This case study discusses the development of Lululemon Athletica (Lulu) which was founded by Chip Wilson in 1998. Competing with Under Armour and Athleta, Lulu must find effective strategies to catch up with its rivals. This case study proposes suggestions and recommendations for the company to take to increase its growth and keep on pace with its competitors.
Alice M. Tybout
Harvard Business Review (KE1010-PDF-ENG)
June 13, 2017
Case questions answered:
- What is the central issue?
- What are the alternative solutions?
- What is your recommendation?
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Case answers for Lululemon Athletica
Executive Summary – Lululemon Athletica
Lululemon Athletica takes pride in their products and has patents on their design and engineering to back that. With a background in stretch fabric and durable clothing, Chip Wilson was not new to the playing field. He held an extensive knowledge base in activewear material. Rivaling with companies such as Under Armour, who had revenue of $3.96 billion in 2015, and Athleta, who had over 100 stores by 2015, Lululemon had some catching up to do.
With a revenue of $1.8 billion in 2015, the company needed to develop a growth strategy to surpass their competition. To see an increase in the growth of their business, Lululemon Athletica should broaden its target market by growing its men’s line and expand to international markets.
The company also has accounts of customers questioning their product quality and integrity as a company. To promote growth, the company should also look at its brand awareness and company culture. By improving these aspects, they will create a more welcoming atmosphere and likely invite added sales.
Having much of my family in Canada, I was exposed to Lululemon Athletica at a very young age. The brand was all the hype when I was in sixth grade; every young female I knew was wearing it. Lululemon Athletica’s target audience is affluent 18-34-year-old women who are health-conscious, fit, and fashion-forward. Their target market persona, “Ocean” is a 32-year-old single female who is a career-driven person and makes a $100,000 salary.
The problem with this target segment is that it leaves out an entire gender that may be equally as enthused by yoga and other sports activities. The fundamental issue that the company must consider is how to promote the growth of their business to increase their bottom-line. Lululemon Athletica should reevaluate their core audience and decide whether to expand it or remain consistent with their original target segment. An analysis of the marketing mix will provide a deeper understanding of the company.
Lululemon Athletica has a number of avenues that they may take to stimulate growth. The first one is to expand their women’s line, further. The company offers activewear in the form of leggings, yoga pants, tops, and jackets. They may expand this line by adding products such as socks, beanies, visors, outfits specific to certain sports, and business casual clothing that is still comfortable. That is, they may add dress pants that are made from the same stretchy material to provide a comfortable, yet professional look.
In going this route, Lululemon Athletica may experience growth due to its product portfolio expanding. Also, in going with this method, they will continue to target the same segment as they have been doing originally. Although this may speed up growth, they will likely not acquire new customers from just this. Women who shop here already will possibly consider the expanded line of products and shop them but other women who purchase dress pants from, say, Banana Republic will not go out of their way to spend more money on a brand that specifically caters to female yogis.
Another alternative would be for Lululemon Athletica to…