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  1. • Objective: – To develop a solid position in the China and Australia. – To establish a consistent brand globally. – To develop brand awareness and brand loyalty. – To develop the market with an aim to obtain 3% market share. By, Shailesh Kachi (21224071)
  2. Agenda • Introduction • Market Analysis • Market Entry Process • Conclusion
  3. Introduction • Born Under INDITEX foundation. • First Zara Store opened in 1975 by Spanish Tycoon, Amancio Ortega. • Over 1975 stores in over 86 countries in upscale Locations. • Headquarters: Spain (La Coruna) • Accounts about 66.11% of Inditex
  4. ZARA’s Product line constitutes of casual, trendy fashion clothing for women men & children ageing from 0-45
  5. ZARA’S PRODUCT LINE  ZARA’s production line covers wide range of clothing including dresses and suites for events, formal wear, informal casual wear to clothes worn on daily basis  ZARA product line also includes handbags, shoes, accessories and fragrances  Around 11,000 distinct products are launched per annum  ZARA does not keep or sell any of its product for more than four weeks
  6. WHO ARE THE CUSTOMERS?  ZARA’s target market is young, price-conscious & highly sensitive to latest fashion trends  Product line segmented by women (60%), men (25%) and fast growing children (15%) department  Gain advantage over traditional retailers by defining target by segmenting ages & lifestyles
  7. Zara’s Global Positioning Map
  9. Brand Equity model (Brand Pyramid) Salience High Recognition for Zara’s Brand Known for its differentiating Style Judgement Well known Spanish Brand Superiority in market Elite Social Approval Comfortable Conventional Feeling Casual, Stylish Rich Heritage, Elegance Exclusive Imaginary Excellent quality Reliable and durable Reasonable Price Resonance Performance Loyal Followers
  10. Brand Identity Prism
  11. Temperature Gradient Model Hot Cold USA & UK China Australia India Saudi Arabia Pakistan UAE Bangladesh Brazil
  12. STRENGTHS •Global outreach •Strategic locations •Seamless distribution •Fast changing collection OPPURTUNITIES •Demand for fashion at affordable prices in Sydney & Beijing •Growing economy & market in China WEAKNESSES •Brand image closely tagged to competitors •Limited stocks •Less marketing •Less communications THREATS •Fierce competition •Forgery of goods •Dilution of brand equity ZARA SWOT ANALYSIS
  13. Decision to internationalise Deciding the markets to enter China and Australia Market entry strategies Designing the global marketing programme Implementing and coordinating the global marketing plan Source: Svend Hollensen.; Essentials of Global Marketing; GB; Pearson; 2012, pg 5 Five Stage Decision Model in Global marketing
  14. China Capital: Beijing Population: 1,362,391,579 GDP: $12.61 trillion Labour Force: 795.4 million Inflation Rate: 2.6% Monetary Unit: Yuan Renminbi
  15. PESTLE Economy Analysis: • Second Largest Economy (GDP growth of 10.50%) • High inflow of foreign investor (Total FDI- 1.80 trillion) Political Analysis • Stable politics • Restrictions on internet (damaging sales) Environmental Analysis: • Subject to world extreme weather.
  16. BERI Index
  17. Porter’s Five Forces Competitive Rivalry 1. Zara’s brand reputation 2. Fond of western culture (HIGH) Threat of New Entrant 1. Removal of import quotas 2. Less infrastructure cost (MODERATE) Threat of Substitute 1. No Substitute for clothing 2. Low economies of scale for local competitors (Moderate) Bargaining Power of Buyer 1. Low switching cost of buyer 2. Lot of substitutes (HIGH) Bargaining Power of Supplier 1. Switching cost of supplier is low 2. Integrated logistic system (LOW)
  18. Chinese Culture Hall’s Classification: Higher context • Relies on Implicit communication • Non verbal communication • Prefers indirect style Cultural Framework: • Education: Literacy rate 95.1% • Equal career development • Lack of language skills, do not like to speak English • Increased knowledge and sophistication due to foreign travel and internet • Aesthetic: Red (Happiness), Green (Bad for family)
  19. Chinese Apparel Industry • Leading apparel retail industry • Market revenue worth 140.7 billion (expected to be 218.2 billion in 2016) • Lucrative Chinese market. • Two main street fashion – Xiao Qinxin (little freshness) – Zhong kouwei (heavy flavour) Datamonitor
  20. China Fashion Industry • Leading country in Apparel retail industry. • Market revenues of $140.7 billion (2012) • Lucrative Chinese market • Low labour cost • High quality of clothing • Leading companies:- • Me & City • Bosideng • MetersBonwe
  21. Chinese Consumer Need and Behaviour • Price and Quality important • Brand name is marker for prosperity. • Seek emotional satisfaction through better taste. • Status remains most desired brand quality among 32% of market. • Prefer cotton and linen.
