Patagonia LOHAS Community Marketing Plan Proposal by Heath Ross, Mark Susor, Francis Ukpolo
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Patagonia LOHAS Community Marketing Plan Proposal by Heath Ross, Mark Susor, Francis Ukpolo
- 1. MBA 676 – Marketing Presentation D6A4 Heath Ross Mark Susor Francis Ukpolo Patagonia
- 2. Agenda • Company Summary, Business Model and Strategy • Product Introduction • Product Description • Target Market • Strategic Initiatives (Goals) • Situation Analysis – Market Dynamics – Customer – Product – SWOT Analysis – Positioning Statement – Competition • Strategies/Tactics • Marketing Program – Product – Place – Promotion – Pricing, Positioning and Branding • Financial Overview – Break-even Analysis – Expense Forecast – Sales Forecast • Website Presence • Privacy/Security Issues • Monitor Your Results – Product Evaluation – Controls • References
- 3. Company Summary, Business Model and Strategy Patagonia History – Founded in 1972 by Yvon Chouinard – Outdoor and Equipment Company – Focus on impacting consumption patterns and sustainability – Utilized Direct-mail Catalogs • Sell outdoor clothing and equipment • Promote social causes supporting sustainability Strategy: Environmental differentiation strategy Business Model: Innovation through its processes, product and services, and business model – Create value through operational excellence, customer intimacy, product leadership, and environmental stewardship “Patagonia is built on the principle of living and examined life”, Rose Marcario, Patagonia CEO
- 4. Product Introduction • Patagonia’s Organic Cotton Line – Made from 100% organic cotton – Superior quality, durable – Free of harmful chemicals
- 5. Target Market The LOHAS Community • Our marketing program will target the Eco Tourism and Natural Lifestyles segments which makes up $52 billion of the LOHAS market. • The two segments consist of tourism travel, adventure travel, apparel, social change philanthropy, indoor/outdoor furnishings, organic cleaning supplies, and compact fluorescent lights. • The integrated marketing campaign will focus on acquisition and conversion of LOHAS members building on the existing Patagonia environmental differentiation strategy.
- 6. Strategic Initiatives (Goals) • Patagonia is launching an organic product line intended to support sustainability within the apparel industry and attract the LOHAS Community consumer; they are the “future of your business and also the future of progressive social, environmental and economic change in this country” (LOHAS, 2014). – This particular product line will focus on two of the identified segments with the LOHAS Community; they represent a $52 billion of the $290 billion LOHAS market: Eco Tourism and Natural Lifestyles. • By 2014, Patagonia’s organic apparel intends to capture $52 million of the LOHAS Community Eco Tourism and Natural Lifestyle consumer spend in 2014 in the US. Moreover, the Patagonia’s organic apparel will sell $104 million of organic cotton apparel in 2015, $156 in 2016 and $208 in 2017. • We will establish a relationship with the LOHAS Community that generates 1% donations to Patagonia grass-root environmental causes. • We will obtain Patagonia organic cotton apparel and LOHAS Community as a Google level one category hits for 90% of all users that search for designated tags. Such strategy will ensure Patagonia’s exposure to a large audience base in the US LOHAS Community. • We will monitor web traffic by state and the goal will be to obtain a 10% conversion in each state versus total clicks.
- 7. Situation Analysis • Top quality and long lasting products • Environmental friendly • Leaders in ethical business practice • Strong brand presence • Expensive product line due to high quality and manufacturing process. • No loyalty programs. • Limited models, styling, and outdated trends compared to competitors • Introduce more models • Keep up with newest trends • Ship to more countries • Increase brand awareness • Competition from more popular brands (Columbia Sgm, North Face) Strengths Weaknesses Opportunities Threats
- 8. Market Dynamics • The Market dynamics represented by the organic cotton retail segment is best described by worldwide double digit growth with tremendous opportunities to expand and leverage a consumer that is looking for products that are sustainable and whose manufacturing processes protect the environment. According to the 2012 and Preliminary 2013 U.S. Organic Cotton Production & Marketing Trends: • The number of facilities becoming certified to GOTS [Global Organic Textile Standard] increased 11 percent to surpass the 3000 mark in 2012, growing from 2,714 facilities in 2011 to 3,016 facilities in 2012, according to the GOTS International Working Group. The U.S. ranks 13th with the number of GOTS-certified facilities increasing from 40 to 44 facilities from 2011-2012. • The increased adoption of GOTS is in part the result of rising awareness of U.S. organic textile policy which requires companies claiming their organic fiber products are “organic” to be certified either to GOTS or the U.S. Department of Agriculture National Organic Program’s standards.
