Patagonia Marketing Strategy Analysis

This assignment examines Patagonia's marketing strategy. It analyzes the company's focus on quality products, environmental responsibility, and brand image. The analysis recommends strategies like advertising and business partnerships to enhance Patagonia's global presence.

Running Head: Strategic management 1
Strategic Analysis of Patagonia

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Executive summary
This report provides a deep understanding of the strategic management and marketing
strategies adopted by the company Patagonia which is the subsidiary of VF Corp. the report
focuses on the strategies adopted by the company to stay competitive in the outdoor clothing
industry. For this manner, the report will analyze the environmental impacts on the company by
various analyzes like PESTEL analysis, resources and capabilities analysis, Five forces analysis
and SWOT analysis. The environmental analysis will be helpful for the company to understand
its position in the market. Further, mission statement of the company will also be analyzed in the
report to know that the mission statement of the company is suitable to achieve the
organizational goals and objectives. Based on the SWOT analysis, some recommendations will
be provided for Patagonia to implement the changes in the business operations for future
perspectives.

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Contents
Executive summary.........................................................................................................................2
Introduction......................................................................................................................................4
External environment.......................................................................................................................4
PESTEL analysis..........................................................................................................................4
Industry competition....................................................................................................................6
Porter’s five forces analysis.....................................................................................................6
Resources and competencies of Patagonia......................................................................................7
Resources.....................................................................................................................................7
Capabilities...................................................................................................................................7
Evaluation of mission statement......................................................................................................8
SWOT analysis of Patagonia...........................................................................................................8
Recommendations for strategic change.....................................................................................10
Conclusion.....................................................................................................................................10
References......................................................................................................................................12

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Introduction
This report is the strategic management analysis of the company Patagonia based on the
given case. Patagonia is the famous outdoor clothing company which provides quality clothing
products to the customers by identifying their needs and demands. The company was founded in
1973 by Yvon Chouinard. Patagonia is the unique brand providing outdoor active lifestyle
clothing products. The company is deeply committed to protecting the environment and creating
sustainable products for the customers. The report focuses on the environmental factors and
resources and capabilities of Patagonia to analyze its business operations in the clothing industry
(Patagonia, 2017).
External environment
PESTEL analysis
Political factors-
There are some issues in the in the political and administration system in America i.e.
increased taxation on the shipping from the factories to overseas. This impact the business
operations of the outdoor active lifestyle clothing industry hugely because of various wok houses
are made outside of the country and all the clothing products are shipped from America. To get
profitable returns, clothing companies would need to hike the prices even higher. Due to high
prices, companies may lose more customers who will be unable to afford the products. So the
taxation system of the country affects the business operations of clothing industry in the negative
way (Cavusgil, 2012).
Economical factors-
In terms of economic factors, it is observed that clothing industry is in its high time
because the interest rate is low, the sales are wonderful and companies are gaining large profits
in their business. Along with this, exchange rates as well as well as inflation rate are also
affecting the economy of the garment industry. Further, credit crisis is another factor which
impact on the business of clothing companies. The credit crisis is the problem for both produces
as well as buyers in the market (Boone & Kurtz, 2013).

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Social factors-
The clothing industry in America is basically affected by the social behavior and attitude
of the customers towards the particular product. The cultural differences and the attitude of the
people for the clothing products impact the business operations of the clothing companies in the
market. Along with this, the cost of labor also impacts the clothing industry as it depends upon
the society and impact on the sales of the products. There are many social causes in the society
like rules against the child labor that has to follow by the industry. The outdoor active lifestyle
clothing industry is influenced from the social environment and tries to make the customers
satisfied with the buying products. The industry wants to implement the feeling of goodness and
self worth by providing the fashion products (Gilligan & Hird, 2012).
Technological factors-
Outdoor active lifestyle clothing industry like Patagonia use a material in many of the
clothing products named GORE-TEX. This is waterproof, lightweight, breathable fiber and
perfect for the outdoor sports where weight and space are important such as cycling and rowing.
Along with this, the industry uses environment friendly products for the production and operates
wi8th the CSR policy. The technological factors impact the clothing industry by providing ample
amount of resources and their optimal use (Schilling, 2010).
Ecological factors-
There is the issue regarding recycling the products which remained critical for the
clothing industry. To keep the environment clean, companies have to follow the rules of
environmental protection. The industry obviously takes actions for the sustainability of the
environment while producing quality clothing products. With the current climate state i.e. global
warming, companies have to adopt some strategies for the environmental protection (Claudio,
2007).
Legal factors-
Outdoor active lifestyle clothing industry ensures the legal and fair labor practices by the
work in factories and the supply chain management process. Along with this, there are some
rules and regulations imposed by the government of the country to reduce the child labor. There
are many legal activities which were held accordingly.

