Urban Outfitters PDF

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Urban Outfitters Marketing Plan...

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A Strategic Marketing Plan for a Post-Pandemic Retail Market

TABLE OF CONTENTS Executive Summary ………………………………………………………………… 2 Part I: Situation Analysis ……………………………………………………………3 Company Overview ………………………………………………………….3 Consumer Analysis …………………………………………………………..4 Competitor Analysis …………………………………………………………8 SWOT Analysis ……………………………………………………………...10 Part II: Objectives ………………………………………………………………….. 11 Part III: Marketing Strategy ………………………………………………………..12 Segmentation …………………………………………………………………12 Targeting ……………………………………………………………………...13 Positioning …………………………………………………………………... .13 Part IV: Marketing Mix ……………………………………………………………...13 Product ……………………………………………………………………….. 14 Price …………………………………………………………………………... 15 Promotion …………………………………………………………………….. 15 Place …………………………………………………………………………... 17 Part V: Action …………………………………………………………………………17 Implementation Timeline ……………………………………………………. 18 Part VI: Control ……………………………………………………………………… 19 References …………………………………………………………………………….. 20

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Executive Summary The focus of this project is to create a strategic marketing strategy to assist Urban Outfitters in repositioning and recovering from the sales drop caused by the Covid-19 national lockdown. The marketing strategy will follow the Hollensen (2019) strategic marketing process which contains six elements: situation analysis, objectives, strategy, marketing mix, action, and control.

When conducting a situation analysis, it was found that Urban Outfitters customers are young, collage-aged individuals between the ages of 18 and 30. They have a trendy, creative aesthetic, and value individuality when it comes to shopping. Several growth initiatives were suggested to help Urban Outfitters continue to target this audience such as interactive events, pop-up shops, increased technology, and better advertising via social media. To illustrate the marketing strategy, the STP (segmentation, targeting and positioning) model was used, followed by a tailored marketing mix to suit the needs of the target market.

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Part I: Situation Analysis

Company Overview

Urban Outfitters is a multinational fashion and lifestyle corporation headquartered in Philadelphia, Pennsylvania. The retailer was founded in 1970 by Richard Hayne and Scott Belair who collectively came up with the idea of selling inexpensive, second-hand items to college and graduate students near the University of Pennsylvania’s main campus. Fast forward to today, Urban Outfitters offers an omni-channel shopping experience where consumers can shop seamlessly online or in one of their 248 brick-andmortar locations (Statista, 2020)

The Urban Outfitters brand primarily targets young adults with a merchandise mix of fashion apparel, accessories, and apartment décor. The brand is especially appealing to teens and young adults who are interested in hipster subculture and alternative fashion, and those who embrace rebellion, creativity, and self-expression. Urban Outfitters aims to connect with the consumer on a personal level through unique products and compelling store designs. Pompei A.D, an architect for the brick-and-mortar store, strived “to give young consumers the transformational experience of freedom to explore who they are, to experiment with different styles, and to feel comfortable as they define themselves” (Communale, 2008). A great deal of focus on customer experience is what differentiates Urban Outfitters from its competitors, thus generating enthusiasm and increased consumer spending within the store.

The retail industry is currently suffering amid the recent Covid-19 pandemic. The ongoing coronavirus pandemic has had a significant impact on sales at Urban Outfitters in the fourth quarter of fiscal 2021, with sales decreasing by 8% (Singh, 2021). This figure fell short of the consensus estimate – the average of all estimates made by brokage analysts. Therefore, it is relevant to research and suggest new initiatives to help Urban Outfitters reposition and recover from this decline in sales. Before proposing a potential

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marketing strategy, several analysis tools will be utilised to evaluate the company’s internal and external environment.

Consumer Analysis

By examining demographics, psychographic and behaviour, a consumer analysis will be undertaken to establish the needs and wants of shoppers at Urban Outfitters.

