chapter i executive summary

Chapter I: EXECUTIVE SUMMARY Trần Thanh NgânThe fast fashion trend in the apparel industry has been revolutionized in recent decades by companies such as Zara, H&M and Topshop London Bus

UNIVERSITY OF ECONOMICS & FINANCE HO CHI MINH CITY

• Hoàng Thị Thanh Hiền

• Phan Công Minh

• Nguyễn Vũ Đan Hạ

LECTURER

Munish Shalini

Table of contents

Chapter I: EXECUTIVE SUMMARY 3

Chapter II: OVERVIEW 3

1 General introduction 3

2 Zara history ’s 4

3 Foundation and competitive advantage 4

4 The product line of Zara 5

Chapter III: OBJECTIVE 5

Chapter IV: SITUATION ANALYSIS 6

1 Market Analysis 6

2 PESTLE Analysis110SWOT Analysis………

Chapter V: STP ANALYSIS 12

1 Market Segments 12

2 Target segment 14

3 Positioning 14

Chapter VI: MARKETING STRATEGY 18

1 Product Strategy 18

2 Price Strategy 21

3 Place strategy 22

4 Promotion strategy 23

4.1 Advertising 23

4.2 Direct marketing 24

4.3 Promotion 24

4.4 Public relations (PR) 24

4.5 Personal sales 24

Chapter VII: FINANCIAL PROJECTIONS 24

1 Sales forecast 24

2 Budget 25

2.1 Direct ads estimated budget table 25

2.2 Instorre-marketing estimated budget table 27

2.3 Sponsorship program estimated budget table 28

2.4 Income statement and total marketing estimated budget 28

Chapter VIII: IMPLEMENTATION PLAN 30

1 Sponsorship programme………31

2 TV ads………31

3 Instorre-marketing………32

4 Online advertising……… 33

Chapter IX: EVALUATION AND CONTROL METRICS 33

1 Evaluation criteria 33

2 Evaluation methods 33

3 Estimated plan 34

Chapter X: PERSONAL REPORTS………35

Chapter XI: REFERENCES 40

Chapter I: EXECUTIVE SUMMARY (Trần Thanh Ngân)

The fast fashion trend in the apparel industry has been revolutionized in recent decades by companies such as Zara, H&M and Topshop (London Business School, 2008) Accordingly, factors influencing the apparel industry at large will also influence the fast fashion apparel industry

Zara was established in 1975, as the flagship brand of Inditex group, which was founded by Amancio Ortega In a short period, Inditex group has become one of the world’s top fashion retailers with more than 4000 stores across 82 countries around the world and more than 50% is accounted for by Zara's Zara is an international fashion retailer which has gained considerable acclaim, being one of the leaders of the high-street fashion industry, and regularly producing new products for the market, at a rate that is quicker than its competitors can achieve, due to the strong supply chain in place Despite this, the organisation is facing continual challenges, both in terms of consumer demand and costs; therefore, a detailed marketing analysis needs to be undertaken, to look at broader forces that are upon the industry and identifying ways in which the company can then use its own strengths and opportunity to establish an even stronger position within the high street fashion industry By focusing on what it does best, namely using an efficient supply chain, this will enable it to beat its competitors to the market and to produce new products,

on a regular basis, thus allowing the company to gain a competitive advantage in the war which is emerging among these high-street brands

Chapter II: OVERVIEW (Hoàng Thị Thanh Hiền)

1 General introduction

Founded: 1975; 46 years ago (as Zorba) in Spain

Founders: Amancio Ortega, Rosalía Mera

Headquarters: Arteixo (A Coruña), Spain

Number of locations: 2,270 stores

Zara’s Mission Statement and Vision Analysis:

‘Give customers what they want and get it to them faster than anyone else.’

‘To contribute to the sustainable development of society and that of the environment with which we interact.’

