Patagonia Apparels Case Study 1

PATAGONIA APPARELS CASE STUDY

By Student’s Name

Course Name
Professor Name
Institution
Date
 Patagonia Apparels Case Study 2

I. Introduction

According to Patagonia.com (2006), Patagonia, Inc. adheres to a core mission of “Build

the best product, do no unnecessary harm, use business to inspire and implement solutions to the
environmental crisis” that is still as strong as it was when Patagonia was founded by Yvon
Chouinard over thirty years ago. As noted on OutdoorEd.com (2006), Patagonia continues to
have values that reflect those of a business started by a band of climbers and surfers, and the
minimalist style they promote. The approach taken by Patagonia, Inc. toward product design
demonstrates a bias for simplicity and utility. The company also donates time, services, and at
least 1% of its sales to hundreds of grassroots and environmental groups all over the world who
are working to help reverse the tide that is environmental damage.
Patagonia’s clothing is made for people who love the outdoors, as reflected by the quote on
Patagonia.com (2006) that states “We enjoy silent, human-powered sports done in nature, where
the reward involves no audience and no prize other than hard-won grace. These entail risk,
require soul, and invite reflection. They bring us closer to the natural world and to ourselves.”
That same risk, soul, and reflection is shown in all of the products that are created under the
Patagonia brand. Examples can be seen in the clothing production methods used by the
company, as well as the vehicles chosen to market them. Patagonia’s award winning catalogs are
printed on recycled materials and feature environmental articles and images of materials that
were recycled to produce featured clothing lines.
Additionally, marketing channels that are not environmentally sound, like billboard advertising,
are not used. Patagonia’s limited number of distribution partners, like REI, must also share
similar missions and values. In 1996, Patagonia switched to organic cotton that is used in
clothing production, according to CIO.com (2006). Paints with low amounts of volatile organic
compounds are also utilized in combination with many other manufacturing processes that have
been installed to store and conserve energy. Manufacturing consumption has shifted away from
virgin crude oil that was previously used to make garments. Even left over fleece scraps used in
the production of adult clothing is reused to create patchwork clothing for children, known as the
“Seedlings” line. While the cost of Patagonia clothing is higher than most competitors, the
passion that is evident in the company’s pursuit of “green” manufacturing practices and world-
class customer service justifies it and helps build out a loyal customer base.
Clothing from the company lasts significantly longer than that of competitors and can be
returned for repair, no questions asked, and often with little or no extra cost. An example of such
exemplary customer service was expressed in an article on CIO.com (1999) in which loyal
customer Leslie Barnes, an avid skier from MA, who bought her first Patagonia pullover in 1984,
said “There may be a difference in price, but there's also a huge difference in quality. My
husband has a jacket that's 10 years old. I just sent it back to have the zipper fixed, which
Patagonia repaired for free. After 10 years you'd expect to buy another coat, but once the zipper
was replaced, this parka was ready to go another decade."
 Patagonia Apparels Case Study 3

II. Situational Analysis

a) A Review of Strengths, Weaknesses, Opportunities, and Threats

The SWOT analysis for Patagonia is presented in the following section and is followed by
analyses of influential market conditions including the primary target audience, geographic
considerations, campaign seasonality and timing considerations, the competition, and budget
considerations.
STRENGTHS

 Customer service policies, including those for returns and repairs

 Employee knowledge/lifestyle fostering/policies (on-site day care, etc.)
 Environmental issues champion – mission statement carries through to products,
distribution channels, marketing, philanthropic causes
 Easy-to-navigate website
 Direct-to-consumer distribution methods – website, stores, catalog
 Expansion into surf shops that stay true to corporate mission, according to Hamm (2006)
 Sense of ‘community’ built for customers through website, values, lifestyle
 Accolades as a best company to work for, according to Gangemi (2006)
WEAKNESSES

 Slow to expand product lines, expand into new outdoor sporting areas
 Price points higher than some competition, particularly in the minds of uninformed
consumers
 Limited distribution partners
 Website could state the return and repair guarantees more prominently than in the footer
of web pages, according to MultichannelMerchant.com (2005)
 Limited product/brand knowledge outside of primary target audience when compared
with other brands (while not everyone buys Columbia, everyone knows it via ads, etc.)
 Potential for market saturation among target audience – too niche?
 High operating margins relative to the industry – high end of 12-15%, according to
Hamm (2006)
 Limits on market share and growth versus mainstream competition
 Ambassador negative publicity – Dean Potter climbed Delicate Arch at Delicate Arch
National Park in Utah – illegal – generated anti-Patagonia sentiments according to
thepiton.com (2006)
OPPORTUNITIES

