the growth stage as they continue to lead with their market share (which is only possible by keeping up with trends and offering innovation) yet the fact that the market is increasingly becoming very competitive indicates that the offering is reaching maturity as more competitors adopt it. To continue, ZARA often focuses on optimizing their existing/ mature offering which in turn allows them to bring a new and improved offering to the market without radically producing innovations. This is an indication of both a growing/ mature offering. Lastly, ZARA’s consumers consist of individuals who want the latest trends, due to the aspect of fast fashion, yet also value quality at an affordable price. This once again shares the characteristics of consumers of a growing and mature offering. These consumers can be early adopters/ early majority; those who are among the first to try the latest fashion trends without/ with limited information. They can also be the late majority; those who want a well-established product that is proven to be the best price and quality for what they are getting. (Grewal, Levy & Lichti 2023)

Products that are in the growth/ maturity phase require investment and businesses should continue to innovate their offering to maintain competitive advantage in the market that is quickly gaining competitors. What this implies is that my team will have to focus on analyzing and implying the market penetration strategy to encourage further consumption of the offering and to increase sales; we must look at the best plan for ZARA to get current consumers to consume more of the offering and simultaneously bring new customers. Furthermore, this information gives us more detail regarding our target market. Knowing the characteristics of consumers who consume products in the growth/ maturity stage will help us confirm if we are analyzing the appropriate target market, and if not it will give us an idea/ guide as to the direction we should take. This will aid with understanding our STP marketing model. Lastly, as mentioned we must innovate our offering, this will be possible by creating a thorough SWOTT. In doing this we will know more regarding the external environment through opportunities and threats. This would allow us to renovate our offering based on our findings, creating an offering that accommodates niches in the market and that can withhold the competition that is expected in its market. - How might you extend the products lifecycle? What are the implications for your team’s marketing plan? As we have mentioned previously, ZARA must innovate their offering that is in the growth/ maturity stage to extend their lifecycle and avoid falling into the decline stage of the cycle. Let’s discuss how they can do this. Zara can extend its offering’s lifecycle by modifying it. One way they can modify the offering is by incorporating more aspects of sustainability, which many consumers hold in high regard. This could look like changing materials to those that are more eco-friendly to create and dispose of (recyclable). This could also take the form of introducing a rewear program; one which customers can trade second- hand products through. Zara can modify some of their products to stay attuned to different cultures as people are increasingly embracing their identities. A last suggestion could be to do something as simple as improving product quality. They can focus on making their offering (their clothing for example) more durable and precisely/ neatly developed (ex: reducing new products with snagged threads, pilling, etc.). Another way they can extend their offering’s lifecycle is by delving into related product categories. We have witnessed ZARA successfully introducing beauty products (makeup) (Lancaster, 2021) and they can further diversify their offering by expanding into fashion for homes (unique home décor). This allows them to have a broader portfolio of products they offer which ensures the potential of successful sales as it is not limiting the portfolio to one product. Zara can extend their offerings lifecycle by expanding their users. This can be done by offering collaborations/ limited edition products. This can allow more people to be introduced to the brand (through collaborative partners), and others to get excited about a fun and different offering which in general allows for the offering to be fresh and desirable to the consumer. Furthermore, Zara can increase the frequency of use for their offering by implicating subscription services. This would be different from ZARA’s consumer’s regular use. It would add an element of excitement/ surprise where people would receive an number of products monthly to try something new. Lastly, ZARA can increase their promotions or try a new style of promotion to add life and rejuvenate their offering. (Grewal, Levy & Lichti 2023) What this information would imply for my team's marketing plan is that our target audience may need adjustments and we may need to broaden the group we are considering as consumers. We may need to analyze niche target markets to know what kind of product innovation is needed. This can also imply that we would have to reevaluate how we create value through product place price and promotion. As we attempt to extend the offering's life cycle, we will have to manipulate these factors in order to align with whatever changes we make. The process of extending the offering's life cycle would include an

