2014 YMA Scholarship Case Study Project. Aspects of the project: developed a competitive analysis of Lululemon, created a 6-month marketing plan for a new campaign of choice, developed a merchandise assortment plan pertaining to the new campaign, completed a price analysis, and a 6-month open-to-buy plan.
1. Healthy Aging
2014 YMA FSF Scholarship Case Study
University of Missouri – Columbia
Textile & Apparel Management
Megan Wood
2. 1"
Part 1
Healthy Aging
Lululemon’s newest marketing campaign, Healthy Aging, is planning to launch in the fall
of 2015. The goal for this particular campaign is to expand Lululemon’s current target
market and focus on an older demographic. Today, Lululemon uses a niche marketing
strategy that focuses on younger, middle to upper class women who are physically active
and well educated. Through this campaign, Lululemon wants to further differentiate their
brand from competitors by breaking into an untapped market. By expanding into the
retired market, the opportunities for growth in the company suddenly seem endless.
Members of this baby boomer era seek a healthy lifestyle and appreciate high quality
products. With Lululemon’s product offerings, the company will be able to reel these
consumers in and create a loyal customer coming back for more regularly.
Consumer Profile:
Ellen is a 63-year-old woman who is happily married with two children and five grand
children. She is now retired, but previously worked as a Registered Dietitian in a
prestigious suburb of Charleston, SC. Ellen is physically fit and is still conscious of her
appearance after all of these years! She loves being comfortable in what she wears, all
while still looking, and feeling feminine. Ellen particularly loves yoga, and thrives off of
the inner peace that it brings into her life. The Lululemon brand fits perfectly into Ellen’s
life with the versatility of their clothing, and the comfort that it provides. She is now a
loyal customer, and proudly lives the Lululemon lifestyle.
Psychographics:
The Baby Boomers were born prior to 1947 and grew up in an era of extreme optimism,
with opportunity and progress. “Boomers are a self-absorbed generation that demands
3. 2"
personal recognition and fulfillment” (Schmitt, 2010). This age bracket seems to be on
the quest to ‘never be old’ and have a hunger for personal wealth and materialistic gain.
Advertisers have often failed at reaching this market because they don’t take into
consideration the psychographics of the Boomers. This market doesn’t want to see
advertisements that feature an old, gray-haired lady who is learning how to prevent
arthritis. Instead, they want an advertisement that represents them as vibrant active
women so they can relate, but also prefer clothing that covers their midriff and provides
accurate coverage.
Why Shop at Lululemon:
Lululemon offers quality products at a price that is best suited for the Baby Boomer’s
spending habits. At ages 55 to 75, they have the financial capability to purchase
Lululemon products with ease. These women are willing to spend more on their yoga
clothing because they appreciate quality and know that these products will last. In a
survey that I conducted, I asked women, “What do you look for in your yoga clothing?”
The most frequent responses were style and fit. Even at this older age, these women want
to look good in what they wear, whether they are working out, or simply running errands.
The frumpy, ‘grandma clothes’ aren’t what these women want, or need. Instead, this new
campaign will offer age appropriate products to make these women feel young and
healthy. See Table 1.0 for Survey Results.
SWOT Analysis
Beyond Yoga and Athleta are two retailers that have drawn in a significant number of
baby boomer consumers in recent years. These companies share many of the same
strengths and weaknesses when compared to Lululemon, but the Healthy Aging campaign
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will provide many new opportunities for Lululemon’s brand that will differentiate them
from the competition. See Table 2.0 for SWOT analysis.
Marketing Mix
Promotion/Advertising:
Lululemon is well known for their limited promotion through media channels, and
instead wants to connect with their customers on a personal and emotional level, with
word of mouth advertising. For the new campaign, Healthy Aging, Lululemon plans to
step outside of their rigid advertising box, but not too far. The company still wants to
keep the exclusivity and prestigious image of the brand, so it will continue to stay away
from celebrity endorsers or TV advertisements. In two years, the baby boomers will hold
roughly $3 trillion in buying power, which proves that this market needs to be effectively
targeted (NAOA, 2006). A common misconception with this older market is the lack of
adoption to new technology. However studies have show that this audience is the fastest-growing
segment using social media platforms. Knowing this, Lululemon’s first
advertising approach will be through Facebook. The second approach will be through
print advertisements in popular magazines throughout the new target market. Print
advertisements are actually more effective than media advertisements because it is
perceived to be used less in today’s society, so it tends to stand out more to the consumer.
