REI Marketing Plan - commonlybowtied



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Marketing Plan

May 1, 2014

Produced by:

Amber Craig, Tyler Coopman, Kaily Loofbourow,

Jillian Shy, and Ian Whitlock

Executive Summary:

REI is the biggest name in recreational equipment and education. They have products for every outdoor activity and clothing for everyday life. Because of their focus on experience and education, they tend to rely on their brick and mortar stores rather than their online presence. This is a challenge, because more and more competitors are emerging online. To compete with this, it is proposed to use social media in an attempt to create the experience of an REI store on their website. This will start with the women’s and children’s apparel sections, but can potentially be used for the rest of the product lines, depending on success.

Challenge:

REI offers clothing, equipment, and training for hiking, camping, paddle sports, snow sports, fitness, climbing, cycling, and every day wear. These can be subdivided into women’s, men’s, and children’s. Currently the selection of women and children’s clothing is much less extensive than men’s. One goal is to expand the amount of women and children’s clothing by 10% within two years. Another goal is to increase the sales of these products, specifically online sales, by 15% within two years.

Situation Analysis:

Company Analysis:

REI lives and breathes experience. The world is a beautiful place, and REI hopes to “inspire, educate, and outfit for a lifetime of outdoor adventure and stewardship.” The beauty about the adventures that REI prepares people for is not in the views or scenery, however majestic, but the experiences and challenges that are overcome during the endeavor. REI strives to help people have these experiences so they may grow and breathe the fresh air that is out there. They do this through retail sales of outdoor equipment, expert knowledge of employees, and operations that are intended to increase environmental sustainability, create involvement, and do work within the community.

Established in 1938, REI began as a rental and trade cooperation that was meant to provide quality climbing equipment in the Pacific Northwest. By 1983 they created their own line of road and mountain bikes and cycling gear. The 70’s and 80’s were a large time of expansion for REI. They attempted to move internationally by building a store in Japan, but the price sensitivity of the culture led it to failure. This was also a time for REI to widen product lines and create their Adventures program, which offers trips around the world for cycling, kayaking, hiking, or climbing. They have expanded to 129 stores around the US, and have created programs that fund outdoor recreation. Employees of REI are experts in outdoor recreation. They consider the work environment playful, casual, approachable, and collaborative. REI ranks 69th in the “best places to work” score in 2014 and has ranked at the top since 1998. Employees really love working there, and members of the company are very involved in the sustainability efforts of the company. Each year REI sends out a stewardship report to inform members and the community of their impact and actions. They are continually innovating equipment with suppliers and creating new ways to help people become more active through their Outdoor School and their Adventure programs.

Customer Analysis:

REI customers value experience, environmentalism, service, and expert opinion. They want to be treated as equals and fellow enthusiasts of outdoor recreation. REI strives to make their stores interactive, with climbing walls or a shower that lets guests test how waterproof a jacket is. Customers also prefer REI, because REI strives to promote environmental stewardship. This appeals to customers who love nature and value the environment. Many people purchase a membership for the dividends that they receive with purchases, sales, and the return service that REI offers which allows customers to return nearly anything for full price. This warranty has recently been changed. Results of this have yet to be studied. A large amount of REI’s customer base comes from their nearly 12 million members, who are actually stakeholders in the company, because it is a co-op (REI Strategy Brief). Customers are male and female, age 20 – 45, with income of at least $60,000, and exposure to higher technologies (REI How to Improve). Less than half of the population of the nation participates in outdoor recreation. There is always room to expand through education about outdoor recreation, which is something that REI strives to provide. Ultimately, REI customers could be broken into much more specific demographics based on the casual outdoorsman (20-55, Family, middle-class, visits in leisure, may purchase a membership after a few visits), the expert adventurer (25-45, willing to pay more, focus on trying out the product, visits repeatedly to keep the most advanced gear, member), and the straggler (20-45, very few visits, focus on clothing or lowest cost products, no membership).

