Brand Audit: Lululemon Athletica By: Christina Johanson, Joanna Komvopoulos, Shital Kadakia

Professor  O’Meara   MBA 6403 December 12, 2012

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Table Of Contents Company History ............................................................................................................................................ 4 Brand Offering ................................................................................................................................................. 4 Point of Differentiation ................................................................................................................................. 5 Brand Architecture .......................................................................................................................................... 6

Product ........................................................................................................................................................... 6 Product Attributes ................................................................................................................................. 7

Positioning ......................................................................................................................................................... 8 Brand Elements and Promotion ................................................................................................................. 9 Marketing Channels ....................................................................................................................................... 9

Media Advertising .................................................................................................................................. 10 Public Relations ....................................................................................................................................... 10 Consumer Promotions ........................................................................................................................... 10 Direct & Online Marketing ................................................................................................................. 10 Event Marketing & Sponsorship ....................................................................................................... 11 Word of Mouth ......................................................................................................................................... 12 Other ............................................................................................................................................................. 12

Current Market Strategy & Objectives ................................................................................................ 12 Distribution Channels ............................................................................................................................ 12 Added Value of Distribution Channels ........................................................................................... 13 Pricing Strategy ........................................................................................................................................ 14 Price Compared to Competitors......................................................................................................... 14

Brand Performance ...................................................................................................................................... 14 Growth ......................................................................................................................................................... 14

Athletic Apparel Market .................................................................................................................. 15 Profitability and Income ....................................................................................................................... 15 Brand Value ............................................................................................................................................... 16 Quantitative and Qualitative Surveys .............................................................................................. 16 Brand Elements ........................................................................................................................................ 16 Brand Image & Associations .............................................................................................................. 17 Success of Marketing Efforts .............................................................................................................. 19 Brand Equity Improvements ............................................................................................................... 21 Leveraging & Extension Strategies .................................................................................................. 21

Secondary Associations ................................................................................................................... 22 Conclusions ................................................................................................................................................... 22 Work Cited ..................................................................................................................................................... 23 Appendix 3. Product Circle .................................................................................................................... 27 Appendix 4. Fabric List ............................................................................................................................ 27 Appendix 7. Descriptions of Social Media Marketing Channels ........................................... 30 Appendix 8. Competitor Comparison Pricing ............................................................................... 34 Appendix 9. Direct and Indirect Athletic Apparel Retailers in U.S. .................................... 34 Appendix 10: Profit Margins of Top 10 Apparel Retailers ..................................................... 35 Appendix 11. Survey Questions and Results: ............................................................................... 36

Survey 1: ............................................................................................................................................... 36

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Survey 2: ............................................................................................................................................... 45 Appendix 12. BCG Growth Share Matrix ......................................................................................... 56 Appendix 13: Ansoff’s  Model ................................................................................................................ 57 Appendix  14:  Recommendation……………………………………...………………………………….  58 Appendix  15:  Implemented  Recommendation…………………………………………………….  59

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Brand  Inventory

Company History Lululemon Athletica [Lululemon] was founded  by  Denis  “Chip”  Wilson  in  1998, after he took a yoga class and was swept away by the fitness high, but disappointed by the ill-fitting cotton clothing people wore. Wilson recognized an opportunity to change the status quo by using innovative design and athletic fabrics to create a new offering for customers. Wilson started an underground yoga apparel movement by offering clothing to instructors and relying on their feedback to grow his business.1

Lululemon opened its first store location in Vancouver, Canada in 2000, developing an environment within the store where consumers could learn, exchange ideas, and contribute to a healthy living community through their love of yoga. The company soon took this idea of wellness education a step further, training staff as educators not only about product performance, but also health and fitness in general.2 The company has now expanded to over 201 locations, with stores in the United States, Australia, and New Zealand and

showrooms  in  Hong  Kong  and  Great  Britain.    The  company’s  huge  success  led  it  to  go  public in July 20073.4

In the fall of 2009, the company expanded and launched Ivivva Athletica, a subsidiary that targets a younger female demographic - girls ages 6-12 years old. Ivivva Athletica currently has 7 locations, which are located in Canada and the United States.5

Brand Offering Since 1998, the company has expanded its product portfolio beyond its original niche offering  to  include  men’s  apparel  and  products  designed  specifically  for  activities  such  as 1 our history | lululemon athletica. (n.d.). yoga clothes & running gear for sweaty workouts | lululemon athletica. Retrieved October 25, 2012, from http://www.lululemon.com/about/history 2 ibid 3 Hutchinson, T. H. (2011, January 31). The World's Hottest Retail Stock Has Room to Run - NASDAQ.com. Home - NASDAQ Community. Retrieved November 18, 2012, from http://community.nasdaq.com/News/2011-02/the-worlds-hottest-retail-stock.aspx?storyid=55806#.UK0ZzkJ-jPo 4 "Dennis "Chip" Wilson, founder of Lululemon Athletica, presides over the opening bell". Nasdaq. Retrieved 2012-07-29. 5 Form 10-Q

Figure 2. Lululemon Store Exterior, Walnut Creek, CA

Figure 1. Brand Word Mark & Logo

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spin and running. However, there continues to be a strong focus on high-end yoga apparel for female consumers. Lululemon does not simply sell fitness apparel; it sells an experience and a lifestyle that combines high fashion with health and wellness in a way that has enabled the Lululemon brand to become synonymous with stylish fitness apparel that evokes a modern athletic life. By selling an attitude

and mindset, Lululemon has successfully taken advantage of a societal shift toward a more holistic lifestyle, enabling it to create a large base of loyal customers.6

Point of Differentiation Lululemon was founded on the premise that women should not be an afterthought in the sportswear and fitness market. The company recognized a consumer need for stylish, high-performance yoga apparel that was not being met by sportswear giants such as Nike or Adidas. As such, Lululemon differentiates

itself by providing women high-quality, stylish, and functional fitness apparel, treating them as the target consumer, not an  afterthought  to  a  men’s  line. The company also differentiates itself from other industry giants by cultivating

and providing a community of health and wellness in each of its stores where consumers can participate in outdoor fitness events, free yoga classes, and other group activities that align  with  the  company’s  mission  of  health  and  fitness.    

6 Hutchinson, T. H

Figure 5. In-store Yoga Class

Figure 4. Lululemon Special Community Events

Figure 3. Lululemon Store Interior

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Brand Architecture Traditionally, Lululemon has had a very monolithic brand portfolio, until launching the Ivivva brand for girls. The current brand architecture segments products by both category and function, leaving room for confusion. While Yoga Apparel seems to have received more attention within the Women’s  Lululemon line, the other categories of this brand are not segmented by function or given trademark names. As a result, running and spinning,  the  brand’s  other product focuses, are not clearly communicated through the brand hierarchy. This indicates a growth opportunity for the Lululemon brand. Lululemon’s focus on yoga apparel is logical given its brand heritage. However, given the  brand’s  expansion  into  new athletic functions with new product lines, it must realign its architecture to better fit the product offering of the company as a whole.

