1. Barriers to entry: HIGH
1. High fixed cost business requires economics of scale for sustained profitability
2. High SG&A which includes advertising, in-store promotions, etc.; up to 3.5% of its revenue, even though for Zara, the company is famous for spending minimum level of advertisements and commercials. However, recently the company announced that it invested €450 million in commercials as well as logistics area (Inditex, Inditex’s net sales rise 6% to 7.7 billion euros, 2013).
3. Concept to store which takes 6 months to a year which refers to long sales cycle. However, in case of Zara, the lead time of clothes first-designed by the designer teams to finished products sold at the store take only about two weeks.
4. Brand equity which is valuable to consumers
1. Barriers to entry: HIGH
1. High fixed cost business requires economics of scale for sustained profitability
2. High SG&A which includes advertising, in-store promotions, etc.; up to 3.5% of its revenue, even though for Zara, the company is famous for spending minimum level of advertisements and commercials. However, recently the company announced that it invested €450 million in commercials as well as logistics area (Inditex, Inditex’s net sales rise 6% to 7.7 billion euros, 2013).
3. Concept to store which takes 6 months to a year which refers to long sales cycle. However, in case of Zara, the lead time of clothes first-designed by the designer teams to finished products sold at the store take only about two weeks.
4. Brand equity which is valuable to consumers
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