The Introduction of Lululemon in Japan

THE INTRODUCTION OF LULULEMON ATHLETICA IN JAPAN

The Introduction of Lululemon Athletica in Japan,An International Integrated Marketing Communications

Plan

By: Jill BichnerDecember 4, 2008

IMC 453, Fall 2008

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The Introduction of Lululemon in Japan

Table of Contents:

Cover Page 1

Table of Contents 2

Executive Summary 3-4

Situational Analysis/Competitive Climate 5-6

Cultural Issues for Product and Target Market 7-9

Marketing Objectives & Strategies 10

Tactics and Creative Executions 11-13

Plan Rational 14-15

Bibliography 16-17

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The Introduction of Lululemon in Japan

Executive Summary

Lululemon is an athletic apparel company that gears its merchandise towards yoga.

Founded in Vancouver, the company aligns itself with many of the same values that yoga

displays; balance, harmony and culture. Since is conception in 1998, Lululemon has grown to 80

locations and counting. Currently, Lululemon serves markets in the United States, Canada,

Australia and China.

What helps to make Lululemon successful is the growing demographic of people coined

by sociologist Paul Ray as “cultural creatives.”(www.corporate.gaiam.com) This group is no

longer obsessed with material things but rather they are on a quest to find deeper more

meaningful lives. It is estimated that 50 million adults in the United States alone fits this

description as well as 80-90 million adults in the European Union.

At its very core, Lululemon is a company that shares these same thoughts. Its vision is to

“elevate the world from mediocrity to greatness.” (www.lululemon.com) and the company’s

intentions are to do this, through people. Lululemon believes in empowerment and personal

responsibility. Lululemon is passionate about the planet, hence the organic clothing and yoga

props line and finally, Lululemon is actively involved in each community that it holds a presence

in.

The growing interest in yoga is also a major factor to Lululemon’s success. . It is also

estimated that over 15 million people in the United States practice yoga. In Japan, interest in

yoga has been growing in the 1970’s.

(http://yoganiketan.jp/yogatherapy%20in%20japan.pdf0) It is estimated that 500,000 to 1

million people in Japan practice yoga. The opportunity for Lululemon to be successful in Japan

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The Introduction of Lululemon in Japan

exists. While there may be cultural barriers to overcome, it is believed that Lululemon has a

vision for the world that is growing in consistency with people all across the globe.

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The Introduction of Lululemon in Japan

Situational Analysis/Competitive Climate

The business situation for Lululemon is as follows; Lululemon has 80 locations and 2300

employees. (http://media.lululemon.com/press_kit/lulu_media_kit.pdf) On July 27, 2007

Lululemon Athletica became listed on the Toronto Stock Exchange and the NASDAQ.

(http://media.lululemon.com/press_kit/lulu_media_kit.pdf) According to Hoovers.com

Lululemon’s revenue in 2007 totaled $148.9 million, the gross profit totaled $76 million with

operating income at $16.2 million and a net income of $7.7 million.

The top competitors for Lululemon include NIKE, Adidas and Under Armour. Again,

according to Hoovers.com annual sales are $18.627 billion for NIKE, $13.303 billion for Adidas

and $606 million for Under Armour. Each of these competitors has a strong international

presence and each is already competing in the Japanese market. It is important to note that of the

competitors, NIKE and Adidas are the only ones that have a specific clothing line geared towards

yoga. Neither of these competitors has a men’s yoga apparel line. Lululemon however, is geared

specifically towards yoga and carries both a men’s and women’s line of apparel. Furthermore,

Lululemon’s clothing line is made up of 90 percent organic cotton (www.lululemon.com) while

NIKE uses only five percent organic cotton and finally, Adidas and Under Armour do not use

any organic cotton in the making of their clothes.

Lululemon is ahead of its competitors in this respect, as the use of organic cotton is a

growing trend. Additionally, “eco-chic was all the rage at FutureFashion”

(www.coopamerica.org/pubs/realmoney/articles/orgainccotton.cfm) a show put on in 2006 in

New York which featured clothes made from organic fibers. This competitive landscape also

relies on a number of other factors as well. According to Hovers.com, demand for specialty

retail goods is driven by gains in consumer incomes as well as tastes and comparative costs of

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The Introduction of Lululemon in Japan

manufacture in the US and overseas. Relative to cost, a smaller company such as Lululemon can

compete with larger competitors such as NIKE, Adidas and Under Armour by offering different

merchandise or providing a higher level of service. It appears that small companies are able to

compete effectively with the larger ones by specializing in a particular type of apparel, as is the

case with Lululemon’s concentration in yoga apparel.

