Patagonia case study
Summary of the Organization
The competitive nature of the clothing industry forces organizations to come up with creative strategies to attract and retain customers. The need for innovation in such an industry is intensified by customer’s shifting needs and wants as they try to keep up with current trends. Since fashion is a concept that is constantly evolving, organizations in the clothing industry must be flexible enough to anticipate these changes and offer products that satisfy the customer’s needs. For organizations like Patagonia, success is determined by how well the company manages to differentiate its products from those from the competition. Differentiation is therefore a major contributor for Patagonia’s success in the clothing industry despite the existence of stiff competition.
Patagonia is an American clothing company located in Ventura, California. The company was founded in 1973 by Yvon Chouinard and has managed to acquire a significant market share through marketing and sale of outdoor clothing. The founder is a rock climber and during its early years, the company specialized in the sale of mountain climbing gear (Thangavelu, 2020). The products sold by Patagonia when it was first started were hand forged and sold through Chouinard’s company, Chouinard Equipment (Patagonia, 2020). The company operated as a sole proprietorship until later in 1965 when Chouinard teamed up with Tom Frost. By this time, the company was experiencing tremendous growth and Chouinard needed help supplying the growing demand for products. Teaming up with Foster also helped to innovate and develop better products to match the customer’s shifting needs and wants.
The company has tried to remain flexible by expanding its products and innovations that target customers in different sports like surfing. The company has also tried to add variety through additional products like sleeping bags, camping gear and backpacks for daily use (Thangavelu, 2020). Despite the existence of stiff competition from organization offering similar or alternative products, Patagonia’s differentiation strategy and customer base gives the company a competitive advantage by creating constant demand for its products.
Customer Base
Patagonia’s customer base consists of fashionable individuals who are committed towards keeping up with the latest fashion trends. They comprise of individuals who dress well on a daily basis and prefer doing some form of research before making the purchase decision. The company’s target audience is also well informed and up to date with current and emerging trends that revolve around the world of fashion (Hiebert, 2017). The company’s customer base further comprises of ethical customers who are picky about where the products are manufactured and the impact that the raw material has on the world’s natural resources. Although majority of them are driven by the desire to keep up with emerging trend’s in fashion, a significant number prefer to shop from organizations that are committed to preserving the environment and extend the same when manufacturing their products.
The company’s customer base mostly lives in the suburbs or major cities with small potion live in towns and rural areas. The group is made up of both men and women in the ages of between 18 and 50 years (Hiebert, 2017). The customers lead expensive lifestyles and are willing to spend on fashion. The impulse to buy is triggered by preference rather than necessity and majority of the customers go for products that are appealing, innovative and fashionable.
Mission and Core Values
Patagonia operates under the mission statement ‘we’re in business to save our home planet’ and it summarizes the company’s core values and code of conduct. The mission statement was recently changed from the old one which read “build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis” (Patagonia, 2020). The old mission statement has been in use for more than 45 years and the decision to adopt a new one was influenced by the company’s desire to communicate its growing vision.
The company tries to place more emphasis on its commitment to preserve the environment and protect its resources from being exploited through the new mission statement. The new mission statement is therefore a testament to the company’s commitment to offer comfort and convenience to not only its customers but everyone in society through its products and commitment to preserve the environment.
Patagonia’s core values reinstate the company’s commitment to deliver the highest quality of products while doing the least damage to the environment. Other than ensuring that its products are environmentally friendly, the company has also put measures to ensure that the processes involved from making products to delivering to customers is environmentally friendly (Heath, 2019). The company relies on recycled materials and reuses some of the raw material as a way to minimize the amount of raw materials used in the manufacturing process. Patagonia further engages in different ways to reduce the number of greenhouse emissions, chemicals and toxic waste that is emitted during the manufacturing processes.
Vision
Patagonia is aligning itself on a path to be one of the leading organizations that promote environmental sustainability by ensuring that its processes are environmentally friendly. The company operates under the vision statement that reads “A love of wild and beautiful places demands participation in the fight to save them, and to help reverse the steep decline in the overall environmental health of our planet”(Patagonia, 2020). The vision is brough to life through practices such as the company’s activities on social media platforms. A good example is the company blog that allows customers to post photos and share their experiences using Patagonia clothing and other products. The posts shared highlight the unique qualities of the products and also the beauty of the environment that the organization is committed to protect.
The Worn Wear Wagon is another example of the company’s commitment to enhancing environmental sustainability through recycling and ruse. Instead of advertising more products and encouraging customers to make new purchases, Patagonia engages its customers on activities such as the Worn Wear Wagon to teach the target audience on the importance of reusing and recycling their old products before purchasing new ones (Thangavelu, 2020). The worn wear wagon was a marketing strategy where the company would visit designated locations to repair any damaged products bought from its stores. The company assisted its customers to make repairs on torn clothes and spoilt zippers. Customers also received training on how to make their own repairs instead of substituting damaged products with new ones.
