lululemon athletica inc. 2 01 8 report G.E.M.S. Laurel Friedman - - PDF document

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lululemon athletica inc.

201 8

Laurel Friedman Kelsie Heaslip Haley Soble Jamie Somerstein Grace Withers

G.E.M.S.

April, 24, 2018 ADV3500

report

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shop.lululemon.com

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the team

• ur philosphy

G.E.M.S., or Gaurenteed Excellent Marketing Solutions, is a hardworking team of individuals who are dedicated to assisting companies in their marketing and advertising pursuits. Guided by in-depth research, G.E.M.S. strives for consistency, accuracy, and quality of results and recommendations.

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laurel Friedman Grace Withers Jamie Somerstein Haley Soble Kelsie Heaslip

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table of contents

Agency Philosophy......................................................................................................................4 Team Members...........................................................................................................................5 Executive Summary.....................................................................................................................8 Research Questions....................................................................................................................9 Situational Analysis...................................................................................................................10 Industry Analysis.......................................................................................................................10 Company Analysis.....................................................................................................................12 Competitor Analysis..................................................................................................................14 Consumer Analysis....................................................................................................................18 Qualitative Research.................................................................................................................22 Quantitative Research...............................................................................................................32 Research Conclusions...............................................................................................................36 SWOT Analysis..........................................................................................................................38 Reccomendations....................................................................................................................40 References...............................................................................................................................42 Appendix.................................................................................................................................45

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executive summary

Lululemon athletica inc. was founded by Chip Wilson in Vancouver, Canada in

• 1998. It is a multibillion dollar, worldwide company that has over 400 stores as
• f January, 2018. Best known for its upscale clothing for yoga, running, cycling,

training, and other athletic activities for both men and women, lululemon is at the forefront of the athleisure and luxery athleticwear trend. Due to its prestigious positioning in the athleisure apparel industry, we analyzed lululemon athletica to gain a better understanding of the product benefjts associated with the brand’s high pricing strategy. In addition to researching the benefjts associate with the brand we analyzed the overall attitude towards the athleisure trend.

9 With the recent athleisure trend, we decided to analyze the price points of lululemon in comparison to other athletic apparel brands. Athleisure has been on the rise within the past few years. This upcoming trend can be defjned as comfy, casual clothing that can be used for exercise and everyday wear.

definition of athleisure research question

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situational analysis

industry analysis

brief history

The athletic apparel industry has been on the rise in more recent years as it has become more “fashion-forward” to wear athletic apparel in leisure settings. There has also been a rise in the industry as settings that were

• nce considered formal are

becoming increasingly casual. It is more acceptable today to wear comfortable clothing in public than it was in other decades. The industry has expanded with the rise in athletic participation and health consciousness as well. Withing this industry there are around 3,020 businesses/stores. The revenues of the global sports apparel market are around $656.72 billion. (see Appendix A)

seasonality

Athletic apparel has a relatively low seasonality. However, there are ties between sales in active apparel and seasons. Sales tend to increase during warmer tem- peratures when it is more natu- ral to spend time outdoors. For example, there is a rise in sales in colder climates between the months of March and August as it tends to be warmest in the spring and summer in those areas.

product lifecycle stage

This industry is in the maturity stage Industry has wholehearted market acceptance Industry goods lack large technological innovations Industry is saturated with major Players account for signifjcant amount of industry revenue

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growth & potential forcasts

The athletic apparel industry is predicted to grow 30% between 2016 - 2020, totaling to $353

• billion. In addition to this growth,

the prices of goods and consum- er demand, due to a rise in par- ticipation in sports, are expected to increase. Conversely, revenue growth predicted to slow, and most sales will come from return- ing customers.

the economy

The athleisure trend and subse- quent market grew 42% between 2009 and 2016. Exports and im- ports in this industry are low and

• steady. The locations of stores

dedicated to this type of apparel are typically located where the most active people of the US population live. Industry sales are somewhat dependent on con- sumer disposable income levels, as goods in this category are

• ften expensive, and therefore

considered luxuries. The level of capital intensity is low: for every $1 spent on labor, the industry spends $0.10 on capital.

legal & regulatory issues

The athletic shoe store industry is not subject to any industry- specifjc regulation. Congress and individual states have enacted trade regulations with the intention of creating a free and competitive economy. Industry costs are highly dependent on minimum wage levels (higher wage costs lead to lower profjt margins for industry participants).

societal & cultural considerations

The rising focus on health will keep industry revenue growth

• steady. Increased interest in

fjtness and healthy lifestyles has helped industry growth. Growing acceptance of casual wear in the workplace and in general has led to a boost in sales.