Product All Lululemon products use the company brand name. While some products, particularly in  the  Yoga  Apparel  category,  seem  to  have  individual  names  (e.g.  “Groove  Pant”,  “Astro  Pant”,  etc.)  all  products  fall  under  the  Lululemon  brand  name  and  are  tagged  with  the  Lululemon  logo,  a  stylized  “A”.

Figure 6: Lululemon Brand Architecture. For complete brand portfolio and architecture see Appendix 1 & 2.

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Product Attributes Lululemon products are strategically positioned and differentiated from competitors by using high-quality and technically advanced fabrics to create products that are specially designed for optimal, activity-specific fit and function. For example, the company uses different fiber fabrics to produce Yoga apparel pants than it does for its running or spin products.

The use of technically advanced material is not very different from what competitors such as Nike, Reebok, or Under Armour are employing. However, the key differentiator for the Lululemon brand is that the company combines technology and function with style, thus  appealing  to  women’s  inner  need to look and feel beautiful and sexy while working out. Until recently, this has not been the focus of most  of  Lululemon’s  competitors, allowing Lululemon the opportunity to gain significant recognition in this category. Furthermore, Lululemon places a premium on offering a total product experience, emphasizing the importance of exceptional customer service, custom tailoring and community events.

Fabrics. For a list of trademarked fabrics please see Appendix 4.

Figure 7: Lululemon Total Product. See Appendix 3 for larger view.

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Positioning Lululemon positions itself by taking advantage of its points of differentiation (PODs). Thus, Lululemon places women front and center and focuses on its reasons to believe (RTBs) of innovative technology, high quality fabrics, and functional apparel to provide fashionable luxury fitness apparel in an industry with few premium products. Through unique positioning and strategic laddering up the brand pyramid, Lululemon has managed to create a niche market within the fitness apparel industry, differentiating itself from its competitors by providing a unique product offering in the form of stylish, high-performance apparel. Figure 8 illustrates this unique position, using data from our consumer surveys.

Figure 8: Perceptual Map Based on Survey Results, Demonstrating Lululemon's Unique Market Offering

Figure 9: Brand Pyramid

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While Lululemon has positioned itself on each rung of its brand pyramid, its focus is on the top two tiers, beliefs and values and emotional benefits. This allows the brand to cultivate value based on how the products make consumers feel. This is further supported by the  brand’s  elements,  mainly the manifesto, which feed into the top two rungs along with the in-store classes and community events, which help to sell a lifestyle of empowerment. (see Appendix 5 for Brand Blue Print)

Brand Elements and Promotion The brand is clearly communicated through its brand elements. The most distinguishing element is the brand’s logo,  a  stylized  “A”,  which  was  part  of  the  word  mark  for  “athletically  hip”  – a name that the brand ultimately did not use.7 This  logo  appears  on  all  of  the  company’s  product  offerings, marketing materials, and communication elements. The company has built such equity in its logo, that it is immediately associated with the company name, allowing consumers to recall the brand in a variety of settings without the need for a category cue.

The Lululemon reusable shopping bags have also become a tremendous brand element for the company. The red and white bags rarely include the Lululemon Athletica name. Instead, they are filled with manifestos and mantras that represent the company and its mission. These bags have taken an active role in the societal trend that is Lululemon, as men and women alike, use the bag in their daily lives for non-shopping reasons. The bag thus has become a type of status symbol through which consumers can express their belonging to the Lululemon lifestyle. Furthermore, the ability for consumers to recognize these reusable bags and recall

that they are Lululemon, without the bag explicitly indicating the brand name, further supports  the  strength  of  Lululemon’s  brand  awareness  and  overall  equity.

Marketing Channels Unlike active wear industry giant Nike, Lululemon Athletica does very little

marketing communication through traditional media channels like TV and print. Instead, it has focused its efforts on IMC elements that emphasize the personal, emotional connection customers have with the brand, mostly through interactive and word of mouth communications. IMC elements in the Lululemon marketing mix include:

7 our history | lululemon athletica. (n.d.). yoga clothes & running gear for sweaty workouts | lululemon athletica.

Figure 10: Lululemon Logo

Figure 11: Lululemon Manifesto, as on Reusable Bags

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Media Advertising The brand limits resources allocated to traditional media advertising. Select, cheeky print ads  (i.e.  2010  “Say  no  to  camel  toe”  campaign)  run  in  niche  yoga and running magazines.8

Public Relations Lululemon’s  Public  Relations  and  Sustainability  Communications departments work to make sure that key efforts and brand messaging are consistent across communication platforms, including in-store educators, support and social media. Internal PR specialists work as evangelists to develop relationships with bloggers, investors and media influencers, ensuring positive publicity for the brand.9

Consumer Promotions Consumer promotions are limited. The brand does not promote in-store sales, and has articulated online discounts  as  “We  Made  Too  Much”  to  minimize  damage to the perceived brand value.

Direct & Online Marketing

Lululemon.com. The website has two goals: to create an online community and facilitate the online shopping experience. Landing page visuals highlight product and people, not brand elements. Value-add content includes product information, videos, a blog and (e.g. product demos, yoga classes and  ambassador  “chats”)  profiles  of all brand ambassadors, described below.

Digital Relationship Marketing Program. Customers have the option to sign up for email list, but it is not aggressively marketed on the consumer landing page, staying true to the visual language of the brand and improving the consumer landing experience.

8Helliker,  Kevin.  “Lululemon  Grows  Fast  on  a  Slim  Budget”.  WSJ, September 13, 2010. http://online.wsj.com/article/SB10001424052748703960004575481890366935552.html 9 careers | lululemon athletica. (n.d.). yoga clothes & running gear for sweaty workouts | lululemon athletica. Retrieved October 25, 2012, from http://www.lululemon.com/about/careers

Figure 12: 2010 Lululemon Ad Campaign

Figure 13: Lululemon.com Black Friday Homepage, 11/23/2012

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Mobile. In 2011 Lululemon launched a mobile optimized shopping site for iPhone, Android and Blackberry devices but does not engage in mobile advertising.

Social Media & Viral Marketing. Lululemon uses various social media and viral marketing platforms to develop a deeper emotional connection with consumers and foster the feeling of local and global community. This channel, along with event marketing, is arguably the heart of their promotional mix and communications strategy. Verbiage, imagery and tags (e.g. #thesweatlife) are consistent and shared across all corporate communication platforms. Many local stores use independent social media accounts to connect more directly with community and facilitate geographical consumer targeting. See Appendix 7 for more details on specific social media channels and engagement statistics versus competitors.

Event Marketing & Sponsorship

Athlete Sponsorship. In an effort to appeal to male consumers, a relatively new market  for  the  brand,  Lululemon  sponsored  the  US  Men’s  Beach Volleyball team at the 2012 Summer Olympics. Lululemon logo (w/o name) appeared subtly on uniforms. Both Jake Gibb and Sean Rosenthal are Lululemon Elite Ambassadors.

Sponsored Community Events. The brand often sponsors yoga festivals (i.e. Wanderlust) and produces the SeaWheeze Lululemon Half Marathon in Vancouver. Events are promoted through social media channels. Additionally, individual stores promote the community values of the Lululemon brand through free in-store yoga

classes and co-sponsored private shopping events with companies such as Bloomspot.com.

