Inditex Articol PDF
Inditex Articol PDF
Autumn 2017
ABSTRACT
Syksy 2017
TIIVISTELMÄ
1 INTRODUCTION 1
1.1 Research Background 1
1.2 Thesis Objectives, Research Questions and Limitations 2
1.3 Theoretical and Empirical Framework 2
1.4 Research Methodology and Data Collection 3
1.5 Thesis Structure 4
2 FRANCHISING 6
2.1 Franchising 6
2.2 Forms of Franchising 7
2.3 Advantages and Disadvantages 8
2.3.1 Advantages of Franchising Bershka 8
2.3.2 Disadvatages of Franchising Bershka 9
2.4 Franchising Zara 11
4 COMPETITOR ANALYSIS 19
4.1 Porter’s Five Forces 19
4.2 Porter’s Five Analysis on Bershka 21
6 MARKETING TO WOMEN 30
6.1 Vero Moda 30
6.2 Comparison of Vero Moda and Bershka 30
6.3 The Difference in Customer Service and Online
Shopping 31
6.4 Marketing Bershka for the Target Audience 32
7 CONCLUSIONS 35
7.1 Answers for Research Questions 35
7.2 Validity and Reliability 37
7.3 Suggestions on Further Research 37
8 SUMMARY 39
REFERENCES 41
APPENDIX
LIST OF FIGURES
1 INTRODUCTION
This chapter helps the reader get familiar with the research topic of the
thesis. This chapter explains research background, thesis objectives,
research questions and limitations. Theoretical framework and thesis
structure are explained.
The author got the idea for the topic when being in Cyprus for the school
exchange. Cyprus had two Bershka stores which were both beautifully
decorated to catch people’s eye. The author fell in love with the beautiful
design of the clothes and constantly changing fashionable clothes
collection made from soft materials. The idea to open a new Bershka store
to Finland was born.
Finland already has Zara franchise, which is part of the Inditex group as
well as Bershka, so why not bring Bershka to Finland? The author is also
interested in women’s buying behaviour and how the company’s
environmentally friendliness affects on concumers. Interesting topic is also
how consumer buying decisions are made, so the thesis concetrates on
combining these two subjects.
For all the reasons mentioned above, the author decided to find out what it
takes to open a new Bershka store in Helsinki, Finland. However, this
thesis does not make a marketing plan for a new store, instead the main
focus point is in the customer group and how to market for the selected
customer group. This thesis also provides an idea about women’s buying
behaviour for future research purposes. This thesis also examines
franchising opportunities generally and for joining the Inditex group.
Research questions
To make the thesis more constructed, the author has one main question
and three sub-questions.
The author also uses Porter’s Five Forces to analyse the market
environment for Bershka in Finland. The competition and other possible
threats are examined. Bershka as a case company is introduced and the
ecological factors and how they affect consumers are discussed.
The empirical part of the thesis is an interview done with women’s clothes
store Vero Moda’s store manager. The author uses this interview first to
compare Vero Moda and Bershka. Differences between customer service
in both stores are taken into account.This part of the thesis is a
comparison to how Bershka could succeed among Finnish customers.
There are two research methods that can be applied to a thesis. Deductive
and inductive methods. Deductive research method is seen as more of a
top-down approach that works from the general to the specific. Deductive
approach lets a market researcher think about research that has been
conducted and develop an idea about adding to that theoretical
foundation. In an inductive method, the researcher does not consider
related theories until further along into the research, this means that
theories or hypotheses do not apply at the beginning of the research.
(Kothari 2004, 3, 4.)
There are also two types of data, qualitative and quantitative. Qualitative
methods focus more on small or localized objectives and examine them
more deeply. Qualitative data allows the individual to build up their own
theory. Qualitative methologies analyse subjective experiences with a
level of depth over a long period of time. In contrast, quantitative methods
tend to be more numerical. Quantitative data includes mathematical
structures and analytical graphs to reveal research answers. (Walter &
Andersen 2013, 11) Quantitative data is studying and measuring how
variables change. There are several types of variables which can be
4
From here we can see how the author is planned to write the thesis. Each
part is marked in the order of appearance.