  22. Australia Capital: Canberra Population: 22,262,501 GDP: $1.54 trillion Labour Force: 12.15 million Inflation Rate: 1.8% Monetary Unit: Australian Dollar
  23. PESTLE (AUSTRALIA) Social Analysis: • High labour force participation • Low poverty level. • Very High on human development • Aging population. Legal Analysis: • Strong business environment. • Strong corporate governance. • New tax reforms. • Lengthy permits process Economic Analysis: • Strong FDI • Growing Industrial Sector • Strong Trade and Investment Policies • Basically Strong at Economy
  24. BERI Index Criteria Weights Rating Index Comments Economic growth 2.5 3 7.5 Stable economy Labour Cost/ Productivity 2 1 2 Expensive labour Attitude towards the foreign investor and profit 1.5 4 6 Multicultural country and welcome foreign investors Communication: Mass Media 1 3 3 Good at communication and technology Overall 67 Moderate Risk
  25. Porter’s Five Forces Competitive Rivalry 1. Online retailers like “Asos” 2. 47% increased in sales (HIGH) Threat of New Entrant 1. Rapidly growing apparel industry 2. Experience and Differentiation (Medium ) Threat of Substitute 1. High substitutes 2. Retailer, designers and boutiques (HIGH) Bargaining Power of Buyer 1. Brand conscious customers 2. Average price margin (Medium) Bargaining Power of Supplier 1. Vertical integrated logistics 2. Manufacture and sells itself (LOW)
  26. Australia Culture Hall’s Classification: Low context • Rule oriented • Task-centered • Time conscious Cultural Framework: • Respect for equal dignity • Freedom of religion • Support for parliamentary democracy • Gender Equity • Equal opportunity Diffusion Rate: Fast
  27. Australian Fashion Culture • Trend are related and playful • Comfortable and favors casual attitude • Influence of chinese and japanese silk • Fashion is distinct and creative
  28. Australian customers need and behaviour • Cotton and silk preferred. • Bright colour • Warm weather so some light clothes. • Beach clothes • Sporting clothes
  29. Zara Positioning Map (Price V/s Design) Design PriceHigh Low HighLow
  30. Zara Positioning Map (Price V/s Trendy) Trendy PriceHigh HighLow
  31. Quality PriceHigh Low HighLow Zara Positioning Map (Price V/s Quality)
  32. Zara Positioning Map (Price V/s Emotional Attribute) Emotional Atttribute PriceHigh Low HighLow
  33. Market Entry Strategy
  34. Market Entry Objectives China • Develop a solid position in both countries • Establishing a consistent brand globally • Brand awareness (Advertisement) • Brand Loyalty • 1-2% market share in the first year • 3-5% market share in the second year Australia
  35. Finance China • Total budget - $4million – Wholly owned (High Risk) $3m – Franchise (Medium Risk) $1m – Low infra-structure cost – Cheap labour Australia • Total budget - $6m – Wholly owned (High Risk) – High infra-structure costs – Expensive labour market
  36. Objectives Psychographic objectives  To develop a strong position in Japan and France  To establish a consistent brand globally  To develop brand awareness and brand loyalty. Monetary Objective • To develop the market with an aim to obtain 3% market share  Specified budget: 10 million
  37. Segmentation Demographic: • Emerging middle class • 75% of urban consumers will earn $9,000 to $34,000 per annum by 2022 (Mckinsey research) Psychographic: • 65% women consider themselves as leaders of fashion • Luxury brand has become a curatorial influence in contemporary Chinese culture Behavioural: • G2 most striking. Confident, Independent minded • Determined to display their independence through their consumption. • Seek emotional satisfaction from higher status
  38. Market Entry China Australia • Wholly Owned Subsidiaries • Franchising Entry Mode • Wholly Owned Subsidiaries • Beijing Site Location • Sydney • Focus on small sizes • Adjustment in seasonal collection • 176.6 cm tall (male) • 161.8 cm tall (woman) Sizes of Product • Focus on medium and large sizes. • Focus on more elegant clothing • 170.2 cm tall (male) • 158.6 cm (female) • Price is bit higher Price • High Price
  39. Market Entry China Australia • High End Shopping street (Sanlitun Mall) • One Flagship Store Place • Shopping mall (Westfield) • One Flagship Store • Fashion magazine • Fashion weeks Promotion • Fashion magazine
  40. Advertisement through magazine China Australia
  41. The Sanlitun, Beijing China New ZARA Flagship store, Beijing ZARA FLAGSHIP STORE IN BEIJING, CHINA
