INTEGRATED PROJECT PRESENTATION

POORNA MADAN PGFMG - 3

OBJECTIVE

•

To pick up a brand and study about it in details

•

Give a business proposal and explain how it will work

•

What are the strategies that it will have to follow in order to penetrate better in the market

•

To show the entire planning of the project from scratch to how it will be launched

THE CONCEPT

•

To introduce the brand ZARA HOME in India

•

Bring fashion into the homes of the people and change the meaning of home décor

•

Take the brand ZARA to another level

• THE MARKET: • The furnishing market in India is booming • Expected to touch 20,000 crores by 2012 • Has an average growth of 12% • Contributes 4% to the GDP • Provides employment to 15 million people • It is the bed and bath segment that dominates the genre taking up two thirds of the furnishing segment.

• The shift in the industry toward branded products has become more pronounced in the recent past (exposure to international brands)

RATIONALE

THE BRAND

• Zara is now a well established brand in India, benefit for zara home • People trust the brand, loyal • Zara home is doing good in the International market • Since 2003, 293 stores in 28 countries and still expanding n .

( http://www.india-reports.com/summary/documents/wp-home-furnishing-051108.pdf

PROJECT SCOPING FORM

PROJECT NAME : Getting zara home to India (Brand extension) PROJECT MANAGER/TEAM MEMBERS : Poorna Madan PROJECT GOAL: To bring Zara home to India and creating awareness about the new line of home decor.

• SUCCESS CRITERIA: Meeting potential customers • Meeting people who have visited zara home abroad • Introducing the concept of fashionable home decor and taking the furnishing market to another level • OPPORTUNITY: Huge market of furnishing in India, expected to reach 20,000 crore by 2012 • • Introducing a new concept of Fashionable home decor Zara is already an established brand in India and doesn’t need any efforts to make people aware about the brand • Zara home is doing well in other countries, it has 293 stores in 28 countries OBJECTIVES: • • • • To study the furnishing market before establishing the brand in India To study the market and understand the potential customers Then accordingly deciding on the strategies to be used To establish its name in the home furnishing market just like it has established itself in the clothing line ASSUMPTION : The name is so well accepted in India because of its clothing lines that people will try its home decor products too RISKS : Existing brands in the market OBSTACLES: No store in India in order to understand its functioning in details

RESEARCH METHODOLOGY

RESEARCH OBJECTIVE 1: To study the brand Zara in details and understand its strategies and working RESEARCH DESIGN: Exploratory and Descriptive DATA COLLECTION METHOD: Primary (from stores, work staff), Secondary (internet, articles, essays) RESEARCH OBJECTIVE 2: To study the furnishing market and do the market analysis RESEARCH DESIGN: Exploratory DATA COLLECTION METHOD: Secondary RESEARCH OBJECTIVE 3: To understand what people think of the brand ZARA.

RESEARCH DESIGN: Descriptive DATA COLLECTION METHOD: Primary (Brand audit) SAMPLE DESIGN: Sample units: Women Sample size: 15 Sample technique: Judgementa l RESEARCH OBJECTIVE 4: To understand the customers of home furnishing products and what they think of ZARA HOME coming to India RESEARCH DESIGN: Descriptive DATA COLLECTION METHOD: Primary (Questionnaire)

SAMPLE DESIGN:

Sample units: Women between the age of 25 - 45 Sample size: 50 Sample technique: Judgemental RESEARCH OBJECTIVE 5: To study about Zara Home and its working strategies in other countries RESEARCH DESIGN: Exploratory DATA COLLECTION METHOD: Secondary

SWOT ANALYSIS

STRENGTHS Well established Brand strong customers No fashion brand has home décor Fast fashion WEAKNESS They play with limited colors Indian culture demands bright colors too SWOT OPPORTUNITIES Booming market in India Increase in demand of branded goods (exposure to international brands) THREATS Another fashion brand with same concept No acceptance

INDITEX (PARENT COMPANY)

• Inditex - large Spanish corporation, the world's largest fashion group • Headquarters – Arteixo, in the province of A Coruña, Galicia, north western Spain.

