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Yoga Inc.
Topics: Markets-Emerging MarketsHealth-MindfulnessCustomers-Customer SatisfactionGlobalization-Cross-Cultural and Cross-Border IssuesEntrepreneurship-General
Yoga Inc.
Topics: Markets-Emerging MarketsHealth-MindfulnessCustomers-Customer SatisfactionGlobalization-Cross-Cultural and Cross-Border IssuesEntrepreneurship-General
Yoga Inc.
Above: photo by Kevin Frayer/Getty Images
On a late summer day in Portsmouth, New Hampshire, in a large carpeted room with a colorful cloth tacked over a dropped fiberboard ceiling, Bob Vaccaro (MBA 1970), short white hair, eyes crinkled with smile lines, sits easily, legs folded beneath him.
The door to his studio, Yoga by Donation, is never locked. Students slide dollar bills or, occasionally, tens and twenties into a black safe on an unattended reception desk before slipping off their shoes and finding a spot on the floor of the one-room studio. If you can’t pay for a class, you sign up to vacuum, sweep, or dust. Five women and one man array their mats around a rose quartz sphere. “Dedicate your practice to a prayer in your life,” he tells them. “Ideally, one of personal transformation.”
It’s a traditional approach that stands in contrast to a modern reality: Yoga today is not a spiritual pursuit so much as it is a $16 billion global brand, with a number of HBS alumni involved in that transformation. Once limited to the devotees of a handful of swamis and gurus who introduced the practice to the West in waves from the turn of the 20th century through the 1960s, yoga now claims an estimated 36.7 million US practitioners purchasing classes, gear, and accessories—an increase of 80 percent in four years. It has also spawned a number of lucrative business models: Vancouver-based apparel company Lululemon Athletica expects to earn about $2.6 billion in revenue this year; studio chain YogaWorks went public in August, valued at about $40 million; and Wanderlust’s yoga-focused festivals have attracted major crowds and major sponsors.
But the bigger the business of yoga gets, the further away it moves from its roots. It poses the kind of existential crisis that might require meditation: Can yoga lose its spiritual focus and still be profitable?
Yoga first appeared in sacred Hindu texts as a means to broaden consciousness, calm the mind, even mystically inhabit the bodies of other beings. The current notion of yoga as poses, breathing, and meditation is around 150 years old—a blip for an entity that dates, some believe, to the third millennium BCE. Yoga was widely introduced in the United States in the 1950s and ’60s, as Indian practitioners emigrated to the country, and Americans traveled to the source to study with noted yogis. Although much of the practice’s original spiritual underpinnings were lost in translation, Americans who embraced yoga brought their own desires for self-discovery and community to the mat. Yoga was a decidedly counterculture activity; guru Swami Satchidananda, his billowing white beard a shock against his bright orange robes, opened Woodstock in 1969. “Let all our actions, and all our arts, express Yoga,” he told the crowd of some 400,000 people, before leading them in a resounding “om,” a resonant sound considered sacred in yoga texts. In later decades, as the flower children faded, yoga became the province of the health club alongside step aerobics.
The modern US yoga experience is defined as much by its pants as it is by its practices. And one of the biggest drivers of that redefinition is Lululemon. The chain’s 250 US stores—with more than 100 global locations—have established it as a leader in athleisure, a phenomenon it pretty much created. “From the foundation of yoga wear, we started a category that before us did not exist,” says Vivien Yeung (MBA 2001), Lululemon’s chief strategy officer.
Understanding the public consumption ritual around yoga offers market opportunities through classes, accessories, and amenities. (Bloomberg/Getty Images)
“Yoga is at the core of our identity and culture,” Yeung continues. “It has kept us grounded in who we are as a company. It influences our brand strategy, the product categories we go after, and the relationships and experiences we create in our communities.”
As Lululemon’s senior vice president of global community, Eric Petersen (AMP 175, 2008) spearheads efforts to connect with customers, promoters, and loyal fans—in Lululemon-speak, “guests, ambassadors, and influencers”—in Beijing, Montreal, London, Los Angeles, Sydney, and the other cities that make up the company’s global brand. Petersen, who joined the company in 2004 as head of marketing, says he’s never seen another business open its meetings with meditation, or offer free yoga classes to all its employees. Yeung adds that enabling staff “to live a life they love, creating a common purpose, and instilling fun at work” helps attract and retain employees.
“We believe the pillars of yoga are expressed in different ways for different people. The practice is so much more than what happens on the mat.”