Theoretical part
Introduction Franchising, consumer
Thesis background,objectives, behaviour and marketing,
data collection methods, competitor analysis, customer
limitation, structure segmentation, Bershka and the
ecological impact to consumers
Empirical part
Interview with store manager, Conclusions
comparison of Vero Moda and Answers to research questions
Bershka and findings
Summary
This thesis consists of seven chapters. In the first chapter the author
explains the methods and reasons for this study, second chapter focuses
5
2 FRANCHISING
2.1 Franchising
Franchisors run the business according to the operation’s manual and the
franchise contract. Franchisors must also pay the franchise fee (licence
fee) and ongoing royalties as well as marketing and advertising fund.
(Caramela 2016.)
7
Buying a franchise offers many advantages that are not available for
entrepreneurs starting from scratch. In addition to a well-known brand
name you also get proven system of operation and training in how to use
the system. New franchisees can avoid a lot of mistakes in starting a
business, because the franchisor has already perfected daily operations
through making mistakes and experimenting. (Entrepreneur 2017.)
Reduction of risk
Standardized systems and products
9
come from Inditex factories, which means the quality is checked so that it
is consistent. Since each franchisee affects the whole chain, there is a risk
that other Bershka franchisees perform poorly and that gives bad
repurtation for the Bershka under planning. (Bershka 2017.)
There are also risks associated with the franchisor performance. When the
franchisee signs the franchise agreement the franchisee is formally binded
into a particular franchisor and it is, therefore, vital to select one which is
competent and ethical. (Holden 2017.) Learning more about target
companies’ environmental policy, code of conduct and circular economy is
necessary to understand how the business works. Bershka has very strict
policies concerning environment, code of conduct and circular economy.
These policies and how they relate to consumer behaviour are defined in
chapter four.
11
Zara landed to Finland in 2002 and at the time, Zara’s stores were being
franchised by Stockmann. In 2013, Stockmann ended franchising contract
with Inditex due to the fact that Stockmann wanted to concentrate on their
own core business. Zara stores in Finland are owned by Z-Fashion
Finland, which is also owned by Inditex. (Penttilä 2013).
The third factor is personal factors. These are person specific factors that
may not relate to any certain group of people. These characters include
person’s habits, interests and opinions. The consumer behaviour is
13
Consumer choise modelling was not developed by only one person. The
history of consumer choice modelling was developed independently by
mathematical psychologists and economists. Consumer choice shows how
people make choices given their financial status and preferences.
(Investopedia 2017).
The habit model is controlled by brand name, logo and other features that
are associated with a product as a result of previous purchase. In this
model, the consumers may be unaware of improvements in products from
which they could benefit. This purchasing model can be frequently
satisfactory but it may not be always the best solution due to the fact that
consumers always buys the same model unaware of the new one. (East,
Wright, Vanhuele 2013, 13).
14
When talking about women’s buying behaviour and how it affects stores
we have to mention Zara, which is the most successful of Inditex stores.
So what does Zara know about women that other stores do not know?
Zara has scored several victories. First of all, their knock-off or otherwise
called “speed-to-market” within the industry is incredibly fast. When you
see something in the Paris runway, two weeks later you are able to buy a
copy from it in Zara. Zara sees, copies, produces and delivers. (Underhill
2010, 124.)
Zara has also trained its shoppers to accept the prices. If you see
something you like and it fits you should buy it because it will never go on
sale and it will not be in store next week. Bershka works in the same
principle as Zara. The fashion shifts quickly so the stores must adapt to it
to get the trendiest collection first to attract customers. (Underhill 2010,
124).
Companies today recognize they cannot appeal to all buyers in the same
way. Buyers are too varied on their needs and buying practises.
Companies must identify the parts of the market they can serve best and
most profitably. Thus, companies have moved away from mass marketing
and toward target marketing. Target marketing includes identifying market
segments, selecting one or more of them and developing marketing
programs tailored for each. (Kotler, Armstrong 2014, 214).
Bershka’s target consumer group is Finnish women. The main question is:
how to market Bershka for Finnish women? Young Finnish women spend
a lot of time in the internet. Studies show that 87 percent of young Finnish
women between the age of 16 to 24 use internet many times in a day.
(Tilastokeskus 2017.)
