Brand Positioning in Market- UNIQLO v ZARA PDF

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Introduction Uniqlo Co., Ltd. was founded in 1949 in Yamaguchi, Japan but is now a 100% consolidated subsidiary of Fast Retailing Co., Ltd since 2005, with its headquarters in Tokyo. In November 2010, UNIQLO first reached Malaysia’s shores in Fahrenheit 88, Kuala Lumpur. At present, UNIQLO has 39 stores throughout the whole of Malaysia with a majority of its stores in Kuala Lumpur and the Klang Valley (Uniqlo, n.d.).

Zara was founded in 1974 in Spain by Amancio-Ortega under Inditex, which Ortega owns approximately 59% of. Zara opened its first Malaysian outlet in MidValley Megamall in 2003, and at present, it has a total of 10 outlets situated in Kuala-Lumpur and Shah-Alam (Appendix 1).

Zara and Uniqlo are chosen as the offerings of this report due to their established brand presence in Malaysia. Although both brands appear undistinguishable, a thorough analysis of their segmentation, targeting, positioning and marketing mix strategies, with consideration of their environmental forces, indicates notable differences. The two are distinctive in their segmentation strategies, target market, Unique Selling Proposition (USP) and marketing mix mechanisms. Due to these differences, the two brands will be affected differently by their customers.

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Uniqlo Segmentation and Targeting Uniqlo targets a wide range of Malaysian consumers with respect to Uniqlo’s slogan, “made for all.” However, its main target market is female and male adults ranging from the age of 18 to 40 who seek for affordable high-quality casual clothing that fits their daily lifestyles (Fintell & Morimura, 2016). Uniqlo uses differentiated marketing by effectively segmenting its products based on demographic, psychographic and behavioural variables that reflect its target market.

Uniqlo designs its products based on gender, age and lifestyle of Malaysians. Uniqlo’s Work Smart collection caters to both male and female adults working in white-collared industries (Appendix 2) while Uniqlo Sport caters to both male and female adults who are active (Appendix 3). Uniqlo also practices multivariate demographic segmentation by catering to female Muslim adults with their Modest Wear (Appendix 4) and Hana Tajima Collection (Appendix 5) besides catering to women who are in their life-cycle stage of pregnancy with their Maternity Wear collection (Appendix 6).

As consumers differ in behaviour toward brands, Uniqlo segments consumers of different user-statuses. For instance, Uniqlo targets non-users and potential users through advertisements on social media platforms such as YouTube (Appendix 7) and Facebook (Appendix 8). Uniqlo also lures potential and first time users on their online website to make a purchase by providing free delivery for purchases over RM150 (Appendix 9) and through promo codes (Appendix 10). For Uniqlo’s website loyal users, Uniqlo rewards them with emember specials online (Appendix 11). Uniqlo caters to the different benefits sought by consumers by introducing different lines. For example, Uniqlo’s HEATTECH (Appendix 12) and AIRism (Appendix 13) line caters to consumers who prefer functionality over design while its collection such as its UT Line (Appendix 14) and SPRZNY Line (Appendix 15) caters to consumers who seek for fun designs.

2 Positioning Uniqlo’s competitive advantage is its ability to produce innovative clothing while its USP is its affordable comfortable casual clothing which are made out of high-quality fabric and developed by advanced technology (Fintell & Morimura, 2016).

Uniqlo does not chase trends but focuses on fashion staples (Dursin, 2013). This allocates more resources contributing to Uniqlo’s point of difference – it is always a step ahead in product innovation and quality. Its mass production of similar styles keeps prices low and make products affordable (Dursin, 2013). The perceptual map below illustrates Uniqlo’s position compared to other brands in Malaysia’s apparel retail industry.

3 On the vertical axis, affordability reflects how inexpensive a product is, the more affordable brand would be able to serve a larger range of consumers. On the horizontal axis, quality reflects how long-lasting and comfortable the product of a brand is. A brand with higher quality products would appear more favourable to consumers. Uniqlo is located on the top right quadrant as it offers high quality products for prices which are more affordable.

In the map, Uniqlo’s position is relatively close to H&M because they share almost similar quality and price. To illustrate, a female basic white top is used. UNIQLO is positioned as more affordable because it charges RM39.90 (Appendix 16) while H&M charges RM49.90 (Appendix 17). UNIQLO is positioned as higher quality because its top contains 90% exclusive Supima Cotton which provides a silky touch (Appendix 18) while H&M’s top contains only 60% cotton.

