Lululemon's "Manifesto" Explained - Business Models of an Innovative Marketing Company

                          

Who is lululemon?

Founded in 1998 with ideas from surfer/snowboarder, Dennis "Chip" Wilson, lululemon has established themselves as the top yoga athletic apparel with an average growth rate of 31.6% in the last 5 years (Phalguni).  Their focus on building a successful business model has contributed greatly to their success. lululemon has established a merchant model to base their company on. More specifically, lululemon seems to have implemented the 'brick-and-mortar' model, a subset of the merchant model, by providing goods and superior services to their customers through corporate-owned retail stores and online shopping. According to Bloomberg, as of February 2015 lululemon operates 302 corporate owned stores in the US, Canada, Australia, New Zealand, the UK, and Singapore. To better understand how lululemon started with one location in Vancouver, Canada successfully launched 300+ stores, this post will dive into the values and business model that launched lululemon into the sphere of Nike and Under Armour.

What are the elements of a business model?

According to our book, "Internet Marketing Integrating Online and Offline Strategies" by Roberts and Zahay, there are six main functions of a business model:

• To establish a value proposition
• Identify a market segment
• Define the structure of the value chain
• Estimate the cost structure and profit potential
• Describe the position of the firm within its industry
• Formulate the competitive strategy that will allow the company to hold competitive advantages against rivals

How lululemon's model aligns with these elements: 

lululemon's value proposition has take on a new form with this company's revolutionary marketing. Instead of having a set statement, lululemon has a list of 31 phrases, or "ideas", that the company holds their educators to. lulu has translated this into a new 'manifesto' that they carry throughout their brand. Examples of this can be seen in their bags and clothing. This manifesto is implemented in order "to guide the company in creating a unique niche and future retailing success" (Beaumont). 

                                 

lululemon's ideal market segment are active, stylish, and middle to upperclass women whom value an active and healthy lifestyle. As consumers, we buy products that reflect who we are and help to create an image of ourselves that we are happy with. lululemon appeals to those hoping to identify with trendy sportswear, healthy living, active lifestyles and being fashionable all along! 

                       

lululemon's value chain depends on customer satisfaction and ensuring high quality products. Their products' technology is patent protected and offer the best quality sportswear available. Fabrics like Luon, Silverscent, and UV protection fabrics help set apart their products, adding value in the customers' eyes.

                     

With such high quality products, lululemon is able to charge a high premium for their clothing. With shirts priced at $48 and leggings ranging from $50-$120, lululemon has been able to create a huge profit margin that allows them to expand rapidly, pay for premium locations, and invest in their company and international markets (Beaumont). 

Within the athletic wear industry, lululemon has gone from a small-town, local run business to a dominant, global player in the last decade. Their program is designed the "support you in c

Reasons Why Nike Marketing Has Been Killing the Game

 

Why I chose Nike, Under Armour, and lululemon:

Throughout this semester I will be following Nike, Under Armour, and lululemon's marketing strategies and business models. As a marketing major, I hope to learn how these companies maximize their online and offline marketing efforts and also learn how they continue to keep customer satisfaction at such high levels. I also chose to pick these companies because I am a student-athlete and spend a lot of my own time in athletic apparel! These are three brand names that I love to wear and think are very comfortable. It will be interesting to see what all goes into these companies' methods and how they continue to keep customers happy while growing their profit. 

Reasons Why Nike Marketing Has Been Killing the Game

Phil Knight, a University of Oregon track athlete, founded Blue Ribbon Sports, in 1964. In 1971 Blue Ribbon Sports became the powerhouse name we now know as Nike. According to Forbes, Nike is ranked #1 in the World's Most Valuable Sports Brand valued at $19 billion! Obviously since 1971 Nike's marketing branch has been working hard to promote the brand, value, and customer satisfaction. This blog will look at examples of how Nike has implemented a marketing paradigm that other companies are striving to copy, and how we, as customers, continue purchasing from them.  

What does the Marketing Paradigm consist of?

The Marketing Paradigm consists of 4 goals: customer acquisition, customer conversion, customer retention, and growth in customer value. Nike has worked to achieve these goals with various product lines, online shopping, high quality products, and great customer service. The four goals of the Marketing Paradigm are explained more with examples of Nike's efforts. 

• Customer acquisition - Businesses have to attract a stream of customers.  An area Nike excels in is sports teams and their fans. Nike has partnered and launched with several athletic teams, nationally and internationally, as their main sponsors. This move helps to attract a vast network of fans that will, season after season, be buyers of Nike products. Nike also makes great offline marketing efforts by gaining sponsorships from top name athletes including Lebron James, Kevin Durant, Sydney Leroux, Kobe, and Cristiano Ronaldo  and Michael Jordan. Big names like this help create interest in Nike products.  
• Customer conversion - This is the process of converting shoppers and visitors to actual customers. Nike's online store plays a large role in accomplishing this goal. For example, if you're shopping on Nike.com, a live chat option pops up to help you get a more personalized shopping experience without having to go to the store. This also increases the probability of actually buying a product. 
• Customer retention - Acquiring new customers is always a plus, but keeping us as returning customers is always better! Research shows that it is easier and cheaper for companies to retain customers than to market to new ones. When Nike offers sales, of course new customers may be tempted. But returning customers know the value we are getting since we have already purchased something from Nike. These sale prices entice us to buy more products because we realize the value of the products, but get to buy them at a cheaper price! 
• Customer Value - Finally, customer value is one of the most important aspects of the marketing paradigm. If a customer is continually satisfied with products, they will continue to buy from them. Nike has established another branch of online shopping called NikeID. This allows you to customize a variety of products to ensure you get exactly what you want. Along with customization, once a you order a product, you receive updates throughout the production process of your item. This ensures that you know exactly where your product is, and a more accurate estimate of when your product will arrive! 

How Successful is Nike? 

Nike reaches a pretty broad demographic group ranging from young to old across the world. Many of their customers are middle-upper class, which is reflected in Nike's pricing. Nike has various apps that help grow their brand name including: Nike Run - an app that tracks users' runs, miles, trail, calories etc., Nike SNKRS - an app that allows shoppers to view thousands of shoes, Nike+ - an app made to easily access the Nike FuelBand information for users. 

By having such a variety of apps and sites, Nike allows customers several options. Nike has taken advantage of new technologies available to reach and target certain markets. Younger people now have access to Nike products on their phones, tablets, and computers - making shopping easier than ever before. 

As the #1 athletic apparel brand name in the world, Nike has succeeded in utilizing new marketing technologies. Their focus on customer value and customer satisfaction is seen with their ever changing product lines. I don't foresee Nike slowing down anytime soon as they continue to acquire sponsorships from nationally ranked sports teams, while also improving their products day in and day out.