Lululemon — DTC Brand Case Study

Lululemon is a yoga-inspired apparel company founded in 1998 in Vancouver, Canada. In the beginning, Lulu is designed for yoga, now it has already expanded to running, cycling, training, and even dairy outfits for both men and women. Its retail stores are to engage its customers in healthy lifestyles and create better relationships between guests and the brand.

Brand Performance Today

Financial

In the report, we can see the revenue of Lululemon constantly increases through the past 5 years, except for the first quarter of 2020. It has grown all the time, which means, Lululemon has kept an excellent brand standing for years and the company has stable finance.

Lululemon held a 60 percent market share in the fourth quarter of 2020, followed by Athleta from Gap Inc with 21 percent and Fabletics with 13 percent.

Lululemon is the most expensive of its rivals. It focuses on targeting customers at a higher price range. Lululemon also targets female customers more. Financial analysis showed that the women’s clothing industry is expected to grow by 3.6% in 2020, while the men’s clothing industry will grow by 1.1%. This shows the difference in targeting customer bases and Lululemon has been able to capture on this growth with its female-targeted marketing strategy.

Social Media

Lululemon is expanding its marketing goals from just physical stores to its online presence as well. They are now using social media to connect digitally with their customers.

With digital marketing, Lululemons mission is the same to spread positivity and happiness through yoga and fitness. The company has utilized Instagram, Facebook, and Tiktok for this purpose. They have been successful with Instagram in particular because it’s a platform that is designed for sharing pictures and videos. Tiktok also provides good opportunities for video ads and other ways of generating content like polls or quizzes to provide entertainment while also increasing brand awareness. The Lululemon website also has a free blog that is updated daily with new content relating to topics such as yoga, running, and more. The company also targets its customers by using promotional offers.

The “Lululemon Athletica Inc. (LULU)” company is one of the major competitors in the performance athletic wear industry that has a strong following of millennial customers both online and in stores with its premium prices. The company has been able to grow significantly over the last decade due to the popularity of yoga, running, Crossfit, and other fitness classes among millennials who now represent a major portion of its customer base.

Competitors

Nike is the second-largest maker of athletic footwear in the world behind Adidas. The company offers shoes for a range of sporting activities including soccer, running, basketball, and cross-training. Nike also produces apparel for a range of sports with a focus on an urban audience.

Under Armour sells sports equipment with a particular emphasis on performance wear for men and women. One example among many is their compression tights that allow for improved blood circulation which leads to better muscle recovery rates post-exercise.

Athleta is an American women’s athletic company that offers both fitness wear and activewear at affordable prices while staying competitive with other brands like Gap and Lululemon Athletica has a partnership with Beyonce’s new athleisure line called Ivy Park.

Key persona

Mia is 35 years old and earns $50k-$100k per year. She works full-time and spends about 50% of her disposable income on clothing. Her priority is fashion first, and price second. As long as she gets what she wants at a good price, she’ll buy it. She lives in the suburbs or small towns and shops online for clothes and accessories. She prefers buying from local boutiques, but if she cannot find those nearby, then she will shop online. She may have a few favorite brands, but she does not try out many different styles. She likes to workout in the morning before going to work. Her typical workout routine includes cardio, weight training, and stretching exercises. She wears workout gear to work, and she occasionally takes breaks throughout the day to go outside and do some walking. She might take a break after lunch to get away from others and have a snack. She might also go to the gym to exercise afterward. She works in a corporate office as an executive assistant. She has been working in the same firm since college.

Channels

• Retail store
• Online website
• Social media — influencer marketing
• Word-of-mouth marketing
• Get into Farfetch recently

DTC distribution — blended distribution

Lululemon is one of the most successful brands in the world. It is a pioneer in the DTC (direct-to-consumer) model and has found success in both blended distribution and online websites. Lululemon has a strong online presence with its own website, which offers free shipping on all orders, as well as its mobile app which allows for easy checkout. They also have an active Instagram account with over 5 million followers.

As for their retail stores, Lululemon has over 300 stores worldwide and they are still opening new ones every year. The company’s success can be attributed to its innovation, customer service, and commitment to quality products.

Effects of blended distribution

Lululemon has seen significant success from its blended distribution strategy. They have seen an increase in brand awareness and customer loyalty because of the increased availability of their products and the ability to interact with customers in person.

Lululemon has also been able to improve customer relationships by using its retail stores as a way to create an experience that online shopping can’t provide. This is something that many other DTC brands are now implementing into their business strategies as well. Lululemon has created an ambassador program to find inspiring leaders, storytellers, and doers for its retail stores. They are not just a partner, they are an extension of the brand and an inspiration to guests. Consumers can be more engaged when shopping in the Lululemon stores with those professional ambassadors.

4Ps

Product

• Lululemon’s product line has basically fulfilled customers’ needs, but they need to focus more on its supply chain because most of the popular products are always out of stock.
• Conduct more research and development for innovative products, which can be more competitive over other athletic brands. Lululemon has the advantage of its materials.
• As Lulu sells products all over the world, it should improve the size of its product based on the people in specific areas. And it can provide limited colors or items in different areas.

Price

• The overall price is higher than other competitors, even if it has some sales and “we made too much” which provides lower prices for new products.

Place

• Farfetch is a good place to start its sales on other platforms because Farfetch is an online luxury fashion retailer, which is popular among the younger generations. Lululemon’s targeting customers have more possibilities to shop on Farfetch, which provides many higher price products.
• Outlet stores can reach more customers who don’t want to pay a lot for or are unable to afford athletic wear. Lululemon can distribute its “we made too much” section in outlet stores to increase brand awareness.

Promotion

• Lululemon already utilizes influencer marketing and word-of-mouth marketing, which are often used to increase brand awareness.
• Its ambassadors are a good source for influencer marketing both online and in-store.
• Sponsoring some yoga events or other related events can be effective to advertise the brand among those potential clients.
• Note: This article is a class assignment for BUS 465 — Integrated Brand Promotion and Advertising at NCSU Poole College of Management.