lululemon case study recommendations

How Lululemon Athletica Beat Nike By Creating A New Category

Table of contents.

How did Lululemon go from one tiny yoga studio to becoming the official brunch uniform of women everywhere? Read on to learn about the impressive growth story of Lululemon.

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The Retail Experience

Founder Chip Wilson had 18 years of retail experience prior to Lululemon, as he'd previously built a surfing and snowboarding apparel company-  Westbeach back in 1979.

The company was relatively successful in the early days; mostly because of the market in Japan. The sub-brand Homeless did particularly well (Chip believed it was because of the letter L in the brand's name, which is a clear sign of American brand authenticity to the Japanese.)

But it was struggling nonetheless, Chip decided to sell the company for $15 million from which he was able to keep $1M. That was the basis of Lululemon.

“In Westbeach I made 2 million in two small vertical retail stores and I lost a million dollars on this global wholesale business. If I can deliver through vertical business at a price women will buy in volume."

Since the founder has had experience in snowboarding, skateboarding, and niche fitness apparel, he did not only learn from previous mistakes in the field but also gained access to journalists in the same field. Being one of the first in the field gave him the permission to become a sort of a de-facto person in all things related to surf, ski, skateboard, and yoga business.

Key takeaway #1

Healthy cash flow will give you the freedom to source the best materials and develop a relationship with distributors who will respect deadlines.

Emerging Trend

Business meetings with cigars and steak dinners have been replaced by 45-minute cycling classes at spin class, as Jason Kelly describes in his book Sweat Equity .

To think about it, how much are you spending each month to break a sweat? It used to be a $20 gym membership or putting on high school shorts and going out for a run or a game of pickup basketball.

The professional segment started to embrace the premium fitness classes as the place of business development. And if you pay $34 per spinning class or yoga sesh with the potential strategic partner you better change your business suit to professional athletic apparel.

Keith Ferrazzi, author of Never Eat Alone, a book about networking, suggests taking business partners with you to create a stronger bond and close more deals. Yoga joined the trend of high-priced fitness memberships with upper-class clientele. 

Members preferred smaller fitness classes with dynamic instructors because they felt more significant - as a part of the tribe. Once you start being a SoulCycle member, a Yoga practitioner, or a CrossFit firebreather, you also need to dress the part.

The Yoga industry has been growing steadily and hit 16 billion worldwide in 2021.

Building the product quality

It’s almost redundant to talk about the quality of the product since this is always the prerequisite for any company to move forward. At Lululemon, they went all-in on the design and the quality that resonates with their target persona (chapter 5).

The product line

• Design - Shannon Wilson (Chip’s wife) and Chip were both coming from the apparel design background. Chip was adamant about having stitches on all the right areas . He doesn’t hide the fact that yoga pants are intentionally designed to be as comfortable and as flattering to the female body curves.

• ‍ The Tech - Primary function of performance and fit has been achieved by the construction of the garment which hugs and promotes performance. Lululemon's’ apparel includes reversible, brushed, and textured fabric with a water repellent finish and Silverescent tech. ‍
• Materials - to add a special flair and solidify the brand, big brands “invent” their own technology. Lululemon calls itself a technical apparel company. That’s why Lulu yoga pants are made from engineered fabric (Luon™, Luxtreme™, Nulu™, Nulox™) depending on the compression level and the intention of the garment (run, train, or yoga practice).

These names aren’t just an easy way to differentiate from the competition but they also carry unique features.

Luon is 86 percent nylon and 14 percent lycra. VitaSea fabric is made from SeaCell. SeaCell is a yarn made from seaweed and blended with spandex and cotton. VitaSea allows for an ultra-soft fabric that holds its shape and stays soft after many washes. This can be found in the company’s t-shirts and light layers. Silverescent is an odor-stopping fabric technology. The X-Static technology is woven into Silverescent fabric bonds 99.9% pure silver into the surface of each fiber.

• R&D - besides having the internal designers and innovators working on the designs and fabric options, Lululemon innovates through customer feedback and their retail staff. Some Lululemon stores have a blackboard where customers can leave suggestions or share them with the staff. The store managers translate the gathered qualitative info back to Lululemon’s HQ in Vancouver. There are no focus groups or website data collecting. This (conscious) lack of data collection works great for Lululemon in product innovation: however, it hurts them a little on the e-commerce shop (more on that in part 2).
• Price - the quality justifies a high price tag, the target profile, and creates a healthy margin for expansion. Just like Apple, Tesla, and other premium products on the price matrix (high quality, high pricing), Lululemon products don’t typically have discounts. As that would be detrimental to the brand image.
• The practicality of it - As much as it is frowned upon (especially for men) to wear sweatpants as streetwear, Lululemon yoga pants doubled the activewear as streetwear, thanks to the design aspects of the product. The new trend was born - athleisure - more on that in the Law of Category chapter)

The incredible part about Lululemon is that they have done such an incredible job with the product, they really don't need to over-advertise the brand. — Robyn Young

Key takeaway #3 Your product has to both appear and be of quality and design. Make the perceived value be an actual value.

Nailing The Niche

In the book, 22 Immutable Laws of Marketing , the law of category states: “If you can’t be first in a category, set up a new category where you can be first."

Example: What’s the name of the third person to fly over the Atlantic Ocean solo? You probably don’t know. Yet you do. It’s Amelia Earhart. But she isn’t known for that. She is known as the first woman to do so.

Lululemon completely embodied the law of category. They stepped into the emerging trend of premium athletic apparel and targeted it directly at the yoga industry.

They picked a narrow field and focused on the target persona of middle to upper-class women who appreciate comfort and designer clothing.

If they’d just become another athletic apparel they would have to compete against Under Armour, Nike, and Adidas, which would be waging a losing battle. The Law of Duality from the same source says that in the long run, every market becomes a two-horse race (e.g. Pepsi and Coke or Samsung and Apple).

Lululemon yoga pants became an iconic piece of clothing of the fitness economy. In its utility and ubiquity, sleek and expensive epitomizes how fitness has shifted from Old Navy practical running shorts to a piece of apparel that tells the person and the observer who we are.

Key takeaway #4

Find a unique angle only your product provides. Be the first one in your niche.

The Cultural Shift & Target Profiles

While it seems like the founder, Chip Wilson was just at the right place at the right time, he actually used demographic data to predict the ripe environment for his idea to grow.

According to TedX’s talk, Chip expected a gap in the market that would serve his company in the talent section as well as in the customer audience.

Ocean and Duke- Lululemon’s customer personas

Many companies identify and create a profile of a perfect client. To embed it into the marketing heads, this illusionary person has a name. In Lululemon’s, these muses are Ocean and Duke.

Ocean is a smart 32-year-old woman, who is well-traveled, athletically fit with her own condo, and just about to be married. In the NY article, Wilson explains the observations in yoga classes. As he looked around the mostly female yoga class, he noticed that women wanted well-fitting athletic clothing that was also easy on the eyes. In his opinion, there will be a market segment of women that fits a specific target persona.

Are they hitting their customer persona audiences?

Absolutely — one quick insight from the demographics section of their websites tells us the majority of visitors are coming from 25 - 34 years old women.

Key takeaway #5

Know exactly who your customer is. The more detailed the better.

Happy Employees

Happy employees definitely help with the growth of your business and the representation of your brand. Lululemon takes special care of their talent. In the retail section, they pay over 30% of the local rate . The higher wages also mean less turnover and progression up the chain of command.

These are mostly younger, educated women straight out of college.

Every “educator” is asked to write multiple-year goals and share them publicly. Chip Wilson is also known to be a big proponent of the Landmark Forum program — a self-help personal development program that is supposed to help with the growth of your integrity and leadership capabilities.

On the HR end, Chip created an environment for women who can grow the company with their skillset, resourcefulness, and grit while still having a family life and time off for maternity leave. Since retail workers are usually underpaid (especially women) he decided to pay them much better so the workers would have a financial incentive to come back and continue working for Lululemon.

For all those reasons, Lululemon was is in the top 10 Best Places to Work in 2018 according to Glassdoor.

Key takeaway #6

Keep your staff happy.

Brand Image

In retail, a brand is of the utmost importance. We’ve already mentioned that people buy the identity more than just a product. There’s a problem with branding since there are so many intangibles connected with the term.

Once the company knows what it stands for - its values, what its audience cares for, and who they are, the decisions will come naturally. It sets the tone of how the company behaves, what is its voice.

According to Scott Kraft (CMO of Menlo), the brands start with brand pillars, which serve as a foundation of the company — the core values. We all know what MVP stands for — a product that with just enough features to satisfy initial pain points for core clients. But there’s an idea about MVB — minimum viable branding.

The key components of MVB are Audience needs and functional needs are the products’ domain. Real branding starts with the emotional benefits - the fuzzy area where we are touching our audience. Then you have the personality which determines how the customers are going to perceive you.

