Lululemon Case Study Analysis

Background

Lululemon is a Canadian based retail company specializing in athletic , yoga-inspired apparel for active men and women. It was founded in 1998 by Dennis "Chip" Wilson, with its first store opened in 2000. As of January 30, 2011, branded apparel was principally sold through 137 stores located in Canada, the United States and Australia. The company mission statement "Creating components for people to live longer, healthier, more fun lives" , is the core of its business module and corporate culture. Lululemon has demonstrated continuous growth and strong financial performance with a net revenue for the first two quarters of 2011 increasing 37% to $399.1 million from $290.5 million in the same period of fiscal 2010.

Internal Analysis

Strengths

Lululemon prides itself on using cutting edge quality fabrics that deliver maximum function, performance and athletic fit. Innovative features and styles such as high impact fabric "all-moisture wicking", flat seams, tear-out labels, and thumbholes on sleeves and pockets for credit cards, radio players and heart beat monitors make designs not just for athletes but also customers who desire everyday casual wear. A vertical retail strategy where company produces everything and sell in own stores allows company to gather more feedback from customers and maintain greater control of brand. Selective outside retailers, such as premium yoga studios, health clubs and fitness centers, represent brand ambassadors and though his sector accounted for only 2% revenue in 2010 it effectively builds brand awareness, specifically in new markets. Lululemon is positioned as premium brand with premium pricing, generally higher that similar workout apparel- average $50-60 for t-shirt and $100 for pants- caters to upper class consumers that can afford products even downturn economy. It chooses premium store locations in line with target markets- most recently launching the Madison Avenue location. The well-trained staff- known as educators undergo extensive training in first 3 months making them expert on the brand value and product knowledge. The community-centered marketing approach builds brand awareness and relationships through philanthropic and personalised activities.

Weaknesses

There is a weak brand recognition in the U.S on a national level due to the slow growth strategy and lack of mass marketing. The companies decentralized marketing strategy where each store has full control over their own message may alter the overall brand philosophy. Additionally, Lululemon may not be able to reach all potential consumers because of its limited retail outlets.

External Analysis

Opportunities

There are major possibilities for the brand including, international expansion in countries such as China, further developments of market segments-men and youth and strengthening US brand recognition and increasing growth in U.S market.

Threats

Lululemon has major competition including Nike, Adidas and Under Armour, with secodary competitiors Bebe stores, Jockey International, Liz Claiborne, Lucky Activewear and Gap (Hoovers,2011). Manufacturers such as Stella McCartney, Juicy Couture, and Norma Kamali, Nike and Adidas are pushing their sporting apparel lines with "an ever-increasing variety of styles that can go from gym to nightclub" (Plunkett, 2010). A lack of health focus in US makes market size relatively small and heavily focused word of mouth marketing strategy poses a lack of control of the core message.

Recommendations

Though Lululemon has a superb product, strong corporate culture and a committed following of customers, its individual approach to marketing has resulted in weak brand recognition in the US and a slow growth strategy. The company's marketing strategy is heavily focused on word of mouth and grass root marketing styles, making it essential to always be aware of the consumers experience and perception of the products/brand. Lululemon needs to focus on building more brand awareness and image positioning on both a local and national level, engaging current and potential customers and further develop customer loyalty. It is suggested that Lululemon hires an external PR and marketing firm that can develop and merge a mass marketing communication plan with the current strategies.