Alptuğ İkaSelen Yeniçeri

Why We Are Here?• Highlight what are the Strengths,

weaknesses, opportunities, threats of Zara.

• Explain the target market and active customers of Zara

• Focus on the potential customer’s Value Proposition and the reasons why people prefer Zara.

• Then, analyze of marketplace and fashion industry and position of the Zara among the industry by regarding prominent competitors.

• Examines financial analysis of Zara and whole industry.

• Determine the strategy the firm pursues and develops.

Customer / Market• Young people who want be fashionable but at a low cost.

• All price sensitive fashion-enthusiasts!• young professionals• university students• high school teenagers• children.

• Big Cities• Istanbul, Ankara, İzmir, etc.

• Target Market• 4-40 age• Mid-range income• interested in fashion trends

• located in big cities.

Customer’s Value Proposition

Why customers use our and our competitors’ product ?

• Why do you think fashion has importance among people ?

• Basic needs

• External conditions.

• Self expression.

• Looking good.

• Self-confidence.

• Dress codes

Customer’s Value Proposition

• Fashionable, affordable clothes

• Fast-changing product variety

• Large choice of styles

• Scarcity

• Prime locations

Why our products over our competitors ?

Marketplace AnalysisGeneral Economic

Conditions

• Population 80 million• GDP Growth 4,1%• GDP per capita 10.971

dollar

Marketplace AnalysisSocietal Values and

Lifestyles• Advanced communication technologies.

• Similar demands with Western societies.

• High brand consciousness.

• Like shopping

Marketplace AnalysisLegislation and Regulation

• Additional tariffs

Marketplace AnalysisPopulation Demographics

• Young population• 0-14 (25.5%)• 15-24 (16.8%)• 25-54 (42.9%)• Big cities• Istanbul, Ankara, Izmir, Bursa, Adana• Upper middle income• Highest income group (46.6%) contribution• Lowest income group (5.9%) contribution

Marketplace AnalysisTechnology Infrastructure

• Improving technology

• High technology products create value

• Flexible production

Analysis-Industry

Driving Forces• High population

• Shopping is a trend

• Fashion followers

• High income group

• Flexible production

Key Success Factors • Utilizing shops actively.

• Brand image.

• High quantity production.

• Creating the value from product differentiation.

Porter’s Five Forces Model

•Rivalry

•Threat of New Entrants

•Supplier Power

•Threat of Substitute

•Buyer Power

Sales growth of Zara as follow so we can say that now it is on the maturity

stage

6.16% 13.39% 10.11%

ZARA H&M

• Smart casual style• Branding style is

based customer experience

• Prices/quality ratio is high

• Better brand image

• Target market much more narrow

• Practical life• Quality lower

than Zara• Designer collaboration

• Price/quality ratio low (is good)

• Sales growth higher

• Target market has wide range

Strategic Group Map Of Turkey Textile Industry

GAP ZARA Tommy Hilfiger

H&MBenetton

Lc Waikiki

PRI CE

QUALITY

Financial Analysis  2014 2015 2016

Net Sales

Turkish liras

11084 12527 13793

COGS

Turkish Liras

4756 5105 5612

Gross Profit

Turkish Liras

6328 7422 8180

Net profit

Turkish Liras

1322 1741 1946

  year 2014 2015 2016

ratio

Sales Growth 6.16% 13.39% 10.11%

profitability growth 4.75% 31.69% 11.77%

Assets Growth 6.87% 7.17% 17.88%

Debt Growth -81.99% -83.81% -82.50%

Financial Analysis

SWOT

Strength

High Turnover of product

Ability to recreate of fashion

Active use of stores

Weakness

Middle Priced Goods

Low quality

Limitations on Services

Opportunities

Global Fashion Product

Growth of fashion market

Diverse cultural area

Threats

Emerging New Comers

Limitation of Design Copies

Generic Strategies• Cost Leadership Strategy

The company has to decrease their cost, and to achieve cost advantage below its competitors in the market. By doing this, a company is able to lower prices and performs above the average performer in its industry thanks to the fact that the cost for the company will be less than its rivals.

• Differentiation Strategy Customers look at the attributes of the products other than looking at the price. To apply

this strategy, the firm has to differentiate itself in terms of its products for instance by focusing on the quality of the products or in terms of provided service by focusing on the delivery system by means of decreasing the lead or delivery time.

• Cost Focus StrategyThis strategy has two variants which are differentiation focus and cost focus. Differentiation focus aims at differentiating a segment or a group by satisfy their unusual needs and the in Cost focus, the firm seeks to achieve low-cost advantage in order to provide the products at cheap prices and the concentration is made only for a small number of the market segments. However, the risk of these strategies is that competitors can easily recognise the success and may copy them

Environmental Factors

Organic food products have become popular, it is inevitable that consumers will extend their scope of purchase to the organic textiles and this trend is already started as some retailers such as Marks and Spencer introduced range of clothes made with organic cotton. As a result of the pressure on environmental issues, Zara implemented a framework called the Environmental Management System which is the pursuant to ISO 14001 standards. This is a good opportunity for Zara because the company can now position itself as a socially responsible for environment. In addition, emerging trend for organic cotton can be an opportunity for Zara to strength its image and help the company to attract customers who prefer made with organic materials.

Social Factors

The social factors are one of the most important factors which affect the fashion industry. Culture of the society is viewed as the most significant factor in terms of its effects in fashion since it is different from one country to another, even it might be different in the same country. Moreover, culture changes as time passes and these changes affect preferences in fashion. As a result, predicting changes become difficult since taste of consumes can be influenced by several factors, such as weather, movies, or even footballers or pop stars.The impact of this would be a threat for Zara if they company cannot be able to adapt themselves with ever-changing nature of tastes.

Threat of Entry

Threat of entry indicates the entry barriers to an industry. Since there is several numbers of clothing companies in the Turkey, it is a highly competitive market. This makes difficult for the new entrants to compete in this market as there are some barriers to enter and compete in the market. One of the barriers is the need for large sum of financial resource to compete in the market as entering requires building both tangible and intangible assets which can be achieved by investing in advertising, customer service to build a customer loyalty as well as investing in physical facilities for stock holding and distribution.

Strategic Map

Improve new products each

year by regarding changing

fashion trends

Select qualified Factories for

production and regularly control

them

Developing new fabrics via

cooparation of suppliers

Mass produce targeted items by imroving

their quality

Spread value added information through marketing channels

Focus on potential customers and giving

quick response to their changing needs

Work with the fashion professionals a

introduce advanced technologies

Expand pr activities by using

TV, newspaper,

social media

Providing strong employee motivation

Possible Implementations• Cross functional business intelligence department

could be establish to give quick response for external changes.

• Collaborative network with a local firm could be conducted.

• Invest in R&D department for different type of organics cotton, especially for long stable superior types.

• Find vocal people of influence who are within your target market who can be brand ambassadors for your company.

• Host or be sponsor for an local Interactive Fashion Show