Demographics

Urban Outfitters caters to young individuals between the ages of 18 and 30, who identify as male, female, and non-binary. The brand has successfully catered to the needs of a rather powerful and opinionated customer base – and has remained a leading brand among this type of customer throughout. The decision to never change the philosophy of the brand to suit the ageing customer is a reason why the Urban Outfitters brand is so successful and distinctive (Danfourth, 2014).

These consumers have completed primary education and are seeking opportunities for further education. They come from households with middle to upper-middle income tax brackets, and still live with parents or in shared living accommodation. In terms of occupation, they are typically a working student or a recent college graduate seeking fulltime employment. The majority of them are unmarried and have no children, but they do have animals or plants that they consider members of their family

Psychographics

Urban Outfitters customers are creative, trendy, and rebellious. They are highly representative of a strong metropolitan indie subculture and tend to live an edgy lifestyle. The word ‘indie’ is short form for ‘independent’ and is typically used to describe Urban

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Outfitters customers as they embrace an alternative lifestyle and go against mainstream trends. These customers usually would never buy into capitalist markets but are persuaded by the brands core emphasis on creativity and individuality.

Urban Outfitters customers are members of Gen Z and Gen Y (millennials). These demographic cohorts are high users of social media as they grew up with internet access and digital technologies. Therefore, they are most likely to turn to social media as a news source over traditional printed newspaper. They are also very likely to turn to social media for entertainment purposes to relieve themselves of boredom.

Social media

provides extreme unprecedented transparency and instant access to information. Therefore, Urban Outfitters customers are highly informed and educated. They tend to form powerful and strong opinions on relevant issues such as environmental sustainability, racism, and gender equality.

In terms of interests and activities, these consumers value experiences over tangible objects and prefer to spend their time doing something meaningful in order to reach fulfilment. Hobbies may include music festivals, thrift shopping, photography, art, interior design, reading, skateboarding and group exercise.

Consumer Behaviour

Considering the VALS framework (1978), Urban Outfitters customers are a combination of innovators and strivers. Innovators are at the forefront of change, with such high selfesteem and resources that they can pursue any or all self-orientations. They value image as a means of expressing taste, independence, and personality. Their purchasing decisions are through critical thinking and awareness, with focus on the "finer things in life." On the other hand, strivers are a low-resource group of people who are driven by their accomplishments. They share many of the same values as achievers, but they have fewer financial, social, and psychological resources. They place a high value on style because they want to express individuality and be like those who they admire.

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Something that sets Gen Z and Millennials apart from previous generations is their need for transparency when shopping with brands. According to McKinsey (2019) consumers have become increasingly concerned about issues such as sustainable practices and fair labour. Consumers are eager to pay more for sustainable items, with 66% preferring to pay extra. Before purchasing a product, 42% of millennials want to know what goes into it and how it is created, compared to 37% of Gen Z. There is a need for Urban Outfitters to retain trust with their consumers.

Customer Profiles

A customer profile (or buyer persona) is a semi-fictional representation of a customer who represents a specific target audience. Customer profiles of ideal buyers at Urban Outfitters will be shown below.

Figure 1: Avril Customer Profile

Figure 2: Taylor Customer Profile PAGE 6

Figure 3: Isla Customer Profile

Competitor Analysis

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Due to a diverse merchandise mix, Urban Outfitters is able to compete with a large variety of retailers. Additionally, their digital presence allows them to also compete with a range of e-commerce businesses. Urban Outfitters’ main competitors are GAP, Calvin Klein, ASOS, Abercrombie & Fitch, American Eagle, H&M and Forever 21. The positioning map below shows how Urban Outfitters competes in terms of price and quality. The results were generated by analysing data such as pricing, product descriptions and customer reviews for an ordinary/basic ‘White T shirt’:

Figure 3: Positioning Matrix

Positioning Matrix

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In 2020, Urban Outfitters had a market share of 3.44% (CSI Market, 2020). The pie chart below illustrates UOs share in the market in comparison to a selection of its competitors mentioned previously:

Figure 4: Market Share

Market Share Urban Outfitters Calvin Klein

GAP Abercrombie & Fitch

13.89% 12.50%

23.66%

49.95%

Note: This is not representative of the entire market but does give an illustrative insight to Urban Outfitters position in comparison to competing retailers.

