Promotion Strategy for Lululemon - Research Paper Example

?Promotion Strategy for Lululemon Lululemon Athletica Inc. is a Vancouver-based athletic wear manufacturer and retailer. It was founded in 1998 in Vancouver and opened a store in Oregon five years later (Lacy, 2010). The company is now 54 years old and has an estimated worth of $1.25 billion and the company that started out as a yoga-inspired company is presently a retail phenomenon (Nelson, 2011). The company promotes the message of wellness through exercise and positive thinking; the message has been embraced by the masses through effective use of their unique marketing techniques. According to Gray single women are expected to out-earn their male counter parts in the near future so they represent a very attractive consumer base for major apparel manufacturers (Huffington Post, 2012). Over the years the segment of women’s athletic wear has been majorly neglected. Just like any other form of clothing women sports-wear is very different from men’s. The Lululemon logo depicts the consumer’s health consciousness and their affinity to an elite club of enlightened people who wear similar clothing. According to Nelson (2011) Lululemon’s real genius relies on their Blue-Ocean strategy, which means to create demand in markets where competition is low instead of fighting for a share in a competitive market. So Lululemon emerged as a retailer that targets this niche of women’s athletic wear, and over the years has managed to grab a notable share in the 15 billion USD market for women’s fitness clothing (Helliker, 2010). Lululemon is the first clothing retailer to have adopted the Salon Business Model—which implies that like-minded body and fashion conscious women get together (Nelson, 2011). The main purpose of such a model is to bring together like-minded people who would work together for mutual benefit that would transcend the benefit from the economic transaction. Lululemon started off with niche marketing and was not intended to be mass marketed. The target market of the brand is the affluent, figure-conscious and stylish women (George, 2006, para. 7). Direct Marketing and Personal Selling Lululemon spends very little on promoting the brand through mass media, perhaps occasionally in magazines and newspapers. Lululemon has used “brand ambassadors” for the promotion of their brands, these ambassadors and not salaried employees but in fact peers or opinion leader that are given $1000 worth of free apparel in exchange for modeling the brand for their clients (Helliker, 2010). Lululemon calls it a stealth strategy not marketing—that has minimum cost and maximum impact. This is a very unique marketing strategy that clearly distinguishes Lululemon from competitors like Nike and Adidas, who spend million in celebrity endorsements. Lululemon has included ambassadors in areas of running, weight-training and men. The men’s fitness wear is also a very rapidly growing segment for Lululemon but still accounts for less than 20% of total sales (Helliker, 2010). According to Kurtz, MacKenzie and Snow, each Lululemon store across the globe has its own promotional strategy which is specific to that area. This could be in the form of painting their store front or covering their windows with slogans. The store hosts their own free yoga classes and store employees are referred to as educators. The company invests extensively in the recruitment and training of these store employees, because eventually these employees play an important role in the promotion of the brand. Personal selling has been greatly influenced with the emergence of e-commerce and the internet. It enables the manufacturer to establish databases and CRM systems to better meet the needs of the customers and gather extensive data about them at the same time (Kerin, p253). Internet plays a vital role as consumer promotions are deeply integrated with online product offerings, this can be done so using micro-sites and even email marketing approaches that reach directly to customers at almost no cost (Kerin, p253). Customers can sign-up for their free email list and stay updated on latest product offerings, specials and sales (www.malaho.com). Public Relations Sacks in her article in the Fast Company, refers to Lululemon’s approach as the Cult of Selling (2009). Lululemon urges employees to attend and inquire about all possible yoga and fitness centers and to establish a relationship with the most influential person there, who is generally the instructor. When a store opens within that locality, the yoga-instructor gets into a formal relationship as the “ambassador”, as the brand ambassador the instructor gets free athletic wear as well as a large portrait at Lululemon (Sacks, 2009). This automatically works both ways as the instructor sends her clients to the outlet and the outlet advertises the instructor for them. According to Nelson in her article in the Canadian Business, the company aggressively engages in guerrilla marketing. The company sends employees to attend work out session and model their athletic-wear at the same time; the stores also involve communities by hosting events that provide free yoga classes. Since a great deal of sales is expected to be generated from employees alone, Lulu invests in their