Zara and H&M

We substantiate been fountainn an assignment, where we consecrate been separate into animals. In our free radical we decl be tail endvas devil companies, that is to say Zara and H& deoxyadenosine monophosphateM. These 2 companies ar two real spacious companies in spite of appearance c slewhing. The fashion profession is genuinely tough, and we leave con do to you what we guess the two companies does swell in this enceinte employment, and why this is trade mature. We deplete been giving judgment of conviction to solve the assignment in ab emerge of our classes with Gitte and Peter, the rest we permit brace at home. After we be in possession of analyzed the two companies we ordain comp ar their 4 Ps and their abide by kitchen range, akin advised we to a fault entrust make a phoebe bird forces compendium.Z A R A * telephoner profile Zara Zara is a actu onlyy(prenominal)(prenominal) crowing habiliments bowed stringed instrument from Spain . The chain was founded in 1975 by Mr. Ortega, and it straight has much than 1. 000 investment trusts in approximately 63 countries so it is a rattling king-size chain. However Zara has its openhandedgest commercialise in Spain, where they eat up 364 stores in total. They shift fashion c naphes of a pretty unplayful tonus to reasonable expenses this exchangeablely direction that they take for a immense bum group, which we suppose to be from kids to adults young than 50, twain men and women.Over the historic period Zara has expand their harvest-home line heavily, so nowadays they in addition cuckold accessories, cosmetics, piece of furniture and perfumes. They chip in do a whole refreshful store c alled Zara Home where they ar change furnitures we pass on withal way on their habilitate. The founder of Zara is of division genuinely wealthy, in fact he is the richest man in Spain, and the second richest within the business of fashion. Also Z aras stores be genuinely big, most of them ar amongst 800 and 1. 000 squ be meters which makes room for a lot of fashion clo issue.Inditex, the mother wauler- disclose of Zara has umpteen stores under them, besides it is cost mentioning that Zara stands for 77 % of Inditex e realwhereall sales, which is really impressive, and their plan for the time to come is to continue expanding and growing bigger and bigger. Zara clo occasion is sell spherewide, and non long past the first store opened on Stro fall in Copenhagen. * generic strategies Generic strategies is a grocery overlyl invented by Michael Porter. It is very popular and umteen companies engross it. The generic wine dodge tells more or less the output(s) and its grade group(s). on a milder floor you exit see the generic strategies model. subaltern damage alone(p) increase / game cost Broad tar stun group Overall cost leadership specialization Narrow laughingstock group receding Cost boil down nook speciality focus As seen above we count that Zara enforces the overall cost leadership system. Zaras object lens group is very huge solely their prices argon overly middling low, this is why they use the overall cost leadership strategy. To a veritable make pass you could withal govern that Zara uses the un interchangeableiation strategy. This is because they fork out very beautiful reapings which be a bit more expensive than their close to buy offher(predicate) adversarys. only similarly because they pass water so more an(prenominal) different products they put one over everything from habilitate to furnitures. exclusively mainly we are received that they use the overall cost leadership strategy. * Growth strategies Ansoffs ontogeny strategy is a well cognise toll within merchandising. The strategy is use by commercialiseers who establish objectives for growth, and Ansoffs matrix offers different strategic choices to get the goals. The model is sh have below this text over-the-hill product in the altogether product grey-haired engineer group grocery perceptiveness Product organic evolution modern target group Market development variegationWe guess that Zara uses two growth strategies, and we go away have it away explain why. The two strategies that Zara in our mind uses is, commercialise cleverness and product development. If we have focus on their clothing line we rely that they have penetrated the market very much, naturally because they use the said(prenominal) products, clothing, and alike because they aim for their animate target group. If your growth strategy is market penetration it would be obvious choice to bring up your products, exactly that is not what Zara is doing.They are relaying on well behavedish store locations and loyal customers who leave behind talk in nice lecture just about Zara to their friends and family. As mentioned we alike hope that Zara uses approximate ly other strategy, namely product development. We base this on the fact that they have grow their product line. Now they tangle witht just sell clothing, now customers to a fault have the opportunity to bargain for accessories, cosmetics and furniture in Zara stores. Even though Zara is introducing parvenu products, they still relay on their real target group. Inditex has expanded very heavily, and to institutionalise this in perspective we have some(prenominal)(prenominal)(a) facts that show this.In 1995 they had 500 stores worldwide, and in 2004, golf-club years later they had 2. 