Marketing and Distribution Channel Patagonia
Patagonia Two interrelated strategies : * how to expand their product portfolio US outdoor apparel industry Competitors : * The North Face * Marmot Mountain * Mountain Hardware * ARCTERYX * Columbia Sportswear Patagonia’s history Target market : * Core users, Patagonia tried to remain true to them. They had ambassadors. * Will to expand to customers outside the core Product Line Eight smaller lines Gross margin from 40% to 55%, variability on geography and distribution channel Patagonia’s activities Design and Development : 3 criteria : quality, impact on environment and aesthetics Feedback on products by professionals
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Environment : use of recycled polyster new supply chain more expensive Procurement and Production Most garments raw materials 200 different suppliers around the world Outsourcing of manufacturing Produt lines wider than competitors Prefers long term Relationship Try : – outsource some of its activities * reduce lenght to supply chain Marketing & Sales Print advrtising, electronic media, grassroots efforts, public affairs, trade shows, product graphics. 2002 : « Commited to the core » Able to sell its products for signifiantly more than other outdoor manufacturers. distribution channels : in US : 50% wholsale, 30% retail, 20% direct (internet, mail order). Price equity between channels. Gross margin : wholesale = 40%, retail = 50%, direct = 60%. International = try to have one single global product line. Europe : prices 5% higher than in other markets but magins less important. Outbound Logistics and Customer Services One central distribution center in Nevada. Contracted with third-party logistics providers for international operations. Customer service center = return rates = 15% for mail and 20% for internet, lower than the industry.
Quality of the product very important possibility to return a product. Human Ressources 1000 employees. Worklife very cool. Governance and Organizational structure Patagonia held by Lost Arrow Company, set up in 1984. Commitment to the environment 1991 essay will to limit its growth. 1985 : Earth tax = donate 1% of sales or 10% of pretax profit to organization 1985 – 2002 : $17 million. Plus non-cash donations Try to minimize the environmental harm of its products and processes. 1996 : shift to 100% organic cotton. « 1% for the planet »