Competitive Forces : Marketing Strategy

Lululemon’s Pricing Strategy aims to communicate to its guest that they are a brand that supports innovative, high quality apparel. Their items, specifically the Groove pant, is targeted at educated women with higher than average incomes, Therefore

Levi’s decided to place their product in department stores as they had good relations with the retailers due to their volume sales of jeans. They did not have any real relationship with the specialty stores where the independent male shopped. Rather than placing their new products which would be considered as high-end in these specialty stores and where they would be among the lower price range, they chose to place their products in the department stores where their products showed a deviation from the regular Levi formula and were considered very pricy as compared to other high-end department store brands such as Haggar’s. This price raised some concerns among the retailers as they were unsure if Levi’s formal wear would move out of the stores at a required pace. Also, due to price-quality inference, if Levi’s was placed in a specialty store, the Q2 customer might prefer to buy a more expensive product.  Levi tried to sell these formal clothes in the same stores as their casual clothes for the same segment of customers. Customers saw these formal clothes at the same place priced higher than the casuals, and therefore found them to be expensive.

I am going the review the Article "The Five Competitive Forces That Shape Strategy" written by Micheal E. Porter. This article was published in Harvard business Review in year 2008.

Lululemon faces constant competitive pressures from the five main driving forces: rivals/competitors, new entrants, substitute products, suppliers bargaining power, and buyers bargaining power.( Thompson, Peteraf, Gamble, and Strickland) Below is a detailed analysis of the competitive forces noted in Exhibit 2.

Bargaining Power of Buyers: The bargaining power of buyers is high in the department store retail industry. The volume of buyers is high, and buyers are very price sensitive in this industry. The products are not highly differentiated, and there are numerous stores that offer the same, or similar, products, giving buyers the opportunity to search for the lowest prices and information. The industry has substitutes available in the form of specialty, differentiated products and stores. This increases the power of buyers,

glory was overshadowed by their wiliness to depend on third party manufacturers in which they outsourced for fabrics. This caused a huge production shipment problem that had inferior and low quality “Luon Pants”.Due to their inability to be in control of this catastrophe 17% of inventory was lost along with customers and a tarnished brand name in 2013. Current and future customers were also left skeptical about the brand and its products when Chairman and CEO Chip Wilson blatantly told the media that product issues were as a result of overweight women. The company later on, only produced appeal for slim built individuals and not plus size male or female. These weaknesses caused a lot of top executives and senior official in the company to resign or step

As mentioned before, Lululemon has suffered from backlash due to controversial misconduct from their former CEO and from statements made from their founder. Therefore, now it is more important than ever for it to not give reasons to customer attitudes by tainting their brand image. Through this, it shouldn’t only focus on the conduct of management, but also how the behavior of their suppliers and third-parties they work with could potentially reflect on the company as well.

Lululemon is a high quality clothing brand selling items at an expensive price. Customers are willing to pay a substantial amount of money to purchase this clothing. Lululemon has the power to adjust prices constantly because they have a high budget. Hundreds of companies sell athletic clothes, but it can be argued that customers spend money to buy the logo rather than the clothing itself. Some of Lululemon’s competitors are Athleta, Nike, Fabletics, and Under Armor. Lululemon's $98 pair of leggings looks almost exactly like Athleta's $79 pair. Lululemon has the ability to do this because they know their customers will choose to buy their logo oppose to Athleta’s. The target area for Lululemon is typically upper middle class women but men and

It also faces competition against retailers that have monopolized the commodity of traditional athletic apparel, such as cotton t-shirts and sweatshirts, and companies that have existed for far longer than LULU, and have a created a stronger brand name, many of which have a more established presence. Lululemon also spends more money investing in research and development. In order to develop leading-edge fabrics for its apparel, prices are relatively higher for its products than for those of many of its competitors (Price, 2013). Similar products at Nike or Under Armour sell for much less. Since Lululemon prioritizes the buying behavior of its core audience of higher income women, this is not a problem, but this could be prove problematic as the company tries to expand its audience, or if unforeseen forces cause customers to become more price-conscious. Menswear sales rose 21% last year (Schlossberg, 2016), but with stiff competition from Under Armour and Nike, it may be difficult for the company to make moves on this front. These are a few barriers to entry that keep the competition out in the market of

When Quiksilver announced the start of its women line Roxy in 1990, they defined the brand as a “fun, bold, athletic, daring and classy” brand for young women. Market segmentation is a crucial marketing strategy and Roxy utilizes the four bases that are commonly used for segmenting consumer markets including geographic, demographic, psychographic, and benefits sought segmentation. The geographic segmentation is ideally unlimited for the Roxy target market because the brand offers clothes for both warm and cold weather, however, it focuses mainly on the “beach lifestyle” and is generally more popular in beach towns. The demographic segmentation of the Roxy brand, is aimed to attract young women between the

Since the craze of Lululemon had taken off many rival companies such as gap, nike, Nordstorm and others have tried to capitalize on the yoga market. Rival companies have priced their clothing less then Lululemon, however they have not been able to outperform or take loyal customers away from Lululemon.

There are a lot of suppliers available in the market that want to produce for lululemon because of the increased value of the company

In the article, “The Five Competitive Forces that Shape Strategy,” Michael Porter argues that the five forces are an important element for managers and investors in the business industry. Porter stated that it is important to “understand the competitive forces, and their underlying causes” which many companies will use to determine if they will gain profit or not (Porter 80). Companies determine their profitability of the industry through the level of the force that they face. For instance, when the forces are favorable, most companies will be profitable. Porter gives a detail description of the five forces and explains the importance of each force. The five forces are the threats of new entrants, the power of the buyers, the power of the suppliers, the threats of substitute for products or services, and the rivalry among existing competitors. Porter believes that “a company strategist who understands the competition extends well beyond existing rivals will detect wider competitive threats and be better equipped to address them” (Porter 93). In other words, when strategists understand the different forces it will benefit them to make better decisions and to be ready to face the different challenges between competitors. In the article, Porter’s main goal is to present the importance of the five forces to the audience.

Limited bargaining leverage helps Lululemon Athletica, which have a short-term positive impact on this entity, which adds to its value. "Large number of customers (Lululemon Athletica)" is a difficult qualitative factor to defend, so competing institutions will have an easy time overcoming it.

In general terms, marketing is all related to the places of buying and selling of goods and services to satisfy customers’ needs. Nowadays marketing is the most important issues for success of every business marketing is the activity, set of institution, and process for creating, communicating, delivering, and