De La Salle University

Ramon V. Del Rosario College of Business

Management and Organization Department

THE NORTH FACE

CASE ANALYSIS
Submitted
in Partial Fulfilment of the Requirements in
MKT535M Marketing Management

To:
Ms. Regina Dy

By:
Lim, Rapunzel Grace T.

7 April 2015
FACTS
The North Face (TNF), is the worlds premier supplier of authentic, innovative and technically
advanced outdoor apparel, equipment and footwear. Its products are specially made and targeted
for mountaineering, backpacking, skiing retailers, sporting and outdoor goods retailers. It has
attained the reputation of being a high performance, quality, outdoor brand. TNF is a subsidiary of
the Vanity Fair (VF) Corporation, was founded in 1966. Its first retail store was established in 1968
at San Leandro, California, USA.
Company Background
VF Corporation is a global apparel and footwear company founded in 1899 at Greensboro, North
Carolina. At present, VF Corporation is a $12 billion apparel and footwear powerhouse, as well as,
a global leader in the said industry. It has a wide range and an international portfolio of brands and
products. Its diversified business model is classified into five product categories: Outdoor and
Action Sports, Jeanswear, Sportswear, Contemporary Brands and Imagewear.
Outdoor and Action Sports category comprises of Eastpal, JanSport, Kipling Europe, Napapijri,
The North Face, Reef, Vans, Eagle Creek, SmartWool, Timberland, Lucy. The Jeanswear
category includes famous brands such as Wrangler, Lee Jeans, Rustlers, 7 For All Mankind, 20X,
Chic and Rock Republic. Sportswear section consist of Nautica and Kipling U.S. While 7 for All
Mankind, Ella Ross and Splendid are classified under Contemporary Brands. Lastly, Imagewear
consists of the following: Red Kap, The Force, Bulwark Protective Apparel, Chef Designs and
Majestic Athletic.
In 1966, outdoor sports and gear industry was still in its fancy in the US Alpinists were forced to
buy military packs, tents and apparel in Army supply stores. Backpacking was a foreign concept at
that time. When Doug Tompkins, a passionate skier, and his wife Susie opened a ski and camping
gear storefront at San Francisco North Beach.
In 1968, TNF begins manufacturing. Kenneth Hap Klopp acquired The North Face and shifted its
focus from retailing a variety of products to designing and manufacturing outdoor gears under The
North Face brand. The first production facility was squeezed into the back of The North Face store
in Berkeley. Hap also hired his friend from Standford Business school to run the factory and launch
a wholesale business. Thereafter, several outdoor products are developed and clicked on the
market.

The North Face, as an outdoor and action sports brand, aims to continually inspire outdoor
enthusiasts to get outside and explore more with its position Never Stop Exploring. The company
also aims to provide both professional and amateur athletes and enthusiasts high quality, technical
and in-style apparel, footwear and outdoor gears. TNF filed for bankruptcy in the late 90s. But in
the last quarter of 2010, TNFs profits rose by 20% as driven by its sales in the Asian markets.
The North Face in the Philippines
The North Face Philippines is under the Primer Group of Companies. The Primer Group is founded
in 1985. Akin to VF Corporation, Primer Group is engaged in the retail and distribution of premium
consumer brands in outdoor, travel, footwear, fashion, wellness and urban lifestyle. The company
has a diverse portfolio of products and services. Under the Outdoor Category of its brand portfolio
is The North Face.
At present, The North Face is among the most well-known brands of outdoor apparel and gears in
the Philippines. Although it has a variety of products, TNF backpacks are among the sought after
backpacks to both expert and amateur mountaineers, hikers, backpackers and even just for light
travel or school. Its backpack products are divided into two: daypacks and the technical packs. The
latter cater mostly for the heavy-users, professional and athletes.
STATEMENT OF THE PROBLEM
What should The North Face do in order to address the threat of substitute products such as
Deuter, Columbia, Patagonia and Brown Trekker?
OBJECTIVES
To offer more affordable backpacks
To develop quality products at the least possible cost
To compete with other brands such as Columbia, Deuter, Brown Trekker in terms of price
To address the lack of consumer knowledge on quality and technological innovation
AREAS OF CONSIDERATION/ASSUMPTIONS
TNFs brand image and name recall. When canvassing for a backpack to be used mostly for
travel or mountaineering, TNF is often the first brand the pop into ones mind. Several outdoor
enthusiasts and bloggers also recommend buying TNF backpacks for amateur travellers because it
is lightweight, high-quality and durable. Research and interview revealed that when Filipinos are
asked about The North Face, some associate it with sports, for climbing a mountain,
backpacking, the only brand Im familiar with that sells hiking backpacks, travel, bags.

