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Lululemon's Reaction to Yoga Pants Mishap: Brilliant Marketing

Wall Street expectations can really push a small company's "internal capacities perhaps way too far that mistakes creep up," says Brian Sozzi, chief equities analyst for independent research firm, NBG, and a contributor for TheStreet's sister Web site RealMoney.com.

But this is not a story about lululemon's supply issues, it's about how the company's swift and transparent action towards the yoga pant sheerness problem was a marketing win, experts say.

Dr. Baldwin's tweet gets to the essence of what's going on here: that if a problem is communicated effectively, it can be a win for the business.


"A recall can be a costly headache for a company, but if it is handled well, it can also be an opportunity to enhance the company's credibility and reputation. It's critical to be transparent and responsive to your customers during challenging situations. That is how you build a trusted and respected brand in the long run. People tend to remember how you made a tough situation right rather than the tough situation itself," says Annie Xu, U.S. general manager of Alibaba.com, a global e-commerce platform.

"I think what they're doing is brilliant," says Bernhard Schroeder, the director of San Diego State University's Lavin Entrepreneurship Center. "It's a hell of an FAQ. Very well done on their part and consistent messaging - [the] customer is No. 1. Ninety days from now you're going to see the stock price up and maybe even revenue trending up."

"They picked up on this quickly," Schroeder says, adding that lululemon was faced with two choices - either to quietly pull the product or do it publicly, reinforce the brand, its message of quality and hope for a big public relations hit.

"And that's how it's going down in my opinion," he says. "You couldn't script a better marketing move."

"This product 'didn't meet our quality of standards for our brand and so we decided that we may take a short-term hit, but in the long run it will be even better for the brand'. It reinforces for existing customers and all new potential customers" that quality is paramount, Schroeder says. "The way they are addressing it is such a perfect crisis-management move."

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