The increased use of internet and the facilities websites offer may change
the rationality of choice. The ability to compare prices online drives down
the price of goods and services bought online. The internet makes it easier
to compare products and prices without leaving your house, so it can take
some of the effort out of the shopping. The internet can assist consumers
to make better decisions and buy more cheaply, but it also takes the
shopping experience the consumer gets from the store away. If women
shop for the basics or clothes from familiar brand they already know,
online shopping can save time and be more convenient. When women
want something more unique for special occasions they go to stores
because they want customer service. (East, Wright, Vanhuele 2013, 14).
utilitarian shoppers since they can control the whole shopping experience
better when shopping on the internet. (Fernie 2005, 123)
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4 COMPETITOR ANALYSIS
In this chapter the author explaines Porter’s Five Forces and then uses the
model to analyse Finnish competition for Bershka.
Before using Porter’s Five Forces model, the five areas that help shape
competition must be understood. The five areas are:
Bargaining power of suppliers analyses how much power and control the
supplier has over the prices. The number of suppliers available is
analysed, the fewer there are, the more power they have over the market.
Suppliers can capture more value for themselves by charging higher
prices or limiting services. (Martin 2017).
amounts the buying power is low. Powerful customers can capture more
value by forcing down prices, demanding better quality and more service
and generally playing industry participants off against one another. (Martin
2017; Porter 2008, 14, 15).
Threat of new entrants studies how easy or difficult it is for the competitors
to join the marketplace in the industry that is being examined. Profitable
markets attract new entrants, which erodes profitability. New entraints to
an industry bring new capacity and desire to gain market share that puts
pressure on prices, costs and the rate of investment necessary to
compete. (CGMA 2013; Porter 2008, 18, 8).
The threat of new entrants was found low. If Bershka were to enter the
Finnish market, it is possible that another Inditex group store could follow.
Inditex has already Zara and Massimo Dutti placed in the centre of
Helsinki. It might also be possible that smaller not so well-known
companies could try and follow if Bershka succeeds.
has the competitive edge because of the low prising and constantly
changing collection that is designed for the young and adventurous.
(Bershka 2017).
Threat of new
entrants
LOW
Rivalry amoung
Bargaining
excisting
power of
competitors
suppliers
HIGH
MEDIUM Porter's
Five
Forces
Threat of
Bargaining
substitute
power of buyers
products
HIGH
MEDIUM
Porter’s Five Forces figure above concludes the analysis. Finnish market
area is competitive and the highest threats are caused by the bargaining
power of buyers and rivalry among excisting competitors. Bargaining
power of supplier was found medium as well as the threat of substitute
products. Threat of new entrants in Finland is low because of the high
entry barriers for Finnish clothing industry.
24
This chapter discusses briefly Inditex and then the case company
Bershka. Bershka’s environmental affect on consumer buying habits is
discussed as well as ecological affect to consumers.
5.1 Inditex
5.2 Bershka
Bershka was created in 1998 as a new brand of the Spanish group Inditex.
Inditex has over 1000 Bershka shops in more than 70 countries, with sales
representing 9% of the total revenue of the group. Bershka has a sales
area of over 455,000 square meters. Bershka is targeted for adventurous
young people who are aware of the latest trends and are interested in
music, social networks and technology. Bershka’s products vary from
casual wear to sports and from basic garments to more fashionable items.
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Saving energy.
Eco-efficient stores.
26
Team awareness.
(Bershka 2017).
Bershka shares the same values of many consumers. People are very
aware of the environment and shopping in a store that is designed from
used furniture and eco-friendly materials attracts customers. There are
several psychological buying behaviour factors that the awareness of the
environment triggers. The consumer wants beautiful clothes and it is
considered as a good factor that the garnment is made while thinking
about the environment and the impact on the environment. (Bershka
2017).
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Everything Bershka does starting from the making of the clothes affects
the customers. Bershka sells clothes to consumers with the whole product
lifecycle in mind. Consumers get latest fashion clothes that they can be
sure are made responsibly by following circular economy. (Bershka 2017).
Inditex has 4,519 eco-stores, the aim is to have 100 percent eco-efficient
stores by 2020. One of the primary considerations in Inditex stores is eco-
effiency. New stores are designed eco-effiently and old ones are
renovated to comply with effiency targets. There are several factors to why
eco-stores are more efficient. The main factors include saving energy with
using led lightning and using automatic motion sensors that dim lighting up
to 80 percent when no one is present. (Inditex 2017).
the shopping experience as well. Green plants can be found in the stores,
which makes the store look beautiful but also benefits the eco-system
because plants clean the room air. (Inditex 2017).
