Case Patagonia 2

Sector Attractiveness
 Threats of New Entrants – Low ------------------ Threat of Substitutes – Low to Medium

 Power of Suppliers – Medium to High--------------Power of Buyers – Medium to High
 Competition – High
Alternatives Pros Cons

Discard product lifecycle initiative No hindrance to growth Not in line with company vision
No growth in global presence
Discard product lifecycle initiative No hindrance to growth Not in line with company vision
and increase donations to Strengthening reputation Extra cost to company
environmental organizations
Discard product lifecycle initiative Increase in global awareness Not in line with company vision
and instead enter new global High potential of growth Costly to enter new markets
markets Increase in market share Risk in entering new markets
Execute product lifecycle Initiative New customers will lead to Increase costs
and target new segment with Swap increase in sales. Possible decrease in sales of
platform Increased publicity existing products
In line with company vision People might be hesitant to buy
second hand products
Execute product lifecycle Initiative New target market might lead Increase costs
and create a less premium sub to increase in sales High competition for less
brand In line with company vision premium products. Customers
might switch to other brands
Execute product lifecycle Initiative Increase in sales Increase costs
and market it extensively. Increase Increased publicity People might be hesitant to buy
prices to adjust repair costs while Increased global presence second hand products
targeting new segment with Swap In line with company vision
platform
Patagonia should execute product lifecycle initiative. The core of Patagonia business is its value proposition.
Patagonia has differentiated itself from others not only by price and quality but also by reputation of being
responsible. Although Patagonia has been successful in creating a niche market, Patagonia spends less than
1% on its marketing efforts, they must increase the marketing budget to make this initiative viral across the
globe. They can hire marketing experts to create educational campaigns to spread awareness. This will not
only educate consumers and lead to increase in sales but also strengthen the brand of being a responsible
company worldwide. They can also create online marketing campaigns around how much environmental
impact (Water usage) a consumer can reduce by buying one-time Patagonia product. With more and more
people wanting to be environmentally responsible, I personally believe there is lot of potential in targeting
specific consumer base on social media. To offset the recycle and repair costs, Patagonia can increase the
prices of their products. Since the targeted consumer segment is with income above $160K, these consumers
wont mind paying marginal extra. This marginal increase in prices will decrease the additional load from
executing this initiative. By also creating Swap platform, Patagonia can repair other brand products and sell
them on the market. This will lead to new customer segment, leading to increase in revenues. This is a great
move towards circular economy. Such a platform will reduce consumption, extend lives of products and
intensify product use through shared economy. They can also partner with NGO’s or other similar companies
for recycling items or with even with suppliers. They should try to convert the platform into a community of
people who understand the impact different business have on the planet and want to contribute to this
environmental problem. Patagonia can also offer DIY or YouTube tutorial on SWAP platform on how to repair
products at home. Lastly Patagonia must continue to pursue strategic partnerships like in the past and in
future possibly with different stores for pick up and drop service for repairs to reduce shipping costs.
Although there are multiple alternatives Patagonia can pursue, most have the risk of uncertainty nonetheless
it should continue to take business decisions motivated by its environmental goals despite them being
difficult, expensive and time consuming. As Yvon quoted from his experience of Zen Philosophy ‘doing things
right’ is the right way of doing things.

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Sector Attractiveness

 Threats of New Entrants – Low ------------------ Threat of Substitutes – Low to Medium

Alternatives Pros Cons

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