zaras marketing plan to expand to vietnam

When targeting Vietnam''''s fashion market, Zara Vietnam belongs to the franchise chain of Mitra Adiperkasa Indonesia in Vietnam.. Besides Mitra Adiperkasa Vietnam to do business in Zara, M

Principles of Marketing

Semester 01-2020

ZARA’s Marketing Plan to Expand to Vietnam

Submitted by:

Thân Vũ Quỳnh Hương - BAFNIU19091

Nguyễn Hồng Phương Uyên - BABAIU19370

Đặng Ngô Lam Thanh - BABAIU19316

Trần Ngọc Dan Tuyên - BABAUH19050

Lecture:

Trần Tiên Khoa

Vietnam Market analysis

© Demographics and Other Economic Indicators (e.g Population, GDP,

of the globe's huge fashion retailers operating in the field of business and management including many of the world famous brands such as Pull&Bear, Stradivarius, Oyshyo, Zara was established in 1975 by Amancio Ortega and Rosalia Mera in

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Galicia city, Spain With the starting point as a small boutique, Zara today has a presence in every country and becomes the world's fastest development fashion brand

In 2018, Zara was ranked 25th in the Best Global Brands ranking developed by the marketing consultancy firm Interbrand And in 2020, it was ranked 35th in the Best Global Brands ranking and reached 14,862 million dollar of the brand value When targeting Vietnam's fashion market, Zara Vietnam belongs to the franchise chain of Mitra Adiperkasa (Indonesia) in Vietnam The Zara stores in Vietnam are operated by Mitra Adiperkasa (MAP), a partner of Inditex in Indonesia Besides Mitra Adiperkasa Vietnam to do business in Zara, MAP also established three other legal entities to trade brands such as Pull & Bear, Stradivarius, Massimo Dutti in Vietnam

Zara's Vision Statement

"To attain market leadership through unmatched quality, a diverse and unique product mix, empowered employees, world-class systems, and the highest ethical and professional standards."

Zara's Mission Statement

"ZARA Textile is devoted to achieve consistent improvement in the system of providing products & services to the customers through On Time Delivery & Enhancing Customers Satisfaction by means of Quality and Value."

Zara's objectives

To be an eco-friendly brand Entirely abolishing the use of plastic in production " [We] are highly focused on making clothes in a responsible, sustainable way, that limits the impact on the environment and [which] challenges ourselves to continually work as hard as we can to improve how we manufacture,” said Marta Ortega With the advantage of the speed of product creation is very fast, making its products always "on trend" (fast catching fashion trends) Customers who come to Zara always have the mentality to experience the latest trends, the latest collections with the latest designs This is one of the reasons why, although only appearing in Vietnam, Zara quickly proved its attractiveness to Vietnamese consumers when the 3-year revenue reached more than 3,000 billion VND According to Zara Vietnam's financial statements, In 2017, the revenue of the entire Mitra Adiperkasa system in Vietnam has hit the roof to more than 1,100 billion VND (data published by this group) Before that, at the end of 2016 with a business period of less than 4 months, Zara Vietnam recorded revenue of 321 billion VND, equivalent to average daily revenue of 2.8 billion VND and profit before tax of 38 billion VND according to the Vietnam

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Industry Research and Consulting JSC (VIRAC) In total 3 years on the Vietnamese market, Zara earned nearly 3,100 billion VND, with an average annual gross profit margin of about 40%, nearly equal corresponding to the brand name IPP Group of Mr Jonathan Hanh Nguyen and other large luxury retailers such as Tam Son Fashion

(Hermes, Bottega Veneta, Boss .) of OpenAsia Group or MaiSon International Retail (Mango, Topshop Topman, Charles & Keith .)

