zara: smart app development
DESCRIPTION
Overview and analysis of ZARA's business model,as well as a proposed smart application to drive growth and revenue.TRANSCRIPT
Smart Application Development
Sungkyunkwan University
Spring 2012
JuneHyo Ahn SunHo Lee
Chris Lopez
Background Overview SPA Brand Company Introduction Product Concept
Business Analysis Trend & Environment Analysis 3C Analysis SWOT STP
Market Analysis Consumer Needs & Wants Segmentation & Target Consumers’ Journey Consumers’ Pain Point
New Service Concept
Contents
Specialty store retailer of Private label Apparel
One Company manages all processes of design, producing, marketing, retailing
Quickly understanding consumer’s lifestyle
Short-term design improvement
ZARA, MIXXO, SPAO, Uniqlo, H&M etc
Background Overview1
SPA Brand
Background Overview1
SPA Brand
prod-ucts
MIS
Market-ing
De-sign
Manu-factur-
ing
SPA Brand Factors
Background Overview1
Company Introduction
1963 : founded INDITEX
1975 : opened the 1st ZARA store in Spain
1988 : opened the 1st oversea ZARA store in Portugal
1989 : entered to the Americas in New York
1991 : entered to Asia market opening in Japan
2005 : opened ZARA store in Indonesia
History of Zara
Background Overview1
Product
Business Analysis2
Trend & Environment Analy-sis
Consumption Increase rate
09 first 09 second 10 first 10 second
Industrial Growth Rate
Spain UK Japan Ko-rea
In spite of economic depression, SPA Industry has been growing
Business Analysis2
Trend & Environment Analy-sis
Company Sales Growth CAGRShinsegae Int 5,832 32.8% 21.3%
Louis Vuitton 4,273 14.8% 21.3%
Gucci 2,731 -3.2% 14.3%
Prada 1,757 46.9% 45.5%
Ferragamo 821 16.6% 11.4%
Zegna 330 7.1% 9.5%
Dior 304 -4.1% 4.6%
Burberry 1,850 16.5% 11.7%
Uniqlo 2,260 84.3% 61.7%
Zara 1,338 67.4% 57.4%
H&M 375
<2010 Sales Analysis of Foreign Capital Com-panies>
Business Analysis2
Trend & Environment Analy-sis
SPA Brand Aware-ness
SPA Brand Prefer-ence
Awareness Preference
Business Analysis2
3C Analysis
reasonable price, products' fast rotation, high awareness of the brand- Method for reducing cost : direct distribution process, few of staff at the store- following the frequent trends change- fashion consciously change- no inventory by reducing exhibit in the store- plenty of stores all over the world with mid-low level of price
Company
prefer high quality with low cost levelcheap and chic designemotional & impulse buying more than rational purchasingimportance of "word of mouth"consumption focused on the trendprefer polished place to shop
Customer
Business Analysis2
3C Analysis
Competi-tors
The World’s first SPA CompanyLow & Middle price in U.S
Combination QR with SPASimple, Effectiveness, Durability
Benchmarked GAPLow & Middle price in Korea
SPA through Becoming lager from 2001
The first SPA in Korea from 2000
Business Analysis2
SWOT Analysis
zS
tren
gth
Weakn
ess
Op
port
un
ity
Th
reat
Broadly defined marketHighly responsive vertical organiza-tion Flexible supply chain organiza-tionHuge variety of stylesStyles are closely linked to current trendsHigh quality
Priced higher than SPA competi-torsLimited stock availableEmerging highly competitive marketLack of traditional advertising
Greater individualized advertis-ingLively communication (between consumers and firm)Convenience of one stop shop-ping (for entire family)Increased point of purchase stimuli
Competitors online storesLimited transmission of virtual closet
Business Analysis2
STP Analysis
Segment1 Segment2 Segment3
AGE Mid-Teen ~ Mid-Twenties Mid-Twenties ~ Mid-Thirties Mid-Thirties ~ Forties
% 12.7% 23.1% 20.5%
Interest ▸fashion-conscious
▸Trendy, Impulsive Buying
▸Utilitarian
▸Price & Design
▸Luxury Brand
▸Practicality & Quality
Style Pref-
erence▸Casual
▸Casual & Formal
▸Differentiation▸Formal
Market
Share
▸ 19%
(Cheap Price)
▸ 29.4%
(Price & Design)
▸ 30.6%
Purchase
Channel▸Bonded mall & Online mall
▸Department store & On/off line
mall▸Department store & Outlet
Segmentation
Business Analysis2
STP Analysis
Segment 2
▸ Mid-Twenties ~ Mid-Thirties
▸Trendy, Impulsive Buying▸Utilitarian
▸Price & Design
▸Casual & Formal▸Differentiation
▸ 29.4%(Price & Design)
▸Department store & On/off line mallSegment 3
Segment 1
Market-ing Mix
Targeting
Business Analysis2
STP Analysis
Positioning
Design Differentiation
Reasonable Price
Fast Trend