employees. Lululemon pays for yoga sessions twice a week for their employees at an approved studio. This brings the functions not only as an incentive to employees but is beneficial for the organization too. This way employees come into the natural settings of the product as encourages direct interaction with the consumers and potential consumers (Bogomolny, 2006). Lululemon relies heavily on organizing social events, promoting good word-of-mouth and using social media. This marketing strategy seems to be very effective as by 2009 the profits of Lululemon showed a 28% increase from last year (Lacy, 2010). For example in 2006 the Lululemon store sponsored a yoga session on the beach in Santa Monica California (Bogomolny, 2006). This year in August Vancouver Canada, Lululemon is hosting a half-marathon event called SeaWheeze that aims to celebrate the beauty of lulu hometown as well as bring communities together (lululemon.com). A separate website has been created to promote the event, which enables the customers to enroll online and provides tips to consumers on attaining their fitness goals. Sales Promotion Lululemon presents itself as a luxury brand but still within the reach of most of the consumer, and consumers are willing to pay the price for the good value they are getting for it (McCullough, 2010, p.26). This also implies that Lululemon rarely offers discounts to their customers. So the customers pay full price with confidence and rarely feel that the product quality has depreciated or it is out-of-fashion so the company is trying to get rid of access stock and offering discounts. On the other hand the consumers wait for lower-end brands to go on sale and feel cheated if they have to pay full-price for something which will cost one-fourth the price in a few months. Interestingly Lululemon tops and pants actually resell very easily over the internet for about 60% of the price and even more shocking is the fact that Lulu bags sell for $5 online, which are available free on the stores (Urstadt, 2009). According to Brown (2012) Lululemon is known for avoiding mark-down on their merchandize. In fact the brand builds on the scarcity model giving the customers the perception that their product is limited in stock which also facilitates immediate purchases. This approach was so impactful that the store actually did have an inventory shortage and they had to struggle with demand and had to further promote their online store which carries a wider selection (The Canadian Press). However, Lululemon does offer discounts occasionally in the form of coupon codes, these enable the consumer to avail discount in terms of shipping on international orders, shipping within United States and Canada is free but with coupons one can be eligible for specialized shipping (shop.lululemon.com). However according to Stephanie Trow (2010), the Lululemon clothes she bought on sale were barely affordable but due to the peer pressure in her up-scale yoga class, this was an indulgence she could afford. Advertising Lululemon works extensively on presentation, in terms of recruiting real athletes; encouraging customers to test products and their symbolic logo represent the core values that the brand represents (McCullough, 2010, p.26). Ever since Lululemon opened their first outlet in 1999, they have been growing. However, this growth has been achieved without much support of traditional advertising such a print ads or television commercials (Bogomolny, 2006). On the contrary the company does not even have an in-house marketing division; they refer to it as the community relations (Bogomolny, 2006). Lululemon prints slogan and motivational lines on their apparel and bags. Last year the Lulu bags were printed with the question “who is John Galt?” This is the first line of Ayn Rand’s novel Atlas Shrugged which promotes the free market philosophy and working for self-satisfaction (Austen, 2011, para.2). The act according to the manufacturer was an act of corporate social responsibility by promoting such concepts, however not all consumers associated themselves with Ayn Rand’s philosophy. Advertising is a paid non-personal communication that delivers a persuasive message from an identified sponsor (Kerin, 2010) Lululemon is a top-notch retail brand that sells flattering quality clothing. The company is a market leader and was also an innovator in the yoga apparel, so Lulu as a pioneer in eco-products and spirituality marketing (George, 2006, para. 6). In the Western world ,yoga has progressed from basic Hindu principles of physical health and spirituality and extrapolated into a corporate avenue in the much competitive athletic industry (Callwood, 2012, para 4). The pants in spite of being rather well-designed are still made from cheap material spandex, so when one looks at the high price tag they can only conclude that consumers are willing to pay that price for the brand. Advertisers have come to embrace the fact that in order to appeal to the women, they need to target their strengths instead of weaknesses. They need to exhibit the woman wants to take care of herself, has inner strength and beautifies for herself rather than to appeal to the opposite sex. Lululemon has focused on this very aspect of the female sex, encouraging them to embrace their