When comparing cost Lululemon lies within respect to its competition. NIKE’s yoga

apparel prices range between $30-$75 dollars. Adidas’ yoga apparel ranges anywhere from $33-

$80 dollars and while Under Armour does not hold a yoga specific category, the clothes range

between $20-$80 dollars. Lululemon apparel fits in right at about $30-$80 dollars. Each of the

competitors offers its own unique technology such as Adidas, “Techfit”

(http://www.shopadidas.com) and Under Armour’s “HeatGear.”

(www.underarmour.com/shop/#)

Lululemon not only offers apparel made from mostly organic cotton but it sets itself apart

by offering flat seaming, reversed stitched lining, locking zippers, credit card and key pockets,

thumb holes on some long sleeved apparel, regular and tall length pants, wicking and quick dry

technologies. Finally, the designers at Lululemon work once a week in the retail stores to gain

feedback about designs directly from consumers.

(http://media.lululemon.com/press_kit/lulu_media_kit.pdf) It is in these respects that Lululemon

is able to compete with larger companies in a global market.

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The Introduction of Lululemon in Japan

Cultural Issues for Product and Target Market

One cultural issue for Lululemon involves the perception of yoga in Japan. There are

several common misconceptions about yoga that would hinder a yoga apparel company in any

market. Some misconceptions include, that yoga is a sport and the physical side to yoga is the

most important. On the other side of that, is that yoga is simply stretching or that it is a religious

activity. Other misconceptions include that yoga is only for women, for the young, for the

extremely flexible, that it must be done outdoors and finally that everyone must practice the

same yoga postures. These misconceptions could hinder growth of a yoga apparel line in any

market that is not willing to accept yoga as a form of exercise.

Despite these misconceptions, Lululemon has an opportunity for success in the Japanese

market. Interest in yoga has been growing in Japan since the 1970’s and it is now estimated that

almost one million people in Japan practice yoga. Yoga “has become one of the fastest growing

lifestyle sectors right across the country promoting a healthy alternative to the sometimes

stressful pace of modern day living in Japan.” (Oancia, 2006)

The target market attracted to yoga in the United States is made up of a majority of

middle to upper class, educated women. In 2004, of the 15 million people in the United States

who practice yoga, 77 percent of them were women, 70 percent have college degrees and 30

percent of them have an annual household income of $75,000 or more. Lululemon shares this

target market. In Japan, the target market looks similar. It is consistent all over the globe that

more women practice yoga than men.

Japan uses the term, fuyuso to “refer to wealthy families with money and education.”

(Howard, 2008) It is estimated that the number of profiles that fits this description is as high as

10 million, “if all assets are included.” (Howard, 2008) The Asia-Pacific Wealth Report

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The Introduction of Lululemon in Japan

produced by Merrill Lynch states, “the number of wealthy individuals in Japan grew by 5.1

percent in 2006.” (Howard, 2008) Consumer spending in Japan accounts for “approximately 11

percent of the global economy.” (Howard, 2008) Additionally, Howard writes that present day

Japanese consumers are both well-heeled and diverse with an increasingly more open-mind than

in the past. This trend in consumer spending is creating new opportunities for foreign

multicultural companies.

Cultural barriers that will need to be addressed when marketing Lululemon to Japanese

consumers include four idiosyncrasies. First, Japanese consumers tend to agree with the

opinions of other people. Second, there exists two extreme price market segmentations, the

lowest price is for convenience and the highest is for “ostentation of their social status.”

(http://www.intelbridges.com/japanseconsumer.html.) The third consumer purchase behavior is

that culturally, Japanese prefer modest and humble designs and finally, they typically tend to pay

more attention on “precise finish than overall performance.”

(http://www.intelbridges.com/japaneseconsumer.html.)

