Lululemon Athletica
Introduction
According to stokes (2009, p. 17), Lululemon was founded in 1998 by Chip Wilson in CANADA. The company has grown over the years and owns over 165 stores in different countries such as China, United States, and Australia. The company has specialized in Yoga and provide a line of clothing in different countries. They host different events from free yoga classes to self defence, which are conducted by professionals. This study, therefore, will analyze factors that need to be considered before the company expands into Spain, giving suggestions whether or not it should enter the Spanish market.
Industry Outlook
The industry that Lululemon Athletica is likely to operate in is highly competitive. The industry deals
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with fitness apparel with some of the well known established companies such as Under Armour, Nike, Champion, and Adidas. The customer base in the industry is also large and continues to grow every single day especially with women embracing sporting activities more in Spain. The Market The growth rate and the revenues of the firms in the industry are likely to have positive correlations.
Lululemon Athletica is likely to have a growth rate of 381% with Under Armour coming second at 128.67 and finally Nike at 20.84%. Since the size of the market is expected to grow, revenues are also expected to follow suit. In order for Lululemon Athletica to become a market leader, it needs to engage in development and research to come up with new products (MarketWatch, 2013).
Business Market Segments
The target market of Lululemon can be segmented based on different factors such as demography, geography, and psychography. However, the market is segmented mainly based on demography. Lululemon Athletica mainly targets men and women who have been motivated by personal fitness and health to undertake Yoga and other fitness programs. Spain is also popular for sporting activities such as basketball and football which require their jerseys to be produced and designed (Lamb, 2012, p. 363).
Nature of
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Competition The competition in the sports apparel industry is high due to a large number of competitors that provide different designs, variety, and prices. The industry leader is Nike, owning most of the market share followed by Under Armour at second and finally Adidas at third position. The other small competitors hold the rest of the share. Nike as the market leader has majorly two strengths. The company is highly innovative and has a stable cash flow. However, it also has weaknesses such as high costs of advertisements and bureaucratic tendencies. The other firms also incur high costs of advertisements due to high levels of competition (Lamb, 2012, p. 363). The competitors have majorly specialized in outdoor sporting wear especially football and basketball and ignored yoga that has lately become popular. Channels of Distribution Lululemon Athletica has various options when it comes to distributing its Yoga products.
The company could outsource these services from professional firms at a cost. The firm also has the option of opening retail outlets in different parts of Spain to improve the accessibility of its products. The other firms in the market have adopted an online distribution strategy for its customers to make purchases online. The companies also have superstores in shopping malls and highways to sell their products. Companies like Nike entered into contracts with other retailers to sell their products. Additionally, grey market is one of the challenges facing these firms. However, grey markets can be curbed through developing a comprehensive quality control program and developing a policy handling and inspection of a good. New entrants in the firm face a locked-up distribution channel due to high level of competition. New entrants, therefore, find it difficult to distribute their
products. Summary of Implications Despite the market being moderately attractive, it is growing, and companies expect high profits. Although the competition is high, Lululemon Athletica is still in a position to make high profits. Women in Spain are becoming more aware of Yoga, working out and a healthy lifestyle that everyone desires.
Finally, Lululemon also faces competition from active-wear giants, like Nike. Nike has introduced a yoga line, which they are in the process of expanding (Lutz, 2013). Nike proves to be a major rival because they have a greater reach to customers than Lululemon (Lutz, 2013). According to the Nike website, they are selling their yoga pants for $100.
Since 1998, Lululemon has transformed the way people dress to workout. Through innovative products and technical athletic fabrics, a brand was created to provide clothing for workouts such as yoga, running and cycling. Lululemon opened its first store in Vancouver in 2000 with the plan to have the store be a community hub for people to learn and discuss their physical fitness and overall health goals. As Lululemon was more than a store to provide products for consumers, their goal was to influence every person who walked into the store. A basic criterion for investment is Lululemon’s mission to create components for people to live longer, healthier, fun lives. All Lululemon locations maintain strong relationships with local communities and host in-store events such as complimentary yoga classes and goal-setting workshops.
Lululemon geographics have expanded into Asia, Africa, Europe, and have densified in North America with new openings of stores. The companies’ demographics have also expanded. Previously only focused on yogi’s, Lululemon is now focused on any one who sweats and is interested in athletic wear and the lifestyle it promotes. Lululemon also offers the same quality leggings to men and young females; one of Lululemon’s biggest market segmentation moments was when they opened their sister store Ivivva to market the same product to a younger female audience. However, they are still fixed on offering their products at a higher cost, meaning only customers who have money for discretionary products can purchase them; the high exclusiveness and quality has created a loyal fan base. The organization also continues to segment themselves as a leader in the health conscious market, promoting the better lifestyle with yoga ambassadors. With the rise of people being aware of their bodies, Lululemon fits perfectly into the new
Advertising Objectives: The advertising objectives for Lululemon are comprehension, desire, and action. Lululemon wants consumers to have a better understanding of the benefits and features of Lululemon so that the consumer differentiates them from their rivals. Lululemon also wants to further implement consumer desire. Once a consumer has an inclination towards Lululemon, it can become all they think about and this could lead to the final objective: action. Lululemon wants consumers to know that they have fashionable and high quality workout clothing compared to its competitors. The advertisement should affect consumer actions by convincing the consumer to abandon Lululemon’s competitors in favor of Lululemon.
