Marmot Strategic Situation

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Table of Contents

Analysis: Successful Strategies
Emerging Problems: Price Competition
Recommendations
Reference

Marmot is one of the leaders in the global outdoor equipment market, founded by several American students. In 1971, two students of the University of Santa Cruz – Eric Reynolds and Dave Huntley – worked on a project on glaciology in the icy expanses of Alaska. For a whole year until 1973, in the student dormitory, Eric and Dave thought over and developed prototypes of more modern outdoor clothes. They started with a vest, jacket, and parkas; then followed the development of 3 models of sleeping bags. As a symbol of their company, the guys chose a small animal, perfectly adapted to the conditions of life in the mountains — marmots. Eric and Dave came up with the Marmot Club and several rules, one of which was that everyone in it was its president.

The third member of the Marmot club was Tom Boyce; he climbed Grand Junction in Colorado together with Eric. A year later, Eric and Dave came to Tom in Colorado and rented a century-old stone building that once served as a grocery store. There the guys opened a rental and retail store of their equipment. The new sign on the building read “Marmot Mountain Works” — “Creativity of Mountain Marmots.” Trying to stay afloat, the guys worked part-time, giving lessons in alpine skiing to beginners.

In 1974, the Marmot trademark was officially registered, and the first Marmot sleeping bags were sold for $ 168. In the same year, during Tom Boyce’s trip to Peru, a landmark acquaintance takes place. Tom meets with the famous Hollywood cinematographer Mike Hoover, who works for 20th Century Fox. Mike was working on the project “The Eiger Sanction” with Clint Eastwood in the title role. After learning that Tom is engaged in the production of outdoor clothing, Mike offered to buy 108 jackets for filming.

In 1976, another landmark meeting took place, this time with a representative of the then little-known company “Gore and Assoc” Joe Tanner. And so it happened that Marmot became one of the leaders in the use of Gore-Tex membranes in the USA. The first experimental Marmot product with a Gore-Tex membrane was a sleeping bag. Its prototype was thoroughly tested in the field and in the freezer, where Eric and Dave spent seven days comparing a membrane sleeping bag with conventional models. Obsessed with the new concept, the guys passed a membrane sleeping bag literally through fire and water. Inspired by the result, they ordered 100 yards of membrane material and put the prototype into production (Cho et al., 2020). This is how the world’s first sleeping bags with Gore-Tex appeared on sale. From that moment on, Gore membrane fabric was used in everything that was done at Marmot.

Marmot grew, and by 1977 it already had 11 dealers; all Marmot equipment sellers were trained, which was an indisputable advantage and helped the development of the company. Since then, Marmot has grown significantly: now the company has 650 US dealers. The main office is located in California, but representative offices are also open in Colorado, Canada, Hong Kong, England, Sweden, and Germany.

Analysis: Successful Strategies

The founders of Marmot, from the very beginning, set the task of making technological equipment. They knew perfectly well what requirements they needed to make, and they knew what they were working for. The design group of modern Marmot is advanced users of outdoor equipment. One of the right strategic decisions was to attract people closely associated with active recreation and well-known in the circle of climbers as the face of the company. The Marmot team consists of experienced guides-climbers, free-riders, rock climbers, rescuers, ski instructors, and writers and photographers who embody a source of active and extreme activity. Marmot believes that if their products satisfy the most demanding requirements of the design group, then less demanding consumers will certainly like it.

Choosing the Principle

The next right strategic decision was to choose the principles of “comfort and safety” as the slogan; the concept of comfort involves a lot of factors. In conditions of high humidity and low temperatures, an uncomfortable state for a person can cause excessive fatigue, poor health, injury, or even death. Thus, in the Marmot company, the concept of comfortable technical clothing means, first of all, safety. The entire line of Marmot clothing is based on the principle of the theory of layers. Depending on their activity and the place where they are going, each person can independently combine the necessary kit.

Using Only High-Quality Materials

Another strategy that the company adheres to is the use of only high-quality materials that pass mandatory certification. Firstly, all the brand’s outerwear is distinguished by such characteristics as water resistance due to the use of a special water-resistant coating and water-repellent polyurethane treatment. Marmot’s clothing is also characterized by thermal insulation, good thermoregulation, and wear resistance.

