Could Lululemon have achieved the same level of success had it executed an alternative pricing strategy? As the brand started growing it continued to adopt a focused differentiation strategy based on its brand identity, however with the extended line of apparel athletic wear, its market segment started growing to target a wider range of user. Grow the Social Media Team and Create Accounts. Despite the activewear market growing, even as COVID caused delays to newness, the number of arrivals this year have contracted 10% YoY as the retailer invests in tried and tested styles. During the sale, Lululemon has incorporated lottery pricing and dollars off purchases over certain purchase value. Garrant, C. (n.d.). Lululemon uses a value-based pricing strategy in that the price consumers pay for the products are justified by the quality received by the product. By raising prices of core categories helps to protect margins, creating a necessary buffer during this volatile trading period. Since the pricing is made on the buyers perception value rather than the sellers cost, Lululemon created special products, with special features to meet a niche market segment by creating a new demand which never existed before. This makes it a very good time for Lululemon to continue expanding into the Chinese market (Who Knows China, 2020). The following selection describes the market, the competition, a SWOT analysis of Lululemon, Lululemons customers, as well as its products and services. Consumers love them, the only thing they dont love is how thin the material is, but that is one of the reasons they are best for yoga and working out. There will be multiple colours to pick from including neon pink, yellow, blue and lime green. Small businesses that have unique products can differentiate their merchandise with higher prices and a quality image. We further estimate that Lululemons market share is 2.7%. Keeping the assortment tight is at the core of Lululemon, helping it maintain minimal discounting. Since China is the second-largest activewear market in the world it is a great opportunity for Lululemon to increase its revenues (Swartz, 2020). The average price of Lululemon leggings cost more or less around $80.00 to $100.00. At the end of every week I look at the key stories, offering my view on what they mean for you and the industry. Revenue in the womenswear business rose by 20% during the fourth quarter, while menswear sales rose by 28% and accessories revenue increased by 33%, compared to the same period two years prior. This leaves Lululemon with a lot of room to expand and grow in markets like Europe, and Asia. Since January, the percentage of products reduced at Lululemon hasn't exceeded 20% of its total range compared to the larger proportions noticed at its competitors. Accordingly, the company set the costs of its products. They will create a legging that grabs attention and makes a strong first impression. B. This makes it a uniqueproductwhich has no analogueon the market. All rights reserved In 2018, Lululemon implemented its Power of Three growth strategy focused on three main categories. I believe in todays world though a consumer would always want to get the best prices but offering your brand at a discount can undermine profits and threaten viability. Promising updates on its loyalty proposition in the coming weeks, McDonald believes the brand has built very strong loyalty by forging relationships with customers and a focus on product. Identifying an accelerated level of cross-shopping throughout the pandemic period, Lululemon sees a higher value coming from customers who shop with the brand across ecommerce and physical retail. Edubirdie. Lululemon should go with colourful and all-purpose leggings. Prices will be determined for each season 1 month before the product goes live online and instore. In mainland China, revenue increased by more than 60% on a two-year basis. Undoubtedly, Nike's pricing strategies are effective as Forbes rates it as the most valuable company in The Forbes Fab 40: The World's Most Valuable Sports Brand with a value of . However, some . Digital marketing received a total budget of $447.5 million, product adaption received a total budget of $268.5 million. Get your paper done in as fast as 3 hours, 24/7. These include: Lululemons strategy allows them to become one of the major players in athletic apparel. Lululemon also offers free tailoring or replacement of items when the seams come loose or undone (Kalpazanova, 2016). Direct mobile marketing has been described an engaging and enjoyable by the Gen Z and Gen Y and they are likely to subscribe to push notifications to get the latest information on their favourite brands (Lee, 2017). Since then, online sales have grown strongly, making up 16.5% of revenues in the . Perfecting second-skin, four-way stretch, moisture-wicking leggings in all your favorite colors may have something to do with it. Under Armour, Gymshark and Adidas are also some brands that have made similar leggings to Lululemon. Not only do we work with some of the biggest activewear retailers, but we can also help you refine your pricing strategies. Analyzing the full price of leggings reveals Lululemons high pricing interval strategy. lululemon's Social Media Strategy. Lululemon has used customer value perception model in its pricing, the prices for their basic products have been set higher than the competition but not too high, so it stays at the range of price celling, where no