Zara’s Fast Fashion Strategy: A Dual Analysis of Market Segmentation and Price Elasticity

Abstract

This study adopts a three-part elasticity framework—price elasticity of demand (PED), income elasticity (YED), and cross-price elasticity (XED)—to quantify the changes in demand and reveals Zara’s dual pricing strategy: seasonal trendy items (high PED, large demand fluctuations) and core basic products (low YED, stable demand). In addition, this study examines Zara’s market dynamics, emphasizing its pricing tactics, competitive strategy, and barriers to entry specific to the fast-fashion segment. Through this analysis, the study clarifies Zara’s market positioning, adaptive responses to competitive pressures, and strategic measures for maintaining its industry leadership position.