By: Eva Fernandez
With the concept of health and fitness on the rise, demand for athleisure clothes, created for both exercise and everyday use, is increasing at a rapid rate. An industry that used to be occupied by a few firms, has now expanded into a monopolistically competitive market with many companies attempting to target the busy, yet athletic consumer. If one thing within this industry has remained constant, it’s Lululemon’s popularity and dominant presence in this market. Lululemon is a yoga-inspired brand based in Canada. It opened in 1998, but since this date has expanded from just yoga apparel and has opened 404 stores worldwide. Lululemon can contribute its rising success and global popularity to its unique advertising strategies implemented to differentiate itself and its products from competitors.
Lululemon main competitors include Nike, Athleta, Adidas, Under Armour, Zella, and Fabletics. However, this company stands out due to how it has created its well-known brand name. One strategy Lululemon implements in their business strategy is knowing their consumers and the psychology behind their purchasing choices. According to Business Blueprint, Lululemon understands that their audience is often fitness oriented people that are non-conformists and see themselves as individuals. These consumers aren’t appealed to giant logos of these mega corporate brands. Rather, they would rather support a more personable company that emphasizes quality. Lululemon recognizes these wants and creates functional fashion with a small, reflective logo.An advertising strategy that sets them apart is their outreach to local influencers to cost-effectively endorse the brands. Rather than spending millions to endorse a professional athlete, they opt to find about 20 highly respected fitness instructors within an area with a storefront. They send these small-community influencers some merchandise, put them on their social media, and endorse their local businesses. This builds a strong connection between corporate Lululemon and local influencers as these influencers feel loyalty to the brand and exclusively promote Lululemon to those they train. This strategy is both cost-effective and maintains the appealing atmosphere of a local, friendly business.
To maintain this feeling of a local business, employees are trained differently than those of say, Nike or Under Armour stores. These employees are titled “educators” are told to not sell the product, but rather educate the uses of each product and endorse the overall athleisure lifestyle. This allows customers to trust the brand rather than feel pressure to purchase. Customers are also addressed by name and their feedback is highly regarded. All this serves to build a relationship with the consumer so they come back and bring their friends. This cycle is what brings Lululemon its success.
Because of all these successful strategies, Lululemon can set a higher price than other brands in this monopolistically competitive industry. When a customer feels valued and confident in the quality of the clothing you can charge a high price and therefore bring in a high profit. This allows for fast expansion, ability to purchase prime property for new stores and to extend the brand internationally. The unique ways that Lululemon differentiates itself from its competitors allows it to dominate the athleisure market and find increasing success each year in operation.
“Eight Secrets to Success from Lululemon.” Business Blueprint, 2 Dec. 2016, businessblueprint.com.au/secrets-to-success-lululemon/.
“Lululemon Athletica.” Wikipedia, Wikimedia Foundation, 4 Dec. 2018, en.wikipedia.org/wiki/Lululemon_Athletica.
Newlands, Murray. “How Lululemon Made Their Brand Iconic: An Interview With SVP Of Brand Programs Eric Petersen.” Forbes, Forbes Magazine, 21 Feb. 2016, www.forbes.com/sites/mnewlands/2016/02/21/how-lululemon-made-their-brand-iconic-an-interview-with-svp-of-brand-programs-eric-petersen/.
Quiroz, Michael Angelo. “A Growth Strategy for Lululemon – Michael Angelo Quiroz – Medium.” Medium.com, Medium, 8 Jan. 2018, medium.com/@michaelangelo_q/a-growth-strategy-for-lululemon-68819680e511.
Luke Lochner
ReplyDeleteI have recently wanted to purchase more lululemon gear and it is because of the high quality of the products and the fact that the lulu logo is a very respected logo. I enjoy all the apparel I have of lululemon even though it is very expensive. The way they treat you in the stores is good too. They don’t get all up in your grill when you are trying to browse around which makes me want to come back more. I would say that the one negative of lululemon that I just learned from this article is that they were created in Canada.
I agree that Lululemon is a high quality product that lots of people purchase. Since its so expensive a lot of people also stray away from the product and buy clothes that are more cheaper but still have pretty high quality. Other companies such as Fabletics have more styles of athletic clothes and it is all based off online so you can purchase your clothes at home. This makes the market a lot more competitive which is really good for the economy as more and more people keep buying items they prefer the most.
ReplyDeleteAs someone who is not impressed by brand logos, it intrigues me that there are brands that can identify themselves without having to... brand it. As the active wear industry grows, each company succumbs to branding and generic advertising, but Lululemon seems to set themselves apart. While the prices can be high, people are willing to pay for it because of the quality and the experience you get. This is like restaurants where the food is more expensive on a beach front. People are still willing to go there because it is the experience that matters. The idea of looking at the psychology of the market is a smart idea as nowadays more and more people are trying to become individual from others. While there market tools are working, what would happen if they begin to sponsor popular athletes?
ReplyDeleteI definitely agree that regardless of the price, Lululemon will continue to grow as a company. I personally wear Lululemon clothing and the quality is outstanding compared to a classic Nike or Under Armour. The leggings last months in comparison to a Nike pair of leggings that may only last a few wears and begin to fade in color. Additionally, the store hires fantastic employees. You can tell the employees are educated rather than just working for the store to make some easy cash. They know the products they are selling. I bought a pair of leggings a few weeks ago and the lady who checked me out was informing me the best way to wash and keep the leggings in good condition. I really appreciate that education when I am spending over 100 dollars for a pair of leggings. I want them to last and with that education I know how to make them last. The company also saves a lot of money having athletic fit people advertising their clothing rather than celebrities. Celebrities have higher expectations for the amount they are getting paid to do some modeling of clothing while normal average athletic people wouldn’t necessarily. The only concern is while the company begins to become more popular, you have to wonder if the prices will continue to rise. At some point, it could become unaffordable for some which may draw consumers away and lower the demand for the products produced by Lululemon.
ReplyDeleteI agree that Lululemon is doing a good job of product discrimination in a monopolistically competitive market. By choosing to focus on a specific group of consumers, Lululemon appears to understand that, to be successful in this market structure, they must exploit a certain niche in order to charge higher prices. Based on your description, Lululemon definitely seems to cater to younger customers who tend to shop at local businesses and value the feeling of being an individual. Having a clear description of the customer allows the company to employ more unconventional advertising that it knows will resonate with younger customers. In the end, this generates higher profits for the firm.
ReplyDeleteI really like how you chose to talk about Lululemon and how it is part of a monopolistically competitive industry, as well as I learned a lot about the company that I didn't know. It is very interesting to compare them to Nike or Adidas as both of those brands rely heavily on branding and expensive athlete sponsorships, but the fact that Lululemon does neither of these things speaks for itself. Targeting local influencers and businesses is a very smart way to target a niche market in an explosive way. It was also good to note that they don't rely on branding, having a very small logo, but can still charge high prices because of these other aspects that you mentioned. I will say that one downside of Lululemon is that their competitors have a wide expanse of products to choose from with very loyal customers, while Lululemon continues to serve a small niche group of athletic consumers. I wonder, if they were to expand their product line--with all the loyal customers that they have--if they could increase their profit further or if it would detract from the relationship they have established with the customer?
ReplyDeleteI find it interesting that they choose to not partner with large name celebrities, but choose to make sure their customers can see that their products are worn by someone in their community. I myself wear lululemon and they have very good quality clothes and amazing customer service, which continues to bring a lot of people back into their stores. I wonder if they every had a period of time where they were not using the business model they now use, and if they found that unsuccessful? To sell these high priced goods, they needed to find that niche target market and a way to sell the products that people found value in.
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