Lululemon was founded in 1998 in Vancouver, Canada and has grown to a $1.37 billion company by targeting women with disposable income through their line of yoga apparel. They have been able to grow despite issues like quality problems by being leaders in social media and creating brand ambassadors. Lululemon's biggest strength is their innovative fabrics and quality promise, but their largest weakness is their higher prices compared to competitors. Their marketing, products, and focus on quality have allowed Lululemon to compete successfully in the athletic apparel industry.

1. Market Term Paper
December 11th, 2015
Anna Hughes and Crystal Thompson

2. Executive Summary
Lululemon was founded in 1998 in Vancouver Canada. Knowing that they could never compete
directly to Nike and Under Armour they decided to take a different approach in the athletic
apparel industry. Targeting women with disposable income, Lululemon started a line of yoga
apparel. Having many ups and downs such as the sheer leggings in 2013 Lululemon has built a
1.37 billion dollar company in under 20 years. Lululemon has been able to do this by being on
the leading end of social media and jumping in front of the band wagon and leading the way.
Lululemon has also created a quality promise is said to encompass their employees and their
product.
By promising quality people Lululemon has been able to create brand ambassadors that truly
represent Lululemon’s health and environmentally friendly missions. The brand ambassadors
allow Lululemon to go out into the community in a way that other companies have not been
able to achieve. In 2013 Lululemon had a huge quality spill within their leggings and lost a lot of
trust with their customers. They created their quality campaign to regain the customers trust
and to gain new customers. Lululemon’s quality is their biggest strength but the largest
weakness that Lululemon has is that they are priced well above their competitors in almost all
areas of product. Lululemon is able to price their products so high because of their innovative
fabrics that make up all of their clothing. The fabrics that Lululemon uses is patented by the
company; none of Lululemon’s competitors can use the same factor that gives the wearer a
sleek feeling. Lululemon’s marketing plan, innovative product, and quality promise is what has
allowed Lululemon to grow and compete in the competitive athletic apparel industry.

3. Company Description
Instead of jumping right into the big leagues, Lululemon took a different approach. Lululemon
focus strictly on yoga apparel, accessories, and products. Unlike Nike, Underarmor and many
more, Lululemon started with the smallest target market and is working slowly, but surely, to the
larger markets. For example, recently released this winter are a new apparel line for runners. The
apparel line has pants and tops with reflectors on them to make it safer for their running
customers to run at night. This new addition to their running apparel line is only helping the
company grow to compete with the big league companies. Lululemon has a growth sales of
approximately 12.3% with a revenue of $1.8 billion in 2015. They are having this great of
growth with only 8,630 employees and bringing in a profit of $239 million. They may be small
in size, but they sure have big dreams that bring them up to the big league company standards.
Strategic Focus and Plan
Lululemon is adapting to its customers by molding its strategy to better fit their needs. For
example, they have created new additions to their products, mission, and quality promise
statement which help give the company guidance in what is strategies moving forward. The
following are major strategies that will give the company this guidance.
Mission/Vision
The mission and vision help keep Lululemon on their toes in moving the company forward and
having a base belief to make decisions off of. The mission Statement of Lululemon states that
they are “creating components for people to live longer, healthier, fun lives” (Who is, 2015).
This mission statement is expanded on within the Lululemon manifesto where they state “We are

4. passionate about sweating everyday” and “breathing deeply, drinking water and getting outside
are top of the list of things we can’t live without” (Manifesto, 2015).
Strategy
Lululemon has three main product lines such as yoga, running, and on the go wear. Lululemon
has placed their new line of 360 degree reflectivity gear alongside their running apparel already
in stores. The have the coldgear running apparel line already in placed and then have added new
socks to go with their running apparel. The 360 degree reflectivity apparel is a product
development strategy. With this product, Lululemon will be able to stand up to the competitors.
Competitors reflectivity product lines are not prominent or focused on by the company. The lines
are small and barely developed, whereas Lululemon has put this product out with a large line to
go together. This strategy is used to help push back competition to grow a larger market share.
Current Products New Products
Current Markets Toasty Tech Tight 360 degree reflectivity (lights out*)
New Markets Speed Sock Silvers N/A
Objectives
The following objectives are put in place to keep the company on the right track to following its
mission, vision, and promises. By following these, Lululemon will help increase popularity and
become even more successful.

5. ● Lululemon will create 5 new products in the 360 degree Reflectivity Lights out apparel
line in 2016../
● Lululemon will increase sales from this new line by 5% before December 1st of 2016.
● Lululemon will open two new store locations within Europe (preferably Spain and Italy)
by December 31st of 2016.
Situation Analysis
Lululemon is in an industry that is constantly changing, growing, and molded by what fashion
says and wants. So, understanding what is going on in the industry, SWOT analysis, and
competitors is key to being successful.
Industry Analysis

6. People across the nation are jumping on this new “healthy” train. Running participation has
jumped by 5.3% (2014 State of Sport, 2014). The majority of that jump is from the increase in
women's interest and participation. As shown in Figure 1.0, women in the age 25-34 are taking
over.
Figure 1.0 Getting a Closer Look at Gender Participation. (2014 State of Sport, 2014).
With women being more active, they need apparel to make them look and feel great as well.
Companies in the clothing and athletic apparel have to change with this new fashionable,
comfortable, and functional clothing for women.
Athletic apparel has been out performing the clothing industry for a couple years (Kell, 2014).
With the shift is society to a more healthy lifestyle this has allowed the athletic apparel industry
to grow and prosper. Fashion has seen a demand for apparel that is comfortable and fashionable.
This is where the athletic apparel industry stepped in and met a large demand.

