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![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](https://image.slidesharecdn.com/patagoniappt-13318680818596-phpapp01-120315222257-phpapp01/85/Patagonia-Ppt-8-320.jpg)
Patagonia Ppt
- 1. Product Lifecycle Initiative LauraAcosta & John E. Mroczek
- 2. • Business Modelof 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? WorldwideLeader 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 CycleInitiative • 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 “Environmentaldecisions 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
- 15. ACTION PLAN Activity Flows 15
- 16. ACTION PLAN Work Break Down Structure 16
- 17.
- 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 isrooted 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 LifeCycle Initiative offered only for Patagonia Products. • Outsourcing Repairs to facilities abroad. • Selling of refurbished items to younger Dirt Bags 20
- 21.