The report is about Lulu lemon Company, based in Canada planning to make an entry into the French market with its sports apparel products. The marketing objective of the company is to gain 70% of the market share for sports apparel by 2017 in France by $2 billion. The recommended strategies the report proposes to Lulu lemon Company include; market entry strategies, product strategies, distribution strategies, promotional strategies, and price strategies. The report also has a detailed marketing mix where the products, promotions, price and promotions that the company can apply is detailed. The expected impact of the company into the French market include increased awareness of their brand, increased sales, creation of distribution channels, proviso n of high-quality sports apparel. The report also analysed the situational analysis of France where it discussed the trade and economic situation, political situation, legal and regulatory situation, social and cultural forces and the situation concerning other variables in the environment. All these were discussed with their implications on the lulu lemons product marketing strategy
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This report focussed on company strategies, industry dynamics and the international marketing plan of lulu lemon. Lulu lemon is a Canadian based company that produces innovative and high-quality performance athletic apparel. Their product offerings to the market place the company place them in their market segment and niche and separate them from their competitors. The report examined Lulu lemon company and designed an international marketing plan that can be used in penetrating the France market. For increased profitability and growth.
France is a country located in Europe with a population of 65.3 million people by 2012, and a GDP of US $2580 billion in 2012 (Baumohl, 2005). The per capita GDP in 2012 was the US $ 40,690. The top five main industries in France according to Sonnet & OECD (2013) is an automotive, railway, aeronautics, chemicals, pharmaceuticals and machinery. The main imports into France include automobiles, petroleum and refined products, chemicals, aerospace and aeronautics, apparel, machines and equipment. The main sources of imports include germane, Italy, Belgium, Spain and the United Kingdom. Similarly, the main exports of France include spatial and aeronautics, automobiles, pharmaceuticals, plastics, chemicals, and machinery and equipment. The main destinations of their exported include Germany, China and Hong Kong, Belgium, United States and Italy
The French economy has recorded a slow growth rate and its prospects remain fragile and weak of Europe’s poor economic conditions and lack of competitiveness by France. In 2012, the average annual growth in GDP did not exceed 0.2%, and it continued remaining low in 2013. The proactive forecast favoured by the government is +0.8% while the consensus is +0.4 % (Dumouriez, 2014). Moreover, Beik (2009) noted that there has been a sustained increase in unemployment by 10% and this has limited household consumption. Similarly, France has honoured her European commitment of bringing down its public deficit in 2011 by 5.2% of the GDP, in 2012 by 4.5%, in 2013 by 3% and hopes to achieve it fully by 2017 (Baumohl, 2005).
With the stable economic growth and a high number of middle-class people in France, lulu lemon company will capitalise on them to make high sales. Moreover, the country has low inflations and is working to zero out their debt. This means that their economy will rise shortly and that is a potential business for lulu lemon company.
France as a country has an independent judiciary, in addition to the firmly established rule of law. Moreover, contract and property rights enforcement are secure. Intellectual property rights are highly respected according to international standards. Moreover, there are anti-corruption measures in place to ensure that there are government integrity and transparency (Dumouriez, 2014).
When this favourable political atmosphere, lulu lemon company believes it will conduct its business well in France. The rule of law shall prevail whenever there is a dispute and their patented products will be respected by the intellectual property rights. Moreover, with high government integrity, the company hopes will not be arm twisted to corrupt government officials bribe them
The start-up process of business in France is relatively straightforward. There is no required minimum capital. There is stagnation in the labour market ostensibly to protect the workers. Moreover, the rigid labour codes regulations appear to have hurt employment and competitiveness prospects (Sonnet & OECD, 2013).
When lulu lemon products will be introduced in the French markets, it is expected to be registered smoothly without any problems. This will make the business start business straight away
In France, citizens are very social and friendly people to other people in their country. Moreover, they have a culture of welcoming, assimilating and associating with non-French people to influence them to their way of life (Beik, 2009).
