2. • Business Model of Patagonia
• Situation Analysis
• Dilemma at Patagonia
• Action Plan
• Project Scope
• Implementation & Marketing
• Challenges and Risks
• Recommendation
AGENDA
Patagonia represents a way to “challenge conventional wisdom and
present a new style of responsible business” - Yvon Chouinard
3. BUSINESS MODEL
WHO? Worldwide Leader of environmentally responsible business.
WHAT? Offer products that are simple, functional and
multifunctional.
HOW? Leader in Technological Innovation to develop and test
raw materials to cause the least amount of harm to the
environment as possible.
4. SITUATION ANALYSIS
Company: Focusing on the production of simple, functional and
multifunctional product to encourage customers to consume less by
consuming better.
Customer: someone who was an avid climber and took temporary jobs in
order to pay for climbing expenses
Competition: All of the competitors targeted the middle to high end outdoor
apparel customer demographic of 38 years old. Using Mass Market retailers
to distribute their product.
Collaborator: chosen in regards to their alignment to the value of the Patagonia
corporate culture.
Climate: Corporate Social Responsibility has become a must for any
successful company.
** The experience Patagonia has created something that is rare,
valuable, non-substitutable, and inimitable
4
5. Product Life Cycle Initiative
• Pledge to make products:
• High quality goods
• Multifunctional
• Repairable
•Sending old garments for
repair and reuse
• Place them on the online
market:
• For sale
• Exchange ** Take responsibility “from birth to
• Donation death and then beyond death to
rebirth”
5
6. Dilemma at Patagonia
“Environmental decisions were not at
odds with the optimal financial
performance”
• Target of increasing a 10%
annual sales growth.
• Requires evaluation of the
sacrifices it is willing to make:
• Company Values & Purpose
• Scope of the project
• Costs & Resources
• Time
6
7. Dilemma at Patagonia
Alternative 1. Establish the 10% Sales Growth Strategy
“to lead corporate America by example, it had to be
profitable”
Pros-
Increase 1% for the Planet contribution by 64%.
Cons-
Diverge from its core values, quality products and reduction
of environmental sustainability.
Focus towards a revenue growth focus company.
Effectively translated into the company image.
7
8. Dilemma at Patagonia
Alternative 1. Establish the 10% Sales Growth Strategy
“Forget about the goal and
instead focus on the individual
movements involved in shooting
an arrow- if [the elements are
perfected, one] can’t help but
to hit the center of the target”
- Yvon Chouinard
8
9. Dilemma at Patagonia
Alternative 2. Product Life Cycle Strategy
Pros-
Aligned with the core values.
Encouraging their customers to limit their consumption.
Cons-
1% of sales to the planet can be compromised.
Increases reparation, transportation, material and
administrative costs
Against “using the company’s environmental position as a
marketing tool to encourage customers to increase
consumption”
Acquisition costs of new Patagonia customers
9
10. Dilemma at Patagonia
Alternative 3. Product Life Cycle for Future Dirt Bags
Promote less consumption.
Encourage to repair and reuse garments them as long as possible. When
disposed of they can be refurbished and sold at a slightly lower price.
Outsource repair in Manufacturing and Distribution.
Pros-
Larger Customer Base.
New Market Demographic.
Leverage Existent Resources and Customer Loyalty.
Remain profitable.
Cons-
Gimmick to increase.
Affect the image of the product.
10
11. Dilemma at Patagonia
Alternative 3. Product Life Cycle for Future Dirt Bags
2011 2012 2013 2014 2015
Net Sales 384,456 444,046 512,873 592,369 684,186
Cost of Goods Sold 199,318 217,499 237,499 259,499 283,699
Gross Sales 185,138 226,547 275,374 332,869 400,487
SG&A 208,451 240,761 278,078 321,181 370,964
Operating Margin -23,313 -14,214 -2,704 11,689 29,523
% of Sales -6% -3% -1% 2% 4%
11
12. ACTION PLAN
Take the responsibility to reduce landfill waste by
repairing and recycling Patagonia Garments to sale for
the future generations of dirt bags in 3 years.
Objectives
Transmit the same quality, durability and environmentally
conscious productions to future generations of Dirt Bags.
Uniting all in a virtual community that represents a common
space where individuals can communicate a common
ambition.
Make the physical deposit of recyclable and reusable
products as accessible as possible.
12
13. ACTION PLAN
PRODUCT LIFE CYCLE OUTSIDE PRODUCT LIFE
INITIATIVE SCOPE CYCLE INITIATIVE
Leverage knowledge to create Redesign or re-manufacture
functional, simple garments. the garments sent in.
Integrate refurbishing its already Only refurbish Patagonia
existent manufacturing and Products.
distribution centers.
Easy to use website to connect
consumers to Patagonia.
Creating an IT Center to
support advocating
environmental commitment.
13
14. ACTION PLAN
Implementation-
3 years
Outcome- Strive to retain the same core customer
and to reinvent the repaired garments to attract
new customers.
Leverage the education Patagonia Core
Customers.
Go further by educating on purchasing
refurbished clothing.
Sold at Patagonia Stores and in the Baselayer
Dealers
14
18. RISKS
• Initiative can simply fail causing significant losses
and damages to the brand name.
• Providing Competitors information about failing
practices.
• Risk of downgrading the quality of the products.
• Overall revenues will be affected in the 1st and 2nd
years.
• High level of dependency on IT department and
Customer
• Diverging from core competencies.
• Loss of market share because of aggressive plan
18
19. BENEFITS
• Decision is rooted with core competencies of Patagonia
• Reach broader customer base
• Online network will foster sense of community
• Patagonia will maintain position of innovative and industry
leading company.
• Tax Incentives and over all reduced costs.
• Educate and enhance customer knowledge further.
19
20. RECOMMENDATIONS
• Product Life Cycle
Initiative offered only for
Patagonia Products.
• Outsourcing Repairs to
facilities abroad.
• Selling of refurbished
items to younger Dirt Bags
20