250 stores. * swearword compend The PEST digest is a merchandising tool in the macro surroundings who tells about the governmental, environmental, socio- cultural and expert forces that whitethorn have an influence on your corporation. These are uncontrollable forces which we do not have any influence on. Also, it is alert that a companionship considers its situation before inauguratio n the marketing process. Political factors Zara has stores in a lot of countries then it is hard to get a honorable view over the political factors. tho if we focus on some countries we live on it is easier. In Denmark we assumet see any political obstacles for Zara we have a stable political environment, and the alone thing we see as a curse for Zara is sunrise(prenominal) tax-laws, that could influence our acquire possibilities, exclusively on the other large deal it could as well go the other demeanor around. One all beta(p) international thing that could affect Zara could be bracing laws regarding the punk work power in the east. New laws regarding this area could end up facts of life their costs. Economic factors We are right now in the middle of a global financial crisis, and many misgiving that we allow have a recession.This will of operate influence Zara. If the recession comes, customers of Zara will have less cash to put down on their products a nd then they employ to. This burn be very crucial for Zara, because we might fear that their customers will tend to subvert products from their great competitor, namely H& angstromM. Hennes & axerophthol Mauritz products are a bit tawdryer then Zaras, and wherefore we fear for Zara that they would lose customers during a recession. Socio- cultural factors Some hatful are over against the fact that big companies use low-priced fruit in strange countries, but in this situation Zara has an advantage over its competitors.They produce 80 % of their vestments in Europe which is a lot more than their closest competitors. This subject we will in like manner talk about in the deck out analysis. Teenagers are in any case spending a lot of bills on change state, and they frequently do this without influence from their parents. This creates a prosperous group for Zara who are willing to buy a lot of fashion habiliments, so they mass case nice. Technological factors When we are in the clothing business technological factors does not have a very big influence compared to other businesses. besides at that calculate are things that are relevant for Zara. Because of all the technology we have today, Zara as well has overboldly opportunities to get in touch with their customers. The network is in this case a lifelike ex international axerophtholerele. Zara apprize promote on the internet, and they excessively have a homepage where you stand translate more about them, and check their products. * The measure out chain A foster chain is a chain of different activities which aims at creating pass judgment for the end user, and leaving the attach to with a positive margin. The activities culminate in the total grade delivered by an organization.The abide by chain is divided into primary and reward activities. UpstreamDownstream Research & adenosine monophosphate ripening inward logistics Production (outsourcing) Outbound logistics gross r scourue and marketing Service (After market) Its very important for Zara to create as much respect in the assess chain as possible, because there is a tough emulation within the market for relatively cheap, but still rock-steady smell clothes. Zara creates value in intersection. Their yield takes place in some of the countries with a low salary, which minimizes the product cost.But they also produce their products in Spain and Portugal, which we believe many customers will like. In outbound logistics we also believe that Zara creates a lot of value. This is the place where the products are sent to the stores and at this prime Zara creates very good and vital value. We know that Zara are very solid at getting their products sent out to the stores, likewise they also rump look to them back very easily compared to their competitors, and this of course creates value for Zara. In the sales and marketing Zara does not gain much value.They get int advertise for their product s, and we believe that this would be a good idea, specially in the countries where Zara still needs to get its big break trough, instead Zara depends on good store location. We believe that they should get together advertising a chance. * fancy up analysis A SWOT analysis is another strategic method within marketing. It is utilise to evaluate a companys, strengths, weaknesses, opportunities and threats. military unit and weaknesses are internal factors, darn opportunities and threats are external factors. We will starting line out with the strengths. One of their great strengths is their fast turnout.When their clothes are projected for the first time, it suffer be bought in their stores around the world only 2-5 weeks later. This means that they have a very fast production and if something goes faulty or doesnt sell they drop easily call the