Figure 14: Images from Various Lululemon Social Media Channels

Figure 15: Jake Gibb at the 2012 Olympics. Source:

www.lululemonstory.com

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Word of Mouth

Ambassador Program The company recruits fitness instructors who lead yoga, spinning, pilates and running classes who embody the lifestyle and live the culture, giving them a clothing $1000 allowance for apparel. Ambassadors act as guerilla marketers in communities. Similarly, the brand fosters relationships with select gyms, exercise studios and yoga/pilates facilities  that  align  with  the  brand’s  positioning  to  offer  instructors  a  corporate  discount  on merchandise.

Other

Shopping Bags. Reusable shopping bags emblazoned with the Lululemon Manifesto and/or images from advertising campaign are used as another form of practical and recognizable advertisements for the company especially since the target customer would be proud to reuse the shopping bag.

Lululemon Running Clubs. Many retail locations hold weekly/bi-weekly group runs. This serves as a way to engage consumers in the Lululemon community and encourage store traffic as runs generally begin at a store location.

Current Market Strategy & Objectives Distribution Channels

Lululemon Athletica Retail Stores. Lululemon retail stores are owned by the parent company and fully branded as Lululemon Athletica locations. They are stocked using centralized distribution facilities strategically located in their operating footprint.10

Lululemon Athletica Showrooms These small retail locations are meant to be  “cozier  versions  of  

our  retail  stores,”  according  to  spokesperson  Tracy  Keough. Such locations allow the brand to become an integrated part of the community, providing a retail experience that is unique to the area yet still embodies the Lululemon brand promise. These 10 Form 10-K

Figure 16: Lululemon Retail Store - Union St., San

Francisco

Figure 17: Lululemon Showroom - MARRS Building, Sacramento

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stores are only open part of the week so that employees can actively engage with the local community.11

Lululemon.com – See Direct & Online Marketing on Page 9

Lululemon Outlets. Overstocked items are available at discounted prices at outlet locations. While the Lululemon logo is used, the full brand name is not visible on store signage.

Certified Partners/Strategic Sales. Lululemon has a selective strategic sales program through which the brand works with certified partners to offer its products at yoga studios, gyms and wellness centers internationally.  Partners  are  generally  a  strategic  fit,  serving  “high-end”  clientele  and  aligning with the Lululemon brand image. Examples include Equinox Gyms, The Dailey Method and Physique 57.

Added Value of Distribution Channels The primary drawback of this distribution strategy is that it limits both reach and accessibility. While the brand has grown substantially, opening retail stores in areas that meet certain demographic and psychographic segmentation criteria, most stores are concentrated around metropolitan areas including San Francisco, Los Angeles, New York and Chicago. As a relatively young brand, it is likely that this is part of an early market growth strategy designed to launch the company into the mainstream market. The  primary  benefit  of  Lululemon’s  distribution strategy is that it gives the brand a large degree of control over merchandising and marketing – ensuring that the brand message is strong and consistent at all consumer touch points. While certified distribution locations are not branded, they too add value to the brand by associating the Lululemon with “luxury  fitness” in the minds of  consumers,  thus  reinforcing  the  brand’s  market position. Scarcity of the product may also support the premium position of the brand.

11 Kelly Johnson (March 30, 2012). “Yoga gear chain Lululemon coming back to Sacramento.”  Sacramento Bee. Retrieved November 26, 2012 http://www.bizjournals.com/sacramento/blog/kelly-johnson/2012/03/yoga-gear-chain-lululemon-sacramento.html?page=all

Figure 18: The Dailey Method - Vancouver. Source: www.thedaileymethod.com

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Pricing Strategy Lululemon has positioned itself as a premium athletic brand – a position supported by the brand’s  overall  pricing  strategy.  Product  life-cycles are short and stores intentionally keep stock low. The planned obsolescence and promise of exclusivity create a sense of urgency for shoppers in search of specific product/color offerings. This tactic helps to substantiate the premium price point and keep consumers coming back to their stores. The brand rarely discounts merchandise and attention is not drawn to in store sales. Both of these tactics help to maintain  the  brand’s  perceived  value  and  encourage  customers  to  buy at full-price.

Price Compared to Competitors The  brand’s  price  point  is  on  par  with  other  luxury  active  wear  brands  such  as  Lucy and Gap,  Inc.’s  Atheta  brand. The premium price point is slightly higher than “performance brand” competitors such as Nike and Under Armour. Despite higher prices, our research revealed that the brand has created significant perceived value for consumers, which has helped to differentiate it from its competitors. (See Appendix 8. for Comparison Pricing and Appendix 11 for Survey Results).

Brand Performance Lululemon is financially sound and is exhibiting overall strong performance. The company has a healthy balance sheet, income and cash flow to sustain future growth and profitability. The following is a brief financial summary of the company.

Growth Since  the  company’s  inception,  Lululemon  has  grown rapidly in the United States, Canada, Australia, and New Zealand. The company ended their third quarter of fiscal 2012 with a total of 201 stores worldwide which includes 194 Lululemon branded stores. Majority of the stores, 127, are located in the United States, which accounts for majority of the company’s  revenues.12 The United States market is expected to lead the

12 Form 10-Q

Figure 19: Lululemon Product Lifecycle and Planned Obsolescence

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company’s  future  expansion  with  new  store  openings  (8 expected in Q4) but the brand is looking to continue expansion into Asia and Europe over the next two years.13 Lululemon ended fiscal 2011 with just over a billion dollars in revenues, an increase of 40.62% over fiscal 2010.14 The company is on track to surpass fiscal 2011 revenues and is estimated by analysts to earn around $1.37B in revenues for fiscal 2012.15 For the third quarter of fiscal 2012, the company earned revenues of $884.9M for the 39 weeks. This is an increase year over year of 41%. The company is poised for

continued growth and expansion heading into the fourth quarter, generally their strongest quarter due to the holiday season.

Athletic Apparel Market Lululemon competes directly with a handful of competitors who are more established and have greater financial resources. Two of its closest competitors, Lucy and Athleta, are both owned by larger corporations with broader brand portfolios and have greater resources to expand, grow and compete (see Appendix 6 for Competitive Review). The company has a much longer list of indirect competitors such as Walmart and sporting goods stores that also sell athletic apparel (See Appendix 9).

Profitability and Income Lululemon’s  apparel  is priced at a premium. These high prices help the company enjoy a healthy profit margin. The company ranked second among the top ten apparel retailers worldwide in terms of profit margins. The profit margin improved from fiscal 2010 at 17.11% to 18.40% in fiscal 2011. (see Appendix 10 for graph of leading profit margins by retailers). Lululemon increased net income 51.15% from fiscal 2010 to fiscal 2011, earning $184.1M in net income. This is one of the highest among the top U.S. publicly traded apparel companies. The company ended the third quarter with net income of $162.1M for the 39 weeks in fiscal 2012.16 13 (Maurer, 2012) 14 Form 10-K 15 http://finance.yahoo.com/q/ae?s=LULU+Analyst+Estimates 16 http://www.sec.gov/Archives/edgar/data/1397187/000119312512492935/d423946d10q.htm

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$50.00

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Figure 21: Market Capitalization of Top Athletic Apparel Brands, 12/10/12.

