This report seeks to assess the efficacy and sustainability of Patagonia’s strategy, its success in being an industry role model and the prospects of its Product Lifecycle Initiative in generating profitability and improving the environment.
Business Model and Overall Strategy
Patagonia’s value proposition is based on embedding environmental sustainability in every business decision it makes. Its core strategy is differentiation by focusing on durability and quality of products whilst minimising its carbon footprint and use of synthetic ingredients (what). The business model revolves around developing innovative technologies and influencing competitors and suppliers alike to adopt environmentally-friendly processes (how). Commitment to these causes while maintaining quality has allowed it to develop a loyal customer base amongst high income groups and athletes (who) and significantly increase customer’s willingness to pay.
Products are sold not only via wholesale and catalogue/internet channels but also through 52 dedicated retail stores which provide a sense of community to customers. Value Curve Analysis (Appendix 1) reveals that Patagonia scores highly on qualitative aspects of customer experience and products which offsets higher prices. It has multiple unique product offerings consisting of patented technologies and designs such as Synchilla, Capilene and insulated wetsuits which could be considered as its Valuable, Rare and Inimitable (VRI) resources. However, it’s
Patagonia is happier to change the production mode, because it really wants to freeze and prevent damage. There is an example told to explain. The company stops producing hard steel pitons, and everyone has realized that they are destroying our environment so hard. It creates and makes a brand new product instead of them, and the new product would not damage the rock surface, where “aluminum chocks that could be wedged in and removed by hand without the use of a
The Panera Bread Company is starting 2007 with unfinished goals and missed targets previously set and a review of their strategy is in order to continue their ongoing success. The company has grown substantially since its inception in the competitive restaurant industry; however, an aggressive target of 2,000 Panera Bread bakery-cafes will require a focused strategic plan. The company has a strong base with loyal customers who appreciate Panera’s unique dining atmosphere with a focus on quality products at a reasonable price. Panera will need to continue its market research and focus on environmental issues, which are an important core value. The opportunity for
For the analysis the packaged food company ConAgra Foods, Inc (CAG) was chosen. According to ConAgra 2013 Annual report, ConAgra Foods, Inc. is one of the USA’s leading food companies. It has a strong brand recognition and consumer loyalty. ConAgra 's products are sold both in large supermarkets and convenience stores. Company operates in Commercial and Consumer Foods segments. The food industry is especially interesting for the research as the demand on food will stay relatively stable even during economic crises and is continuously growing.
The Gatorade Company is mainly concerned with the manufacture and distribution of sporting equipment for commercial and domestic uses based on their knowledge of the best industry practices for the production of sporting equipment. The primary agenda of this market plan is for it to work as a strategy to guide the company on how to supply the customers of Gatorade with quality yet affordable products. This brand of sporting equipment will be produced and supplied in many different designs and colors that will be appropriate for both genders. Approximately half of the clients of the Gatorade brand, range between the ages of 18-34.These clients are ardent customers as they make the most purchases and are the company’s primary target. Gatorade sporting equipment are purchased more by those who dwell in the Northeast regions and Midwestern parts of the United States. This market plan focusses on the introduction of a range of Gatorade environmentally friendly brand of sporting equipment into the United States market.