Lululemon’s grassroots marketing concepts are well suited for this market. Lululemon

creates a buzz around communities by their use of ambassadors. Lululemon forms partnerships

with community members who embody active and healthy lifestyles essential to any community.

With this partnership Lululemon encourages and promotes the ambassadors as well as allows

them to test drive new products. Thus, Lululemon is essentially creating local brand experts who

can then use word of mouth marketing to recommend its products to their peers and students.

This addresses the issue that Japanese consumers will make purchases based on what others are

recommending as well as with what others think is a good choice.

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The Introduction of Lululemon in Japan

The price point of Lululemon which is on the higher end, address the two extreme market

segment of Japan. The benefits of using organic material and ecologically friendly stores and

manufacturing plants all add to the cost of the product as well as the benefit of the planet.

Meanwhile, the growing trend of “eco-chic” may appeal to “ostentation” of the Japanese

consumers’ social status. Finally, Lululemon’s designs are modest and simple and would likely

appeal to those consumers who prefer these qualities when making purchases.

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The Introduction of Lululemon in Japan

Marketing Objectives & Strategies

Objectives:

Create awareness of the sustainable practices and benefits of Lululemon amongst the Japanese decision makers by utilizing local brand ambassadors and thus breaking into the Japanese market by December of 2009.

Utilize Lululemon’s local brand ambassadors to communicate Lululemon’s positioning and create a buzz amongst Lululemon’s target market in order to enable growth of the Lululemon athletic line in Japan by December of 2009.

Strategies:

Establish a brand ambassador relationship between local Lululemon stores and yoga enthusiasts so that these enthusiasts can be the voice of the brand to Japanese consumers.

Through the use of print media, equate values of personal responsibility, harmony and conscious communities with the Lululemon brand in order to appeal to the Japanese target market.

Use celebrity endorsements to entice Japanese consumers to try the Lululemon brand.

Establish the Lululemon website in Japanese in order to communicate the brand’s core values to the Japanese target market.

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The Introduction of Lululemon in Japan

Tactics and Creative Executions

Currently Lululemon advertises in “Yoga Journal Magazine” as well as by using its brand

ambassadors. When marketing in Japan it is recommended that Lululemon attempts to use these

same methods in order to reach the target market while remaining true to the brands grassroots

marketing image. Research suggests that there is currently no magazine in Japan dedicated

entirely to yoga. For this international communications plan, it is recommended that instead,

Lululemon seek advertising through other Japanese fitness magazines such as, “Nikkei Health

Magazine.” “Nikkei Health Magazine’s” core readership is made up of mostly women in their

30’s and 40’s “who are interested in healthy diet, exercise and relaxation.”

(http://www.nikkeibp.com/adinfo/printmedia/pm_001005020.html) The magazine is sold

through an annual subscription and had approximately 88, 192 issues in circulation as of 2006.

Aside from using print media, Lululemon will form alliances with local brand

ambassadors, these people will be community decision makers as well as yoga studio owners.

This relationship will work two ways. The alliance is such that, employees of Lululemon can

receive free yoga classes at the yoga studios in which Lululemon has established the ambassador

relationship with. The yoga studio then bills Lululemon directly for those classes each month.

To benefit the studio owners, Lululemon utilizes an in store bulletin board which features all the

ambassadors and information on their studios. This creates awareness for the consumers while

helping to ensure that these places of practice come highly recommended by Lululemon

Athletica. Additionally, there is a lot of “yoga” talk at the studios, in this world; word of mouth

is a key factor. This method appears to be consistent with the preferences of Japanese consumers.

The creative aspect of these tactics will remain the same as far as the ambassador

relationship is concerned, however the print advertisements will have to change in order to

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The Introduction of Lululemon in Japan

reflect the needs of the Japanese consumers. The company must first position itself as a

trustworthy company if Japanese consumers are going to give it a chance at all. Secondly, the

brand must be positioned as being, preferred by most, superior in quality but not flashy by

design. Also, the brand must conform and simultaneously be unique as it is a foreign brand and

foreign brands are not often preferred over any local brands. It is recommended that Lululemon

uses its eco-friendliness to establish itself as unique and unlike the local competition. This will

also ensure that consumers see that Lululemon Athletica is a trusted company that is highly

community conscious as well as a company dedicated to the betterment of the overall quality of

life. Finally, the print ads will have to make heavy use of the “likeability” factor as this is a

factor that is the strongest predictor of purchase in the Japanese market.