- 9. Competition
- 10. Competition o Started in 1966 o Eventually bought out by VF Enterprises, publicly traded o Co-creator of Conservative Alliance with Patagonia, REI & Kelty o Very small selection of organic cotton products o Big focus on Responsible Down Standard Program o Close the Loop recyclying program o Started in 1938 o Incorporated as non-profit coop in 1956 o Functions more as a re-seller rather than manufacturer o Limited ability to control sustainability efforts during production process o Re-sells other brands organic cotton apparel, including some of Patagonia’s o Started in 1938 o Publicly traded company o Bought Sorel, Montrail, and Pacific Trail outdoor gear companies o Focused on water-based adhesives for footwear o Focused on recycled polyester o CEO and President are the daughter and grandson, respectively, of the founders o Does have organic cotton products The North Face REI Columbia Sportswear
- 11. Strategies/Tactics Goal #1: To capture $52 million in Patagonia Organic Cotton Apparel sales from the LOHAS Community during 2014 in the North American market. To obtain $52 million of Patagonia Organic Cotton Apparel sales in 2014, $104 in 2015, $156 in 2016, and $208 in 2017. Strategy: To monitor sales trends and marketing effectiveness monthly, adjusting our strategy accordingly. Tactics: •Rigorously execute and monitor progress of all aforementioned LOHAS Eco Tourism and Natural Lifestyle marketing initiatives weekly. “Winner’s Circle” segment. •To execute and monitor Common Threads Partnership with eBay. “Shotguns & Pickup” segment. •Increase brand awareness, drive traffic to Patagonia website, and increase customer loyalty while attracting new customers.
- 12. Strategies/Tactics Goal #2: To generate $520,000 or 1 percent of revenue from the LOHAS Community in socially responsible donations to Patagonia’ grassroots environmental organizations. The goal is to increase these LOHAS Community donations to $1,040,000 in 2015, $1,560,000 in 2016, and $2,080,000 in 2017. Strategy: To show consistent growth per month with LOHAS Community customer base by generating donations toward Patagonia’s grassroots environmental organizations. Tactics: •Increase traffic to Patagonia’s website through various internet-based marketing such as SEO, PPC, Email Marketing, Social Media, Blogging, CRM/Loyalty Programs and Affiliate Marketing. •Execute aggressive advertising campaigns in states with a higher percentage of click-through behavior. •Incorporate Patagonia Organic Cotton Apparel success stories into online marketing programs.
- 13. Strategies/Tactics Goal #3: To obtain Patagonia Organic Cotton and LOHAS as Google level one category hits for 90% of all users that type in the following search tags: “Organic Cotton,” “LOHAS,” “Natural Lifestyle,” “Eco Tourism,” etc. Strategy: To convince Google of the environmental benefits of Patagonia’s Organic Cotton Apparel and establish an effective advertising partnership. Tactics: •Provide Google with advertising space on Patagonia.com •Work with Google executives monthly in order to research and expand search tags that will provide Level One Category hits for Patagonia Organic Cotton Apparel or LOHAS Community. •Offer varying week-to-week incentives for consumers that visit website (i.e. % off product price, Eco T-shirt, water bottle, etc.)
- 14. Strategies/Tactics Goal #4: To obtain a 10% conversion in each state versus total clicks. Strategy: To adjust and re-direct marketing campaign accordingly in order to ensure appropriate exposure in each state. Tactics: •Set up peak-hour infomercials in struggling states. •Offer incentives for social media channels to discuss the benefits Patagonia Organic Cotton Apparel and the website incentives being offered. •Increase the number of peak-hour local channel commercials based on tracked website traffic patterns per state.
