Pricing Strategies of Zara | Essay Example (2024)

Zara’s Pricing Strategy: Introduction

Zara is an apparel chain store that operates globally with a majority of its stores situated in Spain. The chain store has been on the front line in the fast fashion industry setting the pace for its major competitors such as Topshop, Benetton and Mango. With its more than 19,000 designs per year and a strategic pricing strategy, it’s imperative to indicate that the chain store has already cut a niche for its products (Ghemawat, & Nueno, 2006).

Zara’s Pricing Tactics

Pricing is a major consideration that marketers should consider before embarking on retailing their products. Zara have maximized on its variety of products ranging from female, male and children ware to attract a wide market. To maximize on their products marketability, Zara have embraced a pricing strategy that targets both the middle class which make up their largest market share and the wealthy in the society (Jingjing, 2007).

This strategy has seen the American and Europe market for Zara access Zara products at a relatively cheaper prices as the main target for the chain store in this two regions is the middle class. However, on the other hand Zara products are quite expensive in other regions.

Consumers of Zara products in the Chinese market are expected to pay almost double the price for the same product that is retailing in the American and European Markets. This is because the major consumers of Zara products in this region comprises of individuals with a relatively high status quo in the society (Jingjing, 2007).

Further the chain store keeps reviewing its product prices depending with the region and the season. This is in line with Baker, Mann and Zawada (2010) who argue that pricing of products should be adequately adjusted throughout the life cycle of the product. This is vital for organizations that deal with frequent innovations such as fashion and design.

Therefore, the pricing strategy of Zara can be termed as below the market price or penetrating price in both the America and Europe region. This strategy is also referred to as a charming price tactic (Gilkey, 2011). On the other hand, Zara prices can be termed as above the market price or skimming price in other regions such as the China market where consumers are less sensitive about the market price.

Pricing of Zara and Marketing Mix

Zara follows the 4ps marketing mix which includes product, price, promotion, and place to actualize its pricing strategy. With the wide variety of products, the chain store is able to attract a wide range of consumers who fit in their product mix that encompasses male, female and children ware for all the seasons.

Further, Zara continuously launches new products in the market periodically thus meeting the needs of their consumers and keeping pace with the changing fashion designs. This tactic is appropriate for promoting their products and it is also in line with Welch argument that companies are likely to reap maximum profit margins if their products prices are in line with the consumers’ behavior and preferences (Welch, 2010).

Another aspect that dictates Zara’s choice of pricing strategy is its expansive retail stores that are located at different places thus attracting different clients of different social status. Further, the chain store promotes its designs through different advertisem*nts with different prices for their different markets globally (Ghemawat, & Nueno, 2006).

Effects of Zara’s Price Strategies on Competition

Andreas et al. (2001) assert that the nature of the pricing strategy determines the growth of any particular organization and thus the competitiveness of the company. With reference to Zara, the chain store has been able to gain a competitive advantage over its rivals such as Mango and Topshop due to its pricing strategy and wide product range in the fast fashion industry for a very long time. This has seen the chain store open up more retailing stores globally in order to meet the demand for their products (Jingjing, 2007).

Zara Pricing Strategy: Conclusion

A companies pricing strategy has a lot of bearing on the nature of the market and the returns on revenue of its products. Therefore, the pricing strategy should strive to meet the needs of the consumers and defeat the rival’s prices to maximize on returns.

References

Andreas, F., Maurer, B., Schmidt, B., & Vahlenkamp, T. (2001). The race to the bottom: When industries deregulate, their managers face unfamiliar challenges, Price wars are often the unfortunate—and unnecessary—result. Web.

Baker, W., Marn, M., & Zawada, C. (2010). Do you have a long-term pricing strategy? Web.

Ghemawat, P., & Nueno, J. (2006). Zara: Fast fashion. Harvard Business School, 9-703-497. Web.

Gilkey, C. (2011). The ABC’s of Pricing. Web.

Jingjing, J. (2007). Passion for fashion. China Daily. Web.

Welch, N. (2010). A marketer’s guide to behavioral economics. Web.