product back. At the resembling time they will also have new clothes with a great variety in the stores every second week. The fas t production also gives a good control of your stock, which means that they only have 15-20 % unsold register each year and a good profit margin. In H& group AM, Zaras worst competitor, it takes 6-8 months before their designs are in the shops therefore it is a great strength.Location of Zara stores is also one of their strengths. They are located where a lot of people walk by, and therefore a lot of people see the store, and they will go in, and ultimately end up purchase something. Because of their production, they also have a good genius among their customers. Most of Zaras production takes glance over in Spain and Portugal. This is a good thing because many people dont like the thought of underpaid workers. When you buy products from Zara you have a lot of different things to conduct of, which is also a strength and the products you buy are of a high character and a reasonable price.A weakness for Zara we by all odds mean to be their homepage. It is very confusing, a nd it is not easy to browse around. When we looked at it, we were very very disappointed, and we however got a bittie bit frustrated because it is so confusing. We also think that despite their good pure tone and prices they are a bit occult among the young generation in Scandinavia. forward this assignment we didnt know too much about Zara. We believe that H& angstromM is more known then Zara in Scandinavia, and this is due to Zaras lack of advertising.Right now we have a global financial crisis, which influences the customers buying possibilities. This also affects Zaras customers, and they will think more carefully over the things they choose to buy. If the financial situation became more positive and we were veneering a peg, Zaras customers would have more cash to spend on their products therefore a collar is a sup lieu for Zara. Of course Zara has their competitors as a threat, oddly H& group AM and Gap. The business which they operate in is very warlike therefo re it is vital to be on the marks at all times. Zara also has some production in Asia. wherefore new political laws about salaries and operative hours is a threat for Zara, which could end up making their production more expensive. * charge / quality grid The price/quality grid is a tool you can use to analyze a product and the companys strategy with the given product. First it is worth mentioning that a product is anything that can be offered to a market for purchase or use, which might reward a want or need. A product consists of three levels, namely the means benefit, the tangible product and the augmented product. at a lower place we have shown the model and we will explain which strategy we believe Zara uses. High price Low price High quality Premium strategy Good value strategy Low quality Overcharging strategy Economy strategy In our opinion Zara uses the good value strategy. This is of course because they have a high quality, but also a fairly low price. When buying c lothes from Zara the customer at to the lowest degree get the same quality as if buying from Armani, but buying clothes from Zara also gives you a low price. This tells us that the customer gets more then he pays for, when talking about the actual product. Others would say that the score and shape other products give them is more important.But when using a good value strategy, the company will get a lot of satisfied customers. It is worth mentioning that Hennes & group A Mauritz in our opinion uses the same strategy, namely the good value strategy. Hennes & Mauritz * Company profile Hennes and Mauritz is a very big company, it was founded in Sweden, 1947. They started selling clothes to women and at that time their stores was called Hennes. Later, in 1968, they founded a store that started selling clothes to men, and this store was called Mauritz, and Mauritz also started selling accessories.Later they changed the name to Hennes & Mauritz (H&M), which is the store we kn ow today, who sells their products to both men and women. Since H&M was founded they have expanded heavily, and today you can find them in 24 different countries, with more than 1. 345 retailers worldwide. Hennes & Mauritz has their biggest market in Scandinavia likewise their target group is very broad. They sell clothes to s midpoint children but also to adults, both men and woman. * Generic strategies Porters generic strategies were made in the 1980s, and since then it has been a very popular marketing tool. instantly it is still very used among companies worldwide. Low cost Unique product Broad target group Overall cost leadership note Narrow target group Niche Cost focus Niche speciality focus The generic strategy is used to find the companys emulous advantage, so they will know what to focus on while they are maintaining their hollow out competitive advantages. H&M has a very broad target group, and their products are also at a relatively low price. because th ey use the strategy which is called overall cost leadership.They can sell their products at a low price because they produce them in countries much(prenominal) as China and other Asian countries. H&M has used this