Marketing of Zara fashion wear in

China

Spring semester, 2015

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Tutor: Hans Breitenstein

Module No.: HUMS 3006

Date: 14th Apr. 2015

Word count: 2047

Group members:

P13018434

P14010490

P14010303

P14010197

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Table of Contents
Introduction............................................................................................................3

Zara as a fashion wear.............................................................................................3

Chinese markets for fashion wear...........................................................................4

Geographic Segmentation in China..........................................................................5

Demographic Segmentation by Income...................................................................5

Demographic Segmentation by age and gender.......................................................6

Competitive advantages..........................................................................................7

The differentiation of Zara (USP).............................................................................8

Conclusion..............................................................................................................9

References............................................................................................................10

Bibliographies.......................................................................................................11

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Introduction

Chinese fashion culture has formed and developed only over the past 20 to 30 years.

With the steady growth of the Chinese economy, Chinese consumers' purchasing

ability power keeps increasing, while the vast consumption potential will offer a great

opportunity for the people who are engaged in China's fashion industry. This report

intends to examine the marketing of Zara fashion wear in China. It will include

analysis of the product, the pricing policy, the distribution channel and the product

with the details of segmentation. There are many famous and popular brands of

fashion wear in China, meanwhile, Zara faces a super market with strong strength

competition. Moreover, this report will analyze Zaras competitive advantage, and

through research, to describe the unique selling proposition of Zara.

Zara as a fashion wear

Zara is a Spanish chain store owned by the Inditex Group, which was founded by

Amancio Ortega in 1975. So far, Zara runs about 1390 stores in 74 countries. Zara

designs and produces clothes, shoes and accessories for women, men and children.

Zara concentrates on excellent designs and lower prices, which catches the young

peoples eyes in the apparel market. Young people love Zara very much because

they can afford it as well as having high fashion. Young people love Zaras products,

which offer the latest fashion at an affordable price.

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The Chinese markets for fashion wear

Now China is not only the biggest producer and exporter of textiles and clothing,

according accounting for 50 per cent of worlds total fibre production and 58 per cent

of world texiles textile and clothing trade in 2009, but also a potential buyer and

importer, backed by a fast-growing market (International Trade Centre, 2011: 1). In

2008, the financial crisis lead led to world trade textiles clothing dropped sharply

[caused the global textile and fashionwear market to drop precipitously, and also the

Chinese market felt the impact], the Chinese market was consequently affected.

However, the Chinese government began to implement policies attempted aiming to

stimulate the domestic economy. International Trade Centre (2011) has pointed out

that, Chinas per capita fibre consumption increased from 4.1 kg in 2000 to 20.3 kg

in 2008. (p.1) Restoring the economy will accordingly enlarge the market and

provide more opportunities to the industry in the future. According to the National

Bureau of Statistics of China (NBS), the total apparel sales grew by 24.2 per cent

year-on year in 2011, reaching [RMB/CNY] 795.5 billion Yuan.

With a population of 1.4 billion and a rapidly rising economic trend, China offers a

lucrative business opprtunity for the rest of the world. Due to the appreciation of the

RMB, which will bring huge great/significant changes in Chinese peoples peoples

lives style. In 2013, Chinese spending on clothing expenditure was GBP 103 billion,

a report by consultancy Conlumino says. At the same time, this also means that

Chinese consumers will have more stronger purchasing power. China is accordingly

providing offering a promising market with unprecedented potentials to a crowd of

business organizations. Chinese young people, especially between the ages of 25 to

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35, pay more attentions to fashion wear. The key for the success of Zara is the fast

fashion the companys ability to respond fast to new fashion trends. Currently, the

Chinese apparel market is moving towards in the direction of fast fashion, which is in

line with the development direction of Zara. This offered Zara a very favorable

favourable condition for entering the Chinese market.

Geographic Segmentation in China

China is the worlds third-largest country with an area of 9.6 million square

kilometers, over 1.4 billion population, that is more than any other country in the

world. Based on its distinct political and economic development, China has been

divided into different level cities. For example, the so-called first-tier cities include

Beijing, Shanghai, Guangzhou and Shenzhen, second-tier cities has more than thirty

and those cities also have a good economic base with a large quantity of population.

