Question
Executive Summary Founded in Vancouver in 1998, Lululemon is an athletic apparel company that offers products for a full range of activities and sports. The
Executive Summary
Founded in Vancouver in 1998, Lululemon is an athletic apparel company that offers products for a full range of activities and sports. The nature of the products makes it important for the company to focus both on functionality and aesthetics. Initially, the products were intended for women and for the purpose of yoga exercises. Gradually, however, this has come to include all other kinds of sweaty pursuits. Lululemon offers an entire array of products for both men and women and also produces various accessories like backpacks, bags, hats, etc.
With the world shrinking to a global village, the products of Lululemon have immense potential in the international market. The company's success in various nations is a testament to the same. Yoga, running, etc., have truly transformed themselves into globally practised activities, and hence, consumers around the globe are willing to offer the right price for the right product. This insight has driven Lululemon's endeavours into a global arena.
Introduction
The country or region selected for expansion here is the Philippines. Lululemon's success in other countries is expected to benefit the company in the Philippines. The industry in the Philippines is huge and is pegged to grow annually by 9.11% from 2021-26.
(Apparel - philippines: Statista market forecast). While the global sportswear market shows growth in general, major growth in the coming years is expected from the Asia-Pacific region. (Sports apparel market (2020 - 2027): Industry Share, analysis - mordor intelligence). The Philippines is part of the prominent ASEAN grouping. Canada and ASEAN have announced negotiations for a free trade agreement. Once approved, the treaty will subsume various taxes and tariffs.
SWOT Analysis
- Strengths The niche market that Lululemon is in differentiates the company from many others. The focus is on functionality and aesthetics. Lululemon is known for its high-quality products that are also trendy. The importance of yoga, running, etc. is increasing across the world, which strengthens the case for Lululemon.
- Weaknesses A Limited international presence compared to its rivals is a weakness for Lululemon. This reduces brand recall. The Price of Lululemon products is higher than its competitors' and hence is a weakness.
- Opportunities Aggressive expansion internationally can spread Lululemon's brand across the world and keep it on par with rivals like Nike and Under Armour. The rise of niche exercises such as yoga, Zumba, and others presents opportunities for Lululemon.
- Threats Technology and the early adoption of it in apparel is a threat. Sports apparel is a technology intensive industry, and hence, not integrating the latest technology early enough can cost dearly.
Segmentation
Lululemon must use an integrated market segmentation strategy to include several elements for it to penetrate the Philippines market. One of which is demographic. Their leggings cost as much as one hundred dollars; hence the income level of their primary consumers would be above average. They aim at serving both women and men, but it is easier to say that women consume more of their products. Currently, their marketing is specified for only adults. From a geographical perspective, lululemon has a massive reach. Their shipments are made internationally to several nations. Behaviorally, the brand aims at segmenting individuals who employ fitness in their daily living and mostly wear athletic attire. The pandemic has broadened this; hence persons working from home are as well-targeted. In terms of psychographic, lululemon was previously known for its yoga attire. They have since extended into many other aspects, including tennis, swimming, travel, biking, and hiking. Individuals participating in these activities yearn to stay comfortable and look good.
Competitor Analysis
The sports apparel market in the Philippines is growing and exhibiting promising sales. The revenue in the sports and outdoor product sales in 2021 is USD 181 million in the Philippines (Statista, 2021). The growth rate expected in the Philippines by 2025 is around 14.55% with expected revenue of USD 312 million and the expected user penetration in the market to grow from 8.3% in 2021 to 13.3% in 2025 (Statista, 2021). Therefore, the competition in the market will also be high for Lululemon since many brands are already established in the market. Some of the major competitors for Lululemon in the Philippines are as follows.
1. Nike
Niki was established in the Philippines in 1998 and has grown since then. Nike has 14 retail stores established and the Nike products are available through Nike website and many other shopping websites (Nike, 2021).
2. Adidas
Adidas in the Philippines can be considered as another major competitor for Lululemon because the products are similar and come under around the same price range. The net revenue of adidas in ecommerce alone is estimated around USD 12.8 million (Ecommercedb, 2021).
3. Reebok
Reebok is also another competitor for Lululemon in the Philippines. Reebok owns many retail stores in the Philippines and products are available in many other online stores as well. The company is active in the market launching many events for the consumers.
4. Under Armour
Under Armor currently owns 3 stores in the Philippines (Under Armour , 2021). The presence of Under Armour in the Philippines market is considerable when it comes to competition with other brands.
5. New Balance
New balance is another brand that can be considered a competitor to Lululemon. The company has 11 stores in the Philippines (New Balance, 2021).
Some of the local competitors for Lululemon in the Philippines are as follows.
