Analysis Of Zara And Uniqlo Strategies
Zara clothing line was created by Amancio Ortega in Spain in 1975, and has remained in business since then, competing with other textile and fashion companies across the globe. Zara has undergone through various stages of development and applied several marketing strategies hence enabled it to remain competitive in its life cycle. Unlike online selling where consumers can only view the products on a screen, Zara’s regional retail centers has made it possible for potential customers to view products physically, hence satisfy their need to fit clothes, feel and touch the products’ fabric and texture, which increases their potentiality to purchase.
Zara has minimized the cost of production by introducing regional centers near their target region. Production is done in the regional centers hence reducing on the cost of distribution and transportation across long distances. The introduction of regional production centers in various located in all continents helps the company focus on the trends on that particular region, as fashion and consumers’ needs differ with locations. the company has focus more on having their flagship stores in prime and centralized locations, over advertising. Zara only spends around 0.3% of revenues in advertising, and most of its money on enhancing their products and retail stores across big cities in the world like; London, New York, Paris among other big cities in the world.
Another value proposition for Zara is their unique branding across all stores they possess. All their stores advocate for sustainability, beauty, clarity and functionality. The lay out of their stores throughout the world is similar, making its brand outstand and identifiable by potential customers all other the globe.
Zara has become competitive over the recent years through marketing strategies with the help of its research and development department. The company has produced products based on the current fashion and trends that consumers are preferring, hence prioritized by trendiest consumers who look forward to keeping up with the fashions. The company conducts market research on its consumers to determine their tastes and preferences, then introducing new fashions based on the consumer’s suggestions and recommendations. Another strategy that has defined the company’s value proposition is their ability to drive fashion. Instead of waiting for fashion to stay for long in the market, Zara has influenced and even altered fashion by introducing new collections in the market which is usually timed, to ensure that it maximizes sales. The company is known for introducing new styles and fashion clothes into the shelves every 4-6 weeks, unlike other competitor companies that introduce new fashion clothes once every season.
How does it differ from Uniqlo?
The value proposition of Zara differs from those of its rivals such as Uniqlo. While Zara produces and modifies its products every 4-6 weeks, Uniqlo does it once every season which leads to a difference in the variety each company produces. Zara produces an average of 18000 styles annual, as compared to Uniqlo which produces an average of 2000-4000 styles annually. The difference in the number of varieties between the two companies translates to a difference in revenues, with Zara taking the lion’s share. Studies and research have shown that, the difference in variety leads to a difference in the average number of visits for regular customers annually. Since Zara has a lot of variety that changes every month, customers tend to visit Zara stores approximately 17 times a year, as compared to Uniqlo where customers visit their stores 3 times a year. Innovation as part of value proposition for the two companies differ. Zara has innovated and adopted a radio frequency identification technology, which hastens the process of tracking inventory and also easily assists online shoppers by identifying where a particular item is still in stock. Uniqlo on the other hand uses bar code technology which is not as updates as the radio frequency identification technology, hence a bit ineffective in tracking inventory.
How do the two companies differ in terms of target segment?
Uniqlo and Zara differ a lot in terms of target segmentation. Zara mainly focuses on a niche of young people, mostly the youth. Zara has adopted on customer and niche segmentation, with a focus on the young people who are known to be explorative in trying out new things. Young people tend to be early adopters and have minimal news to care for unlike the older people who have tight budgets and dozens of requirements that require their finances. Unlike the young, older people are conservative hence late adopters and laggards in trendy fashion, making the niche for Zara lucrative as fashion for the young is dynamic and changes after a short while.
On the other hand, Uniqlo does not target a particular segment as their clothes can be worn by everyone. In terms of income segmentation, Zara products are usually high end, hence targeting high income earners. Unlike Zara, Uniqlo does not segment its target customers in terms of income. Its products cut across all statuses as their clothes are affordable to those in a high income bracket as well as those in a low income bracket. Zara products are modified to suit the trend and fashion of a particular region the production center is located. Uniqlo on the other hand has adopted to a Japanese styling and aesthetics in most of its products.
