Zara's Clothing Product Line Development

Introduction

Every business manager understands the importance of being competitive as it contributes to the firm success and overall productivity. Business management involves a wide range of strategies that must work together through research and development, which initiates innovation and creativity. Notably, running a business and preserving its success is not an easy task. Therefore, a company must maintain, develop as well as make new inventions and strategies as they play a significant role in competitiveness and success. This report presents a proposal for Zara, an apparel retailer company, in developing a successful clothing product line. It uses two dimensions of the four Ps, product and process, in addition to employing new product development like the implementation strategy.

Zara’s Corporate Background

Zara SA is a famous fast-fashion retailer specializing in products such as shoes, perfumes, swimwear, accessories, clothing, and beauty. The firm is among the largest in the world’s apparel retail. Zara commenced its business in 1975 with Amancio Ortega as its founder (Inditex, n.d). The business headquarters are in Arteixo, Spain, and has expanded to over 96 countries. Zara is a unique company both in product design and quality. Zara distinguishes its apparel from that of other clothing stores by making distinctive designs inspired by high ends brands. Zara’s expansion to a new location helps the company access fabric in less expensive sources. Its production factories are in Spain, Portugal, and Turkey. The company uses its own fabric and manufacturing, leading to low-cost production and meeting lead time more easily. The production process is fast, and the company’s product has a short product life cycle; it assists Zara to meet consumer preferences by offering a design that consumer considers best.

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4PsInnovation mix is an imperative model in understanding how innovation occurs. Notably, innovation relates to successfully developing, implementing as well as generating a new design, idea, or improving an existing product. It enhances the current product, strategy, or process, which leads to commercial success and market leadership while creating value for stakeholders. In addition, successful innovation drives economic growth as well as improves living standards (Katz, Preez, and Schutte, 2010). From the definition, it is clear there are two types of innovation, incremental and radical.

For any business manager or leader, understanding which type of innovation to employ is critical to their success. There are various factors that determine the levels of innovation, namely product innovation, position innovation, process innovation, as well as paradigm innovation. These are termed as the 4Ps providing a framework for mapping innovation space available in a firm, as proposed by Tidd and Bessant (2009).

Product innovation includes making changes in design, which leads to creating a new product or service. In product innovation, there is a radical innovation that relates to a new service or product or improving the services’ or goods’ version, incremental innovation (Slater, Mohr, and Sengupta, 2014). Product innovation examples include enhancing the quality and overall performance or using new material to produce a novel product. Product innovation comes with advantages like expanding competitive advantage and switching of a company brand and product line (Slater, Mohr, and Sengupta, 2014). However, its main disadvantage is the possibility of a high risk of failure and the subsequent high cost of investment.

Process innovation, on the other hand, are changes occurring in creating as well as delivering goods and services. It happens when an organization solves existing problems using radically different methods generating high benefits (Tidd and Bessant, 2009). For example, introducing a new sequence of the production process that speeds overall production by 100% or 50% can be a process innovation. Process innovation is somehow different from incremental innovation where, whereas incremental innovation generates limited value; process innovation increases value by 100% or more. With process innovation, the system generates significant gains in overall delivery and product and service development.

Position innovation includes the context in which the specific product or service gets introduced. Position innovation considers consumers’, employees’, and stakeholders’ perceptions of the service or product. For a company, position innovation would consider improving the firm’s image and publicity by undertaking creative steps that communicate and enhance how customers and stakeholders perceive the brand. Satisfying customers’ needs through creating a new perception can create a new market segment for a company.

Paradigm innovation relates to different changes in underlying mental models. It frames how a firm does its operations. For example, a business may change how it offers services like the introduction of online services. Notably, paradigm innovation is a more specific innovation being more radical than incremental. An organization looks at the company operations from a different angle, noting a gap in the market that the company can utilize with a similar product hence creating value (Akgun et al., 2017).

Innovation Strategy

Zara employs some innovative strategies to remain competitive in the market. Before discussing Zara’s innovative strategy, it worth defining what a strategy is in this context. A strategy includes a set of concepts, policies, and actions that reacts to a challenge. It involves selecting a long-term enterprise objective necessary to attain set actions (Novikova, 2016). Notably, any strategy is not well-shaped at the beginning but rather becomes better and clearer after trying its viability and workability. According to Novikova (2016), a strategy has premonitory diagnostics, coherent actions as well as leading policies.