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company analysis

history & company mission

Lululemon was founded in 1998 by Dennis Chip Wilson, but the fjrst store, located in Vancouver, British Columbia, did not open until 2000. Lululemon’s athletic apparel is designed for those with an active lifestyle. Products are sold both online and in stores. Lululemon’s apparel includes, but is not limited to, tops, pants, shorts, jackets, and accessories, with an adult line (Lululemon) and a line for young girls (Ivivva). Lululemon prides itself on the “lululemon manifesto” instead of having a direct mission statement. The manifesto is a unique way

• f

expressing the company’s visions and inspiration. In 2017, Lululemon’s vision was to touch the lives of a billion people leading an active, mindful lifestyle.

sales

The company’s revenue in the United States have increased

• ver the past fjve years. In 2014,

revenues were $1.59 billion. These sales have grown and revenues to date in 2018 are up to $2.65

• billion. Below is a look at the annual

fjnancials from 2014 to 2018. Additionally, profjts are Revenue had grown by seven percent from previous years. Lululemon hopes to reach revenue sales of at least $4 billion by the year 2020. (see Appendix B)

locations

There are 351 lululemon stores and 55 Ivivva stores located in the United States, United Kingdom, Canada, Australia, New Zealand, China, Singapore, Hong Kong, South Korea, Germany, Switzerland and Puerto Rico. Lululemon also sells from many outlet stores and online. Customers love that lululemon has free shipping and free returns for their online orders.

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advertising expenditures & media allocation

Until recently, lululemon relied primarily

• n

word-of-mouth, store ambassador programs and community events for their marketing strategy. Corporate just announced their fjrst advertising campaign will be launching soon, which they plan to do through more traditional media channels. In 2016, lululemon spent $56,200

• f measured media in the US. This

is twice the amount allocated for 2015 advertising budget money. Lululemon uses Vice Media advertising agency for its work.

creative strategy

Lululemon focuses

• n

a community- based marketing approach. They differentiate themselves through this approach by participating in social media, an ambassador program, community events and community boards.

new developments

Within the product line, lululemon’s newest women’s leggings is made with Everlux™

• fabric. This premiere material is

meant to allow airfmow during hot, in-studio workouts. For the men’s line, lululemon is introducing an everyday, lightweight crew neck t-shirt. The design on the shirt is inspired by a photograph taken by a lululemon brand ambassador, Mason Mashon.

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Competitor analysis - direct

brief history

Athleta creates and sells women’s athletic wear and related accesso- ries through its catalog, website and fmagship store in San Fran- cisco, CA. Established in 1998, Athleta is a dedicated premium fjtness and lifestyle brand. In 2008 they were acquired by Gap Inc., which includes the Gap, Banana Republic, Old Navy brands.

advertising expenditure

For Gap Inc. expenditures in 2012 came out to $653 million to about $601 million in 2016. Athleta fjles their marketing and advertising budget under operating expenses

• n their Annual Report. In the

2017 report, it states that there was an increase of $138 million of

• perating expenses, partially due

to an increase of the advertising budget.

sales

Since Athleta is under the Gap name, their sales are included with Gap, Banana Republic and Old Navy brands. Revenues have fmuctuated for these brands within the past fjve years. Net sales were $16.148 million in 2013, while 2017 sales were $15.855 million.

media allocation

Their fjrst TV spot occurred in 2016 with the Power of

• She. With Athleta’s constant

marketing schedule, executives are trying to maintain and revive some of its brand image. Due to the ever-changing media environment, Athleta stays up to date on social media posts and

• nline dispersion of advertising
• campaigns. According to the

2017 Annual Report, Athleta mainly advertises in television and magazines, as well as other advertising events.

athleta

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position

Athleta’s mission is to ignite a community of active, healthy, confjdent women and girls who empower each other to realize their limitless potential. Simply, believing in the “Power of She”.

advertising strategies

Truth-telling, aspirational and inclusive The “Power of She” campaign was a major success. It was all about inclusion, empowerment, and women coming together to defending each other. This campaign also fjt perfectly with the new law enforced in France that requires marketers to label Photoshopped advertisements.

new developments

They are opening new retail

• locations. (Ex. In Tennessee)

creative strategy

Gap, Inc. has begun closing Banana Republic stores and

• pening Athleta locations.