Competitor Analysis:

REI’s competitors are hard to identify. They are different in every region, due to the fact that most outdoor recreational equipment stores are small, family-owned businesses. The main national competitors are Sports Authority, The North Face, Eastern Mountain Sports, and Dick’s Sporting Goods, though only Eastern Mountain Sports is the only competitor with the breadth of products that REI offers (REI How to Improve). The largest competition is from online sales. With the rise of Amazon, The Clymb, and various other outdoor recreation websites, REI has lost part of its market share. Now customers can come into REI, gain the expert knowledge they need, and buy their equipment for the cheapest price online. Even with the rise in Internet sales, there are very few competitors that fight for direct market share with REI. Amazon has a section of their sales that compete with REI, The Clymb focuses on overstocked items, and various other websites compete on specific areas of outdoor recreation. The only direct competitor with REI is EMS which is only located in the Northeast.

Collaborators:

REI is a retailer for a variety of brands such as Black Diamond, North Face, and Arcteryx. REI also sells its own equipment, but these partnerships and alliances make up a large part of their sales, which means that REI must continually manage relationships with these brands. Another very important group of people for REI is their members. Because REI is a Co-op, it allows members to vote on board members and have a say in the actions of the company as a whole. Members are any customer who purchases a membership. REI shows their care for this group of people by offering dividends, which are a percentage of purchases, every year and offering special deals only offered to members.

Climate:

Political

The political climate of the US is one that allows REI to grow as it wishes and encourages them to expand. There is no reason to be afraid of any major shifts in the political climate.

Economic

Though the US has recently experienced a recession, the economy is on the rise and is in a great place for REI to expand. As people are becoming more and more confident in the economy, they are more willing to spend money on leisure activities or hobbies such as cycling, camping, climbing, or kayaking. The economy looks promising for REI, though they may need to find a way to compensate for their perceived high prices, which hurt their revenues during recessions.

Social

Recently there has been a large amount of buzz around environmentalism and sustainability. This is great for REI, because they help people travel to remote places or nature just outside of the city to experience its beauty and wonder. The social push for environmentalism joins with REI’s stance to help sustain the environment for future adventurers.

Technological

Technology is continually shifting. REI must work with their suppliers to innovate and create the best products that are the safest, most durable, and easiest to use so that more and more people can share in the experience. The technology level of the US is at a great point of growth that helps REI attain this goal.

SWOT Analysis:

Strengths

One strength that has developed over the life of the company is very strong brand loyalty. Brand loyalty has developed from other strengths like excellent customer service (highly trained/knowledgeable employees and a great return policy), fair prices, and the highest quality items. Because of these strengths, customers are willing to pay the extra money to buy from REI instead of discount gear outlets. With hopes of increasing female interaction and sales, having loyal customers could be a great resource in reaching women. Loyal customers are often the best form of advertising as they are advocates for the brand and use word-of-mouth to attract other customers who trust people they know who have shopped there.

Outside of retail sales, REI has also diversified its product offerings with extensive outdoor trips to destinations around the world. This is a strength because they are utilizing their highly trained staff to reach customers on a more thorough level than any of REI's competitors are able to do. Finally, REI also has high employee satisfaction as a place to work; passionate employees lead to customers feeling good about who they are buying from.

Weaknesses

A weakness for REI is they only have brick and mortar locations in 32 states, meaning the brand awareness may be minimal in some areas of the US. This could limit some outreach to the female market because states that REI is not currently in may have a high demographic of females that would purchase products sold at REI. Another weakness is that their REI Outlet is completely online and separate from the store, so customers cannot get outlet prices at the brick-and-mortar locations.

Finally, their primary market and greatest sales generator are males, and the store favors this with much smaller women and children's sections. The REI “look” and set-up that is consistent at all locations primarily uses earthy, gender neutral colors, but often exposes the customer first to products for the male demographic.

Opportunities

Externally, there are a few opportunities that REI has to expand its success. First REI could create new locations in states that they are not currently located in. This would spread brand awareness and increase brand loyalty if the location was appropriate. Second, they could increase women and children customer base. While not every female will shop in the kids section, every mother shopping for children will likely shop in the women's section. Product offering could increase in some areas, but the opportunity is more in the presentation of those products to customers in the store or online through social media.

Threats

REI has a majority market share in the outdoor recreational equipment industry, but online competition is a threat. Similar to the “Amazon showroom” mentality that Best Buy is currently fighting, customers may come to REI for great customer service and knowledge only to make the purchase through a less expensive website. REI's loyalty program has helped counter this threat, but more steps need to be taken moving forward to prevent this.