Figure 20: Lululemon net revenue growth. Source: shareholder.com

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Brand  Exploratory Brand Value One  of  the  major  disadvantages  of  grassroots  marketing  efforts  is  that  the  company’s  brand may not be as widely known or recognized. Figure 22 demonstrates the  company’s  enterprise and brand value for 2012. We expect that as Lululemon continues to expand its footprint and grow, brand value should also increase with comprehensive marketing efforts.

Quantitative and Qualitative Surveys To further explore what consumers thought about Lululemon, two surveys were conducted. The surveys were conducted using surveygizmo.com and included both quantitative and qualitative questions. They were  designed  to  understand  consumer’s  knowledge, understanding, perceptions and associations of Lululemon and its competitors. Survey 1 was more exploratory and included more assisted recall questions. Forty-three total surveys were completed. Survey 2 was more in depth with 67 surveys completed. Both men and women completed the survey though women made up three quarters of participants. Participants also were from a wide geographic, age and income range. The following are the key findings and takeaways from these surveys. (See Appendix 11 for survey questions and results)

Brand Elements

Brand Name The brand name consists of black, red and white, which most respondents were able to recall. However, survey results suggest that consumers are only familiar with “Lululemon”  and  not  the  full  brand  name,  “Lululemon  Athletica.”  Furthermore, responses revealed that many participants were confused as to the spelling of the name, indicating many  variations  including  “Lulu  Lemon”  and  “Lulumelon.” Survey results also suggest  that  the  company  should  consider  dropping  the  “Athletica”  name  to  avoid  confusion with Athleta and strengthen the equity of the Lululemon name.

Figure 22: Source: http://0-www.statista.com.ignacio.usfca.edu/statistics/238666/enterprise-and-brand-value-of-lululemon/

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Brand recall was much lower for men than for women. When asked to name the top five brands that came to mind in the athletic apparel category, only 44% of men named Lululemon. At the same time, three quarters of women surveyed recalled the brand and for 43% of these respondents Lululemon was the first brand named. It is clear the brand does not resonate with men, a market which the company has been trying to attract and grow.

Logo Survey findings show that the Lululemon logo is recognized more than Athleta, Under Armour and Reebok logos but was not as widely recognized as the Nike logo. Figure 23 highlights the most common associations that participants had with the logo and emphasizes the strong female and yoga-centric messaging that resonates with consumers.

Brand Colors The core brand colors are black, red and white, which were accurately identified by a majority of survey respondents, suggesting strong consumer recall.

Lululemon Manifesto Another brand element is the reusable shopping bag imprinted with the Lululemon Manifesto. A majority of participants claimed not to see the bag on a daily basis. However, follow-up questioning revealed that this may be due to selective attention on the part of many consumers.

Brand Image & Associations

Image Identification and Association Survey participants were shown three types of brand images that featured products, advertisements and other images featuring male and female athletes. When participants were asked to match advertising images to athletic retailers results revealed that 49% of participants associated the Athleta campaign, which featured a female doing yoga, with the Lululemon brand while approximately 30% of participants associated the Lululemon image of a female running on the beach with the Nike brand. This suggests that while the Lululemon campaigns may convey a message that supports the brand’s essence and positioning of empowerment, it is a message that consumers do not predominantly associate with the brand.

Figure 23: Word Map Based on Survey Results on Logo Associations

25%

19%

16%

11%

7%

6%

6% 5% 5% Black

Red

White

Pink

Purple

Green

Yellow

Orange

Figure 24: Colors Most Associated With Lululemon Brand Elements. Based on Survey Results, n = 33.

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Gender associations hindered notable results. When participants were asked to identify which of the four images featuring male athletes they associated with the brand 54% overall all participants and 56% of males did not associate any of the images featuring men with Lululemon. One image, of the official US volleyball men’s  team of the 2012 Olympics wearing Lululemon branded uniforms, was only recognized by one participant (out of 67). The brand is clearly not resonating or associated with men. However, the running and spin images were recognized as fitness activities Lululemon caters to, suggesting a slight degree of consumer brand knowledge.

Consumer & Brand Perceptions Lululemon brand perceptions are closely related to how participants described Lululemon consumers. The top unprompted brand  associations  were  “yoga”,  “women”,  “expensive”,  and  “fashionable.”      The  brand  ranked  highest  among  competitors  for  

“luxury  fashion appeal.”    Lululemon  consumers were described as an active female who practices yoga. She is wealthy and conscious about being trendy, fashionable and fit, which aligns with the psychographic and demographic market segments the brand targets. Men were not associated with the brand, despite the  company’s  attempt  to  develop  a  men’s  line  of  products.    

In addition, while community is a cornerstone and point of differentiation for the brand, this

message does not seem to resonate with most survey participants. Being a part of a community ranked the lowest when consumers were asked which lifestyle statement they identified with most. Over 50% of participants identified with the statement that suggested  superior  athletic  performance,  supporting  the  brand’s  decision to provide consumers technically advanced products. Survey participants also purchased Lululemon products more for themselves rather than as gifts citing reasoning such as “comfort”,  “fit”,  “quality”  and  love  for  the  brand.    Quality also ranked first in what consumers looked for in athletic apparel. Lululemon should continue to innovate and develop products with these qualities and highlight them in their integrated marketing communications. Lululemon products are perceived as

Figure 25: Campaign Images Included in Survey 2

Figure 26: Primary Brand Associations Based on Survey Results

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expensive, but the value of the products in relation to the cost was perceived as medium to  high.    This  plays  squarely  into  the  brand’s  current  positioning.

Customer Loyalty Current market trends suggest that brand loyalty is not as important to consumers today as in years past. Overall, our research was consistent with this theory; however, approximately 10% of respondents claim to purchase everything from Lululemon, which suggests loyalty to the brand does exist. The most popular item purchased from Lululemon is yoga pants followed by tops. Most respondents wear Lululemon products to the gym or yoga studio but a notable percentage of consumers revealed that they wear the products “everywhere.” This fits with the assertion that the brand caters to a lifestyle, selling products that are not only functional for athletic activities but also fashionable for everyday life.

Brand  Strategy

Success of Marketing Efforts Overall, Lululemon as a brand has been relatively successful in its marketing efforts to date. For its initial go-to-market strategy, Lululemon chose a well-defined target consumer in the niche yoga market, filling a need for technically advanced yoga-wear. From the start, they offered a whole product centered on the idea of creating a community for its customers and as a result has seen tremendous growth since it first launched in 1998. Its success appealing to the yoga community made for a smooth transition from the early market to the mainstream market – a challenge that many new brands struggle to overcome. However, the brand is in a transitional stage due to its rapid growth and must reevaluate its positioning and

39%

29%

10%

0% 7%

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10% Nothing

Yoga Pants

Tops

Equipment

Crops

Outerwear

Accessories

Everything

Figure 27: Top Lululemon Products Purchased by Consumers. Based on Survey Results, n = 43

Figure 28: "Love Notes" Campaign, Dec. 2012. Source: www.lululemon.com

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communication strategy if it hopes to achieve sustainable growth in the athletic wear category. All  of  Lululemon’s  marketing  communications  are  driving  towards  the  goal  of  creating  a  sense of community. Each of the IMC elements used works well together for cross promotion and delivers a consistent, authentic voice and message across channels. The brand has been very successful in communicating values of empowerment, quality, luxury, fitness and style to its loyal customers. By emphasizing interactive and experiential marketing initiatives the company has positioned itself to create positive sensory-emotional connections with consumers, that can improve brand resonance and ultimately consumer based brand equity.

