Zara is the Spanish clothing brand, founded by visionary Rosalia Mera and Amancio Ortego in the Artexio Galicia, in 1975. It is popular because of selling “INDITEX” which is one of the leading fashion retailer. It is currently operating in more than 86 countries and has more than 7000 outlets across the globe. Zara has very limited outlets worldwide, because of which, selective targeting approaches and strategies are used for making the product availability in market. As being a successful business, Zara also adopt some effective strategies for the expansion purpose, and hence uses the usage-based positioning approaches for highlighting the customer centric approaches in order to satisfy the customer needs with the changing fashion trend across the globe. It knows that the consumers want updated and new trends, and hence targets the consumers exclusively on the basis of designs, and creativity (Adam, 2018).
However, all of this is possible by analyzing effectively the company’s strategies, approaches, and future options through various matrices. BCG matrix is one of the most effective tool, which helps in analyzing the strategic position of different products in the product portfolio of the company. This deals in two main dimensions; market share and market growth. Here is the detailed BCG matrix analysis of Zara;
Cash Cows
The products in this category are the major source of the cash inflows in the organization. Such products are successful in creating the strong market hold and successfully develop the high level of market demand. Such strong position helped the company in enabling the products for becoming the major source of revenue for the entity. Trafaluc cloth range, Jeans, shoes and skirts are the cash cow of the Zara. In the most competitive market, Zara is able to make its own position by availing the share of 45%. The main competitors are H&M, Gap, Gucci, etc. Many people in various countries know Zara because of its apparel and accessories (Ketsadayurat, 2012).
Stars
These products help in generating the enough revenues for companies to be known as profitable, but still have a chance for expanding as having star products. The main reason of the future growth of star items is the scope of industry growth, and consequently support the high market share of such products. Fashion denim, Fashion jersey, and unique collection of bags and accessories of Zara are the star items. Zara TRF and Zara man are also the star items, with the estimated market share of 24% and 10%. Zara retain this position with the help of effective marketing strategies like product development, market penetration etc. (Bhasin, 2017).
Question Marks
In product portfolio, there are products that have the low profitability than star products and cash cow. Along with the weak financial position of such business units, it possess the potential for future growth, but still the situation is uncertain. If market conditions are stable and favorable, these products then are able to grab the large market share to become the star item. Pull & Bear, Bershka and Stradivarius are the question mark for Zara, which has 9.3%, 6.8% and 6% market share. Zara’s kid segment is also the cash cow for the company with 21% of market share (Adam, 2018).
Dogs
The products which are constantly underperforming, and consume more than generating return, are considered as dog items. For Zara, its maternity wear and underwear are categorized in this quadrant, as there are many competitors in the industry which are dominating the market, and Zara is unable to make the space for itself. Zara needs to invest more in this category to make it cash cow of the company, or should shut down its operations, so that funds could be used somewhere else (Ketsadayurat, 2012).
References
Adam, P. 2018. The strategic management analysis of Zara. [Online], Available at: http://www.academia.edu/5492552/The_Strategic_Management_Analysis_of_ZARA_Relative_to_the_Case_in_Developing_Countries_, [Accessed on: 26th August, 2018].
Bhasin, H. 2017. Marketing strategies of Zara. [Online], Available at: https://www.marketing91.com/marketing-strategy-zara/, [Accessed on: 26th August, 2018].
Ketsadayurat, S. 2012. Business strategy of Zara. [Online], Available at: https://issuu.com/sarutketsadayurat/docs/business_strategy_zara, [Accessed on: 26th August, 2018].
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