The difficult part is that the emotion, personality, promise, and vision are intangible. Lots of companies just pulled the nice adjective from thin air and put them on the about page. As you are going to find out, Lululemon took branding extremely seriously.

And it paid off better than anyone could have imagined.

What are the brand pillars?

What are the 3 attributes that the company couldn’t exist without? If you’d have to choose what three adjectives describes your company the most - what would they be?

For example, if we put together: American, Free, and Badass a brand like Harley-Davidson comes to mind.

Lululemon branding breakdown and personality

Lululemon is a brand that triggers an emotional impact. The point of branding is to bring people to the point of making somebody feel.

When you’re wearing Lululemon you will feel more beautiful, protective, cared for.

• Branding Pillars : Quality, Fun, Empowerment
• Top Audience : Women who do Yoga. Narrower Audience: Successful Women in their Early 30’s Doing Yoga who need gear designed for modern practice
• Emotional benefits - Feeling Vibrant, Sexy, and Balanced

All those components combined lead to Lululemon’s personality: A Cheerleader of the New “modern” Yogi

Lululemon built an amazing brand. Their customers are proud to show off their product on social media. They strut on the walkways with the company’s branded shopping bag with the manifesto printed on it.

Key takeaway #7

Spend time to develop your own MVB. Decide what are your pillars of branding, your top customer audience, their top 3 needs, and top 3 emotional benefits.

The Customer Experience

If there’s something we have learned from the companies that made their name for customer service is that it solves two major problems

First, It creates a foundation for the company culture. If ridiculously good customer service becomes a keystone habit in the company, it starts pulling all other positive elements in the big picture.

And second, it starts the word-of-mouth effect among customers. Best customer-faced salespeople establish personal relations first.

Finally, they lighten the mood and really take the time to get to know the potential client. Once the solid foundation is established, only then they move into the sales section.

Lululemon, as is expected for their incredible focus on company culture, translated that into customer service. Shopping at Lulu’s is an experience. The customers are asked by their first name before they go into the changing cabins. The retail salesperson (referred to as ‘educator’ in Lulu’s naming convention) scribbles the name on a tiny whiteboard and proceeds to address the customer by their first name.

For the whole procedure of the sale (customer success journey), the customers are called by their first name by the entire retail staff.

Consider the product they are selling. There are cheaper alternatives. But one of the core values at Lululemon is to feel significant. Hence the first-name basis, hence asking about the needs.

Sometimes they turn the entire store into a free yoga studio. These social pop-up events start building even more positive connections to the brand. What was that one class-based fitness craze that has been growing like crazy in the last 10 years? Oh yes, CrossFit.

The Lululemon's In-Store Yoga Class led by one of the brand ambassadors. | source: DrapersOnline

Combined with the quality of a product and having a sense of being in the premium circle the experience becomes addicting.

Since every store has only limited stock of products (thus creating a sense of limitation).

Key takeaway #8

Go out of your way to create a meaningful personal shopping experience.

The Ambassador Program

Adidas is paying millions of dollars to dress the biggest icons in the sport. Crossfit athletes and UFC fighters are wrapped in Reebok from head to toe and Nike puts on track spikes on every track athlete in the Summer Olympics.

There’s a clear necessity of putting an influencer, an icon, or an archetype of an avatar in front of people. These are usually charismatic celebrities in sports, entertainment, and even business.

When you target a narrow niche, especially in a hyper-local environment you have to take the local stars and put them on the pedestal. This strategy worked out great because it works in symbiosis. The local yoga and fitness coaches got exposed in the store, got free high-quality products to wear, and started growing their business. In return, they have to put in a number of hours inside the Lululemon retail stores and run free yoga classes and represent the brand.

Since Lululemon's has such a large reputation, the ambassadors are getting a significant surge in business. Some of the trainers and coaches are trying hard to become ambassadors.

Key takeaway #9

Identify the leaders of the community you are serving. Recruiting them by making them look better.

Social Marketing

If you would have to pick a social media channel and your audience are women interested in fitness and design aged between 25 and 35, what would you pick?

That’s right, Pinterest is known to have a massive female audience and Lulu is making a killing on it.

While it’s arguably a tough channel for selling, it does well for branding and inevitably serves as one of the touchpoints that leads to a sale.

2+ million followers on Pinterest - a social media with strong women audience base.

However, even though those numbers look fabulous, it works mostly in branding perspective. Hence the photos are high quality, professional, and highlighting the design features — perfect for saving them in a lookbook for the next Lululemon haul.

Unfortunately, they are not utilizing it as much as they could (more on that in the second part). This might be the result of Wilson’s persistence in an ethereal, transcendental conviction on branding alone and abstinence for numbers and data. His replacement Laurent Potdevin (ex-top of Burton Snowboards) incorporated a more data-driven approach which resulted in increased sales and better social media presence. But there are still opportunities.

Facebook and Tumblr are also doing okay, however, nothing too earth-shaking. The one thing that works really well though, is the symbiosis with the ambassador program. Each ambassador has its own social circle of influence which extends to the online reach.

The Instagram control center

Instagram proves as one of the biggest opportunities. The social media channel has just reached 1.074 billion monthly users and is great for branding and impulsive decisions.

Their account is filled with live events, motivational sayings, and no sales posts whatsoever. Those product-pushing posts are now a part of the stories section where people are more inclined to impulsive purchases.

With a 3.7m Instagram follower base , Lululemon developed multiple destinations where the brand followers can turn to.

Over 3 million Followers on Lululemon's Instagram account. 

• The Spotify soundtrack. Goal: Brand affiliation The keyword 'lululemon' in Spotify and Apple Music leads to Lululemon created a playlist for various workouts.

Goal : Brand affiliation

• The Desktop Instagram Dashboard With a click on the explore Lululemon , the Instagram desktop app will curate and duplicate the content of the original post wall into CTA funnels for each image. This is the service Lululemon is using for each post — Curalate . This is a regular Instagram post on desktop and mobile:

And this is the post with Curalate add-on with CTAs that lead to the online shop:

Upgraded Instagram with software that leads to online purchases

Goal : Multiple — Brand Experience and sales through events and residual word-of-mouth points from attendees

• The Instagram stories. There's more to the brand than just clothes. Lululemon developed a wholesome lifestyle catered towards modern yoga :

Fuel - Light nutritional recipes 

Discover - Upcoming trends What We Love - In-house weekly news of new product arrivals Visio+Goals - Motivational, goal-setting stories Travel - Travel tips and styles mixed with travel destination's inspirational imagery Workouts - Yoga sessions, HIIT classes, movement What's New - New products

IGTV - On the Instagram mobile app you will also find the newly launched IGTV section where Lululemon's shows off longer 20 minutes Yoga flows

Key takeaway #10 

If you’re using Social Media in your marketing strategy then use the one that has your target profile base

Brought to you by:

Lululemon Athletica

By: Alice M. Tybout

The case traces the development of Lululemon Athletica (Lulu) from founder Chip Wilson's first post-yoga euphoria in 1997 through the sale of all his shares in 2015. Officially founded in 1998, Lulu…

• Length: 10 page(s)
• Publication Date: Jun 13, 2017
• Discipline: Marketing
• Product #: KE1010-PDF-ENG

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The case traces the development of Lululemon Athletica (Lulu) from founder Chip Wilson's first post-yoga euphoria in 1997 through the sale of all his shares in 2015. Officially founded in 1998, Lulu was built on the foundation of its "miracle" figure-enhancing yoga pants made from a proprietary stretch fiber. The case outlines Wilson's early experience in technical performance wear, which gave him the expertise needed to launch the Lululemon brand with its premium-priced, fashion-designed product line targeted at upscale women. The case also highlights the retailing and promotion approach that drove Lulu's first decade of success. The snapshot of how the Lulu brand cult was born and diffused provides the backdrop for assessing whether the brand has already hit its peak or whether it can sustain the explosive growth that effectively created the athleisure category. To aid in this determination, the case presents two competitors as comparative foils (Under Armour and Athleta) to contextualize Lulu's growth prospects. The Lululemon case highlights the importance of the competitive frame of reference when positioning a brand and describes how this may differ for the three competitors. The case also allows for a discussion of the challenges of maintaining the congruence of a retail brand with a diverse product line. This struggle is unique to retailers who must fit ever-varied product assortments (not just a single product line) under the umbrella of a single brand proposition, and is particularly relevant to vertically integrated brands such as Lululemon.

Learning Objectives

After analyzing the case, students will be able to: analyze a brand's intended positioning and assess its alignment with product, pricing, distribution, and promotion decisions; apply positioning- and product-driven insights to plot and justify growth opportunities; and understand the strategic considerations in extending a successful niche brand into a larger market where it is likely to encounter new competitors.