Corporate level strategy
Patagonia’s corporate level strategy that focuses on growth and is responsible for determiningwhat approach the business takes when innovating products and making them available to the target audience. The company constantly innovates its products and launches new ones to satisfy an identified opportunity in the market (Avishikta, 2016). Growth is achieved through different platforms such as the company’s online platform. The website is used to highlight the company’s products as well as capture natural scenes that serve as backgrounds for images and videos posted on the company website.
The information shared through Patagonia’s social media platforms helps to keep customers informed about existing products and those that will be launched at a set time in future. The platform personalizes the company and its products as the content shared serves as testimonials from customers who have purchased and are already using Patagonia merchandise (Avishikta, 2016). The exposure helps to attract new customers who purchase new products and create more demand for Patagonia products. The growing demand in turn promotes growth for the company as it ensures that there are customers ready to buy products from Patagonia as soon as they are made available in market.
Business-Level Strategies
To gain a competitive edge, Patagonia uses differentiation as a business level strategy to set its products apart from those from the competition. A good example of the differentiation strategies used is the ‘anti-black Friday’ campaign carried out by the organization. Instead of urging customers to make more purchases during the black Friday shopping craze, Patagonia opted to advise its customers on the importance of reusing old products (Lutz, 2014). The move was backed by an advertisement discouraging customers from buying a jacket in their products list and repair the clothes that the customers already have as a way to reduce wastage and destruction of natural resources.
The company’s business level strategy has helped Patagonia to differentiate its products from its competitors as it goes against what most of the competitors are doing. The decision to discourage people from making unnecessary purchases communicates the company’s commitment to offer quality and preserve the environment. Customers are therefore more likely to purchase products from Patagonia that the competition as the former is seen as being more invested on the customers well being more than it does towards making profits.
PESTEL Analysis
- Political
Patagonia’s political environment has the most relevance to the company’s success as it determines how the company goes about manufacturing its products and making them available to the target audience. The company has established a reputation of being corruption free and this has a positive impact on the target audience which promotes growth.
- Economic factors
Patagonia’s economic factors influences decisions such as employee working hours, state of economic growth, inflation and wage rates. The company has developed strategies that look out for customer interests while at the same time protecting the customers interests and preserving the environment in the process (Basil et al, 2019). The company’s ability to balance its economic environment gives the company the market share it currently enjoys.
- Social factors
The social factors at Patagonia create the biggest challenge for the organization. Although the population leads a lifestyle that requires Patagonia products and services, the population growth rate in the market is very low and this discourages steady growth. Patagonia has opted to deal in products that are appealing for customers of both genders and in different age groups(Basil et al, 2019). The large segment of customers ensures that there is constant demand of products for customers at different stages of development.
Literacy rate is really high and it has the 4th least expensive baby death rate. Population growth rate of Patagonia Case Pestel Analysis is low.
- Technological
Technology also has relevance in that it influences the efficiency of production and quality of products made. For Patagonia, the challenge arises when the technology needed relies on energy that could affect its ability to reduce waste in all stages of production (Patagonia, 2020). The company is however careful when adopting new forms of technology. Reliance on alternative forms of energy helps to cut down on wastage and maintains the company’s commitment to preserve the environment.
- Environmental
The company engages in various activities to try and preserve the environment and its resources. Patagonia is heavy on recycling and organizes drives to repair damaged products as a way to discourage customers from making unnecessary purchases(Basil et al, 2019). The approach is likely to create more opportunities especially since people are more inclined to making purchases from organizations that are committed to preserve the environment.
- Legal factors
Legal factors dictate how a company operates and offers guidelines on how to interact with employees, customers and the environment in general. Patagonia’s corporate policy ensures that all activities are in line with the legal requirements and that employees and customers are treated fairly and in a humane way.
References
Avishikta R, (2016) “Types of corporate level strategies” The Next Generation Library, retrieved from, https://www.yourarticlelibrary.com/strategic-management/types-of-corporate-level- strategies/99697
Basil, D. Z., Diaz, M. G., & Basil, M. D. (2019). Social marketing in action: Cases from around the world. Cham, Switzerland: Springer
Heath A, (2019) “Spotlight on Patagonia: Core values key to employee engagement” retrieved from, https://wethrive.net/blog/spotlight-patagonia-core-values-key-employee- engagement/#:~:text=What%20are%20Patagonia's%20core%20values,include%20transp arency%2C%20collaboration%20and%20improvement.
Heibert P, (2017) “A look at the type of person who shops at Patagonia” YouGov, retrieved from, https://today.yougov.com/topics/consumer/articles-reports/2017/07/10/the-type-of- person-who-shops-at-patagonia
Lutz A, (2014) Ä clothing company discourages customers from buying its stuff-and business is booming” Business Insider, retrieved from, https://www.businessinsider.com/patagonia- business-strategy-2014-9?IR=T
Patagonia, (2020) “About Patagonia” retrieved from, https://www.patagonia.com/our-footprint/
Thangavelu P, (2020) “The success of Patagonia’s marketing strategy” Investopedia, retrieved from, https://www.investopedia.com/articles/personal-finance/070715/success- patagonias-marketing-strategy.asp