• Runs over more than 5,000 stores worldwide • BRANDS - Zara, Zara home, Massimo Dutti, Bershka, Oysho, Pull and Bear, Stradivarius, Tempe and Uterqüe, and also a low cost brand Lefties • 2008 – Took over GAP • • • •

INDITEX BY 2011: On April 20, 2011 - first Zara flagship in Australia Made its presence in 5 continents, 78 countries Full-year sales growth of 13% to Euro 12.53 billion Net worth – US$31 Million

http ://www.inditex.com/en/who_we_are/our_group http://www.retailangle.com/companynewslisting.asp?company_name=Zara&display_name=Zara )

BRAND VISION

• • To be in tune with the customers and provide them with what they wish • To continuously increase its number of stores and have it’s presence everywhere Expand itself online

BRAND MISSION

ZARA contribute to the sustainable development of society and that of the environment with which we interacts

BRAND PHILOSPHY

Short lead time = more fashionable clothes Lower quantities = scarce supply More styles = more choice and more chances of hitting it right .

ZARA

• • • Founded in 1975 by Amancio Ortega • Flagship store of Inditex • Strategy of Fast fashion • Unusual strategy of 0 advertising • 1980 – international expansion with Portugal 1989 – U.S.A

1990 - FRANCE •

ZARA NOW : 2011 1557 STORES IN 73 COUNTRIES, STILL COUNTING

•

44th most valuable global brands released by brand consultancy Interbrand, Leaving behinh high end fashion brands like HERMES, BURBERRY

http://www.inditex.com/en/press/other_news/extend/00000887 http://www.interbrand.com/en/Default.aspx

http://thirdeyesight.in/articles/ImagesFashion_Zara_Part_I.pdf

•

Zara - valued at USD 8,065 million (EUR 6,056.5 million) 8% higher than the previous year

REF. HAVARD CASE STUDY

MARKET ENTRY STRATEGY

FOLLOWS TRHEE TYPES OF STRATEGIES: • COMPANY OWNED – MAXIMUM STORES • FRANCHISING:– SMALL AND RISKY COUNTRIES Eg: Andorra, Iceland, Poland, and the Middle Eastern countries • JOINT VENTURE – LARGER, IMPORTANT MARKETS, BARRIER IN DIRECT ENTRY Eg: Germany, Japan, India

MARKET ENTRY IN INDIA:

JOINT VENTURE WITH TRENT LIMITED FDI REGULATION – 49% HOLD WITH THE LOCAL RETAILER

ZARA INDIA

• Launched first store – May 29, 2010, Select city walk (Saket), 18,000 sq. ft • Within 1 WEEK – Promenade and Palladium mall Mumbai • Joint venture with Trent Limited • City walk - Highest one day sale recorded by an international retailer (90 lakh) • Monthly sales of 4-5 crore at every store • 2011 – 6 stores http://www.thirdeyesight.in/articles/zara_pitch.htm

PRODUCTS

Woman collection: •Coats •Blazers •Dresses •Skirts •Trousers •Jeans •Knitwear •Shirts •T-shirts •Shoes •Handbags •Accessories TRF collection: •Coats •Jackets •Dresses • Skirts •Trousers •Jeans •Knitwear •Shirts •T-shirts •Shoes •Handbags •Accessories Man •Coats and trench coats •Jackets •Blazers •Suits •Knitwear •Shirts •T- shirts •Trousers •Jeans •Basics •Shoes •Bags •Accessories •Home wear KIDS •Girls ( 2- 14 years) •Boys (2-14 years) •Baby girl (3- 36 months) • Mini (0-9 months) STRATEGY: NEW PRODUCTS – 10 DAYS 12,000 DESIGNS EVERY YEAR ARTIFICIAL SCARCITY OF PRODUCTS = INCREASE IN SALES

PRICE

Zara's scarcity climate allows the company to sell more items at full price The woman collection starts at Rs. 990 and goes up to 12,990 in case of overcoats and jackets The TRF Collection:

Starts at Rs. 250 (Ganjees) and goes up to Rs, 5,690

The man collection :

