Comparison between Zara and Metersbonwe
This paper sought to compare a global company with a domestic Chinese company. The apparel giant, Zara, and the Chinese apparel company, Metersbonwe were chosen as the case studies for analysis. In the first part, the paper examined the market segmentation and target market for the two companies where it was found that both of them appealed to the middle and low-income earners. Using secondary and primary data, the researcher evaluated various aspects of the two companies marketing mix and strategic marketing options. In the third part, the paper highlights some ethical and social issues in marketing, with a view of recommending actions for Metersbonwe Company.
China is the world’s largest producer and market of all kinds of apparel, accessories and luxury products. Currently, more than 30% of clothes worn across the world are produced in China either by Chinese firms or international fashion companies (Oliveira, 2014). Some of the local producers of clothes in China include Anta, Belle and Metersbonwe, among others. On the other hand, top global fashion brands such as Nike, Louis Vuitton, GAP, Zara and Armani, among others have also localized production factories in China (Oliveira, 2014). The global trend towards producing in China is explained by the advantages of low production costs and huge Chinese market. However, Chinese brands have not permeated the world market as expected. This situation is attributed to poor brand marketing by the Chinese firms (Fung Business Intelligence Centre, 2014). In terms of revenue, Anta has grown to become one of the world’s largest fashion companies due to their intense focus on the Chinese market. Additionally, the 2014 apparel market research indicated that Metersbonwe had also entered the top 10 list of world’s largest apparel companies (Fung Business Intelligence Centre, 2014). Therefore, this paper focuses on the critical analysis of the differences in marketing strategies of a global brand (Zara) and a local Chinese brand (Metersbonwe).
Zara is one of the international brands that have permeated the Chinese market due to their business strategy that targets the low and middle income market segments (Dua, Liu and Huang, 2015). Zara is a Spanish based apparel company that was found in 1975 but has since grown to become a dominant force in the global market. With more than 30 factories and retail outlets in more than 60 countries across 5 continents, Zara has become a major player in the fashion market globally (Dua, Liu, & Huang, 2015). According to Dua, Liu and Huang (2015) Zara has also set a production plant in Shanghai, China in order to perfectly position for the Chinese market. Its products target mainly the middle class segment of the market.
On the other hand, Chinese firm Metersbonwe Group is said to bear the potential to become a dominant force in the world’s market in the next few years. The 2014 marketing report by marketing research firm Millward Brown Optimor showed that the Chinese firm was the 10th largest global apparel company (Fung Business Intelligence Centre, 2014). Metersbonwe Group was found in 1994 as a privately owned firm based in Shanghai (Fung Business Intelligence Centre, 2014). In less than 10 years, the firm had opened stores in most of the first tier, second tier and third tier cities in China. Today, the group has added to affordable leisure brands and sportswear, CH’IN (Fung Business Intelligence Centre, 2014). Their marketing strategy is to focus on the tastes of the low and middle income earning Chinese as they plan to enter the world market. According to Fung Business Intelligence Centre (2014), Metersbonwe is facing strong competition in the Chinese market from local apparel firms such as Anta and Belle as well as international companies such as Nike and Zara. The marketing strategies of Zara and Metersbonwe will be analyzed through a critical evaluation of secondary and primary sources of data.
The paper aims at developing marketing strategic options for the Chinese firm, Metersbonwe. Therefore, in the analysis of Zara and Metersbonwe’s marketing strategies, the it is first necessary to explore their market segmentation as well as their target market. Secondly, it is relevant to examine their marketing mix as well as ethical and social considerations. Lastly, recommendations out of the comparative analyses of the two firms on ways that Metersbonwe can improve their marketing strategy will be provided.
Marketing strategy is the most important part of a marketing plan (Kotler & Armstrong, 2006). Additionally, Kotler and Armstrong (2006) highlighted that a marketing strategy will determine the success of an organisation’s business idea or strategy. In this regard, marketing strategy can be described as a marketing mix that would propel the company to achieve its profitability and sustainability goals. Kotler, Keller and Lu (2014) explained a marketing mix as the description of the product offer by the firm. It is drawn not only from the quality and functionality of the product but from the way the firm develops its targeting, segmentation and positioning plan (Kotler & Armstrong, 2006). According to brand analysis, Zara and Metersbonwe position themselves as low-cost producers of high quality but affordable apparel.