TNF as the status symbol. Research and interview also showed that TNF is a status symbol in
the Philippines. To some people TNFs quality and user compatibility only comes in second to its
brand name.
TNF is coined as overpriced. There a quite a few mountaineering experts who shared that TNF
is overrated. Although they agree that the quality is indeed impressive, they think that it is
unnecessary to spend a huge amount of cash when there are other options. While some think that
TNF backpacks are great investment, others prefer buying two backpacks with only one TNF
backpack price.
Cheaper alternatives and substitutes. When an amateur looks for an outdoor gear or
backpack, there are also some who suggests TNF as the best investment. However there are a
few who suggests that when such backpack will not be used often, other brands such as Columbia,
Deuter or even local brand, Brown Trekker, are more affordable alternatives. Some people were
asked of what they think when they hear the word The North Face, they replied with too
expensive, there are cheaper backpacks, look for a fake TNF bag instead.
SEGMENTATION, TARGETING AND POSITIONING
Market Segmentation
It is important for a company to initially segment its market before identifying its target consumer
market. Market segmentation is the process of dividing the market into several groups
based on factors such as demographic, geographic, psychographic and behavioural
factors.1 Segmentation will allow TNF to have a better understanding of its market and
to be able to serve this market effectively. This paper concludes that TNF market
segments are demographic, psychographic and behavioural.
Demographic segmentation divides the consumers into several factors such as age,
gender, family size, income, occupation, religion, social class, nationality, race and
more. One reason demographic variables are so popular with marketers is that theyre
often associated with consumer needs and wants. 2 This market segment is broad that
it became easy to measure and it covers almost all types of consumers.

1 Larse, N. (2010). Market Segment: A framework for determining the right target consumers. BA-thesis.
Aarhus School of Business. University in Aarhus, Denmark.

TNF targets the upperclass consumer market. TNF equipment and technical backpacks
do not cost less than P3,000. Thus, the companys demographic segment comprises of
social classes A and B. Moreover, the common demographic of TNF are often young
men and women. Most of them are sports and outdoor enthusiasts, may they
professionals or amateurs.
The second one is the psychographic segmentation wherein the buyers are divided
into groups based on psychological/personality traits, lifestyle or values. TNF caters
mostly to consumers who incorporate or try to incorporate exercise and outdoor
activities into their daily lives, unlike most people who live a sedentary lifestyle. The
common personalities of TNFs target consumers are outdoor and fun-loving people,
active, adventurous and high in energy. Athletes are also target consumers.

Market Targeting
The companys target market are adventurous, outdoor-loving, active individuals. These individuals
take exercise, travel and exploration seriously that they are willing to invest in gears which are
durable and of high quality to fit their lifestyle.
This paper concludes that TNF applies a combination of mass marketing and niche marketing.

Mass marketing, also called undifferentiated marketing, allows the product to

be sold to the broadest number of buyers via mass distribution. This type of
marketing creates a large market at a low cost. While, niche marketing creates
a product which target a specific market need. TNF has a wide range of
distribution channels. Its retail outlets are very much accessible nationwide as
TNF products are present at every mall.
On the other hand, TNF products are specially made for mountaineering, backpacking,
skiing, sporting and outdoor goods. TNF is often popular amongst those who love to travel and
explore. However, there are also a number of people who are not familiar with the TNF brand
because outdoor activities do interest them. Rather, they heard of the brand but didnt know the
purpose and technological innovations that the brand has to offer. Nonetheless, the companys
goal is to encourage people to explore and go outdoors.
Market Positioning
2 Kotler, P. & Keller, K.L. (2012). Marketing Management. New Jersey: Prentice Hall.