Athleta is growing despite the apparel industry being in decline.

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Competitor analysis - indirect

brief history

According to their website, NIKE,

• Inc. “fosters a culture of inven-
• tion. We create products, services

and experiences for today’s ath- lete while solving problems for the next generation.” (https:// about.nike.com/)

advertising expenditure

For Nike expenditures in 2014 came out to $3.03 billion to about $3.34 billion in 2017.

sales

Nike’s estimated annual sales of $34.35 billion, and a net income

• f $4.24 billion in 2017.

media allocation

Nike says it boosted its spending

• n demand creation, which

includes advertising, brand events and digital marketing (10% to $804 million in 2016)

nike

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position

Nike’s mission is to help bring inspiration and innovation to all athletes around the world

share

• f voice

Digital Share of Voice was 3.49% in 2016

creative strategy

Nike advertising utilizes the emotional branding technique

• f Heroism to inspire customer

loyalty all around the world. In utilizing this technique, the hero comes from humble beginnings, challenges a foe greater than he or she, and prevails against all odds. Nike marketing isn’t the only group that utilizes this

• model. Nike brand strategy

situates you, the consumer, in this story as the hero and illustrates your lazy side as the villain.

new developments

Nike has a strategic partnership with Zotefoams, a footwear technology Development of the Nike+ Mobile App

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consumer analysis

trends

$270 billion and a sales growth of 42% over the last 7 years. Millennials are driving the majority

• f growth in the market with their dedication

to athleisure apparel. Lululemon offers more than apparel, it offers a community with a common lifestyle of health and mindfulness. “For example, lululemon embodies a healthy lifestyle for mind, body and soul – something millennial consumers are extremely passionate about” (Forbes). The retailer offers events such as yoga workshops to customers. Four percent of teenagers, with an average age

• f 16, began to wear lululemon as of Fall
• 2016. These teenagers tend to come from

upper-income families that have and overall household income of $109,000.

consumer attitudes

According to data from Mintel, when it comes to athletic wear, men are more brand-conscious than women. Female store preferences indicate a desire for a one-stop shopping experience, making them more likely to buy active wear while they’re buying other items. Men tend to seek out brand name athletic stores as a “destination” One-third of survey population wears the same active wear for working out and casual day

• clothing. Women are more likely to purchase

active wear as inspiration to exercise more frequently (Mintel).

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consumer lifestyle

“Former chairman and founder of lululemon, Chip Wilson, developed a “muse” named Ocean as inspiration for his products. Ocean is a single 32-year-old woman who makes $100,000 a year.” (New York Times) Similarly, when lululemon came out with male apparel Wilson created a male muse, Duke, who is a 35- year-old male who earns a higher salary than Ocean and enjoys athletic activities like snowboarding and surfjng. According to Mintel’s The Affmuent and High Net Worth Premium Brand and Luxury Consumer Report conducted in 2016, 59% of affmuent and high net worth millennials purchase luxury brand products at full price, which is signifjcantly higher than the 41% of all affmuent and high net worth individuals purchase goods at full price. Millennials are also more likely to make spontaneous purchases and purchase items that are non-essential. According to the data, higher income households (200,000 or more) are more likely to participate in yoga for longer durations of time, which is a large portion of lululemon apparel’s advertised

• purpose. lululemon consumers are typically

focused on their career and their family, but also prioritize a healthy lifestyle, both physically and mentally. These consumers generally live an active lifestyle and most enjoy yoga or related activities. While lululemon attempts to foster a sense

• f community among its customer base,

the brand excludes potential customers by

• ffering a limited range of sizes. Competitors

like Nike offer plus size athletic clothing, but lululemon clothing only goes up to a size 12.

brand limitations

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primary research

shop.lululemon.com

21 Lululemon has a substantial amount of secondary research available for anyone to access. However, we found it necessary to conduct our own primary research in search

• f consumer behavior trends, demographic information,

and brand recognition and loyalty. We did so by using both qualitative and quantitative studies to receive the results below.