Zara SA uses three innovation strategies, namely, product, process, and paradigm innovation, as discussed below.

Product Innovation

Zara uses fast fashion as an innovative strategy. Fast fashion includes the production of products and services with a short life cycle. As indicated above, Zara deals with men’s, children’s, and women’s clothing. In all its stores, Zara highly responsive supply chains ship new products twice a week. Zara enhances faster supply as it takes only fifteen days from production to delivery to stores, notably, the long-distance stores. For shorter distance stores, it only takes 48 hours for delivery. Zara SA reduces products lead time hence responding to customers’ needs as fast as possible.

Fast fashion is a product innovation strategy for Zara SA. As compared to the 6-month industry average, Zara only needs one week to develop and subsequently deliver products into the store. It allows Zara to launch an estimated 12,000 novel designs annually (Burgen, 2012). Whenever a product does not meet customer preference, the Zara SA production department can modify the existing product with as little as two weeks. Notably, if a design has little sold within a week, Zara withdraws it from the stores and shops and cancels any further orders. In return, Zara SA pursues another design which concurs with customer preference. In taking advantage of product innovation, Zara SA monitors customer fashion change through its well-developed customer care department.

Zara SA produces basic designs constantly carried over from one year to another. These designs enhance customers to visit their stores. Through estimation, Zara SA customers make repeat visits 17 times annually (Roux, 2002). In addition, different fashion-forward designs are on shelves for less than four weeks so that repeat customers can find them. With its own production, Zara SA manufactures fashionable items while also outsourcing longer shelf-life clothes from low-cost suppliers.

Introduction of the food line and adding of loyalty card are the two most suitable inventions for Zara SA. Expanding the department store by introducing food into the existing market can be an appropriate venture for Zara SA. As stated above, the firm is among the largest in apparel distribution and production. It can use the existing market share to diversify its product line. There is a high expectation that the consumer base will rely on their brand loyalty and confidence in purchasing Zara SA food. Zara’s brand and customer base can reduce the expected risk of diversifying into a new product line.

Adding a loyalty card is another product innovation strategy. Notably, a loyalty card acts as an incentive to customers who wish to accumulate as many loyalty points to redeem them in the future. As customers try to accumulate more points, Zara SA will make more profit. A loyalty card will enhance word-of-mouth, which acts as the positive publicity of the company (Roux, 2002). Similarly, introducing a loyalty card will attract new customers who wish to enjoy free money or discount, thereby becoming Zara’s competitive advantage. A loyalty card is not common in the apparel industry; therefore, adding it to service production comes with advantages like increased customer base and market share in addition to profitability.

Process Innovation

Process innovation includes all changes in creating and delivering goods and services. Zara SA introduced the Radio Frequency Identification (RFID) chips used to take inventory. The RFID tags are a security tag removed from a cloth once purchased and can be reused. Whenever an item gets purchased, it sends a signal to the stockroom for faster replacement. An RFID chip allows the adoption of Just-in-Time (JIT) purchases in Zara stores. Notably, it helps employees find and deliver items faster to customers hence reducing the lead time as well as stock-out on the shelves. The use of RFI is both a product and process innovation in that it allows faster delivery of products as well as becoming a product that ensures increase competitiveness and consumers’ convenience.

The proposed innovation strategy in terms of process is the introduction of interactive fitting rooms. Interactive fitting rooms include a dressing room fitted with adjustable and interactive mirrors. The room has adjustable lighting, which lets the customer see the outfit appearance at a different time of the day. Similarly, it allows a shopper to choose a different color of outfit as the interactive mirror provided different sizes and color options for specific garments. In addition, the interactive mirror displays other items that match well with a chosen piece encouraging a shopper to purchase more outfits.

An interactive fitting room will change how Zara SA delivers the products. It will give shoppers a chance to compare different outfits and present Zara with an idea of customer preference. Therefore, an interactive fitting room will be necessary for both shoppers and Zara’s decision-making process. It is a process innovation not only in delivering shoppers’ preferred outfits but also adds attached items to a personal customer profile, which can be accessed in future visits. It improves Zara SA and customers’ experience.