In 1997, TNF adopted the tag line Never Stop Exploring. The company reinforced the
spirit of adventure that would continue to guide The North Face. The Athlete Tested

tag line also emerged in the same year. TNF adopts an intensive research and
development to specifically cater to the needs and wants of its target consumers.

Its research and development team send out equipment and outwear prototypes for
athletes to try in rigorous and real-time field-testing. The company encourages an
active lifestyle to everyone. TNF makes adventure and travel more desirable with its
mantra Get Connected. Get Involved. Get Outdoors.

Marketing Mix
Product
TNF has a wide range of sports and outdoor apparel and equipment which caters to
both men and women. Its products ranges from T-shirts, jackets, pants and shoes to
equipments such as backpacks, tents and the like.

This paper however focuses on TNF backpacks. Perusing through blogs and conducting
interviews, it appears that a TNF backpack is one of the most sought after products of
the said company. It appears that TNF doesnt only offer a backpack but one with
features fit for the needs of a consumer. There hiking backpacks can go as light as 0.9
kilos or have a a maximum capacity as spacious as 66 liters.
TNF continuously develops innovative and proprietary fabrics for both their apparels
and equipments. TNF wants to ensure that its products are comfortable durable and
outperforming longer in a variety of weather conditions. It continuously experiment
with fabrics to produce a lightweight and durable products fit for general outdoor
activities and even for day-to-day use.

Price

TNF backpacks are notorious for being too expensive. Most of its backpacks can go as
low as P3,000 and as high as P12,000 plus.

Place
TNF is the leading technical backpack brand in the Philippine market. Its products are
available at variety of malls in Metro Manila and provinces nationwide. The Primer
Group Philippines posted in its website the different store branches locations of The
North Face brand. These are the following:
PHILIPPINES: NCR
THE NORTH FACE - SHANGRI-LA PLAZA MALL
THE NORTH FACE - SM MALL OF ASIA
THE NORTH FACE - GLORIETTA 4
THE NORTH FACE - SM MEGAMALL
THE NORTH FACE - SM NORTH EDSA ANNEX
THE NORTH FACE - ALABANG TOWN CENTER
THE NORTH FACE - SM AURA
THE NORTH FACE - SUBIC HARBOR POINT
PHILIPPINES: PROVINCIAL
THE NORTH FACE - SM ILOILO
THE NORTH FACE - SM CEBU
THE NORTH FACE - SM CAGAYAN DE ORO
THE NORTH FACE - SM DAVAO
Promotion

TNF is very much active on its campaign to get involved outdoors. TNF Philippines is

well-known for its yearly Break All Boundaries Trail Running Challenge. It also hosts
several events such as the Great Camp Out, Seven Summits Pilipinas (Conquer Your
Seven Summits), Davao Wall Climbing Competition and the like.

With social media, TNF brand is covered under the Primer Group of Companies
website. TNF also has its very own Facebook page The North Face PH. The North Face
Philippines (Fan Page) was also created but Filipino outdoor enthusiasts. Although TNF
Philippines is not big on social media such as getting involved in other sites such as
Twitter or Instagram, it already attained a brand recall because of the activities the
brand is involved in.
THEORETICAL FRAMEWORKS

Despite its strong reputation and brand recall, it cannot be disregarded that there are many players
in the backpack industry. It is necessary to understand and study the factors influencing a business
operation. This paper will apply Porters Five Forces Model of Competition focus on Substitutes in
relation to Nagle and Holden Perceived Substitutes Effect.
Michael Porter has identified five forces that determine the intrinsic long-run attractiveness of a
marker or market segment. The company has to consider the industry competitors, new entrants,
substitutes, buyers and suppliers.
Figure 1: The

North Face

Philippines
Forces

Porters Five
Application

Threat of New Entrants

The increasing number of new startup competitors is the biggest threat faced by established small
and medium businesses.3 New players industry becomes a threat to existing competitors because
of the possibility that they can decrease the market share of the existing players. When the entry
barriers are low in a profitable industry, it will be easier for new players to enter the market.

