A Systematical Analysis Framework on Lululemon---- High-end Professional Brand Image and Close to life Promotion

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A Systematical Analysis Framework on Lululemon----
High-end Professional Brand Image and Close to life
Promotion
Yuzhuo Diao1, *
1 School of Economics and Management, Beijing Jiaotong University, 100091, Beijing, China
*Corresponding author. Email: 18726086@bjtu.edu.cn
ABSTRACT
As the sportswear market continues to be sluggish and the global retail industry is in a weak state, lululemon, which
started with yoga clothes, has developed rapidly and has become a sports brand comparable to Adidas and Nike. In
recent years, with the development of China's economy, the yoga market has continued to grow. Lululemon also
targeted the Chinese market for its next development strategy. This article analyses the brand strategy of lululemon's
successful marketing strategy from three aspects: brand positioning, brand image shaping, and brand community
culture. And used porter's five forces and the SWOT model to further analyse lululemon's strategic moves.
Keywords: SWOT model; Porter five forces; Market strategy.
1. INTRODUCTION
When we discuss the sporting goods market, it is
more like a lifestyle industry. With the Chinese
government’s emphasis on sports for all and the
increasing participation of young people in sports, this
market has shown great potential [1]. The current
market value of yoga in China has reached $10 billion.
Lululemon is known as the first professional sports
brand in Canada. In North America, it is a high-end
sportswear brand for people to perform yoga and fitness.
This brand started with yoga clothes, focusing on the
women's sports market, with sales of $1.8 billion in
2014 [2, 3]. Lululemon's brand strategy and marketing
strategy are the key factors for success.
The brand has 80% to 85% awareness in Canada,
about 45%-50% in the US market, and only 12% in
China. Many brands have entered China in recent years,
all expressing that they will open 300 to 400 stores
within two years. This is not the way lululemon
operates. It hopes to establish a sustainable business
model in China [4]. Lululemon emphasizes deepening
the community and building a deeper understanding
through brand ambassadors, fitness studios, and
consumers. Instead of promoting itself through large-
scale marketing and channel advertising [5].
Lululemon has been deeply involved in the North
American market since its establishment 20 years ago
[6, 7]. However, it only entered China about 5 years
ago. The popular forms of exercise in China include
yoga, indoor spinning, CrossFit, boxing, etc., which are
similar to Los Angeles, New York, or London. From a
global perspective, sports events may have regional
differences, but people's pursuit of an enterprising and
mindful lifestyle is consistent. China is changing very
fast. Nowadays, consumers generally have global
awareness, and transparent market information makes
the activities of the Chinese market almost synchronized
with the global market [8].
Today's fitness sports market has ushered in a great
leap. There are 415 million millennials in China, and
how this generation of young people interact in the data
age is different from other age groups. At the same time,
their consumption behaviour also indicates the future
direction of the market. The behaviour of Chinese
consumers is extremely advanced, such as how to use
WeChat. How to use social media software to connect
to all aspects of life. From a technical point of view,
China is far ahead in the global market. At the same
time, consumers began to pay attention to sports and
healthy lifestyles, which gave the brand a good
opportunity for development.
In this work, we conduct a detailed analysis of the
firm’s financial situation, the consumer, and the
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Cultural Industry (ICEMCI 2021)
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strategy. Besides, we present the five forces analysis
and SWOT analysis to this company. We give some
conclusion. New brands all emerge from the fringe zone
because strong brands already occupy the central zone.
Yoga clothing brand Lululemon has emerged from
many sportswear brands in just a few years, and it seems
that it has evolved into a lifestyle rather than just a
clothing brand. The rise of the middle-class era means
that people begin to pay for the design, brand, social
attributes, emotional elements, and other matters beyond
the basic functions after the commodity economy is
enriched. The design and aesthetics of the products have
been greatly improved, slightly higher. Prices are
completely acceptable to the average middle class.
Brands with a strong sense of design will emerge in
various fields, determined by the consumption habits
and aesthetic taste of the middle class. Lululemon's
design is an important reason for the high-end brand
image. It not only sells products but also promotes yoga,
sports, and a healthy lifestyle and spirit. Its packaging
bags are filled with various inspirational slogans and life
attitude slogans. This avoids product homogeneity and
establishes a brand. Many people buy Lululemon as
their daily wear, which not only shows the consumption
level of their own class, but the price is not very high
compared with high-end clothing, so the price has a
great advantage. Last but not least, teaming up with
local yoga masters is the key to victory.
The remainder of the paper is organized as follows.
In section 2, we describe the financial situation of this
company. In section 3, we present its consumer and give
an analysis framework. In section 4, we introduce the
strategy of this firm. In section 5, we give a five forces
analysis. In section 6, we present the SWOT analysis to
this company. Finally, we summarize the conclusion in
section 7.
