Urban Outfitters: Value Creation Within the Brand Community

Danutė Rasimaviciute

Urban Outfitters: Value creation within the brand community

Spring 2010

URBAN OUTFITTERS:

Value creation within the brand community

By Danutė Rasimaviciute

Supervisor: Michael Hubertz

Department of language and business commutation

Århus School of Business

Århus University

Spring 2010

Abstract

Title: Urban Outfitters: Value Creation within the brand community

Author: Danutė Rasimaviciute

Field of study: Marketing and Management communications (MMC)

Institute: Århus School of Business, Århus University (ASB)

In recent years, one of the trends in modern brand management has been the endeavor to establish a tight relationship with the consumers in order to engage them with the brand. Therefore developing brand communities, which augment from a loyal consumer base, had become the Holy Grail for the brands.

The overall objective of this report is to investigate theories related to the value generation within brand communities’ topic and finally apply them to the Urban Outfitters study case by analyzing how Urban Outfitters communicative efforts on its website and its blog facilitate the value creation within the brand community. The first part of the report deals with outlining the importance of the chosen subject as well as introducing Urban Outfitters community. The second part outlines the chosen theoretical framework which is mainly based on value creation practises suggested by Hope Jensen Schau, Albert M. Muniz Jr and Erik J. Arnould’s and Thomas W. Gruen, Talai Osmobenkov and Andrew J. Czaplewsk’si theories , where the authors explain what impact the MOA model has on the collective value creation when customer to customer (C2C) exchange occurs. Later, at the third part, it is preceded to applying the chosen theories to the Urban Outfitters case. The Fourth part of the report offers a conclusion, explaining what communicative actions are taken to generate value creation within the brand community.

The report not only helps to understand UO communicative efforts on the UO website and the blog, but also works to point out the week points of the communicative strategy. The further improvements of the strategy could lead to a stronger brand community and the more effective value creation

Table of contents

1. Introduction 4

1.1. Problem statement 5

1.2. Methodology 5

1.2.1. Theoretical framework 5

1.3. The choice of empirical data 6

1.3.1 www.urbanoutfitters.com 7

1.3.2. www.blog.urbanoutfitters.com 8

1.4. Delimitations 8

2. Valuen creation within Brand communities 10

2.1. Brand community features 10

2.2. Genretating value 11

2.2.1. Value Creation practices 11

2.2. C2C exchange and The MOA model 12

2.2.1. Value of the firms offering 13

2.2.2. Loyalty intension 14

2.2.3. Moderating factor 14

2.3. Four Motivations by Oversloot and odekerken-schroder 15

2.4. Netnography 16

2.4.1. Limitations of netnogrphy 16

3. Generating value within the UO brand community 18

3.1. Does Urban Outfitters have a brand community? 18

3.1.1. Shared consciousness 18

3.1.2. Rituals and traditions 18

3.1.3. Sense of moral responsibility 19

3.2. Generating value 19

3.2.1. UO Social networking practices 19

3.2.2. UO impression management 21

3.2.3. UO community engagement practices 22

3.2.3. UO brand use practices 25

3.3. The effects of UO value creating practices 25

3.4. C2C exchange and the application of MOA model to UO case 27

3.4.1. UO motivation strategies 27

3.4.2. Opportunity to engage in UO C2C 28

3.4.3. Ability to engage in UO C2C 29

3.4.4.Moderating factor applied to UO case 29

4. Conclusions 31

5.Bibliography 33

6. Appendix 34

“Very successful brands are like clubs. It creates a sense of something a customer wants to belong to.”

Nathan Coyle

1. Introduction

In recent years, one of the trends in modern brand management has been the endeavor to establish a tight relationship with the consumers in order to engage them with the brand. Therefore developing brand communities, which augment from a loyal consumer base, had become the Holy Grail for the brands. According to Porter (1980)[1] brands that wish to succeed in this highly competitive environment have to pursue any of three generic strategies, which are cost leadership, differentiation and focus. Harsh Arora (2009) argues that many companies have decided to focus on a differentiation and therefore initiate brand communities around brands. As it is a human nature to live with other like-minded human beings and form informal networks[2], these informal networks can be structured and used as an effective mean to obtain a competitive advantage when members of a brand community tend to hold a tight emotional association with a brand. This explains why even if most of the value comes from the customer’s and company’s encounter, marketing studies have also put a focus on the influence of other customers on perceived value[3].