Market Segmentation and Target Marketing of Zara and Metersbonwe Apparel Companies
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Market segmentation and targeting are the initial steps in the development of a good marketing strategy. According to Kotler and Armstrong (2006) market segmentation refers to dividing the market into small parts with similar features in order to effectively market a product (Kotler & Armstrong, 2006). These similar features can include geography or physical location, culture, language, economic status or income and technology, among others (Kotler & Armstrong, 2006). Zara is a global producer and distributer of apparel. It has significant presence in the North America, Europe, Asia and Australian market (Dua, Liu, & Huang, 2015). However, the company has also been exploiting growth opportunities in South America and Africa. The company segments its market in terms of income. Income segmentation implies dividing the market in terms of high income earners, middle income earners and low income earners. After this type of segmentation, Zara targets each specific market differently (Oliveira, 2014). This is achieved by offering a fashionable product that is affordable to every segment.
Metersbonwe is a local Chinese brand in the apparel industry (Fung Business Intelligence Centre, 2014). The company targets dominance in the entire Chinese market. The company recognizes the different demographic features of the Chinese market and segments their market in terms of needs of the customers (Kotler, Keller, & Lu, 2014). In this regard, Metersbonwe produces various kinds of products consisting of casual wear, sportswear and luxury wear, among others (Fung Business Intelligence Centre, 2014). Secondly, Fung Business Intelligence Centre (2014) noted that Metersbonwe also segmented their market in terms of age. In this type of segmentation, Metersbonwe had focused on the Chinese market for the youths. The rationale behind targeting the youth’s market was to take advantage of their need for high class fashion brands, which can be unaffordable to them (Fung Business Intelligence Centre, 2014). Metersbonwe intervenes in this market by offering these top class fashion products at an affordable price (Waldmeir, 2012). Waldmeir (2012) highlighted that Metersbonwe also used visibility strategy in reaching their target markets. In other words, the company intends to make its presence be felt by the entire market by opening stores across all parts of China.
Customer satisfaction is an important indicator of the effectiveness of the marketing strategy (Kotler & Armstrong, 2006). In this regard, quality customer service has been identified as an important feature of both Zara and Metersbonwe’s marketing strategies. Zara’s customer relationship management strategy allows the company to receive feedback from customers on time and with a large network of production plants, Zara is able to respond promptly to these needs (Dua, Liu, & Huang, 2015). Furthermore, customers’ data helps Zara in developing their supplying chain and enhancing their plants and distribution channels, but most importantly, it assists the firm to refine and redefine its market segments. In the case of Metersbonwe, customer needs is one source of market segmentation (Dua, Liu, & Huang, 2015). Consequently, customers’ feedback is very crucial in the development of products that meet the needs of the customers (Fung Business Intelligence Centre, 2014). Through their huge network of stores across China, the company receives customers’ feedback, analyzes the feedback and hence develops products according to the customers’ specifications.
Marketing mix can be defined as a marketing tool used in the development of a marketing strategy for a firm or a product (Constantinides, 2006). This tool describes the product the firm is offering. According to Kotler and Armstrong (2006), a marketing mix is usually described in terms of the 4Ps of marketing, which include price, product, promotion, and place. In addition, Constantinides (2006) argues that a marketing mix is only effective if it assists the marketers to describe or define various marketing elements, which could help in market positioning. Furthermore, an effective marketing mix should not only lead to the realization of the business objective but also to customers’ satisfaction (Kotler and Armstrong, 2006). In this regard, the 4 Ps of marketing are used to explore the marketing options of the firm in terms of the product they offer, place, price, and promotional activities. Therefore, Zara’s and Metersbonwe’s marketing mix are highlighted below.
Zara’s Marketing Mix
As a global player, Zara faces huge competition in the global and Chinese market. Some of the major competitors of Zara include Nike, Louis Vuitton, and Armani, among others. Thus, market positioning is very important in adoption of a marketing mix strategy (Kotler & Armstrong, 2006). In order to position ahead of their competitors in the global market, the Spanish apparel producer and distributor must introduce a perfect marketing mix for their brands (Dua, Liu, & Huang, 2015). Thus, the firm relies on their strong network of stores to advertise their product offer. In this type of strategy, the clothes are allowed to advertise themselves. Additionally, the stores are painted with Zara, which is a logo that communicates quality and fairness in pricing. The marketers at Zara believe that strong and positive brand recognition is one step towards the success of a marketing strategy (Oliveira, 2014). In regard to the company’s continued growth and competitiveness, the management has highlighted that creativity and innovativeness must be incorporated as parts of the firm’s marketing and competitive strategy (Oliveira, 2014). The company must continue to pride itself as the leader in distributing affordable and innovative fashion brands to the global market.