5 Keys of the Zara Business Model ’s

• Teams: “Teams with vast sales knowledge geared towards the customer.” Make the stores a pleasant environment

• Store: “Meeting point between the customer and the Zara fashion offer.” New

products introduced twice a week

• Customer: Lead role in store design, production

• Logistics: Designed with maximum flexibility and customer oriented 24H – receiving order to store delivery

• Design/Product: “Inspiration comes from the store.” Immediate reaction to trends with the support of 1,186 suppliers and 200 designers

2 Zara ’s history

o 1975: Amancio Ortega opened the first Zara store

o 1980s: Ortega changed the design, manufacturing, and distribution process to reduce lead times and react to new trends in a quicker way, which he called

"instant fashions"

o 1985: Amancio Ortega set up a parent company for Zara before engaging in global expansion

o 1988: the company started its international expansion through Porto, Portugal

o 1989: the company entered the United States, and then France in 1990

o 1990s: Zara expanded to Mexico (1992), Greece, Belgium and Sweden (1993)

o 2000s: Zara opened its first stores in Brazil (2000); Japan and Singapore

(2002); Venezuela, Russia and Malaysia (2003) … South Africa and Australia (2011), and Peru (2012)

o 2010: Zara launched its online boutique

o 2014: Zara introduced the use of RFID technology in its stores in 2014

o 2015: Zara was ranked #30 on Interbrain’s list of best global brands

o 2019: Zara updated their logo

o In 2019, Chief Executive Person said the brand is waiting for more acceptable global rent levels to continue its expansion In Europe, the brand planned to cut the number of retail locations beginning in 2020

3 Foundation and competitive advantage

Foundation

Zara SA stylized as ZARA, is a Spanish apparel retailer based in Galicia, Spain The company specializes in fast fashion, and products include clothing, accessories, shoes, swimwear, beauty, and perfumes It is the largest company in the Inditex

group, the world's largest apparel retailer Zara as of 2017 manages up to 20 clothing collections a year

Competitive advantage

ZARA has grown into a world famous fast fashion brand and its international

presence has seen an impressive rise in recent years its network of physical stores has reached more than 2200 Apart from that the brand is also operating e-

commerce websites across 48 markets Overall, ZARA is in a strong position to

achieve faster growth in the near future Some other key strengths that have helped

it achieve an edge over its rivals include its pricing strategy, focus on quality and customer service and the excellent in-store experience it has designed for visitors

4 The product line of Zara

Zara stores have men's and women's clothing as well as children's clothing (Zara Kids) Zara Home designs are located in European stores The majority of Zara customers range from 18- mid 30s years old After products are designed, they take

10 to 15 days to reach the stores

Chapter III: OBJECTIVE (Trần Thanh Ngân)

Increase customer equity Increase Consumer Satisfaction, decrease dissatisfaction of the plus size consumer

Increase purchase frequency among plus size customers

Continue to grow by extending the Zara fashion brand

Increase brand awareness and favorable attitudes among consumers

By 2020, a commitment to Zero Discharge of Hazardous Chemicals for its supply chain, training all of its designers in the cruciality of circularity, and not using fibers from endangered forests

By 2023, ensuring the use of 100% sustainable cellulosic fibers for responsible

viscose, the absolute eradication of single-use plastics, and complete adoption of green-only packaging

And before the end of 2025, collections created out of 100% sustainable cotton and linens and 100% recycled polyester, as well as zero landfill waste from its facilities,

and achieving 80% renewable energy use for its HQ, distribution centers, and stores

Chapter IV: SITUATION ANALYSIS

1 Market Analysis (Đỗ Huy Thạch)

Asia is now the main manufacturing of the fashion industry This region alone

accounted for 60% of global clothing exports in 2015, of which China, Bangladesh and Vietnam were the top three suppliers according to UN data As a matter of fact, rising incomes also push up demand for quality clothing in Asian countries We can see that the fashion industry has been growing dramatically for the past several

years

Unfortunately, the growth couldn’t continue since the Covid-19 happened Revenue from the fashion market in 2020 has decreased by over 10% compared to 2019

under the impact of the epidemic In particular, clothing still contributes a great deal

of sales with more than 50% of the industry’s total revenue Media channels and

online shopping received remarkable growth when people began to have the habit of shopping online Lazada accounts for about a half of the total revenue of online

fashion shopping channels, followed by Sendo, Facebook, Tiki …

Young people aged 25-34 are the group that spends the most on fashion This is reasonable because young people always pay attention and are willing to spend on their appearance Besides, this is also the group that quickly grasps new trends and has consumer behaviors that are influenced by the media and celebrities In which, the proportion of spending on the fashion of women in Vietnam is slightly higher than that of men, reaching over 50% in 2020