Starts at Rs. 990 and goes up to Rs 11,990 The kids collection starts at Rs. 450 and goes up to Rs. 3,690

STRATEGY: Inditex for Zara opens stores and outlets that provide the Zara experience at high profile locations to set the image of the brand as being trendy, hip, high fashion and accessible

PLACE

• • • DELHI – 3 STORES Select citywalk, Saket DLF Promenade, Vasant Kunj Pacific Mall, Tagore Garden • MUMBAI – 1 STORE Palladium commercial centre • PUNE – 1 STORE Pheonix market city • BANGALORE – 1 STORE Whitefield ( 3 RD November 2011)

PROMOTION

Strategy of 0 advertising Spends only .3% of its sales on promotion and advertising • • • • •

PUBLIC RELATION TOOLS:

Stores Launch event – RED CARPET Catalogues, look books, campaigns (website) Facebook Style shoots •

PERSONAL SELLING:

Newsletters •

BELOW THE LINE ACTIVITY:

Cash back

THE BRAND ‘ZARA’

ZARA BY IT’S FOLLOWERS

What comes to your mind when you hear the brand name ZARA?

Fast fashion, innovation, value for money, huge store, its logo, bright colours at the trf section, puffed sleeves t-shirts What do you feel of others who wear Zara?

What do you feel of yourself when you wear Zara?

What other brands are you aware of which are like Zara?

How do you compare the brand Zara with other brands?

Experimental, brand conscious, well dressed, trendy, updated with fashion Stylish, confident, happy, content, comfortable, chic, exclusive, fresh Nothing beats Zara, Forever 21, Vero moda, Mango, Promod Not fast but fastest fashion, Variety, price, availability of colours, quality

BRAND IDENTITY PRISM

PICTURE OF SENDER PHYSIQUE INNOVATIVE, TRENDSETTER, MAGNETIC, THE LOGO, THE STORE I O N E X T E R N A L I Z A T RELATIONSHIP DEPENDENT ON THE BRAND, GOOD QUALITY, AFFORDABLE PRICE KAPFERER’S BRAND IDENTITY PRISM PERSONALITY FASHIONABLE, FRESH, CHIC, TASTEFUL CULTURE EUROPEAN, SUSTAINABLE, FAST FASHION REFLECTION UPDATED, TRENDY, EXPERIMENTAL, ONE OF THEM SELF IMAGE CONFIDENT, STYLISH CONTENT PICTURE OF RECIPIENT I O N I N T E R N A L I Z A T

I LOVE ZARA: MEMORIES AND THOUGHTS

“

MY TRIP TO A MALL IS INCOMPLETE IF I DON’T VISIT ZARA” “I LOVE ZARA SOO MUCH THAT IF IT WAS A MAN I WOULD HAVE MARRIED HIM, LOL!!”

“ I DEPEND ON ZARA , IF I HAVE TO GO SOMEWHERE AND NEED SOMETHING TO WEAR I KNOW I WILL FIND SOMETHING AT ZARA” “I CAN NEVER FORGET MY 21 ST BIRTHDAY DRESS THAT I GOT FROM ZARA 2 YEARS BACK, I LOVE IT!!” “MY BOYFRIEND GIFTED ME 2 DRESSES FROM HIS FIRST SALARY, THE DRESSES ARE VERY PRECIOUS TO ME“

VALUE PROPOSITION

FUNCTIONAL BENEFITS

PRICE : EASY ACCESS TO LATEST FASHION AT AN AFFORDABLE EMOTIONAL BENEFITS: CLOTHES , CONTENT WEARING THE LATEST FASHION, HAVING THE BEST OF SELF EXPRESSIVE BENEFITS: STYLISH, EXCLUSIVE

ZARA HOME

• Youngest commercial format by Inditex • Created in 2003 • Part of Zara • Most of its products are textiles: bed, table and bathroom linens • Brings Fast fashion to home furnishing • Has 295 stores in around 30 countries

