Inditex’s “multi-brand strategy”/”multi-store concept strategy”
Inditex’s broad brand portfolio, which comprises eight brands, serves to reduce risk and refine the company’s targeting of specific customer groups. Inditex’s main fascias, Zara, Stradivarius and Massimo Dutti, have achieved high levels of consumer recognition. In 2008, Inditex introduced Uterqüe, its eighth brand. Inditex’s multi-brand strategy has helped it broaden its customer base, for example through the Bershka fascia, which has successfully attracted a younger generation.
The principle of having a “multi-brand strategy”
Basically, I agree with the principle of having a multi-brand strategy.
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If the initial brand becomes successful the company can develop a second brand without generating much expense. The marketing department of the company can market the different multi-brand products just in the way an agency works for multiple clients. All these advantages of multi-brand strategy can generate economics of scale.
But one of the things a company has to consider while managing multi-brands portfolio is that there is a constant need of analyzing the condition and profitability of each brand and to decide how much marketing and other expenditure needs to be done on it, if at all it is to be continued. Hence, there is a constant requirement for line pruning.
The implementation of the “multi-brand strategy” by Inditex
I fully agree with the way Inditex has implemented the multi-brand strategy.
Starting from the 1990s, Inditex has built its own multi-brand portfolio which has allowed Inditex to target various market segments more effectively. Inditex uses the multi-brand strategy to diversify its eight brands. Zara is the flagship brand of Inditex. Although Pull & Bear and Massimo Dutti are both fashion brands for women and men, their target market is different. The former brand targets a younger group with more “free and easy fashion”, while the latter one targets men and women from 25 to 45 providing “contemporary, fashionable clothing for business, evening and casual needs”. Bersha and Stradivarius provide elegant and latest fashion for only young woman.
The main advantages and the main disadvantages/risks of a “multi-brand strategy”, compared to a single-brand strategy
Mulit-brand strategy does have some advantages as a means of
• obtaining greater shelf space and facings in retail stores, leaving little for competitor’s products and increasing the visibility of the company as a whole
• saturating a market by filling all price and quality gaps
• giving greater alternatives to consumers, especially brand-switcher users...