Learn Various Models of International Marketing Through Case Study of Zara
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The success of any business organization is basically depends on the ability to convert its plan in to reality that can achieved by the interpersonal and strong execution skill. International marketing refers to the key principles of marketing which are enable at the time of exchange of goods and services across the globe in order to satisfy varied needs and wants of customers. The present case study is based on International marketing, Zara multinational fashion group is taken in to consideration (Boone, and Kurtz, 2013).
It is one of the top leading Spanish multinational textile company. Company main focus is to improve core philosophy of a product in terms of creativity and quality design with a rapid market demand. Under this case study it evaluates the marketing tools and models like (PESTEL, SLEPT and porter 5 forces model) which influence the strategic marketing plan of a company. It also considered the international factors that influence the company productivity which are competitive environment and intensity of competitive rivalry in industry.
International marketing strategy refers at the marketing of goods and services outside the firm's home country. Marketing tools and models are to be prepared on the basis of integration and coordination of whole over marketing activities across the foreign market. It always be identical and unique in terms of brand loyalty and their service providing strategy over their competitors.
Advertisement of a product at International level is one of the most critical task because its marketing strategy are differ from country to country where culture, competition and several aspects are different (Hallbäck, and Gabrielsson, 2013). The main purpose of international advertising is to reach and communicate to mass audience in more than one country. Market entry strategy is a planned and well defined method of delivering goods and services to a new target market that time company observes many opportunities and faces various threats from the external environment. PESTEL analysis is an important and widely used tool for examining the external market factors.
It helps the managers to gain better understanding of opportunities and threats that are exist in a market place. It provides direction for smooth running of business function in order to firm can compete profitability. PESTEL is an acronym for political, economic,sociology-cultural and technological etc. All these factors are considered and analyze it and simultaneously draw conclusion when a firm is entering in to a new market.
Political Factors- Political environment influences business activities and consumer buying behavior. Government policies of regulation and taxation are vary across the national boundaries. Every country have theirs own norms and social welfare policies which are sometimes favorable and unfavorable in nature it helps in understanding about opportunities and threats. Trade agreement are also involved in governmental policy.
Economic Factors- Mangers needs to consider macro economic factors which affects the long term planning of business strategy. Such factors inflation rate, interest rate, tariffs and exchange rates are the critical factors all these factors are consider when firm expand their business the globe.
Social-Cultural Factors- These factors are vary from country to country, factors such as local languages, religion, cultural views towards leisure time the age and lifespan demographics, Sociology-cultural characteristics includes attitude towards consumerism, and roles of men and women in society (Fletcher, Harris, and Richey Jr, 2013). Textile business are mainly affects by the social and their cultural factors which affects the consumer buying behavior so that company try to deliver their products and services to the country culture and demand.
Technological Factors- Technological factors creates opportunities and threats in the external market place. New technology made the product and services more cheaply and better of quality. Marketing of a product brand may be easy by the use of technology. It helps in to cover wider region by print and social media marketing. New technology also provide opportunity for more innovative product and services to end consumers.
Environmental Factors- Product supply lines are affected by such factors weather, natural disasters and the cost of fuel. If supply cost suddenly double due to any calamities affects the marketing strategy. On the hand supply can be drop out due to cheaper labor and struggling in job market.
Legal factors- Legal factors reflects laws and regulation of a particular region. Laws are a changeable property and can hinders the opportunities for sell of a product. It may be impose restriction on purchase a particular product affects the consumer ability. License and any other requirement affect the marketing strategy.
Competition is the most of the critical factor for the success of any organization it totally based on the competitive environment and the intensity of competitive rivalry in an industry. Sometimes market are already saturated with the existing product or services so that companies always came up with the new creative market ideas that helps in to maintain competitive advantage. Michael Porter five forces model helps in to analyze market competition and competitive strategy (Boso, Story, and Cadogan, 2013).
Barriers to Entry- Zara clothing multinational company wants to expand their business across the world but existing competitors and government takes action to inhibit the entrance of new competitors. It act as market entry barriers so Zara always come up with the new creative idea and standard quality of product with respect to country culture and consumer buying behavior. Sometimes company uses various market entry mode like joint ventures and licensing through this company can easy to enter in the emerging market.