PRODUCTS TO BE LAUNCHED

BEDROOM BATHROOM LIVING ROOM TABLEWARE HOMEWARE BODY AND BATH

MERCHANDISE MIX

PRICE

The pricing would be similar to that in DUBAI. (REFERED) The products would be between the range of Rs. 500 – Rs. 20,000 BEDROOM: Rs. 950 – Rs. 15,000 (for some specific quilts) BATHROOM: Rs. 450 – Rs. 3000 DINNERWARE: Rs. 900 – Rs. 8000 (dinner sets) LIVINGROOM: Rs. 900 – Rs. 18,000 (some rugs) HOMEWEAR: Rs. 900 – Rs. 3000 BATH AND BODY LINE: Rs. 250 – Rs. 1500

PROMOTION

Zara already has a very strong name, benefit for Zara Home • • PUBLIC RELATION: CATALOGUE, LOOKBOOK, CAMPAIGNS FACEBOOK – Creating a Zara home India page, • posting about its opening on the Zara clothing page EVENT: Red carpet event in the store, only by invitation done by propaganda events • INAUGRATION BY TWINKLE KHANNA HOME STYLIYST • • • • Cash back Delivery Coupons at Zara clothing Gift Vouchers: i) Rs. 10,000 gift card for Rs.7500

ii) Rs. 12,500 gift card for 15,000

COST OF THE EVENT

INVITATION : A CARD IN A BOX : Rs. 300 per card CATALOGUE: Rs. 250 per catalogue CANDLE: Rs. 100 per piece TOTAL COST = 650 per piece INVITES = 350 Approx Total cost = Rs. 2,27,500 EVENT: ORGANIZED BY PROPAGANDA EVENTS F&B = Rs. 2500 per person Total cost = Rs.2500*350 = Rs. 8,75,000 approx DÉCOR, EVENT AND ORGANIZATION FEE :Rs.2,00,000 PLUS THE FEE FOR CALLING TWINLE KHANNA = Rs. 10,00,000 Total cost = Rs. 20,75,000 TOTAL COST : Rs. 23,02,500 approx

INTEGRATED MARKETING COMMUNICATION TABLE

JANUARY EVENT GIFT VOUCHERS FREE DELIVERY FEBRUARY GIFT VOUCHERS STYLE SHOOTS FREE DELIVERY MARCH COUPONS FREE DELIVERY APRIL STYLE SHOOTS FREE DELIVERY MAY

--------

FREE DELIVERY JUNE STYLE SHOOTS FREE DELIVERY CASH BACK ON PURCHASE ONLINE PROMOTIONS HOME STYLIST CASH BACK ON PURCHASE ONLINE PROMOTIONS HOME STYLIST CASH BACK ON PURCHASE ONLINE PROMOTIONS HOME STYLIST CASH BACK ON PURCHASE ONLINE PROMOTIONS HOME STYLIST CASH BACK ON PURCHASE ONLINE PROMOTION HOME STYLIST CASH BACK ON PURCHASE ONLINE PROMOTION HOME STYLIST JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER --------- --------- COUPONS -------- COUPONS COUPONS FREE DELIVERY CASH BACK ON PURCHASE ONLINE PROMOTIONS HOME STYLIST FREE DELIVERY FREE DELIVERY CASH BACK ON PURCHASE CASH BACK ON PURCHASE ONLINE PROMOTIONS HOME STYLIST ONLINE PROMOTIONS HOME STYLIST FREE DELIVERY CASH BACK ON PURCHASE FREE DELIVERY CASH BACK ON PURCHASE ONLINE PROMOTIONS HOME STYLIST ONLINE PROMOTION HOME STYLIST FREE DELIVERY CASH BACK ON PURCHASE ONLINE PROMOTION HOME STYLIST

• • • • • 1 st

STORE, Year 1

SELECT CITYWALK, Saket Exclusive Store in Delhi AREA: 8000 Sq. Ft RENT: 500 Rs per sq ft.

INTERIORS: 2000 Sq. Ft

PLACE

2 nd STORE, Year 2 Palladium mall, MUMBAI AREA: 8000 sq. ft approx RENT: 300 sq. ft INTERIORS: 2000 Sq. ft

CONSUMER PROFILE

SEGMENTING DEMOGRAPHICS: AGE: 22 YEARS – 45 YEARS INCOME: UPPER MIDDLE CLASS – UPPER CLASS OCCUPATION: WORKING WIVES, YOUNG ENTERPRENEURS, INTERIOR DESIGNERS, HOUSEWIVES.