Lulu lemon company will operate well in France given the social and welcoming nature of the French people. Moreover, given that they embrace different products from different areas with their international traders. Lulu lemon will be influenced to design their products in a manner that satisfies the population
There is an income tax rate of up to 45% but the corporate tax rate has been reduced to 34.3%. Other taxes to business include value-added tax (Fund, 2008).
These taxes as much as are high, if they apply fairly to all companies in the industry, will cause an insignificant impact. However, if the taxes exceed the cost of production in Canada, the company will likely make losses
According to Oster (1999), the industry f performance apparel comprises of companies that design and sell footwear, clothing and accessories. The categories of products in the industry include luxury items to the basic ones. Apparel companies traditionally wholesale large quantities of their products to the retailers, who consequently mark the products and sell them for a profit to consume. However, for the past few years, the distinction is becoming unclear between the retailers and the wholesalers because most companies manufacturing the apparels now operate using both retailers and wholesalers. According to Porter (2010), apparel companies create divisions for retailing so that they possess total control over a product brand image and identity through merchandising and branding. Retail stores compared to wholesaling is much more profitable because of the elimination of the middlemen. However, Chevalier-Roignant & Trigeorgis (2011) stated that having the retailing stores increases the risks of companies having locations of physical stores and also managing their inventory to avoid being marked down.
Given that most consumers of sports apparel tend to look for performance apparel online, an internet offers an essential platform for the retails. Adoption of e-commerce by the retailers does not entail having physical stores with staffs working. However, the methodology applied by the retailers of apparel to determine their success or profits is year-to-year sales. Their success will be indicated by the reported operating margins and gross. According to Oster (1999), the product margins of business are influenced by factors such as promotions, markdowns and selling, general and administrative expenses. Also playing a major role in determining profitability is the product mix, as generally, accessories have a higher margin of profit because they are one size fits all (Porter, 2010).
Chevalier-Roignant & Trigeorgis (2011) stated that the industry of sports apparel is in the industry’s maturity phase. Therefore newcomers such as Lulu lemon are still in the growth phase and therefore are majorly focused on establishing and building their brand for recognition. The approach adopted by Lulu lemon has created a very lucrative niche for the company and they have stolen from the major industrial leaders of sports apparel.
Several factors affected the growth and size of the market of sports apparel. During the five years leading to 2013, DeDecker (2014) indicated that the global recession hurt the sports apparel industry. There was a fall in consumer spending on athletic and sports goods, and this led to a decrease in inventory in most retail stores. However, many consumers are increasingly becoming aware of the benefits of heath associated with healthy lifestyles and exercises. Because of the increasing consumer awareness, more people are making investments in athletic wear, which in 2013 boosted the revenue.
Another factor that affects the size and growth of the market is the volatile nature of the international market. Sportswear demand is driven largely by retail level trends. Perlack et al (1995) observed that the fluctuating preferences of the consumers between the sporting activities play a significant role in determining the industrial goods manufactured. The demand for athletic and sports products and goods have constantly remained due to minimal demographic shifts. However, Siegel (2014) argued that the demand in the next decade is expected to weaken because of the increase in the average age of the population. The argument and trend are based on the assumptions that participation in sports by the older populations are less likely. Moreover, there also exist several sportswear substitutes
For the market to grow and increase in size, the following factors are of great significance; strong brand name, the ability of a company to adopt new technology, quality control and inventory control
In sports and athletic apparel industry, the major competitors to lulu lemon company in the industry include Adidas AG/Reebok, puma and Nike. However, Carbasho & Greenwood Press (2010) observed that all these competitors of lulu lemon in the industry manufacture mostly the footwear. The global sports apparel was estimated to grow from 2012 to 2019 at a CAGR of 4% (n.a, 2012).