The average revenue per product decreased slightly in 2020 as consumers cut down spending According to a survey by Asia Plus Inc on Vietnamese fashion consumption behavior, price is always a higher criterion than the brand’s popularity, plus the

impact of epidemics, the sales of luxury goods have decreased significantly

There are more and more international brands entering the Vietnamese market and fighting such as H&M, Zara, Uniqlo, … Currently, there are more than 200 foreign fashion brands from mid to high-end products that have their official stores in

Vietnam The “landing” of many foreign fashion brands has pushed the domestic

fashion industry which has only a small market share shrinking

According to the data from Euromonitor, in the Vietnamese fashion market, no

business holds more than 2% of the market share With the largest market share, Adidas Group holds 1.5% market share In which, the top 3 enterprises in Vietnamese fashion companies are all from abroad with many famous brands which are very

popular with Vietnamese consumers

Following the top 3 are Vietnamese enterprises that own familiar Vietnamese brands such as Biti's, Canifa, Viet Tien, May 10 … Some domestic brands that are considered

to have a foothold in the market such as Viet Tien, Nha Be, An Phuoc, May 10 , … are also concentrated in the office product segment Some domestic brands such as Foci, although once considered a “luxury brand” with large chain stores, have closed

Vietnamese businesses outsource to many major fashion brands in the world, so the quality of products produced by Vietnamese enterprises, in fact, is not too different if compared to the products of many international brands

2 PESTLE analysis (Phan Công Minh)

Factor Analysis

Political Stable political environment, increasingly improved legal system

to create favorable conditions for business enterprises

very low But the company is still a popular fashion brand in Viet Nam and the regional neighboring countries It’s because the company is satisfying the needs and desires of the majority of people Most importantly, the brand has a big database of loyal customers

The pandemic of covid-19 and lockdown have shut down businesses across the world Zara has no other choice except to shut down 2270 of its worldwide retail stores One of the smartest decisions the company has ever made is to bring its business online It helped to minimize the damage

Sociocultural The interesting thing about the fashion industry is that it doesn’t

stay the same The social trends keep on changing and they impact the supply and demand of a company’s products The target

market for Zara is very big and large The company offers a great variety of products to its customers They don’t always create social trends Sometimes they do, and other times they don’t

Cultural trends play a very important role in influencing the purchasing decision of customers It could be clothing, apparel, shoes, or some other product If the customers do not find the trend assimilating to their environment, they won’t accept it Zara,

on the other hand, launches products that are locally and culturally trending

Technological When the pandemic of covid-19 hit the world, the wave of

lockdown and shutdown of businesses emptied streets, shopping malls, and shops across the world Zara was quick to invest in the e-commerce and online retail tech business It paid off the company very well

Environmental The environment for the fashion industry is tremendous Many

industry areas are growing and developing The only concern for the environment is the impact on the environment due to

significant energy and water consumption, greenhouse gas emissions (GHG), hazardous waste generation, and the discharge

of toxic effluent from the industry

laws Balenciaga and Adidas have accused Zara many times of stealing their clothing and other designs Therefore, Zara should consider the implementation of copyrights and patent laws, because they would help save its digital and intellectual assets