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Industry competition
Porter’s five forces analysis
Buyers’ bargaining power-
In this factor, buyers of the clothing products focus on the low prices not on the products.
For the affordable prices, they can switch to other retailers. In case of clothing industry, buyer
power is strong. The cloths shoppers are those people who have direct bargaining power. They
have many alternative stores and brands to shop for the clothing products and little incentives to
stay.
Suppliers’ bargaining power –
In the fashion and clothing industry, the power of the suppliers is relatively small with the
insignificant force. Most of the clothing companies source their products from third party
manufacturers who get small part of the profit. Suppliers have very less control on the clothing
industry and unfortunately, they are not essential all the time in the industry. The result is that the
input prices are relatively low.
Competitive rivalry-
There is the high level of competition in the clothing industry. In the industry, there are
large numbers of retailers who are selling similar products. But there is the concept of brand
which allows the companies to sell the products for low rates. There is innovation in the clothing
market and the market is saturated with the similar products. In this sense, there is the strong
competition in the clothing market (Armstrong & Cunningham, 2012)
New entrants-
As mentioned above, there is the strong competition in the market so, the force if new
entrants are somewhat small. New entrants are finding new ways such as social media to enter in
the market and popularize their products. The fashion industry is now in the state of ‘high risk
and high reward’ for the new entrants. So, it is difficult for the new companies to enter in the
clothing industry.
Threats of substitute –

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Every industry has to deal with the threat of substitute products. in case of Outdoor active
lifestyle clothing industry, fortunately there is little to no substitute clothes. so, the force of
substitute product is negligible in the clothing industry. All the substitution in the fashion
industry is just for the competition.
Resources and competencies of Patagonia
Resources
There are basically two types of resources the company Patagonia is having. Those
resources are tangible and intangible resources which are effective in gaining competitive
advantage in the operating market. Based on analysis of the operations of Patagonia from the
internal perspectives, it is observed that the company is operating various resources and
organizational and capabilities with the fullest potentials. Patagonia is creating values as then
clothing company based on the knowledge of primary and secondary activities. The company has
effective operations foe adding values in the business to attract the customers. Patagonia
maintains a management system including environmental performance based on five key areas of
the production process i.e. resources productivity, water emission, consumer safety, air emissions
and occupational health and safety (Peck, Christopher, Clark & Payne, 2013). In terms of
tangible resources, Patagonia has effective tangible resources which allow the company to stay
competitive in the outdoor clothing industry. The tangible resources of the company include
unique and effective products, innovative production process and their favorable manufacturing
locations. Along with this, there are three intangible resources which Patagonia has in the
business operations. Those resources are brand or reputational name, environmental activism and
the internal culture of the company. Both internal and intangible resources are the sources of
competitive advantage for Patagonia in the clothing market (Turnbull & Valla, 2013).
Capabilities
In terms of organizational capabilities, as a company Patagonia has also some capabilities
which allow the company to transform the inputs into outputs. Patagonia has excellent
organizational capabilities in terms of product development, customer service, manufacturing,
and innovation. In terms of the product development and manufacturing, Patagonia is focusing

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on the quality and leadership in the area of environment friendly procedures (Peñaloza, Toulouse
& Visconti, 2013).
Evaluation of mission statement
Patagonia is the leading retailer, designer and distributor of the high quality outdoor
clothing products and gear. The company is listed on the top companies in terms of quality
products. Based on the analysis of given case study, it is observed that company has clear values
in the business operations. Along with this, company treats the employees, its customers fairly
and the environment in the line with those values (Lovelock, 2011). The values of the company
include integrity, environmentalism, quality products and services and not bounded by rules.
Patagonia has effective strategic vision and mission which are helpful for the company to
achieve its organizational goals and objectives. The mission statement of Patagonia is ‘building
the best product, using business to motivate and implement effective solutions to the
environmental crisis and preventing from unnecessary harms’ (Fifield, 2012).
As a company, Patagonia has very clear and unique strategic objectives which can be
seen in the mission statement. Company wants to build high quality products based on the
demands of the products and the operating environment. At the same time, company also wants
to ‘reason for no unnecessary harm’. It means Patagonia wants to reduce the impact of its
products on the environment and atmosphere and make positive contributions to the
environment. The mission statement of the company reveals that it wants to operate the business
by being honest and transparent with its potential customers (Taleghani et al, 2011).
SWOT analysis of Patagonia
Patagonia is California-based clothing company which mainly focuses on the outdoor
clothing products. The company is the member of many environmental movements. The
company provides various outdoor clothing products to the customers. Patagonia is operating at
the big scale in the clothing industry. For analyzing the success of Patagonia, it is important to
understand the internal factors of the company and external factors of the market. For this
manner, SWOT analysis would be effective to analyze the situation of the company in the
market.