Jun 13, 2017

Discipline:

Geographies:

Canada, United States

Industries:

Apparel industry

Kellogg School of Management

KE1010-PDF-ENG

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Values and goals of Lululemon

Lululemon embodies a set of core values and goals that differentiate it from competitors, focusing on delivering high-profile, healthy lifestyles to its customers. Some of the key values they uphold are:

1. Taking Personal Responsibility:

Lululemon encourages its employees to take ownership of their roles, strive for excellence, and continuously learn and grow. This empowers both the brand and its workforce, leading to improved performance and results. For example, the company invests in training employees to enhance their omnichannel capabilities and provides digital educators to assist customers in seamless online shopping.

2. Choosing to Have Fun:

Embracing their vision of living life to the fullest in healthy ways, Lululemon values the importance of having fun. They believe that a positive and joyful approach to life and work contributes to overall well-being and fulfillment.

3. Valuing Connection:

Lululemon places a significant emphasis on fostering connections, both with their customers and among their employees. They believe that strong connections cultivate brand loyalty and promote a sense of community. Initiatives like online sports challenges, such as Move and Stay Connected, enable people from around the world to connect and train together as a supportive community. Also their strong communication strategy with their customer base portrays their connection with their target market. We as an apparel marketing agency feel valuing connections among your customers is a very important aspect to consider.

4. Nurturing Entrepreneurial Spirit:

Innovation has always been at the heart of Lululemon’s identity. They actively encourage and support entrepreneurial ideas and thinking, continuously seeking fresh and unique approaches to stand out and excel in the market.

By adhering to these values and goals, Lululemon has carved a distinctive path in the industry, offering more than just products but an entire lifestyle that resonates with its customers and employees alike.

SWOT Analysis Of Lululemon:

Brand Reputation:

Lululemon has successfully positioned itself as a premium brand within the athletic apparel market, earning recognition for its top-notch products characterized by innovation, quality, and style.

This positive brand reputation has played a significant role in cultivating a devoted and loyal customer following.

Product Innovation:

Lululemon’s dedicated emphasis on research and development has led to the introduction of exclusive and proprietary fabrics like Luon and Nulu. These specialized materials offer unparalleled performance, comfort, and durability, setting Lululemon’s products apart from the competition and giving the company a distinct competitive advantage.

Community Engagement: Lululemon actively engages with its customers and local communities through various initiatives, such as the Ambassador Program, local events, and in-store classes. These efforts not only build strong relationships but also foster a sense of loyalty to the Lululemon brand, creating a vibrant and connected community.

Omni-Channel Presence: Lululemon has strategically established a strong retail presence across multiple channels, including physical stores, an e-commerce platform, and select partner locations. This well-rounded omnichannel strategy enables the company to reach a diverse customer base and offer a seamless shopping experience, catering to different preferences and needs.

High Price Points: Lululemon’s premium pricing strategy often sets its products at higher price points compared to competitors. As a result, price-conscious consumers may be deterred from purchasing their products, potentially limiting the company’s market reach, especially in price-sensitive markets or among budget-conscious shoppers.

Limited Target Demographic: Historically, Lululemon has primarily targeted affluent, fitness-oriented women. Although the company has taken steps to diversify its product offerings to appeal to a broader consumer base, there is still an opportunity for growth in capturing other market segments, such as lower-income individuals and a more extensive male audience. Notably, Lululemon’s largest market is North America, accounting for approximately 85% of its 2021 net revenue.

Dependence on Company-Owned Stores: Lululemon heavily relies on revenue generated from its company-owned stores, accounting for around 45% of its total revenue. This reliance makes the company vulnerable to fluctuations in foot traffic and consumer preferences for physical retail shopping. The impact of the COVID-19 pandemic on temporary store closures and reduced foot traffic exposed the risks associated with an overreliance on brick-and-mortar stores.

Opportunities:

Expanding Men’s Segment: Lululemon has the opportunity to further develop its presence in the men’s athletic apparel market. By creating innovative products tailored specifically for men and increasing targeted marketing efforts, the company can capture a larger share of this growing market and attract male customers to its brand.

Emerging Markets: Venturing into emerging markets, particularly in Asia and Latin America, presents Lululemon with a chance to tap into new customer bases and meet the rising demand for premium athletic apparel in these regions. This expansion not only diversifies revenue sources but also offers significant growth potential.

Product Diversification: Lululemon can explore diversifying its product portfolio beyond athletic apparel. Entering the footwear market or expanding its range of fitness accessories are avenues to consider. This diversification strategy could open up new customer segments and strengthen the company’s position in the broader fitness industry.

Intense Competition: Lululemon faces fierce competition in the athletic apparel market from established brands like Nike, Adidas, and Under Armour, as well as emerging players and fast-fashion retailers entering the athleisure space. This heightened competition can exert pressure on Lululemon’s market share, pricing capabilities, and profit margins.

Economic Conditions: Economic downturns or recessions can significantly impact consumer spending, especially on premium and discretionary items like Lululemon’s products. A weak economic environment may lead to reduced demand for the company’s offerings, potentially resulting in lower sales and revenue.

Changes in Consumer Preferences: The athletic apparel industry is highly influenced by evolving fashion trends and shifting consumer preferences. If Lululemon fails to anticipate and adapt to these changes, it risks losing market share to competitors who can better cater to the ever-changing desires of consumers. Staying attuned to shifting preferences is essential to maintaining a competitive edge in the market.

Lululemon USPs

Some things that make Lululemon stand out are its commitment to high-quality materials and its customer-centric approach, which allows for better innovation. At the core of Lululemon is a company obsessed with innovation. Those stretchy black leggings your friend is wearing aren’t just any leggings. They are pants which have been engineered for maximum performance. 

They wick away sweat, dry quickly, reduce bacteria causing odors and feel great. Lululemon has largely marketed its brand via word of mouth. It does this through its events but also through relationships with brand ambassadors. Before athleisure was even a word lululemon was making high-performance leggings. The lesson to be learnt from here is to always follow your instincts. 

Lululemon has a different approach to athleticwear which makes it different from other brands, they have premium quality products and apparel wear, priced high but still, it sets them apart from other brands.  Lululemon specializes in an in-store experience, many stores include built-in yoga studios, spin classes, and more. The ambiance is just excellent, and not pretentious. 

Company Summary of Lululemon

Lululemon was founded in Vancouver, Canada in 1998, it is a technical athletic apparel company for yoga, running, training, and other physical pursuits, in addition to clothing it also deals in accessories like bags, socks & yoga mats. While the company’s target audience was women initially, they expanded their audience to men and youth. They also opened a store for men

Lululemon’s marketing strategy has helped the company carve a niche for itself amongst its competitors. The company operates 521 stores worldwide, but products are also sold via e-commerce and digital sales as well as in health clubs and yoga centers. The company does not own any manufacturing benefits, it deals with certain suppliers to provide fabrics or produce its merchandise.

The company’s business strategy is based on promoting its “Lululemon Athletica”-branded products as stepping stones to an active and delightful lifestyle, this has been a tremendous idea as they have the upper hand in pricing their products at a premium. Following this marketing strategy Lululemon has been able to attract a loyal Lululemon target market. considering it is known for high-quality, innovative & stylish products. 

Lululemon has an omnichannel presence through its physical stores, e-commerce platforms, and select partner locations, this factor allows Lululemon to cater to a large audience worldwide including loyal customers, and providing them a seamless shopping experience.

Lululemon’s Advertising Strategy

Community Building: Lululemon fosters a sense of community among its customers by organizing fitness classes, workshops, and events at their retail stores. They also host online communities and forums where people can share their fitness journeys and experiences.

Branding and Lifestyle Marketing: Lululemon emphasizes the idea of a healthy and active lifestyle, positioning itself as a premium brand that caters to fitness enthusiasts and individuals seeking a balanced, healthy life. Their advertisements often feature active individuals engaged in yoga, running, gym workouts, or other fitness activities.

Influencer Marketing: The company collaborates with fitness influencers, athletes, and celebrities to promote their products. These influencers often share their experiences and showcase Lululemon gear, creating brand awareness and driving sales through their substantial follower base.

Social Media Engagement: Lululemon has a strong presence on social media platforms like Instagram, Facebook, Twitter, and YouTube. They use these channels to showcase their products, connect with their target audience, and promote fitness-related content, events, and campaigns.

Product-focused Campaigns: Lululemon occasionally launches advertising campaigns centered around specific product launches or collections. They highlight the unique features and benefits of their apparel, often using aesthetically appealing visuals and storytelling.

These marketing strategies have proven to be highly effective for Lululemon in building a loyal customer base and enhancing brand visibility. The emphasis on a healthy lifestyle in their branding and advertisements resonates with their target audience, positioning Lululemon as a premium brand that complements their fitness aspirations. Overall, Lululemon’s combination of community building, lifestyle marketing, influencer partnerships, social media engagement, and product-focused campaigns has created a holistic and impactful approach to marketing, making them a dominant force in the activewear industry.

