MBA7003 Marketing
MBA7003 Marketing
Introduction
New product development techniques help businesses to create new value to customers while increasing business opportunities to expand the target customer base. This report has focused on developing a new product of “Summer 100% Cotton Dress” for Zara to attract customers in UK market. It has included a critical analysis of macro environmental elements through PESTLE analysis helps in identifying business environmental trends and identification of major challenges faced by Zara to operate in UK market. Application of Ansoff’s Matrix would be beneficial for developing new products such as “Summer 100% Cotton Dress” catered to customer needs in UK. Integration of STP analysis for segmentation, targeting and positioning along with long term organisational direction would be essential for Zara for developing an effective product of 100% cotton dress for UK customers.
Macro-environmental analysis
PESTLE analysis
| Factors | Elements | Impact |
| Political | ● UK political system has developed a multiple-party and democratic nature in creating a political business environment.
● Increasing prevalence of corruption challenges in UK has been increasing issues of decreasing national reputation of stable and effective political systems.
● UK has the lowest ever scope and ranked at 18 in Corruption perception index in 2023 (Transparency, 2023). |
Medium |
| Economic | ● GDP growth rate in UK has been estimated at 0.5% in 2023 and expected to grow at 0.7% in 2024 (Commons Library parliament, 2023).
● Inflation rate in UK was highest in 2022 at 11.1% and decreased to 4.6% in October, 2023 (Statista, 2023). ● As of 2022, apparel market in UK has a market value of 58.5 billion British pounds which is projected to be valued at 75 billion British pounds by 2026 (Statista, 2023). ● Apparel and fashion industry in UK was expected to grow by 3.56% in between 2023 and 2027 (Statista, 2023). |
Medium |
| Socio-cultural | ● UK population has reached at 67.73 million in 2023 (Worldometers, 2023).
● Eco-conscious customers in UK have been increasing demand for sustainable fashion products to benefit businesses to improve sales and profitability (Mckinsey, 2022). ● Around one quarter of fashion and apparel customers have been expecting integration of sustainability in product development activities in UK (Statista, 2023). |
Positive |
| Technological | ● UK has raised £3.12 billion in 2023 for improvement technological infrastructure in this country (GOV, 2022).
● UK fashion companies have invested at around 1.6 to 1.8 percent of their revenue for technological advancement (Mckinsey, 2022). |
Positive |
| Legal | ● Businesses in UK adhered to “Health and Safety at Work etc Act 1974 (c. 37)”, “Equality Act 2010 (c. 15)” and “Data Protection Act 2018 (c. 12)” to help in effective operational management. | Positive |
| Environmental | ● Adherence to “Environmental Protection Act 1990 (c. 43)” benefits businesses to eliminate environmental challenges faced in UK. | Positive |
Table 1: PESTLE analysis (Source: Influenced by Statista, 2023)
From the above PESTLE analysis, ineffective political and economic environment in UK has increased challenges for UK fashion industry in positive growth management. However, an expected industry growth of 3.56% between 2023 and 2027 in UK fashion sector indicated a positive market growth opportunity in future (Statista, 2023). In addition, increasing sustainability focused products development activities has assisted UK in management of highest approaches of organisational operation management activities. Statista has reported that around one quarter of customers in UK has been promoting sustainability focused product development activities (Statista, 2023). This has implied that UK improving their abilities in operational planning and new product development following sustainability guidelines would be beneficial for companies such as Zara in new product development. Further, it would be essential for Zara in creating a product range of “Summer 100% Cotton Dress” collection for UK market.
Highlighting the key issues facing the company
Changing external business environments has created challenges for Zara in organised operational and performance management in UK. Ineffective economic capabilities management amidst of COVID-19 has led to Zara closing over 1200 stores (Theguardian, 2020). It has negatively impacted Zara to manage organised approaches of operational performance management in UK. In addition, Zara has been assessed as facing ineffective accountability and transparency management practices for this organisation to enhance its operational effectiveness in business management. BBC has reported that “Inditex, which owns Zara, remains one of the major fashion retailers that are dragging its feet on publishing a list of its manufacturers” (BBC, 2019). This has questioned Zara’s effectiveness in operational accountability as well as standard management practices for product development and operational performance improvement activities. It has essentially encouraged Zara to develop sustainability focused products to cater to needs and requirements of customers for improving its sales scope. Following this, Zara has promised to use cotton, linen and polyester that are sustainable, organic or recyclable for product development activities (BBC, 2019). Further, it has assisted Zara to develop a new product range on sustainable clothing items to attract UK consumer base and manage competitive positioning in this country.
