Zara's competitive advantage is derived from the company's strategic utilization of technology in influencing various processes such as design and product offerings, production, inventory, logistics, marketing, and profitability in the long run. There are intelligence-gathering efforts that assist in the determination of what is put on the store racks. The store managers use personal digital assistants used in gathering customer input. After the stores close, the staff investigates trendspotting. The PDAs have a link with the point-of-sale system that helps in capturing the customer purchase information. This allows the collection of information on what the clientele needs. This ensures that the company can strategize styles and issue rebuy orders as per the input from the clients. The objective of collecting reliable data is to enhance the frequency and quality of the instituted decisions for the teams responsible for design and planning.
In the design, Zara uses evidence of customer demand instead of pushing new lines. The company use "The Cube" which consist of teams who evaluate data on what sells and the consumer needs. The designers always welcome feedback from colleagues and collectively share credit in case of success. Another source of competitive advantage is the ability of the company to quickly get locally targeted products into the shelves using the efficient manufacturing and logistics. It takes approximately fifteen days for a concept to move from being an idea to appearing in the stores. This means Zara is approximately twelve times faster than its competitors in addition to offering more unique products. Its responsiveness is appropriated through the competitor-crushing strategies which include vertical integration and technology-set up that manages suppliers, just-in-time manufacturing, and well-planned logistics. The company has used a limited production run to its advantage in the manufacturing of its products. First, there is the cultivation of exclusivity in the company offerings in that products are tailored to the taste of local client base. The limited runs also encourage clients to make immediate buys and at full price. To improve its competitive edge, the company invests technology at the point in the value chain that will have most impact to ensure return on investment. This means there is less IT expenditure as compared to the rest of the fashion industry.
Compare and Contrast Zara's and H & M
Both Zara and H&M have retailer stores in North America. These companies engage in product design and manufacture, marketing and distribution. The products from these companies include clothing products for men, women, teenagers, and children among others. In the design of its products, Zara uses evidence of customer demand (Alii, 2012). This compared to H&M which seeks to produce cheap products of reasonable quality through the inspiration from the latest catwalk trends. In the manufacturing of the products, Zara can design, manufacture and sells its products in their stores (Parietti, 2015). This is easy and quick since the company possesses the vertical means of production. There is a production establishment located in La Coruna where Zara was established. H&M, on the other hand, outsources the manufacture of its designs. The company does not own factories but patterns with suppliers worldwide. Using its internal logistics, the company can promote efficiency during the transportation of goods from factories to stores (Parietti, 2015).
In the marketing strategy, Zara uses loyalty programs in the creation of links with the clientele and improving the number of customers visiting the stores. The company also focuses on the improvement of its logistics system (Lynn, H., Bennett & Joines, 2009). Its marketing is geared to a more Euro-chic consumer segment who requires more fashionable clothes within short lead time. The company is reliant on the retail stores establishments and doesn't rely on advertisement in the attraction of customers. It is more concerned with establishing the best retail site for the company instead of spending on attracting customers to the stores. H&M, on the other hand, uses mobile marketing campaign in the promotion of the latest collection. Through this, customers receive mobile banner ads and SMS coupons through portals and media sites (Lynn et al., 2009). In distribution, Zara seeks to offer more available products as compared to its competitors. Zara has been known to provide more than 10,000 pieces each year compared to most of the competitors who offer 2,000 to 4,000 articles of clothing (Lynn et al., 2009). This unique feature has enabled the company to appeal more to a wider customer base with unique tastes. In boosting sales, H&M provides products that have been marketed through well-known names such as Alexander Wang and Versace (Lynn et al., 2009). Through the provision of the productions through its locations, H&M promotes its reputation through partnerships with valuable persons in the fashion industry. There is offering of additional lines characterized by unique look and style from the mainstay company designs.
Alii, A. (2012). Zara marketing plan. Slideshare.net. Retrieved 20 January 2018, from https://www.slideshare.net/AwaisAlii/zara-marketing-plan-11773443
Lynn, H., Bennett, S., & Joines, H. (2009). H&M vs. Zara Comparing Marketing Strategies. Dianajoines.files.wordpress.com. Retrieved 20 January 2018, from https://dianajoines.files.wordpress.com/2009/09/final-term-paper-hm-vs-zara-marketing-strategies.pdf
Parietti, M. (2015). H&M vs. Zara vs. Uniqlo: Comparing Business Models. Investopedia. Retrieved 20 January 2018, from https://www.investopedia.com/articles/markets/120215/hm-vs-zara-vs-uniqlo-comparing-business-models.asp
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