6. World Balance
7. Aphon.Ph
8. Vamos
9. Lotus Activewear
10. Be Amaz1ng
Marketing Objectives
In addition to their segmentation strategy, lululemon needs marketing objectives to be successful in the Philippines. Their objectives should be tailored toward doubling revenues from male products and quadrupling revenues internationally. The objectives should be timed to a longevity period of not less than five years for good revenue acquisition. Increasing male consumer concentration would expel their traditional norms, thus developing more innovative commodities, making it an experimental product that generates compelling experiences for new consumers yearning to live a comfortable life. One of the objectives is the introduction of new categories of goods such as having membership deals. This helps eliminate rigidity within the brand, thus resonating with changes in modern societies. An additional marketing objective would be constant innovation (Alice,2017). The brand should increase revenues generated from men. Women's accessories should also be further broadened. The existing and newly introduced categories of commodities should be grown further to support other elements of sport such as physical exercises and running. The brand needs to collaborate its commodities while expanding its operations to include self-care routine products for its customers.
Market Entry Strategy
Market entry strategy is one of the most important processes in international marketing because it involves a major risk. The Philippines is a potential market for Lululemon to enter and the major competitors of Lululemon like Nike, Adidas, Under Armour and all are successfully doing business in the country. The sports and outdoor sales revenue in 2021 are around USD 181 million in the Philippines (Statista, 2021). Therefore, in our opinion, Franchising is the best option for Lululemon to enter the Philippine's market.
Franchising helps Lululemon enter Philippine's market with less risk since it is a new market for the company. It helps in reducing the risk of failure and losing all the investment incase if Lululemon decides to enter through direct investment. Franchising also facilitates Lululemon with more information regarding the distribution, sales, and marketing in the country through the franchisee who is familiar with the market conditions. The franchisee can establish the Lululemon trademark throughout the country by properly analyzing and exploring through the most potential areas of business in the Philippines. With a proper study of local legal conditions, Lululemon can find reliable franchises and make franchising agreements with them. The franchises who do not follow Lululemon's contact agreement can be terminated by the company. Franchising will also be an advantage for Lululemon in the case of exit strategies compared to direct investment and licensing.
Lululemon can also engage in the Philippines market through joint ventures with online retailers to increase their sales and consumer loyalty. The Covid-19 pandemic has forced the world to a point where a considerable percentage of the population is working from home and a major portion of the population purchasing online. Therefore, the online presence of Lululemon will benefit the company greatly. Some of the retailers both online and direct that focus on sports apparels which Lululemon can consider entering into joint ventures are Zalora, Tobys Sports, The Shape Shop, and Lotus Activewear.
Marketing Mix
Lululemon needs to have a market mix to exploit consumers fully. One of the aspects of a market mix is the product approach. Concerning this, lululemon can employ adaptation which encompasses product breadth, product line depth, and product line length. Lululemon is well established and could quickly expand to nearing sections where consumers use complementary goods from other companies and still achieve maximum profits from their goods. Decisions surrounding the product line have to be weighed between the service needed and the complex nature of the commodities available. The marketplace niche should also be a consideration. This is easily worked out if the company sticks to the products present instead of launching entirely new commodities to their consumers. This would enable them to stretch their line of products easily. Lululemon could also stop trading in goods that no longer make a difference from the available goods in the market or are not profitable. Lululemon Athletica can try to reposition the products from the existing brands within one line. The brand should work on modes of having additional value and features to their existing products that could hugely impact their consolidation and positioning in the market. They could have a new brand introduced in the available products or establish an entirely new line of products.
Pricing, however, entails a lot of complexity. To some extent, pricing is dependent on the three Ps used in product marketing. These are promotion, place, and product. Conceptually supposed cost is the extreme charge a consumer is ready to spend on the products of lululemon in any aspect of competition. In this case, the price would be one hundred dollars. This is due to the high quality of commodities produced and the distribution channels used to reach the consumers. The final price of the goods would be increased due to distribution channels. This is due to their costs in repackaging, customization, and modifying goods to suit consumer needs. Additional to pricing is the effect of the exchange rates. Suppose there is an increase in the exchange rates, the price of local commodities increases. On the other hand, the cost of imported goods becomes relatively cheaper. There is an inverse association between purchasing power and the price of goods. High purchasing power means prices become lower and vice versa. Risk management of currency could be done through global diversification of the markets of the lululemon goods.
Additional to the market mix is the channel of distribution. This is the mode by which products are delivered to consumers. Lululemon needs an exclusive distribution. Here only one distributor is charged with providing the goods to the consumers. This distribution model reduces intermediaries; thereby, the consumers' final price on the commodity is not high. Lululemon needs a partnership with large distribution companies such as Amazon, which are charged with a worldwide shipment of commodities, thus easing market penetration on the international font. The international distribution management would involve the acceptance of a wide range of currencies plus an integrated online system for efficiency.
Lastly, promotion as a part of the market mix includes advertisements, sales promotions, direct marketing, and relations with the public. The modern world is at the heart of social media use; thus, marketing ensures the products reach a larger audience. Some details include the price of the goods, features, and where they can be easily accessed. New markets require cultural understanding; hence when promoting goods, there is a need to learn greetings and some of the common phrases by the community, such as the Philippines, for ease of familiarizing with the customers. Promotion needs a one-hundred-day period before entry into the market and should go on as long as the products are available.
NOTE: this is my term project and the topic is introduction of lululemon(canadian company) to the Philippines. I need a conclusion from the above information. Nothing to take from outside, just from the above information, I need a conclusion to end the paper.
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