Sears and Wal-Mart are large stores whose strategy is based on providing fashion for the mainstream customers. Countercultures are not targeted by these stores because it is not economically viable for the stores to shop in small quantities…
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Today the company has a global presence in Africa, Asia Pacific, Atlantic Caribbean, Australia & New Zealand, Canada, South and Central America, and in the Middle East (Urbanoutfitters, 2011). Urban Outfitters has become a global icon and their operations were converted into upscale stores. Companies that are able to sell retail clothes at premium prices have higher profit margins. The counterculture that was build by the company occurred though many years of hard work and focus by the executive management team to build up the value of brand of the firm. One of the most amazing features of the Urban Outfitters success story is that the firm was able to achieve tremendous growth with minimal advertising and marketing budgets. Word of mouth advertising was critical to the success of the counterculture image the company built. Word of mouth advertising can be defined as the unpaid spread of a positive marketing message from person to person (Marketing-made-simple). 2. Could the big box stores sell merchandise identical to Urban Outfitters? Explain your answer. Big box stores such as Sears, Wal-Mart, or JC Penney could not sell merchandise identical to Urban Outfitters due to the strategic and operational approach of the companies. All large retailers pursue the same strategy of taking advantage of their buying power to achieve economies of scale in their purchasing function. Economies of scale are critical to the success of large retailers because it keeps the cost of clothes merchandise low. Urban Outfitters focuses a lot on differentiating their clothes. The company has different clothes at each of its stores due to the fact that each store is customized and designed based on the local preferences of the neighborhood. The firm does an outstanding job of performing market research in order to satisfy the unique needs of its customers. The approach Urban Outfitters uses is to buy clothes in small quantities in order to provide a greater product variety than large retail stores that purchase in bulk. Over the years Urban Outfitters has adapted to new trends such as its customer base becoming mostly of women instead of men. About 80% of the firm’s sales are of women clothing and other accessories. The company seeks to achieve differentiation in its overall shopping experience. The shopping experience at Urban Outfitters is superior to large retail stores. 3. Identify at least three reasons why exclusivity is valuable. Exclusivity is valuable for a variety of reasons. Being exclusive can increase the demand of a product based on the economic principle of scarcity. Scarcity can be defined as a basic economic problem that arises because people have unlimited wants, but resources are limited (Investopedia, 2011). Urban Outfitters artificially creates scarcity by limiting the quantity of clothes of a particular design. A second benefit of scarcity is that it raises the price of the goods sold in the marketplace. The law of supply and demand states that prices goes up when the supply of an item is limited. A company that is able to sell its clothes items at higher price points is able to achieve a higher level of profitability. A third benefit of exclusivity is that it creates an image or perception of quality. People perceived expensive clothes items to be of greater quality and superior materials. Well design clothes such as the items offered by Urban Outfitters usually are of top quality since the company takes great pride in offering
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Urban Outfitters Continuing Case Study
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