Yeung, who helps set Lululemon’s long-term vision and market strategy, says that while principles of yoga have been at the core of the company’s brand and culture, it has only recently amplified that message externally with the launch of its first global brand advertising campaign called This Is Yoga.
The spots include zero yoga as a physical practice. Olympic gold medalist volleyballer Kerri Walsh Jennings, Australian pop artist CJ Hendry, Beijing drummer Shi “Atom” Lu, London rapper P Money, and American pro surfer Maddie Peterson, among others, show off their respective skills, juxtaposed with yoga-related words such as “breath,” “meditation,” “self-discipline,” and concepts such as “joy,” “trust,” “letting go,” and “nonviolence.” Yoga “off the mat,” as Yeung puts it.
By expanding the definition of yoga and “celebrating the unexpected ways that it empowers people around the globe to live a life of purpose,” Yeung says the campaign “recontextualizes how the world sees yoga culture.” “We believe the pillars of yoga are expressed in different ways for different people,” adds Petersen. “The practice is so much more than what happens on the mat.”
Rohit Deshpandé, the Sebastian S. Kresge Professor of Marketing and an expert in global branding, believes that Lululemon’s biggest accomplishment has been positioning itself as an upscale athletic leisure brand akin to Nike, rather than as the accoutrements of a spiritual Indian pursuit. “Yoga is a very small part of what they’re doing,” he says. “It’s cool to be seen wearing or carrying the Lululemon brand. It’s telling other people something about yourself.” And having a strong brand is especially important in this industry: “When you’ve got something like yoga in a very competitive marketplace with many different price points, including zero, the brand becomes absolutely critical.”
Besides, he observes, those seeking to make money from yoga need to weigh the pluses and minuses of that authenticity. Origin stories such as those used by Ben & Jerry’s and Peet’s Coffee have been crucial for brand success. Likewise, yoga is more authentic if, for example, you use Sanskrit names for the asanas, or poses. But others find what they hear as “Sanskrit mumbo jumbo” off-putting, Deshpandé says. At YogaWorks, former president and COO Jay DeCoons (MBA 2006) notes that the company encourages its instructors to stick to English and keep the spirituality to a minimum. “If you talk about a life philosophy, maybe that’s OK,” says DeCoons. “But I think that [yoga’s spiritual side] probably draws a little too close to religion for some people.”
For DeCoons, the draw to yoga was more physical. A former triathlete, he was invited by his investment firm’s partners to a hot yoga class. “I could not believe how I felt afterward,” he recalls. “That halo effect after a good sweat—it opened up my chest, and I got the entire therapeutic aspect of it.” DeCoons found that yoga also helped lengthen and restore his tight, overworked muscles, and it became part of his workout regimen. During his time at YogaWorks, he is credited with boosting the company’s market position and launching its online platform, as well as doubling the studio count—40-plus in seven cities—and annual sales. (DeCoons left YogaWorks in 2014 to head The Bar Method, an exercise studio with over 100 US locations.)
“When you’ve got something like yoga in a very competitive marketplace with many different price points, including zero, the brand becomes absolutely critical.”
DeCoons believes the physical aspects of yoga that he found so beneficial also drew others to practice yoga. “People were realizing that they needed to take care of their bodies more, and that they were more stressed,” he says. Opportunities to strengthen, lengthen, and stretch, coupled with the “mental break” of breath work, resonated with clients. It’s all part of a larger “integrated lifestyle” movement, encompassing nutrition and wellness, athleisure, and boutique fitness, he says. “It’s in vogue to work out.”
Then there’s Wanderlust, multiday festivals headlined by yoga instructors, musicians, speakers, and chefs, in locales known for natural beauty. “They are creating these experiences in an authentic way, so I think that’s definitely part of the future,” DeCoons says. “Even mainstream brands like Under Armour and Adidas want to be part of those experiential events, because they want to cater their products to support those lifestyles.” There’s an opportunity, he adds, for companies in industries peripheral to yoga and wellness to connect with a real brand that stands apart from other fitness experiences. “I know that’s happened already in other areas of fitness. I could see it happening more in yoga, for sure.”
Until recently Daphne Kwon (MBA 1996) was Wanderlust’s CFO, one of a team of almost 60 that produces a series of yoga- and music-based festivals and other events in 22 US and 23 international locations each year. Before joining Wanderlust last December, it struck her that she’d never worked in a place where would-be employees’ number one reason for applying was pure admiration for the brand—even if they’d never been to a Wanderlust event. The brand, she says, is synonymous with “finding out what’s important to you and whether your life is moving in the right direction. Being vulnerable. Being honest with yourself.”