Line extensions – similar to surf shop expansion stated in above Strengths analysis
 Expand travel tie-ins – like destination weddings – partner with travel destination
websites (weather.com, travel.discovery.com, etc.) and present clothing
suggestions/environmental tips via online co-brands with links back to Patagonia.com
 Patagonia Apparels Case Study 4

 Increase top-of-mind recognition through sponsorships, co-branding – partner with

hybrid automakers, Sponsor College sports clubs, etc.
THREATS

 Competition with more attractive pricing, mainstream presence – Columbia Sportswear

Company, The North Face, Inc., etc.
 Global expansion of competition – like Recreational Equipment, Inc. in 82 stores in 25
states, according to REI.com (2006), vs. Patagonia retail in 39 stores, 7 countries in the
Americas, Europe, and Asia, according to Hamm (2006)
 Expansion of mainstream competitors into emerging markets, like China
a) A Review of Influential Destination Wedding Market Conditions

Target Audience

As outlined in the previous section covering brand background, Patagonia, Inc. has a distinct
corporate mission. As stated in the company history section of Patagonia.com, “Patagonia exists
to use business to inspire and implement solutions to the environmental crisis.” The target
consumer markets of Patagonia, Inc. are also unique when considering destination wedding
travel. Target consumers are demographically comprised of young, eco-conscious outdoor
enthusiasts within the age ranges of 18 to 30, according to Consumer Specialty (2001). In this
plan, the focus will be tighter, and comprised of those in the 25-30 year old, soon-to-marry end
of the target and prospect audience. An article from CIO.com (1999) notes that,
psychographically, Patagonia, Inc. target consumers are committed to environmental, moral,
ethical, and philosophical causes and are highly opinionated and passionate people who seek out
adventure and are curious to explore new things. They do this while, at the same time, they do
not ruin the environment that they are exploring.
A Day in the Life of Patagonia Target Customer

To further analyze the psychographic characteristics of a typical representative of Patagonia,

Inc.’s target audience, it is useful to present a “day in the life” profile of a sample customer. In
doing this, we are better able to analyze what a typical customer thinks, feels, and does over the
course of a normal day. Additionally, it allows for analysis of other potential touch points with
Patagonia customers over the course of any given day. Below, in Table 1, two sample customers
are presented, along with a typical “day in the life,” broken down by time of day from the time
they wake up, until they go to sleep. Following the profiles of Bob and Mary are visuals, in
slides one through three, of who Patagonia customers are and who they are not. Again, this
provides for a different way of thinking about our target audiences and making sure that they are
being served.
 Patagonia Apparels Case Study 5

Slide 1: Who Patagonia Customers Are, Bulleted, 2006

Slide 2: Who Patagonia Customers Are, In Visual Format, 2006.

Slide 3: Who Patagonia Customers Are Not, In Visual Format, 2006.

 Patagonia Apparels Case Study 6

b) GEOGRAPHIC CONSIDERATIONS

When making geographic considerations when planning how to best reach Patagonia’s target
audience for destination wedding travel, focusing on the top three cities with the highest number
of weddings overall and close proximity to a Patagonia retail outlet, as well as the top five U.S.
destination wedding locations, according to Callaway (2006), is important. If successful, the
plan can be rolled out more extensively to other regions. For reference, the top cities for
weddings in the U.S. include:
- New York, NY
- Los Angeles, CA
- Chicago, IL
The top destination wedding locations include:
- Legion of Honor, San Francisco, CA
- Central Park, New York, NY
- Columbia Gorge Hotel, Hood River, OR
- Longfellow’s Wayside Inn, Sudbury, MA
- Chicago Botanic Gardens, Chicago, IL
c) SEASONALITY AND TIMING

The recommended media mix will incorporate a combination of pulsing and continuous
scheduling. Because the recommended Patagonia.com co-branding partnerships, explained in
the next section, are evergreen, this media will receive continuous scheduling. The content and
information will change by the season to accommodate different wedding types and consumer
interest changes by season, driven by more or fewer weddings during certain months of the year.
The media that will fluctuate include direct mail, through quarterly list rentals. The first quarter
of the year will not have a mini-catalog mailing because of fewer weddings during the quarter.
Additionally, online ad buys will be more concentrated in the April, May, June wedding season
timeframe, with follow up placement in August and October.
d) COMPETITORS

