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Stages of the product life cycle, including their impact on marketing mix decisions...

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Innocent MD, Richard Reed describes how his company started expanding into international markets to protect the smoothie brand against European competition

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Online Marketing Strategy for Zara Clothing

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Zara Masters the Art of Retail | The Beast File

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Subscribe for more Hungry Beast: http://bit.ly/HungryBeast Meet Zara: the Spanish company at the forefront of Fast Fashion, where speed and disposability are the new black. Launched in 1975, Zara now has almost 2000 stores in 77 countries.

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Most books by college professors are erudite but dry. Not so the New Science of Retailing (Harvard Business Press, 252pp, 2010) by Marshall Fisher and Anent Raman, professors at the Wharton School at the University of Pennsylvania and the Harvard Business School. The premise that markdowns can be optimized if proper analysis is made is just one step in understanding the dynamics of retailing where computers can guide the merchandise decision-making process.

Early in the book the authors' point out that investors are well advised to watch for involuntary inventory accumulations in companies that they follow. Inventories should rise less than the sales growth rate of a company. The book discusses the determination of the optimal price at which a product should be sold to attain the optimal sales levels and the maximum gross margin levels. In fact, the book is a practical guide to good inventory management, the reduction of markdowns, and the achievement of higher gross margins.

In the book there are many good examples of successful strategies. Companies like Abercrombie & Fitch, Best Buy, Joseph A. Banks, Borders, National Bicycle, Walmart, World and many others, are highlighted. I particularly liked the discussion of Zara, the fast expanding, fashion-right, company headquartered in the remote northwest corner of Spain in La Coruna. The founder - Amancio Ortega founded Zara in 1975 in order to better understand world markets for his fashion merchandise. A decade later he formed Inditex as a parent company for Zara, as well as several other retail concepts and suppliers that he had built.

While Zara's original stores were in Spain, today it has stores throughout Europe, the Americas, the Middle East, and Asia. The company opened their first store in Russia on August 28, 2013. In fiscal 2012 Inditex reported total sales of € 15.9 Billion ($20.7 Billion); Zara represented 66% of total sales or €10.5 Billion ($13.6 Billion) with 120 stores world-wide. Other, smaller, divisions include Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterque.

Zara has focused teams of designers and product managers. They oversee the design, sourcing and production of a specific classification such as dresses or women's sportswear. They are responsible for both the initial collection and in-season response. Importantly to its success, Zara produces where it sells. This achieves short lead times for new fashion ideas.

Today, Zara can replenish existing items in as little as two weeks. The company spends almost nothing on advertising and uses the savings to support higher cost of producing in Spain. This enables the company to produce what the customers want. The tight integration of design, planning, merchandising and production in La Coruna enables the company to be flexible and therefore able to respond quickly to any market need.

Zara's business success with its flexible approach is demonstrated in its stock market success as well. The authors analyzed the stock performance of Zara, the Gap, and Limited Brands. Their analysis shows the strength of Zara, and demonstrates that accurate forecasting creates the most effective supply chain. Zara's success proves the theory that if a retailer can forecast demand accurately, far enough in advance, it can enable mass production under push control and lead to well managed inventories, lower markdowns, higher profitability (gross margins), and value creation for shareholders in the short- and long- term.

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Zara's Secret To Success: The New Science Of Retailing

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Most books by college professors are erudite but dry. Not so the New Science of Retailing (Harvard Business Press, 252pp, 2010) by Marshall Fisher and Anent Raman, professors at the Wharton School at the University of Pennsylvania and the Harvard Business School. The premise that markdowns can be optimized if [...]

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Relations between the US and Mexico appeared to be heading for crisis on Thursday after Enrique Peña Nieto cancelled a meeting with Donald Trump and the White House retaliated by suggesting a new 20% tax on imports from its southern neighbour to finance the construction of a border wall.

The proposal came amid a new low in relations between the Trump administration and Mexico, following a bitter election campaign in which Trump referred to Mexicans as "rapists" and insisted that the country would pay for the wall.

The White House press secretary, Sean Spicer, made the announcement to reporters on Air Force One as Trump returned from addressing the congressional Republican retreat in Philadelphia.

Spicer painted the border tax as one aspect of a broader tax reform policy. "When you look at the plan that's taking shape now, using comprehensive tax reform as a means to tax imports from countries that we have a trade deficit from, like Mexico," said Spicer.

"If you tax that $50bn at 20% of imports - which is by the way a practice that 160 other countries do - right now our country's policy is to tax exports and let imports flow freely in, which is ridiculous. By doing it that way we can do $10bn a year and easily pay for the wall just through that mechanism alone. That's really going to provide the funding," he said.

The comments sparked confusion in Washington. Republicans in the House of Representatives saw it as endorsement of their own proposals for a border adjustment tax to help exporters while Trump's chief of staff, Reince Priebus, appeared to walk back the proposal, describing it as one of a "buffet of options". Spicer later said it was "one idea" to pay for the wall.

