“Inditex: 2012” (Harvard Business School 9 – 713-539 – Published on June 3, 2013)

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.

In today’s highly competitive retail market, targeting a specific customer demographic might not just be the most efficient way to go. But being able to cater to a wide range of tastes and budgets, on the other hand might be more target-oriented. This seems to be especially true with relatively lower-cost items, in particular when there is little if any brand loyalty.

Looking at several multi-brand companies, I can see that most exist in the B2C industries such as Inditex at hand but also for example Proctor & Gamble (FMCG), L’Oréal (cosmetics), Volkswagen (automotive) as well as Pfizer (pharma). Companies in B2C industries pay more attention to market segmentation than companies in B2B industries. Market segmentation is a good way to increase the company’s influence to consumers who make purchasing decisions based on factors which vary drastically from one consumer to another. It would be difficult for one brand to position itself to match this variation and still maintain a strong brand identity. Therefore, by diversifying its brands, a company can fill multiple market positions to maximize relevance to the consumer.

The decision of a company in adopting multi-brand strategy depends on the success of the initial brand. If the initial brand becomes successful the company can develop a second brand...