Table of ContentsZara StoryMission, Vision, GoalsSpecific Target MarketSegmentationTargetingPositioningManufacturing Strategy AnalysisZara Manufacturing ApproachStrengths of Zara Manufacturing StrategyVertical IntegrationSmall Batch ManufacturingExcess Capacity AgilityUse of Big Data and Advanced Technologies:Weaknesses in Zara's Manufacturing Strategy:ChallengesInternet of ThingsAutomation, Change and RoboticsCybersecurityChanging Customer BehaviorConclusion:References:The Story of ZaraZara, the world's largest fashion store, has was founded by Amancio Ortega in La Coruña, Spain in 1975 (Inditex, nd). It is the most profitable brand of its parent company, Inditex Group, and has several departments such as Zara Women, Zara Man and Zara Kids. Zara is one of the 500 largest multi-channel retailers in Europe according to the “Internet Retailing Europe Top500 (IREU 500) study 2017” (Jindal I., 2017). Additionally, the Zara brand has over 2,200 stores worldwide in 96 markets as of 2018 (Forbes, 2018), and plans to expand its online presence to an additional 106 countries worldwide (Dowsett S., 2018) . Say no to plagiarism. . Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get the original essayMission, Vision, GoalsZara has an elegant perception of quality and authenticity. According to Inditex, the Zara brand has remained faithful over the years to its beliefs and values ​​expressed by the four key words: beauty, clarity, functionality and sustainability (Inditex, nd). Zara has a strong vision while respecting the environment and the development of society through its economic model. In addition, it aims to build an excellent relationship with its customers based on trust and loyalty and to improve customer service through unique and responsible clothing. The creators of the Zara brand place customer satisfaction at the top of their priorities and instinctively respond to the changing needs of the public. Additionally, Zara responds intelligently to the latest trends and continually improves the quality of its collections through innovative design ideas and affordable products (Inditex, n.d.). Specific Target MarketFor this report, I have chosen to analyze the Zara brand market in Spain based on segmentation. – Targeting Theory – Positioning (STP) by Philip Kotler.SegmentationThe segmentation method aims to identify groups of customers with similar needs and characteristics. There are four segmentation variables that can identify the different segments of the Zara market in Spain. Firstly, according to the demographic variable, Zara's segmentation is based on people aged 18 to 40 with average income. According to Statista, 65.88 percent of the Spanish population in 2017 was in the age group between 15 and 64 (Statista, 2018). Additionally, Zara's demographic segmentation includes people interested in fashion trends, working in big cities, and pursuing higher education. According to a consumer study carried out by Mintel, Spaniards are interested in sustainable fashion and clothing retailers. They are conservative and prefer known products to new products (Trade Portal, 2018). Additionally, Zara has no gender specification while it has three different departments of Zara women, Zara Man and Zara Kids. Second, it uses geographic segmentation based on region. According to Appendix 1, Zara had 306 stores in Spain in different cities in 2018. Third, Zara uses psychographic segmentation and targets appearance-conscious people, who tend to have choicesmore trendy clothing and those looking for quality. Spanish customers have a very modern vision and quality is the most important factor for them.TargetingAccording to appendix 2, Zara occupies the first position in the BrandZ Top 10 most valued Spanish brands survey in 2017 with a value of mark of 25,135 million dollars (WPP, 2017). Additionally, Spanish customers visit Zara stores 17 times a year on average, compared to 3 times a year for competitors. Because their clothing designs change often, it is more difficult for people to see them clearly on the Internet and so they are encouraged to come to stores and try the unique fashions offered by Zara. PositioningZara's competitors in Spain are Mango, Stradivarius, Bimba and Lola, Desigual, Pull&Bear, Adolfo Dominguez and Oysho. Zara has a deep understanding of the entire value proposition that it exchanges with its customers. Its fast-fashion deliverable is available in the quantity, format and time frame in which the customer needs the product. This translates into great value (Danziger P., 2018). Manufacturing Strategy Analysis Zara's Manufacturing Approach Zara has its global headquarters in Arteixo, a small town located in northern Spain. Its 860,000 square foot campus is home to 10 different factories, which produce Zara's most cutting-edge clothing, as shown in Exhibit 1. These factories are connected to the distribution center by a network of secret underground tunnels that transport clothing on electric wardrobes. However, all manufactured items will return to one of its distribution centers to be sent to stores, as shown in Exhibit 1. Zara is a leader in the retail market, due to the innovative technology strategy it uses for the manufacture of its products. products. The multi-channel retailer adapts new tools such as big data that contribute to a successful manufacturing strategy (Aller MG, 2017). In-depth data analysis helps Zara determine the average weight of people in different stores. Zara uses this information to determine which sizes to make for each gender, city or neighborhood. For example, each product is tagged with an RFID chip before it leaves the factory, allowing the company to track the product until a customer buys it. According to Ravneet Uberoi, “data on the sale of each SKU (stock keeping unit), the inventory levels in each store and the speed at which a particular SKU moves from the shelf to the point of sale is sent in real time. at the Inditex central data processing center” (Ravneet Uberoi, 2017). Zara's successful manufacturing strategy allows, through innovative technology, to stay up to date with user experience and needs. This way, the multichannel retailer stays informed in real time and controls both its physical locations and its online stores. Highlights of Zara's Manufacturing Strategy Zara's manufacturing approach has various strengths that help the company have a competitive advantage.Vertical IntegrationFirst of all, Zara uses vertical integration and it is a key strategy for its rapid product introduction cycles. The company makes the majority of its products “in house,” compared to other traditional fast fashion companies that produce their clothing outsourced. Additionally, most of Zara's factories are located around its main manufacturing facilities in Spain, which also helps speed up its product cycles (Gorrepati K., 2016). Small-Batch Manufacturing Second, Zara manufactures its products in