Lululemon Athletics

Issues

What strategies are most appropriate for Lululemon Athletics Company to have an edge in a competitive market?

How can Lululemon maintain a positive image of its brand amidst increased threats in the market?

What growth strategies can be adopted by Lululemon Athletics Company given the different challenges in the case?

Analysis

Competition

The clothing market in which Lululemon Athletics operates is very competitive since customers especially women have a variety of products from which to choose from.  This is indicated by the intensified competition in the active-wear category for women’s segment driven by heavy investment by Gap’s Ahtleta and Under Amour, the major competitors for Lululemon.  The firm may be losing its competitive edge because of changing tastes for customers, especially women who are fashion-conscious and might be getting tired of the look and looking for other types of casual wear. The loyalty of women to Lululemon’s products may be shifting to the other providers in the market results to loss of a competitive edge. The competitive edge of the firm in women’s active wear category  of the market which  had been defined by high quality clothing products  for yoga , other athletics and casual wear. For some time, the competitiveness of the firm had been based on the innovative and high quality clothing products that were protected by patents for the design.  The use of reusable bags by the firm with an aim of promoting positive and health living also placed the firm at an advantage place in the market. The strategy of limiting supplies and discouraging customers from waiting product releases and the pricing strategy were also major competitive strategies.  However, the competition presented by Under Armor and Gap’s Athleta by also targeting women requires that Lululemon has competitive strategies that will put it ahead in the market.

Lululemon’s brand image

The image of Lululemon’s brand has largely been positive driven by products with a cult-like following among its customers, but various situations have dented the brand.  The band’s image is built in the firm’s mission that involves creation of components for lives that are longer, healthier and fun.  The focus on the Japanese perception of the company by Wilson was the main driver of initial success among the Japanese investors.  The Ocean persona and Duke persona augured well with female and male customers so that the perception of the firm’s products has been positive. This drew women and men to their respectively categories of the products as they attributed their own experience to the characters presented in these personas. The brands image was therefore, built on innovative and high-quality products with unique and patented designs.  Various occurrences have dented the image of this brand. The questioning of validity of claims and quality of the product by asserting that VitaSea clothing were made of “anti-inflammatory, hydrating, anti-bacterial, detoxifying benefits” and from seaweed were proved to be false which dumped the brand’s reputation.  The recall of 17 % of the black-yoga pants because they were too shear had a negative impact, which was further worsened by the report of women being asked to wear the pants and bend over.   Complaints from customers on yoga tights being susceptible inner thigh fabric pilling led to recall of 300,000 tops due to metal and plastic tips could cause injury to the customers further dented the firm’s brand.  In addition, various controversial statements that Wilson made brought about damaging press coverage like mocking Japanese inability to pronounce the name of the firm and calling extra-large wear as money-loser further destroyed the brand image.  Negative comments about the bodies of some women elicited much criticism from customers.  With such issues being in the domain of the public who makes up the firm’s market , the brand image of the firm might have suffered a great deal .

Growth

By 2015, Lululemon was growing at a high rate, raking in $ 1.8 billion revenue due to high demand of its products.  The women’s wear segment was growing which can be related to this growth.  In the same year, the growth rate for the firm slowed which led to a decrease in earnings per share. The shift in the growth can be related to various problems experienced by the firm relating to quality of the product. While some analysts foresaw a situation where the firm might have enough room for growth for both men and women customer base, others shows shifting loyalty of women customers as a hindrance to this growth. The growth in men customer base may be hindered by men’s reluctance to buy a brand with a strong association with yoga and women customers.  The growth of the company is also complicated by the fact that main competitors, Gap’s Athleta and Under Amor embarked on a growth strategy targeting women customers, the main market segment forming the largest market share for Lululemon. However, the projected growth of the market in cloth retail industry (active-wear market) presents an opportunity for Lululemon to expand and grow its operations.

Recommendations

To gain an edge in a market that is becoming increasingly competitive, especially for the women market segment, Lululemon needs to adjust its products to fit the changing women needs. This involves redesigning the women wear so as to prevent the customers from shifting their attention towards competitors’ new designs. The firm also needs to  change the its approach sp that various products including sports , foot and  casual wears are made of high quality as indicated in packaging. High quality with better designed products will retain the loyalty of both men and women customers and the firm will have a competitive edge over its competitors.

To repair the image of the company’s brand, Lululemon needs to adopt an ethical code which forms a strategy of enhancing the reputation of products offered.  This involves communicating truthful about the product’s quality and function so as to avoid cases of recall and this will maintain a positive view of the firm’s products in the public. There is also a need to observe quality to avoiding confrontations with authorities which can negatively affect the image of the brand in the market.

The active-wear market is expected to grow, as continuation of the 2015 trend. This means that Lululemon needs to expand its reach of the market by including broad line of product designs that serves the changing market demand. As the competitors are focusing on women wear only leaves out an unexploited men wear market segment, Lululemon should offer a product line separate from female wear and exploit that market opportunity. Increased product category will also expand the market segment of female active wear.