Everyone can remember the controversial Benetton campaigns designed by Oliviero Toscani. For many years, these campaigns had enjoyed great success with a unique and provocative advertising.
However, when Zara and H&M entered in the fashion market and started capturing market share and brand loyalty through a different strategic approach, Benetton had to react and rethink its marketing strategy.
A couple of weeks ago, with my MBA group visited Inditex Group the Spanish fashion group located in Arteixo that owns brands like Zara, Massimo Dutti, Bershka, Oysho, Pull and Bear, Stradivarius, Zara Home, Tempe and Uterqüe, and also a low cost brand Lefties.
Zara is the Spanish clothing and accessories retailer and the flagship chain store of Inditex. Zara has changed the fashion business model because from the beginning understood the new patterns of consumer behaviour by designing new products and distributing finished goods to its stores all over the world in two to four weeks, this strategy means that by shortening the product life cycle Zara has greater success in meeting consumer preferences. Zara has studied the marketing mix variables as well and has seen that global supply management, service and physical evidence such as store prime location and its layout were more important than traditional marketing expenditure on advertising.
Zara spends 0,3% of total revenues on advertising and marketing, this is significantly less than their competitors who on average spend 3-4% of their total revenues on similar expenditures (source: ZARA: Fast Fashion, case study by Harvard Business School), or Benetton alone that focus on creative advertising spending more that 80 mm euros on advertising alone.
For me, marketing means that by understanding the customer needs and making marketing choices to match these needs is the main goal of any business. In the case of Zara, the business prospered due to its focus on rapid delivery of fashion while Benetton has seen its error by investing a large amount of money in modernising its global supply network. Vincenzo Scognamiglio, Benetton’s chief designer says “time is my enemy”.
In conclusion, advertising is not everything, we need to use the full range of marketing mix the basic 4p’s: price, product, promotion and place and the extended ones (+ 3p) people, process and physical evidence) to succeed.