MA Final Proposal IMC Plan for Lululemon Athletica in China

MA Final Project Proposal Integrated Marketing Communication Plan For Lululemon Athletica in China

Savannah College of Art and Design Luxury and Fashion Management Wei Han

“Lululemon has developed a distinctive corporate culture with a mission to produce product which create transformational experiencesfor people to live happy, healthy and fun live.�

Lululemon Athletica

Table of Contents

1.0 Biography 2.0 Abstract 3.0 Company Overview 4.0 Market Overview 5.0 Target Market Identification 6.0

Key Success Factors

7.0

Methodology

8.0

Research Design

9.0

Annotated Bibliography

10.0 Appendix

1.0 Biography

2.0 Abstract

Weihan, a Mongolian girl, comes from China. She was born on March 23, 1992, to a family of three. From 2010 to 2014, Weihan studied English Literature in Caprital Normal University where she earned a bachelor’s degree. She began her graduate education at Savannah College of Art and Design in the Luxury and Fashion Management program in spring, 2015.

During that time, Weihan completed an internship at Xinrui Magazine as assistant editor and stylist. Weihan plans to start her career in luxury and fashion industry after graduation.

Born in Beijing, China

1992

Internship in Xinrui Magazine

2010 -2014 Capital Normal University English Literature

2014

Estimate Graduation

2015 Spring

2017 Spring

Savannah College of Art and Design Lusuxry and Fashion Management

Nowadays, more consumers are adopting healthier and more balanced lifestyles, and “athleisure” (athletics and leisure) outfits have gained popularity. Many designers of apparel and footwear have witnessed the growing “athleisue” trend in activewear. Various apparel brands in both mass and luxury segments responded to this growing trend and launched more clothing and footwear products that combine an athletic, comfortable and casual style. In China, athletic fashion leads the way. According to Euromonitor, the increasing consumer participation in sporting activities has seen the sports industry enjoy recovery after a decline. Sporty fashion has emerged as a key trend among young people.

Lululemon, a professional athletic brand from Canada, is over-reliant on the North American market for its revenue.

Since the Asian Market is growing rapidly, there is a market potential for Lululemon to integrate the market into China. For a few years now, yoga-pants peddler Lululemon has had its eye on a big expansion into Asia and Europe. The expansion is paying off. Lululemon opened stores in Hong Kong, Singapore, and Seoul in the last year. CEO Laurent Potdevin was “very happy” with the results, and Asia is far exceeding their expectations so far.

This project aims to complete the IMC plan (Integrated marketing plan) for Lululemon and introduce the brand to the Chinese market and increase the brand awareness among Chinese consumers. This project will be done through the ten-week Winter quarter. Through primary and secondary research, I will collect the data and accurate information in order to support the IMC plan. The primary research will be gathered through telephone, email, and face-to-face interviews, surveys and questionnaires. The secondary research will be gathered mainly by searching the official website and relevant websites such as Euromonitor, ReferenceUSA, and Women’s Wear Daily to collect professional data.

Finally, the data and information will be carefully examined and summarized to provide detailed solutions and plan.

3.0 Company Overview

3.2 About Lululemon Athletica

3.1 Area of Interest

According to Lululemon’s 2016 annual report, “Lululemon has developed a distinctive corporate culture with a mission to produce product which create transformational experiences for people to live happy, healthy and fun live.” Lululemon shares a deep love for yoga. As indicated on their official website, the brand aims to create more than a place where people could get gear to sweat in; they want to create a community hub where people could learn and discuss the physical aspects of healthy living, mindfulness and living a life of possibility. The brand aims to create real relationships with their guests and understand what the customers are passionate about and help them celebrate their goals. Today, they do this in their store around the globe, and will continue sharing the same value in their market expansion in China.

The company also concentrates on sustainability in their marketing strategy and aims to help keep a healthy planet and thriving company. In order to keep up with their brand culture of helping people to live long, healthy, and fun lives, the company has set up a responsible supply chain strategy and is doing their best to reduce the carbon footprint.

