Answers to Zara Case
1. Zara was developed with the initial goal to link customer demand to manufacturing, and link manufacturing to distribution. Goals such as short production times, decreased inventory risk, and great choice of clothes have helped formulate a unique value and shape Zara’s current business model.
Zara’s business model is based on three aspects:
Zara’s fundamental concept is to maintain design, production, and distribution processes that will enable Zara to respond quickly to shifts in the consumer demands, even so where the consumer demand is difficult to forecast. They have a fast production and distribution strategy that allows them to offer the latest fashions in less than three weeks. This increases customer visit frequency which consequently increases sales and adds value to their product.
Zara’s unique approach to advertising and marketing is an additional factor within their business model that adds to their success. Zara spends 0.3% of total revenues on advertising and marketing. Hence, Zara maintains a cost advantage to their competitors in marketing activities. In order to effectively compete with their peers Zara uses store layout, location and short product lifespans to act as their marketing tool in order to attract consumers.
The senior managers of Zara wanted to capitalize on the knowledge and the decision making skills of the employees throughout the organization, instead of relying on a small group. This trust gave them a wider vantage in understanding the general population’s perception of fashion which gave them the edge in manufacturing the right apparel.
2. The fashion business is turbulent with unpredictable demand and consumer preferences. To cater to customer demands, Zara established three processes –
Ordering – Speed and decision making at its best, ordering includes both the renewal of existing items and fulfilling of requests for new ones. “Hard” deadlines are given to stores for replenishing existing items in the store to cater to the
Zara’s business model is based on three aspects:
Zara’s fundamental concept is to maintain design, production, and distribution processes that will enable Zara to respond quickly to shifts in the consumer demands, even so where the consumer demand is difficult to forecast. They have a fast production and distribution strategy that allows them to offer the latest fashions in less than three weeks. This increases customer visit frequency which consequently increases sales and adds value to their product.
Zara’s unique approach to advertising and marketing is an additional factor within their business model that adds to their success. Zara spends 0.3% of total revenues on advertising and marketing. Hence, Zara maintains a cost advantage to their competitors in marketing activities. In order to effectively compete with their peers Zara uses store layout, location and short product lifespans to act as their marketing tool in order to attract consumers.
The senior managers of Zara wanted to capitalize on the knowledge and the decision making skills of the employees throughout the organization, instead of relying on a small group. This trust gave them a wider vantage in understanding the general population’s perception of fashion which gave them the edge in manufacturing the right apparel.
2. The fashion business is turbulent with unpredictable demand and consumer preferences. To cater to customer demands, Zara established three processes –
Ordering – Speed and decision making at its best, ordering includes both the renewal of existing items and fulfilling of requests for new ones. “Hard” deadlines are given to stores for replenishing existing items in the store to cater to the