- 15. Marketing Program In order to best serve our target market in the LOHAS community, Patagonia will focus on its organic cotton line as it fits the lifestyle, needs and ethical beliefs of the ‘natural lifestyles’ target market o Organic Cotton line will be available in retail locations as well as websites. o Limitations will be set on how many and which websites & retail locations product can be found, in order to preserve authenticity of the product Our promotional goals are to increase brand awareness, drive traffic to Patagonia’s website, increase customer loyalty while attracting new customers and to increase sales on Organic Cotton Apparel The pricing of the Patagonia Organic Apparel is based on the fact that it is a revolutionary and innovative product line that is differentiated from the competition by its unique materials and manufacturing processes. Product Place Promotion Pricing, Positioning and Branding
- 16. Promotion We will launch a “Buy One, Give One” program that allows customers to accumulate points on purchases made which can be donated to a charitable organization supported by Patagonia. A series of email newsletters will be sent to Patagonia’s listserv on a regular basis to highlight new products, new initiatives, stories that inspire social change philanthropy, etc. Social media channels would also be used to strengthen Patagonia’s brand, and to engage/interact with our audience. CRM Strategy Email Campaign Social Media
- 17. Financial, Budgets, Forecasts Year 1 Revenues $52 million Year 1 Units Sold 473,000 Year 1 Advertising Budget $300,000
- 18. Product Evaluation o Informercial run in a variety of states o Offering viewers a free t-shirt for completing an online survey o Banner on informercial will give text info specific to that state in order to receive link for survey o Organic cotton products come with certification insert. Insert will provide link to take a satisfaction survey o Consumer has one month from purchase date to complete survey o As incentive to complete survey, they will be entered in drawing for a free eco weekend trip o Hold 2 monthly marketing initiative evaluation meetings with consumers for first 3 months o Have consumers view all marketing materials such as commercials and ad print o Collect feedback and ratings from consumers concerning marketing initiative o Incentive of free t-shirt and entry into drawing for eco tourism weekend trip Evaluation 1 Evaluation 2 Evaluation 3
- 19. Controls o Revenue: Monthly and Annual o Expenses: Monthly and Annual o Customer Satisfaction o New Product Development o Marketshare Increase/Decrease o Competition/Industry Innovations
- 20. Website Presence As part of our strategy to increase sales, we will redesign the product page on the website to enhance the user experience, and optimize it for search engines by including product descriptions, keywords, and YouTube videos which has been proven to improve SEO
- 21. Website Presence – Cont’d Patagonia will also use Pay-Per- Click advertising to drive traffic back to our website and to increase awareness of the brand.
- 22. Privacy/Security Patagonia will follow the Fair Information Practice Principles, and will remain transparent to customers by featuring a privacy policy page. We plan to acquire an SSL certificate to further protect our customers information from being compromised. The SSL certificate encryptions when sending customer data to our servers.
- 23. References B Lab. (2014). What is a B Corporation. Retrieved from Certified B Corporation: http://www.bcorporation.net/what-are-b-corps Ball, J. (2009, December 28). Patagonia Clothing: Making a Profit and Meeting Environmental Challenges. Mother Earth News. Retrieved July 24, 2014, from http://www.motherearthnews.com/nature-and-environment/patagonia-clothing- zmaz09djzraw.aspx?PageId=1#axzz38QgDED2X Casey, S. (2007, May 29). Patagonia: Blueprint for green business. Retrieved from http://archive.fortune.com/magazines/fortune/fortune_archive/2007/04/02/8403423/index2.htm Columbia Sportswear. (2014). Our History. Retrieved from Columbia Sportswear: http://www.columbia.com/history/About_Us_History,default,pg.html Ebay.com. (n.d.). "Patagonia - About Us." Patagonia - About Us. Retrieved from http://campaigns.ebay.com/patagonia/about/.