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qualitative research

In order to determine how to increase sales, we researched what exactly drives consumers to purchase not only lululemon but high end athletic and leisure clothing in

• general. We utilized a number of research methods to

pinpoint what exactly causes consumers to purchase activewear, expensive activewear, and lululemon products in particular. The methods used include in-depth interviews and focus groups. Conducting in-depth interviews allowed us to dive into what exactly drives individuals to purchase activewear, how activewear makes them feel, how they feel when wearing more expensive activewear, and other related

• questions. Focus groups allowed for a more collaborative

environment, which fostered a more productive information gathering process.

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shop.lululemon.com

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interview

The results of our interviews reveal that all of our participants feel that lululemon produces high quality products, with a majority of our participants reporting that they feel that the quality of the products justifjes the higher

• prices. Our participants reported shopping at lululemon because of the

high quality and longevity of their products. While they noted the high prices, our participants noted that the products they have purchased there last them a long time so they do not have to shop at lululemon too frequently and there is no need to replace the items they already own. Our participants all have had primarily positive experiences regarding all aspects of lululemon, from their products, to shopping in the stores and working with the employees. Our research shows overall positive feelings towards the athleisure trend, as our participants reported that they love that they can wear easy, comfortable clothing and still look fashionable. Our participants all enjoy leading active lifestyles and feel that wearing athleisure helps them facilitate this way of life.

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• 1. What are your feelings on the athleisure trend?
• 2. How many items have you purchased from lululemon in the past 6 months?
• 3. What do you typically purchase from luluLemon?
• 4. How do the price points impact which lululemon products you purchase?
• 5. What alternative athletic clothing retailers have you purchased from?
• 6. What did you like about the competitor?
• 7. What did you dislike about the competitor?
• 8. How do you feel about lululemon’s pricing?
• 9. Elaborate on what qualities you would pay more for in a brand.
• 10. What are your feelings about lululemon’s online store?
• 11. Have you visited a lululemon location in person?
• 12. Describe your experience with customer service, store atmosphere, and store

interview questions

26 Annabella Gallagher, 20, was interviewed for the qualitative research portion of the project. She is pro-athleisure and enjoys the trend because it promotes healthy living and a positive lifestyle. She likes that this trend can be tailored to any type of man, woman of any shape or size. When buying athleisure clothing, Anna prioritizes price. Because of this, she sometimes does not shop at lululemon because of the high prices

• f their products. Anna owns lululemon sports bras, and a few pairs of leggings. Often,

Anna shops at competitor stores because of the lower pricing. However, she did mention that she notices the lower quality in products that are cheaper. Anna does sacrifjce quality for price. When asked about her thoughts on lululemon pricing, she said it is reasonable for smaller items, like sports bras, but unreasonable for products like the leggings. In the leggings she does own, Anna notices the higher quality that comes with the higher price. Overall, Anna has a good perception of the lululemon brand.

interview 1 summary

Alyssa Rubin is a 21 year old female from Wellington, FL. She is a rising senior at the University of Florida and was able to take the time out of her day to talk about the lululemon brand. When asked about her feelings towards the athleisure trend and the lululemon brand her immediate response was that she loved it. She doesn’t mind the prices as much because she doesn’t purchase on a regular basis. Instead she makes an actual purchase two times within a six month time frame. Rubin said that when purchasing lululemon versus other competitor brands such as Nike and Target, she takes into consideration the quality, comfortability, material, design and customer service. “Honestly I went into the store for the fjrst time about fjve years ago because I was so drawn into the design and organization of the store. Their employees were so welcoming and made sure that everything was fjtted perfectly to my body” said Rubin.

interview 2 summary

Devin Lewis, a 22 year old college student, is a supporter of the athleisure trend, but comments that there is a distinction between which clothing items are athletic wear and which ones are athleisure. An easy way to see this distinction, she explains, is in tennis shoes. For example, she wears a pair of Brooks for running but adidas or nikes for everyday purposes. Devin has been a loyal lululemon customer for around 8 years. In this time she has collected a rather extensive collection of their products, and noted that her very fjrst pair of leggings still look great to this day. Although pricing does affected the quantity of items she purchases, the quality of the products keeps the price from deterring her. She noted that she receives a discount for being a group instructor, which does help a little with the price. Despite raving about her in-store experience, Devin mentioned having issues with the website glitching and not being organized effectively. Although she owns and wears mostly lululemon when working out, Devin wears athletic and athleisure items from the company Outdoor Voices. She typically wears their items in an athleisure capacity, like to class and to run errands. Devin noted that she would still choose lululemon over Outdoor Voices for working out due to the fjt of the clothing and the materials used.