A Data of from the China National Bureau of Statistics (NBS) indicates that the first-

tier cities have a massive population with over CNY 60,000 of average annual

income. Zara as a Spanish clothing retailer should focus its efforts consumer markets

on the first-tier cities, due to the high population density, a large number of middle-

class and an income level much higher than the national average. Zara, as a Spanish

clothing retailer, suits the consumer on both the first-tier cities and second-tier cities.

Demographic Segmentation by Income

In most cases, price is always peoples first consideration of purchasing. In 2014,

Chinas GDP was CNY 63.65 trillion or USD 10.36 trillion. GDP per capita reached

46,652 Chinese Yuan, with [a 9.9 per cent annual growth rate] a percentage of 9.9

increases over the previous year. The rapid economic growth of China would

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represent plenty of opportunities for foreign corporations (e.g. Zara) to expand the

potential consumer markets. China as a developing country could be segmented into

three different consumer groups. That is a small number of newly rich, a growing

middle-class and a large number of poor. China is the second-largest luxury market

in the world. The luxury consumption is rising sharply among the rich people in

China. In addition, the Chinese middle-class with higher education and good income

is growing rapidly. Purchasing quality products and foreign brands is becoming a

growing trend. As a result, the Chinese middle-class could is likely to be the biggest

group of potential customers for Zara.

Demographic Segmentation by age and gender

Focusing on segmentation by age and gender could be necessary for Zaras

development of consumer markets in China. According to the Boston Consulting

Group China Fashion Research Survey, the younger generation tends to spend more

on fashion wear than other generations, fashion conscious and foreign brands are

more considered by important to the younger generation. Especially consumers from

between 25 to 35 spend most on clothing, and Zara as a Spanish brand is widely

accepted by this age group. In general, female consumers have stronger purchasing

power on fashion wear than male consumers. In China, population of females is over

650 million, which provides the largest consumer markets for Zara womens wear.

Moreover, the demands for womens wear has have continued to increase as the

number of Chinese career women has risen. However, China with a male population

of nearly 690 million, Chinese male consumers is still a huge potential market for

Zara mens wear.

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Competitive advantages

Nowadays, customers spend their money on electronics, education, healthcare,

vacation travel and so on. They are spending less money on clothes. Moreover, they

are selecting the latest fashionable clothes but they want it in less at a lower price [for

less]. Thus, to gain the market and attract the customer, Zara is the only brand who

that produces the up-to-date fashionable clothes in at an affordable price. The

European fashion plays an important role in the Chinese? society because people

always want to look good and wear something fashionable that is very important for

them. People are always finding the way that they can become the first one

representing to wear the latest fashion. Zara also wants its customers to look

different from others. Therefore, Zara provides the best and most fashionable

clothing to its customers with high quality and low price. Zara has many competitive

advantages, such as short lead-time, production completed by Zara and no

advertising cost. In a short amount of time Zara is able to distribute and produce new

styles of fashion for their customers. According to research, Zaras most powerful

competitive advantage is that they are offer the newest design. However, Zaras

marketing focuses on young peoples wears, so they offer latest fashion to their

young customer in less than two weeks due to their good distribution strategy and

fast production, which is 12 times faster than their competitors. It allows them to

attract the customer from in a competitive the market. The next big advantage is that

Zara provides their distribution center centre closer to their retailers so they can

reach the Zaras retail stores in less time. This advantage makes people have to buy

the latest clothing in time. Another big advantage is that Zara creates clients

prospective by their segmentation on different characteristics such as lifestyle and

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age. Zara sells three different kinds of items, for children, men and women. Zara

aims to cover young consumers, and want to provide them best latest fashionable

clothes in fewer at lower prices.

The advertising cost of Zara products is significantly less than other companys

companies products. The popularity of Zaras products is magnificent. Moreover,

Zara focuses and produces superstar inspired clothes. Zara attracts their customers

in many ways. They provide their customers best up to date and modern fashions.

Mostly, Zara having their distribution center centre out of Europe. Therefore the

waiting time is almost two weeks but in China is around two months. International

brand are taking three to four months. This means that Zara warehousing costs are

nearly 60 percent less than other clothing. Zara has a following of more than six

million dollars on fashion brand.

The differentiation of Zara (USP)

Young people like to follow fashion but fashion styles change very fast. Zara defines

its own unique selling proposition (USP) as its resolve and ability to react

immediately on changes in styles and fashion by responding to movement of

products in its own stores. Products remain on the shelves for no longer than four

weeks, and if a product or line does not sell fast enough, it is rapidly discontinued.

