Instructions
For this case study style assignment, you will review information about a given industry and produce a reasonably robust economic analysis from which you will respond to targeted questions. The target industry / market to be analyzed for this purpose is women’s yoga pants and other “athleisure” wear. To provide further focus, pay attention to the brand Lululemon which is referenced throughout, although you also need to analyze the market as a whole.
READ:
“Athleisure – The fastest growing retail sector in the world(Links to an external site.)” for a very general market overview
“The rise of women’s activewear(Links to an external site.)” for a more specific overview of the yoga pants segment
“Why Lululemon’s pants are so expensive(Links to an external site.)” for an overview of a high-price firm, Lululemon
“Brands that could be the next Lululemon(Links to an external site.)” for an overview of a number of competitors
“Here’s why Lululemon’s stock is up 80%(Links to an external site.)” for a report on Lululemon’s success pre-Covid
“Spotlight on Lululemon’s Pandemic-Proof Strategy(Links to an external site.)” for a report on Lululemon post-Covid
“Activewear Market Analysis Report(Links to an external site.)” for a high-level look at the current state of the industry
Question 1
Is the demand for yoga pants more inelastic or more elastic with respect to their price? How strongly does it display that characterization?
Provide specific evidence here from the industry briefs to support your response and explain how it displays inelastic or elastic demand.
Your response should be limited to a couple brief paragraphs at most. Do not just give definitions of terms; I know them. Explain cause and effect.
Question 2
Explain any demand &/or supply shifts that have occurred in the market (identity around 2-3 such shifts). Describe the source / cause of each shift.
Provide an analysis of what should have happened to price &/or quantity produced and sold. Answer whether this happened; if it hasn’t, explain why.
Your response should be concise, but be very precise in your language. Do not say “demand has increased” if it’s just that price has fallen so more people have bought.
Question 3
Is there evidence of any notable form of income elasticity for demand? Are there any significant cross-price elasticities (whether substitutes or complements)?
Explain how these elasticities would impact the market for yoga pants, and provide specific examples of any changes that have occurred that support that take.
Your response should be concise, but be very precise in your language. Do not say “demand depends on income” or “substitutes impact the market”; explain how and how much.
Question 4
Is the competition in this market better characterized as perfect competition or imperfect competition? How intense is price- vs non-price competition?
Give examples and evidence to support your response, and identify specifically any examples of firms succeeding because of their competitive position.
Your response should be concise, but be very precise in your language. Do not say “the market is very competitive”; explain the basis and causes of competition.