There are two primary areas of competition for Patagonia, Inc. The first includes companies that
manufacture and/or sell similar outdoor clothing products and also incorporate environmentally
focused mission statements and promises to consumers. The second includes companies which
manufacture and/or sell similar outdoor clothing products, with similar durability and similar
price points, but that do not adhere to the same environmental guiding principles as Patagonia.
Additionally, the second group has greater brand recognition and revenue. REI, Inc., is an
example of a company that can be categorized into the first group listed above. This retailer was
also founded by climbers and sells outdoor products for active consumers. According to
REI.com (2006), the company gives back to the communities in which its stores are located
through grants and outreach programs that often benefit the environment.
Prana also fits into the first group and is a competitor in manufacturing and retailing of
environmentally friendly clothing whose mission statement is similar to Patagonia’s. According
to Prana.com (2006), “With every new season, Prana looks for new ways to fold sustainable
 Patagonia Apparels Case Study 7

materials and practices into the line, from the energy we use to the fabrics we select, we hope to
lighten the load on our natural resources with each small step.” A key differentiator between
Patagonia and Prana, however, is that Patagonia is deeply rooted in durable outdoor gear,
whereas Prana is more focused on casual clothing and accessories like shorts, pants, golf shirts,
handbags, and backpacks.
Competitive companies that fit into the second group include Columbia Sportswear Company
and VF Corporation, the parent company of the North Face, Inc. In addition to much greater
brand recognition, the revenue generated by these two companies is also significantly higher
when compared with Patagonia Inc.’s $260 million in revenue in 2005, according to Hamm
(2006). See tables two and three, below, for key revenue numbers for Columbia Sportswear
Company and VF Corporation, according to Hoovers.com (2006).
Table 1: Columbia Sportswear Company Sales Growth, 2005

Table 2: VF Corporation (subsidiary is North Face, Inc. Sales Growth, 2005

e) BUDGET CONSIDERATIONS

The budget for this campaign, which incorporates employee training, online ad buys, list rentals,
and mini-catalogs, is estimated at $758,000. Of the estimated 2,272,624 weddings in the U.S.,
according to theweddingreport.com (2006), this campaign will target 1% of the market, or,
22,726 wedding couples. If all couples in this target group were to buy a package worth $1,000,
revenue generated will be $22,726,000. To break even, 758 couples, or .03% of the target
market, would need to buy a package for $1,000.
 Patagonia Apparels Case Study 8

Detailed budget estimates are included below in sections A through E.

A. Patagonia Employee Destination Wedding Gear Package/Registry/Travel Information
Expansion Training and Outfitting
• Uniform shirts with relevant information/Training Materials
o 20 stores x $7shirt x 15 employees per store = $2,100 for shirts w/destination
wedding messaging
o $15 per employee training kit x 3 managers/store x 20 stores = $900 for kits
• Travel to train employees
o Flight: $350 per flight x 20 trips x 2 employees = $14,000
o Hotel: $150/night x 20 trips x 2 employees = $6,000
Total for Employee Training: $23,000
B. Banner and Online Ads:
 Banner Ads on travel.yahoo.com top U.S. destination wedding site search landing pages
o Build up to wedding season ad buys: $1,500 per ad until click through run out x 5
top site landing pages x 3 months (April, May, June) = $22,500
o Pulsing, reminder ad buys in August and October: $1,500 per ad until click through
run out x 5 top site landing pages x 2 months = $15,000
 Google Ad Words tied to Destination Wedding Searches
o Build up to wedding season ad buys: $1,500 per ad until click throughs run out x 3
months (April, May, June) = $4,500
o Pulsing, reminder ad buys in August and October: $1,500 per ad until click throughs
run out x 2 months = $3,000
 Banner Ads in travel/wedding sections of online versions of newspapers in major target
cities of New York, Los Angeles, and Chicago:
o Build up to wedding season ad buys: $2,000 per ad until click throughs run out x 3
top targeted newspaper sites landing pages x 3 months (April, May, June) = $18,000
o Pulsing, reminder ad buys in August and October: $2,000 per ad until click throughs
run out x 3 top targeted newspaper sites landing pages x 2 months = $12,000
 Banner Ads on climbing.com and powder.com that correspond to month before
destination wedding mini-catalog drops (March, June, August, October) to target
audience from Climbing Magazine and Powder Magazine list rentals:
o Build up to catalog drops: $1,500 per ad until click throughs run out at cost of $16
CPM x 2 websites x 4 months (February, May, July, September) = $12,000
Total for online ad presence: $87,000
C. List Rentals:
 Cost to rent select target audience lists from Climbing Magazine and Powder Magazine
for 4 mini-catalog mailings:
o Climbing Magazine: $125 CPM per select x 9 (approx. 9,000 subs in target) x 3
rentals = $3,375
o Powder Magazine: $125 CPM per select x 11 (approx. 11,000 subs in target) x 3
rentals = $4,125
Total for list rentals: $7,500
 Patagonia Apparels Case Study 9