One thing that sets Urban Outfitters apart from its competitors is that each store is unique. Urban Outfitters gives their management the flexibility and freedom to establish a competitive advantage by allowing them to design the store with music and artefacts from outside. They also made changes to their hiring process and seek to hire art and design graduates instead of business graduates – this offers a creative perspective and more design freedom. If a manager noticed an old rusty lamp on their way to work and thought to themselves, "That would look excellent in the men's department of my store," they are free to bring it in and display it (Krippendorff, 2019).

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Another competitive advantage for Urban Outfitters is that they are difficult to imitate. They sell used second-hand clothing which traditional retailers would find too disruptive. To attempt to replicate Urban Outfitters business model, traditional retailers would have to abandon 80% of target market as UO only sells to college students. They would also need to completely rethink their hiring process and their supply chain – this would increase costs and would not be worthwhile in the long run

SWOT Analysis

To further our situational understanding of Urban Outfitters internal and external environment, a SWOT analysis technique will be used to identify their strengths, weaknesses opportunities and threats:

Figure 5: SWOT Analysis

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Part II: Objectives

Growth Initiatives

After analysing the internal and external factors that will impact the proposed marketing strategy for Urban Outfitters, multiple opportunities for growth have appeared. Implementing these growth strategies would allow Urban Outfitters reposition in the uncertain state of the retail market due to the Covid-19 outbreak.

The proposed aims will be SMART, meaning they will be specific, measurable, achievable, relevant, and time-bound (Chartered Management Institute, 2014). The growth initiatives/objectives for Urban Outfitters to act upon within the new fiscal year (1st February 2022 – 31st January 2023) are as follows:



Increase consumer engagement via interactive events, aim to use up 90% of the venue capacity.



Increase sales and exposure through pop-up shops, aim to get 1 in 3 customers to sign up for digital marketing messages.



Increase brand exposure on social media. Aim to double UO’s Tiktok following by the end of the fiscal year.



Increase transparency by educating consumers on aspects of the supply chain. Aim to increase UO’s transparency percentage on the Fashion Revolution Transparency Index from 20% to 60% and aim to improve UO’s ‘good on you’ rating from ‘not good enough’ to ‘good’.



Increasing the use of technology online and in store. Aim for 85% of customers to be ‘satisfied’ with the use of technology.



Introduce a new product range, aim to completely sell out within a month of the first drop.

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Part III: Marketing Strategy

The marketing strategy illustrates how Urban Outfitters can reach their long term objectives and is the key step in defining strategic direction (Hollensen, 2019). To illustrate the marketing strategy, the STP (segmentation, targeting, positioning) model will be used. This involves targeting specific client segments with marketing campaigns suited to their tastes, as well as adjusting UO’s position to meet expectations (Wright, 2020).

Market Segmentation

Market segmentation is the division of the target market in to specific, approachable segments. This approach will be illustrated and condensed involving the four main segmentation-based

variables:

geographics,

demographics,

psychographics,

and

behavioural. Geographics

• •

Urban/semi urban areas. 76% living in a city centre or an outlying district, 23% living in small towns or the countryside (Rathbone, 2019) Europe, North America, and Israel.

Demographics

• • • •

•

Men, women, and non-binary. Aged between 18-30 college students or graduates Middle class/uppermiddle class Single, unmarried, no children

Psychographics

• •

• • •

Creative, trendy, and rebellious. Representative of an indie/hipster subculture. Interested/concerned about social status. Tech-savvy individuals Prefer experiences over tangible objects.

Behavioural

•

•

•

Combination of innovators and strivers (VALS Framework, 1978) Seek transparency when shopping with retailers. Most purchases are made online.

