08

14

Fall
Fall

Exhibit 1: The Yoga Apparel

Industry - Five Forces

Competition
Rival Sellers
Competitio
n from rival
sellers
-Moderate
Competitio
n from
potential
new
entrants
-Low

Competition
the industry is
centered on
products
performance
capabilities
many rival
companies
comparable
Competition
generally sells
product for
less than
Lululemon,
from brands
that sells at a
Competitio
lower and
n from
producers
pricing
of
themselves
substitute
lower (C1).
products
growth of the
sports apparel -High
Supplier
has been
bargaining
people have
power
using the
-Low
for more than
yoga. It has
Customer
propelled this
bargaining
segment to
power
growth that
-High
companies
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

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
quality,
and
with
selling a
product.
their
much
ranging
like Nike
bit
Athleta
20$
The
yoga
industry
huge a
been
product
just
such
other
have

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 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

igh-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).

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,
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

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/whylululemonspantsaresoexpensive
20149>.
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."Business
Insider.BusinessInsider,Inc,11June2013.Web.03Oct.2014.
<http://www.businessinsider.com/lululemonmustexpandmenswear20136