Overall, Lululemon’s marketing strategy serves as an inspiration for businesses aiming to elevate their brands and cultivate a closely-knit and engaged customer community. By prioritizing innovation, customer satisfaction, and meaningful connections, brands can stand out and thrive in a competitive market. Lululemon’s success lies in a well-crafted fashion marketing strategy 

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Lululemon Athletica – Case Solution

This case study discusses the development of Lululemon Athletica (Lulu) which was founded by Chip Wilson in 1998. Competing with Under Armour and Athleta, Lulu must find effective strategies to catch up with its rivals. This case study proposes suggestions and recommendations for the company to take to increase its growth and keep on pace with its competitors.

​Alice M. Tybout Harvard Business Review ( KE1010-PDF-ENG ) June 13, 2017

Case questions answered:

• What is the central issue in this Lululemon Athletica case study?
• What are the alternative solutions?
• What is your recommendation?

Not the questions you were looking for? Submit your own questions & get answers .

Lululemon Athletica Case Answers

Executive summary – lululemon athletica.

Lululemon Athletica takes pride in its products and has patents on its design and engineering to back that. With a background in stretch fabric and durable clothing, Chip Wilson was not new to the playing field. He held an extensive knowledge base in activewear materials.

Rivaling companies such as Under Armour, which had revenue of $3.96 billion in 2015, and Athleta, which had over 100 stores by 2015, Lululemon had some catching up to do.

With a revenue of $1.8 billion in 2015, the company needed to develop a growth strategy to surpass its competition. To see an increase in the growth of their business, Lululemon Athletica should broaden its target market by growing its men’s line and expanding to international markets.

The company also has accounts of customers questioning its product quality and integrity as a company. To promote growth, the company should also look at its brand awareness and company culture. By improving these aspects, they will create a more welcoming atmosphere and likely invite added sales.

Fundamental Issues

Having much of my family in Canada, I was exposed to Lululemon Athletica at a very young age. The brand was all the hype when I was in sixth grade; every young female I knew was wearing it.

Lululemon Athletica’s target audience is affluent 18-34-year-old women who are health-conscious, fit, and fashion-forward. Their target market persona, “Ocean,” is a 32-year-old single female who is a career-driven person and makes a $100,000 salary. The problem with this target segment is that it leaves out an entire gender that may be equally enthused by yoga and other sports activities.

The fundamental issue that the company must consider is how to promote the growth of their business to increase their bottom line. Lululemon Athletica should reevaluate its core audience and decide whether to expand it or remain consistent with its original target segment.

An analysis of the marketing mix will provide a deeper understanding of the company.

Alternate Solutions

Lululemon Athletica has a number of avenues that it may take to stimulate growth. The first one is to expand their women’s line further. The company offers activewear in the form of leggings, yoga pants, tops, and jackets.

They may expand this line by adding products such as socks, beanies, visors, outfits specific to certain sports, and business casual clothing that is still comfortable. That is, they may add dress pants that are made from the same stretchy material to provide a comfortable yet professional look.

In going this route, Lululemon Athletica may experience growth due to its product portfolio expanding. Also, in going with this method, they will continue to target the same segment as they have been doing originally.

Although this may speed up growth, they will likely not acquire new customers from just this. Women who shop here already will possibly consider the expanded line of products and shop them, but other women who purchase dress pants from, say, Banana Republic will not go out of their way to spend more money on a brand that specifically caters to female yogis.

Another alternative would be for Lululemon Athletica to…

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Publication date: 13 June 2017

Teaching notes

The case traces the development of Lululemon Athletica (Lulu) from founder Chip Wilson's first post-yoga euphoria in 1997 through the sale of all his shares in 2015. Officially founded in 1998, Lulu was built on the foundation of its “miracle” figure-enhancing yoga pants made from a proprietary stretch fiber. The case outlines Wilson's early experience in technical performance wear, which gave him the expertise needed to launch the Lululemon brand with its premium-priced, fashion-designed product line targeted at upscale women. The case also highlights the retailing and promotion approach that drove Lulu's first decade of success. The snapshot of how the Lulu brand cult was born and diffused provides the backdrop for assessing whether the brand has already hit its peak or whether it can sustain the explosive growth that effectively created the athleisure category. To aid in this determination, the case presents two competitors as comparative foils (Under Armour and Athleta) to contextualize Lulu's growth prospects.

The Lululemon case highlights the importance of the competitive frame of reference when positioning a brand and describes how this may differ for the three competitors. The case also allows for a discussion of the challenges of maintaining the congruence of a retail brand with a diverse product line. This struggle is unique to retailers who must fit ever-varied product assortments (not just a single product line) under the umbrella of a single brand proposition, and is particularly relevant to vertically integrated brands such as Lululemon.

• Consumer Marketing
• Customer Service
• Distribution Channels
• Marketing Communications
• Marketing Strategy
• Service Strategy
• Strategic Positioning

Tybout, A.M. (2017), "Lululemon Athletica", . https://doi.org/10.1108/case.kellogg.2021.000029

Kellogg School of Management

Copyright © 2017, The Kellogg School of Management at Northwestern University

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The Zen of Marketing: A Case Study from Lululemon

• Shama Hyder
• June 8, 2023

The mid-2000s: when social media was just starting to emerge, platforms like TikTok and Instagram were non-existent, and the iTunes store wasn’t even a blip on the radar. It was a time of uncertainty for marketers, as the old rules of marketing simply wouldn’t cut it in this new digital era. Companies who treated these new platforms like mere billboards found their efforts backfiring, with their messages lost in the noise.

But here’s the thing: those who embraced the new ecosystem and understood that marketing in this era was like a graceful jiu-jitsu move, or even a state of zen, found unprecedented success. They realized that going with the current instead of fighting against it made everything easier. They understood the power of not swimming against the tide and not resisting the current.

In fact, some of our best B2B PR campaigns thrived because we went with the situation instead of against it. Whether it was seizing a political moment with a viral open letter or persuading a major financial institution to steer clear of finances , these campaigns stand as shining examples of our best work.

Another recent example exemplifies this zen approach to marketing: the story of Lululemon, the $50 billion athleisure brand. Like many other major brands, Lululemon faced a unique challenge: the rise of knock-offs, also known as “dupes.”

Undoubtedly, Lululemon and other brands lose sales to these dupes. The traditional response would be to fight back, engage in legal battles, and protect their turf. But Lululemon, with its zen-inspired mindset, chose a different path. Instead of resisting the dupe trend, they found a way to make it work in their favor. They turned the tables on the situation, leveraging it as an opportunity to strengthen their brand and engage their customers in a remarkable way.

The lessons learned from their story extend beyond consumer brands; they can be applied to the world of B2B marketing as well.

The Challenge Faced by Lululemon

Dupes became more than just a nuisance. They evolved into a full-blown trend, especially among the influential Gen Z crowd. It’s like a game for them, discovering and flaunting these knock-offs like a badge of honor. The media caught on, and articles like “11 Best Lululemon Dupes on Amazon” suddenly made waves.

Social media platforms became the battleground for dupe enthusiasts. TikTok alone boasted a mind-boggling 3.5 billion views under the #dupe hashtag, while #lululemondupes racked up an astounding 150 million views. That’s right, millions of eyeballs were feasting on content related to Lululemon dupes.

Traditionally, a brand facing such a challenge would go in, guns blazing, ready to unleash legal wrath and protect its territory. But not Lululemon. No, they took a different path, a calmer approach. 

Lululemon organized a bold move—a “Dupe Swap” event right at their Los Angeles store. They invited customers to bring in their knock-off Align pants and swap them for authentic ones. It was a gamble, but not a blind one. Despite the millions of dupes being sold and the insane amount of dupe-related views, the Align pants remained best-sellers for Lululemon.

They had faith in their strong brand culture, online and in-store communities, fitness and yoga resources, relatable ambassadors, and, of course, the quality of their products. They believed that all of these elements combined would shine brighter than any knock-off and convince people to choose the real deal.

In a world defined by deafening noise, Lululemon understood that the ultimate moat was its brand and community. They embraced the challenge, confident in their ability to sway the audience and build a loyal following.

According to Lululemon, a whopping 50% of the participants in the Dupe Swap event were new customers, with half of them under the age of 30. They not only engaged their existing customers but also attracted a whole new audience in the process.

B2B marketers can take a page out of Lululemon’s book. How many times have your prospects complained about those gate-kept reports that require more personal information than a secret agent’s dossier?

It’s time to take a step back, reassess, and ask yourself: What are you fighting that you could be using to your advantage? That’s the Zen way. It’s about finding hidden opportunities, embracing the challenges, and turning them into your secret weapons.