interview 3 summary

27 Charlie Friedfeld, a 22 year old female, is fond of the athleisure trend, as she likes that it is a way for her to look presentable while feeling comfortable at the same time. She says that wearing athleisure clothing helps her stay cool in the warm Florida climate on her commute to class. She usually purchases the workout tops at Lululemon and has bought two in the last six months. Friedfeld feels that the quality of the clothing at lululemon justifjes the premium pricing. Because her clothing that she buys there lasts her such a long time, she feels that everything is well-priced. Besides quality, Friedfeld said she would also pay more for a certain brand label. While she usually shops in Lululemon’s retail

• r outlet stores, she has shopped online for lululemon and found the website relatively

easy to navigate. When she shops in the stores, Friedfeld has found that the workers there are very friendly and helpful. They help her pick out apparel based on what she will be wearing it for. She also noted that the stores have a modern design and are spacious and organized. Friedfeld has not always exclusively shopped for athleisure at Lululemon. She has also purchased from the brand Fabletics, which sells nice quality clothing at a low price. However, she did not like shopping at Fabletics because she had to make an account to shop there and they would continue to charge her monthly until she canceled her subscription.

interview 4 summary

In order to gauge the male perspective on the athleisure trend and the lululemon brand, we interviewed Robby Mijares. Robby, a 21-year-old from Hollywood, FL, feels that the athleisure trend is a fun spin on traditional clothes. “It shows the creativity of fashion infmuencers,” said Mijares. Mijares has visited a variety of lululemon locations including the outlets in Orlando and Sawgrass Mills Mall, and the brick-and-mortar stores in downtown Fort Lauderdale, Boca Mall, Galleria Mall and Aventura Mall. Generally, he gets more excitement out of going to the outlet locations because he feels that the deals are more enticing. “It’s exciting to see how much stuff I can get for a great price. I’ve always had positive experiences with the people working there,” said Mijares. If he can fjnd items on sale, he is motivated to buy more than one article of clothing in one visit to the store. His experience in lululemon stores has been overwhelmingly positive, the atmosphere is always very clean and bright, which he appreciates when he is shopping. In fact, Robby described his shopping experience as “the opposite of hollister.” The customer service is consistently great, and the staff will reserve a room for him when they see that he is walking around with a pile of clothing. When Robby does shop for lululemon online, he appreciates that the website provides multiple angles of the clothes. He also fjnds that the reviews are helpful in determining what he is going to buy. In terms

• f cost, Mijares feels that lululemon’s price points are an appropriate representation of

the brand’s positioning as a luxury activewear company. The longevity and wearability of the apparel makes Mijares inclined to pay more for the brand

interview 5 summary

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focus group

Our focus group participants are all consumers of lululemon to different

• extents. Some of our participants shop exclusively at lululemon, while others

are more open to shopping competing brands such as Athleta on the basis

• f price. While the biggest complaint about lululemon was their pricing, all

participants feel that the quality of the products is why their items are all relatively (in comparison to competing brands) expensive. The quality of the clothing at lululemon was the overwhelming incentive for our participants to shop at lululemon. They also appreciate the comfort of the clothing there. Comfort is another aspect that our participants seek in their athleisure wear, as they would like to stay cool in the warm Florida climate where they all go to school. While some of our participants noted that the quality at lululemon is noticeably better, they also reported shopping other brands for lower quality items when the items are more affordable. Willingness to shop at lululemon also depended on whether the participants were paying for their own clothing or if they were being supported by their parents. Our participants reported that they are less inclined to pay for lululemon when they are paying for their items out of their personal funds. Our focus group participants primarily shopped in stores at malls or outlets because it is diffjcult for them to determine which size they will need when shopping

• nline. They also enjoy the layout of the store and feel that the store is very
• rganized and has great customer service. Overall, our participants were

very likely to purchase lululemon, but this was dependent on what item they were looking to purchase. For some of the more expensive items, some of our participants reported shopping at competitors such as Athleta

• r Victoria’s Secret. Our participants wear athleisure clothing at least half
• f the days in a week, if not all week long, and make a point in exercising

several days a week. Some of our participants only wear lululemon while working out, while others prefer to save their lululemon for other occasions such as going to class because of how nice the clothing is.

