Fall

14
08
Fall




Competition From Rival Sellers
Competition within the industry is
centered on the products quality,
performance and capabilities with
many rival companies selling a
comparable product. Competition
generally sells their product for much
less than Lululemon, ranging from
brands like Nike that sells at a bit
lower and Athleta pricing themselves
20$ lower (C1). The growth of the
yoga sports apparel industry has
been huge a people have been using
the product for more than just yoga.
It has propelled this segment to such
growth that other companies have
recognized the potential.
Competition From Substitute
Products
Brands like Nike and other large
sports apparel companies have now
become big players in the yoga
apparel industry and Lululemons
direct competitors. The lower priced
brands like Athleta yoga pants and
others share a similar combination of
materials that rival Lululemon.

Competition From Potential New Entrants
Entry into this market is very expensive due
to new distribution channels, branding, and
building inventory. This is why the risk of
new entrants is low, due to the expense and
large overhead causing only established
companies to compete at the premium level.




Bargaining Power of Suppliers
Bargaining power of the suppliers is low due
to the large availability of materials and the
level of competition within the suppliers
market. With low costs to produce in foreign
Exhibit 1: The Yoga Apparel
Industry - Five Forces

Competition
from rival
sellers
-Moderate
Moderate direct competition in yoga
market
Large competitive sports apparel
industry
Competition
from
potential new
entrants
-Low
Low new entry barriers
Customer loyalty to recognized brands
Industry requires economies of scale
Sought after brand names are
important
Sophisticated technologies are
required
Healthy distribution network are vital

Competition
from
producers of
substitute
products
-High
Substitutes have less of the market
Substitutes are lower quality
Supplier
bargaining
power
-Low
Intense rivalry among suppliers
High volume orders are important
suppliers
Varied distribution channels required
Customer
bargaining
power
-High
Sizeable number of customers

countries and the abundance of workers the
market has very limited bargaining power.

Bargaining Power of the Consumer
Consumers always have large bargaining power over companies that are not monopolies because
they can choose who, where or why they prefer any company or product to another. The other
side to the purchase decision is brand loyalty; Lululemon was one of the first to expand in the
yoga market with Nike
and competitors coming
along later.
Lululemon has
positioned itself well
within the sports
apparel industry as a
premium yoga and
active wear company.
Marketing its clothing in
the lifestyle market to
the young and affluent
women with plans to
expand greater into the
male clothing market as
well.
Demographics
Lululemon positions its
self towards the fit, hip, affluent young women between 17-34. Lululemons attractiveness comes
across to women that are looking for premium apparel that is comfortable to wear in an active
lifestyle. Targeting women, Lululemons product lines are designed with stretchy materials that
fit the contours of all body types.

Products
Lululemon offers a diverse and growing selection of premium-priced performance apparel.
Lululemons products include three trademarked fabrics by the company: Luon, Luxtream, and
Silverescent. These fabrics build on the style and popularity of the product while diversifying
them from competitors. Plans to expanding further in the mens yoga, running and gym shorts
market will be Lululemons next product line expansion (C4)


P
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P
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Q
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Geographic Market
Strategic Group Map


High-Price Strategy
Lululemon prices their
products at a premium, well
ahead of their competition
listing Lululemon on the top of
the price axis of the
perception map. The
perceived value of Lululemon
and the stigma of a must have
product has created a
willingness to pay the
premium price for their
product. This high price
strategy has proven to be financially successful as shown in the graph.
Key success factors
The most significant factors to the future success of the industry are the factors covering
resources, competitive capabilities and product attributes (C3).

Innovation
Staying current through product development and creation
Capable
Workforce
Employees, staff and executives are just a small part of what makes the day to day operations of
any major company
distribution
facilities
Company owned stores, outlets or retailers to distribute the product
Production
and
manufacturi
ng facilities
Contracting with manufactures to produce and distribute the products efficiently is of the utmost
importance when dealing with large quantities of product.
Extensive
Research &
Development
This factor is used to better understand the consumer and respond to consumer interests.
Research is conducted globally cover demographics, marketplaces and changing interests.
Marketing
Activities
Marketing is essential to project a brands Image within the industry
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
2012 2011 2010 2009
Operating Profit Margin
Net Profit Margin
Gross Profit Margin



Does Lululemon have what it takes in the industry?

Innovation
Using superior materials and equipment in the development of lululemons product has
consistently been a driving factor in their success. By using patented and trademarked materials
and sewing machines that cost around $25,000 (C2) Lululemon has stayed innovative and trendy
in the industry.

Capable Workforce
Lululemon has a trained and informative staff that works to educate its customer, not sell to
them. Using this education strategy has proven successful for Lululemon and the consumer, as it
makes the consumer feel more confortable while shopping.

Extensive Distribution Facilities
Lululemon has posited its product to be sold through select yoga studios, health clubs, and fitness
centers as a way to promote its product locally. Sales within the company owned retail stores
leverage such aspects as displays, customized fixtures and overall decor while keeping select
center displays open for short cycles products that keep the store fresh.

Production and Manufacturing Facilities
Lululemon has contracted arrangements with suppliers, built strong channels and outsourced its
production to be more efficient. Lululemon conducts business on a contract to contact level
allowing them to be flexible with suppliers and receive the lowest rates.

Research & Development
Developing the product as superior quality is done through superior processes. Lululemons
active wear is made with anti-microbial wicking fabrics with flat seams, ensuring it is non-
abrasive to the wearer. The features of the product are designed with the consumer in mind
forming a very desirable product.

Market Penetration
According to Chip Wilson (C2), the key to success in the market is getting in first. First mover
advantage was a huge success factor in redefining the yoga pants in the 21st century.

Lululemon has successfully achieved all necessary key factors in the industry. They have proven
their quality, innovation and distribution of their product at an exceptional level.






Citations:

C1) Peterson, Hayley. "Lululemon's Pants Aren't Worth That Much More Than The
Competition." Business Insider. Business Insider, Inc, 24 Sept. 2014. Web. 02 Oct.
2014. <http://www.businessinsider.com/why-lululemons-pants-are-so-expensive-2014-
9>.
C2) "Lululemon: Building the Brand from the Ground Yoga Mat up." Strategy.
Strategy Staff, 13 Jan. 2013. Web. 03 Oct. 2014.
<http://strategyonline.ca/2003/01/13/lululemon-20030113/#ixzz3F6ZkVgVY>.

C3) "Educating People For Tomorrow." MBA Lectures. MBA Lectures, 7 Jan. 2011.
Web. 03 Oct. 2014. <http://mba-lectures.com/management/strategic-
management/1178/key-success-factors-of-nike.htm

C4) Lutz, Ashley. "Lululemon Has One Huge Hope For Expansion." Business Insider.
Business Insider, Inc, 11 June 2013. Web. 03 Oct. 2014.
<http://www.businessinsider.com/lululemon-must-expand-menswear-2013-6