GEOGRAPHICS: Delhi – Saket, Greater Kailash, Model town, vasant vihar PSYCHOGRAPHICS: Fashionable, brand conscious, home lovers, calm, peaceful.

TARGETING

DEMOGRAPHICS: AGE: 25 Years – 35 years INCOME: UPPER MIDDLE CLASS OCCUPATION: WORKING WIVES, YOUNG ENTERPRENEURS GEOGRAPHICS: South Delhi – Vasant Vihar and Saket. Nearby areas of Select Citywalk.

PSYCHOGRAPHICS: Home lovers, fashionable.

PEOPLE’S REACTION ON ZARA HOME COMING TO INDIA

“I love doing decorating my home and if something like zara home enters Delhi, I would be glad” “I hope Zara home turns out to be like Zara, good stuff, stylish, something that stands out and affordable” “I have been to its store in Dubai at the Dubai Mall, they have beautiful stuff. Its classy and different” “My mom likes what I buy from zara, she likes the brand, I think she would definitely go for Zara Home”

POSITIONING WHAT MAKES ZARA HOME DIFFERENT

?

Innovation: not to stop but always producing new things based on customer desires and changes in market.

The brand aims to provide its customers with a fashionable home decor line at lower prices, which makes the brand popular Manufactures products according to the demands of the customers, react instantly Adds new products to the collection in every 10 – 12 days

COMPETITOR ANALYSIS

Products

Price Place Promotion

GOOD EARTH

Fine tableware,cutlery, glasses, luxuriois bed linen, cushions, pillows, kurtas, bath and skincare products STARTS AT rs. 500 – rs.3,00,000 10 stores.

Delhi -3, mumbai – 3, bangalore – 1, hyderabad – 1, Chennai – 1, singapore – 1 Gift vouchers, personal seller, bride wishlist, delivery Products Price Place Promotion

PURE

Furniture, bed & bath, home accent, tableware, mirror, wall art, lighting and floor covering Rs. 500 – 50,000 Dlf place, new delhi Newspapers, magazines

PRICE HIGH GOOD EARTH

PERCEPTUAL MAPPING

HIGH HIGHLY INNOVATIVE ZARA HOME PURE LOW LOW NO INNOVATIVENESS

BRAND ELEMENTS – ZARA HOME

NAME – ZARA HOME : SIMPLE, LIKABLE, EASY TO REMEMBER LOGO : VERY CLEAR, DIRECT, RIGHT SIZE (FIT BOTH THE EYES) COLOURS -BROWN : Color of earth WHITE - Purity PACKAGING - PAPER BAGS : ECO FRIENDLY

STRATEGIES OF ZARA HOME

• • • BUSINESS STRATEGY DIFFERENTIATION: ADDS FASHION TO HOME DÉCOR ADDS NEW PRODUCTS IN EVERY 10 DAYS GOOD QUALITY AT AVERAGE PRICE • • • • EXCLUSIVE: HUB FOR WORK MARKET COVERAGE TWO STORES – NEW DELHI AND MUMBAU STRONG CIRCLE OF INFLUENCE WEEKENDS – PEOPLE FROM DIFFERENT CITIES VISIT CHANNEL STRATEGY • • PULL: TARGET END CONSUMERS DIRECTLY CUSTOMERS SEEK THE PRODUCTS

SALES VALUE (YEAR 1) SALES VALUE= SALES QUANTITY *AVERAGE SELLING PRICE Monthly sales = 13350*2500= Rs. 3, 33, 75,000 Annual sales = 3, 33, 75,000*12 = Rs. 40, 05, 00,000 SALES SALES VALUE (YEAR 2) SALES QUANTITY = 13350 + 12% Growth + 13350 ANNUAL SALES = 28300*2500*12 = Rs 84,90,00,000 SPF SALES PER SQUARE FEET Year 0 SPF= SALES/SIZE OF THE STORE Monthly SPF = 3, 33, 75,000/8,000 = Rs. 4170 Annual SP = 40, 05, 00,000/8000 = Rs. 50062 Year 1 Annual SPF = Rs 84,90,00,000/16,000 = Rs. 5306 5 PRELIMINARY EXPENSES Preliminary Expenses Legal Expenses Rs. (Year 0) Rs. Year 1 40,000 Brand Launch costs (Marketing) 24,57,500 Other preliminary expenses Total 24,97,500 24,00,000 24,00,000