Wanderlust retreats combine yoga, inspirational speakers, music, art, and food in a “celebration of mindful living” at venues around the world. (Melissa Gayle for Wanderlust Festival)
The Wanderlust mantra “find your true north” is “all about people feeling like they are able to focus on themselves, with the core being yoga,” explains Kwon, now president and COO of Betaworks Studios. “The spirituality of yoga is alive and well at our festivals.”
Corporate sponsors also want in, to get their brands in front of the primarily female attendees with the disposable income for travel, food, and lodging, on top of $100 to $500 entrance fees. Wanderlust works with potential sponsors to fashion spaces where attendees can relax, shop, or eat between sessions: “Sponsors don’t necessarily know how to design an experience for someone who’s having a very self-reflective moment,” Kwon says. “They depend on us to do that. They want to associate with the beautiful experience.”
According to its website, Wanderlust is built on “the pillars of mindful living,” of which yoga is one, along with the arts, personal spirituality, environmentalism, and “conscious consumerism.” Attendees tend to snap up equipment, accessories, and apparel sporting the Wanderlust logo, so “upping our retail game was important, because we wanted to make sure it was a positive experience for them,” Kwon says. Adidas, for one, has launched a yoga-specific activewear line co-branded with Wanderlust.
Wanderlust won’t partner with a company that doesn’t share its vision, she adds, or that might “diminish the hard work and trust that we’ve built with our community.” When exploring a new direction or partnering with a new sponsor, she says that “we’re all of a like mind: Is this going to help people find their true north?”
That focus on the consumer is nothing new, of course, but Deshpandé notes that understanding the public consumption ritual around yoga offers opportunities and points of differentiation, whether it’s through classes, accessories, or amenities. Then there’s the question of price points and market segments: “Finding the right consumer segment is the major issue,” he says, “rather than throwing your product into what you see as an undifferentiated market and saying, whoever wants it can come and get it.” For example, as baby boomers age it could be beneficial to think of health-related concerns for that age group and how yoga in particular can address those needs. Or maybe—as some YogaWorks studios have found—millennials prefer practicing yoga to hip hop music. Consumers will be drawn to, and pay for, those distinctions.
The same could be said for clients at Bob Vaccaro’s Yoga by Donation, even with its pay-as-you-wish approach. That model—more altruistic than capitalistic—sets it apart and draws a market segment that might not be so interested in wearing Lululemon’s Wunder Under Pants. As part of a pre-yoga, 20-year corporate career, Vaccaro created—and in 1990 was forced to sell—a multimillion-dollar health care business. That year, he started teaching yoga and treating clients with a hands-on therapeutic technique, and then in 2009 opened his own studio using the “standard business model,” he says, of clients paying for classes. But he increasingly heard people say they didn’t do yoga because they couldn’t afford it.
As fallout from the 2008 financial crisis worsened, Vaccaro bought out his partner, changed the studio’s name from Ocean Spirit Yoga to Yoga by Donation, and eliminated fees and memberships. “People came in droves,” he says. What’s more, the setup is simplicity itself: no bookkeepers, no passes, no paperwork. All teachers volunteer their time and choose what they teach. Once a week, a volunteer takes the donations, which manage to cover the $1,200 monthly rent, to the bank.
Ironically, Vaccaro has had other studios seek him out about emulating his business model. He’s even been approached about franchising Yoga by Donation. “Think big or go home,” a consultant told him, but Vaccaro politely declined. His current business model, such as it is, works just fine.
And the search for additional models continues. DeCoons sees boutique studios dedicated solely to mindfulness and meditation popping up in New York and Los Angeles, the arbiters of cool. “I think the mental piece [of the yoga industry] is just scratching the surface. There are opportunities that I don’t think a lot of the fitness studios have figured out yet,” he says.
No doubt the evolution of yoga as a market is a story that will continue to unfold in the years ahead—and as it does, the Lululemons, YogaWorks, Wanderlusts, and donation models such as Vaccaro’s can coexist and thrive, says Deshpandé, all proliferating into increasingly narrow segments of a seemingly limitless market. In the end, maybe that’s the real beauty of yoga: Everyone comes to it in search of their own peace.
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Sebastian S. Kresge Professor of Marketing, Emeritus
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