For the production of outerwear, high-quality, innovative materials of the outdoor industry are used. These are a series of modern, lightweight membrane fabrics for various purposes, like Alaska and Classic, Polartec brand fabrics, etc. Moreover, only durable, proven accessories are used, such as Yoshida Kogyo Kabushikikaisha, or textile Velcro fastener. Gore-Tex and goose down which is extracted humanely are used as insulation. Due to this Marmot jackets, parkas, and jackets can reliably protect from winter cold in -77 °F and up to -113 °F (Cho et al., 2020). Comfort and warmth are added by such details as fur fringe on the hood made out of faux fur. Some parts of the product are finished off with soft fleece, warm inner cuffs, voluminous hood-tube, special windproof valves, etc.

Unique Sense of Style

An appealing appearance of the products is also an effective strategy that attracts the attention of buyers: Marmot outdoor clothing has a unique sense of style. By adapting jackets to everyday wear, the brand’s team sought to create functional, lightweight, practical, and comfortable-to-wear clothes without compromising quality. Thanks to modern materials, it was possible to reduce the stuffing while maintaining the temperature regime, which made the jackets less bulky and lighter.

At first glance, the design of the brand’s items is relatively concise – straight cut, clear lines, and monochrome color scheme. However, this is apparent simplicity: Marmot focuses on details that can individualize a thing. For example, branded chevrons with Velcro can be easily detached and changed to any other: with a brand logo or one of the thematic collections. In 2016, Marmot released a collection of chevrons dedicated to “Star Wars” created specifically for “Disney” (Cho et al., 2020). Thanks to removable branded chevrons, the purchased product can be transformed and adjusted to the taste of its owner.

In addition, the brand’s products have interesting decorative and functional details like all kinds of valuable ties, additional roomy pockets, and elements made of genuine leather. Designers also add such elements as zippers on the sides of the jacket, decorative patches with the inscription Marmot on the hood flap, a patch pocket on the sleeve, etc. The use of modern fabrics, such as Sand WebSocket fabric with the effect of “compression” or material with the development of Shape Memory, also gives the appearance of coolness. Each collection of the brand is exclusive and is available in limited quantities.

Eco-Friendliness

In connection with the popularization of respect for nature, the company has adopted an eco-friendly production strategy. In the assortment of the brand, there are only fur coats made of artificial fur. Marmot promotes a careful and humane attitude to the environment; therefore, they strive to abandon the use of natural animal materials overtime completely. The brand also supports the protection of nature financially – part of the proceeds from the sale of jackets are transferred to the Arctic National Wildlife Refuge Support Fund.

Emerging Problems: Price Competition

Due to the popularization of outdoor activities, many new companies appear on the market, forcing others to lower prices. Since Marmot is an experienced company, it has other, higher costs, which results in higher prices. Many competitive companies use direct and covert price competition techniques to take an important place in the outdoor clothing market through a specific pricing policy. Some manufacturers advertise the product at low prices; others launch a product with worse characteristics at a low price, and after a while – its improved version at a higher price. Some companies even use dishonest techniques: deception about the final cost, a substantial overestimation of the price when demand increases. Thus, the main problem for Marmot related to the price competition is the struggle for new buyers. The company’s strategy to win new consumers, expand sales markets, and increase its income is not very successful.

Standard Assortment

Marmot’s product uniqueness strategy also represents a weak link; companies producing outdoor equipment offer the same products, and there are more and more offers. The absence of unique products in Marmot makes the company less competitive because almost any product has a cheaper analog that is not significantly inferior in quality. A lot of outdoor clothing with the same functionality and price appears, forcing Marmot to compete with many participants in this market. In the company’s assortment, there are practically no unique products that have no analogs from other manufacturers. The development of a wider assortment policy should be a key direction in the work of Marmot. A poorly thought-out policy regarding the renewal of goods is dangerous by reducing profitability. When setting goals and objectives in forming the assortment, more attention is paid to the modernization of current products rather than developing new ones. However, it is the introduction of new, unique products that have no analogs that can determine sellers’ success.