Embracing the Zen Way: Unleashing Your Marketing Potential

Take a moment to reflect on your current marketing efforts. Are there any battles you find yourself constantly fighting? Are there challenges or trends that you’ve been resisting instead of embracing? It’s time to identify those roadblocks and shift your mindset.

Remember, marketing is like a dance. It’s about finding that perfect rhythm and synchronizing your moves with the beat of the market. The Zen approach teaches us to let go of resistance and tap into the natural currents that surround us.

Here are some key principles of the Zen way that you can start implementing in your marketing strategy:

Awareness : Tune in to the pulse of your target audience. Stay updated on the latest trends, social media platforms, and cultural shifts. Understanding their needs, desires, and preferences is crucial to create campaigns that truly resonate.

Adaptability : Be ready to adapt and pivot. The marketing landscape is ever-evolving, and what worked yesterday may not work today. Embrace change, experiment with new approaches, and be open to trying different marketing tactics .

Authenticity : Your brand’s authenticity is your superpower. Build a strong brand culture, foster genuine connections with your audience, and let your values shine through. When you stay true to who you are, you create a magnetic force that attracts loyal customers.

Community : Nurture a vibrant and engaged community around your brand. Create spaces, both online and offline, where your audience can connect, share their experiences, and become advocates for your brand. A strong community acts as a shield against any challengers.

Innovation : Don’t be afraid to push boundaries and think outside the box. The Zen way encourages creativity and innovation. Look for unconventional solutions, explore new channels, and surprise your audience with fresh ideas that capture their attention.

Listening : Practice active listening. Pay attention to what your customers are saying, both directly and indirectly. Their feedback and insights can guide you in refining your products, services, and marketing strategies.

Balance : Find the delicate balance between being proactive and responsive. While having a clear vision and strategic direction is important, it is also important to be flexible enough to adapt to feedback and market dynamics. Balance is the key to maintaining harmony in your marketing efforts.

Remember, the Zen way is not a one-time strategy. It’s a mindset, a continuous practice of aligning yourself with the currents of the market. Embrace the challenges, find the hidden opportunities, and let your marketing efforts flow effortlessly.

Ready to really embrace Zen marketing? Reach out.  

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11.4 Lululemon Marketing Strategy and Plan

Having taken an entire course and developed your own global marketing plan, you’re well on your way to being an expert student of marketing. While the experience of developing and presenting a marketing plan for a class may seem far removed from the “real thing,” rest assured that the key elements, structure, and basic layout of your plan aren’t contrived at all. Below is an example of a real marketing plan so you can see what one looks like for Lululemon.

Introduction and Executive Summary

This report proposes a marketing strategy and plan for Lululemon Athletica,  focusing on their Wunder Under product line. In summary, this report concludes that Lululemon should undertake several initiatives to strengthen its position in the market. This report includes a situation analysis, a look at Lululemon’s strategy, tactics, implementation, and financials.

Lululemon Overview, Vision, Mission, and Plan Scope

Lululemon sells yoga and exercise apparel and they have found success in marketing a lifestyle rather than a product. Lululemon’s mission statement is “to elevate the world from mediocrity to greatness.” The mission statement comprises of these components: improving lives, improving health, and exceeding expectations. Lululemon is passionate when it comes to initiating long-lasting changes in everyone that uses their products. Lululemon’s vision statement is “to be the experimental brand that ignites a community of people living the sweat life through sweat, grow and connect.” The statement consists of the following components: exceptional brand, ignite communities through sweat, and create connections. Lululemon prioritizes quality over quantity to provide value to their customers (Mission Statement Academy, 2019).

The scope of this plan includes a look at Wunder Under, a legging product line. Wunder Unders are leggings that are meant to make you feel empowered while having a snug waistline, lots of support and they offer them in many lengths (Lululemon Athletica, 2020). They sell their products in 440 company- owned stores in 15 countries. They also sell online and via mobile apps where they offer many products and services (Dun & Bradstreet, 2019). Most of their stores operate in North America. Lululemon is focused on international expansion, especially in the Asia-Pacific region. They are hoping to introduce Wunder Unders into the Chinese Market.

Lululemon Goals, Strategies and Budget

Lululemon has many goals they hope to achieve. These include:

• Identify retail locations to open new stores and attract new customers.
• Provide customers with new products.
• Sustain their brand image.
• Achieve growth and maintain cash flow.
• Increase sales of current stores.
• Operate efficiently in all departments.
• Keep their dedicated and experienced staff (Ghani, 2015)

Lululemon’s strategy allows them to become one of the major players in athletic apparel. To achieve its goals, Lululemon uses three main strategies.

• Innovation forever- they have a very active Research and Development department and are always looking to get new and improved products to their customers.
• Interactive digital marketing- they portray their brand as essential for athletic teams, fitness facilities and yoga studios.
• Expanding the market by launching new product lines in different regions – while Lululemon has been very successful in North America, they hope to expand their marketing to China (Business Strategy Hub, 2019).

Lululemon had a total revenue of $3.29 billion in 2018. Of that, 65% of it came from their own stores. Lululemon’s sales have jumped with the rising popularity of yoga and their improved brand awareness. They have almost doubled from $1.8 billion in 2014 to $3.3 billion in 2018 and net income has had a similar outcome (Dun & Bradstreet, 2019).

Strategic Analysis

The following selection describes the market, the competition, a SWOT analysis of Lululemon, Lululemon’s’ customers, as well as its products and services.

Lululemon Market Analysis

Lululemon’s leggings operate in the technical athletic wear market made up of women ages 20-40 across the world. Currently, 70% of Lululemon’s sales revenue comes from the USA, 15% comes from Canada and Australia, and the rest are dispersed between European and Asia-Pacific countries(Dun & Bradstreet, 2019). Out of its 440 stores worldwide, 235 locations are in the USA alone, 64 in Canada and only 22 stores operate in China (Dun & Bradstreet, 2019). The rest are in Europe and other Asian-Pacific counties. We estimate the total addressable market to be worth $197.35 billion in revenue worldwide. We further estimate the market penetration to be 59.8% . We further estimate that Lululemon’s market share is 2.7%.

We further defined the market for the following categories

• Qualified customers not buying anything. China is an untapped market for Lululemon, and it currently makes up less than a percent of their total revenue. This number reflects the potential revenue in this market based on the average amount spent / year by Lululemon consumers ($200) multiplied by 25% of the Chinese population (348 250 000) which is $69.65 billion in sales revenue.
• Lululemon’s current customer base $3.2 billion in sale revenue.
• Customers buying from Lululemon and all competitors $118 billion in sales revenue.
• Customers buying exclusively from direct competitors Adidas, NIKE and Under Armour $6.5 billion in sales revenue.

Lululemon Competitive Analysis

Lululemon’s healthy lifestyle inspired athletic apparel and accessories are marketed under the Lululemon brand. They offer a comprehensive line of apparel and accessories for women and men. Their apparel assortment includes items such as pants, shorts, tops, and leggings designed for a healthy lifestyle including activities such as yoga, running, training, and other sweaty pursuits. They also offer fitness- related accessories. Through their vertical retail strategy and direct connection with guests, we can collect feedback and incorporate unique performance and fashion needs into the design process. This way, they can solve problems for their guests. Advance product lines differentiate them from the competition. Lululemon benefits from the growing number of people that participate in yoga, they believe the percentage of their products sold for other activities will continue to increase as they broaden product range (Farooq, 2018).

Lululemon SWOT analysis

We have undertaken a SWOT analysis for Lululemon in the context of our scope and discovered the following:

Product Quality

Lululemon focuses on producing the highest quality of all the products in the market. They have designed their products to last for years. Lululemon has patented 45 materials and has trademarked their products and fabric names to protect them from being copied from competitors (Quiroz, 2018).

Price Point

Lululemon focuses on ensuring that they have made a superior quality product (CPG, FMCG & Retail, 2019). This means that Lululemon has higher pricing points than their competitors. Although in some countries this fact may seem like a weakness, when relating it to the Chinese market it is a strength. In China, people are willing to pay more for “luxury products” with “superior quality” so Lululemon’s price point is a great fit.

Brand Presence

In North America, Lululemon has a strong presence and relies a lot on customer loyalty, word of mouth, and their trained sales associates to sell their products. However, in China Lululemon doesn’t have a strong brand presence, and cannot rely on it for marketing. Instead, Lululemon needs to adapt and become more focused on digital and mobile marketing to tailor itself towards Chinese consumers.

Lack of Customer Base

Lululemon has not expanded into China enough to engage with the customers the way they do in the US. This results in a lack of customer base and customer loyalty.

Opportunities

Global expansion.

