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December 13
Lululemon Athletica Marketing Communications Plan
Jessica Massoni
Lululemon Athletica: to introduce “REPEL”, a water and sweat resistant product line. The
following Marketing Communications Plan includes: Lululemon Athletica organization,
industry, competition, and product analysis; marketing objectives based on new product
introduction supported by marketing research; and target audience analysis and rationale.
Market and Audience Analysis: Final Project
2015
I. Situation Analysis
Description of Organization
Founding in 1998 in Vancouver, British Columbia Canada, Lululemon Atheltica is a
multinational corporation in the 152 billion dollar athletic apparel industry.i The Lululemon
corporation is composed of 302 corporate owned stores in the United Stated, Canada, Australia,
New Zealand the United Kingdom and Singapore, an ecommerce site, multiple wholesale
accounts, and 2,861 employees. Lululemon is a publicly owned company, trading on the New
York Stock Exchange as LULU at approximately $49.90 and reported revenue of 1.37 billion for
the 2014 fiscal year. Lululemon’s mission is to “create components for people to live longer,
healthier, fun lives”.ii Lululemon engages in a grassroots marketing strategy with a communitybased approach and seeks to serve as a hub where people in the community can come together
and practice fitness centric lifestyles with one another. Lululemon practices a vertical retailing
strategy, selling their products only in their corporate owned stores and specific high-end yoga
studios and lifestyle centers. The company believes that their vertical retail strategy and
commitment to boutique style selling allows them to retain more control over their brand,
customer experiences, produce higher margins as compared to their competitors, and to hold
their position in the market as a premium athletic wear retailer.
Competition
Lululemon operates in the highly competitive athletic apparel industry and competes directly
with many direct sellers and wholesalers of athletic apparel ranging from established companies
to new market entrants. Lululemon’s product form competition includes, Nike Inc., Adidas,
Under Armour, Inc., Puma, Reebok, Columbia, Quicksilver and also retailers specifically
focused on women’s athletic apparel including Victoria’s Secret Sport, bebe stores Bebe Sport
product line, The Gap Inc. product line Athleta, Lucy Activewear Inc., Ellie, and Lorna Jane.
Their product category competitors include: Dick’s Sporting Goods, Model’s, Sport’s Authority,
Macy’s, Nordstrom, H&M Sport, and Forever 21 Sport. Lululemon’s generic competition
includes retail store branded items – Kohl’s, Target, boutiques, consignment shops, and other
department stores and wholesalers. Finally, their budget competition includes no-brand shoes,
sneakers, makeup, handbags, accessories, sunglasses, and other non-discretionary opportunities.
Product
Lululemon Athletica offers a comprehensive line of apparel and accessories for women, men,
and the female youth categories. Their products include pants, shorts, tops, jackets, and
accessories including bags, socks, underwear, yoga mats, and water bottles geared toward people
who participate in healthy lifestyle activities. Lululemon is committed to providing their
customers, whom which they refer to as “guests”, with technically advanced fabrics and
innovative functional features that are different than their competitors.iii The corporation does not
own or operate any of their manufacturing facilities and relies on a limited number of suppliers
to produce their products. Lululemon is devoted to continuously innovating their products to
match changing customer needs and industry trends. The lululemon product design team is
composed of designers, international designers, athletes, and users of their products in an effort
to create new customer-centric products.iv
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Due to compelling customer needs determined through marketing research efforts, Lululemon
Athletica has decided to introduce a new sweat and water resistant product line into their product
mix. The product line will consist of running and general fitness inspired pants, shorts, tops, and
jackets made out of technologically innovative and cutting edge resistant fabric. Our new
products will not only be designed for optimal performance in fitness related activities, but also
be comfortable, versatile, and on trend with the current fashion in both athletic and non-athletic
apparel industries. This sweat and water resistant fabric is made out of high-performance,
microfiber, polyester that is designed to repel sweat away from the body and to the surface of the
fabric where it then evaporates.v The products will then be coated with a thin layer of waterproof
material called polyurethane, which works as a water repellant.vi Based on the characteristics of
their new product line, Lululemon has decided brand the new products under the name
“REPEL”.
II. Market Research & Marketing Objective
Marketing Objective
Our marketing objective is grounded in primary marketing research data collected though
research questionnaires in effort to identify new marketing opportunities. The data was collected
online and analyzed to draw specific conclusions. The purpose of our research was to find out
more about our customers behaviors in order to tailor our new product line to match their
specific evolving needs. Following an analysis of the data, Lululemon Althetica identified our
new marketing opportunity to be designing a sweat and water repellant line of athletic apparel,
made of top performance fabrics and based on current fashion trends, to meet the needs of our
target audience who are tasked with balancing an active lifestyle with education, careers, and
families. Our marketing objective is, with the introduction and marketing of Lululemon’s new
sweat and water resistant fashion product line, “REPEL”, to increase overall brand sales by 10%.
