Sigma (“self-energy”) MarketingLululemon Marketing Plan Phase 3

Mark Hughes, Kirsten Schafer, Mary Hipperson

2010

Table of contents

Topic Page Number

Introduction 2

Target Market 2-3

Positioning 3-5

Pricing Strategy 5-6

Distribution Strategy 6-7

Product Strategy 7-8

Branding Strategy 8

Advertising and Promotion Strategy 9

Conclusion 10

Appendices 11

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IntroductionThe Lululemon marketing plan for 2010 includes recommendations and goals for the

Lululemon brand, as well as goals for the newly proposed male brand Outer Muscle.

Main objectives include:

Introduce Male Brand Outer Muscle

o Target “Educated Physically Active Male”

o Price male brand similarly to Lululemon brand, using more-for-more

pricing.

o Positioned as high-price Yoga/Exercise Apparel

o Increased advertising at beginning of Life cycle, reducing advertising with

age.

Continue with Current Lululemon Strategy

o Retain exclusivity of brand

o Continue use of Prestige Pricing

o Little to no promotion

o Very little advertising

o Persist with current marketing strategy for tween brand Ivivva

Increase Brand Awareness

o 2% increase in advertising budget

o Sponsorship of events, increased Philanthropy work, and outreach within

community

Target MarketLululemon’s current primary target market is the “Active Young-thinking Woman”.

Women who are appearance-conscious, physically fit/active, well educated, aged 16-45,

in the upper to middle class and residing in North America. Lululemon is using a niche

marketing strategy, going after a very narrowly defined market segment, in which they

have had great success. This niche market will remain the primary target market in 2010

however; Lululemon will also begin to target the “Pre-teen girl” market with the Ivivva

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brand, and the male market with the Outer Muscle brand. Lululemon already has a male

clothing line, and has been trying to gain a part of the male-workout market for a while

now. In 2010 Lululemon will use product development, introducing “Outer Muscle” as a

new male clothing brand, made with the same commitment to quality as Lululemon. This

new brand will cater to a male target market similar to Lululemon’s female “Active

Young-thinking Woman”. This target market will be the “Educated Physically Active

Male” will target educated males, who are appearance-conscious, physically fit/active,

aged 16-45, residing in North America. This multi-brands branding strategy will allow

Lululemon to market to pre-teen girls who may not be able to identify with the more-

mature Lululemon brand, as well as to male consumers who would not be prone to shop

at Lululemon, due to it’s over-positioned reputation as a female clothing company.

Pricing strategy will continue to be a more-for-more value proposition within all brands

of the company. Each constituent of the marketing strategy serves to ensure that

Lululemon’s position in the mind of the consumer is not changed, while they venture into

new target markets.

PositioningLululemon is currently positioned as a high quality, exclusive, yoga and sporting apparel

company. In many ways Lululemon is over-positioned as a strictly female company,

which is why in 2010 they will use multi-branding to address the male market. In using

the proposed promotion strategy and advertisements, Lululemon will not change their

current position significantly, but instead further differentiate themselves from

competition in already established values.

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It would be a mistake for Lululemon to try to adopt lower prices having traditionally

differentiated their products using more-for-more differentiation. By continuing to

position them self as high-quality, high-price clothing, Lululemon can gain more

customer loyalty, and ensure that they do not lose their image of superior quality.

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Lululemon will continue to uphold the highest quality standards for it’s products and

position the male brand as high-priced, high quality clothing. Both brands will

differentiate themselves from their main competition by catering to the yoga/exercise

market, as compared to competitors addressing the daily-life fashion market, and the

sporting apparel market.

Pricing StrategyValue Added Pricing – Lululemon uses this pricing strategy when creating their apparel.

Rather than cutting costs and making a lower quality product, they add extra features

such as adjustable straps and women’s pockets to differentiate themselves from their

competitors as well as help their target market justify spending more money on their

products.

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Prestige Pricing – Even though Lululemon clothing is not comparable to a Rolex or

Louis Vuitton purse, it is prestigious and exclusive in its product category. This is what

Lulu’s target market loves about their brand. Its high quality not found in every city and

mall, fashion forward and represents a healthy, well off lifestyle.

These approaches to pricing are visibly successful in today’s economy. Even throughout

the recent recession Lulu managed to maintain a profitable company, expanding their

store count while creating expensive, high-end workout apparel. Changing their target

market to accommodate the middle class to lower income demographic could be

detrimental to Lulu’s success. Creating a cheaper line of clothing or marking down

products to sales items would lessen the exclusivity of Lululemon, which could then

effect the current target markets perception of the brand.

Recommendations for the pricing of the men’s brand we suggested earlier, is to keep

prices relatively high but yet great quality and options for different features and different

size options. This will follow the common theme Lulu has instilled in their customers and

will help differentiate themselves from other competitors such as Nike and Adidas who

thrive in the men’s athletic wear market.

Distribution StrategyLululemon stores are not situated on every street corner in every metropolitan area or

large city. They base their distribution strategy more along the lines of exclusive opposed

to intensive distribution, therefore stores can be found in cities across Canada and the

United States where the desired target market is represented by similar and correlating

demographics. Lululemon stores have a very welcoming atmosphere full of friendly faces

and have an earthy feel too them. Saskatoon’s store is located downtown where all the

great shopping lies which makes it a one stop shopping trip for Lulu customers, who can

do it all once entering Saskatoon’s downtown area. Its location provides great

convenience for their target market, which includes working, high-class women and

young university students who live active lifestyles.

Specialty store – Lululemon carries yoga inspired apparel for healthy lifestyles, which

could be categorized as a narrow product line. However, within this line is a deep

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assortment of active wear that can be used for many sports and activities, for all shapes

and sizes.