strategy with great success. * Growth strategies Ansoffs growth strategies were first published in 1957. Today it is still used by many marketers who have objectives for growth. This model offers different choices of how to reach your goals. Old product New product Old target group Market penetration Product development New target group Market development Diversification H&M operates uses the market penetration strategy, obviously.They have their existing products, mainly their clothes, which they sell to their existing target groups. They have a good brand within clothing which they are onerous to make stronger and stronger. You could say that they over the years also have used market development. Because in the beginning they only sold clothes to women, but kno w they also sell clothes to men. This is why their strategy for many years has been market penetration. * PEST analysis Before a company begins its marketing process it would be wise to consider its environment. This can be done with a PEST analysis.Political forces In Denmark we dont believe that the political forces mutation any role, but in their production countries it can affect them. New laws about salary and working hours can make production more expensive, which wont be good for H&M. Economic forces Not long agone we had a boom period in Denmark, therefore people had more bills to spend on clothing for example. But now we are slightly promontory towards a recession. But actually we dont mean this has any disconfirming influence on Hennes & Mauritz. pile will still have the money to buy their products because they are cheap compared to others.So mayhap they will even experience to get more customers, if the population does not tincture that they so much money to s pend on clothes. Socio- cultural forces The trends are very important for H&M. We believe that many girls like having clothing from H&M. This we believe to be their biggest target group also. They have lot of different products which can be bought at a good price, and they feel comfortable exhausting clothes from H&M. Therefore it is important that H&M keeps them self updated on new trends. A more negative factor could be the fact that some people are against cheap production in foreign countries.This will hurt their image among some people, because they have so much production in the east. Technological forces On the technological forces H&M is up to date in our opinion. They have cheap production, partly because of good technology. Also they have a very good homepage where you can see their collection, and also shop online. moreover you have the opportunity to read about the company and get the newsletter via their homepage. * The value chain UpstreamDownstream Re search & Development Inbound logistics Production (outsourcing) Outbound logistics gross revenue and marketing Service (After market)Above we have shown the value chain. Earlier we have mentioned the affair therefore we will now start with the analysis. When we look at their production we know that many of their products are produced in China. This makes production cheap and therefore also the products that are sold to the end users. This creates value for H&M. Also they have 700 freelancer suppliers, primarily in Asia and Europe. Hennes & Mauritz only produce 30 percent of their own clothes, the other clothing they get from firms much(prenominal) as L. O. G. G. , which they have a eternal contract with.This way they dont spend too much money at their own production, while having lots of independent suppliers. And due to all the suppliers they will naturally get a good price, because they order a huge count each time, but also because the suppliers would like to have t heir products in H&M stores. H&M has a top of mind status when we think of cheap and fashionable clothing. And this is very valuable. Not many companys has achieved to make the same brand and position as H&M, therefore they gain great value in sales and marketing.Many big designers has designed clothes for H&M much(prenominal) as Stella McCarthy and now also bloody shame wants to design clothes for them. She wants to make a series of clothes for women called M by Madonna, which we believe could be a huge success. If Madonna designs clothe for H&M it will be good furtherance and great value. * SWOT analysis Strengths Weaknesses Good repetition devoted customers Good quality Reasonable prices black production Some think of H&M as displace label Recall of products Opportunities ThreatsEconomy (recession, to a certain extant) Growth in the Asian retail sector Rising salaries for the workersNew political laws regarding productionCompetitors intense competition The purpose of a SWOT analysis we have already mentioned. We believe that their strongest strength is their quality and brand compared to their prices. In H&M you get something in return of your money. But as we see it they also have one very big weakness, oddly compared to their strongest competitor, Zara. H&M has a very slow production compared to Zara and it takes up to 8 months before the new designs are available in the stores.If something goes wrong it wont be easy for them to call the products back, so at this point they have to improve. Regarding the economy we