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• 1. What is your name, age, hometown?
• 2. What are your feelings on the athleisure trend?
• 3. Are you a consumer of lululemon?
• 4. Where do you consume lululemon (in stores, online, outlets, etc.)?
• 5. What qualities do you fjnd most important in athletic wear? (price, quality fjtting, style)
• 6. Who do you consider to be lululemon top competitors?
• 7. How likely are you to purchase lululemon versus the competitors?
• 8. What do you like about lululemon? What do you dislike?
• 9. Is price important when purchasing athletic wear?
• 10. How often do you purchase lululemon?
• 11. How often do you wear workout clothes?
• 12. How often do you go to the gym?

focus group questions

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question 1

A: Skyler Brandfond, 19 Boca Raton, FL B: Kendall Soule, 21 Asheville, NC C: Sabrina Weldon, 20 Tampa, FL D: Kelsie Boyd, 22 Orlando, FL A: preferred type of clothing B: pro athleisure, loves it C: fan of how comfortable it is and wears it everyday D: great for class, but should only be worn in certain settings A: yes B: yes C: yes D: yes A: in the store because she likes to try the clothes on before buying B: shops in the store and

• utlets, does not shop
• nline often

C: depends on what she is buying D: has only bought in the store A: quality, comfort, breathable material B: quality, odor eliminating, versitile styles C: quality, opacity of the leggings D: quality and variety of sizing and styles A: Athleta, Nike, Adidas B: Athleta, Fabletics C: Athleta, Victoria’s Secret D: Athleta, Victoria’s Secret

question 2 question 3 question 4 question 5 question 6

31 A: not often - 3x a year B: not often - 4x a year C: not often - 2x a year D: receives it as a holiday gift most years A: 4-5x a week B: 7x a week C: 6-7x a week D: 7x a week A: 2-3x a week B: 3-4x a week C: 3-4x a week D: 3-5x a week A: price is important, but quality is more important B: price is important, but quality is more important C: it is worth the investment D: quality makes it worth the price A: likes organization of the store B: likes the aesthetic of the store, styles of the clothing, and customer service C: likes the fjtting & quality D: likes the customer service & store organization *all dislike the price* A: very likely B: it depends on the item C: it depends on the price

• f the item and my budget

at the time D: buying lululemon is more

• f an indulgence so she

does not purchase often

question 7 question 8 question 9 question 10 question 11 question 12

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quantitative research

After conducting qualitative research, we gained a better understanding of what motivates people to purchase lululemon products and others like them. In utilizing the results from that research, we developed a more effective concept for our quantitative research. We utilized a survey for our quantitative research. Distributing a survey allowed us to reach a broader range of participants, which proved particularly benefjcial for surveying busy college students.

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• 1. How often do you purchase lululemon products?
• 2. Why do you purchase athletic apparel?
• 3. How have you interacted with lululemon?
• 4. Did you buy lululemon products on sale or at an outlet?
• 5. WAre you willing to buy lululemon products ful price?
• 6. What lululemon products do you own?
• 7. Which product(s) did you purchae most recently?
• 8. What attributes do you value in lululemon products?
• 9. Was the price a main factor in your purchase decision?
• 10. What is your gender?
• 11. What is your ethnicity?
• 12. What is your age range?
• 13. What is your highest completed education level?
• 14. What is your employent status?
• 15. What is your household income?

survey questions

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survey

After distributing our survey, we accumulated 183 responses. Of these responses, it is clear that most respondents do buy lululemon products. About 30% of survey takers said that they have never bought any lululemon

• products. If a participant selected the “never” option on this question, they

were redirected to the demographic information at the end of the survey. Roughly 74% of participants buy athletic wear for both exercise and casual day wear and most interact with lululemon through its brick and mortar stores. It is important to note that 84% of the survey takers selected yes when asked if they would buy lululemon products full price. Additionally, a little more than half of the participants chose that price was the main factor in their purchase decision. When asked about the different attributes participant’s values about lululemon products, we got an array of results, represented in the graphic on the right. Most of the survey takers were female, white, and ranged from 18-20 years

• ld. Below are some graphics of the results of our survey.