A threat specific to the female product offering would be other athletic apparel companies. REI has an adequate product offering in most sport specific sections of their store, but apparel and footwear departments could easily be substituted with less expensive alternatives like TJ Max, Sports Authority, or Macy's. REI needs to differentiate themselves with unique products, but also in a completely new experience for female customers in the store. Products will likely be the same from store to store, so to prevent this threat from becoming a problem REI needs to be innovative in how to better engage female customers.

The SWOT will also influence the company’s strategy moving forward as they will always look to satisfy customer needs and continue to be cutting edge on the products they offer. REI will also consider their weaknesses and constantly be looking for future opportunities to add new locations and increase product offerings in different departments.

Market Segmentation:

The general target market for REI is outdoorsy young people with disposable income that are part of the middle and upper-middle class. They are price-elastic, as they are willing to spend money for quality products, but unwilling to pay extremely high prices for specialty products. This segment is broken down into several smaller markets, including campers/hikers, cyclists, fitness enthusiasts, runners, paddlers, snow sports enthusiasts, travelers, climbers, men, women, and children.

The first segment is hikers and campers. These individuals want products they need for general use, and they are willing to pay higher prices of REI for a high quality that will not break. As this segment uses the products recreationally, they are not looking for extremely high-tech items. They simply want sturdy, durable gear to use while they explore the outdoors. Since they are not experts, they respond positively to advice from experts whether in store or online. The best way to advertise to and communicate with this segment is through other nature-oriented activities, such as ads in nature magazines and outdoor venues such as a billboard. According to the 2013 American Camping report, camping has steadily been declining in the past few years, due to a high churn rate among campers. The average person who enjoys camping spends approximately 13.6 days per year camping, with the median age of a camper being 33 years old (The Coleman Company, 2013). With this in mind, an estimated 15% of REI income is made from the camping and hiking market segment.

Cyclists are a prominent segment in REI’s market. This includes men and women who cycle indoors and/or outdoors. There are nine million bike trips in the US each day. In 2012, 33% of people reportedly biked for recreation, 28% for exercise and health, 17% for personal errands, 8% to visit a friend or personal relative, and 11% for commuting to work and school (US Department of Transportation, 2012). Thus, an estimated 10% of REI customers are cyclists.

Fitness enthusiasts are another market segment of REI. This group does not competitively partake in a particular sport, but enjoy fitness and fitness activities. An estimated 5% of REI customers fit into this segment.

A significant market segment is runners. Running has been a steadily increasing trend; approximately nine million women and seven million men ran in an event in 2012 (Running USA, 2014). With this information, an estimated 15% of REI customers are runners.

Furthermore, paddlers are a large segment of the REI customer base. Paddling has steadily increased in popularity since 2006. In 2008, 17.8% of Americans ages 6 and older participated in kayaking, canoeing, and rafting. Paddling participants made 174 million outings in 2008, averaging ten days per participant (The Outdoor Foundation, 2014). With this in mind, an estimated 10% of REI customers are paddlers.

The next REI market segment consists of people who participate in snow sports. Snow sports increased in profits in 2014, bringing in $218 million more in August 2013 through February 2014 (snow sport season) than the same months of the previous year. During these months, the snow sport retail market brought in $3.3 billion (SIA Research, 2014). With this in mind, an estimated 15% of customers are involved in snow sports.

Travelers are an additional market segment. Largely due to the poor economy, traveling has decreased in 2014; a vacation deficit is increasing, and the majority of Americans (63%) are not planning to take a summer vacation this year, with more than half giving the reason that they could not afford it. In 2013, Americans collectively failed to take 577,212,000 available days of vacation off from work, which averages to 3.2 days per person. 15% of Americans plan to take a long vacation this summer, and 1/5 of Americans plan to take a long weekend (Skift, 2014). An estimated 5% of customers are travelers.

Climbers are an additional market segment. Rock climbing has steadily increased in the past decade, and it is enjoyed by approximately nine million people each year (Barber, Peacock, & Bericchia, 2014). As climbing is one of REI’s primary niches, an estimated 15% of profits are derived from this segment.

