Kellogg on Branding in a Hyper-Connected World

Introduction: The Power and Challenge of Branding

Tim Calkins

If you want to understand the power of brands, consider Lululemon. This Canadian retailer sells fitness apparel and is best known for its yoga clothing. While it sells to both men and women, the brand particularly resonates with women. Lululemon sells good clothing; their fitness leggings perform and fit well. The items hold up after repeated use. Still, the clothing isn’t completely unique. Many other retailers make similar products for use in similar settings.

Despite this, Lululemon is a remarkable business success. Revenue in fiscal year 2018 was more than $2.6 billion, with pre-tax profit of $460 million. In mid-2018, the company’s market capitalization was well over $17 billion.

Lululemon does well because people are willing to pay exceptionally high prices for their products. On a recent visit to a Lululemon in Chicago, I found that leggings were selling for $98. I found a similar pair of pants at Target for $24.99.

So why are people willing to pay such a premium for Lululemon? Because of the brand. Lululemon is a special brand, one that embraces the ideas of wellness and spirituality. On social media, Lulu encourages people to live a life of balance and caring. Walking around town with a Lululemon bag makes a statement about who you are and what you believe. Buying a pair of leggings at Lululemon is completely different from buying essentially the same item at Target.

At Lululemon, you are surrounded by yoga ...