Product. Zara produces, distributes and sells such apparel products as clothes, shoes, cosmetics and accessories for men, children and women (Oliveira, 2014). The clothes and shoes offered by Zara include the official or formal wear for men and women as well as casual wear. Furthermore, Zara also produces various luxury brands for their luxury market. Zara accessories include watches, bracelets, among others (Dua, Liu, & Huang, 2015). Children market segment is another important target group that Zara has been exploring in the last few years. The company has created a range of various fashionable products for children (Oliveira, 2014). These products embrace several fashion categories including clothes and accessories.
Price. Price is another important feature of the market mix. Pricing depends on the target market and the cost of production. For Zara, their target market consists of middle and low-income earners while they focus on mass production that reduces their cost of production through economies of scale (Dua, Liu, & Huang, 2015). Furthermore, Zara offers fair prices for their products making them affordable to the majority of members of the society. According to Oliveira (2014), Zara prices embrace all income groups. They ensure that the prices they attach to their clothes, accessories, cosmetics, and shoes are affordable and appealing to the lower cadre earners as well.
Place. Place refers to the physical locations where customers or consumers of the product can find it. According to analysis, Zara is one of the apparel companies that have embraced the visibility tactic in their market (Oliveira, 2014). This tactic laid emphasis on wide coverage and a huge presence in many places across the world. Zara draws much of its success to this strategy. For instance, Zara is currently present in more than 60 countries with more than 600 self-operated commercial stores across these countries (Dua, Liu, & Huang, 2015). In China, Zara has a production factory in Shanghai as well as more than 10 stores across the major cities.
Promotion. The main tool of promotion for Zara is the brand that has been made to be available across most of their markets (Oliveira, 2014). However, the company uses advertising in marketing products. Since the company mainly appeals to young customers, it has maximized its promotion campaigns across various digital media platforms. These internet based marketing opportunities include e-commerce, social media, and online shops (Oliveira, 2014).
Zara’s Core Strategic Options out of the Marketing Mix
Out of their marketing mix, Zara has adopted various marketing strategic options in order to ensure that the brand remains competitive across the various segments. These strategic options include market penetration, market development, differentiation and product diversification (Constantinides, 2006). Market penetration is the marketing strategy used by the firm to find and explore new markets. Additionally, Zara has entered new product fields, which also contribute to the huge proportion of their revenues. These new products include cosmetics, accessories and increased focus on children’s fashion. Lastly, Zara has developed new markets mostly in the emerging economies in order to gain a foothold ahead of other international competitors (Dua, Liu, & Huang, 2015). The emerging markets that Zara has invested in include India, China, Mexico and Indonesia, among others.
Metersbonwe Marketing Mix
The business strategy of Metersbonwe and Zara are pretty similar although they operate in different spheres. Thus, Zara is a global brand while Metersbonwe is a major domestic Chinese apparel company. Dai and Zhang (2010) outlined that Metersbonwe has also used the strategy of visibility to exploit marketing opportunities in all segments of the Chinese market as illustrated by their marketing mix below.
Product. Metersbonwe products include such categories as casual wear, luxury wear, and sportswear. The company produces and distributes casual wear for men, women and children across various Chinese market segments (Dai & Zhang, 2010). Since the international luxury apparel brands such as Louis Vuitton, and Armani are relatively expensive to the Chinese buyer, the company produces cheaper versions of luxury wears. Additionally, their sportswear brand, CH’IN, has seen tremendous success over the past few years (Dai & Zhang, 2010).
Price. According to Dai and Zhang (2010), Metersbonwe is seen by most Chinese buyers as a cheaper version to the expensive international brands. A marketing analysis showed that most customers were attached to the Metersbonwe since they are of high quality and cheap (Waldmeir, 2012).
Place. Metersbonwe operates in the local Chinese market for apparel. The company started with stores in the Chinese first-tier cities of Shanghai and Beijing, among others (Dai & Zhang, 2010). However, the company has grown to cover other markets including the second and third tier cities and towns of China. Today, the firm has more than 200 retail stores across various parts of China.