D. Patagonia.com Website Updates and Co-branding site (lonelyplanet.com,

travel.discovery.com, theknot.com) updates and buildouts:
 Creation and maintenance of wedding registry/e-commerce portal and destination
travel information landing pages: $75,000
 Creation and maintenance of co-branded destination wedding travel information and
link backs: $25,000 x 3 sites = $75,000 Total for Patagonia.com/co-brand website
updates: $150,000
E. Creation of destination wedding gear package mini-catalogs for Patagonia retail outlets in
target cities, other cities with Patagonia stores, and list rental mailings:
 Catalog creation for target city Patagonia stores: 5,000 catalogs x $1.50 production x 3
cities x 3 quarterly drops = $67,500
 Catalog creation for other Patagonia stores: 2,000 catalogs x $1.50 x 17 stores x 3
quarterly drops = $153,000
 Catalog creation for list rental mailings: 20,000 catalogs x $1.50 x 3 quarterly drops:
$270,000
Total for creation of mini-catalogs: $490,500
Total Estimated Destination Wedding Campaign Costs: $758,000
The Break Even Point:
 If 1%, or 22,726, of the estimated 2,272,624 wedding couples in the U.S., according to
theweddingreport.com (2006), purchase packages worth $1,000, the revenue generated
will be: $22,726,000
 Approximately 758 couples would need to register and have purchased a gear package
worth $1,000 for the campaign to break even.

III. Marketing communication objectives

From the SWOT portion of the situational analysis presented in section II, an actionable
objective and strategies can be derived to help continue to meet the needs of Patagonia, Inc.’s
target audiences, increase profit margins, and define prospective customers to grow the customer
base. As defined by Duncan (2005), such objectives need pass the SMAC test, that is, they must
be Specific, Measurable, Achievable, and Challenging to Patagonia. The following objective
meets these criteria and can be executed upon within the year.
GOAL: Increase Market Share/Profit utilizing 25-30 year old, soon-to-marry target audience
OBJECTIVE: Through expansion into destination wedding/travel markets that target college
graduates in the 25 to 30 year old, soon-to-marry age range, accelerate the “slow growth” pace
established by Patagonia from 5% annually, around $260 million total in 2005 according to
Hamm (2006), to 8-9%, or an additional $20.8 to $23.4 million, to grow total sales for 2007 to
approximately $281 million, gaining on the sales growth percentages of 5.5% and 7.4%,
respectively, for Columbia Sportswear Company and VF Corporation, the parent company of
The North Face, Inc., according to Hoovers.com (2006). See tables two and three from the
competitor’s portion of section II for additional details.
 Patagonia Apparels Case Study 10

IV. Proposed Communications Strategy

Capture 1% of the U.S. wedding market by expanding into the increasingly popular “destination
wedding” sector. Accomplish this through setting up destination wedding package partnerships
with destination travel suggestion portals (lonelyplanet.com, travel.discovery.com, theknot.com)
to reach the 25 to 30 year old, soon-to-marry end of the target customer and prospect spectrum.
Create packages for specific destinations and active sporting activities and make
recommendations that keep the environment as it was before the couple gets there to enjoy it.
Incorporate links back to Patagonia.com into co-branding opportunities. Set up gift registry
functionality that also captures wedding couple prospect information as well as that of the guests
who buy registry items. This can also be matched back to current customer information to track
increased purchasing through this strategy. Suggest appropriate Patagonia destination gear
clothing packages through co-branded sites. Keep the strategy scalable by starting with ski and
climbing gear packages and co-branding opportunities. If they are successful, expand to sites
that fit the Patagonia mission and sporting goods lines.
If Patagonia captures 1%, or 22,726 weddings of the estimated 2,272,624 weddings in the U.S.
annually, according to weddingreport.com (2006), and has target couples register for suggested
groups of sporting gear worth an average of $1,000 total per couple, an annual gain of $22.7
million would be achieved. This would occur in tandem with capturing leads and growing top-
of-mind awareness among prospects. If this strategy proves to be successful in the U.S., it can be
expanded to Patagonia’s markets in Europe and Asia.