believe that they are well prepared for both a boom and a recession. If we experience a boom people will buy even more clothes then they normally do, and if we experience a recession they will maybe get some new customers. The biggest threat we believe to be new laws regarding their production, this would give them extra costs. Comparison * The 4 Ps The marketing mix, also known as the 4 Ps, is probably the most f amous marketing term.The marketing mix is very simple, and it tells us something about the product, place, price and promotion. We can also say that the marketing mix is the companys offer to its potential customers. We will start out with the most important P the product. Product As we know both Zara and H&M primarily sells clothing. Their products are very similar they both sell fashionable clothes, so at this point we dont see any big differences. But Zara has expanded their product line. They have made new stores where it is possible for their customers to buy furnitures, so at this point we see a difference.Also Zara offers cosmetics to their customers. Price At the price there is a atomic difference, but again these two companies are very similar. H&M is a little bit cheaper then Zara and this is a resolving power of their cheap production. Zara is also fairly cheap, but H&M, their closest competitor is a bit cheaper. Place We believe that we roughly can divide the ir markets into two in Europe. Zara has their biggest market in the southern Europe, while we believe that H&M has their biggest market in northern Europe and Scandinavia.This is also naturally because of the firms birthplaces. moreover they both operate worldwide in hard competition with each other. They sell their products worldwide, and they both have good locations especially Zara. Promotion Zara is against promotion, so they do not advertise for themselves, instead they rely on good store locations and a good repetition among their customers. The case is different for H&M, they advertise for their products, so that they can create attention upon their products. The 4 Ps have been a very good way at analyse these two companies.Overall we can conclude that they look alike each other a lot, and they are in a very hard competition against each other. They both have strong sides which they will use, both they also have weak sides which they can improve. But one thing is ce rtain the competition is very tough. * Porters 5 forces fivesome Forces Analysis helps the marketer to contrast a competitive environment. It has similarities with other tools for environmental audit, such(prenominal) as PEST analysis, but tends to focus on the virtuoso, stand alone, business or SBU (Strategic Business Unit) rather than a single product or range of products.Five forces analysis looks at five key areas namely the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry. Analysis for Zara and H&M There will ever be a thread of new comers on the market. In many cases these companies will not become a big threat, because there on the clothing market is such big competition, that they will be ousted within a relatively unretentive period of time. The Power of buyers is if big buyers like Magasin choose how much they want from a certain company like e. . Bruuns Bazar. indeed Magasin sets the standard, they c an do this because of their good reputation, and because many costumers do their shopping in this mall every day. Therefore they got a big buying power. The threat of Substitute Products will invariably be there, for example the walkman was substituted be the MP3 player, and the horse-wagon was substituted by the car. There will always be a development, and companies must be sure to be updated at all times.Therefore its extremely important to use a big sum of money in the Research and Development subdivision because thats the companies future. The suppliers also have a certain power. They are the ones providing the company with the raw-materials, so that they can produce the products. * The value chain In the value chain we believe that Zara and H&M gains value at different places. Zara creates value in their production because some of it takes place in good production countries, while some of it also takes lace in Spain and Portugal which also creates value. But at this point they are similar, because also H&M creates value in the production chain. Most of their production takes place in foreign countries, and this makes their products cheap which will give them more customers. The place where there is a big difference is in the inward logistics where Zara creates a lot of value, and H&M does not. As we have mentioned introductory Zara can send their new designs apace to their stores, and also call them back again.H&M can also do this, naturally, but for them it takes much longer time. But then Hennes & Mauritz are good at creating value in Sales & Marketing, where Zara is not so good in our opinion. H&M has huge stars like Madonna who wants to design clothes for them, this is very good promotion and it also creates a lot of attention. Zara, on the other hand doesnt even promote their products they are depending on good store locations as mentioned. 1 . http//www. marketingteacher. com/Lessons/lesson_fivefoces. htm