Nike Company, the major competitor which controls the largest part in the sports apparel industry develops, designs and markets high-quality equipment, apparel, footwear with their accessories. To get their products to their consumers, Peng, Chen & Narain (2007) pointed out that Nike Company sells their products to stores owned by the company, online through eCommerce, licenced operators globally and independent distributors. The supply chain of Nike is integrated vertically. During the recession period, Nike Company applied cost-cutting strategies and this significantly improved the company’s revenue resulting in increased profit margins. Currently, the company controls 47% of the market share globally (Carbasho & Greenwood Press, 2010).
For the past six decades, Adidas AG has been having a significant presence in the United States markets. They operate online stores, licenced retailers and also run the company-owned stores. The market share of Adidas in the sports apparel and footwear industry is growing continuously, and this reflects their strong brand name (Peng, Chen & Narain, 2007). N.a (2012) indicated that Reebok Company controls 16% of the market share and is also the second leading in the manufacture of footwear. In 2005, Reebok Company and Adidas AG merged forming the largest conglomerate in the sportswear industry. Consequently, the Adidas group changed from vertical integration brand to a multi-brand functional structure that accommodates the two brands (Carbasho & Greenwood Press, 2010). According to Peng, Chen & Narain (2007), both the Adidas group and reebok companies outsource production in countries that have cheap labour such as China. While the main focus of Adidas has been on distribution and marketing that is created to every buying habits of a country, the strategy of Adidas Reebok, on the other hand, is broad differentiation. Moreover, the main targets of Adidas are basketball and soccer players, whereas reebok focusses on fashion and fitness consumers (n.a, 2012).
Lulu lemon company has some strengths as well as weaknesses that increase of hinders its chances of entering new markets. The first strength of Lulu lemon Company is high annual revenue that the firms generate, in addition to their annual growth rate (CAGR). The two indicators according to Goldsworthy (2013) testify a company’s dynamism and its ability to increase its sales. Lulu lemon Company generates high profits annually which makes it strong to the company and is essential in penetrating international markets when a company has good financial muscles. Another strength of lulu lemon company is that it has several locations globally where the manufacture of its products gets distributed. Eisen, Schatzker & Bloomberg News (Firm) (2013) elaborated that the lulu Lemon Company products are distributed through organized corporate-owned stores and external retailers. The higher number of the company’s stores is an indication that lulu lemon has a wide geographic coverage and can reach to its customers. Another strength is sports sponsorship and the brand image of lulu lemon company. Brands that belong to the performance apparel industry in most instances convey a specific story for marketing to their customers either potential or actual. The brand image of lulu lemon company is related highly to sports sponsorship especially for yoga events and for the yoga teachers which the company sponsors.
As much as the company has several strengths, it has also some weaknesses that hamper its entry in international markets. To begin, Brennan (2013) stated that lulu lemon company lacks brand recognition. To its clients and the potential ones, lulu lemon remains yoga fans brand and also for the female consumers. This technically locks out its brand from being recognized in certain niches in the apparel industry. Fierce competition from competitors is also a great challenge to the company. Powerful companies in the apparel industry such as Nike and gap often attack the target market of lulu lemon hence threatening its growth in addition to exploring international markets. Another weakness of lulu lemon company is its difficulty in offering new products and reaching new markets. Expansion to new markets hinders its international marketing plans and diversification of the products.
