Internet Marketing

Alright, I’m finally up to date with this blog.  Today (well it’s actually yesterday because it’s almost 5am but for the sake of easiness I’ll call it today)  Professor Wymbs discussed with the class several business models.  We started the discussion about Zara’s value proposition: bring trendy merchandise in an expeditious manner.

Zara store in Barcelona Spain

Zara is a clothing company from Spain that unlike many other clothing companies manufactures its line of clothing in Europe.  Not necessarily due to protectionism but mostly for fast response to changes in taste in the market because being able to make the products locally makes production faster.  The fashion industry unlike other industries, is a “touchy” “feely” process in which everyone has a saying.  Zara has taken advantage of that by making the end users the experts in fashion.  Zara has accomplished that by systematically deploying a real time customer and supply feedback system that responds and adapts to taste changes.  From blogs posted on their consumer website to salespeople with their PDA’s in the stores surveying customers for suggestions in color changes in their production facilities in Europe, Zara has created a business model that creates customer loyalty (customers feel empowered because they are treated as fashion experts) and brand differentiation by simply giving customers what they want.

Then we went on to discuss the iPod business model and what it offers to consumers: reliable flash memory, trendy product, high value, friendly user interface, consistency, good customer service, and their valuation of customer input.  We also discussed Apple’s main target college students.

We also discussed the Dell business model and how different it is from Zara’s.  Zara internalizes the operation for speed vs Dell that has a different supply chain model; Dell uses just-in-time processes.  Dell besides customizing PCs and laptops they do not hold much inventory.  For every order they get they immediately order the parts from their supplier so that they do not overstock on one particular model.  Dell believes that cost control creates customer value.

Last but not the least Professor Wymbs discussed the potential of RFID in the market. According to Wikipedia, RFID is an automatic ID method, relying on storing and remotely retrieving data using devices called RFID tags or transponders.  This makes taking inventory very easy for large retailers and warehouses because with a simple scan you can tell how many items and what kind of items there are in a palette.  Currently Wal-mart is leading in the use of this technology among large retailers.  In fact they are forcing all their suppliers to apply it to all their products at least at the palette level for now.  This technology has another 2 to 3 years to develop before it gets to the product level in which in real-time users will be able to tell how many, and, with the combination of GPS, where it exactly is or was moved to at any point in time.

RFID tag shown