Topics: Consumer, Patagonia, Costs Pages: 5 (1746 words) Published: January 15, 2011
After reviewing Patagonia as a company and as a competitor in the market of high performance outdoor wear we have found and will highlight some of their advantages that keep them in business. First, one needs to look at the wide spread selection of clothing line and diversity of each product that Patagonia offers to their clientele. While providing massive selections, they also spent large amounts of money in Research and Development to survey professions that they sell to in order them to give their input on materials and designs to produce the best product available. Patagonia’s target market is also favorable in their success because they focus their products for a “core” user that includes the some of the most elite athletes on the planet. Yvon Chouinard has always felt his vision for his company was not to become Dicks Sporting Goods, but instead keep the company smaller with average growth while staying true to its core users. This has helped the company to keep its sales steady when the economy deals with a recession. Patagonia’s products are still in large demand in part the “core” users need them to compete. After completing the five-force model our group has found that the three forces most important to the serious outdoorsman industry are; bargaining power of suppliers, substitute products, and bargaining power of buyers. Bargaining power of suppliers is the most important force in this industry due to the fact that the product is specialized high performance equipment and clothing, which can only be purchased from specific suppliers capable of handing such unique demands as organic cotton. In order to become an industry leader one must find and build relationships with highly specialized, cost efficient, and reliable suppliers. As show in the diagram, due to the limited number of suppliers, the outdoorsman industry will be much more dependent on their suppliers, than their suppliers will be on them. By developing profitable and lasting relationships a company will be able to try and persuade its suppliers to sell materials at lower costs, thus allowing that company a strategic advantage that might not be offered to its competitors until the number of industry competitors increase. Finding innovative ways to cut down on supply cost could save more money then any other force could offer. One possible way to take advantage of relationships with suppliers would be to find the most cost efficient suppliers in the develop cost efficient relationships with those suppliers, and eventually buy those suppliers out. By buying out ones suppliers a company would be able to better control their own business, as well as the business of their competitors. In an industry with so few suppliers, companies competitors would be forced to buy supplies form them with basically no alternatives.

The second most important force in the serious outdoorsman industry is the threat of substitute products. As described in the model above, much competition exists in the outdoors clothing industry and similar products of all different prices, brands, and qualities exist for consumers to choose from. Due to the fact that there are low, or no user switching costs and substitute products are everywhere, companies must make sure that their product is known, respected, and always readily available to the consumer. Because this industry sells expensive products that are top of the line, the small number of industry leaders will have an edge over many of its competitors that sell lower quality products. As long as consumers believe that the company’s product is an investment that does what it promises, then consumers wont settle for substitute products.

The bargaining power of buyers was the final force our group found to be relevant in the serious outdoorsman industry. In today’s society consumers are smarter and savvier then ever, and are willing to do research to make sure they get what they’re looking for. Selling...
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