due in 24 hours
1. Executive Summary
2. Situation Analysis
2.1. The Internal Environment
2.1.1. Resource Capabilities
We will not need many more financial resources, just keep working with the same
manufacturers we have been, and introduce a newer product. Anticipating sales, Patagonia would
increase slightly in their production resources by hiring more resources within the company in
human resources, manufacturing, and production.
2.1.2. Current Customer Environment
Patagonia members tend to think of themselves as “fashionable” and also ethical in terms
of being conscientious of where their products are made or grown, and purchase fair trade
products (Hiebert, 2017). 75% live in either a city or suburb, while the rest live in either a town
or rural area, and one-third are Millennials aged 18-34. These customers have a willingness to
spend as well (Hiebert, 2017).
The company is known for their outdoor clothing, so most customers wear their clothing
in cold conditions, or while being outdoors (hiking, camping, surfing, fishing, ect.) Within
Ventura County we also see a lot of people wearing the brand as casual wear.
The new product that we will be launching through Patagonia involves their vest with
removable sleeves. This will be targeting to all Patagonia customers as a new innovative way to
purchase and wear their clothing.
2.1.3. Current Marketing Practices
This company not only talks about reducing their environmental footprint, and
manufacturing sustainable products, they ensure their practices are followed through their
actions. The company demonstrates this in many ways such as donation to environmental causes
and uses recycled, “Fair Trade” certified and organic material in its clothing, the use of solar
energy at the companies headquarters, and being the founders of the Sustainable Apparel
Coalition, a group of companies that has promised to reduce its environmental footprint
(Thangavelu, 2019).
The company markets its brand as being “anti-consumerist” and empowering their target
market to only purchase products that last, as opposed to cheaper, fast fashion products
(Hanbury, 2018). With this product, the company will be able to reuse older wear to make and
customize the sleeves and vests.
2.2. Market Summary
2.2.1. Market Demographics
• 50% Male
• 50% Female
• 75% live in a city or suburb
• 25% live in town or rural area
• ⅓ are Millennials aged 18-34
2.2.2. Market Needs
Until now, Patagonia did not have any customizable wear. This was a potential
gap in their market to customers who like to have personalized clothing. A lot of other brands
have the option of customizable wear (Nike, Converse), so this additive can boost sales.
2.2.3. Market Trends
• Estimated annual revenue: $700 million
• Estimated employees: 982
• Sales of $800 million in 2016, which was twice as much as 2010 (Hanbury, 2018)
• Has become a billion-dollar business with 103 stores globally (Hanbury, 2018)
2.2.4. Market Growth
Once the recession hit, consumers were much more cautious about the items that they
were buying as opposed to compulsive buying...as a result of this consumers were more likely to
purchase products with a higher quality so that it would last longer (Thangavelu, 2019). In 2011
during November and black friday season, the company launched an advertisement that read
“Don’t Buy This Jacket” for one of their best selling sweaters (Thangavelu, 2019). The point of
this advertisement was to inform their consumers on the environmental cost, and “asled
consumers to consider before buying the product and instead opt for a used Patagonia product
(Thangavelu, 2019).” As a result of this advertisement, their revenue “grew about 30% to $543
million in 2012, followed by another six percent in 2013. The company was estimated to reach
over $750 million for 2017 (Thangavelu, 2019).”
2.2.5 Government and Social
2.2.5.1. Political Trends
Patagonia introduced a “Time to Vote” campaign which managed to persuade
more than 400 companies (Walmart, Tyson Foods, Lyft) to sign giving employees time
off to cast their ballots (Blakely, 2018). Patagonia also endorsed two candidates,
Democrats Representative Jacky Rosen in Nevada and Senator Jon Tester in Montana,
for their stance on protecting public lands (Blakely, 2018). In addition, Patagonia sued
the Trump administration in December 2017 for reducing the size of two national
monuments (Blakely, 2018).
2.2.5.2. Technological Advancements
Patagonia deems themselves as an unconventional brand due to their marketing
strategies (Rogers, et al., 2018). Patagonia does not do much of advertisements, and hardly relies
on that as their source of income...instead they want to communicate to their target market that
their company is around fair trade (Rogers, et al., 2018). The company focuses on “community
building” which is focused socially online (Rogers, et al., 2018). Technological advances has
made it very accessible for their market to reach Patagonia and understand their purpose.