However, as we have discussed, Lululemon has attempted to extend beyond its original target market – a move not recognized by many consumers due to selective distortion. While Lululemon has tried to communicate that they offer a diverse portfolio of products for both men and women, most consumers retain a narrow view of what the brand stands for. Furthermore, the ideas of community and holistic lifestyle – values at the core of the Lululemon brand – are lost on many consumers who instead view the brand as a symbol of wealth, egoism and superficiality. A primary cause of the disconnect between Lululemon’s  positioning  and  consumers’  perceived  brand image is likely the brand’s  accelerated growth and differentiation, which has confusion among consumers in the mainstream market. This communication breakdown provides an opportunity for the brand to redefine the way consumers view it. We believe that Lululemon can achieve this goal by reassessing the foundation of its positioning, fundamental customer needs, and product portfolio to identify its core competencies and successes and increasing the amplification of the  brand’s  core  beliefs and elements to increase brand knowledge and esteem. While Lululemon has managed to create strong brand awareness and loyalty within its original target market, the lack of a more traditional media platform has limited coverage on a mass scale, which may hinder future growth if the brand hopes to gain significant market share from competitors such as Nike or Under Armour. By dialing-up its IMC through broad-reaching platforms and supporting campaigns, emphasizing the heart of its positioning, Lululemon can successfully amplify its core message and strengthen brand equity.

Figure 29: "Love Notes" Campaign, Dec. 2012. Source:

www.lululemon.com

21

Brand Equity Improvements Lululemon can enhance their brand equity by improving the recognition and recall of some of their brand elements. The brand name is not fully utilized and is more wide known as “Lululemon”  rather  than  “Lululemon  Athletica”.    Since  the  “Athletica”  name  is  sometimes confused with Athleta, the company should consider dropping “Athletica”  altogether.    Furthermore,  the  company should reinforce the brand name so consumers know how to spell it. Color associations are strong with the brand but the company should consider standardizing the usage of color for the brand name and logos on storefront and other non-product specific branding to reinforce brand awareness and knowledge. We do not recommend repositioning the brand but rather reinforcing and featuring brand values and messages so they are more strongly associated with the brand. Two of the key points of differentiation  highlighted  in  the  brand’s  Manifesto,  community values and the balance of self, were missing altogether in the survey aided and unaided brand recall exercises. These values and beliefs are at the core of the company and should resonate with consumers.

Leveraging & Extension Strategies Through our analysis of the Lululemon brand, we have come to realize that there is tremendous room for growth within the brand. Using the BCG matrix model,  the  men’s  line stands out as a category with low growth potential and low market share for the brand (see Appendix 12). The company should consider exiting this market until it has strengthened its position its  current  market  per  Ansoff’s  model  (see  Appendix 13), using resources generated by its yoga product lines to further develop new product lines for women. The  Lululemon  brand  is  synonymous  with  “women”  and  “yoga”  and  this  is  in line with the  brand’s  core  competencies  and  strengths. We suggest that the brand realign focus on its female consumer by expanding its product offerings for women and branding other product lines in the running and spinning functions similarly to the current strategy in the yoga apparel function (see Appendix 2 for Current Brand Architecture). This will facilitate better organization of its brand architecture and will clarify its offerings to consumers, while also providing the company with the opportunity to establish new nomenclatures to brand their fitness category lines (See Appendix 14 and 15 for Brand Architecture Recommendation & Implementation).

Figure 30. Part of Brand Manifesto

22

Secondary Associations As our qualitative research indicated, Lululemon is not currently extracting the true value of its Elite Ambassadors, such as the US Men’s  Olympic  Beach  Volleyball  team.    This was a failed secondary association due to lack of promotion and projection though the  brand’s  IMC  strategy.    We  believe  that  such campaigns would be more successful if the brand chose different sports that are more in line with  the  heart  of  the  brand’s  positioning rather than a superficial attempt to  extend  their  brand  into  men’s  wear. In addition we believe that Lululemon can gain tremendous equity by leveraging its existing certified partners such as the Daily Method, Equinox, and Physique 57 to increase brand knowledge and strengthen its associations with health and fitness rather than trendy fashion. Finally, Lululemon should seek out partnerships and secondary associations with companies such as Whole Foods Market and Luna Bar, which target the same consumer segments but focus on a holistic lifestyle.

Conclusions Through qualitative and quantitative research we have identified key strengths and weaknesses for the Lululemon brand, provided recommendations to strengthen brand equity, and analyzed the market conditions for the brand to expand in the future. For now, we suggest that the brand maintain focus on its primary customer and expand its function categories while dialing up its IMC in order to better align consumer  brand  associations  with  the  brand’s  core  essence  and  values.

Figure 31. Suggested Secondary Associations

23

Work Cited

1. http://www.lululemon.com/about/history?mnid=ftr;company_history 2. "Dennis "Chip" Wilson, founder of Lululemon Athletica, presides over the

opening bell". Nasdaq. Retrieved 2012-07-29. 3. Helliker,  Kevin.  “Lululemon Grows Fast on a Slim Budget”.  WSJ, September

13, 2010. http://online.wsj.com/article/SB10001424052748703960004575481890366935552.html

4. http://www.lululemon.com/about/careers/job-details/?jobId=005482 5. Hutchinson, T. H. (2011, January 31). The World's Hottest Retail Stock Has

Room to Run - NASDAQ.com. Home - NASDAQ Community. Retrieved November 18, 2012, from http://community.nasdaq.com/News/2011-02/the-worlds-hottest-retail-stock.aspx?storyid=55806#.UK0ZzkJ-jPo

6. Tracy Keough, Lululemon spokesperson. http://www.bizjournals.com/sacramento/blog/kelly-johnson/2012/03/yoga-gear-chain-lululemon-sacramento.html?page=all

7. Maurer, B. (2012, 12 10). Lululemon perhaps the best buy in retail. Retrieved from http://seekingalpha.com/article/1054581-lululemon-perhaps-the-best-buy-in-retail

8. Lululemon Athletica Inc. (2012, December 6). Form 10-Q. Retrieved from http://sec.gov/Archives/edgar/data/1397187/000119312512492935/d423946d10q.htm

9. Lululemon Athletica Inc. (2012, March 22). Form 10-K. Retrieved from http://sec.gov/Archives/edgar/data/1397187/000119312512126444/d277556d10k.htm

24

Appendix    

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Appendix 3. Product Circle

Appendix 4. Fabric List Lululemon has invested in developing fabrics and technology as a point of differentiation. One of its main signature fabrics is the luon that is used in their yoga apparel. This fabric not only feels cottony, it is preshrunk, offers 4-way stretch and is wicking.    The  company’s  signature fabrics include all of the following: luon family (including country cousins) swift family silverescent family meshes and liners family natural blend family outerwear & insulation family For an expanded list and detailed description, visit http://www.lululemon.com/education/info/fabricsandtechnologies

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Appendix 7. Descriptions of Social Media Marketing Channels YouTube (http://www.youtube.com/user/lululemon) – this a mix of content, brand controlled.  Viral  videos  like  “Sh*t  Yogis  Say”  as  well  as  footage  from  events.

