Growing Criticism and the Importance of Sustainability in the Fashion Industry


Seminar Paper, 2015

27 Pages, Grade: 1,7


Excerpt

Table of Contents

Executive Summary

Table of Contents

List of Abbreviations

List of Figures

List of Tables

1. Introduction

2. ZARA’ s Marketing Mix
2.1. Product – Customer Value
2.2. Price – Customer Costs
2.3. Place – Customer Convenience
2.4. Promotion – Customer Communication

3. ZARA’s Recent Image Problems and Strategies to solve them
3.1. Critics on ZARA
3.2. Today’s Importance of Sustainably
3.3. ZARA’s Image Strategies

4. Conclusion and Outlook

List of Literature

ITM Checklist

Appendices

List of Abbreviations

illustration not visible in this excerpt

List of Figures

Figure 1: How people answered the question “What is particularly important to you when buying clothes?”

Figure 2: ZARA Boutiques worldwide (2012)

Figure 3: “When would you buy sustainable products?”

List of Tables

Table 1: McCarthy´s Marketing Mix

Executive Summary

Based on assignment No. 1 with the topic “ZARA – From Spain to the Big Wide World” the following work introduces the topic of the marketing mix and specifically analyzes ZARA’s marketing mix in order to obtain information about how ZARA’s marketing strategies are implemented in practice (these strategies were part of as-signment 1). This analysis is performed by using the scientific approaches of McCarthy (4 P´s) and Kotler (4 C’s). Another part in this assignment is to identify if the chosen product or brand generates value for the society and the environment.

After a short introduction into the topic, ZARA´s marketing mix is presented with a focus on the following factors; product (customer value), price (customer costs), place (customer convenience) and promotion (customer communication).

Chapter 3 refers to the topic promotion (customer communication) in chapter 2 and deals with the criticism of ZARA regarding sustainability and the respect of human rights in ZARA's production sites.

The conclusion includes a personal, critical statement and is presented along with an outlook on future research in chapter 5.

1. Introduction

As competition is tougher than ever, the right marketing mix is necessary for com-panies in order to remain competitive. This assignment serves to give a theoretical introduction into the marketing mix according to the scientific approaches of McCar-thy (4 P´s) and Kotler (4 C´s). Furthermore, ZARA’s marketing mix is analyzed in order to obtain information about how ZARA implements its marketing strategies in practice. These topics are discussed in chapter 2.

Chapter 3 deals with the topic promotion (customer communication) that was pre-sented in chapter 2 and refers to the recent image problems ZARA has experi-enced (regarding sustainability and the respect of human rights in its production sites). The chapter also discusses the instruments, which are already used by the management in order to resolve these difficulties and which instruments should be used additionally.

The conclusion and the outlook are summarized in chapter 5. Furthermore, there will be a discussion whether the chosen product or brand generates value for the society and the environment.

2. ZARA’ s Marketing Mix

A marketing mix is the practical application of a marketing strategy that is neces-sary in order to maintain and extend market shares. The following chapter presents an analysis of ZARA’s marketing mix. This analysis is performed by using the sci-entific approaches of McCarthy (4 P´s) and Kotler (4 C´s).

In the 1960´s, Professor Jerry McCarthy developed the so called 4 P model which is a marketing theory that focuses on the distribution channels and sales strategies for products and services from a company´s perspective. The four stand for: Prod-uct, Price, Place and Promotion1. The table below gives an overview of the market-ing mix according to McCarthy´s approach.

illustration not visible in this excerpt

Table 1: McCarthy´s Marketing Mix2

In the late 80s the economist and marketing professor Philip Kotler stated that "The mass market is dead" and proposed that there is need to change from mass mar-keting towards target group marketing. Kotler was responsible for the fact that the notion of the 4 P´s became famous.3 He further advised that the needs of individual customers must be focused upon and that the marketing mix needs to be under-stood from the customer´s perspective. According to his customer-orientated ap-proach he adapted the terms within the marketing mix to consumer value (for prod-uct), consumer cost (for price), consumer convenience (for place) and consumer communication (for promotion). 4

This paper is based on the assumption that the four P's and the four C's cannot replace one another. Rather, they complete each other and it is useful to combine both theories. Therefore, the following analysis concerns McCarthy´s approach as well as Kotler´s 4 C´s.