Apparel makes up a total of 10% of REI’s revenue. This includes everyday apparel, fitness wear, and accessories. This section can further be divided into Men’s, Women’s and Children’s. Men’s clothing makes up an estimated 4% of revenue. Women’s apparel makes an estimated 4%, and Children’s apparel makes another 2%.

Alternative Marketing Strategies:

T.V. advertisements on channels like Lifetime, E!, and Bravo

The women in the target demographic would watch these shows. Creating T.V. advertisements would allow us to reach them on a broad level. The challenges for this idea are the inefficiency of this media, because it would reach many people who we don’t intend to reach, and the ability of potential customers to ignore the message by changing the channel.

Radio advertisements

Radio is incredibly useful, because it uses a frequent message to our potential customer. This would be very helpful, but it is not interactive, which is a large focus for this plan.

Print advertisements focusing specifically on magazines young women look at like In-Style or Homes and Garden

Print advertisements can be very efficient. They can be targeted very specifically by demographics, but they are not very interactive either.

Event marketing geared towards women like yoga, spin and Pilates

Utilize loyal customers as resources for reaching more female customers. Specific referral promotions for female products. Event marketing would be a great way to connect to women and allow them to interact with the brand and products. The biggest challenge to this is its reach. Event marketing is incredibly difficult to use on a national level, thus resulting in only a small portion of the intended audience interacting with the brand.

Selected Marketing Strategy:

After examining REI’s situational analysis our marketing strategy has become focused on increasing sales/focus on women consumers. REI should focus on targeting young adult women ranging from 22 to 25 years of age in order to push them towards brand loyalty. In promoting certain products REI can follow these women as they grow and continue to experience the REI brand as life changes. This strategy can be implemented through promotion of specific product lines (i.e.: clothing, hiking goods) and through the integration of social media on their e-commerce website. Looking at social media websites the numbers show that women dominate the social media scene, whether that be on Pinterest, Instagram, or Facebook. By integrating REI’s Instagram page with their website they will help bridge the gap between seeing and purchasing.

Product:

Apparel

REI alone hosts hundreds upon hundreds of brand name apparel. Some of the top names include REI, Osprey, GoPro, Salomon, Camelback, Smith Optics, Patagonia, Fitbit, Prana, Giro, The North Face, and Thule. Apparel is an excellent product line to introduce to new female consumers because it does not necessarily promote commitment to a specific activity. For example, consumers may purchase a North Face jacket for warmth and later realize it is too warm for hiking. The consumer may then be introduced to a new product line now that they are committed to an activity.

Camping

Camping appeals to a wide array of target markets, but in this instance REI should market their camping equipment to women with families. This product marketing will transition the women into gear as their lives continue to change. Tents ranges in price from $99.95 - $1,399.95 in order accommodate every family’s needs. REI also offers day backpacks for hiking ranging in price from $29.50 - $250.00. They also offer backpacking backpacks the range in price from $69.00 - $549.00. Spending money in these departments may indicate that the REI women is looking to commit to the most popular activities that REI has to offer essentially creating a long loving consumer relationship.

Strollers

Amongst its wide variety of products REI carries strollers ranging in price from $239.93 - $1,250.00. REI also carries add-on features such as weather shields, trays, etc. These strollers range from single to double strollers with a variety of shapes and functions depending on the consumer’s level of activity. Every stroller that is featured and has reviews online ranks with a five star rating. This product line is lesser known to most consumers and could serve to draw the target consumer in. This product line can also serve lifetime consumers as they grow into this stage of life.

Price:

REI has the ability to compete with several price levels. They have their regular priced merchandise, the REI Outlet online, and their annual REI Garage Sale. This pricing strategy allows REI the opportunity to reach new markets at lower price levels. REI also offers a lifetime membership for the one time price of $20.00. Members receive a 10% annual refund along with seasonal benefits.

Place:

REI offers traditional brick and mortar stores as well as online services. When a consumer purchases a product online they also have the option to have it sent to the nearest REI store for in-store pickup. The REI Outlet is currently only available online. This plan focuses on the use of social media to drive online sales.

