Bsam Outline - Lululemon Case Study

Natalya Smith-Njigba, Casey Donovan, Christina Kafkas, Maria Fernanda Castaneda                October 23, 2017

ENT-101 Section V

BSAM OUTLINE:  Lululemon

When and where are we in Time? (Firm location, and during what time frame does the case take place?

• The firm is located in Vancouver, Canada
• This case takes place roughly over the course of early 2013 into early 2014

Who are the Stakeholders? (Group them into categories and put them on the same line by category):

• Chip Wilson (Founder of Lululemon), Laurent Potdevin (CEO & CPO)
• Investors
• Employees
• Customers (In-Store and Online)

Industry Firm Competes In & Customer Target Market:

• Competing in the Yoga and Gym clothing industry
• Competing in the Fashion clothing industry
• Target market is geared towards athletically active people including health professionals
• Also appeals to everyday consumers looking for trendy fashion

Who is the Competition? (Group them into categories and put them on the same line by category):

• Other Athletic Brands such as Adidas, Nike, Athleta, and New Balance
• Brands producing different clothing (pants, shorts, skirts)

Assessment (Key Symptoms and Issues/Problems):

• Public lawsuits against company are tarnishing company’s reputation
• Founder alienating certain certain demographics with poor public relations
• Many key foundational upper management employees resigned/forced out
• Brand image being weakened by poor quality control

Analysis (The ONE Primary Problem):

• The excitement and trust of all customers including most loyal customer base is threatened through quality control issues and PR disasters that have tarnished the firm’s reputation resulting in declining profits.

Explain Best Alternatives and How They Will Help “Solve” the Singular Primary Problem Above:

Alternative #1: Engage in a “back to our roots” PR campaign with a simultaneous donation campaign similar to TOMS with a certain percentage of revenue going towards charitable causes. If marketed properly this should aid the firm’s public image, re-establish the company’s core mission to loyal customer base and distract the greater public from the issues currently facing the firm.

Alternative #2: Create new quality control testing for products before release. This will ensure that there are no quality issues such as the “sheer” problem faced by the pants included in the recall. The end result of this alternative is to re-establish the quality of the brand in customers’ minds and combat any future PR issues resulting from poor quality control.

Alternative #3 (BEST/FINAL): Ultimately the best option for the firm is to implement a blend of both alternatives while also working to establish new revenue streams in emerging markets. By entering emerging markets with their unique community based approach and high quality products the firm has a chance to leave a lasting first impression on an entirely new customer base, allowing them to start fresh without the baggage of their previous mistakes. To keep the trust and loyalty of existing customers the first step is to ensure the products are absolutely reliable and quality tested through extensive quality control measures. To change the negatively trending public image a “Back to Our Roots” campaign should help combat growing skepticism towards the direction of the brand while a temporary well marketed donation campaign should help cast a positive light on the company for the general public.

Implementation of Final Recommendation (Action Plan: Describe ways to put it in motion; its cost, timeline, specific details about the plan – Think through EVERYTHING):

• Hire new personnel with vast experience in quality control techniques throughout the clothing industry. Have new personnel work with manufacturers to create a new set of rigorous quality control testing to ensure that all products meet firm’s standards before shipping. The timeline to implement should begin immediately with an expected set of testing standards established within a few weeks and these standards passed along to each manufacturing site over the course of several months. Once standards are established, site managers should be required to perform “random tests” on products weekly to ensure the standards have not begun slacking. This step should not be particularly costly other than a temporary slowdown of production and adaptation period but should ensure 100% quality checked products to reassure customer base and avoid PR issues.
• A temporary “Back to Roots” marketing campaign should be created with the focus being on re-establishing stores as “community hubs”. This is both an advertising and physical store campaign with stores temporarily changing styling and employee attire to match that of the original stores. The advertising campaign should focus on what customers love about the Lululemon brand such as the distinctiveness of the product and the community and fitness expertise that make the brand experience so unique. A temporary but well marketed 3 month campaign donating 20% of the profits to a relevant charity such as diabetes awareness should help spread a positive image of the company. The costs associated with this step would be the 20% of profits given away through charity as well as the sizeable advertising outlay with the goal being to increase profits and stability long term through these investments.
• Once these steps are taken the next step towards further profitability would be to open new stores in emerging markets throughout the world. This would be done in select cities (such as London, Paris, Singapore, Madrid etc.) over a period of a year with thorough research done prior to ensure the markets are either already open to a trendy fitness store with high class products or are likely to be receptive to the cultural movement the Lululemon brand represents. The demographic associated would be upper class customers able to afford the products with enough free time to also become invested with the associated lifestyle and movement. By having unique customer experience through the brand’s distinct community driven approach there is a real opportunity to foster new customers in emerging markets that are driven by the overall experience and Lululemon lifestyle. This step would require substantial financial backing and a unified marketing campaign but represents a chance to create long lasting revenue streams in emerging markets that may be more receptive to cheaper, more well known brands unless quick action is taken to establish the firm in these locations.

Natalya Smith-Njigba, Casey Donovan, Christina Kafkas, Maria Fernanda Castaneda

ENT – 101-V

Lululemon SWOT Analysis

Strengths

1. Established brand identity and recognition
2. Loyal customer base
3. High quality and stylish products
4. Well trained and knowledgeable employee base
5. Strong local connections in communities

Weaknesses

1. Instability in upper management
2. Small product line (very little choice of products)
3. Narrow target demographic (athletic women)
4. Quality control issues

Opportunities

1. Expand product line to include more varied apparel
2. Emerging markets represent expansion opportunity
3. Growing demand for athletic wear
4. Regain trust of customer base to reignite interest

Threats

1. Increased competition from larger/cheaper well-known brands
2. Damaged product quality reputation threatening to alienate customer base
3. Public Lawsuits
4. Possible further resignations from key positions if company continues to decline
5. Declining profits