  42. References A-B • 'Apparel & Non-Apparel Manufacturing Industry Profile: China' 2013, Apparel & Non-Apparel Manufacturing Industry Profile: China, pp. 1-35, Business Source Premier, EBSCOhost, viewed 14 November 2013. • 'Apparel Retail Industry Profile: China' 2012, Apparel Retail Industry Profile: China, pp. 1-31, Business Source Premier, EBSCOhost, viewed 14 November 2013. • 'Australia: COUNTRY ANALYSIS REPORT' 2009, Australia Country Profile, pp. 1-91, Business Source Premier, EBSCOhost, viewed 14 November 2013. • Australian & New Zealand Journal Of Public Health, 37, 3, pp. 226-232, Business Source Premier, EBSCOhost, viewed 14 November 2013. • Australian Social Trends. [Online] Available at: [Accessed 25 October 2013] • Baker & McKenzie (2007) Business relations in the EU clothing chain: from industry to retail and distribution [online]. Available at: RELATIONSINTHEEUCLOTHINGCHAIN.PDF [Accessed: 10 November 2013]. • Booi Hon, K, Ling, C, & Richard, W 2011, 'Managing production outsourcing risks in China's apparel industry: a case study of two apparel retailers', Supply Chain Management, 16, 6, pp. 428-445, Business Source Premier, EBSCOhost, viewed 14 November 2013. • Brennan, S, Williams, L, Berk, M, & Pasco, J 2013, 'Socioeconomic status and quality of life in population-based Australian men: data from the Geelong Osteoporosis Study',
  43. References C-J • Can Australia's struggling fashion indsutry support its new stars? Accessed online [16 October 2013] • Capell, K 2008, 'Zara Thrives By Breaking All the Rules', Businessweek, 4104, p. 066, Business Source Premier, EBSCOhost, viewed 14 November 2013. • China Unemployment Rate | Actual Value | Historical Data | Forecast . [ONLINE] Available at: [Accessed 14 November 2013]. • Clothing Retailing in Australia: Market Research Report, accessed online at: [18 november 2013] • Council of Textile and Fashion Industries of Australia LTD, accessed online [18 October 2013) • DePilla M. China relaxes barriers to entry. Futures: News, Analysis & Strategies For Futures, Options & Derivatives Traders [serial on the Internet]. (2003, Mar), [cited November 14, 2013]; 32(4): 19. Available from: Business Source Premier. • Echikson, W 2000, 'THE MARK OF ZARA', Businessweek, 3683, pp. 98-100, Business Source Premier, EBSCOhost, viewed 14 November 2013. • Employment in China, 22 June 2013, [Online] [Available at: [Accessed 22 October 2013] • Fast Retailing (2010) Group Company News [online]. Available at: [Accessed: 05 November 2013]. • Global Marketing, Warren J. Keegan, Mark C. Green, London: Pearson Prentice Hall, 2008. • JCFA Study on European Textiles and Clothing (T&C) Industry <Executive Summary> [online]. Available at: executive_summary.pdf [Accessed: 03 November 2013].
  44. References K-Z • Kenna, A 2011, 'Zara Plays Catch-Up With Online Shoppers', Bloomberg Businessweek, 4243, pp. 24-25, Business Source Premier, EBSCOhost, viewed 14 November 2013. • Marks, A 2013, 'The Globalization of the Australian Textile, Clothing, Footwear and Motor Vehicle Industries: Results in Line with Other Western Market Economies', Global Economy Journal, 13, 1, pp. 129-150, Business Source Premier, EBSCOhost, viewed 14 November 2013. • 'MTV partners Zara for men's clothing range' 2009, Marketing (00253650), p. 6, Business Source Premier, EBSCOhost, viewed 14 November 2013. • 'PESTLE ANALYSIS' 2011, Hong Kong Country Profile, pp. 11-27, Business Source Premier, EBSCOhost, viewed 14 November 2013. • Retailing in China, Mintel (2008), accessed Online, 20 October 2013 • The Australian fashion industry is adapting to tough times, accessed online at: [16 October 2013] • Tse E. Is It Too Late to Enter China?. Harvard Business Review [serial on the Internet]. (2010, Apr), [cited November 14, 2013]; 88(4): 96-101. Available from: Business Source Premier. • UNESCO Institute for Statistics. [ONLINE] Available at: 560. [Accessed 14 November 2013]. • Wadud, I 2007, 'SOURCES OF PRODUCTIVITY GROWTH IN AUSTRALIAN TEXTILE AND CLOTHING FIRMS', Australian Economic Papers, 46, 3, pp. 254-281, Business Source Premier, EBSCOhost, viewed 14 November 2013. • Yi Ju, C, Po Chung, C, & Kuo Tsang, L 2013, 'Global Brands Perceptions: The Apparel Industry In China', Journal Of International Management Studies (1993-1034), 8, 1, pp. 134-143, Business Source Premier, EBSCOhost, viewed 14 November 2013.