SWOT Analysis:

® Stylish and high quality designs are @ Unavailable stock product

available at a feasible price @ Weak presence in USA and Asia There are

@ Able to control distribution channels to few stores in Malaysia, Thailand and India capture added value instead of giving to whereas this area makes up 38% of the

@ Actively diversify and promote ZARA stores in India is just 20 (Jan,

@ Zara has a dense coverage with thousands Newzealand has just one store

of stores covering internationally ® Diluted brands because of lacking

® Quick product refreshment While rival specialties and highlights in products brands produced 2000-4000 models per @® Minimum spending in marketing and year, Zara produces approximately 11000 promotion Zara is largely dependent on models in a year It just takes about 2-3 the word-of-mouth marketing (WOM) or weeks for a new design to be ready on social media However, social media is

@ Spend a large amount of budget in prime interaction between the brand and locations in luxurious shopping malls consumers

With the evident of two prime locations @ Inefficient in management In Vietnam, and large scale of Zara in two Vincom some customers said that they feel Shopping Centre in Vietnam uncomfortable when the process of fitting

@® With the vertically integrated supply and payment takes too much time chain, Zara can export 24/24 This vertical | @ Unprofessional employees The lack of integration allows Zara to retain control of employee's flexibility makes it difficult for stitches such as fabric dyeing and the customers to find the outfits they want ability to process fabric on demand to ® Distributing clothing inappropriate to the

deliver precise fabrics for new styles

according to customer preferences

weather and climax in Vietnam Zara displays lots of outfits for autumn and winter while the store is in Saigon

* Opportunities:

@ The demand for apparel in Vietnam has

increased, especially for fast fashion

@ Strengthen presence in fast-growing

markets

@ Increasingly invest in AJ, virtual reality to

bring better benefits and experiences to

customers

@ Focus more on marketing strategy in order

to increase sales and create more value for

customers

@ Attach special importance to E-

commerce Opening the online shop,

Vietnamese followers can shorten their

buying time through ordering online

* Threat:

@® Competition among the mid-range international brands such as H&M, GAP, Uniqlo, Prada as well as Vietnam-grown labels like Nem, Blue or Mango

@ Rise in raw materials and labor cost adversely impact Zara's revenue and long term profits

@ Difficult in accessing diverse consumer classes People who live in mountainous areas may find it difficult to buy Zara outfits due to geographic obstacles

Vietnam Market

I Market over view

Vietnam’s middle class population — currently at 10% — is believed to be the fastest growing in Southeast Asia The middle class earning USD 714 a month or more in

Vietnam will double to 33 million people, about a third of the population, between

2014 and 2020, according to Boston Consulting Group Meanwhile, market research firm Nielsen has estimated that the number of middle class Vietnamese will reach 44 million by 2020 and 95 million by 2030 As a result of this growth, consumers in

Saigon and Hanoi have witnessed the entrance of a plethora of foreign brands in just the last few years

Shopping customers by income Vietnam has a young population, and it’s the young professionals who are the major target for fashion brands Statista Global Consumer Survey stated that in 2020, over

70 percent of fashion consumers were between 18 and 45 years old Meanwhile, almost 50 percent of Vietnam’s population is under 35 years old

@ 15-24 years -34 years 35-44 years 45-54 year @ 55-64 years

into

Shopping customers by age

In Vietnam, there are increasing number of people who are keen on spending on fashion 7% of survey respondents spend more than 1,000,000 VND per month for fashion item and how they buy clothes are quite different from the average They care “design (23%)”, “quality (18%)’ and “brand (17%)” more than “‘cost (16%)” They also tend to buy at shopping mall or department store much more frequently than the average respondents The online shopping usage is different While only 41% have used online for buying fashion items (which are still high), the

ratio of these top fashion spenders who use online goes up to 76% They also tend to buy items overseas

Shopping malls are at the forefront of the modern retail battle Currently, there are

approximately 160 shopping malls in Vietnam, mostly located in major cities like Ho Chi Minh City, Hanoi, and Danang—cities which account for 22% of total nationwide retail sales In order to ensure the desired target market is reached, we need carefully select our locations in malls that pursue a similar demographic

In Vietnam, international brands account for 60% of the total fashion retail market, leaving Vietnamese fashion brands to fill the remaining 40% Retailers like Aeon and Lotte Mart are better locations for those other international and local brands as they cater to the middle class through affordably-priced clothing lines

Price: High quality with reasonable price Place: Over 70 branches across the country

Promotion:

clothes and accessories for every person who has a knack of wearing fashionable stuffs and look trendy They have all sorts

of categories for Men, women, kids and infants

Price: their main focus is on the higher earning and upper-middle earning category

of people

Place: Mango sells its products through its

(Aeon, Crescent Mall, ), and online stores

Promotion: Sale promotions seasonally

Price: H&M offers high quality clothes at a premium price

Place: H&M sells its products through its franchising partners (Aeon, Vincom, ), and online stores

