Niche Brands In Markets Research Paper

Length: 11 pages Sources: 11 Subject: Transportation Type: Research Paper Paper: #22105741 Related Topics: Adidas, Fashion Design, Branding, Stock Market
Excerpt from Research Paper :

Lululemon

Supply Analysis of Lululemon

Porter's Five Forces Analysis of Lululemon

Rival Companies

PESTLE Analysis of Lululemo

Core Competencies

Analysis of Marketing Strategy of Lululemon

Analysis of Company Management

Risk Factors

Financial Analysis

Company History

Lululemon Athletica Inc. which was founded in 1998 in the city of Vancouver by Chip Wilson is a specialist in the design and production of high-end technical clothing for athletes and yoga clothing.

While operating primarily in the continents of North America and Australia, the company initially targeted the educated woman who strives to live an active and a healthy life as their primary customers. The first store of the company was opened up in November of 2000 and it was aimed by the company to also function as a social and community hub allowing people to come together and learn and discuss issues related to physical aspects as well as the mental aspects for leading a healthy life. However, the company started to train their staff once they realized it was difficult to manage the stores as retail outlets and community hubs as it got too crowded.

One of the goals of the company is to train people such that they would positively influence the families, customers and the community at large. The vision of the company is to "elevate the world from mediocrity to greatness." Three types of strategic sale programs were created by the company as the company partnered with the right people so that the concept and prevalence of Yoga is spread and the community health level is increased. The company lays emphasis on quality over quantity. The strategy of the company is to strike strong relationships with their partners apart from producing yoga and athletic clothing that are of high quality (Lululemon.com).

Supply Analysis of Lululemon

Lululemon is hailed as one of the fastest growing brands of Canada. The company has more than 220 stores across the world along with its online store (Kowitt & Leahey, 2013). The enterprise value of the company according to the Forbes magazine on May 2015 was $9.2 Billion and the company had a total of 6,383employees. The company's growth is stupendous as can be gauged from the growth in its brand or enterprise value which was just around $3.245-billion in 2012.

The revenues and the stock price of the company have grown significantly in the last few years. In early 2009 the stock price of the company was around $3 a share which reached $56.88 a share at NASDAQ on February 10, 2016. Hence the stock price has grown nearly 20 times within a period of just 6 to 7 years. The annual sale of the company touched $1.8 billion in fiscal 2015 as a combined sale value of online channels and 354 stores spread globally. The five-year average sales growth of the company till 2015 is 31.6% while the number for the Operating Income Growth if 32.8%. These figures show the strength of the company in the short time that it has been in operation.

There have been some hick ups for the company though in the recent years most noticeably in 2013 when the company had to recall 17% of its products of stretchy black yoga pants which had repeated complaints of sheerness at unacceptable levels.

In 2016, the company plans the launch of its stand-alone stores for men with global expansion plans as the global economy seemingly gets out of the 2008 recession.

Technical fibers that are used in the company products, the in-store shopping experience and its strong brand image are the advantages of the retailer over rivals. These characteristics of eh company are the driving factors for attracting and retaining shoppers. apart from the very strong presence in the North American market which accounts for most of the revenues of the company, Lululemon is eyeing the Asian market where there is a rising demand for trendy athletic fabrics and garments.

External Analysis

Porter's Five Forces Analysis of Lululemon:

Bargaining Power of Suppliers: Lululemon enjoys power over suppliers as there are a number of suppliers who compete to get associated with the company. Materials like rubber and cotton are used in the company products and these raw materials are readily available. Hence Lululemon generally has a lot of choice in terms of choosing who they want to buy from. Therefore, the suppliers tend to have a low bargaining power compared to the company.

Bargaining Power of Buyers: the buyers or the customers of Lululemon have a big bargaining power as the costs of switching are low and the customers can easily switch to a rival brand if the company of its products fails to satisfy them.

Threat of New Entrants: there is a moderate threat from new entrants. The economies of scale have their obvious advantages. On the other hand, companies also have the option of outsourcing of some of the business processes overseas which would entail lesser up-front costs for capital. Access to distribution channels could also be a difficult proposition. But...

...

While new entrants can find it difficult to create and establish and completely new brand, new entrants also have the advantage of low switching costs for customers.

Competition from rivals: in order to attract a larger band of customers and getting a greater market share, there is severe completion in the market of sports apparel. Poaching customers is relatively easy in this industry as the switching cost for customers to move from one brand to another is quite low.

Threat of Substitutes: the threat from substitute products is low as there are not yet many quality substitutes for sports apparel.

Rival Companies:

In the yoga and sports apparel industry there are number of players and companies. The direct competitors of Lululemon include large corporate and companies like Nike, Adidas, Under Armour, and Gap and smaller companies and startups like Lole, Lucy Activewear and Prana.

PESTLE Analysis of Lululemon

Political: for Canadian companies such as Lululemon, it has become easier to open up more branches in North America by the NAFTA.

Economic: the company can be negatively impacted by economic conditions in some parts of Europe and the general stagnancy in global economy triggered by low oil prices and China slowdown. These can impact the global expansion plans of the company. Economic slowdown makes consumers more price conscious and it becomes imperative that retailers provide product differentiation to a greater degree to maintain price levels.

Sociocultural: the rising craving in society to stay active and life healthy right across the globe has given rise to demands for the company products and there is further potential for the company to grow. Ethical production of the products purchased is another growing social realization driving purchase decisions (http://www.lululemon.com).

Technological: growing prolific popularity of online trading aided by technological advancements of internet and smartphones has helped the company to gro. The further growth of internet in developing economies like India and Brazil has potential for growth for Lululemon. The popularity of the social media opens up a media for the company to place advertising and marketing campaigns which can even act as a source of competitive advantage for Lululemon (www.lexology.com).

Legal: the company owns a number of patents for its products that gives it a clear advantage legally over its rivals and competitors.

Environment: ethically sourced products with efforts of reducing the carbon footprint of the company have put the company at the fore front of sports apparel companies catering to a healthy environment.

Internal Analysis

Core Competencies

Core Competency

Valuable

Rare

Inimitable

Exploitation of Competency

Strong relationship with customers

Loyal customers means more market power for the company that gives a competitive edge over rivals

The strength of Lululemon's relationship with its customers has taken years to build and is not easily replicable

The social complexities of the company's relationship with its customers is difficult to imitate

The strong relationships is effectively translated into high levels of sales

Quality of Product and Design

Brand recognition of Lululemon among customers is due to the quality of its products, reliability and design.

To ensure that the products of the company are one of a kind, it has intellectual property rights agreements with suppliers.

Customer feedback is used to design and better products which are not possible to imitate as rivals do not enjoy similar loyalty.

The unique design and the high quality of the products attracts the customers

Effective corporate culture

Employees and customers get attached to the company by getting motivated by healthy lifestyle.

Unique that is shared commonly by company, employees as well as customers is present in very few companies.

Customers who come into the stores gets a unique experience which is difficult to replicate.

Employees are motivated and engaged due to the strong company culture.

Analysis of Marketing Strategy of Lululemon

The mantra for the marketing strategy of…

Sources Used in Documents:

References

Blais, Steven. Business Analysis. Hoboken, N.J.: Wiley, 2012. Print.

Cadle, James et al. Business Analysis. Swindon: BCS Learning & Development Limited, 2014. Print.

http://www.lululemon.com,. "Manufacturing." N.p., 2016. Web. 11 Feb. 2016.

Investor.lululemon.com,. "Lululemon Athletica, Inc. - Annual Report." N.p., 2016. Web. 11 Feb. 2016.


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