2. FIRM FINANCIAL DESCRIPTION
Figure 1 Net revenue of lululemon worldwide from
2008 to 2020 (in million U.S. dollars)
As figure 1 shown, the company’s new revenue
increased gradually between 2008 to 2020, which is
collected from yahoo finance. In 2020, its revenue
amounted to 4401.88 million dollars. However, in 2008,
the net revenue was only353.59 million dollars. The
firm developed quickly in the recent 12 years.
Table 1. Total number of lululemon athletica stores worldwide from 2019 to 2021, by country
2019
2020
2021
United States
285
305
315
Canada
64
63
62
China
22
38
55
Australia
29
31
31
United Kingdom
12
14
16
New Zealand
7
7
7
Germany
5
6
7
South Korea
4
5
7
Japan
5
7
6
Singapore
3
4
4
France
1
3
3
Sweden
1
2
2
Malaysia
-
-
2
Ireland
1
1
1
Netherlands
-
-
1
Norway
-
-
1
Switzerland
1
1
1
Table 1 and figure 2 present the total number of
lululemon athletica stores worldwide from 2019 to 2021
in a different country and comparable sales growth of
lululemon worldwide from 2017 to 2020 in the quarter.
The detailed information would be found in these two
graphs. We hold that the company’s biggest market is in
the US, and the second is China. The average trend is
found from the quarterly data.
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1,370
1,797
2,344
3,288
4,402
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2005 2010 2015 2020 2025
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Figure 2 Comparable sales growth of lululemon
worldwide from 2017 to 2020, by quarter
3. CONSUMER ANALYSIS
When making decisions and making strategies, the
brand should consider consumer characteristics and
market segmentation. It identifies customer groups who
share brand-related preferences [1]. Lululemon adopts a
tailored segmentation method to attract specific market
segments by responding to consumers' buying
behaviour, customizing product lines, and marketing
interactions.
When lululemon was founded in 1998, it was only a
women's yoga apparel brand. It defines its user portrait
like this: age between 24 to 36 years old, annual income
of more than 80,000 US dollars, high education level,
own house, spending one and a half hours to exercise
every day, a super girl with a positive attitude towards
life.
We can see that in this group, lululemon excludes
girls in their early 20s but favours women in the 24 to
36 years old age group. From the perspective of group
characteristics, we can conclude that the former has
youth capital, most of them are young and beautiful,
have too many factors that may affect their shopping
behaviours; in contrast, the latter not only has deeper
pockets, but also more eager to change their life, but
also want to keep figure. At the same time, they are
perceived as successful people in the eyes of most.
The past success of Lululemon has left many
consumers with the impression of a "female" brand.
This impression will discourage many male consumers
from it. So when it was determined to develop the male
market, it began a reconstruction of the brand through
weaken femininity and emphasize strength. At the same
time, lululemon also considers avoiding female
consumers feel abandoned. After all, the female market
is still the main business.
There is no lack of technological breakthroughs in
the sports and leisure field, but strong identity
information is missing most of the time. Lululemon has
just made up for this gap by selling a lifestyle
represented by yoga.
4. STRATEGY
4.1. Unique promotional strategy
It is undeniable that the strategy of Nike and Adidas
to harvest traffic and sales through the all-star lineup is
very in line with the marketing trend. But how to
distinguish from these brands and effectively compete
with them is a topic worth thinking about. Lululemon
provides us with a new idea through the strategy of
building a brand-exclusive consumer community.
In terms of promotion, lululemon hardly advertises
and does not sign traffic stars. Instead, it incorporates
yoga coaches and even consumers into its marketing
system. In other words, behind a pair of yoga pants,
there are hundreds of KOLs in professional fields that
allow you to try and interact with the brand in depth to
the greatest extent, thereby creating stickiness.
Specifically, lululemon will set up the position of
"educator" at the beginning. Unlike ordinary salesmen,
educators are well-versed in brand values and product
features and the important task of finding store
ambassadors. The store ambassador is usually the
founder of a yoga studio or an athlete. Compared with
Nike and Adi’s tens of millions of brand endorsement
fees, lululemon's return to store ambassadors is much
stingier. In addition to new product fittings and gifts,
professional photography benefits are also provided.
However, the premise is that these photos have to be
used as promotional materials for the brand for free.
Lululemon will use these photos on store windows and
social media such as ins, Twitter, WeChat, and Weibo
to build its own brand community culture.
Although the cost is extremely low, lululemon has
gained a very high market promotion effect.