- 24. References French, S. & Rogers, Q. (2010). Understanding the LOHAS Consumer Understanding the LOHAS Consumer: The Rise of Ethical Consumerism. Retrieved from http://www.lohas.com/Lohas-Consumer Hoover’s Inc. (2014). Patagonia, Inc. company profile. Retrieved from http://www.hoovers.com/company-information/cs/company- profile.Patagonia_Inc.06a3d0522670035c.html Kasperkevic, J. (2014, February 9). Patagonia's new CEO: 'You should build a product that lasts'. Retrieved from http://www.theguardian.com/business/2014/feb/09/patagonias-new-ceo-you-should-build-a-product-that-lasts Lohas. (2010). LOHAS Background. Retrieved from http://www.lohas.com/about Mahlich, J. & Schneider, M. (2013, November 30). Environmental Differentiation Strategy of Patagonia [PowerPoint slides]. Retrieved from http://www.slideshare.net/johannesmahlich/environmental-differentiation-strategy-of-patagonia
- 25. References Organic Trade Association. (2014, January). 2012 and Preliminary 2013 U.S. Organic Cotton Production & Marketing Trends. Retrieved from http://www.ota.com/index.html Patagonia. (2014). Our reason for being. Retrieved from http://www.patagonia.com/us/patagonia.go?assetid=2047 Patagonia. (n.d.). "Patagonia - About Us." Patagonia - About Us. Retrieved from http://campaigns.ebay.com/patagonia/about/ Patagonia and Organic Cotton: A Case Study. (n.d.). Patagonia Environmentalism Essay: Organic Cotton Case Study. Retrieved from http://www.patagonia.com/us/patagonia.go?assetid=2066 REI. (2014). REI History. Retrieved from REI: http://reihistory.com/1950/ Segment Explorer. (n.d.). PRIZM > Market Segmentation Research, Tools, Market Segment Research. Retrieved from http://www.claritas.com/MyBestSegments The North Face. (2014). About Us. Retrieved from The North Face: http://www.thenorthface.com/en_US/our-story-experience/#years/1
Hinweis der Redaktion
- Patagonia is a firm unlike any other; its focus is not just about making a profit. Its founder, Yvon Chouinard has created an outdoor and equipment company that looks to make an impact on how we approach consumption and sustainability. Chouinard’s leadership has allowed Patagonia to become an iconic brand that stands for living a better life by taking care of the earth and acting as a moral compass that both companies and consumers can follow. Patagonia, founded in 1972, has utilized its direct-mail catalogs to sell outdoor clothing and equipment, but more importantly to promote the organizations support toward causes like genetically modified food, overfishing, and putting the earth first. What’s makes Patagonia’s message unique is that it voiced these issues when it was not popular to do so; Chouinard let it be known that the earth cannot survive based on today’s consumption practices and there was and is a need to put the earth first and develop a sustainable business model that recycles and reuses materials. (Casey, 2007). Patagonia’s uses an environmental differentiation strategy built on a vision of environmental conservation and restoration, and a foundation of values that include quality, integrity, environmentalism, not bound by convention, and Zen philosophy. Patagonia’s mission statement is “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis” (Patagonia, 2014). The business model supporting the strategy relies on innovation with its processes, product and services, and business model. Innovation allows the company to create value through operational excellence, customer intimacy, product leadership, and environmental stewardship. Customer perceive value from excellent quality and service, and the good feeling that results from doing business with Patagonia. Patagonia is able to capture value via profits, growth and market share. Patagonia’s new CEO (Chief Executive Officer), Rose Marcario describes this model as follows: “Patagonia is built on the principle of living an examined life and I think that permeates into the company culture. Anything we’re doing, any product that we’re building, we examine the supply chain and look at the impacts of that chain on the environment. We look for ways to innovate so that it has less impact on the environment and that requires a lot of self-reflection. And, I think, the company culture is really built on that principle and the result of that is a better product that people feel better about buying” (Kasperkevic, 2014).
- The Patagonia organic cotton line relates to the LOHAS (Lifestyles of Health and Sustainability) market by altering their products to fit the standards set by the LOHAS Community which are to offer products that are organic, not harmful to the environment, fair-trade certified, energy-efficient, and eco-friendly. The LOHAS market community currently use other organic cotton apparel offered by competitors like Columbia and North Face, etc. Customers often fall victim to green washing by major brands, but Patagonia plans to actually give customers the ability to contribute to the company’s vision of environmental sustainability by encouraging customers to reduce waste, and recycle rather than purchase new product. Patagonia has done so by lunching a green initiative called the Patagonia Common Threads Partnership with eBay. The Common Threads Partnership store brings together pre-owned clothing from Patagonia, maker of durable, high-quality outdoors apparel, and eBay, the world's largest marketplace.
