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Case 22: Lululemon Athletica Inc.

At first, if to conduct the industry analysis, it is reasonable to implement Porter's Five Forces model framework to reveal insights on the Lululemon case.

1. Threats of New Entrants – MODERATE

The pressure of the new entrants to enter the market vary. The low amount of pressure from the new players in the industry that have little funding, recognizability, and management capabilities is contrasted by the apparel designers and considerable retailers, such as the Gap. Moreover, an array of competitors can also be intensified by the identification of the narrower specializations and new features.

The threat of substitute products – MODERATE

The crucial point is that the key players in the industry patented the design of clothes, but not the materials. The substitute products are shorts, pants, or similar clothing not created for athletic purposes. Therefore, the industry narrowly focuses on sportspeople, whereas ordinary clothes are to be perceived as the substitute products for the athletic wear industry.

The bargaining power of buyers – HIGH

The athletic wear industry presents a variety of options for buyers, meaning that the differentiation of the product is robust for most of the companies. Buyers in the industry are selective due to the demand of seeking quality over recognizability. Likewise, buyers are mostly well-educated and price-sensitive in the choice of the product, and hence the athletic wear industry presents a vast amount of options for the buyers.

The bargaining power of suppliers – HIGH

Almost all suppliers of Lululemon are located outside the geographical area of North America, which should be reviewed in aggregate with the numerous amount of suppliers focused on the retail business. To such an extent, the supplies of rubber and cotton are negotiable, the entire industry is presented with numerous options to make a deal with the suppliers.

The rivalry among existing competitors – HIGH

The rivalry within the athletic wear industry is massive because of the presence of Nike, Adidas, Under Armour, and VF Corp. The only plausible solution to maintain the strategic advantage is to differentiate the product from the rivalries alternatives, at the same time, focusing on the targeted marketing. Therefore, a particular aspect of the product differentiation is evident in each of the mentioned key players, especially considering Lululemon's concentration on the yoga apparel and running gear.

2. If considering the critical success factors of the industry, it would be reasonable to highlight the solid marketing campaigns of the targeted direction, measures for the differentiation of the product, and construction of a strong relationship with the customers. In some sense, the low cost to switch to the alternatives presented by the rivalries pose severe challenges to each and separate player, which highlights the necessity to focus on a single segment of the apparel that would satisfy the chosen target audience. Another factor that is directly related to the critical success in the industry is the superior customer interaction that correlates with the aspect of comfort and the representational image of the company. The last success factor to mention is the technological innovation, which is supposed to be the domain of economic growth and reformation of the supply chain management. The incorporation of these three success factors is crucial in the athletic wear industry, meaning that its implementation significantly boosts the strategic advantage and competitive power of Lululemon and other key players on the market.