inner strength (Gray, 2012). This has been a very successful strategy to appeal to their target audience. Promotion Conclusion Lululemon started out with a niche in yoga, the initial product offerings included stretchy pants and sweat absorbent T-shirts but gradually the product line expanded to include products like jackets and caps that had little to do with yoga (Walker, 2009). It took a while for competition to grasp the idea that Lulu was not merely selling athletic-wear but was actually selling a membership into a health conscious club that dressed in a very similar and stylish fashion (Nelson). Furthermore, the company has expanded their portfolio to include innovative yoga pants, menswear, winter wear and scuba wear (Brown, 2012). According to Ashworth (2012) Lululemon’s yoga wear contributes to only one-fifth of the company’s overall sales, thus these additions to the portfolio appear to be working well for the company. New product offerings for the year 2012 include cycling and spinning wear and their “silvercent” line which is expected to be odor-inhibiting. Silverscent is expected to have thread f silver that would absorb odor-producing bacteria (Shaw, 2012). The traditional approach for athletic wear manufacturers has been to influence the consumer through celebrity endorsements. Lululemon on the other hand recruits influential women like fitness instructors who are directly in contact with the potential clients and it allows the product to be observed in natural settings. The Lululemon promotional strategy mainly focuses on working with yoga instructors and using their showrooms to attract new clients by offering free classes (Walker, 2009). Lululemon since its conception has extensively stressed and strived to become a moral authority in retail. Thus upon reaching the covenant position the brand is susceptible to vicious attacks on their credibility and working against the core values it stands for. According to Lawrence (2012) the employees at Lululemon are highly competitive almost cultish, this corporate culture has been under a lot of scrutiny from ethical boards as well as their controversial marketing and advertising policies. Such concerns have however, been over-shadowed by the company’s stance on being the pioneer in yoga-culture. These attacks can cause the credibility of the brand to fall, so presently Lululemon does not make any specific claims about sustainable materials or business practices, instead they focus of vague and upbeat slogans like: Friends are more important than money (Walker, 2009, para 9). Some potential obstacles that might threaten Lululemon’s growth are the market potential for high-priced athletic apparel might reduce with the entrance of low-priced competitors and copy-cats as it happened with Gap (Helliker, 2010). Furthermore the yoga community is greatly influenced by elements of culture and preference, these are not measureable characteristics and their needs can be met by more independent producers. Lulu fans trust the brand and the word-of-mouth from their peers hence they are willing to pay the high price for the brand. Two other issues that Ashworth (2012) has pointed are that the brand finds it difficult to create a balance in their inventory as well as managing their appeal to the male target audience. However, these problems aside, the company appears to fare well as compared to competition. The Lululemon brand is high-priced as compared to some other athletic-wear brands but the Lulu fans see the value in the product and are willing to pay the price (Nelson, 2011). So as long as Lululemon invests and stands for its philosophy and keeps on offering value to their customers, chances are that Lulu has a very good prospect. References Ashworth, W. (2012) Battle of the Athletic Gear Makers: Nike vs. Under Armour vs. Lululemon. Daliy Finance.com. Retrieved 10 April 2012 from < http://www.dailyfinance.com/2012/01/23/battle-of-the-athletic-gear-makers-nike-vs-under-armour-vs-lu/> Austen, I. (2011). Lululemon Athletica Combines Ayn Rand and Yoga . New York edition. The New York Times Company. P.83 Bogomolny, L. (2006). Topics  Toned and ready: Lululemon transitions- Strategy. Canadian Business Inc. Retrieved 10 April 2012 from Brown, A. (2012). Lululemon: Shapely Fit For A Growth Portfolio; Stock Trading At All-Time High. Forbes.com. Retrieved 10 April 2012 from < http://www.forbes.com/sites/abrambrown/2012/03/23/lululemon-shapely-fit-for-a-growth-portfolio-stock-trading-at-all-time-high/> Callwood, B. (2012). Pulling Up Lululemon's Yoga Pants. Bezinga.com. Retrieved 10 April 2012 from http://www.benzinga.com/news/earnings/12/03/2443641/pulling-up-lululemons-yoga-pants> George, L. (2006). How Lululemon lost its balance. WordPress.com. Retrieved 10 April 2012 from http://www.macleans.ca/business/companies/article.jsp?content=20080206_87890_87890 Gray, E. (2012). Lululemon: Why Are Women Willing To Spend So Much Money On Workout Clothing? The Huffington Post. Retrieved 10 April 2012 Hellinker, K. (2010). Lululemon Grows Fast on a Slim Budget- Upstart Retailer Enlists Fitness Instructors as Marketing Warriors as It Seeks to Distinguish Itself from Sportswear Giants. The Wall Street Journal. Dow Jones & Company, Inc. 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