7. Lululemon has stepped up to the fashionable athletic apparel that is appropriate for both the gym
and everyday wear. This is what has allowed Lululemon to grow in the last 20 years.
SWOT Analysis
Lululemon is still developing and growing. Understanding their environment is key to becoming
a big league company. The table shows the major strengths, weakness, opportunity, and threat
against Lululemon.
Favorable Factors Unfavorable Factors
Internal Factors Innovative with fabric and
patents of fabric
The price for products.
External Factors Societal shift towards a
more active lifestyle
Distinguishing the
difference between Lulu and
others
The strengths of Lululemon come from their internal ability to be innovated in material, design,
and products. They are always on their game. Having patents on all of their fabrics give them
and upperhand on new materials that make the customer feel more supported. However, the
specialty fabric has a bad side.
The fabric brings the cost of their pants to be more expensive and create a high price.
Surprisingly, this high prices is in the same range as competitors prices. The price being
comparable to other competitors gives them an opportunity to compete in the market for the new
runners and healthy lifestyle individuals. Since most of the increase in the active running apparel
is mostly women, Lululemon has a chance to take a large share out of the market. The only
setback for Lululemon is whether or not women can tell the difference in quality from

8. Lululemon to another competitor. With these taken into consideration, Lululemon has room to
change and grow with this new expansion on the running apparel line.
Competitor Analysis
Lululemon is going against companies that have been playing ball for a long time. Companies
like Nike and Adidas have already made a household brand name for themselves, whereas Under
Armour and Lululemon are still working for that household brand name. The chart below gives a
direct comparison between the company's internal statistics.
Company Net
Income
Growth
in Sales
Revenue Number of
Employees
Main
Product
Line
Share
Cost
Number of
products in
Reflective
women line
(Excluding
Shoes)
Lululemon $239 M 12.9% $1.80 B 8,630 Clothing $48.90 6
Nike $3.27 B 10.5% $30.70 B 62,600 Footwear $131.83 10
Under Armour $208 M 32.3% $3.08 B 10,700 Clothing $87.15 1
Adidas $558 M 0.3% $14.53 B 53,731 Footwear $49.75 2
When comparing all the possible product lines to one another, each company brings something
different to the table. Nike, Adidas, and even Under Armour sell footwear to their customers
whereas Lululemon doesn’t provide as many options. Lululemon, however, specializes instead
on yoga apparel and the quality of their products. The creation of patented fabrics has allowed
Lululemon to stand out amongst their competitors.

9. Market-Product Focus
Lululemon claims to put the customer first which has allowed them to build a personal
relationship that most companies do not have. This has created a loyal customer base that will
pay for Lululemon’s expensive products.
Target Market Description
Lululemon has focused since the beginning on creating yoga pants that are comfortable and
supportive to the woman's body. Yoga has sparked many women's interest across the world. On
average $2.5B dollars is spent on yoga instruction a year (By the Numbers, 2015). In order to go
to these yoga classes, women need something to wear. That is exactly what Lululemon focused
on and blooms from.
Also, Lululemon is targeting individuals with an on-the-go fitness style. These individuals are
moving, moving, moving, and they want to be comfortable when they do that. So, getting
individuals who want a fashionable, comfy, yet sporty look in the Lululemon stores is key. For
example, an individual that fits into this category is a “Fit mom”. A mom that wants to look her
best when she is grocery shopping, picking up the kids (and neighbor kids) from a soccer game,
and having a good time watching a dance recital with other moms. Lululemon has designed their
cloths to look good on these fashionistas all over the world.
Lululemon has recently opened their product lines to men. Lululemon has designed a
product that they call “The ABC pant”. This stands for “anti-ball crushing” which is said to be a
problem for men. However, is should be seen that the target market for this pant may not be men.
Women impact 85% of all shopping (Darroch, 2015). This thinking makes “The ABC” pant
marketable to women because women do not know if “ball crushing” in pants is an actual

10. problem and because women are unlikely to ask if it is a problem or not they will purchase the
pants because they see “ball crushing” as an issue.
Lululemon targets women because in general women with disposable income value
quality and are willing to pay top dollar for a product that will outlast the competition’s.
Points of Difference
When a company is able to outperform, have better quality, and a great brand reputation it can
surpass any other company in the market. Lululemon is no different. Their ability to have
innovative fabrics that are supportive and consistently good quality makes them stronger than
any other competitor. In order to ensure this high quality, Lululemon has created a quality
promise that if anything goes wrong with any of their products they will replace it. That could be
from the logo being worn out to a hole in the side; they will take it back and give you a brand
new pair. This lets the customer know the quality is guaranteed and that if anything goes wrong
they get a new one no questions asked.
Positioning Map
Lululemon has a strong position within the positioning map. Figure 2 shows the placement of
Lululemon and all of it’s competitors. Lululemon shows a strong strength in its quality and with
their quality promise it is obvious that quality is one of the company’s core values. Lululemon’s
biggest weakness is in the price of Lululemon