Lululemon currently has many retail stores, only a few of them operate outside of North America though. This leaves Lululemon with a lot of room to expand and grow in markets like Europe, and Asia. Although Lululemon has an e-commerce site and an ability to sell their products to those countries already, Lululemon sees more revenue when there is a store in place. This means that expanding the number of retail stores in foreign markets could increase their opportunities for sales.

E-Commerce Expansion

Lululemon currently runs an e-commerce website where you can buy many of their products online, however, most of Lululemon’s revenues come from their retail locations. Lululemon could invest in more services for their website to grow online sales in China and give their guests an omnichannel experience by creating content on platforms exclusive to China.

Growing Industry

Mintel, an international marketing agency has estimated that the value of the sportswear industry in China will reach up to 2200 billion before 2020. The quality of life in China is also advancing, and they are continuing to see a growth in health and fitness consumers. This makes it a very good time for Lululemon to continue expanding into the Chinese market (Who Knows China, 2020).

Competition

When it comes to Lululemon’s Wunder Under leggings there is a lot of competition in the market. For example, Nike has a line of leggings called the “one tight” these leggings closely resemble that of Lululemon. Under Armour, Gymshark and Adidas are also some brands that have made similar leggings to Lululemon. Although their competitors leggings are high-priced, Lululemon has the highest price out of all of them (Lululemon Athletica, 2020).

Counterfeit Product

With Lululemon’s high price-point and overall brand image, many people have started to try to create “dupe leggings” and sell them at much lower prices than Lululemon does. For example, brands like Queenieke, and Occffy, sell their leggings directly through Amazon for $29.99, and claim they are exactly like Lululemon’s leggings (Amazon, n.d.).

Lululemon Target Customer Description

Lululemon’s primary and largest customer group is made up of women. This is the typical ideal customer of North America is a 32-year-old professional single woman named Ocean, who makes $100,000 a year. Ocean is also engaged, has her condo, is travelling, fashionable, has an hour and a half to work out a day. The woman is so aspirational because “If you’re 20 years old or you’re graduating from university, you can’t wait to be that woman,” Wilson said. “If you’re 42 years old with a couple of children, you wish you had that time back (Lutz, 2015).

Lululemon Typical Customer

Based on the cultural values in China, we have created a persona for the typical customer for the Wunder Unders.

Breeze is a professional in her twenties, and she is successful in her career. In her downtime, she focuses on her health and fitness. She has some extra money to spend and looks for quality products and a recognizable brand to sweat in during her favourite yoga practices.

Lululemon Customer Buying Process

The typical Chinese consumer behaves very differently in their buying process than the North American consumer. The typical consumer starts their product search online and takes their time to research to ensure products meet their needs (Digital Crew Insights and Analysis, 2019). These are the steps taken to make a purchase:

• Product Search Consumers search on popular Chinese platforms such as Tmall and Baidu. Tmall is a platform for local Chinese and international businesses to sell brand name goods to consumers in mainland China, Hong Kong, Macau and Taiwan. It is the world’s second-largest e-commerce website and it has over 500 million monthly active users  (Digital Marketing to China, 2019). This website is a great platform for Lululemon to communicate the features and benefits of their product, showcase product video content, and list where the products can be found. Baidu is a search engine similar to google. It provides many of the same services as google such as mapping, AI and digital advertising. Chinese consumers will also visit the brands’ official website for additional information. The typical consumer is highly influenced by online and social media content, with 90% of consumers saying they have purchased a product based on their search (Digital Marketing to China, 2019). Currently, Lululemon has a small presence on the TMall channel and has room to grow.
• Product Testing Although the typical consumer does their research online, they will go to showrooms and brick and mortar stores to test the product. Lululemon has 38 stores operating in China for consumers to test product quality.
• Product Comparison Consumers are likely to shop in showrooms and online looking for the best deal, before committing to a product (Digital Crew Insights and Analysis, 2019). Lululemon is exclusive to its stores and has trademarked all of its material and patterns. This makes it difficult to find a comparable product quality for a lower price.
• Product Purchase Based on the consumers’ experience in the product testing they will buy the product in-store or on their mobile phone.
• Post Purchase Behaviour If the consumer is fully content with a product, they will keep the product, and perhaps re-buy in a different style or pattern if they believe in the quality and brand after use. They will also be inclined to engage in online activities with the brand (Digital Crew Insights and Analysis, 2019). It is also important to note that there is a high rate of product return with online shopping. For those consumers who can’t make it to a showroom, the behaviour tends to be a bulk purchase to test products at home, and then return most of the product (Digital Crew Insights and Analysis, 2019).

Lululemon Product and Service Analysis

The following describes the products and service analysis of Lululemon’s Wunder-Under leggings and services relative to the competition brands such as Nike One Tight. Lululemon is a brand that is proud to be environmentally friendly, its distribution centres have a recycling rate of 86% and their recycling and compost program has a 70% recycling rate. When buying Lululemon ‘Wunder-Under” leggings from a store you’ll be given them in 25% recycled reusable bag, which is 100% disposable. ‘Wunder-Under Leggings’ are made of 86% nylon and 14% Lycra. These leggings were created because Chip and Shannon Wilson noticed how poorly cotton-based clothing worked while working out and doing yoga. These leggings are machine washable and the only thing Lululemon advises consumers of is to wash them in cold water to keep the colour and shape longer. Consumers love them, the only thing they don’t love is how thin the material is, but that is one of the reasons they are best for yoga and working out. Lululemon also offers free tailoring or replacement of items when the seams come loose or undone (Kalpazanova, 2016).

Nike One Tights are designed for all-day wear, they are made of 83% polyester and 17% elastane with a mid-rise waistband to feel snug and secure. It’s made from 50% recycled polyester fabric, which comes from plastic bottles that Nike diverted from landfills since 2010. Nike uses a Dri-fit technology to help keep the consumer dry and comfortable during their workout or everyday activities. They have a pocket located on the back of the waistband big enough to hold a phone and a small pocket in the front of the waistband to hold cash or keys (Nike, n.d.).

Nike is one of the most well-known and trusted brands around the world whereas Lululemon is still trying to create that fan base. Nike’s consumers have a wide range of options to choose from, women’s and men’s loungewear, workout wear, shoes and so on whereas Lululemon is still only truly tailored to men’s and women’s workout and yoga gear.

Where we perform the weakest relative to our competition is in the following product and services features and benefits:

Modifications to these product features will form the basis of our marketing strategy. Lululemon could add the following product features to improve their product and stand stronger against the competition:

Lululemon Product Service Analysis

Lululemon marketing strategy.

Based on our analysis to date, we propose that a great opportunity for Lululemon to increase sales in China is to target women in their 20s who are becoming more health-conscious and fit. These women would be part of the upper class with a higher household income, valuing quality and fashion. Lululemon can achieve this opportunity by adapting its product to the market, expanding its retail stores and growing its e-commerce platforms through engaging and information digital and mobile marketing strategies.

We have created the following value proposition based on our strategy:

Lululemon provides quality, performance leggings to successful, health-conscious women by offering personalized brand engagement and an omni channel retail experience to showcase the technical performance of the Wunder Under legging.

Tactical Analysis

This section proposes more specific recommendations for Wunder Under marketing programs, pricing approach, promotion and channel design . Lululemon Product and Service. The following are the changes and improvements in Lululemon products and services proposed to address gaps and opportunities relative to their competition. Currently Lululemon tends to be neutral in their colour choices and they are tailored towards yoga. Lululemon currently offers complimentary hemming on tops and pants in store, returns done in person or by mail and within 30 days of the purchase date, and a contact section on their website with a list of accounts to reach out to through WeChat and Weibo (Lululemon Athletica, 2020).

New Colours and Loud Prints

To make Lululemon leggings work in the Chinese market, they should make them less muted, using more bright, playful colours. Lululemon should go with colourful and all-purpose leggings. Lululemon should launch a new product line to include bright coloured leggings. Including highlighter type colours that are very eye-catching and that will stand out. There will be multiple colours to pick from including neon pink, yellow, blue and lime green.

Create a Line with a Bigger Logo

When researching culture in China, it is stated they big logos are a sign of status and luxury (Pan, 2018). Lululemon should think about having a bigger logo on their leggings so that their brand becomes more known. Lululemon should create a new product line with bigger logos on leggings. They will create a legging that grabs attention and makes a strong first impression. Logos are the foundation of brand identity and it will make Lululemon more memorable while separating them from their competition.

All-purpose Leggings

In China, it seems to be becoming more popular to wear sportswear as an extension of casualwear in fashion (Rapp, 2018). Lululemon should have more leggings tailored to more sports while also focusing on the casual side of their leggings. Lululemon should design leggings to give customers more choice and enhance their workouts with leggings made for specific activities but also focusing on their comfort, casualness and stretch. They will make sure the waistband is high enough for coverage but not so high that it makes it restricts movement during sports or casual activities.

