Urban Outfitters, Essay Example

Identify at least three challenges when setting up a business. Explain why they are challenges?

Three major challenges confronted business organization like Urban Outfitters, while forming a new business are getting the desired financing, selecting an appropriate location where the marketing mix of the organization could be offered to the target market, and fulfilling legal issues before starting a business organization (Kaushesh, 2002). The first issue, financial referred to the decisions pertaining to the left-hand side of balance sheet where the  entrepreneur has to decide what sorts of arrangement will be used to get the needed finances through which the assets needs could be fulfilled. Possible sources may include personal sources including use of personal checking account, partnership with another person having desired resources, bank loan, loan from developmental institutions, leasing arrangements, or a personal loan.

The second major decision in case of small business is location. In fact, the success and failure, in case of small business to a huge extent depends on the appropriate location of the business organization (Kinnear, Bernhardt, & Krentler, 2008). Ideally the business organization should be located at a major hub where customer could conveniently shop their daily needs and the business organization could get the desired inputs in a  convenient manner and where all the infrastructure facilities required for effective functioning of the business organization are available. The last challenge confronted business organization at the time of formation is legal issues. Although sole-proprietorship business could be formed without undergoing many legal formalities, other forms of business organization including partnership, limited liability Company, or public limited company requires fulfilling many legal formalities before the business organization may commence its basic functioning (Westbrook, 1981).

Define what is niche product? Give at least three examples of niche products?

A business organization that usually does not have the needed human financial, information and physical resources to cater to the need of the major segments of the market, usually serves the needs of the fraction of the total market that is usually unprofitable for the larger market players and they have left such segments because they could not reach such segments profitably (Baker, Grewel, & Parsuraman, 1994). Usually a smaller player in the market identifies such niche and tailors its marketing mix according to the unique needs and preferences of such market. Some of the examples of niche product in the market include Apple iPhone, HP All –in-One machine, and Vertu Mobile Phones that has been created with gold plate and are handcrafted. These products weird catering to the needs of a major segment of the market, just serve a very small segment of the whole market.

Explain why a niche company might have an advantage in a market. Would price necessarily be an advantage? Explain why or why not?

A niche company essentially serves the needs of very a small segment of the whole market that are simply unprofitable or unreachable for the large market player. On the basis of specialization and customization and personalization, a niche product marketer creates feelings of distinctiveness, image and uniqueness with respect to the product being offered in the market (GourmetRetailer, 2009). Due to this reason a considerable portion of the market travel an extra mile in order to find out the desired retail outlet where they could get the desired product and satisfy their needs and wants (Kinnear, Bernhardt, & Krentler, 2008).

In the majority of cases niche products are marketed on the unique characteristics and they usually compete in the market on the exclusive features, benefits and advantages that their products offered along with style, image and social class feeling that compel the target market to pay more than the competing brands in the market (Kotler & Armstrong, 2008). In fact, a niche producer might be in a very dismal position had such organization charge a going market rate, as the consumer will then hardly find a good reason to purchase such offerings. When such organization charge premium prices in the market only a portion of the total market could afford to pay the price that the manufacturer of niche product is charging for their offerings. When such sort of conditions exists the product is purchased by the elite class. This gives them an image and exclusiveness and helps them to satisfy their self-actualization and esteem needs.

Identify and explain three reasons why customers would pay more for exclusivity?

The three main reasons, why niche product users are willing to pay premium prices for such products are listed below:

As the product is marketed to satisfy the needs and wants of a particular social class only, the customer believe that the usage of the product will enable them to enjoy an image and exclusiveness. In order to project a favorable impression on people around, they are willing to pay higher prices for niche products (Waterman, 1987).

The customer wishes to purchase a product in an environment that is more intimate and where people belonging to a particular social class could visit. For example, boutique carrying designers clothes, a painting in an art exhibition etc. The major reason behind the purchase of niche product in such case is to enjoy more personalize services and enjoy being treated as “special” (Kotler & Armstrong, 2008).

As the products are exclusively manufactured, marketed and sold, the customer form a perception that the product will be of better quality and due to this reason the product is not sold to everyone in the market than the standards product that is available everywhere in the market.

Explain how a niche player ?chips away at a larger competitor’s base. Give three examples of retailers who have done this.

By catering to needs of a niche, a niche product could chip away a larger customer’s base from the major producer in the market. Although the process may take a very longer period of time, the success thus built will be long-lasting and more deep-rooted. An example of this is Apple iPhone, as before the launch of the product the mobile phone market was lead by Nokia, followed by Motorola, Samsung and Sony Erickson. However, Apple through their development of niche product known as Apple iPhone chips away the larger customer base of this bigger market player, particularly the upscale market segment where the use of iPhone has now become a trend and fashion. Another example niche product is Travel Last-Minute that offers traveling and hotel reservation services at discounted rates. The organization is one of the fastest growing air-ticketing services in UK and now in USA.

The last example of niche product that has now captured a dominant portion of the total industry sales is Starbuck coffee that was originally introduced as special blends of coffee and concoctions. However with the passage of time, the organization keeps on refining the formula of the product along with following a business model that is considered unique. The organization has actively implemented the ISO 14000, green environment standards and is following a business model that is based on good corporate citizenship. Customers enjoy their coffees in Starbucks outlets where a unique design has been created to cater to the needs of environmental conscious people.

Works Cited

Baker, J., Grewel, D., & Parsuraman, A. (1994). The Influence of store Environment on Quality Inferences and store Image. Jouranl of the Academy of Marketing Sciences 22 (rall , 328-338.

Foxell, G., Goldsmith, R., & Brown, S. (1998). Consumer Psychology for Marketing Second Edition. UK: Thomson Business Press.

GourmetRetailer. (2009). Two Major Trends in Retail Emerges. Retrieved July 2010, from The Gorumet Retailer: http://www.gourmetretailer.com/gourmetretailer/content_display/news/e3ib2336cb7507211a24fe4ac912178bc0c

Kaushesh, A. (2002). Retailing: The Sunrise Sector. UK: ICFAI Books.

Kinnear, T. A., Bernhardt, K. L., & Krentler, K. A. (2008). Principles of Marketing. USA: Harper Collins College Publishers.

Kotler, P., & Armstrong, G. (2008). Principles of Marketing. USA: Prentice Hall Publishers.

Waterman, R. (1987). The Renewal Factor: How the Best Get and Keep the Competitive Edge. Business Wek September , 100.

Westbrook, R. A. (1981). Sources of Consumer Satisfation with Retail Outlets. Journal of Retailing 57(Fall) , 68-84.