Identification and justification of new product of Zara
Zara has focused on developing new products of “Summer 100% Cotton Dress” managing sustainable as well as comfortable dress portfolio development for UK customer base. This product emphasising the use of breathable fabric and comfortable designing would be essential for customers in UK to use this dress. As poised by Voora et al. (2020), increasing demand for sustainable products development has increased demand for using cotton as a major raw material for clothing manufacturing. In this context, Zara developing sustainable business development and manufacturing processes would have a positive influence in creating a collection of “Summer 100% Cotton Dress”. This would have a positive influence in Zara to attract customers requiring highly fashionable and comfortable summer dresses to remain competitive in UK fashion industry.
Ansoff Matrix
“Ansoff Matrix” guides businesses to assess market trends to identify operational expansion opportunities to increase overall market share. As per the study by Muchele and Kombo (2019), application of “Ansoff Matrix” helps businesses to develop their operational strategies following “market penetration, market development, product development, and diversification”. Zara developing a new product of “Summer 100% Cotton Dress” would be following “product development” as well as “diversification” processes for effective product development and operational improvement activities to operate in UK market. It would be beneficial for companies such as Zara to generate value, constitute uniqueness and enhance organisational capabilities in UK market.
Zara developing sustainability focused diversification and 100% cotton fabric for new product development of summer dresses would be beneficial to enhance its effectiveness in customer attractiveness management in UK. As poised by Jintana et al. (2021), “Ansoff Matrix” following diversification approaches of sustainable product development activities benefits businesses to increase brand reputation and customer loyalty improvement. It would have a positive influence on Zara to attend to customer needs for sustainable and comfortable product designing activities following “Ansoff Matrix”. This has also asserted that businesses such as Zara managing transparency and accountability approaches in product development activities would also be essential for improving marketing effectiveness in UK.
Development of company’s marketing strategy
Marketing strategy development helps businesses to share relevant information with customers about value proposed by products and services. Zara promoting its “Summer 100% Cotton Dress” would be including online channels such as YouTube, Instagram and Facebook would be essential for this organisation to enhance its marketing effectiveness. As poised by Khorsheed et al. (2020), integration of online channels along with social media platforms benefits businesses to reach out to a global audience base, develop direct connection with customers while creating an organic and loyal customer base. Furthermore, this organisation creating a short online marketing campaign for representing their sustainable values on “Summer 100% Cotton Dress” would be also essential for gaining customer attention towards Zara. It would also increase operational effectiveness for Zara to develop optimised approaches of customer management through developing effective online marketing channels.
STP Model
“STP Analysis” or “Segmentation, Targeting and Positioning” benefit businesses to position their products and services in a highly competitive market. As poised by Thomas and George (2021), integration of STP analysis benefits businesses to identify the most profitable customer segment to increase overall sales and marketing activities. This would be also essential for Zara to use STP analysis for development of the micro segment of customers in UK to target for “Summer 100% Cotton Dress”.
Segmentation
Segmentation assists businesses to divide organisational target market for developing optimised approaches of sales channel development analysing target customer behaviour. IN the views of Nica et al. (2019), businesses using “demographic, geographic, psychographic, and behavioural” aspects for segmentation management of target customer base help in identification of targeted customer base. Following this, Zara would be targeting younger generation demographics of Generation Z and Millennial for promotion of “Summer 100% Cotton Dress”.
Targeting
Targeting in a business can be assessed as the most attractive and profitable segment of customers in a business for improvement of their sales and profitability. In the opinion of Ziółkowska (2021), organisations using targeting activities help in assessment of needs of customers to allocate marketing resources in organised operational planning activities. In this context, Zara would target customers between the age of 18 and 32 for Generation Z and Millennial for promotion of “Summer 100% Cotton Dress”. It would be also beneficial for Zara to improve overall sales management activities for improvement of market position of this organisation in UK.
