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

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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

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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

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 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
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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
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 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
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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.

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 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.

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 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
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 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:
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 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.
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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
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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: 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

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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

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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