11. Figure 2
Marketing Program
Lululemon has a small marketing plan. They do not do commercials, radio ads, or print ads.
Instead they rely on their quality promise to speak for themselves. A quality promise in both
their product and the people they employ has allowed Lululemon to build a strong brand without
needing to spend the large amounts of money on commercials and advertisements.
Product/Service
Lululemon recently released the 360 degree reflectivity gear. This gear is designed to illuminate
with small amounts of light exposure when in darkness. This product has a sleek design that does

12. not illuminate at a blinding rate in full light exposure or during the day, but instead needs
complete darkness and limited light exposure. As seen in Figure 3 and 4 the Pace tight *lights
Figure 3 (Pace tight, 2015) Figure 4(Pace tight, 2015)
out gives a full illumination in darkness and a simple look in full light exposure. The technology
that has gone into the Pace tight *lights out is made with lululemon’s patented fabric luxtreme
and added reflective technology.
Price
There are a few different versions of products within the 360 degree reflectivity *lights out
product line. The Pace Tight is priced at $298.00 USD, the speed tight is priced at $198.00 USD,
The Run: Speed Short is priced at $98.00 USD. The prices are set at a competitive and expected
price from lululemon. Lululemon prices are prestigious and are priced at luxury goods. However,
as far as the competition goes Lululemon is staying in close. Nike, who has released a line of
reflective gear as well, has priced their running tights at $250.00 USD. Under Armour has also

13. released a pair of reflective tights priced at $89.00 USD. Lululemon has not outrageously set
their prices higher than their competition. In fact, the higher prices are something that Lululemon
shoppers have come to expect. Based on the high level of quality that Lululemon brings to the
table the price is fair.
Promotion
2013 marks the year of Lululemon’s long struggle back up. In March of 2013 Lululemon
released a pant that was to sheer that showed off too much of their consumers “assets” (Press,
2013). This reputation has since stuck with lululemon with consumers still saying that the pants
are still see through and Lululemon has not gained back the full respect and trust that they lost in
2013. Since the 2013 scandal Lululemon has launched their quality campaign. On their website
Lululemon has a complete tab dedicated to their quality promise. Lululemon states “If our
product doesn’t perform for you we’ll take it back - anytime” (Our Quality, 2015). This promise
has started to build back up the trust that was lost in 2013.
Lululemon uses social media like most companies. However Lululemon does not use social
media is a product promotional way but instead they use it to build brand loyalty. One important
strategy that Lululemon has implemented is building a relationship with their consumers.
Lululemon initiates conversations about health and fitness amongst its consumers (Allan, 2012).
This allows for brand loyalty and for people from various locations to connect over their product
and brand. Building off of their social media presence Lululemon should bring that presence into
their European market. We know from Walmart’s failures overseas that quality is a high priority.
In order to grow in Europe Lululemon needs to show that quality is something that is a core
value of the company. In Lulu’s product and the people they employ they say that quality is of
the utmost importance. By sending brand ambassadors over to Europe, Lululemon can build that

14. relationship that they have built in Canada and the United states. Lululemon should host fitness
events in public locations to get their name out there and continue their friendly and inviting
attitudes.
Place/Distribution
Lululemon currently has four distribution centers. Located in Vancouver (Canada), Sumner
(Washington), Melbourne (Australia), and Columbus (Ohio) (Soni, 2014). In order for
Lululemon to have a strong presence in the European market Lululemon needs to have a
distribution center located somewhere in Europe. This will cut down on shipping costs and times
on shipping orders. Currently it takes 5-10 days to ship anything to Europe (Our frequently,
2015). In the age of Amazon and one day delivery having a delivery time of 5-10 days is
something Lululemon really needs to cut down on. The European market is the next phase in
Lulu’s expansion plan and a distribution center within Europe is absolutely essential to
expansion.
Conclusion and Recommendations
There are so many competitors in the clothing and athletic apparel industry that it is intimidating
to a small company like Lululemon. However, they have stepped up their game and can compete
with the big leagues. Lululemon has perfected their own niche in the market that it is the next
step to move into other areas, like running apparel and reflective wear. This reflective wear is
just what they need to move from the yoga niche to the running apparel market.

15. To be successful in this market move, Lululemon needs to become more well known by both
women and men. A way to achieve this is by putting more ads out on the new reflective gear
whether the ads be on social media, like Twitter, Facebook, or Instagram, or ads on the
television. Being more well known means more customer reached, which means a chance for
their dollar. If Lululemon can become a brand name like Nike, Adidas, or Under Armour, they
will have a chance to reach this new market of running reflective gear. The best part is the big
competitors, aren’t paying that close attention to Lululemon because who thought they would
leave their little niche market. Surprise, here they come full speed and ready to compete.
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