Recycling old clothes to give them new life is infact trendy as well as
ecological. Young women tend to follow latest trends which include
recycling old clothes to give second life for them. To have recycling
opportunity in the store and knowing that used garnment will go for good
use later on will give the customers good mood and a feeling that they can
do something for the environment. (Bershka 2017).
Inditex code of conduct provides action lines which are then followed by
Inditex Group and its employees in professional duties. The goal of this
code is to demand an ethical and responsible conduct from Inditex and its
entire workforce. These are the core values which training employees and
personal and professional careers in Inditex are based upon. (Inditex
2012.)
Happy workers equal happy customers. The code of conduct makes sure
that the work force is treated in equal manner and justice. Ethical shopping
is considered as a trend and many consumers care about how their
clothes are made and where they are made. Child labour is a subject that
is closely monitored in the fashion industry. Consumers are also very
aware and research the ethicality of the business before shopping. (Inditex
2017).
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6 MARKETING TO WOMEN
Vero Moda is a women’s clothes store, part of Best Seller Retail Finland.
Best Seller consists of several brands that are: Vero Moda, Only,
Jack&Jones, Name It, Mamalicious, Pieces, Vila Clothes and Noisy May.
Best Seller brands are available online and in stores across Europe. Vero
Moda is one of the brands under Bestseller group. Vero Moda’s target
customers are both young and old women but the main customer group
are middle-aged women. (Pusa 2017)
The most bought items in Vero Moda are jeans, coats and seasonal tops.
Women tend to buy products they detect are good in the long run. If
women buy good jeans, there is 70 percent chance they will return to buy
the same jeans in different colour. Finnish women value comfortable
clothes that are “easy to wear” and do not disappoint quality wise.
Branded clothes are more important to young customers than middle aged
women. It takes women approximately 15-20 minutes to make buying
decisions in one store. Everyday casual wear clothes are very popular
whereas too unique clothes with too high prices are usually left to hangers.
(Pusa 2017.)
Bershka is known for making clothes that are according to the latest
fashion trends. This differs from Vero Moda because Vero Moda has a
collection of basic wear which is always available. Vero Moda and Bershka
differ a lot because of the ages of their target groups. Vero Moda’s target
consumer is middle-aged women who know what they want whereas
Bershka targets on young consumers that like to ride on the crest of the
wave of fashion. (Pusa 2017).
The seller has a huge impact to the customers buying decision. At least 50
percent of customers that get service will buy the products. In shops like
Vero Moda, 40 percent of customers are regular customers who shop in
the store because they get excellent customer service. Since customer
service is such a huge part of the shopping experience it is hard to say
how stores without customer service will succeed in Finland. In this case,
Bershka does not have sellers to help customers but they attend to
customers by keeping the store tempting and clean for the customers.
Bershka does not have other stores in Finland so it is also a selling point
and makes up for the loss of full customer service. (Pusa 2017.)
Though Bershka does not have a store in Finland, they have online shop
where you can order to Finland. Since people are almost all of the time
connected to internet, it has been made very easy to order online. This
32
might have negative impact to stores which sell the same products online
and in the stores. Fortunately, usually clothes stores have slightly if not
entirely different selection of clothes. Mainly the reason why people do not
buy everything online is shopping experience and the fact they get to see
and touch the clothes before buying them.
Vero Moda clothes can also be bought online in various places, this does
not affect the sales of the stores negatively. Vero Moda has collect your
online package service, where the customer can pick up their package
straight from the shop and try on the clothes right away. This service
brings more customers to the shop and almost half of the customers
picking up a package end up buying something from the store too.
Bershka stores do not have this kind of custom but the difference is that
Bershka’s clothes are only available for buying in Bershka’s webpage
whereas Vero Moda branded clothes can be bought from many different
websites. (Pusa 2017.)
The advertising in Vero Moda is very active. Vero Moda has a lot of
special offers and events to get the consumers shopping. Vero Moda
updates their Instagram very actively and uses Facebook to reach
consumers that are spending time on the internet. (Pusa 2017).
Social media is constantly present in young people’s lives. Almost all if not
many companies use social media for marketing and gaining the attention
of their target audience. Since Bershka especially directs young women,
social media is a “must” for direct communication. As mentioned before
(see thesis page 17), Bershka has their own hashtag #Bershkastyle where
consumers who have bought Bershka clothes pose in their style choices
and get featured in Bershka’s website.