This imposes pressure on fashion conscious customers to buy new products to keep

up with the designs in the stores before they go out of fashion. According to the

research, Zara has more than 200 professional young designers from different ethnic

groups with 20 countries, and their average age is about 25 years old. They are

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closely following the pace of fashion. Designers always work with passion to catch

the fashion styles so that the young people [stay/remain] pretty faithful to Zara. The

artistic directors lead the designers to follow fashion, the artistic directors in charge of

decision-making, incorporating the latest prevalence information, moreover,

redesigning the styles, finally, and combining into a new clothing series. They are

always shuttling between fashion shows in Paris, Milan, New York, Tokyo and other

fashion cities. So that they can could launch the simulation fashion items as soon as

possible. Zara merchandise spends on average three weeks in the production

process from design to shop sales, the fastest one items only need one week.

Through this strategy strategic, once the most fashion styles appear in anywhere in

the world, which can be produced within five days by Zara, at the same time, it will be

off Zaras sale shelf shelves in five days when the same fashion style come out in the

market. Zara try tries to make sure that put all the similar products off Zaras sale

shelf. Therefore, to competitors, the copy master Zara has the latest style with

reasonable prices. For the competition of the Chinese retailer market, it is still great.

Zaras character is always at the forefront of the fashion trend. The targets of

consumers are these who wear womens fashion clothes. [Zara targets the consumer

segment who buy womens fashionwear regularly to keep up with the latest fashion

trends.] The requirement for quality is low. The USP of Zara is a big advantage of

completion in fashion. In perspective of Zara current develop situation, there is still a

big room for it. The development over the past decade shows that Zara has great

scope for development of sales for its fashionwear.

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Conclusion

In short, China is a [fast, rapidly] developing country with such a large number of

people. However, there are many first-tier cities and second-tier cities with a good

economic base and Chinese young people more and more pursue fashion are fast

becoming very fashion conscious, so Meanwhile, China is a big growing and

potentially enormous market for the fashion industry. With this situation,

consequently, the profit will be very impressive so that many companies want to have

a market share in China. Zara has its own unique characteristics and it has

developed very well in the past few years in China. According to the observations

above, Zara has experienced steady progress and achieved remarkable results. With

Chinas booming economy, thus, fashion will thus increasingly play an increasingly

important role in the future, especially for young people. They are getting intense

pursuit of fashion clothes, but fashion changes fast. Zara is a leader of fashion and

with a low price, it [makes] means that young people can easily follow fashion in time.

Anyway, it has a good position in China. As the great potential, it leads to strength

competition. Any company wants a further development and more opportunities must

have outstanding sides. Zara, in order to stand out from others, has its own unique

selling proposition (USP). This is a big advantage for competition in the market. It is

the trend consistent with Chinese fashion standards. Therefore, the USP of Zara is a

very important element for defeating others in the fashion world in the future. Zara,

hopefully, will develop better in China and the young people around 25 to 35 years

old will welcome it.

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References

Number of stores of fast fashion specialty retailer ZARA in China from 2010 to 2012.

(2015) The Statistics Portal. [Online] Statista.com. Available from:

http://www.statista.com/statistics/289368/china-zara-store-number/ [Accessed

08/04/15].

International Trade Centre, (2012), The Chinese Market for Clothing, [Online]

Intracen.org. Available from:

http://www.intracen.org/uploadedFiles/intracenorg/Content/Exporters/Sectors/Food_a

nd_agri_business/Cotton/AssetPDF/China%20final%20technical%20document

%20for%20print1.pdf [Accessed 09/04/15].

Strother and Stuart, C. (2014) The Consumer Market in New China, Journal of

Global Business Issues, fall, 8, 9, 2, 9-17, ProQuest Business Collection, last

updated 20/02/15.

Bibliographies

2014, Available from: http://www.indexmundi.com/china/demographics_profile.html

[Accessed 08/04/15]

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China overview, 2015, Available from:

http://www.worldbank.org/en/country/china/overview [Accessed 12/04/15]

Matterw, G. Available from:

http://yongkim.ba.ttu.edu/MKT3352/MattrewG_ICA05Best.pdf [Accessed 08/04/15]

English business report, 2011, Available from:

http://www.ensight.ro/newsletter/no45/art1_2_en.html [Accessed 07/04/15]

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