Question 1: How successful has Patagonia been as a company? Evaluate Patagonia's strategy.
Analyzing the industry using Porter’s Five Forces, it can be seen that the Outdoor Apparel industry is very competitive. The threat of entry is very high, with several large conglomerates making acquisitions in the industry and established apparel companies such as Polo Ralph Lauren making expansions into sports apparel. With several brands such as North Face in the high end of the industry, as well as Columbia and several private labels dominating the middle and lower ends, a large number of substitutes are available. Buyers have large bargaining power, as end consumers could easily switch to another brand, while at the same time wholesalers are
On the testing side, Patagonia spent $150,000 annually to field test their products (double that of competitors) and an additional several hundred thousand dollars a year on a laboratory for developing and testing fabrics. All these programs resulted in large procurement and production costs, yet they helped solidify Patagonia’s position as the premium brand in the Outdoor Apparel industry.
The first three strategic areas combined to help Patagonia build a strong brand. In the same way that Patagonia developed a consistent level of quality across their products, they also developed a consistent brand image. They were not merely selling their products, they were selling a set of core values that were consistent both with Patagonia and their target customers. This consistency also translated to the products themselves; Patagonia marketed the fact that they were selling “systems,” not products, and that benefits could be optimized through the integration of several of Patagonia’s products. Patagonia delivered this focused brand image through several marketing medium and their retail stores, which they did not franchise so they could “control the presentation of the brand”. Furthermore, the unique format and high quality presentation of Patagonia’s mail order catalog contributed to image of Patagonia as a premium and high-quality brand.
Targeting a core user, focusing on innovation and quality, and building a strong brand image have all contributed to Patagonia’s