In the map, Cotton On is positioned away from UNIQLO. This is as both brands are more different in terms of affordability and quality. Using the same illustration, a top from Cotton on costs RM59 (Appendix 19) while UNIQLO charges RM39.90 for something similar. Quality wise, Cotton On was silent on the materials used but its infamous reputation for poor quality, as seen in the online review (Appendix 20), acts as a basis of judgement. Based on this, Uniqlo offers a less for more value proposition as compared to Cotton On.

Marketing Mix Product Uniqlo’s core product is to cover consumers’ body parts besides keeping them sheltered from any physical harm, satisfying consumers’ safety need. Uniqlo’s actual product is its established brand name which originated from two words, “unique” and “clothing”. Uniqlo’s actual product also consists of its affordability, comfortability, high-quality, functionality and innovation (Uniqlo, n.d.). Uniqlo’s augmented products includes the free delivery for online purchases over RM150 (Appendix 21), its after-sales jean length alteration and product exchange services (Appendix 22), and its mobile applications. In particular, UNIQLO MY which provides special offers and updates on Uniqlo’s products (Appendix 23). This allows customers to receive added services to support Uniqlo’s offerings.

4 Price Uniqlo uses psychological pricing strategy through reference pricing by selling a T-shirt at RM59.90 instead RM60 because customers will perceive the price to belong in the RM50 category and not RM60 (Appendix 24). This leads to a possible purchase as customers perceive prices to be lower. Promotional pricing strategy is also used as Uniqlo offers a weekly online and in-store markdown on specific products to boost sales temporarily (Inagaki, 2016). For example, the Ponte dress currently costs RM79.90 instead of the original RM129.90 (Appendix 25). Uniqlo uses a low-price strategy while maintaining its quality (Yui, & Huang, 2016). In 2016, Uniqlo reduced its 2014 prices due to declining sales as consumers felt that the higher prices failed to justify product value (Nikkei Asian Review, 2016). Hence, it can be identified that Uniqlo uses value-based pricing as they consider customers’ value perceptions and set prices to match them.

Promotion Uniqlo advertises certain collections to promote new products in Malaysia. For instance, Uniqlo hired Yuna as the face of Hana Tajima’s Hijab collection in 2016 to increase its brand awareness (Appendix 26). Uniqlo also promotes its products on its Facebook (Appendix 27) and Instagram page (Appendix 28) as it can reach a wider audience through the internet. Weekly sale promotions are conducted in Uniqlo on specific products (Financial Times, 2016), acting as a temporary incentive to increase purchases (Appendix 29). Uniqlo emphasises on its public relations and aims to build a good corporate image through its Corporate Social Responsibility (CSR) projects such as Uniqlo Recycle (Appendix 30) and its Worker Empowerment projects (Appendix 31) while minimising its environmental impact (Appendix 32). This helps Uniqlo improve relationships with its public while maintaining good publicity.

5 Place Uniqlo practices selective distribution because its outlets are only located in shopping malls within Malaysia’s prime areas (Appendix 33). Prime locations are packed with Uniqlo’s segment of working adults and they have a high traffic of consumers, which can improve Uniqlo’s brand awareness and sales. Reflecting its slogan, “made for all”, Uniqlo’s online store allows anyone anywhere in Malaysia with internet accessibility to purchase their goods, Uniqlo does not have its own manufacturing site but it still coordinates production with partner factories to produce products which will be delivered to external warehouses. The products will either be sent to consumers who placed orders online through Uniqlo’s website or delivered to Uniqlo stores worldwide where the clothes will be displayed and sold to customers (Appendix 34).

Microenvironment Public Citizen-action publics affect Uniqlo. In 2015, Students and Scholars against Corporate Misbehaviour (SACOM) investigated two of Uniqlo’s major suppliers in China and found garment workers to be working under sweatshop practices (War on Want, 2015). This resulted in Uniqlo pledging to eliminate sweatshop practices (Yui, 2015). It is important for Uniqlo to maintain a good relationship with citizen-action publics because they can hinder Uniqlo from achieving their goals. For instance, Malaysian ethical consumers would avoid Uniqlo’s products to prevent negative association with the brand.