As other interests, Lululemon also works on a community-based social impact program named “Here to be” that makes the healing benefits of yoga and meditation accessible through best-in-class nonprofit partnerships.

The company also faces many opportunities in the future. Since the company over-relies on the North American market, and the Asian market is growing steadily year by year, I think it may be a good chance for Lululemon to expand their business into China. At least 10 million people in China now practice yoga, and the number is growing along with the country’s middle class. It’s all good news for Lululemon.

Founded by Chip Wilson in Vancouver, Canada in 1998, lululemon is a yoga-inspired, technical athletic apparel company for women and men. What started as a design studio by day and yoga studio by night soon became a standalone store in November of 2000 on West 4th Avenue in Vancouver’s Kitsilano neighbourhood.

Now, Lululemon has expanded Glabally. In February 2014, the firm announced plans to open its first full store in Europe with a flagship shop in Covent Garden, London. A year after the expansion to Europe, in 2015, Lululemon opened the first flagship store in Finance Street, Central, Hong Kong. Now by 2016, Lululemon operates more than 350 stores globally, and 4 stores in Asia, 2 in Singapore and the other two in Hong Kong. The distribution facilities in Sumner (Washington), Vancouver (British Columbia), and Melbourne (Victoria). Lululemon manufacturing mainly in South and Southeast Asia, while 23% of the products are manufacturing in China.(Yahoo Finance). The Net revenue increased from $1.8 billion in fiscal 2014 to $2.1 billion in fiscal 2015.

London North America Saudi Arabia

Hong Kong

Hawaii

Singapore Australia New Zealand

3.2.1 Ivivva Athletica

Ivivva athletica is a youth brand which was founded by lululemon athletica in 2009. Created by lululemon’s for its younger clientele, ivivva focuses on creating athletic sportswear for active girls ages 6–14. The company launched with its first store in Vancouver, Canada in December 2009, and has since grown to 19 stores and pop-up shop locations across Canada and the United States. In 2012 ivivva opened its first American stores in New York, Chicago, Boston, Bellevue and Orange County. ivivva’s clothes are designed for young girls in a wide variety of athletic pursuits such as dance, running, yoga, ice skating, gymnastics and on-the-court sports. The majority of their clothing line is heavily influenced by direct input from customers to ensure quality, fit, and function.

3.3 Brand Manifesto

3.4 Products

Their first designs were made for women to wear during yoga. Through plenty of feedback from the guests, ambassadors and elite athletes, they now design for yoga, running, cycling, training and most other sweaty pursuits for women and men.

3.5 Yoga 3.5.1 Lululemon and Yoga

The word "yoga" comes from the Sanskrit root "yuj," which means "to yoke" the spirit and physical body together. Yoga has evolved over thousands of years to embrace a wide range of styles and disciplines, and it’s a popular activity for athletes, children, and seniors. Yoga can be modified to suit all levels of fitness. Yoga not only lowers blood pressure and increases strength and flexibility, but also energizes our bodies and calms our minds.

Yoga would benefit to prevent injuries, strengthen your core, connect to your breath, and clarify your vision.

Proper alignment of yoga postures is important for many types of yoga. It is important to choose clothes that are not too baggy and that help you and your yoga instructor ensure you're not doing anything harmful to your body. Lululemon provides clothes that dry quickly, wick sweat away, and will keep you as comfortable as possible to get the most out of your yoga class. Also, Lululemon provides a yoga guide andoga classes in stores to help connect people’s body and mind through deep meditation.

3.5.2 Yoga in China

Over the years, yoga has become popular all over China with almost all gyms conducting yoga classes. From iron ore to IT, exports from India have a high profile in China these days. But there's one Indian export that a growing number of China's young urban professionals are discovering they really can't live without — yoga. In many ways, China is simply catching up with the global wave of popularity that yoga has been enjoying in more-developed economies. Yoga started to take off in China in 1985 through a daytime television show on the state network CCTV starring Zhang Hui Lan, also known as Wai Lana, who is called the mother of yoga in China. In 2015, China established first yoga college in assistance with India. Also, since Yoga share the similar essence of Tai-Chi which originated from China, an event named Yoga-Tai Chi “jugalbandi” held in China to mark the second International Day of Yoga in 2015, and the event has been held in many place in China. According to the Yoga International, estimates suggest that 10 million Chinese now practice regularly, compared to about 16 million Americans. Long before it displaces the U.S. economy, let alone its military, China will be the world’s new yoga superpower.