Facebook (www.facebook.com/lululemon) – Mix of product and lifestyle posts. Friendly, familiar tone

Twitter (www.twitter.com.lululemon) – Unlike many brands, this platform is not used as a customer  service  “call  center”.  Instead,  the  brand  showcases  a  mix  of  product  and  lifestyle  content, both branded and not

Pinterest (www.pinterest.com/lululemon) – Boards are dominated by motivational fitness imagery, goal setting inspiration, healthy recipes and photos from Lululemon stores and events.

Instagram (www.instagram.com/lululemon) – Pictures  taken  by  Lululemon’s  social  media  team that capture the spirit of the brand. Include behind-the-scenes shots and light-hearted images from the Lululemon offices.

yoga. run. life. blog. (www.lululemon.com/community/blog) – Blog posts cover everything from lifestyle topics to spotlights on new product launches. The blog is an integrated part of the ecommerce site and facilitates the shopping experience when applicable (product related posts). Post credit specific authors/members of the community and  consumers  engage  via  comments,  helping  to  generate  content  in  features  like  “Ask  A  Runner”,  which  encourages  engagement  and  community.

Twitter Statistics

Brand Tweets Followers Following

Nike 10,181 783,229 145

Lululemon 36,164 358,450 101,772

Under Armour 5,487 142,128 1,084

Adidas 481 42,251 124

Athleta 2,763 14,292 473

Lucy 972 8,681 810

Source: www.twitter.com, 12/09/12

31

Facebook Statistics

Brand Likes Mentions Check-Ins

Nike 11,474,941 105,011 6,613

Lululemon 757,551 30,526 36,935

Athleta 85,584 4,527

Lucy 34,193 211 219

Adidas 10,153 114,345

Under Armour 2,142 42,661 186

Source: www.facebook.com, 12/09/12

Examples of Social Media Pages

The Lululemon Athletica Facebook Timeline (11/23/12), www.facebook.com/lululemon

32

The Lululemon Athletica Facebook Timeline (11/23/12), www.facebook.com/lululemon

The Lululemon Athletica Twitter Profile (11/23/12), www.twitter.com/lululemon

33

The Lululemon Athletica Pinterest Boards (11/23/12), www.pinterest.com/lululemon

The Lululemon Athletica Instagram Profile (11/23/12), www.instagram.com/lululemon or @lululemon on the Instagram

App

34

Appendix 8. Competitor Comparison Pricing

Brand

Pants -

Yoga

Pants -

Running PerformanceTanks

Nike $60 - $70 $55 - $100 $28 - $55 Lululemon $88 - $98 $92 - $128 $39 - $64 Athleta $79 - $98 $64 - $98 $49 - $69 Lucy $79 - $98 $79 - $89 $45 - $65 Under Armour $59 - $89 $49 - $64 $22 - $68

Sources: www.nike.com, www.lululemon.com, www.athleta.gap.com, www.lucy.com, www.underarmour.com, 12/11/12

Appendix 9. Direct and Indirect Athletic Apparel Retailers in U.S.

Source: http://0-www.statista.com.ignacio.usfca.edu/statistics/242039/sporting-goods-retailers-in-the-us-by-revenue/

35

Appendix 10: Profit Margins of Top 10 Apparel Retailers

Source: http://0-www.statista.com.ignacio.usfca.edu/statistics/242104/leading-10-apparel-retailers-worldwide-based-on-their-profit-margin/

36

Appendix 11. Survey Questions and Results:

Survey 1: Note: This first survey was designed to be exploratory and geared towards obtaining a first impression of the Lululemon brand and product. It was conducted using an online survey tool, surveygizmo.com and was sent to our personal network of friends. 43 participants completed the survey. Question 1: How familiar are you with the Lululemon brand?

o I  don’t  know  much  about  the  brand o I know the brand name o I know the brand name and logo o I know everything about the brand (logo, name, products, etc.)

Question 1 Results:

Majority of respondents from survey 1 had knowledge about the Lululemon brand, logo and products. Only 9% of respondents did not know much about the brand. Question 2: What colors do you associate with the Lululemon brand? (Select all that apply)

o Green o Black o Orange o Yellow o Red o Purple o White o Brown o Pink o Blue

9% 14%

35% 42%

0%10%20%30%40%50%

I don't knowmuch about

the brand

I know thebrand name

I know thebrand name

and logo

I knoweverythingabout the

brand

How familiar are you with the Lululemon brand? n=43

responses

37

Question 2 Results:

While  the  dominant  color  in  Lululemon’s  brand  is  red,  about  three  quarter  of  respondents  who were at the least familiar with the brand name and logo identified the brand with black. Of respondents who were familiar with at least the brand name and logo, red was the second highest associated color followed by white but less than half of respondents identified the brand with these colors. Red, white and black are respectively the top three colors of Lululemon but interestingly pink, purple, green and yellow were also identified with  Lululemon’s  brand.    Clearly,  the  brand  name  and  logo  colors  are  not  overwhelmingly  associated with the brand. The brand does offer colorful products and perhaps the additional colors are associated with the brand because of their product offering. Question 3: How often do you purchase Lululemon products?

o Less than once a month o Every 1-3 months o Every 3-6 months o Every 6-12 months o More than once a month

Question 3 Results:

75.8%

48.8%

48.5% 33.3%

21.2%

18.2%

18.2% 15.2% 15.2%

What color respondents at least familiar with Lulu brand/logo

associate w/ Lululemon brand? n=33

Black

Red

White

Pink

Purple

Green

Yellow

38

One third of respondents who are at least familiar with the Lululemon brand and logo purchase products from the company less than once a month while another third of these respondents purchase products every six to twelve months. Of the remaining third, 21% purchase products every one to three months while about six percent purchase products more than once per month. Question 4: How would you rank Lululemon against its competitors? (highest on top)

o Nike o Under Armour o Lululemon o Lucy o Athleta

Question 4 Results:

n=43 % of responses by rank (1 is highest)

Competitors 1 2 3 4 5

Nike 39.5% 20.9% 16.3% 20.9% 0.0% Under Armour 16.3% 30.2% 11.6% 14.0% 27.9%

Lululemon 37.2% 23.3% 16.3% 9.3% 9.3%

Lucy 0.0% 18.6% 20.9% 16.3% 34.9%

Athleta 4.7% 4.7% 30.2% 30.2% 18.6%

Nike ranked as the highest among athletic apparel companies but Lululemon was close behind. Question 5: What do you think a Lululemon consumer is like? Describe. Question 5 Results:

33.3%

21.2%

6.1%

33.3%

6.1%

0.0%5.0%

10.0%15.0%20.0%25.0%30.0%35.0%

Less thanonce amonth

Every 1-3months

Every 3-6months

Every 6-12

months

Morethan onea month

How often respondents familiar with Lulu purchase products n=33

Response

39

The word map above highlights the main key words that respondents used to describe a Lululemon consumer. According to respondents, a Lululemon consumer is an active and fit female who is into yoga. She is wealthy, and conscious about being trendy, fashionable and fitness conscious. Question 6: How active are you?

o 1 Not active at all o 2 o 3 o 4 Somewhat o 5 o 6 o 7 Very active

Question 6 Results:

0.0%5.0%

10.0%15.0%20.0%25.0%30.0%35.0%40.0%

Not active at all Somewhat active Very active

How active are respondents n=43

Response

40

Majority of respondents ranged from somewhat to very active. Question 7: How would you rank the cost of Lululemon products?

o 1 Not expensive o 2 o 3 o 4 Somewhat expensive o 5 o 6 o 7 Expensive

Question 7 Results:

n=39 ranking from 1 (not expensive) to 7 (expensive)

Responses 1 2 3 4 5 6 7

at least know brand 2.6% 0.0% 0.0% 10.3% 12.8% 30.8% 48.7%

Majority of respondents, who had at least heard of the brand, thought the products were expensive. Question 8: How would you consider the value of Lululemon products in relation to cost?

o 1 No value o 2 o 3 o 4 Moderate value o 5 o 6 o 7 High value

Question 8 Results:

n=39 ranking from 1 (no value) to 7 (high value)

Responses 1 2 3 4 5 6 7

at least know brand 0.0% 0.0% 10.3% 33.3% 33.3% 12.8% 10.3%

Majority of respondents, who had at least heard of the brand, thought the value of Lululemon products were medium to high in relation to cost. Question 9: Which of the following do you associate with the Lululemon brand? Check all that apply

o Sports o Fitness o Yoga o Running

41

o Spinning o Men o Women o Active o Gym o Workout o Innovative o Quality o Trend o Athletic o Expensive o Apparel o Performance o Power o Fashionable

Question 9 Results:

Among respondents that at least know the brand, the top associations with the Lululemon brand  are  “yoga”  and  “women”  and  “expensive”  and  “fashionable”.    The  words  least  associated  with  the  Lululemon  brand  are  “power”,  “men”,  “innovative”,  “performance”  and “sports”.    Even  “spinning”,  a  fitness  activity  that  Lululemon  focuses  on,  ranked  among  the  lowest 5% of brand associations. The below word map shows these results in a different way

Yoga 11%

Women 11%

Expensive 10%

Fashionable 10% Trend

8% Fitness

7%

Active 6%

Quality 6%

Running 5%

Workout 5%

Athletic 5%

Apparel 5%

Spinning 3%

Gym 3%

Sports 2%

Performance 2%

Innovative 1% Men

1% Power 0%

Most associated with Lulu brand n=39

42

. Question 10: Which is your preferred brand?

o Lululemon o Nike o Under Armour o Lucy o Athleta

Question 10 Results:

Survey respondents who at least know the Lululemon brand overwhelmingly prefer Lululemon followed by Nike and Under Armour. Question 11: How loyal are you to your preferred brand?

o 1 Not at all loyal (I buy whatever I like) o 2 o 3 o 4 Somewhat loyal (I sometimes buy other brands) o 5 o 6 o 7  Very  loyal  (I  only  buy  this  brand’s  products)

Lululemon 44%

Nike 32%

Under Armour

12%

Athleta 7%

Lucy 5%

Brands preferred by respondents n=39

43

Question 11 Results: n=43 ranking from 1 (not at all loyal) to 7 (very loyal)

1 2 3 4 5 6 7

Responses 27.9% 4.7% 18.6% 23.3% 11.6% 7.0% 7.0%

More than half of survey respondents are not loyal to moderately loyal to preferred brands. Even respondents who know everything about Lululemon were not more loyal to the brand. Question 12: What do you purchase most from Lululemon?

o Nothing o Yoga pants o Crops o Outerwear o Tops o Accessories (eg. Water bottles, towels, etc.) o Equipment (eg. Yoga mat, etc.) o Everything

Question 12 Results:

Yoga pants are the most popular item purchased by respondents who purchase from Lululemon followed by tops. About 10% of respondents also seem to shop exclusively from Lulu and purchase everything. They are also more loyal to the brand. No respondents purchase accessories or equipment from Lululemon. Question 13: Where do you wear your Lululemon products? Check all that apply

o Nowhere,  I  don’t  own  any  Lululemon  products o Only when taking a yoga/pilates class o At the gym

Nothing 39%

Yoga Pants 29%

Tops 10%

Equipment 0%

Crops 7%

Outerwear 5%

Accessories 0%

Everything 10%

What respondents purchase from Lulu n=43

44

o Around the house o On a casual day o Everywhere

Question 13 Results:

Most respondents wear Lulu products at the gym but respondents also wear Lulu products for yoga/pilates class, on a casual day or everywhere. Question 14: How many times in a day do you see a Lululemon reusable bag being used for something other than shopping at Lululemon?

o I  don’t  know  what  the  bag  looks  like o Less than 1 time per day o 1-3 times per day o 3-6 times per day o 6-9 times per day o 9-12 times per day o More than 12 times per day

Question 14 Results:

I don't own Lulu 28%

Yoga/Pilates class 15%

Gym 19% Around the

house 8%

On a casual day 15%

Everywhere 15%

Where do respondents wear Lulu products n=43

45

Majority  of  respondents  don’t  see  the  Lululemon  shopping  bag  featuring  the  Lulu  Manifesto  on it.

Survey 2: Note: This survey was designed to obtain more in-depth associations and impression of the Lululemon brand and product. It was conducted using an online survey tool, surveygizmo.com and was sent to our personal network of friends. 67 participants completed this survey. Question 1: What is your age group?

o 10-18 o 19-25 o 26-35 o 36-45 o 46-55 o 55+

Question 1 Results:

Majority of survey respondents were between the age of 26 to 35. The survey included a wide age range but it is skewed towards the 26 to 35 year old.

don't know what the bag

looks like 23%

<1 37%

1 to 3 26%

3 to 6 7%

6 to 9 7%

9 to 12 0%

>12 0%

How often respondents see Lulu shopping bags each day

0.0%

20.0%

40.0%

60.0%

80.0%

19 - 25 26 - 35 36 - 45 46 - 55 55+

Age of survey respondents n=66

46

Question 2: What is your gender?

o Male o Female

Question 2 Results:

Just over three quarter of survey respondents were female. Question 3: Are you currently employed full-time?

o Yes o No

Question 3 Results:

Majority of survey respondents are employed full-time. Question 4: What is your current or most recent (if unemployed) household income?

o Less than $35,000 o $35,000 - $55,000 o $55,000 - $75,000 o $75,000 - $100,000 o $100,00+

Male 24%

Female 76%

Gender of survey respondents n=67

No 34%

Yes 66%

Are respondents employed full time n=67

47

Question 4 Results:

Question 5: What is your favorite way to stay fit? Question 5 Results:

Running, yoga and the gym were equally the top response followed by walking and hiking. Lululemon definitely addresses the running and yoga market segments. Question 6: Where are you most likely to wear athletic apparel?