2.1. Product – Customer Value

ZARA constantly changes its collections (products). This is an important part of the company’s strategy, because it enables ZARA to quickly respond to the fast changing demand of the fashion industry. Moreover, the strategy enables ZARA to increase sales because customers can never be sure what kind of apparel is going to be sold in ZARA´s boutiques the following week. There is no other company that produces fashionable clothes faster than Zara. Not even ZARA´s main competitor H&M is able to offer the newest fashion pieces at affordable prices as ZARA does.5

With this strategy ZARA responds adequately to its customers who are willing to purchase fancy, different and chic fashion while still being price-conscious. As one of ZARA’s PR managers once stated, that if ‘(…) customers are asking for red trou-sers, and if it’s the same demand in Istanbul, New York and Tokyo, that means it’s a global trend, so (we) know to produce more red pants`.6 This shows that the most important fact regarding the customer value is that ZARA is always at the pulse of time and tries to satisfy its customer needs in the shortest period possible.7

2.2. Price – Customer Costs

A product’s price is of greatest importance to a company when it comes to profiting from all the effort that has been invested into the business.8 The other elements of the marketing mix are only producing costs, so that no matter how nice the prod-ucts are, how efficient the supply chain is, or how creative the promotion is imple-mented, the company will only make profits if the pricing is done appropriately (by covering the costs and generating earnings). Since ZARA's target group is a price-conscious customer who is interested fashion and good quality, it is always im-portant to ensure that the quality does not suffer from the price- and cost- pressure. The following figure underlines the importance of adequate pricing, because it shows that the price is the third important determinant of the decision to purchase clothes.

illustration not visible in this excerpt

Figure 1: How people answered the question “What is particularly important to you when buying clothes?”9

Regarding the customer’s point of view ZARA provides fashion at very reasonably price that everybody can afford. The costumer costs are low and the buyer re-ceives trendy products that are sold in beautiful, high-end-looking stores. ZARA´s prices are similar to those of Gap (while ZARA´s image promises chic apparel in-stead of sporty mass production as it can be found at Gap): coats are sold at $200, sweaters at $70 and T-shirts at $30.10

2.3. Place – Customer Convenience

ZARA invests little advertising (see 2.4.). Instead, it invests in selecting suitable locations for its selling places and the presentation of its stores. By investing in the creation of beautiful boutiques in major shopping areas, it also strengthens its unique selling proposition (and its advantage over other fashion companies in the low-budget segment), which is to offer affordable shopping in an environment that seems expensive and makes clients feel like they are shopping at a high-fashion brand.

Another factor that concerns the element place is the region of production. More than half of Inditex’s manufacturing takes place either in the factories it owns or within proximity to the company´s headquarter. Inditex owns factories in Spain and outsources its production to factories in Portugal, Morocco and Turkey, so that the trendiest items are manufactured close to the headquarter and the production pro- cess can be pursued quickly. Basic clothing such as simple t-shirts and pants are mainly produced in China, Bangladesh, Vietnam and Brazil.11

Concerning customer convenience, as listed in Kotler´s approach, ZARA has a good network of stores that are represented in almost every important shopping area and are easily accessible to clients (at least this is the case in Europe; see Figure 2).

illustration not visible in this excerpt

Figure 2: ZARA Boutiques worldwide (2012)12

In contrast, there are only few ZARA stores in the U.S. and this is due to the sensi-tive topic of clothing size. One of ZARA´s Managers responded to the question of why the company does not expand in the U.S like it does elsewhere with the follow-ing statement: “And what is the problem in America? They don’t fit in the clothes. So why do it? Having to make larger sizes makes production so much more com-plex”.13 This approach might be right in terms of keeping production costs low but it is not customer friendly if one can assume that there is also great demand for the fashion that ZARA produces among American consumers.

2.4. Promotion – Customer Communication

ZARA does little advertising, except on social media websites and its homepage.14

It hardly even has a marketing department and, in contrast to its main competitor H&M, it does not collaborate with fashion designers like Karl Lagerfeld, Isabel Marant or Maison Martin Margiela.15 All the promotion that ZARA does concen-trates on real estate. It invests heavily in the appearance of its shops because the management believes that appealing showcases are all the advertising ZARA’s needs in order to be successful.16

The fact that almost no money is invested into advertising may be an advantage when it comes to costs and to maintaining the price-leadership for high-quality and up-to-date fashion. However, it is questionable whether this suffices in order to build up an adequate level of customer communication (4th C´s according Kotler). It is true that the staff in the store pay attention to the customer’s needs and that the newest collections are quickly adapted to them (see chapter No. 2.1.). But is this response sufficient? Especially in times where customers ask more questions and expect more responses (e.g. in terms of sustainability or fair trade products / see Chapter 4.) ZARA needs to fill its gaps in communication.

