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June 24, 2014

Corporate Strategy of Zara High Street

Zara High Street plans to focus on differentiation strategy for marketing of their designer’s clothes. Due to its differentiation strategy it will gain good capacity to fight against competitors especially those with undifferentiated strategy. However, the disadvantage of the strategy is that the costs of production and communication are very high because there are a large number of products. However, cost is not important for Zara High Street’s target customers. The concept of positioning stems from the fact that consumers always have a certain perception of the products and brands on the market. This concept also applies to retail outlets. Positioning the company to identify the product or brand in the consumer's mind, clearly indicating its difference over competitors. This is the place of the brand or outlet in the consumer's mind that he is clearly different from its competitors and meets the expectations of the target. Thus in other words, positioning and differentiation of product is the same concept.
Zara High Street plans to introduce their new products at relatively low cost to attract persons of slightly lower income group as well. The price would cover all marginal or incremental costs- that is, those costs specifically incurred to get the added business. In the long run, however, all overhead costs must be covered as well (Haynes, 1962). Consumers typically choose products and services that give them the greatest value.
Product Life Cycle
Zara High Street has to adopt different marketing strategies at different phases of its new designer’s cloths’ life cycle. At the initiation phase, the first customers are pioneers, and competition is sluggish. The costs involved in the launch (business expenses, technological, marketing) are often higher than the benefits obtained. So at this phase, Zara High Street will spend more on promotion to inform the consumer, the incentive to buy the designer’s dresses and ensure distribution of it in as many outlets. The more a product is distributed, the more visible by the consumer and therefore will be better results in its launch phase.
Growth phase is characterized by growth in sales of the designer’s dresses with a favorable word of mouth that brings new customers. New competitors also come on the market, attracted by the possibilities for development (which may even be beneficial to the product). During this phase, Zara High Street must try to support growth as long as possible by improving the quality of the product, expanding its range to reach more customers, increasing distribution, continuing communication campaigns, lowering gradually low prices (Anderson & Narus, 2004).
At maturity phase, the new designer’s dresses of Zara High Street will experience a slower pace of sales. However, the competition is more intense than in previous stages and it is feasible for Zara High Street to reduce its price further. At the same time, Zara High Street would also try to expand its market by entering new segments; change the product by adding new features to boost sales and improve its quality by changing its style.
Many products and brands are experiencing a decline phase characterized by a collapse in sales. This phase can be more or less rapid. Zara High Street at that time may decide to withdraw the designer’s dresses from the market or keep it in the market. The marketing manager must make to boost sales of the product. For this, it must invest to upgrade the product, and seek to retain more customers.
In order to cater most of its target customers the marketing plan has to be unique (Dwyer & Tanner, 2006). Zara High Street plans to use “super modelquins”, which are the group of Zara High Street’s mannequins. They  are utilized in all of the advertisements, commercials on TV, online videos, ads on the websites, or in print media.  With the help of these accounts the super modelquins can communicate with each other and create a type of drama and can interact with the fans and followers as well.


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