zara: smart app development

Smart Application Development

Sungkyunkwan University

Spring 2012

JuneHyo Ahn SunHo Lee

Chris Lopez

Background Overview SPA Brand Company Introduction Product Concept

Business Analysis Trend & Environment Analysis 3C Analysis SWOT STP

Market Analysis Consumer Needs & Wants Segmentation & Target Consumers’ Journey Consumers’ Pain Point

New Service Concept

Contents

Specialty store retailer of Private label Apparel

One Company manages all processes of design, producing, marketing, retailing

Quickly understanding consumer’s lifestyle

Short-term design improvement

ZARA, MIXXO, SPAO, Uniqlo, H&M etc

Background Overview1

SPA Brand


SPA Brand

prod-ucts

MIS

Market-ing

De-sign

Manu-factur-

ing

SPA Brand Factors


Company Introduction

1963 : founded INDITEX

1975 : opened the 1st ZARA store in Spain

1988 : opened the 1st oversea ZARA store in Portugal

1989 : entered to the Americas in New York

1991 : entered to Asia market opening in Japan

2005 : opened ZARA store in Indonesia

History of Zara


Product

Business Analysis2

Trend & Environment Analy-sis

Consumption Increase rate

09 first 09 second 10 first 10 second

Industrial Growth Rate

Spain UK Japan Ko-rea

In spite of economic depression, SPA Industry has been growing

Business Analysis2


Company Sales Growth CAGRShinsegae Int 5,832 32.8% 21.3%

Louis Vuitton 4,273 14.8% 21.3%

Gucci 2,731 -3.2% 14.3%

Prada 1,757 46.9% 45.5%

Ferragamo 821 16.6% 11.4%

Zegna 330 7.1% 9.5%

Dior 304 -4.1% 4.6%

Burberry 1,850 16.5% 11.7%

Uniqlo 2,260 84.3% 61.7%

Zara 1,338 67.4% 57.4%

H&M 375

<2010 Sales Analysis of Foreign Capital Com-panies>

Business Analysis2


SPA Brand Aware-ness

SPA Brand Prefer-ence

Awareness Preference

Business Analysis2

3C Analysis

reasonable price, products' fast rotation, high awareness of the brand- Method for reducing cost : direct distribution process, few of staff at the store- following the frequent trends change- fashion consciously change- no inventory by reducing exhibit in the store- plenty of stores all over the world with mid-low level of price

Company

prefer high quality with low cost levelcheap and chic designemotional & impulse buying more than rational purchasingimportance of "word of mouth"consumption focused on the trendprefer polished place to shop

Customer

Business Analysis2

3C Analysis

Competi-tors

The World’s first SPA CompanyLow & Middle price in U.S

Combination QR with SPASimple, Effectiveness, Durability

Benchmarked GAPLow & Middle price in Korea

SPA through Becoming lager from 2001

The first SPA in Korea from 2000

Business Analysis2

SWOT Analysis

zS

tren

gth

Weakn

ess

Op

port

un

ity

Th

reat

Broadly defined marketHighly responsive vertical organiza-tion Flexible supply chain organiza-tionHuge variety of stylesStyles are closely linked to current trendsHigh quality

Priced higher than SPA competi-torsLimited stock availableEmerging highly competitive marketLack of traditional advertising

Greater individualized advertis-ingLively communication (between consumers and firm)Convenience of one stop shop-ping (for entire family)Increased point of purchase stimuli

Competitors online storesLimited transmission of virtual closet

Business Analysis2

STP Analysis

Segment1 Segment2 Segment3

AGE Mid-Teen ~ Mid-Twenties Mid-Twenties ~ Mid-Thirties Mid-Thirties ~ Forties

% 12.7% 23.1% 20.5%

Interest ▸fashion-conscious

▸Trendy, Impulsive Buying

▸Utilitarian

▸Price & Design

▸Luxury Brand

▸Practicality & Quality

Style Pref-

erence▸Casual

▸Casual & Formal

▸Differentiation▸Formal

Market

Share

▸ 19%

(Cheap Price)

▸ 29.4%

(Price & Design)

▸ 30.6%

Purchase

Channel▸Bonded mall & Online mall

▸Department store & On/off line

mall▸Department store & Outlet

Segmentation

Business Analysis2

STP Analysis

Segment 2

▸ Mid-Twenties ~ Mid-Thirties

▸Trendy, Impulsive Buying▸Utilitarian

▸Price & Design

▸Casual & Formal▸Differentiation

▸ 29.4%(Price & Design)