Strategy Implementation

The discussed innovative strategy includes introducing new food line, adding a loyalty card as well as adopting interactive fitting rooms. Implementing this kind of strategy requires a well-elaborate implementation strategy, namely new product development. As it is discussed in this section, new product/service development involves an iterative as well as a complex process. According to Tidd and Bessant (2009), new product development involves four different stages, namely concept generation, assessment and selection/definition, product development, and product commercialization/launching. Following the new product development process can help Zara SA realize the proposed innovation strategies.

The whole process of new product development involves research and development (R&D). R&D relates to the creation of knowledge of materials and technologies, which later translate to commercial development. R&D requires high creativity, as it includes high-risk exploratory methods. In developing new food line, Zara management requires to undertake research and development to incorporate what customer needs. In terms of developing loyalty cards and interactive fitting rooms, Zara must evaluate the available method of awarding loyalty points as well as an existing interactive mirror to understand whether it meets customer and company requirements.

In the concept generation stage, two factors, namely market-pull and technology-push, are the main determinants of what method to use. Introducing a food line is a market pulls innovation, whereas a loyalty card and interactive fitting room is a technology push innovation. As a result of a lack of order and structure, this stage may be called ‘fuzzy front end’ (von Zedtwitz, Friesike, and Gassmann, 2014).’ Despite a lack of order, there is the systematic identification of new product concepts.

The product definition stage involves understanding product opportunities and reducing any technological and market uncertainties. Management explains the pros and cons of the service/product besides dealing with technical problems exposed after market analysis. Zara can undertake product definition by understanding the advantages and disadvantages of an interactive mirror and introducing loyalty cards. Similarly, a market analysis is critical in introducing a food line where understanding what competitors do offers an eye-opener before investment.

Product development is the stage where the real product gets produced. It involves combined efforts of stakeholders to put the details into a tangible product or exercisable service. Zara SA needs to call it designers and employees in understanding how the food line will be, where to place the interactive fitting rooms, and how to reward the loyalty point. The stage involves being alert of any discrepancies between what it is expected and actual product or service. Zara SA should now produce the loyalty card, food line, and interactive fitting line ready for use and launching.

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Product development is the stage where the real product gets produced. It involves combined efforts of stakeholders to put the details into a tangible product or exercisable service. Zara SA needs to call it designers and employees in understanding how the food line will be, where to place the interactive fitting rooms, and how to reward the loyalty point. The stage involves being alert of any discrepancies between what it is expected and actual product or service. Zara SA should now produce the loyalty card, food line, and interactive fitting line ready for use and launching.

Conclusion

Summarily, Zara SA is an apparel company operating globally. As discussed above, product and process innovation are the two dimensions in the innovation mix that the company can adopt. Specifically, Zara SA can undertake a new food line and loyalty card as product innovation and introduce interactive fitting rooms as process innovation. The best method to implement the innovation strategy is the use of new product development, which includes four stages discussed above.

References

  • Akgun, A.E., Keskin, H., Ayar, H. and Etlioglu, T., 2017. Why companies go positive marketing innovations: a new theoretical prototype for 4Ps of innovation. Journal of Business Economics and Finance, 6(2), pp.70-77.
  • Burgen, S. 2012. The Guardian: Fashion chain Zara helps Inditex lift first quarter profits by 30%. Available at https://www.theguardian.com/business/2012/aug/17zara-inditex-profits (Accessed 07 January 2020)
  • Inditex. n.d. Zara. Available at https://www.inditex.com/about-us/our-brands/zara (Accessed 07 January 2020)
  • Katz, B.R., Preez, N.D. and Schutte, C.S.L., 2010. Definition and role of an innovation strategy. In SAIIE conference proceedings (pp. 60-74).
  • Novikova, O., 2016. Innovation strategy. Revista ESPACIOS| Vol. 37 (Nº 24) Año 2016.
  • Roux, C. 2002. The Guardian. The reign of Spain. Available at https://www.theguardian.com/lifeandstyle/2002/oct/28/fashion.shopping (Accessed 07 January 2020)
  • Slater, S.F., Mohr, J.J. and Sengupta, S., 2014. Radical product innovation capability: Literature review, synthesis, and illustrative research propositions. Journal of Product Innovation Management, 31(3), pp.552-566.
  • Tidd, J. and Bessant, J.R., 2009. Managing innovation: integrating technological, market and organizational change. John Wiley & Sons.
  • von Zedtwitz, M., Friesike, S. and Gassmann, O., 2014. Managing R&D and new product development. In The Oxford Handbook of Innovation Management (pp. 530-547). OUP.

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