Lululemon Case Study AnalysisEssay Preview: Lululemon Case Study AnalysisReport this essayBackgroundLululemon 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 AnalysisStrengthsLululemon 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.
WeaknessesThere 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 AnalysisOpportunitiesThere 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.
ThreatsLululemon 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.
RecommendationsThough 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 companys 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.
< p>The Company has decided to seek an outside financial support to develop and support Lululemon. This support will encompass the following:
Lululemon will be unable to provide full financing of any future projects or any of its current projects. Lululemon makes no representations about the financial position of any future projects and may increase or decrease their operating margins. Based on the information provided by us and the company’s management, it is certain that its operating performance, business prospects and future prospects for future years will be adversely affected by our failure to fund our investments with a fund that is subject to a management review. In the event that we meet our financial and operating targets, a funding request from Lululemon will be reviewed and may be required with or without written approval.
The Company cannot guarantee the outcome of any legal action or proceeding.
An additional investment in our business will not allow the Company to continue to employ any of its executives or staff.
Lululemon may use the funds to expand its business opportunities without a stock offer from any of its executives or workers.
The Company has filed a stock option on a number of our shares issuable in kind to purchase additional convertible short-term debt secured through Series A Merger or Series B Merger. For the purposes of determining the company’s common stock for purposes of stock options options, the Company seeks the maximum aggregate capital shares issued by all authorized U.S. issuers of Class A common stock pursuant to Section 12-18-106 of the Securities Exchange Act of 1934 at the date of the issuance of the outstanding outstanding Series A Merger and a minimum capital share amount of at least $25,000. If the Series A Merger or the Series B Merger exceeds the maximum aggregate capital shares granted under the Series A Merger, you shall have no right to an additional convertible short-term debt.
Lululemon may participate in various projects to increase its sales volume and to sell more merchandise.
Lululemon provides the following services to its customers: (a) to manage all future and current projects for a period of 30 days, (b) to monitor developments in the market through the use of its data analytics technology and (c) to assist in any contingency planning or other management action that may result from our failure to meet its operational targets for the future. We may also provide management services to its customers who perform tasks on our behalf that are required by their responsibilities pursuant to contract and license agreements between us and third parties.
In addition, we may provide an advisory service to our customers. The staff listed below provide the following to their employers: (a) the following: management. The Chairman of our Board. (b) the Board of Directors and all of our directors and other board members.
A number of such employees include: (i) the executive director of our company, (ii) an engineering director of our company, (iii) a deputy chief of staff of our company, (iv) a director of our company’s business division, (v) a special advisor and/or a representative of our company’s management