The three chosen magazines include Yoga Journal, More, and Healthy Cooking. The
third and final approach will be through small billboards strategically placed in
appropriate markets that display an older, yet attractive, woman, practicing yoga. Seeing
an older person being vital and active on the billboard will inspire them to do the same in
their life and join the Lululemon lifestyle. See Table 3.0 for the 6-month marketing plan.
5. 4"
Pricing:
Lululemon’s current pricing strategy will remain the same for the new campaign because
it will continue to be effective for the new target market. Since Healthy Aging is targeting
an older market, the customers will have more discretionary income, so the high prices
won’t be an issue like it would be for a younger market.
Product:
The products offered will continue to be high quality and technologically advanced, all
while catering to the new market with adjusted styles and fits. The products will continue
to flatter the figure, and the patented fabrics will continue to awe the consumer.
Place:
Lululemon products will continue to be available online and in-store, which allows
members of the new target market to shop at their convenience. Stores are strategically
located in wealthier areas to attract specific consumers.
Retailers
Lululemon’s success in the past has come from creating a prestigious image of their
brand to consumers, so the places of product offerings will not change. Lululemon stores
sell approximately $2,000 per square foot, so launching their products into other retail
locations wouldn’t be a smart financial move for their high profit margins. A relationship
with their customers is another thing that Lululemon values. If they were to launch their
products with other retailers, that relationship would cease to exist. Lululemon has been
extremely successful thus far, and if they want to maintain their exclusive brand image,
the company will continue to sell only from their website and in-stores.
6. 5"
Part 2
Assortment Plan
Lululemon’s new campaign, Healthy Aging, has prices ranging from $58 to $158, which
stays in the same, elite price range that Lululemon has always offered their products. The
average price for this campaign’s merchandise will be around $94 and it could potentially
sell 162,000 items. See Table 4.0 in the Appendix for the Assortment Plan.
Factors for the Assortment Plan:
Brand Strategy:
Lululemon’s brand represents a healthy lifestyle. The demographic age range that the
Healthy Aging campaign is targeting appreciates health and wellness now more than ever.
These baby boomers are really looking for comfort in their yoga apparel, as well as
quality material and a stylish fit. The assortment plan definitely fulfills those needs. The
campaign is offering Practice Cotton™ Yoga pants with a special wide waistband to
ensure comfort for the buyer. The practice cotton fabric breathes naturally and is soft to
the touch, which the consumer will appreciate. The Full-on Luon™ yoga pant with a
high-rise waistband offers incredible support and coverage, and the high waistband will
help to eliminate the extra muffin top that has been accumulating over the years!
Lululemon’s pants are a perfect fit for the target market’s needs, which is why they will
consist of 42% of sales for fall of 2015. The three yoga tops that are offered will have
innovative qualities as well. The Lightweight Seamless™ yoga top is breathable and
won’t constrict the body during any desired pose, and the Vitasea™ Top will be offered
with extra torso length for guaranteed comfort. The tops will make up 30% of
7. 6"
Lululemon’s fall sales. The final merchandise offerings in the assortment plan will be the
cooler weather options. The Merino Wool™ Jacket with an embellished button will be
the most sought after accessory for cooler weather fitness fashion, and the French
Terry™ jacket will be perfect to slip on after a long yoga class. These warmer options are
slightly more expensive due to the high quality material used to construct them, so only
18% of sales will come from these products. All of these apparel options will quickly
become part of the customer’s lifestyle. The stylish, high performance material will
satisfy the target market’s wants and needs by combining technology and function, with
the style, fit, and comfort desired by these older women.
Market Trends:
“For the active wear market, there’s no way but up” (Sherman, 2014). Focusing on more
qualitative research, wearing yoga pants or gym clothes has never looked more
appropriate then they do today. Yoga pants aren’t just made for yoga classes anymore,
but instead, they are designed with the intent to wear out and about, whether that is going
to the grocery store, or picking your grand children up from school. According to NPD,
the sales of active wear reached $36 billion year-to-date in August 2013 (Vingan, 2014).
This market is growing drastically among most demographic age ranges so beating the
competition to the Baby Boomers will be lucrative to the future success of Lululemon.
Sales and Margin History:
Lululemon’s merchandise is priced at a premium, therefore leading the company to high
profit margins. If past products sold well, but the margins were low, it is not worth
repeating, so the current assortment plan shows new apparel with minor changes from
8. 7"
previous products in the color and/or fit. This will help to help raise the margins for the
fall selling season. With revenues over one billion dollars for the last three years,
Lululemon is ready for continued growth in their company.