INITIAL INVESTMENT

Initial investment Total initial investment in fixed assets Interiors Other Fixed Assets Building Total (YEAR 0) Year 1 1,50,000 1,50,000 1,60,00,0 00 1,50,00,0 00 40,000 40,000 N.A

N.A

Total Fixed Assets Pre operative expenses Working Capital Investment (20% of First year Sales) Opportunity cost of existing fixed assets Initial Investments 1,61,90,0 00 1,51,90,0 00 24,00,00 0 24,97,50 0 8,01,00,0 00 16,98,00, 000 9,87,87,5 00 18,73,90, 000

OVERHEADS

Office and Administration Overheads Monthly Rentals (Rent per store*Area *12*Number of Stores) Electricity Salary 500*800 0 =40,00,0 00 1 ,75, 000 Annually Year 0 500*8,000* 12*1= 4,80,00,000 1,75,000*1 2 =21,00,000 27,36,000 2,28,000 Depreciation 67,2000 5,600 Other Office Overheads n.a

Year 1 300*8000* 12+4,80,00, 000 = 7,68,00,000 42,00,000 54,72,000 41,900+67, 200 = 1,09,100 n.a

Total n.a

44,08,60 0 5,29,03,200 8,65,81,100 Selling and Distribution Overheads Advertising and Sales promotion ( .3% of Sales) Logistics (1% of Sales) Other Selling Overheads Total 12,01,500 1,00,125 40.20,000 35,000 n.a

n.a

52,21,500 1,35,125 25,47,000 80,40,000 1,05,87,000

COST SHEET

COST SHEET

Cost of Finished Goods ( Product Cost * Units Sold) Monthly Annual (Year 1) Annual (Year 2)

0 73,42,50 8,81,10,000 15,56,50,00 0

Add Other Direct Costs

0 0

Cost of Goods Sold

73,42,500 8,81,10,000 15,56,50,00 0

Add Office & Administration Overheads Rent Electricity Salary Depreciation

40,00,000 1 75,000 2,28,000 44,08, 600 5600 7,68,00,000 4,80,00,000 42,00,000 21,00,000 27,36,000 67,200 54,72,000 1,09,100 5,29,03,200 8,65,81,000

Add Selling & Distribution Overheads Advertising & Sales promotion Logistics Discount (10% of sales) Cost Of Sales Add Interest cost ( Interest Rate * Loan) Total Cost

1,00,125 12,01,500 35,000 80,40,000 40,20,000 8,49,00,000 4,00,50,000 9,54,87,000 0 4,52,71,500 18,62,84,70 0 0 33,77,18,00 0 0 18,62,84,70 0 25,47,000 33,77,18,00 0 INCOME STATEMENT

PROJECTED INCOME STATEMENT Year 1 Year 2 Sales Less Cost of Goods Sold : Gross Profit

In Rs.

40,05,00,0 00 8,81,10,00 0 31,23,90,0 00 In Rs.

84,90,00,000 15,56,50,000 69,33,50,000

Less Office and Administration Overheads Selling and Distribution Overheads =Operating Profit (EBIT)

5,29,03,20 0 4,52,71,50 0 21,42,15,3 00 0

Less Interest on Loan Less Preliminary Expenses ( Written Off- 1/5th of preliminary expenses) EBT Less: Income Tax @33.99% EAT (NET PROFIT)

24,97,500 21,17,17,8 00 7,59,08,94 9 13,97,54,9 20 8,65,81,000 9,54,87,000 51,12,82,000 0 24,00,000 50,88,82,000 17,29,68,991 33,59,13,009