Besides that, the media public also affects Uniqlo because it either creates a desire or disinclination to consumers towards Uniqlo’s products. With the rise of social media, consumers are able to obtain information about Uniqlo more efficiently. Instagram posts promoting Uniqlo from online personalities, such as Jared Lee, can increase Uniqlo’s brand awareness and influence followers to purchase Uniqlo’s products (Appendix 35) while bad reviews could prevent sales.

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Customers It is important for Uniqlo to understand what customers value (Vargo and Lusch, 2004) and come up with products that satisfies them. Being in the Malaysian apparel industry, Uniqlo faces a threat of substitutes from competing brands like H&M while new entrants, such as Tabao, an online e-commerce site, threatens Uniqlo’s position with its much lower prices. Uniqlo’s customers have high bargaining power due to the presence of substitutes. To consistently remain attractive to consumers, Uniqlo differentiates itself by having a competitive advantage of high-functionality and quality at affordable prices. This draws customers to Uniqlo.

7 Zara Segmentation and Targeting Zara targets demographic, psychographic and geographic segmentations (Bhasin,-2017). Zara market comprises of 60%-women, 25%-men and more recently, children fashion which makes 15% of the market segment (Arif, 2011).

Zara targets the middle to high income trend followers aging 18 to 40 year olds who wish to be trendsetters (Mok, n.d.). This creates demographic options for Zara’s customers who democratize fashion (The-Zaras Brand Strategy Marketing Essay, 2013). With fashion treated as lifestyle, this value falls under psychographic technique which targets audiences who want to be perceived as the ‘V.I.P’ wearing Zara’s stylish up-to-date clothing while remaining price sensitive (Keller, 2012). In Appendix36, there are 10 Malaysian branches that solely belong to the Kuala-Lumpur and Shah-Alam areas due to geographic competitiveness. This acts as their exclusive method of connecting to customers instead of conventional advertising.

Positioning Zara aims to provide a unique value proposition where they ensure customers are able to look trendy as well as purchasing lower priced merchandise (The Zara’s Brand Strategy Marketing Essay, 2013).

8 Being a fast fashion industry, Zara falls under the fourth quadrant on the perceptual map (Hensen, 2012). This is due to their consistent inventory turnover where new designs are released twice a week based on buyers’ constant change in fashion demand (Berfield & Baigorri, 2013). Thus, enabling them to sell cheaper because they possess ownership of their

manufacturing which allows superior control over the inventories (Makori, n.d.) which results in less factors affecting their pricing

Bershka vs Zara: Bershka retails cheaper because it targets the younger market (Bershka, n.d.) who are more price sensitive; whereas Zara targets the more financially stable age group. Fashion related, Bershka and Zara are equally trendy as they belong to the same parent company, Inditex (Inditex, 2015) which have the same goals, striving in producing low-priced trendy clothing.

Gap vs Zara: Gap does not possess a high fashion turnover unlike Zara because they lack a unique supply chain. Gap’s absence of manufacturing ownership forces them to bear the cost of transportation and manufacturing expense into their pricing methods. Thus, the lengthier product turnover for Gap because of outsourcing measures (Ahmed, 2014) which prevents them from competing with Zara’s superior control and turnover rate.

Marketing Mix Product Zara’s apparel strategy enables customers to conceal their birthday-suits with fashionable outfits that bolsters self-esteem by feeling trendy with a sense of exclusiveness.

Zara caters to men, women and children apparel (Appendix37). Zara’s trademark is an example of a simple yet successful business. According to Zara Logo (n.d.), the black background represents “elegance, style and excellence of the brand”.

Zara provides accessible services to customers by having their own application and online store with services of exchange or refunds of item(s) purchased and different payment methods (Appendix38). Zara ensures that customers’ ever changing demands are satisfied by

9 continuously providing the latest fashion trend via their abovementioned offerings to their target customers.

Price

Ortega believes everyone is entitled to constantly look fashionable which positions Zara in the middle-high income trend followers.

Low Price Strategy: Zara implements this strategy because they offer high fashion clothing at reasonable prices globally (Zara Marketing Mix, n.d.). Zara can achieve this due to their supply chain management being able to save on storage, transportation, and advertising costs. This allows them to allocate funds into each departments without compromising their pricing strategies (Shankar, Versoza, Mittias & Sia, 2009).