3. ZARA’s Recent Image Problems and Strategies to solve them

After a disastrous collapse of a textile factory in Bangladesh with more than 1100 deaths towards the end of the year 2013, the topic of human rights and the im-provement of working conditions in so-called low-wage countries dominated the public debate.17

In the following chapter it is analyzed how far ZARA´s image suffers from these events and how important the topic of sustainability is nowadays. Moreover, it is discussed which strategies could help ZARA improve its image in this context.

3.1. Critics on ZARA

Since data has been published about the accidents that happened in textile facto-ries in Asia, the public interest in the situation of the textile workers in India, China or Bangladesh has grown. Moreover, the image of brands that were mentioned in context with the fires and poor working conditions has been damaged.18

The YouGov brand index is a tool that has been developed by the university of Co-logne and can be used in order to reflect the customers´ impression on a brand immediately. This tool showed that since the fire in Bangladesh occurred, the rating scales of ZARA’s image and that of other companies have dropped. The events had such a tremendous impact, that the entire textile industry suffered from image loss.19

However, ZARA was previously confronted with bad publicity in the year 2011. The company faced allegations of slavery-like working conditions at a production site in Brazil and in fact, the company had to pay a fine of 1.4 million Euros. Moreover, Zara has been forced to pursue a more stringent review of its suppliers.20 The par-ent company Inditex was not willing to give any statement regarding the events in Brazil and ZARA was able to put the case to rest without facing any further conse-quences.21 But the media and customers will probably not be calmed that easily this time, because the issues of social responsibility, sustainability and respect for human rights have gained significant importance nowadays.

3.2. Today’s Importance of Sustainably

The global economic and financial crisis may have triggered a change in consum-ers’ behavior. The economist Ulrich Thielemann, who heads the think tank for Business Ethics in Berlin stated, that "The crisis had shaken the faith in the pure market and the question of a more moral order raised".22 Nevertheless, only few consumers are willing to pay a higher price for a sustainably produced product (see Figure 3).

[...]


1 Cf. Kotler, P. et al (2009), p. 17

2 Adapted from Adcock, D. et al. (2001), p. 168 ff. (own illustration)

3 Cf. O´Riordan, L., (2013), p. 9

4 Cf. Kotler, P. et al (2009), p. 17

5 Cf. Scholtissek, S. (2009), p.143 ff.

6 Cf. http://www.nytimes.com, accessed: 16.01.2014

7 Cf. Riekhof, H. (2008), p. 439 ff.

8 Cf. Armstrong, G. et al. (2009), p. 54 ff.

9 Adapted from http://de.statista.com, accessed: 16.01.2014

10 Cf. http://www.nytimes.com, accessed: 16.01.2014

11 Cf. http://www.nytimes.com, accessed: 16.01.2014

12 Adapted from http://de.statista.com, accessed: 16.01.2014

13 Cf. http://www.nytimes.com, accessed: 16.01.2014

14 Cf. Dahlen, M. et al. (2010), p. 123

15 Cf. http://www.nytimes.com, accessed: 16.01.2014

16 Cf. http://leadingcompany.smartcompany.com.au, accessed: 16.01.2014

17 Cf. http://www.handelsblatt.com, accessed: 17.01.2014

18 Cf. http://www.wiwo.de, accessed: 17.01.2014

19 Cf. ibid

20 Cf. http://www.welt.de, accessed: 17.01.2014

21 Cf. ibid

22 Cf. http://www.tagesspiegel.de, accessed:17.01.2014

Excerpt out of 27 pages

Details

Title
Growing Criticism and the Importance of Sustainability in the Fashion Industry
College
University of Applied Sciences Essen
Grade
1,7
Author
Year
2015
Pages
27
Catalog Number
V346472
ISBN (eBook)
9783668359611
File size
1301 KB
Language
English
Tags
growing, criticism, importance, sustainability, fashion, industry
Quote paper
Rima Hammoudeh (Author), 2015, Growing Criticism and the Importance of Sustainability in the Fashion Industry, Munich, GRIN Verlag, https://www.grin.com/document/346472

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