V. Creative Tactics

Summary of the company’s creative strategy

In this destination wedding package and information campaign, the central tagline that remains
consistent throughout is “It’s a Nice Day for a ‘Green’ Wedding” which will be supported by text
that is appropriately tied to each mediums call-to-action. For banner ads, wording such as “Click
Here to See How You Can Save the Planet and Have the Perfect Destination Wedding with
Patagonia” will be incorporated. For those ads running in key cities or on the climbing.com or
powder.com websites, the text can also mention that prospects should stay tuned for “special
catalogs coming to a mailbox near you”. In mini-catalogs, the header will be “It’s a Nice Day for
a ‘Green’ Wedding” with text indicating that the catalog is the premiere issue, introductory, etc.
and call out information on the URL to visit and set up a destination wedding gear package
today.
Imagery in the online banner ads and catalogs will convey wedding-themed imagery, like a
couple in tux and wedding dress scaling a mountain, or skiing, or jumping from a cliff, etc.
Alternatives could include imagery like a plastic wedding couple on top of a “cake” that’s shaped
like a mountain or cliff, a garter belt or bride’s bouquet seen midair with a cliff in the background
as if thrown by a climber, etc. Additionally, a wedding couple could be sprouting out of the
ground like grass blades or plants to keep with the “It’s a Nice Day for a ‘Green’ Wedding”
tagline. See the next section for a complete creative brief.
 Patagonia Apparels Case Study 11

a) Destination Wedding Creative Brief

Couples in the planning stages of destination weddings, according to Callaway (2006), are busy,
nervous, and want everything to be “just right” on the big day regardless of how large or small
the ceremony. Items on couples’ gift registries are extensions of who they are. How can
Patagonia consistently be top-of-mind for destination wedding outfitting while keeping true to
our mission and be an easy, relaxing solution for couples who are registering?
Why are we advertising?
We want to be a top-of-mind destination wedding gift registry sporting goods provider while
upholding the mission of Patagonia (2005) that states “Patagonia exists to use business to inspire
and implement solutions to the environmental crisis.”Who are we talking to? Soon-to-be
married adults, 25-30 years old, who specifically plan to have unique destination weddings that
fit their active lifestyles.
What do they currently think?
This is our big day; everything needs to be perfect. We want to receive wedding gifts that show
good taste, quality, and reflect who we are as a couple. This is our chance to have “nice things”
and get what we need to start a household. Additionally, couples have apprehensive thoughts
about wedding registry gifts that, according to Adams (2006), include:
All material goods fall into one of these categories:
1. Already have it
2. Don’t need it
3. Too expensive for a gift
4. What the hell is it?
What would we like them to think?
Patagonia is the single most reliable, durable, worry-free line of clothing we can take with us.
After all of the hectic planning for the big day, our destination honeymoon will allow us to relax
in comfort, by doing the active sports we love in comfy Patagonia gear. This is awesome
Patagonia already has pre-created packages and gear combinations that we can customize online
and our guests can buy them as practical wedding gifts through our Patagonia registry. How
convenient! This is the easiest part of the planning we’ve done!
What is the single most persuasive idea we can convey?
You both deserve rugged clothing and gear packages that are as durable, long lasting, well
planned, and strong as the ceremony, reception, honeymoon and lifetime journey that you’ve
both embarked upon.
Why should they believe it?
Patagonia (2006) is true to its corporate mission, product quality, and customer service. As a
company, Patagonia walks the environmental walk while talking the talk. Because of this, the
gear suggestions Patagonia makes are trustworthy and worth the cost just like a wedding dress,
tuxedo, etc. because our truthfulness is reflected in other areas of our business. Patagonia is
respectable, but laid-back.
 Patagonia Apparels Case Study 12

Creative guidelines
1. Central tagline is “It’s a Nice Day for a ‘Green’ Wedding”
2. Patagonia.com website landing pages from co-branded partner websites to
skiing/climbing destination wedding gear packages
3. Patagonia.com landing pages from co-branded partner websites to environmental
information for specific destinations
4. Patagonia.com destination wedding package tab on homepage and prominent call out of
the new service on the homepage during intro quarter
5. Patagonia.com comprehensive skiing/climbing destination wedding gear package website
pages, offering suggested packages as well as customizable packages via drop-down
menus for size, colors, types of clothing, etc.
6. The “forward to a friend” link option on the destination wedding pages on Patagonia.com
7. Recyclable, two-sided perforated mini-catalog inserts that call out the new destination
wedding gear package registry service and can also be mailed to a friend
8. Green Patagonia Shirts with tagline included and wedding-themed image on the back for
employees
9. Design 5 1/2” x 7” mini-catalogs with skiing/climbing themes

VI. Reference