How did Zara Capture the Chinese Market?”Damak Donia 杜寧Marketing Management1授課：XXX?What is Marketing Management??Overview Zara–Zara’s Success: Its Business Model? Marketing environment: –China Marketing Environment–Market Attractiveness–Learning from Competitors: H&M and Esprit in China–SWOT Analysis:Threats and Opportunities–Key Success Factors to enter the Market?Strategic Recommendations? Business, logistic and marketing strategy2授課：XXXWhat is Marketing Management?Marketing management is theart and science of choosing target markets and getting, keeping, and growing customers throughcreating, delivering, and communicatingsuperior customer value.3授課：XXXFrom choosing target markets and building profitable relationships with them????? Questions to ask:1.What customers will we serve?What is our target market?2.How can we best serve these customers?What is our value proposition?4授課：XXXTarget MarketingMarket Segmentation:Divide the market into segments of customers5授課：XXXValue and SatisfactionExpectationPerformance108ExpectationPerformance810If performance is lower than expectations, satisfaction is low.If performance is higher than expectations, satisfaction is high.6授課：XXX? Business? The world’s fastest growing fashion retailer of Spanish Brand? Ranks among the three “global winners” with Gap and H&M ? Compelling mix of fashion, price and quality? First store in 1975. Today 536 stores within 30 countries worldwide ? 199 openings in 2009? Financials? Sales: €4.5 Bn in 2008? International sales 60% of total turnoverOverview7授課：XXXBusiness ModelSupply?Whereas most retailers designed 60% at start season, Zara designed 15% ? Dump unpopular product line? Deliver fashion “when the customer desires”?Twice a week delivery schedule Demand? No advertising or promotions ? 10,000 new items at highly competitive price8授課：XXXSouth America: 30 storesAfrica: 41 storesAsia - Oceania: 7 storesEurope: 407 storesNorth America: 47 storesAround the world9授課：XXXThe industry EnvironmentThe Natural Environment– Free access to natural resources for textile clothingDemographic Structure– 1.7 billion people– 85.2% literacy rate – Skilled labour available– English speakers ExistSocial Structure– around 8 national languages–Country of two speeds: urban vs. rural – ‘New’ middle class with purchasing – Cultural shift in urban areasTechnology– Easy access – Financial benefitsChinese Economy– GNP per capita $ 5890 – GDP growth of 10.7%– Industry/service economyGovernment & Politics– Deregulation of most sectors –New textile policy– Stable communist country Marketing Environment: China case10授課：XXXMarket attractiveness DemandIndustry ? Estimated GDP growth of 6-7% in fashion industry ? Undersupply for branded fashion productsTarget markets? 30% potential customers for branded fashion products? 60% estimated for 2010 Supply Design? World class design schools Production? High innovation potential for manufacturingprocedures? High productivity potential? Cheap and skilled labour force? High investment in technologyDistribution? High investment in customer delight’ malls???????????????????????????????????????11授課：XXXLearning from Competitors: H&M and Esprit in China?Clothing, fragrances, sunglasses and home textile ?Introduced watches and accessory (departure from its global tradition)? luxury brand ? High Prices ?Shopping mall and shopping aria?Advertisement in the streets and in the metro stations?Want to be known as a provider of quality ProductEsprit?casual, formal and party wear? three collections per year?Brand extensions: bags, caps, sunglasses, wallets and fragrances?Premium price?Strong control on promotions?International option at high quality / price ratio?international format in major cities (large shopping malls)?Focus on metros and modern cities ?Strong support on printed media (adapting to Chinese culture)H&MProductPricePlacePromotion12授課：XXXSWOT analysis: Threats and Opportunities?Huge untapped market?Changing lifestyle and clothing preferences?Demand outstrips supply!!?Cheap labour and opportunities for local sourcing?High productivity potentialOpportunities?Low entry barriers?Customer bargaining power?Unpredictability of consumer behaviour?Product quality?TraditionalismThreats13授課：XXXKey Success FactorsvValuevLatest fashion with Chinese touchvBest PricesvProduct qualityvVarietyvCost/SpeedvLocal sourcing of raw materialvVertical Integration of supply chainvFast time-to-customervMass customizationvLow process costs14授課：XXXStrategic Recommendations to Capture the Chinese Market15授課：XXXBusiness StrategyGoal ?Fast growth in China How Implement Zara business model ?Introduce European supply chain system with fine tuning to suit the Chinese market ?Customise the marketing mixCOMPANYCOMPE-TITORCUSTOMERCOST/SPEEDVALUE/SPEEDVALUE /SPEED16授課：XXXLogistics Strategy?Localise and implement just-in-time and ‘quick response times’ to demand?Modernising the supply chain with the use of information technology?Forge strong relationships with ‘value chain partners’ (suppliers and delivery co)17授課：XXXMarketing StrategyProduct?Introduce the occidental range of clothes for men and women ?Introduce a small section of Chinese clothes designed by ‘upcoming Chinese designers’ through mass customisation?Introduce cotton clothes for the summer and woollen/synthetic one for the winter collectionsPrice?Use penetration pricing (20% lower than Esprit)?Stay away from the promotion by ‘sale’ paradigm of H&M18授課：XXXPromotion?Promotion targeted at increasing awareness about Zara and the concept of ‘Fashion at great value’?Use of print and television media?Tie up with colleges to sponsor their festivals to increase awareness and ‘catch them young’Place?Set up factory in the Factories area?Find at least more then 5 stores in the big cities.?Open Zara stores in the most shopping avenue and big malls.Marketing Strategy19授課：XXXThank You For Your Attention20授課：XXXThank you!21。