Create Chinese Lululemon App and Social Media

Lululemon should make a Chinese version of the Lululemon App. They should use their website and WeChat to encourage customers to visit their brand-owned apps, where they can get information on products, events and exclusive content including coaching tips and personalized services for Chinese members. Going more digital is a strategy that will help Lululemon do better in Chinese market. Focusing on digital platforms, Lululemon would be able to create different communities and provide various online services and offline experiences.

Women’s Only Stores

Another idea is to open a women’s only store. In this store, they could put on events that are designed to inspire active women. Lululemon would be able to build a more cohesive female community in China (Allison, 2020). There are major gaps in Lululemon’s offered products and services compared to their competition. Lululemon should expand their services online to grow their e-commerce sales in China. Features rated high by Chinese consumers are colourful, eye catchy designs and luxury brand items. Lululemon should work with their designers to incorporate those features in their clothing lines. Lululemon should give their customers a full experience by creating content on platforms exclusive to China (Boyd, 2020).

Lululemon’s Wunder Under leggings pricing strategy is a customer-value based strategy to help grow the companies brand image and luxury status in the market. Lululemon sells all functional garments at a high consistent price point because of their quality and exclusivity. Chinese consumers have a perception that high-quality products are found at a higher price point. To attract more Chinese consumers to their product, Lululemon has inflated its already high price. The high price is further justified by the larger amount of shipping cost and tax to run a business in China. Lululemon is paying a higher rate of tax in China to participate in e-commerce operations. They are also taxes on importing raw materials thought out the world to create their luxurious fabric. These factors justify the high price point in the Chinese market (Thangavelu, 2018).

Lululemon uses a strict pricing strategy to create pricing awareness and maintain their luxury status using the following tactics. Regular price Wunder Unders, which consists of four core colours retail for ¥750, ¥850 and ¥980, which is slightly more inflated than the North American pricing. They are sold year-round at this price point (Tmall, 2020). Seasonal Wunder Under colours retail at regular price for 2 seasons and then enter a discounted rate of ¥ 450-¥ 650 or 20%-30% off. These discounts keep the market happy, knowing it is possible to get a deal, while the company still maintains high profit margins.

This pricing strategy is consistent across all Lululemon stores globally. Pricing is communicated consistently across online platforms and in retail stores. Customers are educated on the product quality first before the price is revealed (Policella, 2019).

Although Lululemon doesn’t typically participate in large discount events, they have adapted to the Chinese culture by participating in International Singles day, a sale event that occurs every year, on November 11. During the sale, Lululemon has incorporated lottery pricing and dollars off purchases over certain purchase value. This is a valuable sale to participate in because it is the largest spending day in China, and it’s a good opportunity to engage new customers who may be skeptical of the regular price point. The discount rate will not drop any further than the regular discount rate of 20%-30% off regular price items to maintain luxury status while still being perceived as a deal (Who Knows China, 2020).

The following is the proposed promotion plan for our target audience including the promotional tools to be used and the key messages to be delivered. We will be applying integrated marketing communication using a mix of digital and traditional channels to communicate with our customers. Our communication channel will focus on leveraging social media platforms to create an online brand community, customer engagement and product awareness online to ultimately drive traffic into our stores for customers to experience the product quality and the brand lifestyle.

Social Media & Direct Mobile Marketing

We will use social media channels such as WeChat and Weibo to create an online community for young yoga enthusiasts. We will also use these channels to advertise our events and generate brand excitement at a national and local level. WeChat and Weibo will also be used as a platform to connect with the brand with any customer service issues, which has already been established.

WeChat has 1 Billion active users as of 2019, and Weibo has 500 Million active users. 70%-85% of users on each of these platforms are in their twenties, and 49.8% of them are female (Verot, 2017). To further our reach with user-generated video content to showcase our product on real people we will create yoga challenges on short video platforms DouYin. We will also be creating short video ads to release through these platforms once a week. The purpose of these ads will be to promote new products like the Wunder Unders, issue yoga challenges, and advertise our local and large-scale events. Direct mobile marketing has been described an engaging and enjoyable by the Gen Z and Gen Y and they are likely to subscribe to push notifications to get the latest information on their favourite brands (Lee, 2017).

Community Events

In the last month of each quarter we will host major gatherings in each major city to give our brand community a chance to get together and socialize, and of course a large group yoga practice. These events will be covered through social media channels as well. Lululemon has hosted large scale events like this in the past such as The Forbidden City Yoga Session is 2017, and the “Unroll Your Mat!” in 2016 To launch the new line of yoga mats (Rapp, 2017) These types of events have been successful in starting the lifestyle community, and by hosting them more frequently we hope to continue building those relationships with customers by engaging them in our lifestyle experience surrounded by their community.

Sales Promotions

In China, November 11 is International Singles Day Shopping Festival. On this day we will hold a nation- wide event in-store, on our website and on Tmall to make the sale accessible. This is the largest spending day in China, bringing in nearly $38 billion in one day in 2019. This event, mostly celebrated by young people of major cities like Beijing, Shanghai and Guangzhou, is celebrated with a lot of festivities (Marketing to China, 2017). This will be the largest discount sale of the year for Lululemon in China. Previously, the discount has been determined by lottery 25%-30% off, with every customer receiving a deal no matter what.

Lululemon Distribution Plan

Direct distribution will be through showroom stores, and we will also distribute our product indirectly through Tmall, an e-commerce selling and distribution agent. Tmall shortens the distribution chain and works as an agent. When distributing Wunder Under leggings, Lululemon would sell the product to Tmall and Tmall would then sell the product directly to the consumer, which eliminates intermediaries and makes the distribution process more efficient and effective.

Another way that Tmall helps the distribution chain is by using a B2D structure (Export China, 2018). This means that Tmall assists in helping brands and companies connect with local Chinese distributors. This process advertises brands in the current market, and allows them to choose their distributor straight from the Tmall app. Tmall is a great asset for Lululemon to continue its relationship with because it allows for direct business to consumer selling, but they also allow for business to distributor selling. Another way we plan on expanding our distribution is by opening more stores. This will be done by adding around 20 new stores to China this year. We plan on opening most of the stores in areas with a higher population, with a younger demographic.

Implementation Plan

Product and service adaptations.

Product and service success will be evaluated throughout the year as we continue to engage the market, look at trends in design and sell through, and review product feedback to create the right product for the market. We will do this by creating two teams:

• Product Adaptation Team – The team will consist of representatives from market analysis, finance, sales and design departments. They will meet at the end of each product season to evaluate the strengths and weaknesses of a seasonal product with a focus on logos, colours and sizing. Based on their evaluation they will come up with a plan to improve next year’s product and tailor it to our target market.
• Service Adaptations Team – The team will consist of representatives from market analysis, digital marketing, customer service, retail operations, e-commerce and distribution departments. They will evaluate the strengths and weaknesses in our services offered instore and online. They will meet quarterly and submit evaluations and suggestions to improve servicing our market.

Pricing Implementation

• Maintain Prices
• Prices will be determined for each season 1 month before the product goes live online and instore. Finance and marketing will determine these prices to maximize the pricing strategy.
• Follow Discounted Pattern
• Representatives from Finance, Marketing and Sales will work together monthly to determine which product should be discounted and when the discount will roll out on a seasonal basis. Sale prices will not exceed 20%-30% off regular price.
• Special Projects Team: International Singles Day – Representatives from Marketing, Finance, Community Events, Digital Marketing, E-commerce, Distribution, Allocation and Retail Operations will dedicate Q1, Q2, planning the logistics for International singles day. They will be responsible for creating the discount structure, an allocation plan for retail stores as well as e-commerce platforms and distributors and an advertising campaign.

Promotional Implementation

The company needs to establish a social media presence on WeChat, Weibo and DouYin to create online community engagement and brand awareness to create a seamless omnichannel retail experience and two-way communication.

• Grow the Social Media Team and Create Accounts.
• Expand the social media team and divide them into National and Local levels for each major city. They will be responsible for content creation on all platforms, liaising with marketing, advertising, store manager, community events team to create consistent two-way communications. Platform Names will include: LululemonChina, LululemonShanghai, LuluLemonHangzhou, LululemonGuangzhou, LululemonChengdu, LululemonShenzhen and LululemonBeijing to target specific communities. Social Media Initiatives will be ongoing throughout the year on a consistent schedule established by the marketing and advertising departments.
• Grow the Community Events Team.
• Expand the Community events team to tailor events to urban areas such as Shanghai, Hangzhou, Guangzhou, Chengdu, Shenzhen and Beijing. The community event team will be responsible for coordinating and planning all events in their designated district and liaising with local store managers, head office and the social media team. They will also need to become product experts to create their events which will feature specific products like the Wunder Under legging.
• Invest in Mobile Marketing.

