Tuesday 2 December 2014

Is limiting growth brave sector leadership or just risky marketing?

Patagonia and North Face are well known as front-runners in the field of ecologically responsible companies. Organic fibers, ethical treatment of workers, minimizing emissions from company workshops, and transparency on business ventures are the orders of the day for both companies. - See more at: http://groundswell.org/the-bottom-line-patagonia-north-face-and-the-myth-of-green-consumerism/#sthash.TX5AgyCb.dpuf
 Patagonia, the outdoor wear supplier, is known as an ecologically responsible company using organic fibres, ethical treatment of workers, transparency of business venture etc.Over a year  ago it set out an interesting marketing goal of limiting growth. It claims it wants to make less than in previous years as a way of serving the environment better and it calls this initiative "the responsible economy".

As part of the campaign it asks prospective purchasers whether they really need a new jacket or are they just bored with labels saying "don't buy this jacket" for example .  It has also started to sell used Patagonia clothing in some of its stores. The key to this strategy therefore has to be whether consumers believe what the company says. It has to be more than just a marketing gimmick for it to work long-term.  It has to be consistent  with all other actions to be credible because otherwise there is a huge reputational and financial risk from increasingly cynical consumers. What is interesting is that its growth has increased over the last year which it claims is from attracting new customers.

So what happens over the next 5 years. For the strategy to achieve its objectives presumably Patagonia needs to both grow its market share and see sales growth fall ie it manages to influence buyers across the sector to reduce their purchasing impacting all their competitors (and helping the environment) and when they do then buy Patagonia is up there as first choice.

One of the benefits of ethical business practices is not just competitive advantage but sector leadership but this transformation as a front-runner comes with massive risks as well as potentially huge benefits. Time will tell whether this is just a clever marketing campaign or sound thinking but for now it does challenge the norm and that's what we really need.