Marketing Research
The athletic apparel industry is highly competitive and the size and resources of some
competitors enable them to compete more effectively than others. vii According to the following
global market share performance chart, Lululemon Athletica does not hold a large enough
market share in the athletic apparel industry to be individually noted on this graph and remains a
member of the “other” brand category.
viii
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However, Lululemon does not seek to compete directly with their larger competitors, such as
Nike and Adidas, but rather, to cater to a smaller, niche market, of high-end, trendy crowds
committed to a healthy lifestyle. Our objective is to increase sales 10% which would generate
approximattely $137 million dollars in overall brand sales.
Research Method
Lululemon Athetica conducted primary marketing research using an anonymous questionnare
distributed online via social media sites in order to produce quantifable market data. The
questions on the questionnare were asked in a pre-determined order in an effort to produce
unbiased results. The questions to include on the survery were selected based on the
demographic and psychographic information the researcher was looking to collect, along with
feedback from external sources, such as suggestions by other researchers. The survery was
administered in english and was a total of 10 questions in legnth. The distribution method, online
via social media, was determined based on the method the researcher found most realistic and
time efficient.
Response Rate
This survey was distributed online across multiple social media platforms and was conduced
ananymously, therefore, was not conducted within a defined sample group. Due to the exposure
posts on social media are suseptible to, there is no way to determine how many people saw the
survery posted online compared to how many who chose to respond, therfore, calculating the
exact response rate of this study is not possible.
Data Analysis
The survery had a total of 75 responses, most of which were woman, due to the fact that the
researcher administring the survery has a social media following composed of more woman than
men. The ratio of women’s responses to this survery as compared to men’s were 61/14 and is
depicted in the graph below:
These results, indicating that the survery received more responses from women than men, are
still applicable in regards to Lululemon considering most of their customer base is made up of
women, and a small, but increasing, percetange of their customers, due to their new product line
“Lululmen”, are, in fact, men.
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The next survery question that aided in Lululemon’s decision to create a sweat and water
resistant product line that is both performance and fashion centered was a question geared toward
gaining a deeper understanding of our customer’s preferences about althetic appareal, and if they
purchase their products more for their performance material, their fashion/style, or a combination
of the two. The results were on point with what our researchers had thought and provided us with
data indicating that 74.67% of our subjects prefer products that are geared to performance and
fashion combinded. The following bar graph depeicts the described data:
The next question was intended to gauge how important the combination of fashion and
performance material were to our subjects. This question was strategically placed after the above
“do you purchase your athletic wear more for fashion/style; technical/performance material; or
both?” and was designed to clarify and reinforce the data that our customers are, in fact, more
likely to purchase athletic wear that is both fashionable and made of performance fabircs. The
response data from this question indicated that even a higher number of responders, 94.67%,
were in favor of products that are both fashionable and made of technical fabrics. The graph
below provides us with a visual represenation of the described data:
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The purpose of the following question was to determine if our audience wear athletic apparel
soley to engage in fitness related activites or if they also wear athleitc apparel for daily acivities
such as running errands or relaxing at home. The resuts from this question depicted that 85.14%
of our respondents do in fact wear athletic clothing on days they are not particiapting in specific
fitness activities. The data from this question furthered our idea to create a new product line that
was not only performance efficent, but that is comfortable and versitale in order to compliment
the lifestyles of our customers. The following graphic depicts these responses:
The data we collected through our research efforts aided us at Lululemon to pinpoint a specific
marketing objective and determine the ideal characteristics for our new product line based on
customer needs. The data above, as well as the additional data collected in the survery, indicate
an overall trend that most people are more likely to purchase atheltic apparel that is both, made
out of quality performance material, and fashionable, so that is exactly what we did. We created
a new product line that is egineered to be a leader in performance ability and is a collection of
functional versatile pieces for our customers to add to their everyday wardrobes. Based on the
analysis of the purchasing patterns of our customers, we are confident that we will be able to
accomplish our marketing objective of increasing overall brand sales by 10% within one year of
our “REPEL” product line launch.
III. Target Audience
Lululemon’s overall business strategy targets higher-end consumers who are willing to spend
more on their athletic apparel in exchange for its’ qualiy and versatility. Lululemon strives to be
known as a premeir retailer of athletic apparel and their retail prices reflect that mentality.
Lululemon makes products for both genders, however, 70% of our products are for women. As
stated in our 2014 annual report, Lululemon Athletica’s ideal target customer is “…a
sophisticated and educated woman who understands the importance of an active, healthy
lifestyle. She is increasingly tasked with the dual responsibilities of career and family and is
constantly challenged to balance her work, life and health. We believe she pursues exercise to
achieve physical fitness and inner peace”.ix
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The demographic characteristics of Lululemon’s target audience are young well-educated,
professional women, ages 25-35, in the high-income bracket. Women with families are also a
large part of Lululemon’s target audience. The psychographics behind the women Lululemon
targets are women who are busy in both their careers and family lives, but are still concerted
about living healthy and fitness-oriented lifestyles. These women are concerned about their
fitness and about how they look and feel in their workout gear. Lululemon customers are willing
to pay premium prices for quality looks and products. These women regard their athletic apparel
as clothing for before, during, and after a workout, that is socially and fashionably acceptable.
