Patagonia

Group 11
Saksham|Arvind | Lakshya |
Aniket| Gourav
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 Patagonia – Business Model
Main Business

Patagonia is a high-end outdoor apparel manufacturer

It primarily focused on quality, environment impact and innovation
Business had four main categories:
• Sportswear: Casual clothing
• Technical outwear: Insulation garments
• Technical Knits: Baselayers with special fabric treatment
• Hard Goods: packs, luggage and accessories
Company’s Mission
To build the best product, cause no unnecessary harm, and use the business to inspire and implement solutions to
the environmental crisis 2
 Patagonia- Its environmental position
The socially responsible company focussed on three things: quality,
environmental impact and innovation
 The company was spending $100,000 annually on field testing

 It chose less environmentally damaging dye and reduced the

packaging size

 Invested $3 million annually in R&D to develop durable fabric

and making 100% recyclable zippers

 Because of these, the company charged a premium of 20% over

other outdoor apparel and 50% over mass market brands 3
 Product Life Cycle Initiative
Reduce Repair Reuse Recycle

• High quality • Free repair service • Second market for • Taking scrap material
used products for free
• Low footprint • Repairing other brand
products • Considers opening for • Consider servicing of
• Organic and recycled other brands other brands
materials • Increases trust in
quality • Another revenue • Cheap resources for
• May lead to increase stream production
in costs • Capacity bottleneck
• Cannibalization of • High cost and
• Limited Product • May miss out on new sales capacity constraints
variety sales and incur costs
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 Growth of Patagonia
• Averaging a Growth rate of 6 % Annually with a target of 10%
• Increased Cost and Product Lifecyle Intiative is making growth difficult
• Environmentally Friendly products help retain customers
• Very high target growth rate putting pressure on Innovation
• Leader in Innovation and Profit averse Initiatives can boost growth
• To growth Faster May have to sacrifice on Core company Values
• Focus may need to shift to Profits instead of Environmental Impacts

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 What if Patagonia was publicly owned?
• Patagonia is currently owned by Lost Arrow Corporation with only two stakeholders: Yvon and Malinda
Chouinard
• Patagonia’s private ownership allowed to follow environment sustainability so aggressively
• Experts argue that this practice is at the cost of revenue and economic growth of company
• In a publicly owned model they would not have been able to follow this model : Stress will be more on
profit and not values
• The main decision maker will be the board and not Yvon and he could even be ousted from the
company, ex. Rahul Yadav from Housing(Albeit a different sector and for a different reason)
• The company would compete with its competitors and to bring the prices down will follow practices
which are not environmental friendly

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 Product Differentiation
Emphasis on Quality Products for customers who live the “dirtbag” lifestyle
• Create products which are simple, functional and multifunctional, simplicity being the major design concept
• Goal is to make sure that the customer not only consumes less but consume better
• Amount to the tunes of 100,000$ is spent on testing products by athletes and new models are released only every 2
years to keep them distinct
Environment Impact Committed to reducing the environment impact
• Follow important environmental practices like choosing organic dyes to reducing packaging
• Keeps the product prices high even at a risk of market loss to make sure not using environment harming things and
even promoting reuse rather than buy
• An example is of using only organic cotton to produce garments as conventional cotton growth is harmful

Innovation Industry leader in technological innovation

• Pioneered many fabrics adopted across the industry for ex., Synchilla, Capilene, etc
• Invests 3 million $ in R&D to maintain a laboratory to develop and test raw materials
• The philosophy followed is that there are no ridiculous ideas and the designers work with an entrepreneurial spirit
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Patagonia’s Strategy to positive impact on the
environment and society?
Vision Mission Believes

“Environment “Strive to build the best - Quality

conservation and product, cause no - Integrity
restoration” unnecessary harm, and - Environmentalism
use business to inspire - Not bound by
and implement solutions convention
to the environmental - Zen Philosophy
crisis.”

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 Secret of Success
Willingness to Pay Credibility Protection against
Imitation
• Bundling of public • Footprint chronicles
and private goods • Process Innovation
(Environment & • Environmental
Quality) impact of 150 • Product and service
different products innovation
• Altruistic reasons documented
• Business model
• Environmental • Retail store lounge - innovation
Prestige to inform about
Patagonia and • Highly integrated;
• Differentiation projects strong
strategy customer relationship
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 Don’t Buy the Jacket!
• Patagonia: known for high-quality, expensive outdoor clothing
• Ad campaign: Doing the unexpected!
• Expect advertising that harps on the value and quality of their product
• But launches advertising that discourages you from buying their products altogether
• Actually want people to know what they are spending on
• Production of jacket requires 135 liters of water, enough to meet the daily needs of 45 people
• In its journey from its origin as 60% recycled polyester to Reno warehouse, generates nearly 20
pounds of CO2, 24 times the weight of the end product
• On disposal to the warehouse, the left behind is nothing but two-thirds its weight in waste

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 To Buy or Not to Buy is the Question
• Ad campaign met by two kinds of reactions:
• Total rejection of this advertisement thinking it is pure hypocrisy
• Total adherence because the message was in line with the company’s set of values
• The “No” actually resulted in a “Yes”
• Company gained the trust of consumers who no longer view them as a profit machine.
• Eco friendly jackets mean another way to connect with the environment patron-consumers
• Triggers the basic human nature of doing things that they are refused to do
• Irrespective of the outcome, strengthens Patagonia’s stance of walking the talk and encouraging more
sustainable consumption

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THANK YOU

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