2 Social media users are increasing worldwide

3 Household income is increasing and so is the consumer spending

Inflation in the economy

is expected to remain low

4 Growth in environmentally friendly products and services

Government is offering subsidies on these

5 Interest rates are low, which provides an investment opportunity for large projects

1 There is a threat of new entrants coming into the market

2 The exchange rate has been devalued

3 Fuel price has risen in recent years making inputs expensive

4 Competition within the industry is increasing

5 More substitute products are now available

S-STRENGTHS STRATEGY S-O STRATEGY S-T

1 Zara has a Strong

Distribution network

with a large number of

outlets

2 It has a low-cost

structure, which provides

it with an advantage over

the competition

3 It has a strong

financial position with

positive profits reported

in the past few years It

also has a strong asset

base

4 It has a skilled labour

force that is highly

qualified, innovative and

diversified

5 It has a strong

presence on social media

-Increase marketing to attract consumers to spend (S1, S3, O3)

-Use its presence on social media for marketing and to attract customer towards its website (S5, O2, O3)

-Develop environmentally friendly products through innovation, at a low cost so that they could be sold at a low price (S2, S4, O4)

-Market products at low prices by offering discounts

This would help increase sales in volumes and is feasible due to low inflation and cost (S2, O3)

-Use a strong distribution network to reach out to customers and fight off new entrants into the market (S1, T1)

-Use its strong financial position to invest in intellectual property rights This would help compete with increasing competition

in the market (S3, T4) -Use its innovative teams to find cheaper alternatives to fuel so that these could be used, thereby reducing costs (S4, O3)

1 A high proportion of

property in use by Zara is

on rent, and rental

charges need to be paid

employee turnover rate,

with low employee

motivation and working

morale

4 It has liquidity

problems with low quick

ratio; the level of current

assets is less than current

liabilities It also faces

-Finance ownership of the property through low interest rate to increase the proportion of owned property to rented property (W1, O5)

-Increase payrolls, provide incentive packages and benefits to employees to reduce turnover and improve work morale This could be possible as costs are low currently (W3, O3)

Increase spending on research and development

to enable Zara to better compete with competition (W2, T4)

-Provide incentives, increase engagement, or provide a better work environment to retain talent This will ensure that employees don’t leave and join competitors (W3, T4)

cash flow problems

Chapter V: STP ANALYSIS

1 Market Segments (Phan Công Minh)

CRITERIA CLASSIFICATION CHARACTERISTICS

Age

18 25

-Most people in this age group belong to Generation Z, who do not have

a strong financial background

Most of their decisions depend on their parents or are influenced by those around them

However, most of them are digital natives, who can easily get access to technology

Usually willing to buy luxury items for their children and grandchildren as long as it is high quality and durable Nearly having no access to technology

Rarely buys high value items Attitudes towards shopping depend heavily on the buying habits of the public

Easily attracted by promotions and advertisements

Income 6-10 million VND

Rarely buys high value items Attitudes towards shopping depend heavily on the buying habits of the public

Easily attracted by promotions and advertisements

10-25 million VND

The average income is higher, so it is possible to buy high-value items Less attracted to promotions

Consumer taste is quite high Often paying more attention to the quality and values that come with the product

Over 25 million VND

Taste is high, demanding more in quality, safety level, promotions, after sales and buying experience

Often choose brands with great reputations and purchasing frequency reaches a regular level

Area Urban

High standard of living with high average income

Most urban people have a need to buy expensive and luxury items in order to show off their wealth, success and social status

Paying a great deal of attention to product quality and design

Rural

Unqualified to pay for premium care products

Average personal income is not high and there is almost no need to buy luxury and materialistic products

Mainly interested in quality and durability

Having changeable consumption habits and are easily influenced by advertising programs

o Incomes: average in the range from 10-25 million VND/ month may be higher

o Living area: mainly in big cities and areas with high population density with

high demand for fashionable clothes and other items such as Ho Chi Minh City,

Hanoi, North Central

o Coast, Southeast, etc

o Work: diverse

o Need: High demand for stylish, durable and affordable clothes The product

must partly reflect the user's fashion sense, success and social status, with diverse designs, suitable to general tastes

o Habit: Have the habit of using a wide range of clothes and items for different

needs of the day Easy to be influenced by buying decisions of people around and

general attitude towards the latest fashion trend of the public Willingness to

spend on investment in luxury items Hunting promotions

o Hobbies: Shopping for fashion products on a regular basis The products can be overpriced but the quality and design must be guaranteed Ready to experience and try a variety of products

o Purchase behavior: shopping at major shopping malls which house a large number of famous and luxury brands on weekends between 5 pm and 9 pm

o Shopping online Hunt the deal and learn carefully about the product before making a buying decision Highly influenced by other users

o Purchase barrier: Price The habit of using other products for a long time and difficult to change