The North Face has a marketing strategy that enables the company to focus on the athlete, the potential of the athlete, and the athlete using The North Face gear for performance. In comparison, Patagonia focuses on the clothing in which they produce and sell, rather than the company's model. Patagonia places emphasis on fabric technology in their marketing efforts and mainly depicts the clothing on company websites and catalogs. Therefore, this is an area in which both Patagonia and The North Face can improve in order to increase product communication towards target consumers. Both Patagonia and The North Face have exceptional product technologies, which they can use to market their brand and inspire consumers to explore the possibilities of their products. However, The North Face invests
In food service it is important to realize and address hot button issues within the industry to begin to understand what the target market wants, increase revenue and decrease cost centers. In researching the increasingly pressing issue of food sustainability in global food service it was discovered that implementations are initially expensive and require large amounts of dedication but are ultimately huge factors in increasing brand loyalty and recognition and gaining popularity within the “green” market segment. It was the goal of this paper to outline specific concerns posed by the issue of food sustainability as well as methods of the industry’s participation in its solutions and to analyze the progress made to increase awareness of
Robert Swan once said “the greatest threat to our planet is the belief that someone else will save it.” Two companies that understand this concept are Patagonia and Nike. How they address these issues regarding sustainable business practice vary, however. Both have made it their mission to deliver excellence and make the best quality products within their industries, Patagonia focussing more on outdoor active wear, while Nike is more sports oriented. Part of this process has been developing products from sustainable sources. Patagonia, for example, actively took a stand against chemical intensive cotton in 1994, and has since switched to less harmful means of organic cotton within all their cotton-based products. They are even going the extra
Having identified the target market of their products, Patagonia was also able to more effectively develop innovative new products. Knowing that their core users wanted high performing fabrics and that they were willing to pay for it, Patagonia was able to make the necessary investments to develop superior fabrics over longer development cycles than their competitors. The new innovations in fabrics and materials trickled down from the higher end lines like Alpine, allowing Patagonia to add value across all their lines and maintain a high price point.
Patagonia has refrained from focusing on attracting the next generation customer for fear of diluting the brand and chasing fashion trends. We recommend that Patagonia explore the opportunity to either:
In 1993, Patagonia was the first company to make plastic soda bottles into fleece, as well as other materials. As many other brands are following in their footsteps, this new technology is a new way to make an Eco-friendly material and that is durable and well made. Patagonia has changed how people view recycling. They are focused on reducing the amount of pollution in the environment. They needed 20,000 barrels of oil to make raw materials, but as they started recycling plastic bottles there was no need for that. Now, there is space in the landfills by keeping millions of bottles out, which eliminates harmful air emissions, making the environment a better place. While Patagonia strives for environmental improvements and to make their products, sustainable, there are now expanding to other fabrics. It has been over
Three key issues contributed to the disappointing sales. First, internal organizational challenges prohibited the growth of the line. Rigid
The responsible company, a firsthand account of Patagonia’s rise to become a leader in sustainable business and environmental practices. This book goes over the ethical and sustainable business practices that Patagonia has been using for the past 40 years. They started off as a small company called Chouinard Equipment, they sold rugby shirts, ice axes, and much more basic mountain climbing equipment. Throughout the course of this paper I will be discussing, Patagonia’s values, ethical framework, and the different elements that made them a highly sustainable business.
Patagonia strives to provide quality clothing and outdoor equipment while staying as environmentally friendly as possible. A hiking boot, for example, would need to fit strict requirements. The boot would need to be durable, comfortable, stylish, and made from environmentally friendly products. You also need to determine if there is a large enough market for the product. This would provide the means necessary to determine if the product has the highest chance of being successful. Given these strict requirements, one way to help keep the costs down is to use recycled material from older products that costumers turn in, therefore saving resources and money.
A turning point in the startups business was the idea of packaging their product in used plastic bottles – now they could offer a product made from garbage packaged in garbage. The new challenge was getting notable retailers to introduce their unknown and maverick product. They managed to get an order from Walmart for 100.000 bottles which was much more than the average order volume. TerraCycle could fulfil the contract under greatest efforts and proved that eco-capitalism is functioning. The next major step was the defining of a new business model, called sponsored waste. Together with Kraft Foods the startup began to made products from recycled materials. The partnership developed fast and leads to enormous strategic challenges because of the huge amount and storage requirements which involve high costs. TerraCycle still has to work hard to produce a profit and struggles with the wide range of activities and products they offer.
Nike has a very sophisticated sustainability strategy. The strategy is based on company’s prospects for future, to ensure that the company remains profitable and reputable, taking into consideration the social responsibility of the company (NIKE 2013). For instance, the strategy is supposed to ensure that the company gains a stable supply for the raw materials for the product manufacturing that will ensure stable supply of the products in the market at favorable prices. The strategy also targets make the company responsive to environmental concerns, aiming at reducing environmental pollution through emissions to the atmosphere (Charter, 2001). The strategy outlines the company