Lululemon Case Study Solution

Case Study #3 Lululemon is the premium provider of yoga clothing. The price of their clothing is atop the market yet the rarely offer discounts. They offer clothing for both male and female and everything related to yoga. Despite their high prices, their brand has become a symbol for status and financial prosperity. For this reason, their sales have increased “60 percent to a whopping $16 billion” in the last four years. Even though yoga started as a practice to avoid self-indulgence, their extremely loyal customer base is more than happy to buy anything and everything that Lululemon has to offer. Relative to customer value, customers are willing to pay premium prices for Lululemon’s products because they are convinced that “Lululemon’s products fit better, feel nicer, last longer, and are more flattering than any competing goods.” While loyalists of each brand of yoga apparel may hold similar or different opinions, Lululemon’s customer’s convictions on the quality of Lululemon cause them not to think twice about spending the extra money. Lululemon’s refusal to give discounts may also play a role. Lululemon has not cheapened its brand by sticking to its premium prices and

At a lower price, Lululemon products would have targeted the market that wants quality apparel at an affordable price. If executed properly, this market could potentially be equally as profitable because there are many people that cannot afford or do not want to spend $98 on pants. Even for those loyalists that may own one or two Lululemon products, a lower price would mean that they could now buy several Lululemon products. The real difference is in the relationship between profit margin and quantity. As of now, Lululemon successfully sells a lower quantity but at a higher profit margin. To do it successfully the other way, they would have to sell a higher quantity at a lower profit