Tax increases would need to be passed by Congress. However, the president has the authority in certain situations to impose tariffs on imports if he believes US interests are threatened.

The Mexican foreign minister, Luis Videgaray, said such a tax increase would pass the cost of Trump's wall on to US consumers. "A tax on Mexican imports to the United States is not a way to make Mexico pay for the wall, but a way to make the North American consumer pay for it through more expensive avocados, washing machines, televisions," he told reporters.

The move would, however, prove disastrous for Mexico, whose economy has become deeply entwined with that of the US since the North American Free Trade Agreement (Nafta) came into effect in 1994.

Mexico is America's third-largest goods trading partner, after Canada and China, with $531bn in total (two-way) goods traded between the two countries in 2015.

Earlier this month, Mexico's economy minister, Ildefonso Guajardo, warned that a border tax would unleash consequences around the world and could trigger a global recession.

Spicer's announcement came hours after Peña Nieto cancelled a scheduled visit to the White House after Trump signed an executive order on the building of the wall.

Peña Nieto tweeted on Thursday that he had informed the White House that he would not attend the meeting with Trump that had been scheduled for Tuesday.

"Mexico reiterates its willingness to work with the US to achieve agreements which benefit both nations," he added.

Speaking to congressional Republicans in Philadelphia, Trump claimed the decision to cancel the meeting with Peña Nieto was mutual and repeated his criticism of Nafta, describing it as "a terrible deal [and] a total disaster for us since its inception".

John McCain said he was "deeply concerned" by Trump's remarks. "Any effort to restrict or impose new barriers on our ability to trade with Mexico and Canada could jeopardize the future of this trade agreement and have serious consequences for Arizona and the country," he said.

Republican senator Lindsey Graham tweeted: "Border security yes, tariffs no. Mexico is 3rd largest trading partner. Any tariff we can levy they can levy."

Lindsey Graham (@LindseyGrahamSC)
Simply put, any policy proposal which drives up costs of Corona, tequila, or margaritas is a big-time bad idea. Mucho Sad. (2)
January 26, 2017

The two countries' economies are so integrated that Mexican exports to the US contain approximately 40% US content and cars built in Mexico are assembled with parts produced in the other two Nafta countries.

"I would assume that this is the start of a trade war," said Jonathan Heath, an independent economist in Mexico City. "And I'm assuming that Mexico would be retaliating with the same and this will also go to the World Trade Organization."

Heath says a trade war with Mexico would bring consequences for US manufacturers, farmers and consumers. As an example, he pointed to supermarkets - such as the stores owned by Walmart, Mexico's biggest retailer - which stock US-grown produce. He also noted some 75% of auto parts made in the US for export are shipped to Mexico.

I suspect if Trump acts in this manner, the Mexicans will most certainly retaliate. We are in very dangerous waters here

Daniel Ikenson, the Cato Institute

"It's going to create, big, big problems on the Mexican side, but in the US too," Heath said. "It's the second or third trading partner of the US. You're not talking about a trivial amount of trade. You're talking about an extremely integrated region."

Daniel Ikenson, director of the Herbert A Stiefel Center for Trade Policy Studies at the Cato Institute, said the suggestion had put the US in "dangerous waters".

"There are a few statutes under which Trump could impose a 20% tariff on all Mexican imports and likely be within the letter of the law," he said.

One such statute was last invoked by President Richard Nixon in 1971 in response to a balance of payments crisis involving Japan.

"Nixon imposed a 10% surcharge on Japanese imports for one year under this law. Trump might claim that the loss of manufacturing jobs or the influx of illegal immigrants from Mexico is a national security crisis that justifies his invocation of this law, and imposition of the tariff. Whether the action would pass muster in a Nafta panel or at the WTO is another matter. There has never been such a case brought to dispute settlement," he said.

"I suspect that if Trump acts in this manner, the Mexicans will most certainly retaliate. We are in very dangerous waters here."

The rift with Mexico comes at a time when there are significant gaps in the US foreign policy establishment that would otherwise be working to heal the divide.

The nominee for secretary of state, the former oil executive Rex Tillerson, has yet to be confirmed and there are still no announced candidates for scores of top posts at the state department.

Meanwhile, key people in the department's senior management are leaving this week. Most of them are political appointees, who routinely submit their resignations at the beginning of new administration.

A former senior state department official pointed out that what was not routine was that there was no one in line to replace them.
Additional reporting by Julian Borger
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Trump-Mexico relations hit new low after 20% border wall tax mooted

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Relations between the US and Mexico appeared to be heading for crisis on Thursday after Enrique Peña Nieto cancelled a meeting with Donald Trump and the White House retaliated by suggesting a new 20% tax on imports from its southern neighbour to finance the construction of a border wall.