Marketing I

Block seminar 1
Zara: Fast fashion
Instructions for subgroups

Fall Term 2008

Your task

Case solving
 Previously we defined marketing as "an organizational function and a set of

processes for creating, communicating, and delivering value to customers and

for managing customer relationships in ways that benefit the organization

and its stakeholders." The Zara case shows that Marketing is intimately

connected to other organizational functions, e.g., finance, manufacturing, and

distribution. Companies need to make strategic decisions in each of these

functions which should be consistent with decisions in other functions. With

this in mind, we want you to approach the Zara case and answer a number of

questions.

Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch 2
Your task: Subgroup 1

Case questions: Sourcing

 What is the logic behind Zara’s decision to manufacture
some items in-house whereas outsourcing other items?
How does this decision contribute to Zara’s capability to
adapt to changing consumer demand during the season?
Why are the most fashion-sensitive items manufactured
in-house? How can Zara be a fashion follower yet sell
"state-of-the-art" fashion? How does Zara manage to
compress cycle times?

Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch 3
Your task: Subgroup 2

Case questions: IT
 What is the strategic rationale behind Zara’s investments
in IT? How does Zara link its distribution system and
stores through IT? What is the role of the store manager
as a user of IT systems? How does the IT system impact
other Marketing mix variables (e.g., enable specific
Marketing strategies not possible if the IT system was not
in place)?

Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch 4
Your task: Subgroup 3

Case questions: Segmentation

 Inferring from the information given in the case, which
variables does Zara use to segment markets? Please
evaluate these variables in light of the criteria for
segmentation variables discussed in the lecture. How do
Zara’s manufacturing and distribution systems support or
constrain Zara’s ability to meet demand in these
segments?

Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch 5
Your task: Subgroup 4

Case questions: Design

 How is Zara's design team integrated into the Marketing
activities? Why has Zara opted for this organization? How
do the special responsibilities of the design team
contribute to Zara's capability to react to changing
consumer demand during seasons? How do the teams'
responsibilities "transcend design, narrowly defined"?
How is Zara able to follow an “evolutionary” product
development strategy during seasons? What are the
competitive implications of this ability?

Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch 6
Your task: Subgroup 5

Case questions: Markdowns

 How is it possible for Zara to keep down markdowns
compared to competitors? How does Zara manage to keep
failure rates low? What is the price paid for this
advantage? What is the role of store managers in Zara's
Marketing (mention at least two)? Which variables do the
incentives for store managers emphasize? How do Zara’s
manufacturing and distribution systems impact on
markdowns?

Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch 7
Your task: Subgroup 6

Case questions: International expansion

 How does local variation in customers' attributes and
preferences impact Zara's international expansion? Which
Marketing mix variables differ across markets? Why does
the mode of market entry vary across countries? Do you
think Zara’s manufacturing and distribution systems work
the best with franchising or direct ownership of stores?
Explain why.

Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch 8