Instagram is a great way to reach out for young consumers. The most
searched categories young women have on Instagram are #fitness,
#fashion, #healthy and #Love. (Instagram 2017). Many companies use
33
code the blogger gave has made them buy the product. In light of this
research, bloggers somewhat help the businesses when it comes to
advertising for women. (Aller 2014).
35
7 CONCLUSIONS
This chapter concludes the thesis and brings together all the main topics
and the research process.
The purpose of this thesis was to find out if there is real customer potential
for Bershka to expand in Finland. The idea was to expand Bershka and
publish a new shop in the centre of Helsinki. The author picked young
women for the target consumer group.
The question was not meant to answer the businesses financial state but
the popularity the potential store could receive. The author found in the
customer segmentation process that the target audience for Bershka is
women and more closely, young women. Women’s customer behaviour
was essential part of this thesis, since it reveals a lot of information about
women shopping habits and what kind of clothes they prefer to wear.
The author came to a conclusion that young women like to dress more
according to latest trends whereas mature women like to shop clothes that
are “easy to wear”. Bershka would have a lot of potential if it would expand
to Finland, since there is clearly a spot for affordable but unique clothes
store. The author did not come to a simple conclusion that bringing
Bershka to Finland would be beneficial, however there is no evidence that
states it would not be beneficial. Because of the wideness of the main
research question, the author decided that figuring out the answer more
research would need to be done.
Finland, however it takes a lot of money. There are several positive and
negative factors in franchising which were related to the ownership of the
business. Franchising is relatively easy way to take company and its
operations overseas. The author thought analysing the competition in
Finnish market would be good to see the bigger picture as to how
successful bringing a new clothes chain would be. When expanding,
Bershka has good potential opportunity for sales grow. Although the
competition in clothing business is fierce, it is possible that Bershka would
be successful because of the competitive prices and quality of products.
It was found that the easiest way to reach young consumers was through
social media. Bershka should be more active and advertise and use their
hashtag to get young people on board. Another interesting fact that was
revealed was that bloggers are a huge influence to women’s buying
behaviour. Figure 8 (see thesis page 33) shows that 81 percent of women
trust blogs as a source of information.
37
Validity and reliability proof the accuracy of the research results. Reliability
is a way of assessing the quality of the measurement procedure used to
collect data. In order for the result to be considered valid, the
measurement procedure must be first find reliable. Validity on the other
hand measures how the results are equivalent to the main goal of the
thesis.
The collected data included both secondary and primary data. The primary
data was collected through a longer interview with the store manager of
women’s cloth store, VeroModa. The secondary data was collected from
written sources, such as books and online sources. The thesis consists of
more secondary data, since it was more easily accessible. The author
thought the thesis to be reliable because of the carefully selected written
sources and wide interview of store manager.
In the process of making this Bachelor’s thesis, the author gained a lot of
knowledge about franchising and what it is to be a franchisee. The author
found both problems and great opportunities in starting a franchise. The
easiest way to bring Bershka to Finland was by franchising since they
already are a strong brand name with many stores.
However, the main research question was left unanswered because of the
wideness of the question. For further research, the customer base needs
to be more carefully examined so that a good marketing plan targeted for
the young can be put in motion.
8 SUMMARY
The final part of the thesis will summarize the contents in detail. The main
objective of the thesis was to find out whether Bershka should expand in
Finland through the examination of the potential customer base.
The second chapter covered franchising in general, what it is, the negative
and positive sides of franchising and franchising in Inditex. The author
chose franchising model because it is possible to bring Bershka to Finland
by franchising. The findings were that franchising requires a lot of money
and usually big companies buy smaller franchises because of the lower
risk.
traditional shopping was shortly discussed. Some marketing ideas for the
targeted young customers where discussed and the effect of social media
was mentioned.
This thesis provides a good base to continue the research further on and
develope a proper business plan for Bershka to enter Finnish market.
Target consumer base is identified so that the research and developing a
marketing plan can continue. Bershka is a well-known and popular shop
among young consumers and it would have good potential if it were to
expand to Finland.
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REFERENCES
Published References
Norman, J. 2006. What No One Ever Tells You About Franchising. Kaplan
Publishing.
Electronic References
Oral References