Promotion:

TV advertisements; H&M comes with creative ads which focus on its latest innovative designs

+ YouTube: H&M has its own YouTube channel where it comes up with unique ad campaigns to engage with the customers

BÀI VIẾT & THẢO LUẬN Ï NGƯỜI THAM GIA THẢO LUẬN

Despite that, these statistics is the overview of the discussion from users in the

Internet about this brand, but it also reflect the potential customers for ZARA in the future

b/ Psychographic Segmentation

Fashion is developing in Vietnam, therefore, the awareness of Vietnamese about

fashion brand is also higher The appearances of fashion enthusiasts who willing to pay for a reasonable and unique design product

Image of larger customers came to ZARA in the Ist day its opening Also that, Vietnamese customers tend to prefer minimalist and not picky clothes but still have their own characteristics, they also value their own individuality and the fact that the way ZARA produced products hot combined the brand logo in is the advantage

Being good company in keep up with trends, ready to update and in accordance with surrounding circumstances

From the aged of 18-25 is students in universities and young employees

From the 35-45 is the people with stable careers and salaries

W/ Behavioral

ZARA's customers are also very fastidious customers in terms of product quality, ZARA has always grasped and ensures that all products are completely up to the standards for sale, in addition, on the website or at every store of ZARA, there is an exchange service and warranty

2/ Targeting

Ever since the intention of entering the fashion market in the other countries, ZARA has always wanted to open as many stores as possible The more stores that line in the pedestrian walkways, the more brand awamess increase (ZARA has more than 2000 stores in 80 different countries)

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4/ Positioning ( Differentiation)

The clothing market with the mid-range price segment is a quite tough market with challenges from other competitors When came in Vietnam, ZARA also “encounters” with strong competitors: H&M, Uniqlo- whose they met in other countries market To maintain and develop the brand’s position, ZARA firstly determined their

segmentation and all goals must be towards to demographic segmentation

Because of the competition of many products with similar characteristics, ZARA must

to enhance the fashionable and uniqueness side of each product, but not lose the mass production-featured clothing brands at mid-range price

Positioning map to compare the position of ZARA with two main competitors are

UNIOLO and H&M

Marketing Mix (4P Analysis)

4, Customers feedback receive from the store managers on the trends and make a design responded to customers and ZARA will consider creating a sense of scarcity and exclusiveness which is calling the customers back to the stores

5, Zara’s strategies like just-in-time manufacturing, delivery and sales, flexible structure, low inventory rule, quick response policy, and advanced information technology enable a quick response to customer’s changing demands

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b Price

Target price:

According to shopping behaviors of Vietnamese, Zara's pricing strategy focuses on the average shopper who wants the latest fashions at an affordable price Our products are priced to cater to price-conscious users who want the most recent but not at a premium The right pricing strategy helps us address the needs of a very large segment of users This type of pricing strategy has also helped to create a unique brand image and develop market share faster

1 Reduce total cost

Total cost is reduced by focusing on partner facilities to store products This helps eliminate the high fixed cost related to rent and warehouse operation expense We will restock the items in our stores through “Just in Time” system which will reduce the inventory carrying cost Moreover, minimizing communication and marketing expenses, focus on advertising on point of sale would be more effective as our brand are generally acknowledged

2 Markup pricing: After targeting our cost, we will add 20% of total cost as a profit margin

c Place

Zara is selling in 202 markets and has stores in 96 of them With totaling more than

7000 stores, Zara has stretched out its influence across the globe In addition to stores, Zara is also focusing on developing an E-commerce platform Zara is in attendance in over 30 countries including Vietnam Zara's first store in Vietnam spreads on two floors in the luxurious space of Vincom Centre, one of the most bustling shopping centres in Ho Chi Minh City The second store is located in Vincom Ba Trieu,which is considered as one of the largest Zara stores in Southeast Asia, nearly twice larger than the one in HCM City with 4500 square metres, 31 fitting rooms for women and 17 rooms for men

Zara does not conduct outsourcing Zara's parent company self-implements from design, production to distribution in order to produce the best quality product More than 50% of Zara products are made at the factory in La Coruna, Spain

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