demand will be available above this level of price, this value is set purely by the mindset of the consumer and the perception he has for the value offered. Fair Use Policy or become aware of any violations, please do not hesitate to contact us via support@edubirdie.com. 3.8K views 1 year ago Lululemon built a $4 billion business in a highly competitive fitness apparel industry by implementing a unique influencer marketing model. Seasonal Wunder Under colours retail at regular price for 2 seasons and then enter a discounted rate of 450- 650 or 20%-30% off. While this simple task might seem easy, it is rarely not. With their new approach to athleticwear, Lululemon paved the way for offering high-quality and performance athletic apparel, available to customers at a very premium price, priced higher than most of the competition setting the brand at a higher position than the rest. PLACE. Strategic Sales. This report includes a situation analysis, a look at Lululemons strategy, tactics, implementation, and financials. The scope of this plan includes a look at Wunder Under, a legging product line. All customers feel comfortable while wearing or using Lululemon products. Explain. Its direct-to-consumer business increased 55% to $545.1 million. In the midst of it all, Lululemon reported a 2% YoY increase in revenue to $903 million during the quarter ending August 2, with online sales surging 157% as stores temporarily closed. There are many reasons as to why consumers buy Lululemon products. It attracts new buyers who want to be perceived as part of an exclusive social community. Lululemon actually raised the average price of these top-performing categories after May. Product Innovation Lulu's mission in this segment was to expand its product depth through. Out of its 440 stores worldwide, 235 locations are in the USA alone, 64 in Canada and only 22 stores operate in China (Dun & Bradstreet, 2019). Tmall is a great asset for Lululemon to continue its relationship with because it allows for direct business to consumer selling, but they also allow for business to distributor selling. These women would be part of the upper class with a higher household income, valuing quality and fashion. The discount rate will not drop any further than the regular discount rate of 20%-30% off regular price items to maintain luxury status while still being perceived as a deal (Who Knows China, 2020). Consumer Perception on brand by different aspects. Good Value Pricing The company was founded in 2001 by Athletica veterans Chip Wilson and Greg Louganis. Previously, the discount has been determined by lottery 25%-30% off, with every customer receiving a deal no matter what. With Lululemons high price-point and overall brand image, many people have started to try to create dupe leggings and sell them at much lower prices than Lululemon does. The strong brand association with the luxury athleisure market creates a sustainable competitive advantage. McDonald explained the brand sets its prices based on several factors, including the value of the innovation and an analysis of the range within the product category and market. To attract more Chinese consumers to their product, Lululemon has inflated its already high price. 11-20 Could Lululemon have achieved the same level of suc- cess had it executed an alternative pricing Lululemon benefits from the growing number of people that participate in yoga, they believe the percentage of their products sold for other activities will continue to increase as they broaden product range (Farooq, 2018). The Canadian clothing brand saw its net revenue increase by 23% to $2.1bn (1.6bn), primarily attributed to increased sales generated by company-operated stores. Deciding how much to charge for each of your products or service requires evaluating how much customers value what they are buying. Perceived Value: You're not likely to find any Lululemon clothing items on sale. 2023 EduBirdie.com. Lululemon stocks a wide variety of activewear, from leggings to sports bras and jackets that typically range from $90 to $130. This section proposes more specific recommendations for Wunder Under marketing programs, pricing approach, promotion and channel design. Lululemon currently offers complimentary hemming on tops and pants in store, returns done in person or by mail and within 30 days of the purchase date, and a contact section on their website with a list of accounts to reach out to through WeChat and Weibo (Lululemon Athletica, 2020). This results in a lack of customer base and customer loyalty. Lululemon Athletica Inc Net Income in the 3 quarter 2022 grew year on year by 36.04 %, while most of its competitors have experienced contraction in net income by -28.59 %. This pricing strategy is consistent across all Lululemon stores globally. The first designs that brought the company name into the market were made for women to wear during yoga. When distributing Wunder Under leggings, Lululemon would sell the product to Tmall and Tmall would then sell the product directly to the consumer, which eliminates intermediaries and makes the distribution process more efficient and effective. The high price is further justified by the larger amount of shipping cost and tax to run a business in China. The Lululemon CEO also noted the importance of combining physical retail with the convenience of digital engagement, which he sees as playing into the companys business model. Luxury Product Marketing: How to Determine Pricing Strategy.