o At the gym/studio o Running errands o Around the house o To work/school o All of the above

Question 6 Results:

0.0%10.0%20.0%30.0%40.0%50.0%

<$35,000 $35,000 -$55,000

$55,000 -$75,000

$75,000 -$100,000

$100,000 +

Household income level n=67

48

Majority of respondents wear athletic apparel at the gym or studio but almost a quarter of respondents wear athletic apparel everywhere. Question 7: List 5 brands that come to mind when you think of athletic apparel? Question 7 Results:

The top response was Nike with 39% of respondents recalling the brand first and about 88% recalling it in their top five. Lululemon was second with 31%. No other competitor came  close.    What’s  interesting however is how respondents recalled the brand. Some separated  “Lulu”  and  “Lemon”,  capitalized  both  “L”  and  yet  others  recalled  it  as  “Lulemon”.    No  responses  included  the  brand’s  full  name,  Lululemon  Athletica.    It  also  appears  that  there may be  some  confusion  between  “Athletica”  and  Gap’s  “Athleta”. For men, Lululemon was not top of mind and was only mentioned as the third or fourth brand that came to mind. Less than half, only 44%, of men identified Lululemon while 75% of women recalled Lululemon overall. 43% of women identified Lululemon as the first brand that came to mind.

All of the above 22%

At the gym/studio

66%

Around the house

9%

Running errands

3%

Where respondents wear athletic apparel n=67

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

160.0% Recall of Top 5 Athletic Apparel Companies n=67

5

4

3

2

1

49

Question 8: Please identify the logos

Question 8 Results:

1. Nike – 99% identification 2. Athleta – only 30% identification. About 5% confused the name as Athletica and

others were unsure as evident by question marks. 3. Adidas – 73% identification though misspelling was common. 4. Under Armor – 55% identification though misspelling was common as was brand

name combined into one word. 5. Lululemon – 72% identification though misspelling was common. Men had 75%

identification while women had 80% identification of the brand. 6. Adidas – 79% (slightly more) identification than the first logo. Commonly

misspelled. 7. Reebok – 63% identification and misspelled.

Question 9: Are you able to identify which brands make the products depicted below? Match the numbers to the appropriate brands.

o Adidas o Nike o Lululemon o Under Armour o Athleta o Reebok

Question: Answer Key (for reference, not included in survey):

50

Question 9 Results:

Lululemon products were widely recognized by 70% of respondents. It was most often confused with Athleta. Surprisingly Nike and Reebok had lower recognition that Lululemon and Athleta which tied. Question 10: What brands do you associate with the images below? Match the appropriate number of the brands

o Nike o Lucy o Athleta o Lululemon o Under Armour

Question: Answer Key (for reference only):

Question 10 Results:

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

Adidas UnderArmour

Reebok Lululemon Nike Athleta

Product to brand identification n=67

51

Under Armour had the highest image to brand recognition while Lululemon and Athleta tied with the lowest recognition. The Athleta image was mistaken to be one for Lululemon by 49% of respondents. But it was actually the Nike image that majority of respondents, 30%, associated with Lululemon.

0.0%10.0%20.0%30.0%40.0%50.0%

Athleta UnderArmour

Nike Lucy Lululemon

Image to brand identification

Most survey respondents associated this actual Lululemon image with Athleta.

Most survey respondents associated this actual Athleta image with Lucy. About 27% associated this image with Lululemon.

Most survey respondents associated this actual Nike image with Lululemon.

52

Question 11: What are the first five things that come to mind when you see the image below?

Question 11 Results:

24% of respondents identified the logo as one of the first things that came to mind. Other brand  image  associations  were  “yoga”,  “expensive”,  “pants”,  “hair”,  “quality”,  “trendy”,  “red”  and  “women”  or  “female”.     Question 12: Which image do you associate with the Lululemon brand? Question: Answer Key (for reference, not included in survey):

Question 12 Results: 54% of survey respondents did not associate images of men with Lululemon even though two out of four pictures were from Lululemon. 56% of men did not associate images of men with Lululemon and only 31% of men correctly associated one of the images with Lululemon. Interestingly, 84% of those who responded got one of the images correct, of a

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man  running  but  the  second  picture,  of  the  Olympic  men’s  volleyball  team  that  Lululemon  sponsored over the summer had only one respondent associate the brand. It seems that there may be some awareness of the sports Lululemon caters too since the running and spin images had the highest associations by respondents. Question 13: Please rank the brands below for luxury fashion appeal and athletic performance.

o Nike o Adidas o Lucy o Lululemon o Athleta o Under Armour

Question 13 Results:

Nike had the highest average rating for athletic performance followed by Under Amour and Adidas. The ratings between these competitors were fairly close, with all rating between 5.75 and 5.08. Lululemon had the highest average luxury fashion appeal rating followed by Athleta and Nike. The gap between these competitors was bigger than for athletic performance.    Lululemon’s  products  are  positioned  as  luxurious  and  fashionable. Question 14: Which of the following is most important for you as a consumer when purchasing athletic apparel?

o Recommendation by a friend/peer

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o Advertisement, promotion or sale o Celebrity endorsement o Quality of materials and design

Question 14 Result:

Quality of materials and design ranked as the most important aspect of purchasing athletic apparel followed by a recommendation from a friend or peer. Advertisements and promotional sales was ranked third and finally celebrity endorsement was last. Question 15: Which statement do you identify with most?

o I want to run faster, spin harder, stretch deeper o When I do work out, I want to look good doing it o Work out? I wear my yoga pants to brunch o I want to feel like I am part of a community

Question 15 Result:

Over  half  of  survey  respondents  identified  with  “I  want  to  run  faster,  spin  harder,  stretch  deeper”  while  “I  want  to  feel  like  I  am  part  of  a  community”  had  the  least  response.    

0.0%20.0%40.0%60.0%80.0%

100.0%

Most important thing about purchasing athletic apparel

4

3

2

1

0.0%10.0%20.0%30.0%40.0%50.0%60.0%

brunch look good community run, spin,stretch

What respondents identified with most n=67

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Community is one of the cornerstones of the Lulu brand, it appears to not resonate with survey respondents. Question 16: Please rank these shopping experiences in order of preference.

o Online o Off-price/discount retailer o Department stores o Brand retail store o Local specialty retailers

Question 16 Results:

About 28% preferred to shop at brand retail stores followed by online. Department stores ranked last for shopping preferences of survey respondents. Question 17: Are you most likely to purchase Lululemon products for yourself or for others? Why do you buy it? Question 17 Results:

About 70% of respondents said they purchase Lululemon. Of that, about 60% purchase for themselves and 30% purchase it for others as gifts. Another 11% purchase for both

0.0%20.0%40.0%60.0%80.0%

100.0%120.0%

Shopping preferences n=67

5

4

3

2

1

0.0%

50.0%

100.0%

myself others both

Who do you purchase Lululemon for?

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themselves and as gifts. Some of the main reasons people purchase Lululemon clothes is because  it  is  “comfortable”,  “high  quality”,  has  a  “good  fit”  and  were  also  given  as  “gifts”.    

Appendix 12. BCG Growth Share Matrix

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Appendix  13:  Ansoff’s  Model

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