Color Story:
(Navy) (Rust Berry) (Fuel Green) (Spiced Pumpkin) (Cream)
(Black) (H. Black) (H. Gray) (B/W Striped) (G/W Striped)
Price Analysis
Lululemon has done a remarkable job at differentiating their products from competitors
and positioning themselves as a premium athletic brand. Lululemon rarely discounts their
merchandise and veers away from getting their customer’s attention through promotional
sales. In the customer’s mind, this creates a sense of value in the brand, and it encourages
them to buy the merchandise at full-price. The Healthy Aging campaign will continue to
use the premium pricing strategy that Lululemon currently uses to target consumers who
are willing to pay a higher price for quality merchandise because they believe that high
quality comes at a premium price (Burns-Millyard, 2014). This will then lead to higher
profit margins for each sale during the fall selling period. The short life cycles of
9. 8"
products and lack of excessive merchandise in the store will continue to create a sense of
urgency for the shoppers to buy products on the spot because it appears that they won’t
be there long. When directly compared to competitors, Lululemon’s merchandise is
slightly more expensive than the others. However, features like the Luon™ fabric, which
enhances movement in exercise, and the added fabric in certain regions for increased
coverage, are the reasons that Lululemon can charge that higher premium price.
Brand& Pants:'''''''''
Yoga'
Top:''''''''''''
Yoga'
Yoga''''''''''
Jacket'
Pricing'
Strategy'
Lululemon' $82'<'$108' $42'<'$68' $108'<'$118' Premium''
Beyond'Yoga' $77'<'$99' $66'<$82' $154'<'$163' Premium'
Athleta' $49'<'$94' $39'<'$79' $74'<'$118' Competition'
Based/'Premium'
6-Month Plan
The six-month plan will help to establish the level of investment that will be available for
the Healthy Aging campaign during the Fall 2015 selling period. With projected sales to
be $2 million during the period, the Healthy Aging campaign is well on its way to achieve
another year of record sales. The breakdown of sales throughout the plan is strategically
determined from factors such as previous sales, competition in the industry, and even
political influences. The planned sales will resemble a bell-shaped curve, with the
October and November months being the peak. Throughout the six-month plan, the
beginning of the month stock will total $4.5 million, with the stock to sales ratios ranging
from 1.1 to 3. These ratios were predicted to allow the campaign to meet consumer
10. 9"
demand, as well as maintain an adequate cash flow into the company. The reductions will
make up 16.6% of total sales. Due to the premium pricing strategy that Lululemon uses,
the need for markdowns is drastically decreased. Reductions will slowly increase from
10% in September, to 35% in January, but most of the merchandise will be sold at full
price. See Table 5.0 for the 6-Month Merchandising Plan.
Pop-Up Store
Healthy Aging has a fairly specific age demographic target market, so placing a
Lululemon Pop-Up shop in Kiawah Island, South Carolina would be beneficial to the
growth and success of the brand. Having a shop in this location would reach the exact
market that the campaign is targeting. Kiawah Island, located forty minutes from the
historic city of Charleston, is a high-end golf and retirement community that offers a
wide range of wonderful amenities for retirees. Two-fifths of the population is 65 years
or older, and the average home is priced around $850,000 (Barrett, 2013). With that
information, this particular location really is full of ideal consumers for the Healthy
Aging campaign. The island provides a plethora of outdoor activities, including multiple
premier tennis courts, five championship golf courses, bike paths covering the entire
island, and many more. This active atmosphere is exactly what the customers of
Lululemon products will want. The target consumer is a wealthier, stylish, older woman
on a quest to never be old as she lives a healthy and active lifestyle. By placing a pop-up
shop on the island, the campaign will be able to expand to a whole new region of
consumers. The pop-up shop will début in late November during the week of
Thanksgiving. Tourist rates are higher during this time on the island, so more publicity
11. 10"
will be drawn to the shop. The Sanctuary Hotel, a top ranked luxury beach hotel on
Kiawah Island, will be the host of the shop, which will draw in the target cliental from
the start. The shop will be located near the state of the art workout facility in the hotel,
where local yoga classes are held, and all of the trainers will be sporting Lululemon
apparel. The shop will pop up unannounced and quickly draw in the desired crowd, then
disappear before anyone expects it too, leaving the customer wanting more of this
surprise, exclusive merchandise. After this pop-up store shows success, the Healthy
Aging campaign will follow along these same lines and locate more pop-up shops in
wealthy, high-end, retirement communities. Three other possible locations that would
attract target customers include Fox Chapel, Pennsylvania; Hidden Hills, California; and
Naples, Florida. All of these locations have housing prices greater than $500,000 and
many outdoor activities for these fitness forward baby boomers to live a healthy,
Lululemon lifestyle.