The most effective way to reach our target market is by Mobile Marketing campaigns. Marketing, Advertising, Finance and the Social Media teams will be responsible for overseeing these initiatives. The marketing and finance departments will be responsible for defining the effectiveness of our mobile marketing initiatives, while advertising, social media will create the content and execute the planned schedule.

Distribution Implementation

• Showroom Expansion – A New Store Opening team, which will operate under retail ops will consist of real estate, facilities, visual, and IT will be created for each major city Shanghai, Hangzhou, Guangzhou, Chengdu, Shenzhen and Beijing. We will be opening 20 new stores, 15 regular and 5 Women-only to grow interest in leggings. The goal is to open five stores per quarter.
• E-Commerce Partnerships – B2B partnerships will be responsible for finding another e-commerce platform to get out product on by the end of the year. They will also continue working with their current partner, Tmall to find more distribution partners to get our products to our consumers quickly and efficiently.

Budget and Forecast

After looking at Lululemon’s 2018 financials we realized they had spent $1.1 billion on their selling, general and administrative expenses, which was a 23% increase from their spending in the previous year (Lululemon Athletica, 2018).  We then estimated that their spending for 2019 would increase by 25%, and further determined that their spending in 2020 would be up 30% for a total budget of $1.79 billion for our implementation strategy. This budget was then allocated to, opening and operating new stores, digital marketing, product adaptation and community events. After estimating each department’s spending, we determined that opening and operating new stores would receive 50% of the budget, giving the department $895 million. Digital marketing received a total budget of $447.5 million, product adaption received a total budget of $268.5 million. We then had 10% of the budget left over which we dedicated to community events, giving them a budget of $179 million.

Since China is the second-largest activewear market in the world it is a great opportunity for Lululemon to increase its revenues (Swartz, 2020). Based on our research we discovered that in 2019 Lululemon had doubled their amount of sales out of the North America region, making that share would 12% of its total sales. We believe that if Lululemon opens more retail stores in China and expands its e-commerce market that it could see an increase of 24% of total sales being from outside of the North American region.

Case: Lululemon’s Marketing Strategy in Hong Kong

Lululemon’s marketing plan has achieved success in Hong Kong. Over the past two years, all my friends have become aware of this brand due to its effective promotional strategies and digital marketing efforts. During the pandemic, when they could not visit gyms, many developed habits of doing yoga at home and sometimes felt lost and insecure about the intense situation.

Meanwhile, Lululemon was promoting the ideas of self-care and well-being, encouraging people to relax by doing yoga at home. Their success in building brand awareness can be attributed to the promotion on social media, holding community campaigns, connecting local athletes and yoga instructors, and even cooperating with other organizations that care about mental health and healing. My friends recognized that Lululemon matched the prevailing trend of yoga, so they followed the brand’s social media account and participated in outdoor yoga events. They have now become loyal customers of their yoga leggings. Lululemon is growing at the right time because there was a growth in health and fitness concerns during the pandemic, whether physical or mental. They build a sense of belonging to a community more than only offering and selling products (Danziger, 2019). Now, it has become the top of the favourite brand of yoga leggings among all my Hong Kong friends.

Zheng Zeng , October 2022

Introduction to Marketing II (MKTG 2005) 15.5 Putting It Together: Marketing Plan by  NSCC and Lumen Learning is licensed under a  Creative Commons Attribution 4.0 International License , except where otherwise noted.

Lululemon Marketing Strategy and Plan written by Taylor Rawding, Jantien Sneyd, Tiffani Hamilton, Saroja Venkatesha, Jodie Holman and Zoe Ciarrocco as an assignment.

11.4 Lululemon Marketing Strategy and Plan Copyright © 2022 by Lina Manuel is licensed under a Creative Commons Attribution 4.0 International License , except where otherwise noted.

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Lululemon Branding Strategy and Marketing Case Study

Analysis and examples of lululemon’s identity, positioning, key messages, tone of voice, brand archetypes, customer benefits, competitors, and marketing content..

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Brand Overview

Business type.

Physical Products

https://lululemon.com

Target Customer

Fashionable Athletic Wear Consumers

Primary Need ( Job To Be Done )

Get athleisure clothing that’s comfortable for workouts and day-to-day life

Brand Visual Identity & Content

Primary brand colors, brand typefaces, hero content.

Hero Content Type

Content features people, brand messaging, key messages, benefit or feature focus, tone of voice, brand archetypes.

( Learn More About Brand Archetypes )

Brand Positioning Strategy ( Elements of Value )

( Learn More About The Elements of Value )

Aspirational

Affiliation & Belonging

Attractiveness

Brand Benefits

Wear clothes that are comfortable for working out and lounging around

Confidence that my clothes work well and show my body the way I want it to be seen

Feel I’m part of a community who invest in themselves both around health and image

Competition

Key competitors.

Nike , Under Armour, Athleta, Adidas , Puma, New Balance, Outdoor Voices, Allbirds

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Lululemon Athletica Inc. Harvard Case Solution & Analysis

Home >> Operations Management Case Studies >> Lululemon Athletica Inc.

Lululemon Athletica is founded by Dennis Chip Wilson in 1998 and located in Vancouver, Canada that provides the highest quality athletic products to satisfy the needs of the target customers. Lululemon Athletica has expanded its market effectively in the local areas and successfully grew there. After getting success nationwide and in some global locations, the company wants to expand its market further in different countries in order to enhance the growth and profitability of the company.

lululemon case solution

But there were several internal and external challenges that Lululemon Athletica have in order to further expand its product offerings across the world. As, the rivalry in the market is increasing at the fastest pace with the many companies having the similar product offerings. The company need to analyze several influences that impact their future growth and size of the Lululemon Athletica.

Following are the issues faced by the company:

• Can the company maintain the effective and strong relationships with the communities as it did historically on which its past success relied with the further expansion in term of growth and size?
• Another issue of the company is related to its international growth . Will the company able to continue its success around the globe with the significant cultural differences?

Lululemon Athletica provides high quality athletic yoga apparel products to its customers at a premium price. The Lululemon has the detailed understanding and knowledge of its target market is an important resource for the company. Furthermore, each employee at the Lululemon Athletica considers valuable resource as the employee development is an important component of the company’s strategy.

The company has focused its strategies on providing the quality products to its target audience rather than selling the quantity. In addition to this, the company spends a lot of money as well as effort into the training of their store employees. Moreover, its close relationships with its communities and customers as well as it’s an inimitable culture are the main sources of strategic competitiveness that gives it an advantage over its rival. The vision of the company plays a significant role in achieving the objectives that result in the growth and success of the Lululemon Athletica. Also, improve the ability of the business to provide quality products that are focused to address the preferences and needs of customers.

The competitive rivalry in the industry is high as there are numerous businesses that are challenging as well as the competition in the industry is growinghasitly. This increase in the competition can create many difficulties for the company to expand its market both internationally and nationally. Whereas, the threat of substitute is moderate for the company as there are not any major alternative available is the market that impacts the profitability of the company.

Additionally, the threat for new entrants in the industry is very high and this may impact the successful affords of the Lululemon Athletica due to the ease of market entry that opened the doors for many firms. Furthermore, these new entrants bring new capabilities that may reduce the profitability of the Lululemon Athletica. The bargaining power of the buyers is high as there many similar products available in the industry by different brands and they have multiple choice to purchase the products. The bargaining power of the suppliers is high as the companies in the industry heavily depend upon the supplier.

The competition in the industry is growing continuously creating threats for the company to survive and gain the sustainable competitive advantage over its rivals in the industry. In addition, this increase in the competition may adversely impact the success of the Lululemon Athletica. The company is prepared for the competitive changes as the Lululemon Athletica continuously evaluate its external environment in order to identify the new potential competitors as well as new trends in the industry.

This will help the company effectively compete and remain profitable in the industry. But in the situation, if the company is not prepared for the competitive changes, then it will reduce the performance and profitability of the company. Furthermore, may impact the productivity and company’s ability to target larger potential customers.

As, the company is growing largely internationally day by day, external environment impact the activities and the operations of the company greatly. The change in the global economy have impacted the sales of the company as the customers are price sensitive and there is a decrease in the spending of the customers.

Moreover, the uncertainties in the political as well as the legal conditions also affect the performance of the Lululemon Athletica. These political factors involve international trade laws and tax regulations.

The technological development play a vital role in the operations and development of the company as many of the product features are technology Driven. The company’s experience supports the resource-based and industrial organization (I/O) model of above-average returns as the company has unique capabilitie................

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IvyPanda . (2020) 'Lululemon Company: Business Strategy'. 1 September.

IvyPanda . 2020. "Lululemon Company: Business Strategy." September 1, 2020. https://ivypanda.com/essays/lululemon-company-business-strategy/.

1. IvyPanda . "Lululemon Company: Business Strategy." September 1, 2020. https://ivypanda.com/essays/lululemon-company-business-strategy/.

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