Customer Driven Strategy: Zara believes their efforts in producing stylish clothing at reasonable prices would enable them to gain customers’ loyalty. As Zara overlooks conventional advertising, it ensures buyers feel a sense of exclusiveness by wearing their apparel due to the limitation of inventory quantities (Lu, 2014), making each piece of clothing personal/unique. Moreover, they value their customers’ dynamic changing fashion demands by ensuring constant new selections, responding to their customers’ demands (Inditex, n.d.).

Market-Based Pricing Strategy: According to Shankar, Versoza, Mittias and Sia (2009), Zara takes advantage of the customers’ willingness to purchase their products at whatever price rate. For example, appendix 39 shows a jacket in Japan cost JPY10990, and the same jacket in Malaysia cost approximately RM23 cheaper after currency conversion, indicating that Zara’s product pricing is country specific (Zara Marketing Mix, n.d.). Subsequently, this means Zara uses demand-oriented methods in product pricing based on a region’s volume of demand.

Place Inditex’s website suggests Zara is now operating in over 93 countries with an aggregate of 2,213 stores worldwide. Their manufacturing hub, headquarters and logistic centres are based in Arteixo, Spain (Inditex, n.d.).

10 Strategy Location: Zara strives for geocentric orientation due to culture differences by each respective country while adopting a certain resolution which differs from home market approaches (Karakusheva, n.d.). Examples include sizing measurements of clothing in Asian markets, and seasonal/climatic differences. Zara has presence in 10 Malaysian outlets situated

in prime locations (Appendix36), with aim to achieve direct communication strategy with customers (Fan & Lopez, 2009). To demonstrate how Zara tactically locates their stores, Zara in One-Utama (OU) will be discussed.

Thorough observation suggests (Appendix40), Zara strategically aligns themselves with other high-end brands to be perceived as a luxurious brand. OU’s Zara is located on Ground Floor where there is higher customer traffic. The moment people enter the mall, they would be strolling around, in the case of the new-wing called ‘Highstreet’, existing high-end brands like Armani-Exchange, Tommy-Hilfiger, Calvin-Klein coexist with Zara as well.

Distribution-Strategy: Zara handles their supply chain management dominantly by being a vertically integrated retailer (Adam, n.d.). Inditex’s 2015 annual report shows Zara’s manufacturing plants are scattered around the Americas, Europe, Asia, and Africa. As products are manufactured, they will be transported to the headquarters for quality control inspections before global distribution. Therefore, by having high control it enables them to produce products efficiently (Appendix41). From preliminary design to point of sale, Zara achieves this within two weeks, provided they have their talented designers identifying the customers’ constant changing demands (Mozzhukhina, 2015). Using this system, Zara responds by providing the latest fashion trend in short time.

Promotion Zara prioritizes their customers by aiming to build long-lasting relationships in order to capture customers’ loyalty by satisfying the needs and wants of their target customers through providing exclusiveness and affordability (Bhasin, 2016).

Zara achieves this by ensuring customers can experience remarkable shopping through impressive customer in-store service and store ambience, such as excellent lighting, white

11 walls, big window displays, etc. Window dressing plays a huge role in Zara’s advertising appearance, as this implements an idea-oriented strategy (Shankar, Versoza, Mittias & Sia, 2009) for customers desiring to visualize the clothing offered. This entices them to browse

through products and possibly purchase spontaneously due to affordable pricing and the fact that display items would be replaced due to high turnover. Zara succeeds in this as they typically customize their stores with big window displays enabling them to exhibit designs on their mannequins’ outfits with new trendy styles (Zara Shop Report, 2014).

Zara delivers accessibility to customers’ demands by providing online browsing/shopping through their application and website (Appendix42). Word-of-mouth is an influential driver that affects customer behaviour therefore Zara provides superior customer service by meeting the demands of their target market (Bernard, 2011), as positive reviews and feedback achieves an increase in sales. By having a unique supply chain system, it has gained brand and customer loyalty that is highly necessary to stay competitive. Zara also controls their inventory by having limited stocks for respective collections, as they want customers to feel exclusive and different from each other with less replicas.

Microenvironment Competitors As ‘competition’ is a microenvironment force, Zara’s fast-paced fashion industry has to compete with other brands like H&M and Uniqlo in order to be a distinctive brand. As shown in Appendix 43, these competitors have their presence dispersed around Malaysia compared to Zara, which gives them advantages of convenience by having more number of stores with larger areas covered. Therefore, Zara should take action by opening more outlets in Malaysia to compete, while inc...