Lululemon’s current operation model focuses on reaching the “underserved but growing customer segment” (Ho 1). According to Lululemon, the educated and sophisticated modern woman is underserved in the current market. However, while this claim was true a few years ago, the situation has now changed and the ‘sophisticated woman’ in no longer underserved. Consequently, the company needs to change this operational strategy and focus on its growing customer base. For instance, the company entered a largely unexplored market where it enjoys a temporary grip on the current market share. Lululemon’s operations should focus on getting ready for the expected competition in the newly created and lucrative market. The new market entrants will likely seek to copy the unique strategies that have already been implemented by Lululemon.
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Lululemon’s strategy should also focus on alternative methods of accelerating growth. Currently, the company’s mode of operation has limited both the size and the location of its stores. Consequently, several hurdles limit the Lululemon’s business expansion. The company should come up with strategies on how to stimulate expansion through alternative methods. For instance, Lululemon’s online expansion is not limited by the factors that limit physical expansion.
Lululemon must perfect its community-based marketing strategies. The company’s marketing strategy combines both its customers’ lifestyles and its brand name. This strategy involves a “grassroots marketing approach where Lululemon develops relationships with yoga instructors and other fitness instructors” (Ho 1). Furthermore, Lululemon’s marketing strategy prompts the company to organize and sponsor community-based events. This marketing strategy is responsible for Lululemon’s successful acquisition of a unique market share. For example, companies such as VF Corporation and Gap have tried in vain to compete with Lululemon’s marketing strategy. The company’s competitors have a hard time aligning themselves with community-based marketing. Lululemon should harness and perfect the community-based marketing strategy to ensure future success and market-share sustenance. Any other company that seeks to emulate the success of Lululemon will take a long time before it acquires the benefits of community-based marketing.
Therefore, community-based marketing is one of the strategies that are of utmost importance to Lululemon. This strategy has created a clear pathway for the company to advance whilst experiencing a slight amount of competitive pressure. Some of the practices that can be employed when harnessing the community-based marketing approach include rationalization of community interaction. It is possible for communities to feel exploited and capitalized on when community-based marketing is done in a rush. Consequently, the company should ensure that any interaction with new or existing communities happens naturally and it is not intrusive or forced.
Accounting and Finance
Lululemon has had significant financial success over the last few years with its statements indicating that the company has had relative monetary stability. As a positive financial strategy, Lululemon should ensure that the healthy balance of its margins is revived. Records indicate that in 2011, the company had gross margin levels of over 56% (Ho 1). However, this trend has been on a constant reversal since 2013. The trend where revenues were growing at a faster rate than overheads has started to change. The increase in overheads has been prompted by massive recalls on some of the company’s products. For instance, a March 2013 recall on yoga pants led to a $50 million dip in revenues. The company should ensure that the low overheads that are associated with the company are maintained.
Ho, Samulel. “Analysis: Lululemon’s next challenge.” Reuters. 2013. Web.