3.6 SWOT Analysis

Strength:

Opportunities:

• The growing sportswear market in China • Premiem brand image • The athelasure trend’s spread through • Brand image makes customers feel healthy, distinguished and goal-driven. China • Government support for fitness.

• High-quality materials.

• Expanding the company’s image to reflect • Technical Product innovation. varieties of exercise apart from Yoga • Vertical retail distribution strategy • Consumers have higher interests in digital technology

Weaknesses: • Weak brand image among Chinese consumers compared to the competitors.

• Culture and linguistic differences • Seasonal business

Threats • Competitors’ brand image is more recognizable by Chinese consumers.

• Competitors with similar products at lower prices.

• Counterfeit products.

4.0 Market Overview

4.1 Sportswear In China Sporty fashion leads the way

Increasing consumer participation in sporting activities has seen the sports industry enjoy recovery. Sporty fashion has emerged as a key trend among young people. In 2015, with the support of national policies and the increasing importance attached to healthy lifestyles by the public, the passion for sports participation increased among Chinese consumers and continued to drive overall market demand. The Chinese government plans to accelerate development of the sports industry and boost sport-related consumption over the forecast period.

In 2015, supported by the favourable national policy towards the sports industry and increasing consumer desire to lead healthy lifestyles, the passion for sports participation remained unabated among Chinese consumers and continued to spur overall market growth. In order to respond to the “National Fitness� initiative, local governments actively launched sports activities such as city marathons and colour runs to encourage more residents to participate in such events.

Meanwhile, consumers’ purchasing behaviour is heavily reliant on social networks and group sharing rather than traditional demand-driven purchasing in brick-and-mortar stores. Chinese consumers with rising household incomes are changing their lifestyles and opting for a balanced work/life approach. Outdoor recreation connecting with nature is a particularly sought-after pastime, with hiking, mountaineering, rock climbing and camping, etc, increasing in popularity among urban young consumers.

Running is becoming increasingly popular in China, as seen in recent years with the tremendous growth in the numbers of marathons and runners.(See Appendix)

Outlook

As forecast by the State General Administration of Sports, the scale of the sports industry will reach more than CNY3,000 billion and account for 1% of GPD in 2020. Meanwhile, set to benefit from hosting the 2022 Winter Olympic Games and other future major sporting events, the scale of the sports industry will exceed CNY5,000 billion in 2025 which represents significant potential. The booming sports industry is expected to accelerate trading up by consumers and lead to further category segmentation, driving demand for functionality over the forecast period. This is expected to see average unit prices rise.

Sportswear projects healthy 11% current retail value growth in 2015, reaching CNY165 billion Surging enthusiasm for sports activities continues to fuel demand for sportswear

The surge in running has triggered enormous demand for running shoes, performance tops, sports bras, athletic tights, and other related apparel. casual outdoor wear is favoured by an increasing number of domestic consumers in China as daily apparel on informal occasions.

Sports goods stores and department stores remained the major retail channels for sportswear during the review period, representing a marginally declining but still dominant combined retail value share of 66% in 2015.

Sportswear distribution, however, reveals a trend for consumers shifting to more convenient and lower-priced internet retailing over the review period. Ever-rising rents placed huge cost pressures on brick-and-mortar stores. Internet retailing is of increasing importance to the growth of the sportswear industry. In October 2014, the government issued a report about accelerating development of the sports industry, such that by 2025, the sports industry in China would amount to sales of over CNY5,000 billion. Meanwhile, the report also indicated that the government would encourage foreign capital to invest in the domestic sports industry and more qualifying sports-related enterprises to become listed companies. The Chinese government would also provide some of the sports enterprises with more favourable tax treatment. In addition, further reports published by the government stipulate that by 2025, China will build new stadiums and gyms equating to space of 1.1 billion sq m. Favourable policies and measures will promote the entire sports industry and provide people more outdoor activity space that will result in consumers increasing their expenditure on sports goods. The sportswear market in China will undoubtedly benefit from these initiatives.

