Lululemon as a company in the competitive market has set a ground that is safe for its operations and continuity. The company has both tangible and intangible resources to facilitate its operations. Lululemon's tangible resources include its product stores. The stores are important because the "majority of Lululemon's revenues come from product sales in its stores located throughout the world" (Ipo 80). In terms of finances, the company has enough cash for its running and holds no debt. Lululemon has invested in technology as a measure to upgrade its business operations. In 2009, the company introduced e-commerce which has worked for its good enabling to reach many customers. The company has set up many design studios from where yoga exercises can be done.
Lululemon's possesses some intangible assets as well. They play a big role in enabling the company to get profits. Some of the intangible assets are the workforce including the Chief Executive Officer and The Board of Directors. The company has its employees acting as the ambassadors of its products. The employees are "the focal point of the company's unique ‘grassroots marketing’ campaign" (Mattloli 115). Another intangible asset that Lululemon has is its brand. "The company provides premium quality athletic apparel at a premium price" (Mattloli 103). The company's customers are its assets being not just customers but diehard clients of the products through a strong relationship. Finally, Lululemon’s way of fulfilling its manifesto is through the organizational culture. Its organizational culture is important in its success and hence is viewed as an asset.
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Despite Lululemon's product retailing for almost double price or more compared to that of its competitors, the company has a lot of customers and thus makes huge profits. Lululemon’s sources of competitive advantage are dependent on many things. To begin with, the company has the "ability to connect with its guest on a deeper level than just the typical sale representative" (Hunger, David & Thomas 42). The company maintains a good relationship with its customers. The other sources of Lululemon's competitive advantage are "its deep understanding of its target market, close relationships with its communities and an inimitable culture" (Mattloli 105). Due to the three reasons, Lululemon enjoys a wide range of customers who are not one-time buyers but loyal customers. As such, the company continually increases its asset base hence overpowering its competitors as it becomes better placed to handle any arising market problems.
Lululemon's vision has influenced the way the company views its goals. The company then "prints its products with Lululemon's manifesto, which is a series of statements that embodies the company's vision, culture, and belief" (Ipo 80). The company's organizational culture enables it "to create components for people to live longer, healthier and more fun lives." (Ipo 80). Lululemon uses the employees as the ‘grassroots marketers'. They (employees) are well aware of the products, and they demonstrate how well the products can work. Customers will meet dedicated workforce and have a memorable experience at the company’s store. When the customers come into the stores or the design studios, they can see the mission in the way the employees conduct their activities.
According to the five forces model of competitor analysis, Lululemon faces five competitive forces that influence its competition. One of the forces is the competition from other industries in the market that offer similar products. Its competitors include Adidas, Nike, Vf Corp, and Under Armor. The competitive world in which Lululemon operates is rife, for example, "On January 31, 2006, Adidas acquired Reebok International Limited…" (Mattloli 111). When Adidas bought Reebok, it meant that it would have a bigger market share. However, Lululemon is ready for the competition, and they have a manifesto to offer the best. Additionally, they treat their customers with quality products and in a way that makes the latter turn into loyalists.
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Lululemon also faces the competitive force of "competitive pressures stemming from supplier-seller collaboration and bargaining" (Hunger, David & Thomas 43). In the frame of a market competition, Lululemon's competitors offer their products at a lower price. The yoga pants from the company’s competitors are cheaper; this is because they are sold "between $25 and $50." (Mattloli 105). It indicates that if customers were to look at the price, they would not choose Lululemon; it means that the company faces stiff competition when selling its products. However, Lululemon beats the competition by offering Yoga pants that are of high quality material and showing how to use them with their prices "ranging between $78 and $128" (Mattloli 106). The competitors are supplied with the same materials and manufacture Yoga pants with a soft cotton just like Lululemon. It beats the competition through standards because "the company has high standards for its suppliers" (Hunger, David & Thomas 56).
Another competition threat that Lululemon faces is new entrants in the industry: “Lululemon faces competition when new companies join the market" (Hunger, David & Thomas 42). The competition is stiff as new competitors are coming in and building their base in the business. A good example is when “Nike launched its line of yoga in an effort to capture part of the growing market" (Ipo 85). Nike is offering the Yoga pants at a slightly lower prices "Nike pants are priced from $40 to $70." (Ipo 85). The company has a clearly set way of addressing this type of competition: "Upon identifying potential issues, Lululemon develops projections of anticipated outcomes should a potential issue become a real problem" (Ipo 78). By conducting the assessment, the company can beat new trends brought in by new entrants.
Lululemon also faces the competition due to buyers’ preferences, convictions, and perceptions. A buyer's preference of one supplier's commodity acts as a threat to the other product providers. Though Lululemon has outlets worldwide, other brands such as Under Armor are "strong in the United states but lacks the universal awareness that Nike and Adidas possess" (Mattloli 113). As a result, companies such as Lululemon, Nike, and Adidas would face buyer competition in the United States as most buyers will prefer Yoga pants from Under Armor. Lululemon is ready for the competition as "The company's success has been built on ability to deliver quality products that are carefully and successfully tailored to address customer preferences" (Hunger, David & Thomas 57).
Though not expressed, competing sellers will hold inbuilt rivalry. The competition is a form of "pressure created by rivalry sellers for better market position and gaining a competitive advantage" (Hunger, David & Thomas 58). Lululemon has many competitors, and their aim is to succeed and be market winners. Rivalry from competing sellers will interfere with the company’s operations. The competition is rife and possible due to the easy entrance into the markets. "The threat of new entrants within Yoga appeal industry is very high, and this poses a threat to Lululemon's continuous efforts to succeed." (Ipo 84). Lululemon is beating this competition by offering high-quality products that end up becoming customer's preference. Lululemon's yoga pants "have highly technical fabrics than other pants hence making it easier for a person to move and breathe" (Mattloli 106). The quality of the products that Lululemon produces enables it to overcome the competition that is posed by its competitors.