Positioning
Positioning helps businesses to develop a unique image for businesses to improve overall sales effectiveness for new products. As noted by Bharadiya (2023), positioning helps businesses to propose unique values of their products and helps to resonate with customers. It essentially helps businesses such as Zara to use “sustainable and breathable” dress material as the unique value proposition for “Summer 100% Cotton Dress”. This would also benefit Zara to enhance organisational effectiveness for increasing popularity of “Summer 100% Cotton Dress” as sustainable and trendy clothing in UK market.
Long-term strategic direction
Zara using online channels along with digital mediums for marketing and sales management were the most effective strategies for Zara to promote “Summer 100% Cotton Dress” in long term. According to Šaković Jovanović et al. (2020), online sales channels or e-commerce benefit businesses to increase the possibilities of sales in national and international regions. This has indicated that Zara using online channels for operational planning and sales promotion would be essential for this organisation to reach out to customers from remote areas of UK. Further, it would be essential for Zara to manage long term vision development for operational performance improvement and sales scope for “Summer 100% Cotton Dress”.
Recommendations to manage market offering for proposed target audience
Zara’s current planning of marketing “Summer 100% Cotton Dress” is focused on the process of market communication and distribution of offering. The management focus of marketing the new product would be using digital marketing communication. Precisely, it is recommended that Influencer marketing could be useful for Zara to promote the new product. Celebrity individuals who have quality presence in social media channels such as Facebook and Instagram must be considered by Zara. PR team, Sales and Marketing team need to collaborate with each other so that right individuals can be chosen for influential marketing, based on their social media subscribers and market influence (Quesenberry, 2020). Apart from that, “Summer 100% Cotton Dress” should be distributed through its own official website, along with localised distribution through its in-store marketplace. The pricing point for this should be the Value-based pricing for Zara. This pricing point would be justified as it would help the sales and marketing team base the price that could relate to customers’ perceived values.
Conclusion
From this report, it can be concluded that Zara is developing “Summer 100% Cotton Dress” following sustainable and breathable approaches to product development. Zara developing online based marketing techniques in targeting customers between the age of 18 and 32 for Generation Z and Millennial would be beneficial for improving sales of “Summer 100% Cotton Dress”. This organisation also develops influencer marketing activities along with optimisation of sales and marketing techniques would be essential for organisational performance management activities. It has asserted that Zara developing sustainability focused and value based pricing strategies would be also essential for promotion of “Summer 100% Cotton Dress”.
References
Bbc.com (2019). Zara promises all its clothes will be sustainable by 2025. Available at: https://www.bbc.com/news/newsbeat-49022453. [Accessed on: 3 December 2023]
Bbc.com (2019). Zara uncovered: Inside the brand that changed fashion – BBC. Available at: https://www.bbc.com/news/business-49268965#:~:text=They%20say%20Zara%20needs%20to,Revolution%20policy%20director%20Sarah%20Ditty. [Accessed on: 3 December 2023]
Bharadiya, J.P., (2023). Machine learning and AI in business intelligence: Trends and opportunities. International Journal of Computer (IJC), 48(1), pp.123-134.
Commonslibrary.parliament.uk (2023). GDP – International Comparisons: Key Economic Indicators. Available at: https://commonslibrary.parliament.uk/research-briefings/sn02784/#:~:text=The%20OECD%20said%20that%20global,2024%20(down%20from%200.8%25). [Accessed on: 2 December 2023]
Gov.uk (2022). UK tech sector retains #1 spot in Europe and #3 in world as sector resilience brings continued growth – GOV.UK. Available at: https://www.gov.uk/government/news/uk-tech-sector-retains-1-spot-in-europe-and-3-in-world-as-sector-resilience-brings-continued-growth. [Accessed on: 3 December 2023]
Jintana, J., Sopadang, A. and Ramingwong, S., (2021). Idea selection of new service for courier business: The opportunity of data analytics. International Journal of Engineering Business Management, 13, p.18479790211042191.