3 Torrance, J. (2014). Growing number of startup competitors is biggest threat to businesses. Real Business.
Retrieved from: http://realbusiness.co.uk/article/27360-growing-number-of-startup-competitors-is-biggestthreat-to-businesses.

Pursuant to Euromonitor, the bag and luggage industry is the Philippines in the past years.
Fortunately, there are high entry barriers to outdoor bags industry because it is a niche market.

Threat of Substitute Products

Consumers are price sensitive. They can shift to variety of alternatives which can provide them
with the same quality product at a lower price. This paper seeks to relate this specific sub-section

of Porters Model to Nagle and Holdens Perceived Substitutes Effect.

Figure 2: Nagle and Holden Perceived Substitutes Effect Application

According to Nagle and Holden, Buyers are more price sensitive the higher the
products price relative to the prices of the buyers perceived substitutes. The said
authors emphasized that perception varies among consumers and purchase
situations.4 Thus, the threat to TNF is the consumer notion that they can get the same
backpack quality at an affordable price with other brands.
Threat of Bargaining Power of Customers
In relation to what was discussed earlier, consumers are price sensitive. They can shift from one
product to another at their liking and most companies will try to keep up with their preferences.
Fortunately for TNF, the company doesnt have to adjust to consumer bargaining power in relation

4 Hinterhuber, A. (2003). Towards value-based pricingAn integrative framework for decision-making.

Industrial Marketing Management Science Direct. Retrived from:
http://www.quartetfest.ca/documents/12170/13.__Hinterhuber___Towards_value-based_pricing.pdf

to its quality. People go to TNF because of its brand name and the high performance product that it
has to offer.
Threat of Suppliers Bargaining Power
TNFs raw materials are imported since it is a large US company with different manufacturing
plants worldwide. Suppliers are the sources of raw materials, machinery, services. Without the
suppliers, a company will be forced to manufacture its own raw materials which will require extra
time and expenses. TNF doesnt have to worry because it is, as reiterated, a successful company
with a number of plants. Thus, it has control of its raw materials. It also develops its own fabrics
where its research and development team come up with durable and high performing fabrics for its
apparel and equipment backpacks.
Industry Rivals
Competition will eventually lead to price wars, advertising competitions, introduction of new
products. There are only a few well-known outdoor, hiking and mountaineering backpack brands in
the country such as Deuter, Columbia, Patagonia and even the local brand, Brown Trekker. In the
Philippine market, research and interview showed that the TNF has the strongest brand recall and
the largest brand. In relation to what was mentioned above, these industry rivals become a threat
only when they are considered as substitutes from the TNF products.

SWOT ANALYSIS
HELPFUL

STRENGTHS
I
N
T
E
R
N
A
L

WEAKNESSES

Strong brand reputation

Technological innovations. TNF

has a strong Research, Design
and Development Team

Niche market. TNF focuses on sports

and outdoor apparel and gears.

Too expensive

Provides environment friendly,

quality and durable products

TNF is big on marketing and

promotions through its
organized outdoor activities.

OPPORTUNITIES
E
X
T
E

HARMFUL

Euromonitor International
provides that Philippine Bags
and Luggage Industry grew in

THREATS

Counterfeiting products is
rampant in the Philippines and in
Asia

R
N
A
L

year 2014.

Same source states that

travel and tourism industry
is profitable as well.

Growing interest of consumers

in outdoor activities such as
hiking and backpacking.