- The target market will focus on two segments of the LOHAS (Lifestyles of Health and Sustainability) Community. The LOHAS Community consists of 13 to 16 percent of the U.S. (United States) adult population which is approximately 215 million. Research shows that one in four adult Americans is part of this group—nearly 41 million people. “These consumers are the future of your business and also the future of progressive social, environmental and economic change in this country. But their power as a consumer market remains virtually untapped. The industry that serves these consumers has been identified in a research report by The Natural Marketing Institute and given the moniker of Lifestyles of Health and Sustainability, or LOHAS—a market conservatively estimated at $290 billion in the U.S., and growing. Cultural Creatives are the basis of the LOHAS market. LOHAS is not a sexy acronym, but one that we think aptly describes what this movement, and our mission, is all about” (Lohas, 2010). Within the LOHAS $290 billion market there are six segments; Personal Health, Green Build, Eco Tourism, Natural Lifestyles, Alternative Transportation, and Alternative Energy. Our marketing program will target the Eco Tourism and Natural Lifestyles segments which makes up $52 billion of the LOHAS market. The two segments consist of tourism travel, adventure travel, apparel, social change philanthropy, indoor/outdoor furnishings, organic cleaning supplies, and compact fluorescent lights. The integrated marketing campaign will focus on acquisition and conversion of LOHAS members building on the existing Patagonia environmental differentiation strategy. Patagonia’s outdoor apparel will positioned to emphasize the innovative processes, products, services, and business model used to create value for their customers. The campaign will incorporate reduce, reuse, repair, and recycle tactics used in Patagonia’s “Product Lifestyle Initiative which represents a holistic commitment to lengthen the lifecycle of each product and reduce landfill waste” (Mahlich & Schneider, 2013).
- Patagonia is launching an organic product line intended to support sustainability within the apparel industry and attract the LOHAS Community consumer; they are the “future of your business and also the future of progressive social, environmental and economic change in this country” (LOHAS, 2014). This particular product line will focus on two of the identified segments with the LOHAS Community; they represent a $52 billion of the $290 billion LOHAS market: Eco Tourism and Natural Lifestyles. The campaign is designed to accomplish two high-level goals. First to grow the organic apparel line within Patagonia’s product and service portfolio, and two, to develop a relationship with the LOHAS Community that can be leveraged to promote sustainability and increase social change philanthropy. By 2014, Patagonia’s organic apparel intends to capture $52 million of the LOHAS Community Eco Tourism and Natural Lifestyle consumer spend in 2014 in the US. Moreover, the Patagonia’s organic apparel will sell $104 million of organic cotton apparel in 2015, $156 in 2016 and $208 in 2017. The website traffic sources will measure promotional activities to ensure efforts are directed toward websites with the highest response rates. For instance, we will obtain Patagonia organic cotton apparel and LOHAS Community as a Google level one category hits for 90% of all users that search for designated tags. Such strategy will ensure Patagonia’s exposure to a large audience base in the US LOHAS Community. The fourth metric will monitor web traffic by state and the goal will be to obtain a 10% conversion in each state versus total clicks. Our strategy and tactics include monitoring sales trends and effectiveness of the marketing campaign on a weekly basis. Furthermore, by incorporating Patagonia organic cotton apparel success stories into online marketing programs, Patagonia will achieve consistent development monthly. Additionally, Patagonia will work closely with Google to attain advertising space, gain level one category hits for Patagonia organic cotton apparel or LOHAS Community, and offer various types of incentives to attract customers. And finally, Patagonia will work with Social Media channels by contributing inducements. Patagonia organic cotton apparel is expected to capture a significant portion of the LOHAS Eco Tourism and Natural Lifestyle market. Its break-even chart indicates 249,091 units sold would be required to breakeven and the product’s 2014 sales forecast surpasses this with a target of 472,727 providing a profit of $16.6 million. Patagonia’s ability to significantly improve customer satisfaction by providing organic cotton products that protect and sustain the environment, while enhancing the consumers outdoor lifestyle separates it from everything else currently available in the market! However, in addition to that, Patagonia’s ability to provide a platform for social philanthropy is really what will blow the competition out of the water! Depending on its wearer, Patagonia’s organic cotton apparel will enrich eco travel, augment natural lifestyles and enrich the feeling provided by taking concrete steps to sustain the environment, protect the earth, and most importantly facilitate a living a healthier lifestyle.
- Patagonia’s organic cotton apparel line for the LOHAS Community is entering its first year of production. The product has been well received and marketing will be key in the development of the brand, product awareness as well as grow the customer base. Patagonia’s Organic Cotton Apparel offers several benefits such as serving the growing social consciousness around the environment while providing quality outdoor wear for the natural lifestyle enthusiast.
