Entrepreneurship Essentials

Practical File

Romir Gopalka
BMS 1A
24199
Introduction
Zara, a flagship brand of the Inditex group, operates around 2,200 stores in 96 countries (Forbes, 2018).
With a response time of just 30 days, Zara effectively meets the demand for ever-changing fashion trends,
outperforming competitors who take 5-6 months (Lopez & Fan, 2009). By closely monitoring fashion shows
and updating its offerings, Zara maintains a competitive edge.

Zara’s manufacturing process prioritizes efficiency and eliminates waste by avoiding bulk production,
reducing risks of unsold inventory. Developing fewer products creates artificial scarcity, increasing demand
and profitability. This strategy ensures customer satisfaction through timely, trendy products.

As of December 2017, Zara reported a net profit of $2.7 billion, with a projected 6% growth due to
expanding markets and stronger sales (Economic Times, 2017). Since entering India in 2010, Zara has
consistently doubled sales every two years, surpassing even major brands like Tanishq with average sales of
Rs.50 crores (Malviya, 2017).

Segmentation
1. Demographic Segmentation

o Criteria: Gender, age, and income.

o Details:

▪ Targets both men and women.

▪ Focuses on young adults and middle-aged groups (generally aged 18–45) who are
fashion-conscious.
 ▪ Appeals to individuals with medium to high disposable income who are willing to pay
for premium and trendy clothing.

2. Psychographic Segmentation

o Criteria: Lifestyle, personality, and fashion sense.

o Details:

▪ Focuses on customers with distinct fashion preferences such as contemporary,

trendy, classic, grunge, and Latino styles.

▪ Caters to individuals who view clothing as a reflection of their identity and seek
uniqueness.

▪ Appeals to aspirational and cosmopolitan customers in urban India.

3. Behavioral Segmentation

o Criteria: Buying behavior, loyalty, and product usage.

o Details:

▪ Targets customers who frequently purchase trendy and new collections.

▪ Appeals to those who value exclusivity and quick turnover of styles, as Zara
introduces new products every two weeks.

▪ Caters to fashion-forward shoppers who are loyal to brands that align with their
personal style and offer variety.

4. Geographic Segmentation

o Criteria: Location-based preferences.

o Details:

▪ Focuses on urban and metropolitan cities in India like Mumbai, Delhi, and Bangalore,
where customers are more attuned to global fashion trends.

▪ Integrates ethnic elements in the designs to resonate with local preferences,

blending international styles with Indian sensibilities.

The segmentation strategy adopted by Zara in India is centred upon the demographics of its customers like
gender, age and psychographics. The segmentation strategy of Zara involves a blend of ethnicity in its
products with a combination of varied settings and tastes for the Indian customers along with introducing
new products every two weeks.

Targeting
Zara’s target audience in India is a well-defined group of fashion-conscious individuals who value trendy,
high-quality apparel. This includes:
 • Women aged 17 to early 40s from the mid-income segment.

• Urban, middle-to-upper class men and women with a preference for global fashion trends.

• Customers who seek value for money while prioritizing quality, design, and brand appeal

With the increasing disposable income in the country there will be fashionable and quality apparels.
Additionally, the increasing penetration of digital media and social platforms has amplified fashion
awareness, making this demographic more attuned to international styles and trends. As a result, Zara’s
fast-fashion model, which emphasizes frequent inventory refreshes and a broad selection of stylish
products, perfectly matches the needs of these consumers.

In summary, Zara’s target audience in India is a well-defined group of women from the mid-income
category, aged 17 to early 40s, who are fashion-conscious, trend-driven, and appreciate the blend of
affordability and quality. By consistently delivering on these expectations, Zara continues to strengthen its
foothold in the Indian retail fashion market.

Positioning
Zara’s positioning strategy focuses on democratizing fashion, making high-end, trendy apparel accessible to
a broader audience. Key elements of Zara’s positioning include:

• Offering stylish, sophisticated clothing at affordable prices to bridge the gap between affordability
and luxury fashion.

• Strategically locating stores in high-end malls and shopping districts to ensure maximum visibility
and accessibility for the target audience.

• Leveraging its fast-fashion model to quickly translate runway trends into retail-ready products,
ensuring a dynamic and up-to-date inventory.
 • Creating demand through limited production and artificial scarcity, making products more desirable
and profitable.

By focusing on these elements, Zara has successfully established itself as a leading brand in the global and
Indian fast-fashion markets.

Conclusion
Zara's comprehensive STP strategy underscores its ability to segment a diverse market effectively, target key
demographics with precision, and position itself as a brand that seamlessly blends affordability with high
fashion. By addressing the unique needs of its audience, from urban, fashion-conscious individuals to
aspirational middle-income groups, and maintaining its competitive edge through strategic store locations
and fast-fashion agility, Zara continues to dominate the fast-fashion landscape in India and globally. Its
alignment with consumer preferences and its innovative operational model ensure sustained growth and a
strong market presence.
 STP
ANALYSIS
FEASIBILITY
ANALYSIS