emphasis on the competitive analysis of our market (in our plan) as we would have to be aware of it to maintain a competitive advantage while enforcing changes to the offering. Furthermore, we may need to look at the potential of market expansion to explore opportunities to aid in prolonging the offering's lifecycle. This could involve international expansion, entering adjacent markets, or targeting niche markets. Lastly, our resource allocation will have to be considered and optimized in our marketing plan to support our extension plan. - Is the product using a push or pull strategy? Do you feel the current distribution is appropriate or would you change it? Explain your answer. The product used to be the focal point of the fashion industry, but in the current retail industry, experience matters most to shoppers. Zara has been successful as they understand this phenomenon. (Zara’s fashion Retail supply chain strategies, 2014) Zara allows the customer to take charge and involve them in the decision-making process. It is therefore apparent that Zara uses a pull distribution strategy. This method creates demand among consumers and lets them "pull" the products from the brand through various channels. (Grewal, Levy & Lichti 2023) Zara’s parent company, Inditex, operates a vertically integrated supply chain that controls all design, production, warehousing, logistics, and distribution processes. (Parietti, 2022) This allows them to continually update their product offering with new and trendy items relatively timelier than most competitors. Their offering has a fast turnover as they produce many styles but only in small quantities for every product. This creates occasional shortages which in turn gives the offering an exclusive/ unique touch. Customers therefore make purchases quickly to secure the items they like before they run out of stock. (Danziger, 2018) This sense of urgency forces consumers to visit Zara stores or the website and stay up to date with their latest collections creating demand amongst them. This tactic of scarcity also allows ZARA to understand which of their offerings are successful (a significant demand) and which are not necessarily accepted by the market. When analyzing their sales, they understand and provide what the customer wants by adjusting their production to favour offerings with larger sales while slowing/ eliminating the production of offerings that clients do not value. (Danziger, 2018) This process demonstrates the aspect of consumers pulling offerings they want through the distribution system. Furthermore, Zara's marketing and advertising campaigns alongside their robust social media presence generate consumer interest in the latest fashion trends which indirectly pushes them to demand more and more of ZARA’s copycat offerings. Lastly, ZARA has mastered the concept of customer evangelism. As they focus on providing a meaningful customer experience, they create loyal customers who advocate and network for their brand, easily building their customer base and creating more demand they can accommodate. (Danziger, 2018) There is no doubt that ZARA’s current distribution strategy is an appropriate strategy to adopt within the fashion retail industry. Typically, in the fashion industry, a hybrid strategy is recommended. This strategy combines the best of the push strategy and the pull strategy. Although, as I have mentioned, ZARA is irregular compared to its competitors. They have the advantage of vertical integration, whereas most retail competitors must offshore their production. This is one of the main reasons why most of ZARA’s competitors cannot solely rely on a pull strategy and must predict the market to give their operations time to be on top of the latest fashion trends. In these cases, using a hybrid model is ideal as retailers can predict most of the regular trends associated with seasonal fashion and invest in costly production from time to time when experiencing an unpredictable trend that consumers are heavily demanding. However, in ZARA’s case, using their unique advantage of vertical integration, they do not have to worry about costly and timely production as they are their own producers. Thus, they are not pressured to use the push strategy and predict the market to ensure their operation expenses are not costly and that

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they can accommodate trends at the appropriate time. Rather, they can wait for consumers to demand their wants and needs and be the first to provide the offering. This allows them to be certain of their production, save resources, eliminate a portion of waste, and generate high sales. Hence, I believe that their current distribution strategy is not only appropriate but an intelligent strategy that makes great use of their competitive advantage. Resources: 1. Daniel, C. (2023, August 10). Zara Revenue and Growth Statistics (2023) . Legit Check by Ch. https://legitcheck.app/stats/zara/ 2. Daniel, C. (2023, August 24). Fast Fashion Industry Report And Statistics (2023). Legit Check by Ch. https://legitcheck.app/stats/fast-fashion-industry/ 3. Danziger, P. (2018, April 23). Why Zara Succeeds: It Focuses On Pulling People In, Not Pushing Product Out . Forbes. https://www.forbes.com/sites/pamdanziger/2018/04/23/zaras-difference-pull- people-in-not-push-product-out/?sh=46b51f0423cb 4. Grewal, D., Levy, M., & Lichti, S. (2023). Marketing (6th ed.). McGraw Hill Canada. https://quickframe.com/blog/audience-demographics-fashion-industry/ 5. Lancaster, K. (2021, May 5). Zara Is Officially Launching A Beauty Collection. Grazia Middle East. https://graziamagazine.com/me/articles/zara-beauty/#:~:text=Global %20fashion%20behemoth%20Zara%20has,line%20to%20be%20available %20worldwide. 6. 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

7. Singsit, J. (2023, September 14). Zara owner Inditex posts a 40.1% net income growth in H1 FY23. Retail Insight Network. https://www.retail-insight- network.com/news/inditex-zara-h1-fy23/?cf-view 8. Zara’s fashion Retail supply chain strategies. (2014). Supply Chain 24/7. https://www.supplychain247.com/article/zaras_fashion_retail_supply_chain_st rategies

product and placement assignment

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