Lululemon Case Study

1. The rivalry among lululemon and its competitors in the market for performance based yoga and fitness apparel is moderate to strong and seems to be on the verge of growing stronger because of the dramatic success of lululemon is enjoying and the added competition from the rivals that lululemon is attracting such as Nike, Under Armour and others. This rivalry is centered on three main factors: (1) product quality, styling, comfort, and performance features (2) Product line breadth (3) Brand image and brand reputation.

Rivalry related competitive pressures are being intensified by the efforts of rivals to expand their product lines and offer wider selection to those who wear performance based yoga and fitness apparel. Also, the pressures are increasing because of the active efforts on the part of the designers/marketers of this apparel to build and strengthen the appeal of their product offerings via lower prices (as compared to lululemon’s product offerings) and good merchandising and eye-catching displays in the stores.  This rivalry is weakened by the differentiation that exists from one brand of apparel to another in relation to product selection, brand image, quality, design and styling. This differentiation creates buyer preferences for the features of certain brands, thus inhibiting brand switching and giving rise to buyer loyalty to their preferred brand. Also, the growing demand for this apparel acts to weaken rivalry among designers/marketers because there is enough new demand to enable each rival to grow sales/market share without having to steal customers away from rival brands in a head-to-head battle for business of fitness conscious buyer.  Overall the competitive pressures associated with rivalry among designers/marketers of this apparel is moderate to strong.

Competitive pressures associated with the treat of new entry into the market for performance based yoga and fitness apparel is a weak to moderate competitive force. Two factors that are acting to intensify the threat of entry are (1) the fast rate of growth in buyer demand for this apparel (2) existing industry members are actively striving to expand their market reach by broadening their product offerings. Factors that are acting to weaken the threat of the entry are (1) the small pool of apparel designers/marketers likely to begin adding performance based yoga and fitness apparel to their product offerings (2) somewhat formidable entry barriers-brand new designers/marketers of this apparel face high barriers in building a retail distribution network and securing attractive retail display space for their product offerings to customers (3) the degree of product differentiation and brand name awareness enjoyed by the big name companies, trying to go head-to-head against them would be quite expensive from the stand point of establishing a credible and potent brand image and brand reputation.  Given all this the competitive pressures from new rivals in the marketplace is relatively weak and relatively strong in terms of existing competitors.