lululemon, the popular athleisure company is mulling over offloading its exercise equipment division, Mirror, after less than three years of acquisition. This insight explores brand integration, discusses the lululemon and Mirror integration, and what brands can do to ensure partnerships yield sustainable success.
Table of Contents
Introduction – Brand Integration
Brand integration is not an easy undertaking. Even when two brands come together through shared business vision, culture, technologies, and customer experience philosophies, the result is not always the rosy picture executives initially imagined.
What Is Brand Integration?
Brand integration starts when two or more internal or external brands merge through three types of tie-ups:
1. Partnership – where two brands are separately owned but working together to provide each other’s customers with more products, convenience, or better pricing (e.g., Air Canada and Emirates negotiated a code-share agreement to provide each airline’s passengers with more travel destination options in North America and the Middle East purchased under one itinerary/ticket. They also partnered on loyalty program benefit reciprocation and passenger management in some locations).
2. Acquisition – where one brand buys another. They could be competitors or have product alignment (e.g., lululemon purchased the at-home exercise equipment brand, Mirror, for US$500 million at the height of the pandemic in 2021 – more about their brand integration later).
3. Alliance – similar to partnerships, an alliance involves multiple brands working together under one umbrella on branding, process, or technologies while maintaining their own brand identity (e.g., Since 1997, locals and tourists alike use the Octopus card to pay for anything from transit rides, a bottle of soda, or a pair of sneakers).
Some common integrations include shared:
– Technologies
– Product/service alignments
– Employees
– Customer data (e.g., loyalty/reward programs)
– Customer engagement platforms
– Revenue generation
The form of integration takes into consideration on:
– How the partnership, acquisition, or alliance is structured
– What is the revenue generation and distribution agreement
– How will data be collected, used, and managed
What Are The Benefits Of Brand Integration?
Brand integration can have many benefits:
– Reduced research and development costs over product and service innovation
– Better alignment between products allow for enhanced customer experience
– Reduced overall operational costs can improve profit margins
– Better capture of performance data
– Improved understanding of customer expectations and needs through an expanded timeline
Case Study – lululemon and Mirror
lululemon is an athleisure brand that strives for a healthy lifestyle through movements. It acquired exercise equipment and fitness software company, Mirror, for US$500 million in June 2020 in hopes to capture consumer at-home workout needs during the early point of the pandemic.
While many lululemon operated markets had physical access restrictions, at-home workouts were booming with companies like Peleton unable to meet market demands. It made sense on paper for these two companies to join as one.
If you have not heard of Mirror, it has a fitness product renamed lululemon Mirror Studio featuring hardware with a big 43″ high definition display embedded in a mirror that costs from US$995 upwards. With the hardware in place, users can perform up to 10,000 live or preset workouts at home with an additional lululemon studio monthly membership of US$39.
This acquisition offered many benefits. lululemon customers who cannot go to their local gyms can use the Mirror Studio wearing their favorite branded workout gear. Former Mirror customers can now obtain lululemon benefits from discounts to in-store yoga class access, and community participation.
Brand integration included showcasing the equipment renamed lululemon Studio at physical store locations, on its social media channels, and its website.
Interestingly, the lululemon Studio was relegated to its own YouTube channel (lululemon Studio) serving 1k subscribers and having an average view count of 2.95k over 9 videos as of April 2023. This is significantly less than the lululemon main YouTube channel which has 283k+ subscribers with an average view count of 203k over 215 videos.
Given awareness plays an important role in building consumer habits with new products, perhaps it would have been more beneficial for the athleisure brand to fold this product into the main channel.
Unfortunately, as pandemic restrictions eased, lululemon’s core customers decided they would be happier wearing branded apparel outside. The at-home exercise equipment demand peaked and cratered quickly as 2022 began. The hardware demand never recovered even after lululemon reduced the equipment price permanently.
As hardware sales disappoint and investment to innovate the product is high, the brand is looking to offload the brand and focus in-application subscription model as of April 2023.
“As previously announced, we are shifting the focus of lululemon Studio from a hardware-centric offering to one that is also focused on digital app-based services going forward,” a lululemon spokesperson said. “This work is underway, and our strategy will enable us to create long-term value and build a larger community of guests with a deeper connection to lululemon.”
The brand has also written off US$443 million associated with the acquisition during the last quarter.
How Do You Achieve Brand Integration?
While product and service alignment can yield positive results, it plays one part in brand integration. While lululemon and Mirror may have suffered from rapidly shifting market conditions, brands can do more to reduce market risks. Here are some examples:
– Instead of an all-out acquisition, brands can form partnerships to build customer familiarity and evaluate prospects. This will reduce costs to complete a full brand integration and allow for retraction should marketability is downgraded.
– Conducting strategic direction exercises in advance allows brands to fully understand stakeholder impacts in short, medium, and longer-term timeframes.
– Integrating new products may require redesigning customer experiences. This may include customer engagement via different omnichannel, educating customers on how new products can enrich their lives, and building extensions on how one product leads to another.
– Cross-product teams should monitor changing market conditions and lay out plans to modify customer journeys, as required.
– Employees should be trained on building values across the new products and communicating customer feedback and inquiries. This improves the speed of product changes (e.g., pricing and experience delivery).
Final Words
Brand integration can be achieved on many fronts (from technology and loyalty programs). Product alignment on paper may not always be enough to justify full brand integration.
It is implicit that brands work together in advance to map out how customer experiences would be impacted by new product or service introductions. Listening to feedback from customers and employees and monitoring real-time performance data is key to making quick strategic changes.
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