- The number of facilities becoming certified to GOTS [Global Organic Textile Standard] increased 11 percent to surpass the 3000 mark in 2012, growing from 2,714 facilities in 2011 to 3,016 facilities in 2012, according to the GOTS International Working Group. The U.S. ranks 13th with the number of GOTS-certified facilities increasing from 40 to 44 facilities from 2011-2012. The increased adoption of GOTS is in part the result of rising awareness of U.S. organic textile policy which requires companies claiming their organic fiber products are “organic” to be certified either to GOTS or the U.S. Department of Agriculture National Organic Program’s standards. GLOBAL SUPPLY AND DEMAND According to Textile Exchange, approximately 637,563 bales of organic cotton were produced on 783,094 acres around the globe in 2011-2012. India grew the most, followed by (in order of rank) Turkey, China, Tanzania, the United States, Mali, Peru, Uganda, Egypt, and Burkina Faso. However, the organization notes that due to the conflict in Syria (which typically ranks second or third in world organic cotton production), no figures were available for that nation. Textile Exchange reports that nearly three quarters of the world’s organic cotton is produced in India, with just over 11% coming from Turkey, about 6% from China, 5% from Tanzania. The U.S. produces just over 1% of the global supply of organic cotton, with all other countries producing less than a percent of the total supply. GROWTH CONSTRAINTS The weather conditions affecting supply are discussed above. However, there are additional factors limiting the supply of U.S. organic cotton at this time. The primary constraint for domestic cotton production in the U.S. is the particular combination of weather and geographical conditions necessary to make this crop thrive. The area must receive enough rain to germinate the cotton, but not so much as to create undue weed pressure. Once sprouted, cotton prefers warm, dry weather during its relatively long growing season. Organic cotton requires a killing frost to defoliate the plant prior to harvest. These periods of deep cold also help to keep pest pressure to a minimum in organic cotton fields. These conditions describe a relatively limited geography in the U.S., and as noted in this report and others, annual weather conditions must cooperate for the crop to succeed. Lack of commercial availability of organic seeds is a major factor inhibiting the growth of U.S. organic cotton. Growing cotton organically also involves overcoming pressures faced by all cotton farmers, but made more difficult by the constraints of the organic regulations. These pressures include weeds, drought conditions and the presence of common pests such as the boll weevil. Compounding these difficulties, little work is being done to improve cottonseed through traditional breeding techniques. 2012 and Preliminary 2013 U.S. Organic Cotton Production & Marketing Trends A final, less tangible, constraint to organic cotton production in the U.S. is the culture among farmers. In areas where organic farming is established and somewhat successful, it can be easier for organic farmers to coexist with conventional neighbors. In predominantly conventionally-farmed regions, organic growers can face skepticism and pressure from neighbors, family members and suppliers. AREAS OF OPPORTUNITY U.S. organic cotton growers responded that they could further benefit from the development of the following resources: 1. Marketing efforts to increase consumer demand for U.S.-grown organic cotton 2. Market development to encourage better gate pricing 3. Improved awareness of GOTS label within the U.S. market 4. Agricultural advances to assist with weed control 5. Continued improvements to crop insurance 6. Cotton seed varieties better suited to growing conditions 7. Streamlined administrative process for the organic grower
- There are numerous companies that compete in the outdoor gear and apparel industry. However when it comes to the product line of organic apparel, Patagonia leads the way. These three competitiors are all major companies in this industry, yet only The North Face and REI offer any organic cotton apparel. The North Face organic cotton offerings actually only consist of a handful of t-shirts, while REI doesn’t even manufacture their own, they simply resell other brands such as Patagonia. When it comes to sustainability efforts, REI is the weakest in this area. Since they are acting as a re-seller then they have very little input or control over the manufacturing process or sustainability efforts during that period. Columbia Sportswear does have more control, but outside of footwear and polyester fabrics their sustainability efforts appear to be more focused in the operational side of the business such as energy savings at corporate offices and distribution centers, recycling paper, etc… and not as much on the manufacturing side. The North Face is the company that most resembles Patagonia as a company. They offer the Close the Loop Program which is very similar to the Common Threads program of Patagonia. Both of these programs focus on recycling clothing and allow the consumers to drop them off at the retail locations. One of the major differences between these companies is that The North Face and Columbia Sportswear are both publicly trading companies, while REI is a non-profit coop that members pay $20 for a lifetime membership. Patagonia is the only one that is privately owned and therefore not publicly traded. They also are a certified B-Corporation which means they have been certified as meeting high standards for environmental and social responsibility as a for-profit company (B Lab, 2014)
- To generate organic cotton retail sales of $52 million during 2014 in the North American LOHAS Community. Focusing on top line revenue allows the organization to directly impact the bottom line profitability and ensure a successful product launch. The $52 million in sales will generate from the LOHAS Community Eco Tourism and Natural Lifestyle market segments in 2014, $104 in 2015, $156 in 2016, and $208 in 2017. The primary reason for selecting sales revenue as a key metric to measure the product launch is to ensure a business performance metric that represents the customer relationship established with the LOHAS Community.