2 Target segment (Nguyễn Huy Hà)

Zara’s target market is young, price-conscious, and highly sensitive to the latest fashion trends They have an advantage over traditional retailers because they do not define their target by segmenting ages and lifestyles giving them a much broader market They segment their product line by women’s (60%), men’s (25%) and the fast growing children’s (15%) department

Zara’s most important target market can be understood by the use of demographics; they target young (18-40-year-old) women, who are pri -conscious with a mid-cerange income, and very sensitive to fashion trends

3 Positioning (Phan Công Minh)

Cong Tri High

CONG TRI is a luxury label in Vietnam which was established by Nguyen Cong Tri – the most famous Vietnamese fashion designer The brand boasts clothing with elegance, poise, finesse for women and continues to expand its top-notch customer profile, from celebrities to influential social icons in Vietnam World-class stars like Beyoncé, Rita Oar, Rihanna, Katy Perry, Gwen Stefani, and Jacqueline Fernandez are known to be a few names of Cong Tri international clientele

IVY Moda Middle

IVY Moda which aims to bring exciting fashion experiences and provide quality products to the customer is considered a pioneer in the Vietnamese fashion market

IVY Moda started as a fashion office brand However, in the past 5 years, IVY Moda has changed to become a Vietnamese fashion brand that leads the trend for all customers IVY Moda is also one of the rare Vietnamese brands to organize 2 shows every year following the trend of the world and cooperate with international brands such as ELLE, fashion designer Graeme Armour,…

Marc

Fashion Low-Medium

Marc Fashion was initially famous for the shirt product line, after more than 10 years, Marc Fashion has become one of the most famous Vietnamese fashion brands

by the variety of design styles, meticulous

in production and good quality targeting women 22-35

Cocosin Middle

Cocosin is known for offering splendidly trendy clothes for women at an affordable price Thanks to its high applicability, diverse channels for easy accessibility, Coco Sin gradually won the love of the young and affirmed its position among

hundreds of designer brands

Besides focusing on design, material, and tailor, Coco Sin also invests in brand image through projects with famous fashionistas, models or celebrities Coco Sin’s product line is also very diverse, from basic clothes such as dresses, jumpsuits, trousers, skirts, accessories such as shoes, belts, bags… to design dresses, evening gowns

An Phuoc –

Pierre

Cardin

Middle

An Phuoc Company manufactures medium

to high-class fashion products for Japanese and European markets This company has established and developed high-end men’s fashion boutique An Phuoc – Pierre Cardin which has confirmed its high quality and gentle style fashion items

Viet Tien Middle

Viet Tien has long been known as the brand

of office men Recently, Viet Tien has made strong strides when expanding the development of sub-brands for casual wear (Viettien Smart Casual) women (T-Up), high-end office fashion (San Sciaro), kids (Viettien Kids),… and combines with international brands such as Sketcher, … with modern stores scale to target a variety

of customers Using diverse materials is a strength that helps Viet Tien brand become the first choice in the line of shirts Fabric is not only cotton, but also many new materials with advanced features such as bamboo nano Tencel, bamboo cotton, modal cotton spun,…

High price

Low High qu Low quality

Chapter VI: MARKETING STRATEGY

1 Product Strategy (Nguyễn Vũ Đan Hạ)

Zara sells apparel for men and women, as well as children's clothing (Zara Kids), shoes, and accessories Zara TRF is a sub-brand for younger ladies and teens that provides trendier and occasionally edgier goods

Zara was placed 29th on Interbrand's list of the world's finest global brands in 2019

Its essential beliefs may be summed up in four statements: beauty, clarity, functionality and sustainability

