Zudio is an urban and semi-urban fashion brand that was launched in 2016 in Bangalore by the Tata Group. The brand is a part of Trent Limited, the parent company. Zudio has rapidly expanded, with its presence in more than 42 cities and over 400 stores across India. The market value of Zudio exceeds ₹500 crore. The brand offers products ranging from as low as ₹49 to ₹999, with very few items priced above ₹999. Today, we’ll take a deep dive into how Zudio’s marketing strategy has propelled the brand to remarkable success in such a short period.
This blog is divided into several chapters, where we will decode Zudio’s marketing strategy and explore its techniques. By the end of this blog, you will understand how Zudio operates, how it generates profits, and how it competes with brands like H&M and ZARA. Moreover, you’ll learn how you can apply these marketing strategies to rapidly grow your own business.
The story began in 1998 when the Tata Group acquired Trent Limited, with the hope of expanding India’s fashion retail market. However, Trent Limited continuously faced losses. By the end of 2014, the company realized that the “scene of fashion” had evolved due to the penetration of the internet and smartphones. They identified three significant market gaps: fast fashion was not affordable, affordable fashion was of very low quality, and fast fashion was actually quite slow. To address these issues, Trent Group launched Zudio, an affordable, high-quality fashion brand. So, are you ready to dive into the first chapter of Zudio’s marketing strategy?
Zudio Marketing Strategy - Chapter 1
Catering to the Middle Class
While other fashion brands focus on high-net-worth individuals, few companies target lower-middle-class families. However, 75% of India’s population falls into the middle or lower-middle-class category. According to economic reports, the average household income in India is less than ₹7 lakhs, making brands like ZARA and H&M unaffordable for many. This is where Zudio steps in. Zudio designs products specifically for the middle class, lower-middle class, and college students, with a price range starting from just ₹49 to ₹999. This gives Zudio a unique advantage, as customers not only buy their products but also recommend them to friends and family. The quality of the products is also commendable. But now, you might be wondering how Zudio can provide such good quality at such low prices. We’ll explore this in the next chapter.
Zudio Marketing Strategy - Chapter 2
From Design to Production, Everything Done In-House
From Design to Production, Everything Done In-House
Trent, the parent company of Zudio, has its own in-house marketing team that handles everything from design to production. They quickly create the latest designs available in the market, often taking just 10 to 12 days to turn a design into a product. Initially, these products are sold in a few stores, and if they receive a good response, they are rolled out to other stores as well. By using this technique, Zudio maintains control over both the price and quality of its products, saving money in the process.
Zudio Marketing Strategy - Chapter 3
High volume low margin Game
To understand Zudio’s business model, let’s compare it to brands like ZARA and H&M. Imagine a market of 1,000 potential customers. High-end brands like ZARA and H&M might sell 50 products, each with a profit margin of ₹2,000. This would generate a total profit of ₹1,00,000 (50 products x ₹2,000 margin).
On the other hand, Zudio targets the middle and lower-middle-class segments. In the same market, Zudio might sell 950 products, each with a smaller profit margin of ₹300. This would result in a total profit of ₹2,85,000 (950 products x ₹300 margin).
Even though Zudio has a lower profit margin per product, its ability to sell a much larger volume of products allows it to generate more profit overall. This strategy of scaling through volume sales, combined with affordable pricing, enables Zudio to outpace high-end brands in terms of revenue while still offering value to its customers.
Zudio Marketing Strategy - Chapter 4
No Online, Only Offline
You won’t find Zudio products available online. But why would Zudio avoid online sales in the e-commerce era? The reason is that selling products online would involve additional costs like delivery and reverse logistics, which would increase the overall price of the products. Zudio’s target audience is primarily middle-class individuals who prefer buying clothes from physical retail stores rather than online.
According to surveys, 24% of products sold online are returned. Since Zudio already operates with very thin margins, selling online would not only add shipping and reverse logistics costs but also expenses related to re-ironing, re-washing, and product maintenance. This is why Zudio focuses on offline sales, keeping their prices low and maintaining their cost-effective business model.
Zudio Marketing Strategy - Chapter 5
The FOCO Model
While many companies operate under the COCO (Company Owned, Company Operated) or FOFO (Franchise Owned, Franchise Operated) models, Zudio follows the FOCO (Franchise Owned, Company Operated) model. In this approach, a third party invests the capital to open the store, while Zudio manages and operates the business.
The benefit of this model is that Zudio can expand its store network without significant capital expenditure, while the franchise owner earns a profit without having to manage the day-to-day operations. This allows Zudio to save a substantial amount on capital expenditures and instead invest in creating better-quality products. By using the FOCO model, Zudio can open new stores with minimal financial outlay, franchise owners earn a percentage of the profits without having to run the business, and customers receive high-quality products at affordable prices.
Zudio Marketing Strategy - Chapter 6
No Marketing Is Zudio's Marketing Strategy
Zudio is owned by the Tata Group, a brand already known for its trustworthy image. This inherent trust allows Zudio to gain customer confidence without extensive marketing. Zudio doesn’t run TV ads or put up banners because they understand that such advertising could make customers perceive their products as expensive—something Zudio wants to avoid.
Instead, Zudio collaborates with local influencers who speak regional languages. These influencers are well-known in specific areas, and their connection with the local audience makes it easier for customers to relate to the brand. Additionally, these influencers charge less for promoting the brand, allowing Zudio to maintain its low-cost approach while effectively reaching its target audience.
In this blog, we explored how Zudio’s marketing strategy focuses on targeting the middle and lower-middle-class segments, offering high-quality fashion at affordable prices. By keeping the entire process from design to production in-house, Zudio maintains control over quality and cost. The brand’s emphasis on volume sales with lower profit margins, along with its decision to focus solely on offline sales, allows it to keep prices low and cater to its target audience’s preferences. Zudio’s use of the FOCO (Franchise Owned, Company Operated) model enables rapid expansion without significant capital investment, and by leveraging the trusted Tata brand, Zudio avoids traditional marketing channels, instead partnering with local influencers to connect with regional audiences effectively and affordably. These strategies have allowed Zudio to quickly establish itself as a successful and unique player in the fashion retail industry.
Call to Action for Marketing Students
- Understand Your Market: Just like Zudio, identify the specific needs and preferences of your target audience. Tailor your products and services to meet those needs effectively.
- Build the Trust Factor: Leverage brand trust to reduce marketing costs. Zudio benefited from the Tata brand’s reputation, demonstrating how trust can replace expensive marketing campaigns.
- Innovate with Low Cost: Focus on efficiency and smart strategies. Zudio’s in-house production and FOCO model are examples of how innovation can help deliver quality products while keeping costs low.