The point of having a brick and mortar store is to interact with their community and
demonstrate their values, as opposed to make sales more easy (Rogers, et al., 2018).
2.2.5.3. Sociocultural Trends
Millenials are changing the way advertisements and products are being presented to
consumers. Now, the greater population is more conscious about what kind of products they are
buying (Thangavelu, 2019). Patagonia’s message reflects upon environmental consciousness
and upscale consumers that are their target audience (Thangavelu, 2019). Besides the products
being able to last a very long time, they can also be recycled for further use (Thangavelu, 2019).
2.3. SWOT Analysis
2.3.1 Strengths
• Adaptability for the consumer: With the sleeves being removable, the consumer is
able to use this product in multiple types of weather. For example, if it is really
cold in the morning the consumer can wear the sleeves, and then remove them
once the weather starts warming up. This minimizes the amount of clothing the
consumer has to bring with them. This product is also adaptable for active
consumers such as hikers, climbers, backpackers, travelers.
• Customizable: The consumer is able to customize the color and material of their
sleeves to make it more personable to them.
• Minimal additional costs: By launching a twist to an original product, costs are
minimal to the company.
2.3.2. Weaknesses
• Losing the sleeve
• Tear the sleeve
• Material does not reattach
2.3.3. Opportunities
• New market potential with new product being offered
• Advertise in marketing with huge temperature differences
• Possible link with tech companies to implement a smart chip within the
jacket that can track the customers heart rate, temperature, ect.
2.3.4. Threats
Some people may not like this change within Patagonia as opposed to the simple design
they have implemented within the company. This will be a new market potential, and could
attract a new target market.
2.4. Competition
• Marmot:
o Biggest rival of Patagonia. Founded in 1971, operates in retail
distributions industry
o Has 782 fewer employees vs. Patagonia
• The North Face
o One of Patagonia’s top competitors
o Competes in the apparel industry
o Has 1,656 more employees vs. Patagonia
• Carve Designs
o Patagonia’s #3 rival
o Apparel retail industry, generates $679.1M less revenue than Patagonia
2.5. Product Offering
The product being offered is a twist on the original products. It is the Patagonia vest with
removable sleeves, this way the consumer is able to detach the sleeves when the weather gets too
warm. This is very attractive to backpackers, hikers, and climbers because they are able to pack
less but still stay warm and be accommodated for the weather.
2.6. Keys to Success
Some factors that will be successful to this product will be the ability for the customer to
personalize their sleeves. This caters to the interests and passions of our target audience, and a
chance for our customers to represent their interests.
5. Financials
5.1. Break-Even Analysis
The break-even analysis below illustrates the number of single sales, or units, that we must
realize to break even. This is based on the price of the new product and the cost of goods sold.
Break-even point = where line intersects 0
We also wanted to show our break-even on initial investment. Since we will be using a lot of the
same equipment for this product, we estimate the break-even on investment will not take long
after launch. We estimate our initial investment will be returned by August, giving Patagonia a
ROI by month 9 of product launch (September).
5.2. Sales Forecast
The sales forecast is broken down into two main revenue streams; direct sales and web sales. The
sales forecast is based on our estimates of our launch for this new product. Since we plan on
launching this product at the start of the new year, we expect the hype to be fairly light,
especially because this is during winter months. Then we plan to increase our reach to the
consumer for our expected busier season of the spring. Since this product is meant for climates
where weather can change quickly, we expect to sell higher volumes of the product in the spring
and fall. Also, as we get busier in the season, more web-based sales will be made, and the slower
seasons will rely on foot traffic for direct sales.
Also, we expect a growth rate of 15% for the second year of this product, and 20% for the third.
We expect Fall (orange) to be our busier season in the first year, and then both fall and
spring (green) to have similar sales volumes in the future.
5.3. Expense Forecast
Cost of Goods Sold will always be the key driver of expenses per month making sure we
are paying for the responsibly sourced material and high-quality parts. We also want to focus our
advertising campaigns in the winter months, first for the launch, and then for the Christmas
Season. We will also plan on boost in advertising prior to the Spring and Fall seasons.