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08

14

Fall
Fall

Exhibit 1: The Yoga Apparel


Industry - Five Forces

Competition
Rival Sellers
Competition
industry is
on the
quality,
performance
capabilities
rival
selling a
comparable
Competition
sells their
much less
Lululemon,
from brands
that sells at a
and Athleta
themselves
(C1). The
the yoga
apparel
has been
people have
the product
than just
has propelled
segment to
growth that
companies
recognized
potential.

Competitio
n from rival
sellers
-Moderate
Competitio
n from
potential
new
entrants
-Low

Competitio
n from
producers
of
substitute
products
-High
Supplier
bargaining
power
-Low

Customer
bargaining
power
-High

Competition From Substitute


Products
Brands like Nike and other large
sports apparel companies have now

Moderate direct competition in


yoga market
Large competitive sports apparel
industry
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
Substitutes have less of the
market
Substitutes are lower quality

Intense rivalry among suppliers


High volume orders are
important suppliers
Varied distribution channels
required
Sizeable number of customers

From
within the
centered
products
and
with many
companies
product.
generally
product for
than
ranging
like Nike
bit lower
pricing
20$ lower
growth of
sports
industry
huge a
been using
for more
yoga. It
this
such
other
have
the

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

Bargaining Power of Suppliers

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 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 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.

Strategic Group Map

Price & Preceived Quality

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)

Operating Profit Margin


Net Profit Margin
Gross Profit Margin

2012.0

2011.0

2010.0

2009.0

Hig

h-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).

Extensive Distribution Facilities


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.
Capable Workforce
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.
Innovation
Does Lululemon have what it takes in the industry?
Marketing is essential to project a brands Image within the industry

Marketin
Marketin
g
g
Activities
Activities

This factor is used to better understand the consumer and respond to consumer
interests. Research is conducted globally cover demographics, marketplaces and
changing interests.
Contracting with manufactures to produce and distribute the products efciently is
of the utmost importance when dealing with large quantities of product.

Extensive
Extensive
Research
Research
&
&
Developm
Developm
ent
ent
Production
Production
and
and
manufactu
manufactu
ring
ring
facilities
facilities

distributio
distributio
n facilities
facilities
n

Company owned stores, outlets or retailers to distribute the product

Employees, staff and executives are just a small part of what makes the day to day
operations of any major company

Capable
Capable
Workforce
Workforce

Innovation
Innovation

Staying current through product development and creation

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 efcient. 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'sPantsAren'tWorthThatMuchMoreThanThe
Competition."BusinessInsider.BusinessInsider,Inc,24Sept.2014.Web.02Oct.
2014.<http://www.businessinsider.com/whylululemonspantsaresoexpensive2014
9>.
C2)"Lululemon:BuildingtheBrandfromtheGroundYogaMatup."Strategy.
StrategyStaff,13Jan.2013.Web.03Oct.2014.
<http://strategyonline.ca/2003/01/13/lululemon20030113/#ixzz3F6ZkVgVY>.

C3)"EducatingPeopleForTomorrow."MBALectures.MBALectures,7Jan.2011.
Web.03Oct.2014.<http://mbalectures.com/management/strategic
management/1178/keysuccessfactorsofnike.htm
C4)Lutz,Ashley."LululemonHasOneHugeHopeForExpansion."BusinessInsider.
BusinessInsider,Inc,11June2013.Web.03Oct.2014.
<http://www.businessinsider.com/lululemonmustexpandmenswear20136