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Take the example of Benetton, founded in Italy in 1965.
Benetton, which for years had enjoyed great success with a unique brand of clothing and provocative advertising, had to rethink its marketing strategy when new fast fashion competitors such as Zara and H&M entered the young fashion market and started capturing market share and brand loyalty through a comprehensive marketing strategy.
Zara understood the new patterns of consumer behaviour of teenagers and young adults – markets that craved new styles quickly and cheaply and were happy with ‘disposable clothing’.
Zara studied the marketing mix variables and saw that global supply network management, service process and physical evidence such as store layout and design were more important than traditional marketing expenditure on advertising.
Zara’s advertising budget is 0.03 per cent of its revenues,4 which is very different to Benetton that focused on creative advertising, spending €80 million on advertising alone. Benetton has now seen the errors of its ways, investing over €160 million in modernizing its global supply chain.
It can now deliver new styles to its worldwide stores once a week rather than once a month, which was its traditional delivery strategy. According to Vincenzo Scognamiglio, the head designer of Benetton, ‘Time is my enemy.’
Zara and H&M have very lean supply chains capable of replenishing shelves in days rather than months. Managing your supply network can be as important as style in the increasingly cut-throat business of mass market cloths.
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