Urban Outfitters Continuing Case Study: Creating a Business
Three challenges when setting up a business is capital, location and marketing - Urban Outfitters Continuing Case Study: Creating a Business introduction. To start a business you need money to get it off the ground. This money will be used to rent or purchase space for the business, furniture and equipment, supplies, professional fees for legal and accounting and research and development of your products. This money will also be used to pay employees. Unless you were born into a wealthy family, money has to come from someplace to get the business running. Figuring out what type of funding will work best for the company will also be something to consider.
There are different funding stages: seed capital, start-up capital, expansion capital and bridge capital. Seed capital is used to do the initial research and planning. Start-up capital is the funding that will help you with paying for the equipment, rent, supplies, and etc. for at least the first year of the business. Expansion capital is for funding a business that is now ready to grow in every area: inventory, building, equipment and etc. Bridge capital ties the current funding’s and the new funding’s together.
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As all of these levels of fundngs are important the one that will make or break the start of the business will be the start-up capital. Start-up capital will cover payroll, utilities, rent, marketing and sales, supplies, maintenance, insurance and taxes. You want to make sure you request or have enough start-up funds so that the business can run smoothly and you don’t go out of business due to poor management. When it comes to marketing you want to make sure you are meeting the needs of the customers at the start of a business.
You have to make sure there is value in the products or services being offered. Every customer doesn’t have the same need and it’s up to you to determine what needs you can fulfill for the potential customer and how you should meet those needs. Marketing also includes analyzing the competition and determining how you are going to win the potential customer business, analyzing competition helps with pricing products and services. How will potential customer know about your products or services? Simple by promoting your products or services through continued advertising, sales, promotions and word of mouth.
Many think that you can just start-up a business anywhere you want. When establishing a business, you have to think about rather the facility you’re renting or purchasing is in a zone right for the type of products or services you’re offering. You want to make sure the facility is large enough for your business. You have to ensure that it has enough space for everything. Considering location also includes thinking about whether the lighting, heating and cooling meet the needs of your business. You want to make sure that you choose a location where customers can easily access you.
Making sure you have enough funds to start-up your business is crucial and actually one of the top and most important parts in running a business. Finding a way to market your products and services to your potential customer is another top priority in running a successful business because without customer there’s no business. Last make sure the location of your business is in an area that attracts the potential customer for your products or services. Define what a “niche” product is. Give at least three examples of niche products. Niche products are products or services that are not produced and marketed by the main marketing industry.
These products have special qualities that attract specific customers who will pay more money for it. Niche products are provided by small size businesses that have a small, but loyal clientele. These products may market towards certain geographic areas, specialty industry, and ethnic or age groups. One example of niche product is kosher milk. Kosher milk is targeted for the Jewish community. There is a company that processes this milk but they have to be under rabbinical supervision. Ethnic grocery stores are another example of niche products these grocery stores may cater to one specific ethnic group.
These grocery stores carry imported items and ingredients that are not found in most Western supermarkets. Raw food restaurants serve raw and living, organic foods. These restaurants do not use stoves or microwaves to cook foods, but offer uncooked, unprocessed foods. These products are created through using dehydrators or sun. 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 might have an advantage in a market because they don’t have to waste time or money trying to sell their products or services to every customer in the market.
They only have to focus on a small segment of loyal customers to retain profits. Another advantage of niche companies in a market is competition. Niche Company normally has no competition to be concerned with. Price would be an advantage to the owner because they can profit by selling their products or services at a very expensive cost since they are the only providing business with this special product and there is no other business to compete with. Identify and explain three reasons why customers would pay more for exclusivity.
A customer would pay more for exclusivity because of quality, reputation and status. Quality is very important when purchasing products, you want to spend your money on something that is going to last awhile and serves it purpose as long as possible. I like to purchase and spend my money with a company that has a good reputation even if it cost me more. The company has to have great customer service, which is so important to me and on top of that the products have to be everything the company portrays it to be, if it is, then regardless of the price I will get it.
Some customers have an image or status to protect so they will purchase the most expensive product just to show off their wealth. Explain how a niche player “chips away” at a larger competitor’s base. Give three examples of retailers who have done this. Niche players can chip away at a larger competitor’s base in many ways. One example could be that the niche players offer something that the larger competitor does not offer like Starbucks providing many different blends of top European quality coffee while entertaining with a social environment.
Another example would be a niche business using a different means of technology to sale a specific product, for instance, eBay auctioning products online instead at a brick and mortar. The last niche player example would be HHGregg. This company offer computers along with other electronic devices but what’s so different about this company is that the employees are knowledgeable about the products and can actually answer any questions that may be asked about a specific product.