Khorsheed, R.K., Othman, B. and Sadq, Z.M., (2020). The impacts of using social media websites for efficient marketing. Journal of Xi’an University of Architecture & Technology, 12(3), pp.2221-2235.
Mckinsey.com (2022). In search of fashion’s sustainability seekers. Available at: https://www.mckinsey.com/industries/retail/our-insights/in-search-of-fashions-sustainability-seekers. [Accessed on: 3 December 2023]
Mckinsey.com (2022). State of Fashion Technology Report 2022. Available at: https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion-technology-report-2022. [Accessed on: 3 December 2023]
Muchele, N. and Kombo, H., (2019). Effect of growth strategies on the performance of food manufacturing firms in Nairobi County, Kenya. European Journal of Business and Management. 11,(15), pp.43-50.
Nica, E., Gajanova, L. and Kicova, E., (2019). Customer segmentation based on psychographic and demographic aspects as a determinant of customer targeting in the online environment. Littera Scripta, 12(2), pp.108-126.
Quesenberry, K.A., (2020). Social media strategy: Marketing, advertising, and public relations in the consumer revolution. Rowman & Littlefield Publishers.
Šaković Jovanović, J., Vujadinović, R., Mitreva, E., Fragassa, C. and Vujović, A., (2020). The relationship between E-commerce and firm performance: The mediating role of internet sales channels. Sustainability, 12(17), p.6993.
Statista.com (2023). Apparel – United Kingdom | Statista Market Forecast. Available at: https://www.statista.com/outlook/cmo/apparel/united-kingdom#:~:text=It%20is%20estimated%20to%20experience,(CAGR%202023%2D2027). [Accessed on: 2 December 2023]
Statista.com (2023). Apparel market in the United Kingdom (UK) – statistics & facts. Available at: https://www.statista.com/topics/3348/apparel-market-in-the-uk/#:~:text=In%202022%2C%20the%20revenue%20of,billion%20British%20pounds%20by%202026. [Accessed on: 2 December 2023]
Statista.com (2023). Desire for increased fashion industry sustainability UK 2022. Available at: https://www.statista.com/statistics/1382698/desire-for-increased-fashion-industry-sustainability-uk/. [Accessed on: 3 December 2023]
Statista.com (2023). UK inflation rate 2023 – Statista. Available at: https://www.statista.com/statistics/306648/inflation-rate-consumer-price-index-cpi-united-kingdom-uk/#:~:text=Inflation%20rate%20in%20the%20UK%201989%2D2023&text=The%20UK%20inflation%20rate%20was,11.1%20percent%20in%20October%202022. [Accessed on: 2 December 2023]
Theguardian.com (2020). Zara owner to close up to 1,200 fashion stores around the world | Retail industry | The Guardian. Available at: https://www.theguardian.com/business/2020/jun/10/zara-owner-to-close-up-to-1200-fashion-stores-around-the-world. [Accessed on: 3 December 2023]
Thomas, M.R. and George, G., (2021). Segmenting, targeting, and positioning (stp) ofgenerational cohorts Y, Z and Alpha. IIMS Journal of Management Science, 12(2), pp.115-129.
Transparency.org.uk (2023). UK plunges to lowest-ever position in Corruption Perceptions Index | Transparency International UK. Available at: https://www.transparency.org.uk/uk-corruption-perceptions-index-2022-score-CPI. [Accessed on: 2 December 2023]
Voora, V., Larrea, C. and Bermudez, S., (2020). Global market report: cotton (p. 16). Winnipeg: International Institute for Sustainable Development (IISD).
Worldometers.info (2023). U.K. Population (2023) – Worldometer. Available at: https://www.worldometers.info/world-population/uk-population/#:~:text=the%20United%20Kingdom%202023%20population,(and%20dependencies)%20by%20population. [Accessed on: 2 December 2023]
Ziółkowska, M.J., (2021). Digital transformation and marketing activities in small and medium-sized enterprises. Sustainability, 13(5), p.2512.
Know more about UniqueSubmission’s other writing services:
