Lululemon: Premium Player in the Apparel Industry

What first comes to mind when you think of Lululemon?  Low prices?  Or quality products?  Most likely, it’s the latter…even if you hit a sale right, low prices and Lulu aren’t typically used in the same sentence.  A product differentiation strategy “is a business strategy whereby firms attempt to gain a competitive advantage by increasing the willingness of customers to pay for the products or services they sell (Barney, 180).  In comparison to a cost leadership business strategy, this is clearly where Lululemon places its focus. 

In the latest 10-K filing, Lululemon even cites its differentiation strategy as its competitive strength, focusing on the following areas:

·         Premium Active Brand

·         Distinctive Retail Experience

·         Innovative Design Process

·         Community-Based Marketing Approach

·         Deep Rooted Culture Centered on Training and Personal Growth

·         Experienced Management Team with Proven Ability to Execute

These aforementioned items correspond directly with Barney’s way that firms can differentiate their products (182).  As an example, the 10-K states that “we locate our stores in street locations, lifestyle centers and malls that position lululemon athletica stores to be an integral part of their communities. We coach our store sales associates, whom we refer to as ‘educators,’ to develop a personal connection with each guest” (http://investor.lululemon.com/secfiling.cfm?filingID=1397187-14-21).  Using this “differential emphasis on consumer marketing,” Lululemon provides a strong stake hold in the market, significant competitive advantage and protects itself from the threat of competitors who focus more heavily on cost leadership strategies (Barney 184).

Works Cited:

Lululemon Athletica. (2014). 2013 annual report of lululemon athletica. Retrieved from http://investor.lululemon.com/secfiling.cfm?filingID=1397187-14-21