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Transcript of Marketing-case10
It can take a product from concept through design, manufacturing, and store shelf placement in as little as two weeks, much quicker than any of its fast-fashion competitors that takes months.
FEATURE 2 "Prolific"
Zara launches about 11,000 new items while most clothing stores introduce about 2,000 to 4,000 items.
FEATURE 1+2 By introducing new products with frequency and in higher number, Zara produces smaller batches of items. Thus, it assumes less risk if an item doesn't sell well and customers check zara store stock more often, leading to very high levels of repeat patronage. Zara sells the latest trends at low prices,
but its clients value its design, quality, and constant innovation.
- Domestic Manufacturing Pays Off -
Zara is the flagship specialty chain of Spain-based clothing conglomerate Inditex.
Amancio Ortega founded Zara in 1975. Ortega started manufacturing in 1963 and opened his first store in La Coru by the name Zara in 1975.
Now Major areas for growth opportunity for Zara account for 66 percent of total group sales, include Asia , Russia and Italy . Q.1 As completely as possible, sketch the supply chain for Zara from raw materials to consumer purchase Q.2 Discuss the concepts of horizontal and vertical conflict as they relate to ZARA. Horizontal conflicts relate to ZARA Vertical conflicts relate to ZARA
Even though Rotte shopping mall or department store are retailers, they can conflict with ZARA in vertical line. Actually ZARA’s format is very unique in terms of specialty retailer of private label apparel. When they don’t have their own structure, they can be part of mall or department store. That’s the reason why they can get another position compared to original retailers.
So, we decided to focus on the relationship between ‘Rotte young plaza’ and ZARA. Vertical conflicts relate to ZARA
Q.3-1 Which type of vertical marketing system does Zara employ?
Zara employs Corporate VMS alike SPA.
Corporate VMS means that combines successive stages of production and distribution under single ownership. Coordination and conflict management are attained through regular organizational channels. Q.3-2 List all the benefits that Zara receives by having adopted this system.
1. It is useful to control over almost every aspect of the supply chain, from design and production to its own worldwide distribution network.
2. Cut production cost- saving time, eliminating the need for warehouse
3. High flexible and Low risk ->keeping inventories low
4. Fast fashion Q.4-1 Does Zara experience disadvantages from its "fast-fashion" distribution system?
1. Difficulty of locating shops
2. High competition of fast-fashion brands(H&M, SPAO, UNIQLO, MIXXO, GAP, MANGO, FOREVER21.......)
3. Cause a waste of money
Q.4-2 Are these disadvantages offset by the advantages?
1. Keeping inventories low
2. Relatively Low price but High brand image
3. Reflect the customer's recent fashion trend
4. High rotation of items
5. Smaller batches of items.
Q.5 How does Zara add value for the customer through major logistics functions? 1. Warehousing- Distribution centers
Distribution centers are designed to move goods rather than just store them. They are large and highly automated warehouses designed to received goods from various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as quickly as possible. 2. Inventory Management- Just-in-time logistics systems
Just-in-time logistics systems help to greatly reduced inventories
and related costs. 3. Transportation- Intermodal transportation(Trucks and Cargo jet)
Within a 24-hour drive, Zara delivers good by truck, whereas it ships merchandise via cargo jet to stores farther away. 4. Logistics Information Management- Integrated logistics management
Integrated logistics management is that company's various departments must work closely together to maximize the company's own logistics performance and integrate its logistics system with those of its suppliers and customer to maximize the performance of the entire distribution system.
Zara sells the latest trends at low prices, but its clients value its design, quality, and constant innovation.