4.2 Competitor Analysis

The sportswear industry has many competitors in the Chinese market. To know competitors better would not only help better understand the market, but also better position the brand in the market. The competitor analysis is divided into two parts: the global market and the Chinese market. The global competitor analysis includes the leading sportswear companies and groups which compete with Lululemon. The Chinese market competitor analysis includes the sportswear brands which share the same customer base with Lululemon. The results and positioning map will help to consider the media strategy.

4.2.1 Global Competitor

4.2.2 Chinese Market Competitor

5.0 Target Market Identification 5.1 Demographic Segmentation(Euromonitor) Age:23 -54 Gender: Both Male and Femail Occupations: White-collar workers, editors, stylists, students Income: At least 204,000 CNY (30000 USD) 5.2 Behavior Segmentation • Wechat Using

Chinese consumers using wechat a lot to sharing lifestyle and fashion trends with friends. Including the products they bought and activities they did in daily time.

• Social Networking using

Chinese consumers using social networking a lot to download the application, find coupous, and latch onto celebrities and brand on a social networking platform.

• Social Media Using

Chinese consumer social media to connet with friends, sharing experience, and get the recent news of their favored brands.

• Online shopping

Chinese consumers prefers to shop online due to the lower price conpared to brick-and-motor stores and various options presented online.

• Indoor and Outdoor activities become new trend due to the changing of lifestyle and government encouragement.

5.3 Lifestyle and Attitude • As women achieve greater economic independence, many find they can afford to find new ways to keep in shape • More women are participating in traditional sports such as badminton and table tennis as well as exercise regimens such Zumba, spin classes, yoga and pole dancing.

• They are fashion-oriented and like to keep up with latest fashion. They prefer fashionable to practical. They like to try new brands and new products.

• They are impulsive, affective and sociable, enjoy expressing their feeling in activities.

• Increasing awareness about healthy lifestyles among a growing middle and upper class.

• Consumers have begun “spending for health” and are now regarding healthy living as a fashionable lifestyle.

• A sporty lifestyle is becoming mainstream, the majority of consumers are looking out for their own health and not just catching up to a fashionable trend.

• Exercise and sports has become a large part of Chinese consumer’s social lives, with 60% saying that they enjoy posting pictures, stats or achievements about their sporting activities on social media. Wechat and Weibo are the key platforms for sharing.

• Women spend more money on health care and tend to concentrate on their own life conditions.

• Consumers are concern about environment and sustainability.

• A new national sense of confidence and a stronger economy is driving more Chinese to seek a more balanced and healthier lifestyle.

• Busy urban living is now subjecting Chinese people to increasing amounts of pressure, and efforts to stay healthy are becoming more prevalent than ever.

• Many people in China believe good health is the key to achieving their personal goals as well as helping them financially and socially.

• In line with China’s ongoing battle with pollution, there has been a trend of people opting to stay indoors to exercise such as Yoga and Zumba dancing.

7.0 Methodology

7.2 Secondary Research

7.1 Primary Research

This project aims to increase Lululemon Athletica brand awareness among Chinese consumers and increase competitiveness in the Chinese market. The primary research for this project will include an online survey, interviews, and a questionare.

• Official Lululemon Athletica website and other competitors’ website The official websites will provide the latest news about brands

• Online survey and qustionare:

In order to understand the demands of the target customer, I will create 15-20 survey questions through Survey Monkey that will include two parts: Lululemon and Yoga. The survey will involve large groups of people in order to collect more quantitive data.

• Interview:

The interview is the most detailed way to understand the thoughts of individuals or groups. The interview will include face-to-face, telephone and email interviews. I plan to interview some people who love yoga and who practice yoga daily. I will have face-to-face talks with people who concentrate on a healthy lifestyle and sustainability in life.

The secondary research will be the first step in this project, and will bring me overall impression of the brand.