Therefore, the overall aim of this report is to explore the definitions and concepts developed in the field of brand communities from a communicative perspective, and link the latter to the study case. The study case strives to examine American retail brand Urban Outfitters’ North American website and the international blog as a catalyst for the brand community.

1.1. Problem statement

How do Urban Outfitters communicative efforts on their corporate website and their blog facilitate the value creation within the brand community? What actions are taken by OU to assure that its consumers perceive being in the community as valuable?

In order to understand the problem statement correctly, I feel that there is a need for a better definition of the word ”value”, as it can have different meanings in different situations. I find it crucial to point out that the aim of this report will be to explain collective value creation within brand communities which benefit community members, not value obtained directly from a company’s offering or value perceived by a company, because of a brand community’s existence.

1.2. Methodology

The problem statement will be answered by a theoretical discussion of the relevant theories and the empirical analysis of the Urban Outfitters (UO) study case. In this report I will use a deductive method, meaning that I will start out by presenting relevant theories dealing with value creation within brand communities and narrow it down to the study case where these general theories will be shown in a perspective.

I have decided to build the report on the philosophical hermeneutics idea[4] of all human-beings constructing meanings in cognitive processes, or in my chosen study case, UO consumers not only creating personal meanings of the brand, but as well being powered by it. As typical to the philosophical hermeneutics approach my overall objective throughout the report will be to understand the way communities’ produces value instead of barely explaining perceptions of brand communities. Moreover I will not examine community’s interpretations and meanings created by the brand by coming to the field as a “tabula rasa”, but instead prior to starting the UO community’s analysis I will have both my own prejudices about the target group and a theoretical framework dealing with the topic. As Gadamer (1974)[5] argues this should not be seen as a barrier to knowledge but rather the condition of it.

1.2.1. Theoretical framework

Albert M. Muniz and Thomas C O’Guinn’s (2001) theory dealing with brand communities constitutes the platform of the research, since the research will be based the notion of a ”brand community” introduced by the scholars. I will start out my report by reflecting on Hope Jensen Schau, Albert M. Muniz Jr and Erik J. Arnould’s work and employing their suggested value creation model as a framework for the Urban Outfitters study case in order to examine what actions are take by UO to generate value within the community. In particular, I will go more into depth with their suggested value creation practices and will strive to identify the latter on the UO website and the UO blog by applying the netnography method. The netnography method, introduced by Robert V. Kozinets (2002), will be applied to get a better insight into my studied UO brand community in their natural environment and interpret what UO actions stimulate value generation among members. Consequently, I will reflect on relationship marketing theories, as they are closely related to the topic of brand communities. Specifically, in my report I will focus on the MOA model and Thomas W. Gruen, Talai Osmobenkov and Andrew J. Czaplewsk’si theories , where the authors explain what impact the later model has on the collective value creation when customer to customer (C2C) exchange occurs. Finally, the model will be applied to UO case to see how this value creation is influenced by factors such as motivation, opportunity and ability. All in all, this will work to explain how UO communicative efforts on the North American website and the blog facilitate the value creation within the brand community and what actions are taken by OU to assure that its consumers perceive being in the community as valuable.

1.3. The choice of empirical data

The North American retail brand Urban Outfitters has been chosen as a case study for this report. It was found in 1970, in Philadelphia, USA, and currently it has more than 150 stores in The USA, Canada, United Kingdom, Ireland, Belgium, Germany, Denmark and Sweden[6].

On their corporate website[7] they claim: “We stock our stores with what we love, calling on our — and our customer's — interest in contemporary art, music and fashion. From men's & women's apparel and accessories to items for the apartment, we offer a lifestyle-specific shopping experience for the educated, urban-minded individual in the 18 to 30 year-old range — both online and in our stores as well as through our catalog.”