Franchise – In Saskatoon the Lululemon is privately owned. This creates the opportunity

for the franchisee to do the hiring and management of his or her employees to the best of

their ability. For instance, the franchisee for Saskatoon’s Lululemon puts on an annual

sale that is not administered by the franchisor. It allows Lulu customers from all over to

merge in Regina for a three day sale of extremely marked down product from previous

seasons.

Recommendations for the men’s brand would be to open new stores beside the existing

Lululemons. This would offer a separate entrance and atmosphere for men to enter in

hope that it will eliminate the stereotype men have with Lululemon stores.

Product Strategy

Many of the components of Lululemon’s product and branding strategy are well

suited for the target market of the company and will be maintained. Others will be

altered in 2010 to increase product differentiation and brand awareness.

Lululemon has a wide product line. This product line is available in a wide range

of colors, designs, and patterns that stand out and are updated often. This allows

Lululemon to remain attractive to their target market of fashionable women. These

women want to stand out as trendy and unique, and because of this, the company will

continue to regularly create many different styles to cater to them.

The company will focus more attention on men’s clothing, but under a new brand.

This strategy will be explained further under branding strategies. The current product

mix will be modified. Currently it is very broad with few focal points. In 2010,

Lululemon will not be offering bags, such as luggage, and backpacks, or work-out

accessories. This strategy will give them the ability to focus more on the men’s brand.

The tween brand, Ivivva, was implemented in fall 2009. This brand will offer

products for those from the ages 6-12. Lululemon will continue to promote and develop

this brand but in addition, new products will be developed including attire for activities

such as dancing and ballet, figure skating, and swimming.

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Lululemon will maintain their current packaging tactics involving the use of

shopping bags and price tags. The bags are reusable, stylish, and inspirational. The tags

that are found on each item are very informative, containing the directions and uses of the

product. Both methods are useful and are appropriate for their well-educated target

market. Since this packaging approach fits the need of the current target market so well,

Lululemon should continue with this strategy.

Currently, the services of Lululemon include free alterations. Lululemon will

continue to offer this courtesy. The company will also be offering various classes such as

yoga and pilates.

Branding Strategy

Lululemon is currently branded as a high quality and prestigious brand. The

company should still be positioned as such, but will become much more distinct.

Currently, Hoopla is a competitor; especially since the clothing styles and branding are so

similar. To differentiate itself, Lululemon will alter the logo that they place on their

clothing. The waistband or the hem of the clothing will feature a small inspirational

message plus the Lululemon logo. Some of these messages include “dance, sing, floss,

and travel” and “breathe deeply”. This characteristic will make Lululemon stand out, as

well as add a unique component to each item. This uniqueness will appeal to the target

market.

In addition, a new brand will be implemented under Lululemon in 2010 for men’s

wear. The name of this brand is Outer Muscle. The logo is derived from the lower case

Greek symbol theta, which will coincide nicely with the Greek Lululemon logo omega.

Theta represents a mathematical tool associate with angle, so Outer Muscle’s slogan will

be “Get the perfect angle on your work-out”. This brand will be targeting educated and

active men in the same age category as Lululemon’s target market. Outer Muscle will

also be positioned as high priced, high quality, and trendy. The branding strategy used is

multi-branding because a new brand is being developed with existing products. Now, the

men’s wear and women’s wear will be separated.

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Advertising and Promotion Strategy (IMC)

Lululemon’s advertising and promotion strategy will mostly be maintained, with a

few modifications. Currently, Lululemon advertises through their reusable bags, through

word of mouth, and through a few events. Also, their logo is found on each product and

they are advertised in a one page spread in the University of Saskatchewan handbook.

Their strategy of involving very little integrated and marketing communications (IMC)

makes Lululemon an exclusive and prestigious brand. Having few sales or promotions

adds to the exclusivity and value of the brand. Since this strategy is appropriate for the

target market that wants to appear distinct, and privileged, it will be maintained.

One alteration is the addition of more public relations by being involved in more

events. By sponsoring athletic events and events at the University, the company will not

only be noticed by their target market, but be seen as an ethical and respectable company.

The company will also be sponsoring events such as the Breast Cancer Walk and Relay

For Life, which will also help the company’s image. Due to the upcoming Olympics,

Lululemon will be sponsoring the athletes with swag bags that include water bottles,

headbands, workout gear, and lounge gear.

An incentive will be added for shoppers in 2010. An events card will be

distributed to customers. This card is a punch card. After purchasing $500 of

merchandise, the consumer will be able to attend a free athletic class that is offered by

Lululemon. By offering events instead of discounts or bonuses as rewards, the company

will still be seen as highly prestigious.

To promote the new brand, Outer Muscle, the IMC budget will be increased from

approximately 1% of total profits to 3%. Strategies such as sponsoring athletic teams,

online advertising, and advertising in athletic magazines will be executed. Once Outer

Muscle occupies 25% of the market share for men’s athletic yoga/exercise apparel and

has been established as a competitor to brands such as Under Armour, the IMC budget

will be reduced back to 1%. It will be reduced to become an exclusive and prestigious

brand like Lululemon.

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ConclusionIn conclusion to achieve our main goals:

Addressing the male market

Preserving “exclusivity” of Lululemon

Increasing Brand Awareness

Lululemon will make use of multi-branding introducing the new brand Outer Muscle

targeted towards the male market. They will continue the use of more-for-more prestige

pricing to retain their exclusive image. Finally they will increase their budget for

advertising/promotions, with a heavy emphasis on philanthropy and community outreach,

to further increase brand awareness and distinguish Lululemon from competitors.

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Appendices

Lululemon Omega

Outer Muscle Theta

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