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36

research conclusions

shop.lululemon.com

37 Through our research methods, we have identifjed several trends in consumers’ attitudes and behaviors regarding the lululemon brand: In our qualitative research, we found that participants overwhelmingly agreed that although the lululemon’s prices are higher than most activewear brands, the quality is worth the cost. Participants in the interview indicated that the clothing they purchase from lululemon is long-lasting, which means they do not need to make new purchases

• ften. Additionally, participants expressed satisfaction with the condition
• f both online and physical lululemon retail locations, along with the

quality of customer service. The individuals who took part in the focus group expressed similar sentiments concerning the trade-off between lululemon’s prices and the quality of the product. Comfort was a key motivator for these customers to purchase lululemon and athleisure apparel as a whole, due to the warm Florida climate. As students between the ages of 19 and 22, the focus group participants indicated that their willingness to purchase was infmuenced by whether or now their parents would supporting them fjnancially. If the expenses associated with shopping at lululemon came directly out of personal income, the students were more likely to shop for a less expensive alternative. Our survey provided substantial quantitative data that helped us understand the signifjcance of price for lululemon consumers. When asked to rate the importance of different product attributes, 72% of respondents identifjed quality as “extremely important.” Contrastingly, 1.6% of participants indicated that sizing options were “not at all important.” However, only 3 out of 183 survey participants used the “not at all important” to express their sentiment toward any of the product

• attributes. The majority of survey-takers were students with a household

income of $100,000 or more. 84% of those who took the survey disclosed that they are willing to pay full-price for lululemon products.The one foreseeable issue with the survey data is the predominance of caucasian, female respondents and the lack of alternative demographic participation. While the age distribution was relatively indicative of lululemon’s target market (69.89% fell between 18-20 and 28.98% between the ages of 20- 23), approximately 90% of survey participants identifjed as white females.

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strengths

Besides being an athleisure clothing retailer, lwululemon fosters a community for people who want to live an active and mindful lifestyle. This builds customer loyalty and brand awareness Brand equity is high and people shop there to sport the prestigious logo Large portion of customer base are millenials who will continue to purchase brand for many years High quality products Fashionable and innovative style Positions itself as a premium brand through premium pricing

weaknesses

Limitations in sizes that lululemon offers excludes potential customers Lack of mass marketing leads to slower growth than its potential Marketing is decentralized and each store can choose its message Retail stores are sparse

SWOT analysis

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• pportunities

Fashion trends are changing and it has now become “trendy” to wear athleisure clothing for everyday, non-athletic purposes Certain settings that were once considered formal environments are becoming more casual Rising focus on health and maintaining an active lifestyle International expansion E-commerce purchases help increase sales New market segments such as men and children Have built up brand recognition

threats

Industry costs are highly dependent on minimum wage levels lululemon has several direct competitors in the industry as well as indirect competitors that have similar product lines

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strategic recommendations

After conducting various research and analyzing the Lululemon brand and its corresponding environment, our group has come up with a few recommendations in order to improve According to our fjndings, the majority of lululemon customers prefer to purchase their merchandise in brick-and-mortar locations as opposed to the online store. In the interest of driving traffjc to the lululemon webpage, we recommend adapting a inbound marketing approach. Rather than using interruption- based marketing strategies like banner ads, inbound is focused on empowering the

• buyer. Content marketing, a subset of inbound marketing, revolves around the creation of relevant,

compelling content to draw potential customers. For example, lululemon has the opportunity to partner with infmuential bloggers or fjtness professionals to promote their products in the form of workout tutorials. When viewers see a renowned fjgure wearing lululemon apparel to exercise, it translates as an endorsement for the brand even if this is not explicitly stated. The same strategy is frequently used on Instagram as companies pay users, like fjtness-celebrity Kayla Itsines, who have a signifjcant following to post sponsored content. Content marketing is a heavily targeted approach that can be tailored to any market according to their psychographic and behavioral characteristics. The intention is to create value for the customer by supplying information that informs or entertains them, while simultaneously promoting awareness of the brand.

content-based marketing

41 Another effective means of improving customer engagement with the online store is the use of Search Engine Optimization (SEO). SEO describes the process of maximizing the amount

• f visitors to a website by ensuring that the site appears higher on the list of search results than
• competitors. Search Engine Optimization ties in to content-based marketing because the more

the brand is mentioned online, the higher chance it will appear in search results for a given topic. When we use search engines, an algorithm sifts through billions of pages in a matter of seconds and presents the results that are most relevant to the search terms. However, the order in which these results appear is determined by the popularity of the page, as popularity is a key indicator of the value of the information provided. Unlike Google AdWords, which encompasses paying for optimal positioning on Google search pages, SEO is typically an organic process. There are multiple calls-of- action to get the most out of SEO, the following are reliable actions that lululemon could take:

search engine optimization

Create a website with distinct text links for each page Make sure that your <title> elements and ALT attributes are descriptive and accurate. <title> elements: defjne the title of the document, displayed in a browser’s title bar ALT or alternative attributes: written description of display images. Mainly implemented for the accessibility community (i.e. for blind users). Use a human-friendly URL with relevant keywords Include keywords in descriptions of each product offering Encourage customer referrals by offering discounts or other incentives when users share links to the page in a Google search for the phrase “exercise apparel,” lululemon brand fails to appear on the fjrst page of results. However, competitors like Athleta and Target both fall on the primary landing page for the search query--this poses a critical threat to lululemon’s online performance.

