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 pres-

ence. 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.

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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).

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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

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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

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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.

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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

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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.

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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.

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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.

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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

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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

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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:

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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, specifi-

cally highlighting products that appeal to women and children. If REI can make these improve-

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ments 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 me-

dia, and this is much more visible for platforms such as Pinterest and Instagram. Creating a cat-

alog 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 fo-

cuses on its website. This also builds consumer confidence in the product by showing that ex-

perts 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.

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Works Cited

Barber, P., Peacock, M. E., & Bericchia, G. (2014). First National Study to Examine Rock Climbing- Related Injuries. Retrieved from Climbing: http://www.climbing.com/skill/first-national-study-to-examine-rock-climbing-related-injuries/

Komvopoulos, Joanna, Labinov, Alexander, Iseri, Brian, Leon, Daniela, Trad, Kristen, & Lopez, Katya (2013). REI Strategy Brief. Retrieved from Slideshare.net: http://www.slideshare.net/JoannaKomvopoulos/rei-strategy-brief

Lorange, Rob, Arora, Rohit, & Madhuva, Krishna (2012). REI Satisfied Customers Is Not The End! Retrieved from Slideshare.net: http://www.slideshare.net/sureshmadhuvarsu/rei-how-to-improve-crm

Running USA. (2014). Annual Reports. Retrieved from Running USA: http://www.runningusa.org/annual-reports

SIA Research. (2014, April 10). Snow Sports Retail Market Sales Up in All U.S. Regions Through February. Retrieved from Snow Industries America: http://www.snowsports.org/blog/index.php/2014/04/10/snow-sports-retail-market-sales-up-in-all-u-s-regions-through-february/

Skift. (2014). Majority of Americans not Taking a Summer Vacation this Year. Retrieved from Skift: http://skift.com/2014/04/22/majority-of-americans-not-planning-on-taking-a-summer-vacation-this-year/

The Coleman Company. (2013). Outdoor Foundation. Retrieved from 2013 American Camper Report: http://www.outdoorfoundation.org/pdf/research.camping.2013.pdf

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

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US Department of Transportation. (2012). Who's Walking and Bicycling. Retrieved from Pedestrian and Bicycle Information Center: http://www.pedbikeinfo.org/data/factsheet_general.cfm

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