ALTERNATIVE COURSES OF ACTION

ACA 1: Keep the current market (Class A and B) but introduce and launch a more affordable
product line.
This option will allow TNF PH to keep its existing market since it is already successful on its
own. Customers have a reference price when there are many substitutes, as long as
the offering it is within that range and acceptable. Marketing can influence which
products consumers will compare yours with.
Research showed that there is high threat of substitute to TNF products because of its immense
cost. As mentioned, TNF are sometimes coined as overpriced and some people suggest that
one can get the same quality at a lower price with Deuter. Thus, this option will allow TNF to
cater to a wide range of consumers without sacrificing its quality.
Pros
To be able to provide more affordable products
without sacrificing its quality and existing market

Cons
Requires extensive research and time

ACA 2: Communicate effectively to the consumers the importance of technological innovations

and quality.
Perhaps the problem is with lack of consumer knowledge on the value of the products quality,
thus they are not willing to shell out huge amounts of cash. However, this option suggests
advocacy. It is important to communicate to its market both professionals and amateurs that
you get what you pay for. Through marketing and advertising, TNF can gradually emphasize
that its products are considered investments, and that durability and quality stomps price.
Pros

Cons

Quick and easy solution. It can be done through

marketing, advertising and constant communication

No assurance that such communication will be a

success

with its consumer market

ACA 3: Tap into the lower C and D consumer market.

This option requires a change in TNFs entirety which is quite difficult since TNF PH is just a
retailer in the Asian market. Philippines is a developing country. The masses are greater in
number than those in the Class A and B market. To delve into this market will expand TNF s
range of consumers since its products will be more accessible to anyone and everyone. This
however will require TNF to look for more cheaper raw materials and no assurance that its goal

and quality will be the same.

Pros

Cons

TNF Ph will be able to cater to a wide range of

consumers and it will be more accessible to anyone
and everyone

The possibility of sacrificing its quality for its price. It

might divert from its vision of providing for comfort,
quality and durability.

RECOMMENDATION
This paper recommends to adopt ACA 1: Keep the current market but introduce a new and more
affordable product line. This way nothing has to be sacrificed. TNF doesnt have to give up its
original concept and objective. It will just launch an affordable TNF product line within the range of
P800 to P2000.

ACTION PLAN

REFERENCES
About the Primer Group. (n.d.) In PRIMER Group of Companies. Retrieved April 6, 2015,
from:http://www.primergrp.com/theprimergroup.html
About VF. (n.d). In vf We Fit Your Life. Retrieved March 30, 2015, from: http://www.vfc.com/about
Bags and Luggage Industry Philippines. (n.d.) In Euromonitor International. Retrieved April 2, 2015,
from: http://www.euromonitor.com/bags-and-luggage-in-the-philippines/report
Equipment. (n.d.) In The North Face. Retrieved April 2, 2015, from:
http://thenorthface.hk/collections/equipment
Hinterhuber, A. (2003). Towards value-based pricingAn integrative framework for decisionmaking. Industrial Marketing Management Science Direct. Retrived from:
http://www.quartetfest.ca/documents/12170/13.__Hinterhuber___Towards_value-based_pricing.pdf
Kotler, P. & Keller, K.L. (2012). Marketing Management. New Jersey: Prentice Hall.
Larse, N. (2010). Market Segment: A framework for determining the right target consumers. BAthesis. Aarhus School of Business. University in Aarhus, Denmark.

Our Brands. (n.d). In vf We Fit Your Life. Retrieved March 30, 2015, from:
http://www.vfc.com/brands
Tested in the Lab. Proven on Expedition. (n.d). In The North Face. Retrieved April 2, 2015, from:
http://thenorthface.hk/pages/research-development
The North Face. (n.d). In vf We Fit Your Life. Retrieved April 2, 2015, from:
http://www.vfc.com/brands/outdoor/the-north-face
The North Face Branches. (n.d.) In PRIMER Group of Companies. Retrieved April 6, 2015, from:
http://www.primergrp.com/Brand_page/tnf_pop.html
Torrance, J. (2014). Growing number of startup competitors is biggest threat to businesses. Real
Business. Retrieved from: http://realbusiness.co.uk/article/27360-growing-number-of-startupcompetitors-is-biggest-threat-to-businesses.
Travel and Tourism Industry. (n.d.) In Euromonitor International. Retrieved April 2, 2015, from:
http://www.euromonitor.com/search?txtSearch=travel+industry