On the one hand, this group of brand ambassadors
are key opinion leaders within the community. Their
consumption choices have a huge right to speak to
potential customers in the region; On the other hand,
compared to celebrities, this group of ordinary people
around them is more influential. According to official
data, lululemon has approximately 1,500 global store
ambassadors; simultaneously, lululemon has signed 9
global yoga ambassadors among the top masters in the
global yoga field, and then signed 35 elite ambassadors
among international star athletes. Together they
constitute the brand ambassador team of lululemon.
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Unlike other retailers who wait for customers to
come to their door, lululemon's community sales
strategy of "educator + brand ambassador + consumer"
directly skips dealers, which not only establishes
customer loyalty to the brand but also have more control
over pricing, discounts, and marketing, and ultimately
enjoy exclusive profits in the closed marketing loop is
constructed.
4.2. Brand community
Lululemon did not spend too much energy to
highlight the performance of its products but focus on
telling you the lifestyle and culture. Many lululemon
stores served both as yoga and fitness studios. The
bottom of the hangers in the store is equipped with
rollers. They can be pushed aside during non-business
hours or when courses are held in store. The vacated
area becomes a yoga practice place for customers. This
approach has become one of the most critical business
decisions in lululemon's history. It has become the core
selling point of the brand and has continued to the
present, and it has directly activated lululemon's sales.
When old customers pass by themselves, they will
habitually enter the store to take a look, and at the same
time, they can take away a few items and bring like-
minded friends to take a look. New customers will also
be attracted by the novel way of operating the store +
yoga studio.
Therefore, lululemon's store is not only a store but a
community for yoga lovers. What's more interesting is
that no matter whether people buy lululemon products
or not, they can take part in various yoga classes
conducted by store ambassadors. In fact, when people
start the free yoga experience, they have also unlocked a
series of hypotheses. As long as I wear lululemon, I can
also have a good figure, and I can also live a fashionable
and healthy life that makes people respect and yearn for.
The in-depth interaction between consumers and
potential consumers and the brand enables people to
better understand lululemon's brand culture, thereby
establishing strong customer loyalty and generating
purchase behaviour.
Lululemon also knows how to push his own
experience to the extreme to stimulate fans' interest and
network effects. The brand regularly sets up different
themes every year. It launches large-scale brand events
in different cities worldwide, such as the sweat festival
in London, the marathon in Vancouver, and the beach
party in Shenzhen Sweat life Festival, consolidating
itself as a part of the city's culture. In addition,
lululemon's social content also always revolves around
lifestyle storytelling. In this way, a pair of yoga pants
have been given more than wearing things-lululemon is
not just a sports equipment shop but a synonym for
sports and leisure activities in global metropolises and a
global symbol of a fashionable and healthy lifestyle.
In addition to the exclusive brand sales community
and lifestyle bundling, the high price is also the reason
why lululemon stands out. A pair of yoga pants that cost
thousands of dollars at every turn, although it is three
times higher than most of its peers, has succeeded in
keeping people other than lululemon's ideal users out of
the price line.
4.3. Target the male market
Lululemon is a big success in the women's sports
and leisure market by selling the lifestyle represented by
yoga. There are many fans among the millennial
generation, "Lulu pink" is spread worldwide. However,
like other brands, such as Gap, Nike, and Under Armor,
which have launched sports and leisure product lines at
lower prices, Lululemon faces an extremely competitive
market. It needs to develop new business. Lululemon's
new strategic direction aims to the menswear market.
In terms of brand building, Lululemon mainly
started from three aspects: first, nationwide advertising,
emphasizing the technological attributes of the brand;
second, opening a male-only retail store; third, adopting
male image spokespersons. As a brand that started as a
female yoga brand, Lululemon has played a technology
card to persuade male consumers to abandon sportswear
giants such as Nike and Under Armour, born with "male
genes".
Lululemon’s main product for men’s clothing is
ABC (Anti-Ball Crushing) pants. This $128 trouser uses
Lululemon’s patented fabric Warpstreme corduroy. It
has strong elasticity and is designed to solve the
embarrassing problem of men’s tight crotch. Lululemon
quickly won positive feedback from the market by
solving the male "crotch problem". This pair of trousers
alone brought a 16% increase in same-store sales.
Online reviews of this pair of trousers are also mostly
positive. Many consumers have mentioned that it is
suitable for many occasions. There are even consumers
who have set up a website, LuluMen, specifically for it.
In terms of the overall menswear promotion
strategy, although Lululemon has also opened several
menswear stores, in general, it still sells menswear
through existing stores. Lululemon’s existing store
traffic itself is very large and women are still the main
shoppers, putting ABC pants next to women's jogging
bras. When women are shopping for themselves, they
may buy a pair of ABC pants.
In September 2020, Lululemon launched the first
global campaign for the male market, changing the
slogan to "This is Yoga". The promotion with the theme
"Strength to Be" included 5 advertisements, reflecting 5
men showing their inner strength and self-awareness.
