Urban Outfitters Continuing Case Study

Assignment #2 – Urban Outfitters Continuing Case Study – Marketing a Business

June 01, 2011

1- Explain why Sears or Wal-Mart cannot effectively create a trendy counterculture image.

The reason why Wal-Mart or Sears cannot effectively create a trendy counterculture image is because, in the case of Wal-Mart, it operates on a high volume low profit margin. They also state that the only way to do this is to be able to mass-produce, have products mass-produced for, or at least, buy in bulk. That very philosophy makes it impossible to be either trendy, or counterculture. Trendy counterculture is about being unique or different going against the norms of society. This makes trendy products costly to make and sell for a hefty sum. While Sears's prices are higher they still sell mass-produced items, which Sears believe will appeal to the general population. Entering into a niche market and attempting to compete with a retailer, like Urban Outfitters, would be financially disastrous for either Sears, or Wal-Mart. According to Strayer University "Penetration pricing, a strategy for pricing new products, aims to capture as much of the market as possible through rock bottom prices. Each individual sale typically yields a tiny profit; the real money comes from the sheer volume of sales. A key benefit of this strategy is that it tends to discourage competitors, who may be scared off by the slim margins. But penetration pricing only makes sense in categories that do not have a significant group of consumers who would be willing to pay a premium price (otherwise, the marketer would be leaving money on the table)". (Small Business Opportunities 2009 pg 177)

2- Could the big box stores sell merchandise identical to Urban Outfitters? Explain your answer.

Big box stores could try to do knock-offs of Urban Outfitters merchandise but it's not likely that they would sell the exact same products as Urban Outfitters. First, some Urban Outfitters merchandise is private label, produced by them for sale in their stores only, and the company would not allow that it to be sold in other stores. Second, Urban Outfitters sells labels that are edgy and are selective about where they sell their product and won't do business with a chain like Wal-Mart or Kohls. Third, if some of its merchandise showed up in Kohls or Wal-Mart, Urban Outfitters would move on to something else.

3- Identify at least three reasons why exclusivity is valuable.

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