By- Hussain Bootwala
Marketing is a collection to activities to transform the idea into tangible product and intangible services. Marketing mix is the crucial tool used to perform marketing activities, marketing mix refers to 4 P’s that include; product, price, place and promotion. Place is the third element of marketing mix, this refers to activities and processes used to make the product and service available to final consumer. Producer or manufacturer used different distribution channels to complete this process.
Distribution channel include different intermediaries like wholesalers, retailers, reseller, agent and franchise. Distribution options and channels are as follows:
ZARA is a well-known Spanish clothing brand famous for its quick response, which is considered as a success factor for the company and gaining competitive edge over its competitors worldwide. Fashion is all about new and trendy clothing, ZARA’s inventory management and distribution strategy are the key elements behind its quick response strategy. ZARA has outlets in 86 countries, including Europe, United States, Middle East and Asia. In 2012, Inditex the parent company of ZARA has claimed US$20.7 billion of total sales, out of which ZARA contributed 66 percent that is US$13.6 billion sales, which is a huge success.
ZARA’s outlet have new batch of clothes after every two weeks, the organization manufactures around 450 million items a year and deliver it to 1770 outlets all over the world. ZARA achieve this control and management over its placing strategy due to its strong supply chain management than many of its competitors.
ZARA has its production or manufacturing units at three distinct places. 50% of its manufacturing is done in Spain, 26% in Europe and 24% is done from Asia and even Africa. From the manufacturing units products are transported to or distributed to ZARA’s headquarter at Spain and then transferred to its outlets all around the world. ZARA’s distribution strategy is vertical integrated strategy and to follow this strategy company requires having a high amount of control from headquarter. Inditex proves to have a well-controlled management from it’s headquarter with the alignment of latest technology they make it possible to distribute its products to its outlets in minimum time frame of just 15 days. ZARA is enjoying the competitive advantage by adapting and offering the latest trend in the market with the use of Hybrid communications system which facilitates the company to produce unique and latest designs with the available material in short production time and expense.
ZARA is following vertical integrated distribution strategy which allows ZARA to enjoy benefits like strong control, cost control, competitive advantage and differentiation. These advantages lead ZARA to be the market leader in clothing industry. ZARA is able to cut its cost and time or having cost and time control as it do not outsource its distribution, this also allows them to avoid the conflicts that usually arises because of adopting different distribution channels. Vertical integration is also serving as a point of differentiation between ZARA and its competitors, as usually retailing stores outsource its distribution and that can be the reason of delayed distribution or supply of products at retail outlets which do not happens in case of ZARA.
The company has highly competent staff which allows ZARA to produce 1200 designs per batch and make it available in stores after every two weeks, which is a big achievement and this hard work pays off ZARA in gaining reporting high sales volume. Customers visit ZARA’s outlet to check for the latest designs and trends, quick and effective distribution could be a best way to gain customer loyalty and good reputation, and these are the lessons that could be learned from the success story of ZARA. Supply chain management of ZARA can be summarized as follows:
Therefore, is can be said after analyzing ZARA’s case that it is the proof that success of any business organization depend on many factors and the most crucial is its distribution strategy or distribution channel followed by any company. Company needs to be further cautious about its distribution strategy to gain the maximum profits and maximum share in the market. On the other hand, marketing and promotion strategy is dependent on the distribution network of any company. It is very important to have a strong market analysis before adopting any strategy for the company.
Moreover, customer is the ultimate focus of any business and all the efforts done by any business is due to its customers or selling the products for its customers. If the products do not reach to its target or potential customers then it would be useless to put so much effort on its production. Placing the right product to right people is the aim of and success of any distribution strategy. Company can get the maximum market share due to its strategy and also can lose the greater amount of market share with high quality goods at lower cost.
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