Zara's success has been primarily attributed to its ability to keep up with fast shifting fashion trends and incorporate them into its collections with minimal delay Zara identified a large market vacuum that few apparel manufacturers had properly addressed from the start This was done in order to stay up with the newest fashion trends while also providing apparel collections that are both high quality and inexpensive Every day, the firm maintains a careful eye on how fashion changes and evolves throughout the world It generates fresh designs based on the newest fashions and trends and gets them into stores in a week or two Most other fashion firms, by contrast, would take close to six months to introduce new designs and collections to the market

Zara was able to outperform its competition due to its strategic capacity to provide

new collections based on current trends in a timely way It immediately became

a popular brand, particularly among those who wish to stay up with the latest fashion trends

The brand is frequently described in the media as producing "freshly baked clothing" that only last a month or two To efficiently "bake" its fresh styles, Zara focuses on three areas:

Shorter lead times (and more fashionable clothes): Zara can ensure that its

stores have the clothes that customers want at the time (for example, specific spring/summer or autumn/winter collections, a recent trend that is catching on, the sudden popularity of an item worn by a celebrity/socialite/actor/actress, the latest collection of a top designer, and so on) While many businesses try to predict what customers will buy months in advance, Zara follows its customers and delivers them exactly what they desire at any given time

Lower quantities (through scarce supply): Zara not only restricts its exposure to

any one product but also generates fake scarcity by decreasing the number made for

a certain style The theory that applies to all fashion goods (and especially luxury) is that the less available an item is, the more desirable it becomes Another advantage

of making smaller numbers is that if a style fails to gain momentum and sells poorly, there isn't a large amount to dispose of Zara only has two time-limited sales a year, rather than regular markdowns, and it lowers a relatively tiny percentage of its items, around half of what its competitors do, which is a remarkable achievement

More styles: Zara creates more styles, around 12,000 every year, rather than higher

numbers per style Even if a design sells out quickly, more styles are on the way to fill the void This implies more options for consumers and a better chance of getting

it properly

Zara's designs are only allowed to stay on the store floor for three to four weeks This strategy encourages customers to return to the store because if they were only

a week late, all of the clothes in a specific style or trend would be gone and replaced

by a new trend Customers are enticed to visit its stores more frequently as the lines and styles presented by its stores are constantly refreshed

The major components of Zara's winning strategy in the fashion retailing business are outlined in the following sections

Customer co-creation: The customer is Zara's main designer

Zara's unwavering commitment to the client lies at the heart of the brand's success and current heights There was an interesting story on how Zara co-creates its items with the help of its customers Miko went into a Zara store in Tokyo in 2015 and inquired for a pink scarf, but the store did not have any pink scarves Michelle in Toronto, Elaine in San Francisco, and Giselle in Frankfurt all stepped into Zara stores and requested for pink scarves practically at the same time They all left the stores without scarves, an experience shared by many other Zara lovers throughout the world over the next several days at other Zara stores

Based on the areas and intended clients, very certain Zara goods specifically have relatively really expensive cost, while others generally have very much much more reasonable pricing By reducing development and delivery expenses, Zara mostly is able to generally maintain a competitive price approach, which definitely is fairly significant This establishes a distinct brand image and accelerates the growth of the company's market share, particularly among millennial consumers in a basically major way

2 Price strategy (Nguy ễn Vũ Đan Hạ )

Zara's pricing approach caters to the for all intents and purposes ordinary customer looking for the most up- -date clothes at a reasonable price in a subtle way As a toresult, its pricing must also definitely cater to price-sensitive clients, demonstrating how as a result, its pricing must also actually cater to price-sensitive clients, which for the most part is fairly significant Zara's price approach actually enabled its items

to actually fulfill the demands of a vast consumer group, or so they for the most part thought However, Zara does not sacrifice product quality, therefore it will generally

be sort of less for all intents and purposes expensive than definitely other brands definitely such as Hugo Boss or Uniqlo, which definitely shows that however, Zara does not sacrifice product quality, therefore it will generally be generally less actually expensive than kind of other brands actually such as Hugo Boss or Uniqlo in

a subtle way