Although celebrities such as Madonna, Gwyneth Paltrow and Sting have helped make

yoga popular in the United States, Lululemon does not make use of celebrity endorsements.

Although it strays away from Lululemon’s grass roots marketing methods used here in the

United States, it is suggested that in order to succeed in the Japanese market that Lululemon

makes use of Japanese Celebrity endorsements. In Japan, “tarento” or use of celebrities to give

face to a brand is widely popular. (Lecture Material) Celebrities such as, Yuri Ebihara a

Japanese model, along with pop star Amuro Namie and finally model and actress Ayumi

Hamasaki would all be well suited to represent the Lululemon brand in Japan. The use of such

celebrities would help make Lululemon appealing to Japanese consumers.

Another tactic that would work well for the Japanese market is the use of Internet.

Lululemon must create it’s website in Japanese. While the website currently does not offer the

ability to purchase merchandise through the site, it is imperative in helping to communicate the

type of brand Lululemon is, and what the company stands for. Selling over the website however

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The Introduction of Lululemon in Japan

is a method that could be tested and put to use. Last year in 2007, Japan experienced an 18

percent increase in confidence and perceived safety of the Internet. As of 2006, Japan has

remained the world’s number one Internet-based economy. Then, nine out of every ten Japanese

person claimed they had used the Internet within the past month, while the average user was

reported to spend, “nearly 14 hours per week online.” (http://news.cnet.com/Study-Internet-big-

in-Japan,-China/2100-1025_3-6055779.html)

Use of these tactics such as previously mentioned print ads, local brand ambassadors,

celebrity endorsements and Internet will help Lululemon establish a presence in the Japanese

market. These tactics help ensure Lululemon stays true to its core message, while meeting the

needs of consumers in the Japanese market place. Traditional, more expensive media forms such

as television and direct mail are not recommended at this time due to high costs and lack of

representation of Lululemon’s ideals and goals.

These are two examples of Lululemon print advertisements that ran in the United States.

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The Introduction of Lululemon in Japan

Plan Rationale

Lululemon is a brand appropriate to market in Japan due to the rise in the popularity of

yoga in the last decade. As yoga becomes increasingly popular in all parts of the globe, it could

almost be considered a universal form of exercise and or meditation. This expansion creates a

large potential for yoga props and apparel companies such as Lululemon Athletica, to expand

into almost every market place.

This plan is appropriate because it takes into the considerations the needs and preferences

of Japanese consumers. This plan caters to Japanese consumers by establishing a strong

company reputation and by making use of marketing tactics and creative executions that appeal

to Japanese consumers as well as increases their purchase intent. It also considers the very

things preferable to Japanese consumers. The use of celebrity endorsements and local brand

ambassadors addresses the issue which states that Japanese consumers tend to agree with the

opinions of others. Secondly, Japanese consumers seek modest and humble designs. Lululemon

apparel already currently utilizes these concepts in the design of their clothes. Further more

Lululemon already has a flexibility policy which allows their designers to seek out the likes,

dislikes and body styles of its consumers and then design their brand according to these specific

requests. Lastly the Japanese consumers’ preference for precision is already addressed in the

Lululemon apparel line. Lululemon is tailored to meet consumer satisfaction but also makes use

of flat seaming, reversed stitching, thumb holes, key and credit card pockets, locking zippers,

wicking and quick drying materials all add to the precision within Lululemon’s designs which

will help win over the Japanese consumer.

Lululemon is a company that by design is able to work its way into the Japanese market

place. The goals of the Lululemon Athletica Company are becoming universal among other

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The Introduction of Lululemon in Japan

companies and consumers all across the globe. The visions of one world, harmony and the

betterment of the over all quality of life are visions shared by a growing number of consumers

across the world. By consciously marketing to the needs of Japanese consumers both

psychologically and aesthetically this plan allows Lululemon the flexibility to expand into the

Japanese market while remaining true to its core values.

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The Introduction of Lululemon in Japan

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The Introduction of Lululemon in Japan

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