▸Department store & On/off line mallSegment 3

Segment 1

Market-ing Mix

Targeting

Business Analysis2

STP Analysis

Positioning

Design Differentiation

Reasonable Price

Fast Trend

Customer Value

Zara creates Customer Value with Trendy Items, Reasonable Price

Business Analysis2

STP Analysis

FOR-EVER21

Top shop Roem

Codez combine

Soup, On&on

Ca-sual

Low Price

For-mal

High Price

TIME MINE

DKNY

ZARA Mango Leshop

SYSTEM

Market Analysis3

Customer Needs & Wants

Rocha’s Clothing and Fash-ion Indica-tors

Climate; moral con-ventions; health

Age ap-pearance, activities to execute, comfort; durability; price

physical adequacy; welfare; balance; ease-of-care; fash-ion; versa-tility

beauty; el-egance; body expo-sure; brand; de-tachment; sensuality

attraction to particu-lar clothes; color; per-sonal style; taste; boldness

Maslow’s Human Needs

Physiologi-cal

Safety Social Esteem Self Actu-alizing

Flugel’s Motivation for Cloth-ing

Protection Modesty Decoration

Zara does not define their market by strictly segmenting ages or life-styles

Allows them a strong competitive advantage over traditional retailers through a much broader market

0 – 40+ age range

Five Clothing Brands Zara Woman, Zara Basic (for women), Zara TRF (for younger women), Zara

Men and Zara Kids Product line 60% Women, 25% Men and 15% Kids

Target Consumer Young, Price Conscious and highly sensitive to latest fashion trends Average shopper comes to the store 17 visits/year versus industry standard

of 3 visits/year• Increased visits due to very high turnover of clothing offered• Zara offers 12,000 styles/year versus industry standard of 3,000/year

Market Analysis3

Segmentation & Target

Store location Always located in high traffic, iconic areas that impart a prestigious air to

Zara• Unique external and internal architecture

Lack of advertising Zara does not use traditional advertising

• Only 0.3% of revenue• Window displays are the first thing to greet potential customers• Meticulously designed to be artistic and attention grabbing, while high-

lighting the newest designs

In-store design Stores are designed to seem airy and light

• Music is played at a muted volume High turnover of styles removes need for large storage spaces

• Inventories are small, creating a high demand for limited pieces

Highly trained staff

Market Analysis3

Customer’s Journey

Market Analysis3


Window Display Ex

Market Analysis3


Zara Interior De-sign

Rome

New York New Delhi

Limited runs of clothing Zara focuses on high turnover fashion with very limited inventories avail-

able• Consumers may not be able to purchase desired pieces

Lack of advertising Zara uses physical stores and large window displays to showcase new de-

signs• If consumers do not physically visit the store it is difficult to keep

abreast of new styles

Pricing While Zara is marketed as affordable designer fashion, some consumers

may feel it compares unfavorable to more utilitarian fashion such as SPAO or Uniqlo

Market Analysis3

Consumer Pain Point

New Service Concept4

Service Concept


Steps to Use

1. Download the App2. Scan and list-up clothes3. Search for near by store

4. Visit the store5. Pop-up : shopping guide advertisement promotions6. Scan codes : suggest matching items to the possession7. Purchase

8. Individualized advertisements Customer feed-back9. Use the App : auto coordination


Consumer Decision Making Process

I. Encouraging them to find ‘need recognition’ easily by sending individ-ualized advertisement

II. Helping them to find new arrival items / near by stores / auto matching to possession

III. Compare to each items at the virtual store on the appIV. Make them visit the store and purchase with either pop-up coupon

when they get in or shopping guide bookV. When they get back to home, they will receive information of related

items / Also send any query or feed back to the firm

Needrecognition

Informationsearch

Evaluation ofalternatives

Purchasedecision

Postpurchasebehavior

1.

2.

3.

4.

5.


App Design

Market Analysis3

Consumer Pain Point

Limited runs of clothing Virtual closet app highlights upcoming styles

• Informs consumer of sold out items and offers alternative sugges-tions

Lack of advertising Virtual closet app offers individualized advertising at minimum cost to

Zara

Pricing Virtual closet app advertises sales, as well as showcasing designer level

of clothing

Pain Point Solu-tions

Thank You

Q & A