Promotion. Apparel stores in China use the distribution channels as part of their promotion mix. These channels include the department stores and the specialty stores. Metersbonwe has recently adopted online retailing as part of their sales and marketing tools. According to Dai and Zhang (2010), Metersbonwe also uses advertising and online marketing tools to promote their products.
Strategic Marketing Options out of Metersbonwe Marketing Mix
Metersbonwe has pursued various strategic marketing options in their rise to become one of the leading Chinese producers of apparel. Metersbonwe has penetrated the Chinese apparel by opening stores with affordable fashion products across various parts of China. Additionally, the company has also diversified into sportswear and their brand, CH’IN has been performing particularly well in the market (Dai & Zhang, 2010). Lastly, the firm continues to explore other segments of the Chinese market, which are still raw.
Social and Ethical Considerations
A good marketing strategy should be able to help the firm meet its performance goals. However, managers and marketers should ensure that these marketing strategies are delivered in an ethical and socially responsible manner (Parıltı, Demirgüneş, & Özsaçmacı, 2015). In general, ethics can be explained as the ability of an individual to determine and do what is right. Thus, in the business world, there are rules, legislations and regulations established to help a marketer determine what is ethical (Al-Nuemat, 2012). Other scholars define ethics as an inquiry into the nature of morality (Al-Nuemat, 2012). That is, ethics is able to examine various judgements, standards and rules of conduct in such a way that they do not impact negatively the consumers or other stakeholders. Al-Nuemat (2012) highlighted that ethical marketing can be defined as the marketing practices that focus on the trustworthiness, transparency and competence of the marketing tools used. In this regard, marketing tools or techniques should exhibit fairness and integrity to all stakeholders within and without the firm.
Ethical marketing is influenced by several factors within the company and outside the company:
- First, the marketers must consider the expectations of the society, culture, and social norms when designing and implementing a marketing strategy (Parıltı, Demirgüneş, and Özsaçmacı, 2015). These expectations define what is morally wrong with that society; thus, contrary actions may be assumed to comprise unethical practice.
- Second, the business or organization culture determines how it relates with other stakeholders such as buyers, sellers and competitors.
- Third, employees’ commitment and top management support is crucial in developing and implementing a successful ethical marketing strategy (Parıltı, Demirgüneş, and Özsaçmacı, 2015).
- Lastly, since personal values and characters differ from one individual to another, employees should always uphold a professional conduct in accordance with the corporate social responsibility.
Marketing ethics also includes the corporate social responsibility strategies. These refer to the activities that the firm undertakes to enhance their social value (Al-Nuemat, 2012). These activities may serve as a marketing tool for the firm since they endear the firm to the community that includes the consumers of their product. A company can be socially responsible by adopting production technologies, which are efficient, using natural resources responsibly, caring for the environment, among other activities (Parıltı, Demirgüneş, and Özsaçmacı, 2015). In this sense, corporate social responsibility can be associated with a social contract between the society and the business. The concept of a social contract implies that institutions and people should always have certain generally accepted policies, practices and duties towards one another. Thus, these policies are integrated into the day to day running of the business, decision making as well as the firm’s responsibility towards the future generations.
A marketing activity, practice or technique can be considered unethical as a result of the mismatch between the individual and the company’s values and norms (Al-Nuemat, 2012). For instance, it is unethical for the company not to fully disclose the details of the products including both positive and negative effects (Parıltı, Demirgüneş, and Özsaçmacı, 2015). Furthermore, the company should not descend into the use of wrong information in order to gain a competitive advantage in the industry. For example, the marketers should not resort to wrong statistics, false publicity or biased situations in order to gain an advantage over its competitors. In this sense, the marketing strategy should not deceive or mislead customers as these may move the customers into buying a wrong product.
Unfair pricing is another unethical issue that can be used by marketers to persuade customers. According to fair practice in business, pricing of a product should follow certain techniques (Al-Nuemat, 2012). For example, the price of a piece of cloth should be equal to the benefit the consumer will get from wearing the cloth. Research on most consumers of apparel products showed that most of the consumers believed that prices charged by most companies were unfair or excessive (Parıltı, Demirgüneş, and Özsaçmacı, 2015). In this regard, fair pricing is an important ethical issue that must be considered by marketers. Misleading prices reductions and some other forms of price advertisements such as predatory pricing and discriminatory pricing are also considered to be unethical. Price increase or decrease should be motivated by certain factors such as the cost of production, among others. It will be unethical to use price reduction techniques to drive competitors out of the market.
