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Five Key Elements Of Lululemon’s Strategy
There are five key elements of Lululemon’s strategy, which includes the following;
International Expansion: The primary strategic objective of Lululemon was to double its size in the United States by adding new stores in order to strengthen its presence while tapping the new geographical markets in Canada and North America.
Increased Brand Awareness: In order to enhance the brand awareness among people, Lululemon leveraged the marketing by opening up a new store with aggressive grass-roots marketing approach, which specifically exploits brand ambassadors such as yoga instructors and athletes. They effectively blend their brand equity and customer loyalty with grass-roots campaigning, which accents on organizing and partnering events with famous local fitness instructors and trainers.
Incorporation of Latest Product Technologies: Lululemon kept focusing on developing new and better products that incorporated the latest technology, improvised feature, and enriched fabrics that differentiate Lululemon from its competitors while expanding its customer base.
Extension in Lululemon’s Product Appeal: Lululemon expanded their product appeal by adding new product line of men apparel and expanding their product category with items like undergarments, outwear, sandals, skateboarding, snowboarding apparel, and athletic bags (Shaw n.d.).
Aggressive Focus on Grass-Root Marketing: Lululemon heavily accentuated on grass-root marketing by utilizing the brand ambassadors such as trainer, yoga instructors, and fitness coaches. This helped them to develop customer loyalty within a particular region by endorsing the local personages to promote the brand (Rupp & Murphy n.d.).
Lululemon’s Competitive Analysis Using Porter’s Five Forces Model
The intensity of Rivalry: Competition is fierce as there are numerous large brands and labels like Under Armour, Nike, Reebok, Adidas, as well as, smaller ones like Gap Athleta, Lole, and Lorna Jane etc.
Potential New Entrants: Barriers to entry are variable as they are low for the new entrants considering the funds and time. However, they are high for the big market players and designer labels such as GAP.
The threat of Substitutes: Threat of substitutes is moderate as a consumer may use any type of clothing such as shorts and pants that are not specifically intended for athletic purposes. However, quality would not be similar.
Bargaining Power of Buyers: Customers’ bargaining power is high due to their capacity of delaying purchase, availability of numerous brands, and low switching cost between substitutes.
Bargaining Power of Suppliers: Bargaining power of the suppliers is high as Lululemon is new and also has high investment. It wants to work with leading suppliers of the fabric and more than 90% of the production is in Asia that is resulting in power concentration (Shaw n.d.).
Lululemon’s SWOT Analysis
Strengths
Lululemon offers distinctive retailing experience to its customers.
Lululemon has an innovative process design.
Effective usage of grass-roots marketing strategy by endorsing fitness and health ambassadors.
High community involvement due to free yoga classes offered monthly.
Responsible market image due to green initiatives.
Enhanced brand identity (Shaw n.d.).
Weaknesses
Poor brand recognition due to a new market.
The supply chain is highly concentrated.
Gained negative attention of media.
Targeting instructors and fitness centers and not general customers.
Narrow product line (Shaw n.d.).
Opportunities
Increasing fitness trend can bring about additional customers and increase sales.
Increased preference of customers to blend fashion and fitness together make them demand and buy apparel of new design more often.
Threats
The intense rivalry as more high-end and larger brands and retailers are progressively capturing the market and also relish their better brand recognition and brand visibility.
Imitators and copy-cats are selling a similar product in even low prices.
The economy is highly dynamic with greater fluctuation in currency rates and fuels price posting fluctuating costs to business.
New entrants are offering better quality at highly competitive prices.
High risks of investment in new and emerging market niche.
The overall situation of Lululemon reveals that it currently holds quite a vigilant and guarded position in the market that it can sustain by effectively handling its existing and potential weaknesses and threat and by exploiting the available opportunities to the fullest using its strengths and resources. Lululemon can accomplish being one of the market leaders if it successfully manages its competition and convince customer to buy its product. It needs to keep its focus on marketing and converting their regular buyer into hardcore loyal customers (Shaw n.d.).
The contribution of Chip Wilson is remarkable for Lululemon as he is the man behind the primary success of the company. The success and initiation of the brand was solely because of the innovative idea of Wilson about the cotton fabric, which according to him was inefficient for workout. The primary requirement of a fabric was to be stretchable and breathable for highly flexible exercise routines like yoga. It is all during his time that Lululemon expanded to 147 stores. Yes, I believe that the exit by Wilson was good for Lululemon as his controversial statements were somehow hurting the brand image and also reflecting it as being objectifying feminine attributes for running a business. This has resulted in gaining considerable negative media attention. Ultimately, the consumer outrage caused Wilson to step down that helped Lululemon to sustain back its market reputation. I believe that the new founder would not face a high level of difficulty without Wilson because Day has already worked with Chip when he was serving as the chairman board. This shows that Day must have learned the values and core business vision from Chip. However, after taking the rein in 2012, she turned around the business goals and developed a revolutionary blend of management, retail, marketing, IT, procurement, design, and operation like other leading market brands. This shows that Day was capable enough of controlling the business on her own but obviously upholds the vision of Chip at large (Rupp & Murphy n.d.).
Lululemon is going to face two different types of experiences in the European and Asian market. European market is well-developed and somewhat saturated. Moreover, the European consumers are already hit by the fitness craze, which is addressed by the bigger brands and labels. This would primarily make it difficult for Lululemon to develop brand recognition, brand awareness, and brand loyalty. Additionally, it would also require Lululemon’ team to position the brand in customers’ mind in a way that they prefer it instead of its competition. Likewise, distribution and the stealing customer base from the competition would need aggressive penetrating endeavors from Lululemon. Contrarily, Asian market is still emerging and lately hit by the fitness trend, due to which, the customers are less aware and less involved in fitness routines. This means that although the Lululemon has an opportunity to exploit the market however, it would take long to persuade people buying fitness apparels and accessories. Moreover, the Asian market is found to be less adaptive in buying high-end products specifically in fitness apparel industry, which means that Lululemon will also come across the pricing challenge within Asian regions (Rupp & Murphy n.d.).
Lululemon, unfortunately, mishandled its ethical issues and faced the legislative procedures as well. For instance, in their case of hiding defect in sheer black pants, Wilson defended their product by blaming customer buying sizes that are too small and unfit for them resulting in sheering of the fabric. This resulted in consumer outrage, which made Wilson to step down. This shows that the brand handled its ethical issues with least courtesy. It is usually said the Lululemon’s culture is particularly cultish in its own way where employees were hired on the basis of Type ‘A’ personality graphs in order to have highly competitive individuals in the workforce who are concerned with personal achievements and improvements. The employees were also asked to write the future goals that are also posted to Lululemon’s store. This has made Lululemon’s employee and customer thinking of Lululemon as a cultish brand and its obsessiveness with greatness does not match the traditions of yoga based on the teaching of Hinduism and Buddhism. Moreover, the employees were forced to read the books on personality development recommended by Wilson, which made the employees to consider and respect Chip and his activities (Rupp & Murphy n.d.).
Works Cited
Rupp, L. and Murphy, L. Why analysts say Lululemon’s growth strategy is a stretch. Bloomberg News. 2013. Web. April 19, 2016
Shaw, H. Lululemon Athletica Inc founder Chip Wilson to step down, new CEO named as yoga-wear maker tries new management on for size. Bloomberg News. 2013. Web. April 19, 2016