12. Appendix
Table 1.0: Survey Results
Note: This survey was designed to obtain information on what my target demographic
age range looks for in their yoga clothing and why they choose to do yoga in the first
place. I was also hoping to get first impressions of the brand if the recipient had no
previous knowledge of Lululemon. I conducted this survey at a local yoga studio where
fourteen women (ages 55+) participated.
Question 1: What is your age?
Results: The recipients’ ages ranged from 55 to 76 years old.
Question 2: Why do you choose to do yoga?
Results: Strength, flexibility, relaxation, improved balance, holistic approach to
physical well-being, overall health, stamina, quiet the mind, and slow aging were a few of
the most popular responses to this question.
Question 3: What do you look for in your yoga clothing?
Results: Comfortable band at the waist, nonbinding at joins, fit, comfort, ability
to stretch, nice material, fair price, functionality, coverage and style were popular
responses to what these women look for in their yoga apparel.
Question 4: How much, on average, do you spend on a yoga outfit?
Results: Answers ranged anywhere from between $40 to $160.
Question 5: Have you heard of Lululemon? If yes, what are your initial thoughts on the
company?
Results: Eight out of fourteen responses stated that they had never heard of
Lululemon. The six that had heard of the brand seemed to have a high recognition and
liking for the company. A few of these responses included that they had heard great
things about Lululemon and that they love the clothing because of the comfort and style.
Table 3.0: 6-Month Marketing Plan!
August September October November December January Total
Advertising
"Healthy Aging" Billboard $1,200.00 $1,200.00 $1,200.00 $1,200.00 $1,200.00 $1,200.00 $7,200.00
Facebook Advertisements $48,000.00 $32,000.00 $32,000.00 $128,000.00
Magazine Advertisements $161,672.00 $161,672.00 $161,672.00 $485,016.00
Advertising Total $49,200.00 $162,872.00 $33,200.00 $162,872.00 $33,200.00 $162,872.00 $620,216.00
Public Relations
Grand Opening Events $150,000.00 $150,000.00
Product Launch Events $100,000.00 $100,000.00 $200,000.00
Newsletters $1,200.00 $960.00 $960.00 $960.00 $960.00 $960.00 $6,000.00
Annual Reports $20,000.00 $20,000.00
Public Relations Total $101,200.00 $150,960.00 $960.00 $100,960.00 $960.00 $20,960.00 $376,000.00
Total Costs $150,400.00 $313,832.00 $34,160.00 $263,832.00 $34,160.00 $183,832.00 $996,216.00
14. Merchandise
Classification/Price
% Sales by
Classification
# of Units by
Classification Color % Sales by Color # of Units by Color Size % Sales by Size # of Units by Size
Pratice Cotton Yoga Pant
w/ Wide Waistband 20% 32,400 Black 30% 9,720 2 - XXS 5% 1,620
Price: $92.00 Navy 22% 7,128 4 - XS 10% 3,240
Rust Berry 16% 5,184 6 - S 18% 5,832
Heathered Gray 18% 5,832 8 - M 35% 11,340
Fuel Green 14% 4,536 10 - L 20% 6,480
12 -XL 12% 3,888
Total 32,400 100% 32,400 100% 32,400
Full-on Luon Yoga Pant
w/ High Rise Waistband 14% 22,680 Black 35% 7,938 2 - XXS 5% 1,134
Price: $108.00 Navy 22% 4,990 4 - XS 10% 2,268
Heathered Gray 25% 5,670 6 - S 20% 4,536
Rust Berry 18% 4,082 8 - M 30% 6,804
10 - L 25% 5,670
12 -XL 10% 2,268
Total 22,680 100% 22,680 100% 22,680
Relaxed French Terry
Lounge Pant 8% 12,960 Black 25% 3,240 2 - XXS 5% 648
Price: $98.00 Heathered Black 23% 2,980 4 - XS 10% 1,296
Cream 17% 2,204 6 - S 22% 2,852
Heathered Gray 20% 2,592 8 - M 30% 3,888
Fuel Green 15% 1,944 10 - L 25% 3,240
12 -XL 8% 1,036
Total 12,960 100% 12,960 100% 12,960
Lightweight Seamless Yoga
Top 12% 19,440 Black 30% 5,832 2 - XXS 10% 1,944