• Euromonitor

Euromonitor data includes competitor intellignece, market and trend analysis,statisticsdata analysis and modelling in industires ranging from consumer goods to travel servies. The project will mainly use the consumer’s analysis, market environment and trend analysis.

• Business Source Premier

Business Souorce Premier provides a widely business database, including market research, industry, country reports, company profiles and SWOT analysis.

• Business of Fashion

Business of fashion provides original fashion business news and authoritative fashion industry intelligence analysis.

• WGSN

WFSN is the world’s ldeading trend authority, serving the fashion and creative industries.

• ReferenceUSA

Reference USA aims to get companies’ information, such as annual reports, financial statements, etc.

•WARC:

WARC is a website that publishes leading journals including Admap, Market Leader, the Journal of Advertising Research and the International Journal of Market Research.

8.0 Research Design Primary Research Survery & questionaries Email/Phone Interviews Secondary Research Conpany Overview Market Overview Target Market Research Analysis Competitive Analysis Positioning Maps Key Success Factors Strategies Product Pricing Promotion Promotion Design Part Financial Budget References & Appendix Final Delivery Final Book Layout & Print Presentation Design Presentation Practice Presentation

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9.0 Annotated Bibliography Simpson, Daniel. “China: The New Yoga Superpower.” Study And Download Yoga Online. N.p., n.d. Web. 22 Oct. 2016.

This article indicates that China has become the new yoga superpower, and Chinese people accept yoga as a daily activity.

Bain, Marc. “As Yoga Rises in China, so Does Lululemon.” Quartz. N.p., 30 Mar. 2016. Web. 22 Oct. 2016.

This article talks about the posibility of Lululemon’s expansion into China and gives advice in entering a new market. Also the author discusses some challenges in entering the new market.

By OZY + PBSPredicted By OZY + TEDEugenious On OZYThe Week On OZYAbout OZYMeet The TeamSign Up for NewslettersContact. “Lululemon Stretches Profits With Asia Expansion - March 31, 2016.” OZY. N.p., n.d. Web. 22 Oct. 2016.

This article outlines the potential market in Asia and the trend for brands such as Lululemon to consider the Asian market.

In, By Or Used. “LULU Income Statement | Balance Sheet | Cash Flow | Lululemon Athletica Inc. Stock - Yahoo Finance.” LULU Income Statement | Balance Sheet | Cash Flow | Lululemon Athletica Inc. Stock - Yahoo Finance. N.p., n.d. Web. 22 Oct. 2016.

This article has an in-depth analysis of Lululemon financial data, including cash flow charts, balance sheet, and income statement.

Trends in Health and Wellness - China - May 2015.” Trends in Health and Wellness. N.p., n.d. Web. 23 Oct. 2016.

This article explores the change of Chinese consumer behavior into a healthy lifestyle, and also gives an analysis of the reasons that drive the changes.

“Chinese Consumers Turn to Health and Wellness Products as Living Standards Rise.” Chinese Consumers Turn to Health and Wellness Products as Living Standards Rise. N.p., n.d. Web. 23 Oct. 2016.

This article emphasizes the Chinese consumer’s expenditures on health and wellness products, providing analysis of the causes for this change.

T “What’s Driving the Chinese Consumer.” McKinsey & Company. N.p., n.d. Web. 23 Oct. 2016.

This article mainly talks about the reasons behind the changing consumer’s behavior, and gives data as part of its in-depth analysis. pricing_experts. “The Changing Chinese Consumer: “Doing It Their Way”” Pricing Solutions. N.p., n.d. Web. 23 Oct. 2016.

This article defines the lifestyle of the middle class in China, focusing on the changing lifestyle and the causes behind the change. here are also some websites that may helpful for collecting information for secondary research. http://www.lululemon.com.hk/ http://investor.lululemon.com/secfiling.cfm?filingid=1397187-15-16&cik= http://0-www.portal.euromonitor.com.library.scad.edu/portal/analysis/tab http://0-www.warc.com.library.scad.edu/Home.aspx http://blog.euromonitor.com/2015/09/top-5-emerging-markets-with-the-best-middle-class-potential.html

10.0 Appendix