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fjnancialSummary.html?companyId=11469000000000&newsCompanyDuns=048626915

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lifestyle-millennials-seek-more-than-just-comfort-from-athleisure-wear/2/#28784e073137 Goods, I. D. (2013, September 18). DICK’S Sporting Goods Details Growth Strategy to Reach $10 Billion in Sales and 10.5% Operating Margin by the End of Fiscal 2017. Retrieved February 06, 2018, from https://www.prnews- wire.com/news-releases/dicks-sporting-goods-details-growth-strategy-to-reach-10-billion-in-sales-and-105-op- erating-margin-by-the-end-of-fjscal-2017-224290471.html Greenstein, T. (2017, April 24). To Meet Consumer Demands, Fabletics Makes Its Own Sauce. Retrieved Febru- ary 06, 2018, from http://wwd.com/business-news/technology/fabletics-bespoke-subscriber-model-10864958/ Group, T. N. (2017, May 17). Understanding Seasonality in Active Apparel and Footwear. Retrieved February 06, 2018, from https://www.npd.com/wps/portal/npd/us/blog/2017/understanding-seasonality-in-active-appar- el-and-footwear/

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industry/default.aspx?entid=5326 Jafgray, I. P. (n.d.). Taking stock with teens - Fall 2016. Retrieved February 06, 2018, from http://www.piperjafgray. com/2col.aspx?id=4200

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Nike brand strategy: emotional branding using the story of heroism. (2017, March 26). Retrieved February 06, 2018, from http://602communications.com/nike-brand-strategy-emotional-branding-using-the-story-of-hero- ism/ Nike Increases Advertising And Digital Budget; Sales Up. (n.d.). Retrieved February 06, 2018, from https://www. mediapost.com/publications/article/271792/nike-increases-advertising-and-digital-budget-sal.html?edition= Pasquarelli., A., & Adrianne Pasquarelli A reporter with Ad Age since 2015, Adrianne Pasquarelli covers the marketing strategies of retailers and fjnancial institutions. She joined Ad Age afuer a dozen years of writing for Crain’s New York Business, where she also focused on the retail industry. Over the course of her career, she has won awards from the Society of American Business Editors and Writers, the National Association of Real Estate Editors and the Jesse H. Neal Awards. Follow View all articles by this author. (2016, April 18). Gap Inc.’s Athleta Debuts First TV Spot. Retrieved February 06, 2018, from http://adage.com/article/cmo-strategy/gap-s-athleta- debuts-tv-spot/303576/

44 Pasquarelli., A., & Adrianne Pasquarelli A reporter with Ad Age since 2015, Adrianne Pasquarelli covers the marketing strategies of retailers and fjnancial institutions. She joined Ad Age afuer a dozen years of writing for Crain’s New York Business, where she also focused on the retail industry. Over the course of her career, she has won awards from the Society of American Business Editors and Writers, the National Association of Real Estate Editors and the Jesse H. Neal Awards. Follow View all articles by this author. (2017, October 03). How Athleta is Bucking the Apparel Downturn and Powering Its Growth. Retrieved February 06, 2018, from http://adage.com/ article/cmo-strategy/athleta-bucking-apparel-downturn/310716/ Financial Information. (n.d.). Retrieved February 06, 2018, from http://investor.lululemon.com/fjnancials.cfm Financial Information. (n.d.). Retrieved February 06, 2018, from http://investor.lululemon.com/fjnancials.cfm Rittenhouse, L. (2017, October 10). Dick’s Sporting Goods Picks VML as Creative Agency of Record for Its New Apparel Brand. Retrieved February 06, 2018, from http://www.adweek.com/agencies/dicks-sporting-goods- picks-vml-as-creative-agency-of-record-for-its-new-apparel-brand/

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appendix

A - size of industry b - lululemon sales