Lulu Lemon has a rich history of its brand and has prospects. The sustainable competitive advantage of lulu lemon includes its brand image, reputation and culture of high-quality products. According to Malone, Fiske & Runnette (2013), this advantage was established by the first-mover position of their “Luon” fabric signature of the company. The uniqueness of the fabric enabled the company to set itself apart from the competition by charging premium prices. Furthermore, Lulu lemon Company has developed a large and loyal customer base that has quickly grown because of lack of competition apparel for yoga market. Therefore, lulu lemon is regarded as a lifestyle brand, and it does not use traditional advertising and marketing techniques. Rather, lulu lemon company partners with different social activities and running clubs to gain brand recognition. Lavrence & Lozanski (2014) pointed out that lulu lemon retail stores provides free yoga products up to $10,000 to the fitness instructors, yoga teachers and others to assist in marketing if their product lines. Additionally, the company also offers yoga classes in-store to build loyalty and trust amongst its consumers. Through this innovative marketing strategy, lulu lemon company can maintain an advantage over brands creating similar produces for lower or half prices
- Lulu lemon company has intensified his expansion strategies geographically by opening stores in North America in addition to other foreign markets such as Europe, and Australia. The geographical expansion of the company will increase its brand awareness globally
- Lulu lemon Company by diversifying their sources of revenue and targeting new markets and businesses aggressively, the company need to and has to impose brands amongst the young women and the men’s business in addition to adapting its products to other forms of sports and size of customers. The company is significantly missing on these sources and by exploring them, the company can have a sudden increase in growth
- Lulu lemon company need to increase brand loyalty and awareness. The company need to continue and even add extra effort in terms of innovation of its products t increase the value proposition of the customer and also eliminate their competitors in the market
- The company also need to focus more quality of their products. In instances where the company’s products in the market will have defects in their manufacture, it can be costly when they are recalled back. Therefore, for the company to move forward smoothly, it must majorly focus products quality to continue charging premium prices for its products. This will enable lulu lemon company to continue commanding their premium prices in the market in addition to reducing rivalry from their worthy competitors.
To gain 70% of the market share for sports apparel by 2017 in France by $2 billion
In identifying and describing the target market of lulu lemon in France, the essay will discuss the market entry strategy, product, promotional, price and distribution strategy to explore all facets of the target in France.
Market Entry Strategy
Lulu lemon company will apply the direct entry method as the entryway to the French market because lulu lemon company has broken already into the European markets successfully. Therefore, there is a higher likelihood that in the French market there will also be successful. The company will have full control over the selection of on sale merchandise and pricing, in addition to being able to alter easily the choices if they will be controlling their products themselves. Dorothy et al (2013) also stated that there is low competition for the sports apparel in France therefore lulu lemon company entry into the market will be easy as the consumers will be free to change.
The product strategy lulu lemon company will use on their direct export of its products to France will be effective. First of all, lulu lemon company will set up a stand-alone store in France. The second product strategy will be the psychological draw of the upscale brand and the lulu lemons image that will be expected to move the French consumers to spend more on their products that they might have not. Lulu lemon products are already successful globally and therefore definitely in France it will be successful. Lastly, just as it is in Canada, yoga is very popular and loved in France.
Place issues/distribution strategies
Geographically France is not challenging but is well-developed. Therefore, it will not be difficult to lulu lemon company to transport their goods from airports seaports to major urban centres and cities as ground transport is not more than a 200km from the seaport while driving, and 40 km from an airport. Moreover, roads in France are in good condition and no goods for lulu lemon company are fragile, therefore if they are packaged properly, transportation will be smooth. The lulu lemon store would be located in the central city centre in Paris which has the highest population of people in the whole of France. By placing the store centrally within the city centre in an affordable location, it will gain popularity faster trough curiosity and word of mouth.
The price strategy the company will apply is the pricing of the products high for optimum profit among the high-end consumers because of the minimal competition. Even though the popularity of yoga is high in France, there is little other opposition in the market that sells yoga apparel. Therefore, a famous brand with a high reputation such as lulu lemon definitely will become successful in France instantly. Hence, pricing and selling of their products highly will make consumers feel that lulu lemon products are not inferior
Product modification: lulu lemon company will translate English words that are printed on their t-shirts to French words and also on labels to make sure that their clients understand things such as clothing material, and how the attire can be washed
Shipping method: shipment by air is the best method for lulu lemons products because it is reliable and fast. As projected, there will be high demand for lulu lemons product and therefore transporting them on air will make them arrive on time
Insurance: just like any other business, the company will go for risk insurance since anything can go wrong during the process of shipping. Therefore, it is imperative to have a protective insurance plan to cushion the company when the goods get damaged or get lost
Lulu lemon will translate its English advertisement into French, and also add the option for the French language on their website. This will enable the French consumers to learn about lulu lemons products and be able to understand. Additionally, the company will continue encouraging the growing social media presence of lulu lemons such as on Facebook, Pinterest, Instagram, Foursquare and Tumblr. According to Jensen (2002), currently, everything is being done on the internet and is the platform where people share their opinions, interest and communicate.