Customer care is another important ethical issue that must be considered by marketers. The aim of customer care is to ensure customer satisfaction (Al-Nuemat, 2012). Furthermore, customer care represents the image that the firm wants to show to their customers. This unit is also tasked with handling of complaints from customers as well as offering after sales services to them. Therefore, in an ethical and socially responsible firm, the customer care representatives should act in a polite, courteous and confidential manner while dealing with customers (Al-Nuemat, 2012). They should also ensure that the information they provide is correct and not misleading. Lastly, they should be proactive in problem-solving.
Corporate code of ethics and internal guidelines within the firm play a vital role in ensuring that the firm acts in an ethical manner (Al-Nuemat, 2012). That is, through full enforcement of the rules and acting with impartiality in regard to employees, a firm will be able to enforce ethical behaviour. Additionally, breaching the code of conduct should attract reasonable deterrent punishment on the offender. In some cases, firms have offered rewards to those stakeholders or employees who uphold ethical ways of delivering tasks. This can help to motivate employees to follow the code of conduct. In addition, moral values must be emphasized if social values are to be maintained (Parıltı, Demirgüneş, and Özsaçmacı, 2015). If the society’s moral values are weak, it will be difficult to enforce a strong ethical code of conduct within the firm. Therefore, managers should consider the moral backgrounds of the employees before hiring.
Recommendations to Metersbonwe Apparel Company
The case study of Zara and Metersbonwe highlighted three key issues or points of deviation between the two companies despite having a similar business strategy. These issues include brand development, product diversification, and market development. These issues are critical if Metersbonwe is to enter and succeed in the global market. In this regard, the paper recommends the following:
Brand Development. The problem with most of the Chinese companies consists in brand development. These companies still rely on traditional strategies in marketing that have been proven to be ineffective in the global market. In this regard, Metersbonwe should reevaluate them and identify their strategic position in the market. Currently, the firm is indulging in both the luxury market and the mass market, which makes it difficult to target the global market. They should focus on their most successful brand and not aim at satisfying all the market segments.
In Zara’s business strategy, the aim is to offer better alternatives to premium brands in the middle and low-income markets. Metersbonwe should also refine their strategy along a specific line.
Product Diversification. One of the advantages of focus strategy of Metersbonwe is the fact that it allows the firm to become more efficient and competitive. However, this strategy has not been proven to be effective in the middle or low-income market segments. That is, the company cannot be able to use premium pricing to gain enough revenues to support innovations for product improvements. In this market, mass production is the key to generating enough revenues. Thus, the company should adopt a strategy of developing varying lines of products so as to respond to various customer needs within their segment. Despite the fact that the customers may be within the same income brackets, the firm should not assume that their tastes are also similar. In this regard, the company should aim at satisfying the customers’ individual needs not general ones.
Market Development. The last recommendation is related to Metersbonwe’s vision of becoming a major global player in the fashion industry. Having explored different segments of the Chinese market, the company should embark on the market research to explore new markets starting with those of similar demographic features as the Chinese market. Such markets will include opportunities in the South East Asia, Australia, and India before delving onto different continents.
E-marketing. E-marketing is another strategy that can be used by Metersbonwe company to attract and reach out to diverse customer groups. The company can use their website as an online shop by availing e-commerce tools to their customers. This is a modest way of targeting those customers who do not like travelling to the stores.
This paper analyzed the marketing strategies of Zara and Metersbonwe apparel companies. Despite some similarities in their strategies, Zara was far much successful than Metersbonwe. Zara had grown to become a global brand for most of the middle class market segments across Europe, Asia and North America. On the other hand, Metersbonwe was still wading through stiff competition with other Chinese as well as international brands. The marketing mix of the two companies also showed differences in their product, place and promotion strategies though pricing was relatively similar. Furthermore, Zara used market penetration, market development and product diversification strategies to improve their market reach. However, Metersbonwe had used a focus strategy on few brands. As the result of this analysis, four recommendations for Metersbonwe were introduced. First, the firm should reposition to enhance their brand appeal. Second, the firm should diversify into other products. Additionally, the firm should explore the e-commerce opportunities to attract more customers, and lastly, the firm should explore new markets for their products.