small batches to support just-in-time capabilities. Consequently, thisreduces waste from large design batches. Additionally, Zara focuses on high product variability and wins. The multi-channel retailer makes 11,000 distinct items per year, while its competitors offer between 2,000 and 4,000 in stores, so this is a strong point for Zara. Thus, Zara's manufacturing strategy has the advantage of low opportunity cost because its customers do not lose interest and seek new designs from competitors. According to a SCM Globe case study, Spanish customers visit Zara stores an average of 17 times a year, compared to 3 times a year for competitors (SCM Globe, 2015). In this way, Zara wins the “brick” game. Excessive capacity for agility. Additionally, another strength of Zara is her excessive agility ability. The company's factories in Spain have the flexibility to respond quickly to unexpected demand. They also have additional capacity to be able to cope with changing demand. For example, it typically operates 4.5 days a week, 24 hours a day, at full capacity, allowing flexibility for additional shifts and temporary labor that can be added when needed (Gorrepati K., 2016). Use of Big Data and Advanced Technologies: Additionally, the use of Big Data and advanced technologies helps Zara save on inventory, personalize customer experience, and achieve more efficient manufacturing. For example, the Zara store on Paseo de la Castellana has a large stock of suits and shirts because it is located in the neighborhood, while its Gran Via store offers more knitwear for women aged 20 to 40. Zara understands the special demand of each neighborhood. and knows how to satisfy him. The company is in close touch with the customer's needs and offers a practically personalized user experience. Weaknesses of Zara's Manufacturing Strategy: However, Zara's manufacturing strategy has a significant weakness. The main part of Zara's manufacturing system is located in Spain, close to its heartland. This centralized system can make the business more prone to unforeseen problems. For example, if any technological problem appears in the distribution network, it will affect the entire manufacturing system, because Zara controls production, manufacturing and distribution from one perspective. Challenges As the technological environment is changing rapidly, Zara must do facing challenges regarding its manufacturing strategy in order to remain innovative in the face of competition. Internet of Things The first technological challenge for Zara's manufacturing approach is the adoption of the "Internet of Things." According to a study by I-Scoop, “‘IoT’ is an umbrella term for a wide range of underlying technologies and services, which depend on use cases and are in turn part of a technology ecosystem broader which includes related technologies such as AR, cloud computing, big data, digital twin simulation, etc. This technology is vital to the manufacturing approach since, through smart objects, IoT can provide crucial data for inventory and can help companies reduce costs, improve efficiency and manage their machines (Intel , nd). Zara is already using some “IoT” technology such as RFID tags and Big Data, as it analyzes above. However, this is not enough as the fast-paced technological environment and digitalization of the world have made things more complicated. Zara needs to find new ways to use “IoT”, especially in more depth, to accelerate its approach to manufacturing. According to the McKinsey Global Institute, the total valueof IoT technology globally in 2025 could reach $6.2 trillion, and most of this value comes from the manufacturing sector ($2.3 trillion) (Bughin J., 2015). So we can say that the competition is huge for Zara, regarding the use of IoT in the manufacturing approach. The multi-channel retailer must adopt these Big Data technologies in order to remain innovative and maintain its fast fashion supply chain in a world where it moves faster than light. Automation and Robotics ShiftOne of the latest innovations in multi-channel retailing that Zara is facing is the automation and robotics shift. Undeniably, technology is advancing and demand is increasing. Manufacturers are under more pressure than ever to fulfill large orders and deliver goods. Efficiency has never been more important, which is why many are turning to modern robotics and automation in order to improve production rates. Cybersecurity One of the major manufacturing challenges Zara faces is data security, specifically cybersecurity. The digital age and technological advancements increase the risk of cybercrime. A report from the EEF and AIG, held by the Royal United Services Institute (RUSI), shows that 48% of manufacturers who participated in the survey had at one time or another been the victim of a security incident. cybersecurity, half of which. As a result, it suffered financial losses or business disruptions, as shown in Annex 4 (EEF, 2018). The challenge for Zara's manufacturing strategy is to protect its supply chain and manufacturing data with cybersecurity systems. Changing Customer Behavior However, the world is transforming every day with the advanced development of technology. As a result, customer behavior is evolving at a rapid pace, alongside the online world. According to Telefonica, “digitalization has had an impact on consumer habits, completely transforming them, especially when comparing offline and online user experiences.” The biggest challenge for Zara is to control both the “bricks and clicks” choices of a Spanish customer and meet their needs through a smart manufacturing strategy. Keep in mind: this is just a sample. Get a personalized paper from our expert now. authors.Get a Custom EssayConclusion: Overall, Zara's manufacturing strategy in Spain has a strong profile and many strengths that make it competitive. But Zara's heartland in Spain must implement new methods of manufacturing its products in order to maintain its competitive advantage. Available at: https://www.ie.edu/corporate-relations/insights/zara-technology-and-user-experience-as-drivers-of-business/ [Accessed: January 14, 2019] Bughin J. (2015) Executive's Guide to the Internet of Things | McKinsey. Available at: https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/an-executives-guide-to-the-internet-of-things (Accessed January 11, 2019). Danziger P (2018) Why Zara succeeds: It focuses on attracting people, not pushing out products. Available at: https://www.forbes.com/sites/pamdanziger/2018/04/23/zaras-difference-pull-people-in-not-push-product-out/#615e540323cb (Accessed: January 14, 2019) .Dowsett S. (2018) Zara launches online sales in 106 new countries - Business Insider. Available at: https://www.businessinsider.com/r-zara-launches-online-sales-in-106-new-countries-2018-11?r=US&IR=T (Accessed January 9, 2019).EEF ( 2018) Cybersecurity for the manufacturing sector | EEF. Available on:. 2019).