In other words UO target customer base is young, cultured, self-expressive metropolitan hipsters, concerned with their acceptance by their peer group. The slang term hipster refers to “young, recently-settled urban middle class adults and older-teenagers with interests in non-mainstream fashion and culture”[8], especially independent rock, independent cinema or contemporary art. UO suits their customers by offering bohemian, retro, even kitschy women’s and men’s fashion apparel, footwear and accessories, apartment wear and gifts made by different brands. To some of them UO has exclusive selling rights as they are developed and designed internally[9] (e.g. Silence&Noise, Urban Renewal), while others such as Levi’s or Cheap Monday can also be found in other retail stores.

All UO marketing strategies underline the sense of uniqueness that the company holds. UO does not advertise, but instead relies on such methods as visible store locations, creative store designs and the word of mouth[10], all of which in along run reinforce the strength of the UO’s community.

However, it is relatively hard to weight the size of UO community for many different reasons. Firs of all, as I will explain further in my report (see 2.), the online UO community overlaps with the offline one as they reinforce one another. This means that any of the UO community members can feel attached to the brand online, offline or both. Moreover community members are not restricted to being UO clients, as UO to a huge extent suggests a lifestyle that supports the brand. For instance, anyone with a “passion for fashion” can follow the UO blog, which not necessarily leads to shopping at UO. However one could argue that, for instance, discussing or reviewing UO merchandise is a big part of belonging to the community, for this reason a person has to be UO client in order to become a “full-fledged” community member.

1.3.1 www.urbanoutfitters.com

For the study case I have chosen the North American UO website www.urbanoutfitters.com, which regardless of some features is almost identical to the European one (www.urbanoutfitters.co.uk). Both of them function to increase UO sales, as all UO items can be purchased online. However it is important to draw attention to the fact that North American and European UO offer slightly different brands. As a result the two websites are adapted to each of the markets. However European users are not able to comment on items displayed on the website, which stands as an obstacle for a clear communication not only between the UO and its European consumer, but also between consumers alone. For this reason it seemed logical to choose the North American website and see how the fact, that consumers are able to interact with one another directly, help to establish and maintain the brand community. The North American website captures the spirit of the store by offering similar merchandise as is sold in the stores. Further in my report I will argue that North American website not only functions as a mean to increase UO sales, since according to the company’s annual report 2010, direct-to-costumer sale were approximately 16,7% of consolidated net sales for fiscal 2010, bus as well works a vehicle for the brand community’s establishment.

1.3.2. www.blog.urbanoutfitters.com

For the study case I will also use the UO blog www.blog.urbanoutfitters.com. The UO blog gives an international spin to the brand community, as it enables the consumer to feel connected to other UO lovers worldwide. The blog can be accessed from both North American and European UO websites. It consist of daily posts (links to external websites) from around the globe, each time with a location clearly indicated, covering topics such as fashion trends, traveling, books, gaming, events and many more. The Blog as well has the Features section, which offers interviews with different artists, contests, insider-stories about U0 photo shoots or articles covering a wide range of topics from employee of the month to style icons. This can lead to a conclusion that the blog suggests topics that could possibly cater the target market’s interests. As the UO’s annual report establishes, the blog fosters the understanding between UO and its consumers, because it not only reveals what inspires UO, but also “allows UO costumers reveal what inspires them”.

1.4. Delimitations

In order to understand and analyze the full range of actions taken by UO to facilitate the value creation within the brand community, it is not enough to examine merely the website and the blog. I would have liked to include such UO communicative efforts as UO catalogs, UO newsletters, communication on social networking sites as Facebook, Twitter or Flickr, as well as attempts to facilitate the value creation offline through UO events or UO stores, since all these online and offline efforts also contribute to creating and maintaining UO community. Due to the restricted length of the report I have decided to go more into depth with the web page and the blog, instead of looking at all UO communicating efforts only superficially.

Secondly, I have also considered using questionnaires and focus groups interviews for my research. However, finally I have decided to focus only the netnography method in order for the research to be as less biased as possible and observe community members in their natural environment without any interference.