Lululemon’s competitive strategy is broad differentiation due to the company expanding its target market and product line. Although Lululemon was initially established to satisfy the apparel needs of adult women who practice yoga, the company has widened its definition to
Lululemon, a premium yoga-focused retail chain, serves two market segments. One segment consists of consumers who are characterized as “trendy urban” and the other segment consists of “wealthy” consumers. The “trendy urban” segment, in summary, is fashion oriented or active women who live in metropolitan areas. The “wealthy” market segment is affluent women who live in either urban or suburban areas. As discussed below, these two market segments are defined by differences in demographics, geography as well as behavioral and psychographic characteristics.
Due to the good establishment of the business, it has huge market national. The company has therefore opened many retail shops and stores all over the country to ensure that their products are accessible to the customers. The entity provides a favorable environment, and many clients view the place as a fun shopping place to be. The retailer has targeted a big pool of customer because of the variety of products it sells. The stores products vary from kitchen goods, jewelry, and electronics clothes to hardware
Conclusion Since Lululemon started in 1998 they have expanded the company into North America and Australia and offered high end yoga products. Lululemon was able to corner the market in a market driven business, which has strengths and weaknesses to consider. This company could benefit from more aggressive advertising because they have such great brand recognition and consumer loyalty. With the retail market changing and more competitors entering the market, Lululemon needs to stay competitive and offer a broader spectrum of products and expand their markets into areas they already have great brand recognition. Lululemon takes pride in offering a high quality product and this company has changed the way the world sees yoga appeal today.
Nike’s goal is to remain unique and different from others in terms of the items offered on the market. Arguably, Nike belongs to a monopolistically competitive market as there only a few organizations with the ability to regulate the amount charged for their product which means they cannot make their prices high as this is likely to make customers move on to other available choices (Nike, Inc., 2012). However, Nike can find a balance between the prices to charge for their products and remaining competitive with other companies in the industry. Nike has formed a distinction between the appearance and performance of their footwear and that of their competitors. Although products are differentiated from other companies, they still influence each other because they are items of the same
Under Armour is a leading athletic clothing line directed towards the overall athlete who is looking for the most comfort during extracurricular activities. The mission of the company is, "to provide the world with technically advanced products engineered with exclusive fabric construction, supreme moisture management, and proven innovation. In short, every Under Armour product is doing something for you; it's making you better."
Under Armour has always set aggressive targets for themselves and they should not change that now. The leadership team believes that “a 3% share of the (athletic footwear) market would nearly double UA’s total revenue” (Wheelen, Hunger, Hoffman, & Bamford, 2015, 2012, 2010), and this should be another one of the metrics that Under Armour monitors and grows.
The sports apparel and accessories industry has a highly competitive market. Businesses are constantly competing for elite athletes to sponsor, raw materials, and every opportunity to expand. Under Armour is able to not only survive but thrive in this market because of their ability to think outside of the box. They are constantly creating new and exciting products that help athletes everywhere.
Many global companies like Nike, Inc. are seen as role models both in the market place as well as in society in large. That is why they are expected to act responsibly in their dealings with humanity and the natural world. Nike benefits from the global sourcing opportunities, therefore areas such as production and logistics have been outsourced to partner companies in low-wage countries like China, Vietnam, Indonesia and Thailand. As a result the company is limited nowadays to its core competencies of Design and Marketing.
The organization has had to ensure that it has retail stores in many countries globally and website options in more than 100 countries. The company further enhances access of online stores in more than 37 countries which is accessible all the time and people are able to access the services regardless of their location. Globalization further affects the organization in the sense of international market management which requires it to engage in strictly global decision making. The organization’s production networks have been geared to enhancing global competition (Lüsted, 2012) .The Company is further good when it comes to seizing the opportunities available in global market. For the organization to find efficient as well as cheap means of production, it has to bargain hard so as to allow its contractors to have low profits. This mostly is consequential to the suppliers cutting corners with the use of cheap
This implies that there is easy accessibility Spain particularly. The growth and modernization of the Spanish agro-food industry has paved the way for larger companies capable of competing internationally to expand their businesses. Also the Implementation of international distribution has been beneficial to export sector in Spain as it has enhanced the