Question

Select two business format franchises choosing one targeted primarily at consumer markets and the other targeted primarily at business-to-business markets. Develop a profile of each, examining their strategy across each of 8Ps and also evaluating its competitive positioning.

Answer 1

ZARA

Company Profile:

ZARA is a clothing company targeted at consumer markets.

Overview

Zara is a popular Spanish clothing store that uses a very clever marketing strategy to achieve its business goals. Consequently, Zara has become Spain’s best-known fashion brand. Amancio Ortea Gaona started the company in 1963. A half a century later, it has become own of the world’s fastest growing manufacturer of affordable Spanish fashion clothing.

1. Product elements:

Designing, producing and selling garments. The product range is from trousers, shirts, bags to shoes. Their product line combines both male and female clothing. They sell good quality for a good price. Zara is known as the Coca Cola of fashion. Such is the craze of this brand among the fashion enthusiasts. One of the major strength of the company is that it is able to respond very quickly to the changing needs of the customers.There are employees in the stores who help to find the fitting clothes.

The company does not outsource its manufacturing process, making it fully in control of the products it produces. Its unique selling preposition is to create the latest trends. In most cases, new styles are normally available on the sales stores within two weeks, four weeks maximum. If a product is not selling in the stores, it is immediately pulled from the stores.

2. Place and Time:

Currently, there are over 2000 globally including China, and the numbers are likely to double in the near future.

The locations they choose for selling their products are in prime positions. That means that they are located in districts which concern other brand offering the same level of service and quality of products.

In fact, 90% of Zara stores are owned by the company and the rest are joint ventures of franchises. This means that customers experience the same environment when entering one of the Zara stores be it they are in London, New York, Paris, Rio de Janeiro. The stores are spacious, well-lit, modern and predominantly whiter and walled with mirrors.

Time:

Customers use the services and buy the product during a walk through these mentioned districts where most of these kind of brands are located.

3. Price

Because the concept of Zara is to provide its products at a reasonable price to its customers, it follows that customers find its prices quite affordable. However, we have to know that we are referring to the cream customers who would compare Zara with Hugo Boss or others. Some Zara stores might be very premium whereas others will be very much affordable. But mostly Zara has a premium pricing strategy. The pricing is made possible by optimizing development and training costs.

4. Promotion:

Zara has a unique marketing policy of “Zero investment in marketing”. Instead, the company uses the money it would have used to advertise in opening new stores. The striking thing about Zara is that it has found differences that matter to the consumers and used that to differentiate itself from the rest of the competition. In other words, its key marketing strategy is based on exclusivity, experience, differentiation and affordability.

In essence, the company relies heavily on the word of mouth advertising more than anything else does. The products target population in age group 18-40 that live in the cities. This is because; this group is the most fashion conscious, more than any other group. Specifically, the market segment comprises of women (65%), men (25%) and children (15%) all of them being fashion conscious, educated and fall in the middle class category.

Small and regular product shipments are designed to keep the inventory scarce and fresh; compelling customers to buy urgently and frequently visit the store to check what is new. Bar coding, online shopping and computer, aided purchases are all measures designed to increase sales and make it a global brand.

5. Process:

Process is not very complicated. The customer goes into the store looking for new clothes. The selling person helps the customer to find the fitting product by evaluating the fit of the clothes. Is an appropriate product found the selling person accomplishes the purchasing process. After the customer pays for the goods he/she leaves the store.

6. Physical Environment:

The stores used by Zara are very stylish and modern. The stores are spacious, well-lit, modern and predominantly whiter and walled with mirrors.

The staff located in the stores is friendly all the time and helps to find the fitting and appropriate clothing.

7. People

The people are the source who run the business, these are the companies employees, without them the business will not be able to operate and generate a successful name. Zara employees complete daily tasks that present a business, they have to ensure that they supply a good customer service to benefit the sales of their products.The elegance with which the shop attendants are groomed is commendable and everything is worked out according to a plan that is very precise. Every store manager has free access to talk to their counterparts at Spain regarding the marketing and improvement strategies.

8. Productivity and Quality

The Quality of the offered products is high, the condition of the clothing stays stable for long time of wear. The Quality is comparable with those from higher pricing Brands.

Zara have a highly developed its Value Chain. This allows designing, producing, delivering and selling their products in a quite fast way. This is an indicator for a good productivity.

HERTZ

Hertz is a leader car rental company focused either on individuals (B2C) and companies (B2B) business

Overview:

The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc. (NYSE: HTZ), is the world's largest general use car rental brand, operating on its own and through agents and licensees in  9,700 international corporate and franchisee locations. Hertz works closely with business (B2B) on a local level through Hertz Link, which has been specially developed with the understanding that efficiency, reliability and quality of service are of high importance when running a business, as well as price.

1. Product

The core product offered by Hertz is car rental, for both individuals and corporate customers, that responds to the customers´primary need. There are also many supplementary service elements that help customers to use the core product effectively.

The products of Hertz are various cars in many different categories. From the Green Collection (refers to organic and sustainable cars) to Trucks. Some of the products offered are:

- Green Collection: Make and model reservable. Environmentally-friendly and fuel-efficient.

- Fun Collection: Make and model reservable. U.S. vehicles include SIRIUS Satellite Radio.

- Hertz Prestige Collection: Make and model reservable. US/Canada vehicles include NeverLost(R) In-Car Navigation.

- Car/Convertible

- Estate

- 4WD/AWD/Minibus

- 4WD/AWD/4x4

- Special

- Commercial Van/Truck

- Monospace MPV

- 2 Wheel Vehicle

2. Place and Time

Place: The booking of cars is possible by using different channels which are internet, telephone and directly at the offices.

Time: In the internet and by using telephone the whole day 24/7. The rental offices have different opening times, depending on the country and place they are.

The company offers a "Self Service Express Kiosks" service, for which the customer can prepay and get on the road quicker, having checked-in online previously. This service is only available in some locations.

3. Price:

Hertz is a premium provider for car rental. The price is therefore higher than from low cost rentals. The service which is delivered is high class.

4. Promotion:

The promotion of Hertz is mostly in the internet but also on signs in the streets. In the internet for example is a platform called connected by hertz. It’s a service which allows rent a car only for a few hours unfortunately it’s located only in a few big cities. A lot of promotion is also done in airports. The car hiring service point is yellow with promotion on it. Every passenger of the airplanes sees the service point and is remembered to hertz.

For business applications are specials offered which allows to book faster and cheaper.

5. Process:

For this kind of service, it´s known that , how a firm does things is often as important as what it does. Creating and delivering this service requires design and implementation of effective processes. Here, customers are actively involved in the process, as they are co-producers.

The car hiring process is not very complicated. The internet solution is the easiest rental process. You only have fill out an internet application and you receive a confirmation by e-mail. By phone you have to give your data to the person on the phone. A confirmation is also sent by e-mail or if preferred by postal service.

When booking at the service point of Hertz the problem is that maybe not all categories of cars are available. It’s also easy to book but you are not sure the wanted car is free.

6. Physical Environment:

Mostly at airports are the car rentals of Hertz easy counter where you can stand in front. The selling person sits behind the counter and makes the necessary details.

Out of airports are Hertz car rentals normal bureaus. The main colour is yellow which fits to the corporate design.

7. People

According to the mission who is given by Hertz they want to be the most customer focused company in the rental sector. This is achieved by involvement of the employees in generating shareholder value. The involvement helps Hertz to communicate the mission to the employees. They give the mission to the customer by helping them in a friendly and competent way.

8. Productivity and Quality

The quality of the offered service is high. They sell their services for high price and give the customer the best possible service in the rental sector.