4. • Consumers today have a number of convenient options to
enhance recreational activities with fun, easy-to-use
technologies
• Companies are finding a variety of ways to meet customer
needs for information in a variety of contexts
4
6. 1) Still a great Patagonia product
• quality, comfort, & durability
2) Basic functionality
• distance, time, elevation, & calories burned
3) Emergency GPS signal
• lost, injury, avalanche
4) The TrekTracker App
• records trip data & connects other app users
• provides real-time location updates:
• flora/fauna identifications
• weather and conditions alerts
• terrain updates
• scenic overlook/trail meeting spot locator
5) Sustainable Steps Program
• Patagonia/Nike charitable partnership supporting sustainable practices
• user miles-hiked points translate directly to dollars for the charity
6
7. • Target Customer Segment:
Weekend Warriors
• Easy to also capture Fitness
Fanatics
• Will not alienate Hardcore
Outdoorspeople
• same shoe plus new safety capability
Weekend
Warriors, 50%
Hardcore
Outdoorspeople,
10%
Trendsetters,
10%
Fitness Fanatics,
30%
7
8. 8
Partner with Nike Develop On Our Own
• Existing technology plus new
features
• Existing relationships with
suppliers/manufacturers
• Traction with target customers
• Lower investment risk
• New business segment
• New hires
• New supply chain relationships
• Greater investment risk
9. • Licensing/Development Agreement
• Collaborate on additions/modifications to
existing hardware and software
• Nike owns technology, but bears costs and risks
• Grant of continuing rights to use and modify
technology
• Exclusivity: Restrict Nike from working with
competitors
9
10. • White-label version of Nike+ Platform, with
additional, hiking-specific features
• Patagonia owns all customer data
• No data sharing obligations
• Option to interact with Nike+ apps at user’s discretion
10
11. 2
0.2
12
1.2
0
1
2
3
4
5
6
7
8
9
10
11
12
Initial Investment Annual CapEx
$inMillions
Capital Investment
Partner
Build
11
• Greater risk associated
with development
• Nike already has the
expertise
• Longer time to recoup
CapEx
• Investment likely higher
than $12M model
forecast
6X
Investment
cost
12. Partner With Nike
• IRR = 38%
• NPV = $4.2M
• Recoup Initial Investment
by late 2019
Develop On Our Own
• IRR = 22%
• NPV = $5.3M
• Recoup Initial Investment
by 2021
12
Takeaway: Financial Projections are similar (and suspect)
in both cases, with a slight edge toward working with Nike
13. • Market share and consumer category adoption rates
• Sensitivity analysis on key consumer groups shows
extreme fluctuation
• Possibility of capturing new customers
13
15. • Weekend Warriors value seamless
integration with social media
• Market to add value for different
consumer segments:
• track fitness
• create community of hikers
• document hikes
• ensure safety
• “Climb Smarter” slogan
15
16. • Customer perception of Nike
• Marketing sustainability
• Patagonia as an ambassador of
sustainable practices via Sustainable
Steps feature
• Prevent alienation of existing Patagonia
customers
• Minimize Nike branding
• Nike+ “swoosh” logo integrated onto
hiking boot tag only
• Product design shows that this is still a
Patagonia product
16
17. • Depth of Research to Date:
• Consumer survey
• Financial models
• Product Development:
• Primary consumer research results
• Life Cycle
17
18. • Conduct additional research
• Negotiate favorable financial
terms with Nike
• Define intellectual property
rights
• Draft licensing agreement
• Develop strategic marketing
campaign
18