Price: $58 Rust Berry 18% 3,500 4 - XS 10% 1,944
Heathered Gray 23% 4,472 6 - S 15% 2,916
Grey/White Striped 17% 3,304 8 - M 30% 5,832
Spiced Pumpkin 12% 2,332 10 - L 20% 3,888
12 -XL 15% 2,916
Total 19,440 100% 19,440 100% 19,440
Vitasea Top w/
Extra Torso Length 18% 29,160 Black 30% 8,748 2 - XXS 5% 1,458
Price: $58 White 25% 7,290 4 - XS 12% 3,500
Heathered Gray 25% 7,290 6 - S 18% 5,248
Rust Berry 20% 5,832 8 - M 30% 8,748
10 - L 23% 6,706
Table 4.0: Assortment Plan
15. 12 -XL 12% 3,500
Total 29,160 100% 29,160 100% 29,160
Merino Wool Jacket w/
Embellished Button 6% 9,720 Heathered Black 25% 2,430 4 - XS 10% 972
Price: $158 Cream 23% 2,236 6 - S 15% 1,458
Heathered Gray 30% 2,916 8 - M 35% 3,402
Rust Berry 22% 2,138 10 - L 25% 2,430
12 -XL 15% 1,458
Total 9,720 100% 9,720 100% 9,720
French Terry Zip-up Jacket 12% 19,440 Black 35% 6,804 4 - XS 10% 1,944
Price: $102 Black/White Striped 25% 4,860 6 - S 15% 2,916
Cream 20% 3,888 8 - M 35% 6,804
Heathered Gray 20% 3,888 10 - L 25% 4,860
12 - XL 15% 2,916
Total 19,440 100% 19,440 100% 19,440
Oversized Vitasea Sweater 10% 16,200 Black 20% 3,240 2 - XXS 8% 1,296
Price: $68 White 18% 2,916 4 - XS 12% 1,944
Heathered Gray 22% 3,264 6 - S 20% 3,240
Gray/White Striped 16% 2,592 8 - M 30% 4,860
Spiced Pumpkin 24% 3,888 10 - L 18% 2,916
12 - XL 12% 1,944
Total 16,200 100% 16,200 100% 16,200
Total of All
Categories 100% 162,000 162,000
Table 5.0: 6-Month Merchandising Plan
August September October November December January Season Total
Planned Sales $0 $400,000 $600,000 $500,000 $300,000 $200,000 $2,000,000
% of Season 20% 30% 25% 15% 10% 100%
BOM Stock ($) 0 $1,200,000 $1,560,000 $1,000,000 $510,000 $220,000 $4,490,000
Stock/Sales Ratio 3 2.6 2 1.7 1.1
Reductions ($) 0 $40,000 $72,000 $75,000 $75,000 $70,000 $332,000
% 0% 10% 12% 15% 25% 35% 100%
Fall 2015
Sales
Retail Stock BOM
Reductions
Retail Purchases Purchases $800,000 $162,000 $85,000 $85,000 $50,000 $1,182,000
EOM EOM Stock $1,200,000 $1,560,000 $1,050,000 $510,000 $220,000 $ --- $4,540,000
16. References
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http://www.forbes.com/sites/williampbarrett/2013/04/02/top-places-to-retire-rich/
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Burns-Millyard, K. (2014). Pricing Strategy Examples. Retrieved from
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http://www.ibx.com/individuals/member_resources/health_wellness/healthy_lifest
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Lululemon (2014). Retrieved from http://shop.lululemon.com/home.jsp
National Institute on Aging (2006, March 9). Dramatic Changes in U.S. Aging
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http://www.nia.nih.gov/newsroom/2006/03/dramatic-changes-us-aging-highlighted-
new-census-nih-report
Neal, R. (2014, January 16). Facebook Gets Older: Demographic Report Shows 3
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million-teens-left-social-network-3-years-1543092
Schmitt, J. (2010, August 10). Marketing Psychographics – Talkin Bout My Generation.
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generation/
Sherman, L. (2014, January 15). For the Activewear Market, There’s No Way But Up.
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Singer, J. (2012, October 23). Lululemon: A Cult, a Phenomenon or Just a Great
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Vasquez, D. (2012, October 25). The Case for Targeting Older Folks. Retrieved from
http://www.medialifemagazine.com/the-case-for-targeting-older-folks/
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