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Strength-
One of the core strength of Patagonia is that the company has high quality clothing
products for the customers. Customers always want quality products at the affordable prices.
Further, the biggest strength of Patagonia is the strong brand image among the customers. Along
with this, the company has innovative culture which is committed towards the environment
safety and sustainability. Strength of Patagonia is the investment done by the company in the
research and development to make the most high tech gear for the customers. Company provides
high quality products to the customers along with the excellent store experience. Patagonia
allows the customers to aspire for the lifestyle (Martínez, 2012).
Weakness-
Despite of various strengths, there are some issues which are needed to be addressed. One
of the weaknesses in Patagonia is that there low morale of the employees at the retail and
corporate level. Employees in the company generally do not have high opinion towards the
senior management. Further, there is no connection between the perception of its own product
and perception of the customers. According to the customers, the products provided by Patagonia
are too expensive to afford. It creates difficulty in communicating with the customers as the
product technology is not so important for the customers. Further, the effort of the company for
community outreach is not so successful.
Opportunities-
There are numbers of opportunities for Patagonia in the outdoor clothing industry. The
management of the company can improve the morale of the employees by providing them
feedbacks and welcome contributions. Along with this, company can also use 360 degree
performance review. Managers are responsible for the act of transparency with the customers.
Further, Patagonia has opportunity to increase the involvement of the local community such as
hiking clubs running clubs, activities and tours. This would be helpful for the company to
enhance its brand value and area of product offering to the customers (Roger, 2013).
Threats-

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One of the biggest threat for Patagonia comes from the competitors that have similar
products and offering to the customers. Although, Patagonia is strong company along with
‘unity’ in the brand but still company has to deal with the threat of competition. Another threat is
the availability of low price competitors like Columbia Sportswear in the market. The products
provided by low price competitors are perceived as more affordable and better value for the
competitors (Brumfitt, 2001).
Recommendations for strategic change
It is analyzed that Patagonia is doing well in its business operations along with
implementing environmental protection strategies. Based on the above discussion, it is advised
that a strategic change must be implemented in Patagonia to make improvement and maintain the
brand image of the company outside of US. There are some recommendations for Patagonia that
should be adopted by the company to enhance the brand value in the market.
 Focusing on television advertisements would be very effective to attract the customers in
the global market. For instance, the advertisement ‘don’t buy this jacket’ could be highly
effective for Patagonia. For maintaining brand equity, there should be tactical approach in
the company (Pavlou & Stewart, 2015).
 Company should do partnership with the other companies in the global market to grow.
For instance, Patagonia can become partner with the similar brand like Barbour which is
the famous outdoor sports brand in the UK market. By becoming their partner, Patagonia
will be able to make the customers aware about the brand (Terpstra, Foley & Sarathy,
2011).
 Based on the SWOT analysis of Patagonia, it is recommended that company should try to
lower its prices of the products to appeal and attract more and more customers and more
advertisements outside of USA. The provided recommendations address the weakness of
the company and allow Patagonia to improve the brand image.
Conclusion
This report is the strategic analysis of the company Patagonia in the clothing industry.
Based on the above discussion, it is observed that The Company is listed on the top companies in
terms of quality products. Company is focused on reducing the impact of its products on the

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environment and atmosphere and make positive contributions to the environment. it is
recommended that company should focus on the global markets to enhance its brand image
among the customers. For this, advertisements and business partnership will be the best ways for
Patagonia.

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References
Armstrong, G., & Cunningham, M. H., (2012), Principles of marketing, Australia: Pearson publication
Boone, L., & Kurtz, D. (2013), Contemporary marketing, USA: Cengage Learning
Brumfitt, K., (2001), The Competitive Business Environment, UK: Nelson Thornes Ltd.
Cavusgil, S. T., (2012), International Business: The New Realities, Australia: Pearson Education.
Claudio, L., (2007), Waste couture: environmental impact of the clothing industry:
Environmental Health Perspectives, 115 (9), A449
Fifield, P., (2012), Marketing strategy (2nd edition), Berlin: Reed educational & publishing Pvt Ltd
Gilligan, C., & Hird, M. (2012), International Marketing Strategy and Management,(Vol. 17)
Lovelock, C., (2011), Services Marketing (7th edition), India: Pearson Education
Martínez, P., (2012), The Consumer Mind: Brand Perception and the Implications for Marketers, USA:
Kogan Page Ltd
Patagonia, (2017), Patagonia Outdoor Clothing & Gear | Free Shipping, accessed on 30th
October 2017 from http://www.patagonia.com/us/home
Pavlou, P. A., & Stewart, D. W., (2015), Interactive Advertising: A New Conceptual Framework Towards
Integrating Elements of the Marketing Mix, pp. 218-222
Peck, H., Christopher, M., Clark, M., & Payne, A., (2013), Relationship Marketing, Burlington: Linacre
house, Jordon hill
Peñaloza, L., Toulouse, N., & Visconti, L. M., (2013), Marketing management: A cultural perspective,
USA: Routledge
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Schilling, M. A., (2010), Strategic Management of Technological Innovation, New York:
McGraw-Hill Irwin
Taleghani, M., Biabani, S., Gilaninia, S., Rahbarinia, S. A., & Mousavian, S. J.,(2011), Arabian Journal
of Business and Management Review :The Relationship between Customer Satisfaction and Relationship
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Terpstra, V., Foley, J., & Sarathy, R. (2011), International marketing. Naper Publishing

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Turnbull, P. W., & Valla, J. P., (2013), Strategies for international industrial marketing, USA: Croom
Helm