Optimization of the Assortment

One of the potential reasons for the decline in profits may be an outdated assortment. The Marmot stores present a product that has been sold for a long time, missing opportunities to attract new and return old customers. The basic assortment has remained unchanged for more than five years and exceeds 80%. At the same time, the share of novelties and seasonal goods ranges from 10 to 12%; the Marmot assortment is not updated often enough (Cho et al., 2020). As a result, the interest of old customers is not maintained, and due to changes in demand, the manufacturer, without adapting, loses money. Proper assortment management is an effective way to reduce costs, attract new customers and retain existing ones. If this nuance is ignored in the store’s activities, a drop in demand and losses are inevitable. Due to the lack of timely optimization, there are economically impractical product groups in the assortment, frozen working capital, and increased overhead costs.

Return of Goods

The pandemic contributed to the growth of online commerce at Marmot, and with it, the number of product returns increased. The total number of online orders has grown, respectively, and refunds, the share of which has changed in the total volume of orders. The number of refunds has almost tripled in recent years: on average, 15% of the goods purchased in Marmot are returned, which leads to a high loss of profit (Cho et al., 2020). Buyers often return the product because it did not fit the color or style. The overhead expenses for refunds are increasing every year, especially with the opening of an online store; this trend is connected with Marmot’s concern for customer loyalty. The policy regarding returns –shipping at the manufacturer’s expense – also encourages customers to return the goods. The introduction of new services and processes aimed at simplifying and speeding up customer refund procedures was also affected.

Sellers

The main drawback of the strategy of offline Marmot stores is sellers. Clients note that the staff is rude, and sometimes communicates with them in a disrespectful tone (Cho et al., 2020). Young sellers do not know the product range; they cannot advise what is better to buy. Employees are not interested in doing their own business: playing with a smartphone, sitting in social networks, talking on the phone. Or vice versa, the staff is too intrusive and too insistently offers additional products for promotions, consultations, registration of discount cards. More experienced employees serve slowly, count the change for a long time, make mistakes. Such personnel does not know how to handle cash register equipment: they confuse codes, cannot cancel a purchase, make a refund or cancel a cash receipt. Some customers note that the sellers are constantly out of place; they often must be waited for. At the same time, the guards show excessive suspicion and walk around the hall for customers to not steal anything.

Recommendations

One of the ways to combat price competition can be the use of discounts; logistics discounts can stimulate sales and increase profits. For example, entering personalized values defined for individual customers or providing a promo code or code word can be useful. This forms relationships with customers, increase their loyalty, allowing them to feel special. Non-standard discounts can also be used, for example, for every hundredth buyer, or in honor of a round date from the day of a significant event in mountaineering. Customers will remember this and tell their friends and acquaintances, which will increase the company’s audience.

The product market of outdoor clothing becomes more and more specialized. One of the ways to increase the uniqueness of the product is to adapt it to the client’s tastes. Thus, Marmot can offer customers a unique product, the analogs of which are absent from competitors. An exclusive small batch of the product can be released, which will give it a rarity and uniqueness. The functionality and aesthetics of the product are essential, but without a legend, it will not be perceived as exclusive. It is the legend that creates a shared space for the product and the potential buyer. Thus, it will be possible to distinguish the product and the company from competitors.

By optimizing the assortment, new customers can be attracted and old ones can be retained. By qualitatively and quantitatively changing the structure of the assortment portfolio, Marmot will be able to increase its rationality. Along with optimization, the so-called harmonization of the assortment can be also applied. This is a set of actions aimed at maximizing the convergence of the optimal composition of the proposal with the real one. To find optimal solutions, it is necessary to predict demand and monitor consumer preferences. It is also essential to analyze the profitability of sales, and track competitors’ actions.

To reduce the number of refunds, several measures should be taken when carrying out online trading. First of all, it is necessary to tighten the input quality control. It is worth taking high-quality photos of goods in high resolution on several cameras. Since the color rendition of monitors is different for everyone, it is necessary to ensure that the color on the screen fully corresponds to the real one. It is also worth placing a size chart with European and American standards to make it easier for the buyer to navigate.

The right employees are the key to the company’s prosperity, so Marmot representatives should be more careful when recruiting staff. It is necessary to train employees to work with technological equipment regularly. It is also worth arranging checks of assortment knowledge and politeness, resorting to the services of secret buyers.

Reference

Cho, H., & Lim, H. S. (2020). Acceptance of smart clothing based on outdoor consumption behavior. Fashion & Textile Research Journal, 22(2), 209-221.

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