Customer Value
Zara creates Customer Value with Trendy Items, Reasonable Price
Business Analysis2
STP Analysis
FOR-EVER21
Top shop Roem
Codez combine
Soup, On&on
Ca-sual
Low Price
For-mal
High Price
TIME MINE
DKNY
ZARA Mango Leshop
SYSTEM
Market Analysis3
Customer Needs & Wants
Rocha’s Clothing and Fash-ion Indica-tors
Climate; moral con-ventions; health
Age ap-pearance, activities to execute, comfort; durability; price
physical adequacy; welfare; balance; ease-of-care; fash-ion; versa-tility
beauty; el-egance; body expo-sure; brand; de-tachment; sensuality
attraction to particu-lar clothes; color; per-sonal style; taste; boldness
Maslow’s Human Needs
Physiologi-cal
Safety Social Esteem Self Actu-alizing
Flugel’s Motivation for Cloth-ing
Protection Modesty Decoration
Zara does not define their market by strictly segmenting ages or life-styles
Allows them a strong competitive advantage over traditional retailers through a much broader market
0 – 40+ age range
Five Clothing Brands Zara Woman, Zara Basic (for women), Zara TRF (for younger women), Zara
Men and Zara Kids Product line 60% Women, 25% Men and 15% Kids
Target Consumer Young, Price Conscious and highly sensitive to latest fashion trends Average shopper comes to the store 17 visits/year versus industry standard
of 3 visits/year• Increased visits due to very high turnover of clothing offered• Zara offers 12,000 styles/year versus industry standard of 3,000/year
Market Analysis3
Segmentation & Target
Store location Always located in high traffic, iconic areas that impart a prestigious air to
Zara• Unique external and internal architecture
Lack of advertising Zara does not use traditional advertising
• Only 0.3% of revenue• Window displays are the first thing to greet potential customers• Meticulously designed to be artistic and attention grabbing, while high-
lighting the newest designs
In-store design Stores are designed to seem airy and light
• Music is played at a muted volume High turnover of styles removes need for large storage spaces
• Inventories are small, creating a high demand for limited pieces
Highly trained staff
Market Analysis3
Customer’s Journey
Market Analysis3
Customer’s Journey
Window Display Ex
Market Analysis3
Customer’s Journey
Zara Interior De-sign
Rome
New York New Delhi
Limited runs of clothing Zara focuses on high turnover fashion with very limited inventories avail-
able• Consumers may not be able to purchase desired pieces
Lack of advertising Zara uses physical stores and large window displays to showcase new de-
signs• If consumers do not physically visit the store it is difficult to keep
abreast of new styles
Pricing While Zara is marketed as affordable designer fashion, some consumers
may feel it compares unfavorable to more utilitarian fashion such as SPAO or Uniqlo
Market Analysis3
Consumer Pain Point
New Service Concept4
Service Concept
New Service Concept4
Steps to Use
1. Download the App2. Scan and list-up clothes3. Search for near by store
4. Visit the store5. Pop-up : shopping guide advertisement promotions6. Scan codes : suggest matching items to the possession7. Purchase
8. Individualized advertisements Customer feed-back9. Use the App : auto coordination
New Service Concept4
Consumer Decision Making Process
I. Encouraging them to find ‘need recognition’ easily by sending individ-ualized advertisement
II. Helping them to find new arrival items / near by stores / auto matching to possession
III. Compare to each items at the virtual store on the appIV. Make them visit the store and purchase with either pop-up coupon
when they get in or shopping guide bookV. When they get back to home, they will receive information of related
items / Also send any query or feed back to the firm
Needrecognition
Informationsearch
Evaluation ofalternatives
Purchasedecision
Postpurchasebehavior
1.
2.
3.
4.
5.
New Service Concept4
App Design
New Service Concept4
App Design
Market Analysis3
Consumer Pain Point
Limited runs of clothing Virtual closet app highlights upcoming styles
• Informs consumer of sold out items and offers alternative sugges-tions
Lack of advertising Virtual closet app offers individualized advertising at minimum cost to
Zara
Pricing Virtual closet app advertises sales, as well as showcasing designer level
of clothing
Pain Point Solu-tions
Thank You
Q & A