Promotion:

Our main marketing platform will be through the use of social media in order to reach the selected marketing group. REI currently has accounts on Facebook, Pinterest, and Instagram, however, they do a poor job of integrating these resources. The idea would be to feature these outlets on the website and vice versa so women have the chance to connect with the brand and the lifestyle that REI emulates. Email marketing could also be used in order to enhance the connection between REI and women in the outdoors.

We believe by vamping up the social media presence as well as connecting the social media sights to the webpage, women will be marketed to. Capturing this demographic will happen by being a presence at their main media uses. As the adopters of social media, the college-aged women will progressively move into their mid-twenties while taking their habits with them. We believe targeting young adult women through social media is a successful campaign for the near future because it is the exact demographic we are attempting to reach that will be transitioning the social media age into the after college years. Family women are currently not catered to in the REI environment so by drawing them in with these gateway activities and products REI can hope to gain customers for life.

Short and Long-Term Projections:

In the short-term sales of women’s and children’s clothing will increase by 5% within a year. This will hopefully continue to increase as more and more women connect with the website and the REI experience online.

In the long-term adjustments will have to be made to address changing demographics of social media users and the changes to social media. Facebook is continually changing its policies, which requires monitoring, and Twitter may cease to be useful within a few years. All of the social media options will have to be monitored to ensure effectiveness and efficiency for an extended time period.

Recommendations:

1) Tie social media tools like Instagram, Facebook, Pinterest and Twitter into the REI website to target women demographics

2) Create the REI experience online with a focus on women with young families

3) Follow up the REI experience online with excellent customer service through phone calls and personal assistance for further purchase

4) Create a more gender neutral store “look” inside stores that balances female and male product exposure more effectively

5) Create a virtual dressing room to pair products together

6) Place expert article links on related products

Conclusion:

REI has great potential among women and families. By utilizing social media, an online experience, personal assistance, expanding the women’s and children’s apparel product lines, virtual dressing room, and expert articles, it can further expand its earnings from this segment by around 10%. Moving forward, REI needs to increase its marketing efforts to families, specifically highlighting products that appeal to women and children. If REI can make these improvements while maintaining its current strengths, it will broaden its customer reach and increase revenue from a segment that is being underutilized.

The reason social media is the strategy of choice over T.V., radio, print, or events is due to the interactivity and reach of the media. Women make up the majority of users on social media, and this is much more visible for platforms such as Pinterest and Instagram. Creating a catalog through Pinterest will create connections between REI and the target consumer (women). Connecting social media to the website will further allow ease of purchase and browsing for consumers. This also enhances emotional ties to REI’s products and the brand itself. Creating links to expert articles with related products brings the experience and education that REI focuses on its website. This also builds consumer confidence in the product by showing that experts suggest it.

Overall, implementing these recommendations will increase REI’s brand recognition among women, furthering sales in product lines including apparel, camping, and strollers. This plan will require monitoring in the future to check the use of social media. It is unclear how long particular social media sites will be effective, so monitoring research on these sites and their efficiency will allow for sustained success of this plan.

Works Cited

Barber, P., Peacock, M. E., & Bericchia, G. (2014). First National Study to Examine Rock Climbing- Related Injuries. Retrieved from Climbing:

Komvopoulos, Joanna, Labinov, Alexander, Iseri, Brian, Leon, Daniela, Trad, Kristen, & Lopez, Katya (2013). REI Strategy Brief. Retrieved from :

Lorange, Rob, Arora, Rohit, & Madhuva, Krishna (2012). REI Satisfied Customers Is Not The End! Retrieved from :

Running USA. (2014). Annual Reports. Retrieved from Running USA:

SIA Research. (2014, April 10). Snow Sports Retail Market Sales Up in All U.S. Regions Through February. Retrieved from Snow Industries America:

Skift. (2014). Majority of Americans not Taking a Summer Vacation this Year. Retrieved from Skift:

The Coleman Company. (2013). Outdoor Foundation. Retrieved from 2013 American Camper Report:

The Outdoor Foundation. (2014). A Special Report on Paddlesports. Retrieved from Outdoor Foundation: ://research.paddlesports.html

US Department of Transportation. (2012). Who's Walking and Bicycling. Retrieved from Pedestrian and Bicycle Information Center:

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