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Targeting and Positioning As mentioned previously, Urban Outfitters made the decision to never change the philosophy of the brand to suit the ageing customer and decided to specifically target college-aged individuals. This is known as a concentration strategy as it focuses marketing efforts on one narrowly defined market segment and uses one single marketing mix (Swann, 2021). The proposed marketing strategy will continue to target young college students as it is easier for UO to tailor their messages to this specific segment. This strategy is cost effective as significant investment would be required to carry out additional audience analysis for a new customer segment.

Students are an attractive target market for UO because their purchasing behaviour is highly influenced by social media and the emergence of new technologies. While students are on campus working on assessments, they most likely have a laptop at hand which allows them to browse the internet. Thus, it is easy for students to immediately find what they are looking for. According to watchdogs’ annual study of media habits, young adults aged 18-25 in the UK have an average screen time of six hours and 25 minutes per day (Wood, 2020). In addition, almost 20% of students look at their phone immediately after waking up, and within 30 minutes, 70% are up to date with the events of the previous night (Chandler, 2017). Therefore, not targeting students would be a missed opportunity. It is important that UO combine digital marketing with a tailored marketing mix that suits their needs.

Part IV: Marketing Mix The marketing mix model will be used to propose marketing objectives which target our concentrated segment of young college students.

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Product Urban Outfitters currently have a unique merchandise mix which consists of women’s and men’s apparel, accessories, beauty, homeware, and lifestyle items. They also stock a variety of well-known brands such as Adidas, Champion, Levi’s, and Juicy Couture. This is especially helpful as nearly two-thirds of young people almost always opt for their favorite brands when making purchase decisions (Houser, 2016).

Considering UO targets creative individuals, a recommended product proposal would be to introduce a DIY range where consumers can add their own personal touch to garments/products in store. The covid-19 lockdown and stay-at-home orders sparked a creative renaissance among young consumers across the globe, since it gave them time to pursue new hobbies/interests. Even if lockdown is lifted, a creative-based product line will allow UO to continue to promote and encourage creative activities. The proposed product line will include:

•

A sewing kit which includes an Urban Outfitters garment, basic sewing tools and a beginner’s guide. The guidebook will show consumers how to rework and transform a plain white T-shirt into something distinctive and fashionable.

•

A fabric dye kit which includes an Urban Outfitters garment, coloured fabric dyes, coloured fabric pens and a beginner’s guide.

•

A T-shirt photo printing kit which includes an Urban Outfitters garment, basic photo printing tools, a book full of graphic, printable designs, and a beginner’s guide.

•

A pottery kit which includes clay, shaping tools, paintbrushes, coloured acrylic paint and a beginner’s guide.

•

A candle making kit which includes candle wax, molds, fragrance oils, coloured dyes and a beginner’s guide.

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•

A DIY neon sign kit which includes bendable LED wire, fixing strips, a color wheel remote and a beginner’s guide.

Price

Urban Outfitters currently uses customer-value pricing, which means that their prices are based entirely on their consumers perceptions of value (Claessens, 2015). Despite this, UO also considers a competition-based strategy as they often benchmark competitors and apply discounts to recapture consumers attention. When looking back at the positioning matrix, it is clear that Urban Outfitters is more expensive than its competitors. When analysing data from the search ‘White T Shirt’, it was found that Calvin Klein was the most expensive, followed by Urban Outfitters, GAP, and Abercrombie & Fitch. ASOS, Forever 21 and H&M presented lower pricing in the matrix.

Considering Urban Outfitters evaluates consumers' perceptions of value when determining product prices, it is suggested that UO carry out focus group research with a group of potential customers who are interested in the new product line. UO will be able to obtain appropriate feedback and price their new DIY range suitably as a result of this.

Promotion

Urban Outfitters understands the value of social media when targeting young college students. Therefore, the brand uses social media as its primary channel for promotion due to it being low-risk and cost eff...