Furthermore, Lululemon targets customers who are inspired through the sense of community the
Lulu brand brings to life, x which further supports our grassroots marketing strategy.
IV. Target Audience Rationale
Based on the below industry research, this pie chart indicates that that Nike holds a larger market
share, 7%, than any of Lululemon’s other competitors, followed closely by Adidas with 6%
market share, and the smaller competitors ranging between 2-3% accordingly, followed by an
overall category labed “others” encompassing the rest of brands, including Lululemon, operating
in the athletic apparel market which hold the remaining 76% of the market.
Nike reported a revenue $27.8 billion for the 2014 fiscal yearxi, which is over 20 times the
reported revnue of Lululemon Athletica. Lululemon understands that due to the size and
resources of Nike, Inc., at this time, our corporation does not have the financial backing, interal,
or external resources to comepte at the Nike Inc. level. However, Lululemon seeks to be known
as a premeir retailer of athletic appearl in the industry and therefore, engages in a vertical retail
strategy, unlike Nike and many of Lululemon’s larger competitors who sell their products to
large department stores.xii
Through their vertical retailing strategy Lululemon has been able to strategically place their
boutique styled retail stores in areas that cater to high-end, trendy, crowds and seeks to provide a
personlized consumer experience for each one of their “guests” through personal selling and
expert employees. Lululemon does not seek to comepete directlty for many of the cusomters the
Nike and Adidas brands cater to, such as professional sports franchises. Rather, Lululemon seeks
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to develop products and experiences for the sophistacted and well-educated women willing to
pay substaintale prices for workout and lifesyle gear. Lululemon is one of the only premier
athletic apparel retailers in the industry with a focus mostly on womens clothing which gives
them an upper hand in this niche market. In an effort to maintain the exclusivity of the
Lululemon brand, Lulu does not rely on any print or media advertising, but rather a community
based maketing strategy. The target audience we selected is one made up of young professional
women who are concerned about their fitness and are drawn to a more community based
marketing appraoch rather than intense and creative campaigns of some of our largest
competitors. Our customers want high-quality products that keep up with the fashion trends, and
by using an intergrated vertical retailing strategy, we are able to update our products in stores in
one month’s time, keeping only the newest and most advanced products readily available to our
customers.
Based on our market research survery data we found that most people wear their athletic apparel
not only for fitness acivities but as a part of their daily lifestyle. Therefore, we developed our
new prodcut line and marketing objective specficially around our target audience. We found that
we not only had to create a product line that was going to be technologically up to par but also
fashioanbly up to par. Furthermore, we found that our research indicated that 21.33% of our
respondents do not excersise at all, which led us to believe there was even more of a need for a
product line that can double in perfomance capabilities and every day wear capabilities. Due to
the exlusivity of our brand, reputation as a premier athletic reatiler, and the loyalty, income level,
and spending habits of our target market, we are confident that with the introduction of our new
“REPEL” product line, we will be able to increase sales by 10% across our brand.
V. Footnotes
i
Industry Statistics- http://www.statista.com/statistics/254489/total-revenue-of-the-global-sportsapparel-market/
About: Lululemon.com http://www.lululemon.com/about
Guests: Lululemon Athletic Form 10-K Annual Report Filed March 26, 2015
http://investor.lululemon.com/secfiling.cfm?filingID=1397187-15-16
iv Product and Competitor Information, Lululemon Form 10-k Annual Report Filed March 26,
2015 http://investor.lululemon.com/secfiling.cfm?filingID=1397187-15-16 & Product
Education, Lululemon Website http://info.lululemon.com/education
v Sweat resistant material information: http://help-enus.nike.com/app/answers/detail/a_id/204/~/what-is-nike-dri-fit%3F
vi Water proof material information: https://en.wikipedia.org/wiki/Waterproof_fabric
vii Competitor Information, Lululemon Form 10-k Annual Report Filed March 26, 2015
http://investor.lululemon.com/secfiling.cfm?filingID=1397187-15-16
viiiAthletic Apparel Global Market Share Chart: http://bruhenbu.com/2014/01/marketshare-apparel-industry/
ix Lululemon Target Audience Information: Lululemon Annual Report:
http://investor.lululemon.com/secfiling.cfm?filingID=1193125-12-126444
ii
iii
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Further Lululemon Target Market Information: Storify Retailer Profile- Lululemon
Athletica: https://storify.com/acarron/lululemon-athletica-s-history
xi Nike Revenue Information: Nike’s 2014 Form 10-K:
http://investors.nike.com/files/doc_financials/2014/docs/nike-2014-form-10K.pdf
xii Lululemon Vertical Retailing Strategy Information: University of Oregon Investment
Group: http://uoinvestmentgroup.org/wp-content/uploads/2012/04/LULU1.pdf
x
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