Intensity of Rivalry Among Existing Competitors- Competitors in market always wants to gain competitive advantage. The effect of competition is to reduce profit and brand loyalty. High fixed cost, exit cost and slow market growth increases the level of rivalries between competitors in market due to this Zara always expand its business in less rivalry competition and high market growth which helps in gain high profitability and maintain competitive image. In intense competition market where company provide creative and customize with respect to regular upgradation in the existing product according to the customer demand and need.
Threat of Substitute Product- Substitute product are those product can replace with the existing product but they are not a direct competitor. For example another company come up with other clothing varieties like western and other cultural pattern that reduces the sales of already existing product. It creates the competitive pressure on that company to reduce their product prices in order to reduce competitiveness.
Bargaining Power of Buyers- Buyers are the more powerful element in the market, they can determine the price paid for supplies. It can increase the level of competition among suppliers. Buyers have an ability to purchase the suppliers if they are in few numbers. Zara always provide their product at optimum cost along with maintaining certain quality to retain the customers for a longer time period (Evers, Andersson, and Hannibal, 2012). Standard quality with standard prices product create intense competition among rivalries in market. This condition may arise when supply of a product is large and demand is low.
Bargaining Power of Suppliers- In case the suppliers in a market are more powerful than buyers that time suppliers exert pressures on the buyers. This condition is generate when the supply and demand of a particular commodity is not equal that time supply of a product is reduce and demand is high. This pressure tends to increase their supply product prices that time buying companies are less competitive.
International marketing is not an easy task because some factors are favorable and some are unfavorable in nature so that company needs to analyze favorable condition in terms of opportunities and overcome the unfavorable condition in terms of threats. Some of factors which are favoring in industry globalization like market, cost, Govt and competition.
Market- Sometimes more similar markets are exist in different region that impose the pressure on company to globalize their business and serve their product to mass customers in to achieve high profitability. It provides uniform market for its product like all of have needs of clothes at any region. Zara is a textile company so that its product needs all over the world.
Costs- H&M, Zara and Uniqlo are three international clothing retailers. Zara strategy is to offer a higher number of products than its competitors. All of retailer provides its product at affordable prices (De Mooij, 2013). All of the competitors provides approximate same pricing with a wide variety of product. They provides low price to upper price product to all kind of people. it helps in reduction of competition in market place.
Government- Favorable trade policies encourage the globalization of business. Govt always play a critical role in globalization by determining and regulating technological standards. It helps in smooth trade between a countries which helps in maximum goods are export and import.
Competition- There are very few key drivers of industry change. If most of the clothing retailers provide same kind and their substitute of products at approximate same prices which reduces the competition.
Slept analysis is a framework to assess an organization external environmental. It considers five factors that affects the macro environment- social, legal, economic, political and technological. The outcome of SLEPT analysis helps in to identify threats and opportunities that can used in SWOT analysis (Boone, and Kurtz, 2013). It provides greater understanding about long term trends and makes the firm in better position for strategic decision making.
It provides the information about the consumer taste and life style and resulting changes in fashion and styles. Economic changes are closely related to social ones. Economy fluctuations are directly associated with general booms and slumps in economic activity. Businesses are more encouraged to expand and take risk when economic conditions are right in senses of low interest rate and rising demand. In this condition Zara expand its business in different countries where demand of a product are rising and have less competition in market. Creativity and expansion in product always being in boom economic condition that expenses are easily recover at rising demand.
From the above carried out report, it can be concluded that marketing plays an important role in growth and success of an organization. Along with, it can also inferred that marketing provides information about changing customers needs and demand with respect to continuous improvement and new development of product to maintain sustainability in market place. Effective marketing practices has developed the brand in attaining higher market share and growth. From the above carried out report, it can be concluded that Zara had adopted different marketing strategy in different countries of the world. Different marketing tools and models are to be considered by Zara with respect to (PESTEL and 5 forces Porter model) helps into gaining understanding about opportunities and threats (Verbeke, 2013).
Zara provides cultural sensitive product so that its business expansion strategy needs to be under consideration of respective country culture, and intensity of competitive rivalry in that country. It always be identical and unique in terms of brand loyalty and their providing strategy over their competitors. Company marketing strategy must be identical and unique with respect to brand loyalty and their service providing strategy over their competitors.
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