- To generate $520,000 or 1 percent of revenue from the LOHAS Community in socially responsible donations to Patagonia’ grassroots environmental organizations. The goal is to increase these LOHAS Community donations to $1,040,000 in 2015, $1,560,000 in 2016, and $2,080,000 in 2017.
- North American Website traffic sources will measure promotional activities to ensure efforts are directed toward websites with the highest response rates. The goal will be to obtain Patagonia organic cotton and LOHAS as Google level one category hits for 90% of all users that type in the following search tags: “Organic Cotton,” “LOHAS,” “Natural Lifestyle,” “Eco Tourism,” etc. As part of this tracking we will monitor several website sources: organic search, referrals, social media, email marketing, paid search, direct traffic, and other campaigns. Of the aforementioned types of website sources, organic search, social media and direct traffic will be utilized for the Patagonia organic cotton apparel. Organic search traffic typically means the “amount of traffic that came to your site via someone who found your site using a search engine.” Today consumers utilize Google, Bing and referral sites like Facebook, Twitter and LinkedIn to stay connected electronically. Patagonia organic cotton apparel will provide another method for family, friends and environmentalist to connect via the LOHAS Community. Leveraging these social connections will be a key tool in the promotion of Patagonia organic cotton apparel to the LOHAS Community market. For instance, Patagonia organic cotton apparel will be listed on information pages on social media websites such as Facebook and Google+ and tracked accordingly based on consumer interests, such as “Like” or “+1”. “When someone finds your site via a link on a social network, they'll be bucketed under social media as a traffic source” (Eridon, 2013). Furthermore, the last type of website sources that is tracked is direct traffic. “Direct traffic refers to traffic you receive to your website that doesn't come through any other channel. So, when you type www.hubspot.com into your search bar and hit 'Enter,' you're accessing HubSpot.com via direct traffic. If someone posted a link to www.hubspot.com on Facebook, however, and you clicked on that link, your visit would be bucketed in HubSpot.com's social media sources” (Eridon, 2013). During product launch it will be critical to assess where traffic is originating in order to ensure promotional activities are properly aligned and producing the desired traffic. Traffic data will be used to measure response rates and allow for near real time adjustments to advertising and direct marketing resources.
- The fourth metric will monitor web traffic by state and the goal will be to obtain a 10% conversion in each state versus total clicks. This will provide another key monitoring metric during product launch that will key in on social media. Monitor website visits state by state via the Internet Traffic Monitoring System (I-TMS) (I-TMS, n.d.). I-TMS is valuable in determining which states gauge the most interest in the Patagonia organic cotton apparel. Accordingly, such information will be utilized in order further strategize and develop continual improvements to the marketing campaign as a value-added proposition. Moreover, such data will be valuable to discontinue selling the Patagonia organic cotton apparel to states that have little or no interest in the product. (Hartley, Kerin & Rudelius, 2013)
- The pricing of the Patagonia Organic Apparel is based on the fact that it is a revolutionary and innovative product line that is differentiated from the competition by its unique materials and manufacturing processes. Patagonia’s organic cotton apparel line will provide each consumer quality outdoor garments that supports their lifestyle and love for the planet. For these reasons Patagonia’s organic cotton product will demand a premium in the market place and its price will send a message of quality. On average when looking at coats, pants, and shirts; apparel will average $110 per unit. Currently the competition offers cotton products ranging from $25 to $100, but these units fail to offer the sustainable benefits of the Patagonia apparel. The Patagonia organic cotton apparel premium price will also signal to consumers that this particular product line represents the social consciousness of the LOHAS Community and their focus on helping to sustain the environment in everything they do. Patagonia’s organic cotton apparel will provide a way to connect with the LOHAS Community and allow family, friends, and environmentalists to connect and share the Patagonia story through their Facebook, Twitter and LinkedIn social media platforms. Patagonia’s price while significantly higher than the competition, offers more than cotton apparel, it offers customers a natural lifestyle with a product manufactured using a process that sustains the environment.
