Competitive force using the five porter’s forces|Lululemon

Competitive force using the five porter’s forces

Explicitly, Lululemon has a moderate strength of competitive forces in the market of fairness apparel and performance-based yoga. The porter’s five force will therefore be utilized to analyze its competitiveness.

Threads of new entrants: Low. This because the new companies are required to have a high capital and has a great competitive edge.

Thread of substitutes: the company is faced with a strong substituted products form some of the established (Reebok) and upcoming brands (Bebe) since they are competing in the same market.

Bargaining power of buyers is low the company sells its products through company owned retailers who are the final buyers.

Bargaining power of suppliers–is high due to the increased interest of working with the leading suppliers of the fabric.

Industry rivalry is high due to the upcoming and the well-established  competitors such as Adidas.

Strategic group map

As observed, in the market of fitness and athletic Lululemon is well position. Further, with respect to the quality and the pricing of the products they are at a medium level thus making them competitive. They also have a defined target consumer who are willingly to access the yoga and the fitness appeal which are of high quality regardless of their high prices.

Key success factors

Ther are various successful factors that propels the lululemon Inc towards being competitive in the market.

• Product innovation and technology that assist in meeting the customer’s preferences
• The brand image and reputation
• Superior customer experience with the product to enhance loyalty
• Growing market of fitness and yoga apparel consumers

Lululemon SWOT analysis

Strength

Lululemon greatest strength lies on the production of quality products through use of innovative technology to meets the needs of the customers.

Weakness 

Compared to its rivals like Nike lululemon has a weak global coverage since it is limited to countries like Japan, New Zealand and Australia.

Opportunities

Lululemon is starting to diversify their product which aims at targeting young women and men in other lines of performance and athletic apparels.

Threats

The primary threat that lululemon is facing is the strength of its rivals like Adidas since they have a strong financial status thus being more competitive in the market.

Lululemon’s primary components

There are common supply chain components entail:

Supply chain management which is composed of the real time inputs from customers and the short time to receive and deliver samples.

Operation which entails more of development process and streamline design.

Distribution which constitutes of stores available in Australia, Vancouver and Melbourne.

Sale management has established brand ambassadors and yoga educators who boost the company’s sales.

Services this entails of the guest and the educators

Key element of the Lululemon strategy

• Diversifying the company’s store base in North America to target young girls and women in the healthy life style like keeping fit, running and yoga.
• In 2014 lululemon Inc introduce new products in other filed like swimming. The new products were for instance, bras, yoga mat, short, swim wear.
• Retail distribution where Lululemon could open serval shows room in order to establish a good relationship with the local instructor and introduce new brands.

Generic competitive strategy

The close competitive strategy used by lululemon entail the focused differentiation strategy. This strategy enhances the limited products, premium priced selection and diversifying of the product line. In the context of diversification, Lululemon provided accessories for young girls and men and the premium priced performance. Further, using this strategy the sessional products and those with special colors were sold in limited time. lululemon Inc used various differentiated products like the pants, hoodies and glovers to target small groups of customers. To remain competitive in the market while using the focused differentiation strategy, the company creates standard products with unique quality features, performance and design. Lululemon, provides lifestyle perception when delivering these products in the various stores.

Lululemon financial and operation performance

Following the data obtained from exhibit 1 for the fiscal year FY 2013 and FY 2012, the net profit margin that portrayed by the remaining percentage revenue decreased after all the preferred stock dividends, taxes, interest and operating expenses are deducted. The gross profit has increased 24 times starting from $ 569.3 in FY 2012 to 997.2 in FY 2016. Thus, the compound annual growth rate is 15.05%

Further, for the last five years the equity per share has grown 21 times. The number of operating stores has intensively increased where in Canada they were 54 stores, 25 stores in Australia and 171 stores in United State. As such, the obtained annual sales form the various stores are on approximate $ 85 million which an increase in the inventory.

Lululemon issues

• Lululemon should observe on their quality control which is likely to affect the brand image hence losing their target customers
• The company should increase their brand awareness through enhancing geographical diversification to the North America since there is a pool of opportunities.
• Due to the present competitive strength conveyed by their rivals, Lululemon should have a competitive pricing for their products to attract a large clientele base through provision of premium products at a lower price.
• Lululemon has limited product categories therefore should expand their products to other sport rather than Yoga and fitness apparel to favorably compete with the high performing athletic leaders in the market.

 

Recommendation

Lululemon should adopt various advertising channels such as social media to increase the product promotion by creating brand awareness to various consumers and other countries globally. This will improve the level of annual sales and return outcome making it more competitive in the market. Besides, the company should identify markets where it can diversify its products to unleash more opportunities which will facilitate growth, development and attract more customers. On their competitive pricing, the company should set standard prices for their products in order to take advantage of the product base market relative to the competitor. Through this, the company shall increase the number of targeted consumers and the annual financial revenue hence being competitive in the market. Further, the company should venture in various brand categories to increase and tap potential client. Through this the company shall not be in fear of the threat of new entrants since it will have established its strongholds in the market thus being more competitive. Finally, it is the use of well-planned social campaigns to improve its brand image. For instance, the company may opt to target more women and young girls to purchase their products therefore they may plan their campaign to target the women safety organizations.