Lululemon Case Study

Lululemon Case Study Words: 1569

I also certify that this paper was prepared by me specifically for this course. Student Signature: Nanas Cascaras Instructor’s Grade on Assignment: Instructor’s Comments: Executive Summary Problem Statement Luncheon is faced with the challenge of developing a set of actions to improve the company’s future prospects. Analysis * The market for yoga clothing and other active-wear is ranked the fastest growing segment of the apparel Industry In the U. S. * There Is a latent profitable market for athletic clothing companies to slut overweight and obese population needs. Two- thirds of adults in the U. S. Re overweight or obese. * Consumers will spend around $332 million on fitness apparel in specialty plus-size women’s clothing stores this year. * Barriers to enter this Industry are very low. Competition among suppliers Is fierce. There are many available options for companies to choose from when it comes to suppliers. * Besides retailers and independent shops, customers can find active wear on the Internet; therefore E- commerce Is considered the main substitute in the industry. * The bargaining power for buyers Is low. Competition among retailers is fierce. All players, but most significantly large impasses, use great amount of publicity for their brands. * Most clothing retailers outsource manufacturers in order to produce their brands, focusing only on their core competency, which would be designing the products. Alternatives * Based on the industry analysis, the company could invest more on designing men’s clothes. * Creating a new line of plus-size yoga wear for women. Recommendation It is recommended for Luncheon to create a new line of plus-size yoga wear for women.

U. S. Has one of the highest rates for obesity, and people are becoming more conscious on this matter. Implementation OFF Developing a market research * Taking advantage of its great designing team and request them to develop a new line of clothes for plus-size women * Implementing a strong marketing campaign * Making use of its distribution network Case Study Report the company’s future prospects. Their main goal is to provide their guests with products that will help them live long and healthy lives.

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Luncheon constantly challenges itself to maintain these social bonds, ethical and social responsibility practices, while achieving their economic and financial quotas. Analysis According to Forgo, R. 2012), the market for yoga clothing and other active-wear is ranked the fastest growing segment of the apparel industry in the U. S. , it is valued over $13 billion and growing. Due to these inspirational numbers, U. S. Retailers are putting a lot of emphasis to keep up with the market by developing their own labels. There is a latent profitable market for athletic clothing companies to suit curvier bodies.

Two-thirds of adults in the U. S. Are overweight or obese, therefore medical experts believe that there might be a solution on a yoga mat. The opportunities are huge for plus-size active wear target market. Fishbowls, a research company, calculates that consumers will spend around $332 million on fitness apparel in specialty plus-size women’s clothing stores this year; and that number does not include purchases of plus-size clothes (White, M. , 2013). As part of the industry analysis, Potter’s five-force analysis has been developed (see Appendix A).

There is a high threat of new entrants. Barriers to enter this industry are very low since there is no need of a huge amount of capital to start a business; actually, this is one of the reasons why this industry has so many independent sellers. One factor that may lower the threat of new entrants is the fact that distribution is vital for this business. In order to get customers to know their brand, companies need a good and strong distribution network. Athletic wear industry is very profitable, and that makes it very attractive for new investors.

Competition among suppliers is fierce. There are many available options for companies to choose from when it comes to suppliers. There is not much differentiation in the products they offer therefore suppliers compete among prices. Since there are so many manufacturers, and the switching cost is low; suppliers have owe to moderate bargaining power. Since clothes really doesn’t have substitutes, this force is seeing from the perspective of how many alternatives are there available for customers to buy fitness wear from.

Besides retailers and independent shops, customers can find active wear on the internet; therefore E-commerce is considered the main substitute in the industry because it enhance the availability of the product, as well as the accessibility for the customers. The bargaining power for buyers is low; they really can’t put that much pressure on retailers, but they are considered a throng force competition since they can switch very easily from one seller to another, and their loyalty is very low. Buyers are considered price sensitive in the industry, creating more competition between sellers.

Competition among retailers is fierce. All players, out most slantingly large companies, use great amount AT putridly Tort their brands; trying to differentiate themselves from others advertising enhanced features, new models, new fashion trends, etc. For the active wear, there are few large competitors but many independent ones; and they all compete fiercely to gain presence in main retailers. Most clothing retailers outsource manufacturers in order to produce their brands, focusing only on their core competency, which would be designing the products.

Luncheon is not the exception, and according to Button, J. (2013), companies that take a supply chain and extend it thousands of miles away, are adding layers of complexity that wouldn’t have to face if they had their sourcing locally, and that makes them lose control over their products. Luncheon is facing a quality issue right now since its pants are presenting see through issues. Nevertheless, the company alleges it audits and inspects factories, making sure its appliers meet the terms of its code of conduct and meet quality requirements.

The company is working closely with manufacturers to get to the root cause of the issue, and it has a team on site in Asia as well as added new quality control leadership to liaison and development teams (Button, J. , 2013). Alternatives Luncheon can consider a couple of alternatives in order to improve its future prospects. Based on the industry analysis, the company could invest more on designing men’s clothes. Right now Luncheon mainly serves women’s needs on yoga wear, but according to Forgo, R. 2012), the male segment of this category is unexploited, and men demand for high-quality, good looking active wear as well. The other alternative for Luncheon to improve its future prospects is to create a new line of plus-size yoga wear for women. Right now, the company’s largest size is 12, and according to White, M. (2013), analysts found that plus size women do not engage in exercise or go to a yoga studio because they do not have the right clothes, and they do not feel comfortable wearing what’s available in the market because it doesn’t suit their bodies.

Recommendation After analyzing the company and the industry, it is recommended for Luncheon to rate a new line of plus-size yoga wear for women. U. S. Has one of the highest rates for obesity, and people are becoming more conscious on this matter. Everyday, more and more Americans and people around the globe are changing their life styles and adding new healthier habits to their routines; exercising is one of them and yoga is one of the most popular ones. According to White, M. (2013), Yoga Journal found that the amount of spending on classes, clothes, and other items grew from $5. 7 billion in 2008 to $10. 3 billion last year.

Implementation After developing a SOOT analysis for Luncheon (see Appendix B) this is the tragedy recommended to implement a new line of plus-size clothes for women to their offers, in order to improve the company’s future prospects. The U. S. Obese population is constantly growing, but also people are becoming more and more health conscious. Therefore, there is a great opportunity for Luncheon to increase their customers by satisfying plus-size women needs of quality, good looking active wear. First, Luncheon should develop a market research in order to know how much is this new segment willing to invest on active wear?

What percentage is interested in engaging with yoga practices? What colors are they attracted to? What should be the largest sale? Etc. I en, Luncheon must take advantage AT Its great selling team and request them to develop a new line of clothes, featuring the same quality and comfort as its regular line, but this time for bigger women. As its designers usually interact with its customers asking for feedback, they can implement the same strategy asking plus-size women interested in engaging with yoga what is it that they are looking for when buying active wear, and asking them to try some of the new line clothes and give feedback.

The company needs to implement a strong marketing campaign in order to advertise its new plus-size product line, and create customer awareness among the new segment. TV commercials, on-line adds on pages for healthy foods and workouts, designating an important space on Luncheon’s website for the new offer, and designating the most visible space in physical stores are some of the ways the company could promote its new line.