- This section will offer a financial overview of the Patagonia Organic Apparel LOHAS Community as it relates to the marketing activities. LOHAS Community break-even chart indicates 284,091 units would need to be sold in order to breakeven. The 2014 sales forecast surpasses this with a target of 472,727 units which will provide a profit of $16.6 million. The following financials will provide expense forecast for promotional activities and sales forecasts for the first three years of production. The financials indicate an aggressive growth plan that looks to capture sales revenue of $208 million in the targeted LOHAS Community market by year three (2017). The total Global Organic Cotton market in 2017 is projected to be worth $39.9 billion. The following break-even chart outlines estimated fixed and variable cost at various production levels and indicates a break-even point of 284,091 units. Fixed costs will consist primarily of building rent, real estate, property tax, depreciation (plant and equipment), administrative and executive salaries, interest and insurance. Variable costs will include direct labor and materials used in production, shipping costs and supplies. Variable costs will also include sales commissions tied directly to the quantity of organic cotton apparel sold. (Hartley, Kerin & Rudelius, 2013, p. 334). Expense Forecast Social media. Facebook offers several different types of advertising options. We will be using the cost per action. With this option, Facebook will show our ad to the people that are most likely to click on it. We will be able to track exactly how many people click on our ad. We will only be charged when someone actually clicks the ad that takes them to our webpage. It will also give us the ability to track conversion. The fee for this type of service is a bidding format. Therefore, we must bid higher than our competitors who are trying to reach the same audience. The recommended bid for this type of service is $2.50 per 1000 clicks. Facebook has a total of 1.23 billion users. We are looking for a 10% conversion rate. In other words, we are aiming for 10% of the viewers to actually purchase our product. We will need to reach 7,250,000 viewers. At $2.50 per 1000, it will cost us $18,125. Advertising. We will be placing display ads in the following online channel: Google. In order to attain 3,000 plus clicks per day and 520,000 plus impressions per day we will budget $2,000 per day for the Google Search and Display Networks. Therefore, it will be $ 30,000 per month and we will be running the ads for 90 days prior to the release.
- We will conduct three different product evaluations consisting of two electronic surveys and one open discussion survey. The first will be an informercial that consumers will see a banner on the screen with a number to text the word “LOHAS” to in order to receive a link to the survey. The incentive for completing this survey is a free Patagonia organic cotton t-shirt. The second survey will come into play when a consumer purchases an organic cotton product from Patagonia. Included with each of these products will be an insert certifying it as made from organic cotton. On this insert there will also be the information for a website to take a survey regarding the product. The incentive for taking this survey is that they will be entered into a drawing for an eco tourism weekend trip, however they must complete the survey within 30 days of purchase. The last evaluation will be an in-person meeting with consumers which will be held twice a month for the first three months of the marketing campaign. During these meetings the consumers will view all current and proposed marketing commercials, infomercials, ad print, and other materials to get their feedback. They will rate these items for effectiveness on a scale of 1-10. They will also be asked open ended questions regarding their feelings about the product, likelihood of purchase, and reasons behind these decisions. Upon completion of the meetings they will receive a free organic cotton eco tourism t-shirt and be entered in drawing for free eco tourism weekend trip.
- In order to gauge the effectiveness of this campaign their must be some controls that are monitored. We must see if this campaign is resulting in increased revenues for the company, both monthly and annually. On the flipside of that we must monitor whether or not expenses have increased to a point that the campaign is deemed ineffective or void of value. The most important control is whether or not consumers are satisfied with the product, and if not then why are they not satisfied and how can the issue be resolved. We also must gauge new product development on our end, is the success of this campaign leading to the development of new products. What ties in with this is competition/industry innovations. Is are campaign and product causing the competition to follow suit, or develop other sustainable options to compete with this line. Lastly, are we seeing a growth or decline in our marketshare, specifically those in the LOHAS community.
- The screenshot above shows a new approach to the product page, on this page the customer can clearly see pictures of the product they wish to purchase, and they can learn more about the product by clicking on the icon which allows the user to read more about the product or what a demo video about the product. Studies have shown that users are 64% more like to buy a product online after watching product demo.
- The mock-up below shows an article about the top 10 mountains to climb, this is a great opportunity for Patagonia to advertise its mountain gear in the designated area of the page and as a result increase web traffic.