The company also plans to hypermarket locally by tapping into communities’ interest and building events on them. Moreover, it will continue with the their “Ambassador Program” where the employees of the store will invite the local instructors of fitness to be lulu lemon ambassadors when they receive the lulu lemon brand merchandise to wear to their fitness centres in exchange of giving product feedback and spreading the word about lulu lemon to their students.
For a person who wants sportswear for exercising or for the gym, then lulu lemon sportswear provides best products for flexible and comfortable workout attire. Unlike other sportswear, lulu lemon sportswear is unique, stylistic, comfortable and has the best fabric
The product line of lulu lemon is the same locally in its home country of Canada and also internationally. The company sells sports and athletic apparel and its accessories for both men and women and is known widely for its figure-flattering styles. Moreover, lulu lemon uses fabrics of high quality including “luon,” its major fabric in addition to other patented fabrics (Goldsworthy, 2013). Moreover, Eisen, Schatzker, & Bloomberg News (Firm). (2013) stated that lulu lemon has fabrics for all-weather condition and activities that range from the thicker outerwear to the light, breathable fabrics. Recently, Brennan (2013) pointed out that the company has developed s more casual everyday look rather than athletic wear. Furthermore, all apparel from lulu lemon is stylistically designed with functions such as places for placing credit cards, money, activity monitors and iPod/mp3. Last year, lulu lemon introduced another line of products for children named “Iviva” that up to now is only sold in the United States and Canada.
According to Malone, Fiske & Runnette (2013), lulu lemon promotes physically a healthy atmosphere. When an individual enters into a lulu lemon store, they enter into a prime brand. Lavrence & Lozanski (2014) observed that water is offered in the stores, there are free classes for yoga, happy and young employees who are physically fit who seem to have a wellbeing focus to assist a client. This allows the clients to feel that by buying products from Lulu Lemon, they will be like the seller of the apparel who is dressed in total lulu lemon attire. According to Goldsworthy (2013), lulu lemon company advertises through fitness clubs and studios because those are the places where the majority of their target markets are found spending some of their time. Moreover, they have an online presence in social media platforms such as Facebook fan pages, YouTube channel, Twitter account, Instagram page and an apple app which assist their clients and consumers in finding yoga studios in their neighbourhood are which are close to them. These online social media platforms allow them to constantly monitor their conversations regarding their brands and what they stand for.
Lulu lemon goods prices are high on the sports apparel, which implies that the target market is the consumers of the upper and the middle class, who are willing to pay for the high prices. Dorothy et al (2013) stated that generally, a typical consumer of lulu lemon products will not be impacted greatly by economic cycle changes so much to the point where they stop purchasing products from lulu lemon. However, stores prices vary depending on their location. For instance, in Canada, the tourist spots tend to have higher product prices by an increase of 10%.
The products of lulu lemon are available in stores and online, which allows their clients to show how and when they are pleased. In overall, their stores are placed in the neighbourhood especially the middle class, and also in higher-end malls where their market or consumers has enough exercising time to frequent workout, or when it Is a high and the main priority activity, so people feel the need of purchasing the sportswear. Jensen (2002) asserted that this allows lulu lemon to apply their strategy of pricing at its best since their stores are placed in settings and neighbourhoods that can afford their products.
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