can lululemon get back on track?
TRANSCRIPT
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A BUSINESS STRATEGY (W501) PRESENTATION
PREPARED FOR
SHEIKH MORSHED JAHAN
ASSSOCIATE PROFESSORINSTITUTE OF BUSINESS ADMINISTRATION,
UNIVERSITY OF DHAKA
PREPARED BY
MARUF HASAN, ZR-13MD. DANIAL RAFI, ZR-27
SHARMILI ROWSHON KABIR, RH-30MUHTASIM SAROWAT RAYED, ZR-61
BBA 21st, SECTION AA2 SUBGROUP
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OUTLINE
CASE BACKGROUND
INDUSTRY ANALYSIS
COMPANY ANALYSIS
PROBLEM ANALYSIS
RECOMMENDATIONS
01 02 03 04 05
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A MAJOR SETBACK
Due to a PR disaster involving see-through pants, Lululemon’s growth in 2013-14 didn’t go as well as expected.
36.9%Revenue Growth
(2013)
16.1%
47%Net Income Growth
(2012)
3.3%Net Income Growth
(2013)
Revenue Growth (2012)
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INDUSTRY OVERVIEW
All Fitness Apparel US Market Size
(2014)
Yoga Apparel US Market Size (2013)
$2-2.5 BILLION
$8-10 BILLION
All Fitness Apparel Global
Market Size (2012)
$135 BILLION
All Fitness Apparel Expected Global
Market Size (2019)
$178 BILLION
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PORTER’S FIVE FORCES
THREAT OF EXISTING
COMPETITIONHIGH
BARGAINING POWER OF SUPPLIERS
MEDIUM
BARGAINING POWER OF
CUSTOMERSMEDIUM
THREAT OF SUBSTITUTES
LOW
THREAT OF NEW ENTRANTS
HIGH
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STRATEGIC GROUP MAPPING
PERFORMANCE FABRIC QUALITY
AV
AIL
AB
LE
SIZ
ES
Athleta
Lululemon
Lucy
Bebe
Nordstorm
Nike
Adidas and
Rebook
UnderArmour
More and more market players are going for more
ordinary fabrics for apparel that are available
in more sizes.
Close competition with other performance fitness wear
brands
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COMPANY VISION
Creating components for people to live longer, healthier fun lives
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COMPANY GROWTH STRATEGY IN 2014
Broaden product line beyond yoga and fitness
wear, offering products for both males and females of
all ages
Grow market presence in North America
Establish market presence outside
North America
Increase brand awareness of
Atheltica and Ivivabrands
Improve online presence to drive sales
Provide distinctive customer experiences
Develop and incorporate next-gen
fabrics and technologies
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CUSTOMER SEGMENTATION
Sophisticated, educated women who value active
and healthy lifestyles
Originally centered around
yoga, grew to include other
activities
Young, athletic women and men who value premium performance fitness wear
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SWOT ANALYSIS
SO
W
T
High Product QualityStrong commitment to
valuesActive Community Presence
Many patents and trademarks
Increasing competition from
both global brands and smaller
upstarts
Not available in as many size as some other brands
Spillage from other market segments dilutes brand equity
Newer technology
Growing health and fitness conscious trend across all ages
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KEY RESOURCES
V
R
I
N
PERFORMANCE FABRIC QUALITY
CUSTOMER EXPERIENCE
ONLINE PRESENCE
RESPONSIVE SUPPLY CHAIN
ALIGNMENT WITH VALUES
YES
YES
YES
NO
YES YES YES YES
YES NO YESYES
NO NO NO NO
NO NONO NO
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CORE ISSUE
Can Lululemon bounce back and recover its growth momentum from the PR disaster in the face of increasing competition?
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UNDERLYING ISSUES
PR Founder Wilson’s
inappropriate remarks damaged brand reputation
Delayed response to PR disaster
PRODUCT LINE Limited compared to
some competitors
VALUE CHAIN High cost for
production and design
Rapid investments in acquisition
Cut-throat competition and price war
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RECOMMENDATIONSREBRAND LEADERSHIP
Capitalize on new CEO Potdevin’s good market reputation
Distance company from
Wilson post-retirement
Update core values to include all inclusive and healthy body image
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RECOMMENDATIONSLAUNCH NEW ALL INCLUSIVE SUB-BRAND
Balance between performance fabric quality and availability of sizes
Channels can include social media, events, partnerships, campaigns
LAUNCH CAMPAIGNCentered around positive messages of self-esteem
Ads featuring men and women of all ages and sizes being active wearing Lululemon apparel
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RECOMMENDATIONSPROMOTE MORE RESPONSIVE STAKEHOLDER MANAGEMENT
CSR ACTIVITYfighting mal-nutrition /obesity promoting healthy living fighting against body shaming and bullying
Communicate swiftly, openly
and honestly with
stakeholders to rebuild brand
equity
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RECOMMENDATIONSSTREAMLINE VALUE CHAIN
CUT COSTSto cut non-value generating activities
Partner with suppliers of fabric for prompt delivery
Effective sourcing and procurement -Look for better avenues for sourcing cheaply
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RECOMMENDATIONSRESPOND TO CUSTOMER DEMAND
MOVE TO FAST FASHIONrespond to demand by launching new products within weeks (ZARA
Model).
Develop a strong supply chain to support this
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RECOMMENDATIONSOMNI CHANNEL CUSTOMER FULFILLMENT
Retail stores and online channels will come together with a holistic retailing capability, speed, quality and timely fashion
Will allow Lululemon to
justify premium
pricing
Increase customer
engagement and make them feel
important
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