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This strategy worked quickly. The financial report for
the second quarter ended July 30 showed that
Lululemon achieved a comparable sales growth of 7%,
exceeding Consensus Metrix's comprehensive forecast
of 4%, and reversing the 1% short-term decline in the
first quarter, earning its place in the North American
leisure sports market.
5. FIVE FORCES ANALYSIS
The framework provides a qualitative and
comprehensive strategic analysis. Porter's five forces
model will help lululemon establish a strategic position
and create a competitive advantage.
5.1. Threats of new entrants
Lululemon is a pioneer in sports and leisure brands,
and the company has a long history of creating
innovative products. It operates an innovation center
called Whitespace in Vancouver and New York to
create new value propositions for customers. It is
joining up with fashion designers to produce new
clothing styles and widen its product lines to develop
effective barriers to protect its competitive advantage.
5.2. Bargaining power of suppliers
Since Lululemon does not operate any production
facilities, the suppliers have high bargaining power.
Lululemon's raw materials come from 65 suppliers, of
which 30% of Lululemon products are made from a
registered trademark supplier called Luon.
5.3. Bargaining power of buyers
Due to the high price of Lululemon, buyers have
very low bargaining power. Lululemon's strategy for the
high-end market has proven to be successful. It has
maintained a competitive advantage.
A strong brand association with the luxury sports
and leisure market creates a sustainable competitive
advantage. It continues to attract new buyers because
consumers want to buy lululemon products to show
their identity.
5.4. Threat of substitutes
Lululemon has a solid and loyal customer base. The
company has a large following and has created a unique
community for the health and fitness market. Lululemon
turned the store into a yoga studio to maintain a stable
community and provide services other than clothing
products.
5.5. Rivalry among competitors
The competition among existing players is fierce.
The sports clothing industry is highly fragmented.
Competitors use pricing strategies to drive down prices,
increase market share, and reduce overall profitability.
The highly competitive sports and leisure market has
become a real threat to Lululemon in the high-end
market. The economic downturn will cause consumers
to switch to more affordable brands.
6. SWOT ANALYSIS
SWOT analysis is a technique developed at Stanford
in the 1970s, frequently used in strategic planning [9].
SWOT is an acronym for Strengths, Weaknesses,
Opportunities, and Threats and is a structured planning
method that evaluates those four elements of an
organization, project, or business venture. A SWOT
analysis is a simple but powerful framework for
leveraging the organization's strengths, improving
weaknesses, minimizing threats, and taking the greatest
possible advantage of opportunities [10]. We utilized
SWOT analysis to analyze the lululemon.
6.1. Strength
Unlike competitors such as Nike or Adidas, which
spend millions of dollars on advertising, Lululemon
Athletica chooses to target influential people such as
fitness coaches or yoga masters, give them gifts, and
then use them to influence target groups and buy their
clothing. Targeting the influencer is playing a more
significant role than traditional advertising. It is
effective because influencers can interact with
consumers on a personal level. Lululemon Athletica is a
brand with a high level of customer engagement.
6.2. Weakness
Compared with its competitors, Lululemon has been
cautiously expanding and has not been too aggressive,
which may affect its long-term growth prospects. Its
inability to penetrate successfully in foreign markets
may hinder the development.
Although lululemon athletica has a solid customer
base, their products cater to the high-end market, so the
brand must rely on value rather than sales. As a result,
the profit margins of all the company's products are low.
6.3. Opportunity
The world sports apparel industry is expected to
increase manifold. And the market is driven by a trend
toward healthier, more active lifestyles, with older
demographics and women are playing a more active part
within it. Lululemon is expected to have better reach
and penetration into emerging economies.
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6.4. Threat
The sportswear industry is highly fragmented, with
many brands competing, from basic discount brands to
high-end fashion brands. Challenges facing sportswear
companies include changing fashion trends, fierce
competition, and consumers becoming more price-
sensitive.
7. CONCLUSION
The case of lululemon embodies a new brand
strategy: establishing a unique brand positioning, using
various effective channels of emotional marketing to
enable consumers to have a sense of identity and
belonging to the brand, thereby forming a good cultural
atmosphere, using culture to gather consumers and form
brand online and offline consumer communities. This
strategy effectively distinguishes itself from the strong
brands in the field. Lululemon not only represents yoga
clothing. It is also synonymous with fashion and social
tools but also means a high-quality lifestyle. We also
analyze the Strength, Weaknesses, Opportunities, and
Threats to this company. A series of recommendations
would be proposed.
This article also exists the limitation. In this article,
we collected little data on the market condition. In the
future, we would investigate the market in detail and
present some quantity models on the research.
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