- Marketing
Case Study: LumaWear’s Viral Growth Dilemma
Case Overview
In February 2026, the executive team at fictional UK-based fashion-tech startup LumaWear gathered in Manchester to discuss a problem many early-stage brands would envy: demand was growing too quickly.
Founded in 2023, LumaWear sold sustainable “smart casual” clothing aimed at Gen Z and younger millennial professionals. The company’s core proposition combined minimalist fashion with embedded NFC-enabled product tags that allowed customers to authenticate garments, track sustainability data, and access digital styling content through an app.
The brand had grown rapidly through TikTok, Instagram Reels, and influencer collaborations. Revenue rose from £1.2 million in 2024 to £8.4 million in 2025. However, despite impressive sales growth, profitability remained elusive.
The company’s investors expected a clear path toward sustainable customer acquisition and stronger brand positioning. The management team faced a critical strategic question:
Should LumaWear continue prioritising viral digital growth, or shift toward a more premium and sustainable long-term brand strategy?
The case places students in the role of Maya Rahman, LumaWear’s Chief Marketing Officer, who must present a 12-month marketing strategy to the board within two weeks.
The case method is widely used in undergraduate and graduate business education to help students analyse ambiguous managerial decisions and develop judgement under uncertainty.
Company Background
LumaWear was founded by three graduates from UK universities:
• Maya Rahman — marketing and consumer psychology
• Ethan Cole — software engineering
• Daniel Mercer — supply chain management
The founders identified an opportunity within the growing sustainable fashion market. Consumers increasingly demanded:
• ethical sourcing
• transparency
• personalised shopping experiences
• digital integration
The founders believed traditional fashion retailers were slow to adapt to changing digital behaviours among younger consumers.
LumaWear launched initially as a direct-to-consumer (DTC) online retailer with:
• limited product runs
• social-first marketing
• influencer-led campaigns
• rapid design cycles
By 2025, the company employed 62 staff and distributed products across the UK and Ireland.
Market Context
The UK apparel market remained highly competitive in 2026. Fast-fashion giants continued to dominate volume sales, while premium sustainable brands competed on ethics, quality, and storytelling.
Several industry trends shaped the market:
Trend Impact on LumaWear
Growth of social commerce Increased online conversion rates
Influencer fatigue Declining trust in paid promotions
Sustainability awareness Higher consumer scrutiny
Rising digital advertising costs Reduced marketing efficiency
AI-driven personalisation Increased customer expectations
LumaWear’s success had largely depended on short-form video content. Several campaigns exceeded 10 million views on TikTok during 2025.
However, recent performance indicators suggested problems emerging beneath the surface.
Marketing Performance Data
Exhibit 1: Selected Metrics
Metric 2024 2025
Revenue £1.2m £8.4m
Marketing Spend £220k £2.1m
Customer Acquisition Cost (CAC) £18 £49
Repeat Purchase Rate 41% 24%
Average Order Value £72 £61
Instagram Followers 84k 610k
TikTok Followers 120k 1.9m
Emerging Problems
During a January 2026 leadership meeting, Maya highlighted three concerns:
1. Rising Customer Acquisition Costs
Paid social advertising costs had increased sharply.
The marketing team relied heavily on:
• TikTok ads
• influencer sponsorships
• affiliate discount codes
The company’s finance director warned that customer acquisition costs were becoming unsustainable.
2. Weak Customer Loyalty
Although sales volumes increased, repeat purchases declined significantly.
Internal research suggested customers viewed LumaWear as:
• trendy
• entertaining
• affordable
But not necessarily:
• premium
• trustworthy
• distinctive
One survey respondent commented:
“I like the videos more than the clothes.”
3. Brand Identity Confusion
The company’s marketing messages had become inconsistent.
Some campaigns focused on:
• sustainability
• ethical sourcing
• craftsmanship
Others emphasised:
• humour
• viral trends
• low prices
The board questioned whether LumaWear could simultaneously occupy:
• a premium sustainable position
• and a mass-market viral identity
Strategic Options
Maya identified three potential strategies.
Option A: Double Down on Viral Growth
This strategy would:
• increase influencer partnerships
• expand TikTok advertising
• launch weekly trend-driven campaigns
• prioritise rapid customer acquisition
Advantages
• Maintains momentum
• Maximises visibility
• Supports short-term sales growth
Risks
• Weak long-term differentiation
• High advertising dependency
• Brand dilution
Option B: Reposition as a Premium Sustainable Brand
This strategy would:
• reduce influencer dependence
• emphasise craftsmanship and sustainability
• raise prices
• launch long-form storytelling campaigns
Advantages
• Stronger customer loyalty
• Higher margins
• Clearer positioning
Risks
• Slower growth
• Potential loss of younger consumers
• Reduced social media visibility
Option C: Hybrid Strategy
This strategy would:
• maintain selective viral campaigns
• build loyalty through memberships and community
• segment audiences more carefully
• develop a stronger CRM strategy
Advantages
• Balanced growth
• Greater customer retention
• Improved data collection
Risks
• Organisational complexity
• Unclear messaging
• Execution challenges
Internal Debate
The executive team disagreed sharply.
Finance Director
“We are buying customers instead of building a brand.”
Social Media Manager
“If we stop being culturally relevant, we disappear.”
Operations Director
“Demand spikes from viral campaigns create supply chain chaos.”
CEO Ethan Cole
“We need growth, but growth without loyalty is dangerous.”
Additional Data
Exhibit 2: Marketing Channel ROI (2025)
Channel ROI
TikTok Ads 1.3x
Instagram Influencers 1.5x
Email Marketing 4.8x
Loyalty Programme Pilot 5.2x
Search Advertising 2.4x
Exhibit 3: Customer Segments
Segment Percentage of Customers Characteristics
Trend Followers 46% Influenced by creators and social trends
Ethical Buyers 28% Motivated by sustainability
Digital Enthusiasts 16% Interested in NFC technology
Style Loyalists 10% Repeat purchasers with high lifetime value
Decision Point
Maya must present her recommendation to the board.
Her proposal must address:
1. Brand positioning
2. Marketing budget allocation
3. Customer retention strategy
4. Long-term competitive advantage
5. Sustainable profitability
The board expects:
• a clear strategic direction
• financial justification
• implementation priorities
• measurable KPIs
Maya has one final question before finalising her presentation:
What type of company should LumaWear become?
Discussion Questions
1. What are the root causes of LumaWear’s marketing challenges?
2. Which strategic option should Maya recommend?
3. How should LumaWear position itself in the market?
4. What role should influencers play in the future strategy?
5. How can the company improve customer loyalty?
6. Should LumaWear prioritise profitability or growth?
7. Which KPIs should management monitor most closely?
8. How could CRM and data analytics support the strategy?
9. What are the risks of relying heavily on social media platforms?
10. If you were the CEO, what would your 12-month marketing plan include?
Teaching Note (Instructor Summary)
Learning Objectives
Students should be able to:
• analyse marketing strategy under uncertainty
• evaluate customer acquisition vs retention trade-offs
• apply segmentation and positioning concepts
• interpret marketing metrics
• assess digital marketing effectiveness
• develop strategic recommendations
Suggested Frameworks
Students may apply:
• SWOT Analysis
• STP (Segmentation, Targeting, Positioning)
• AIDA Model
• Customer Lifetime Value (CLV)
• Brand Equity Models
2. Management and Leadership
Case Study: Northstar HealthTech and the Leadership Transition Crisis
Case Overview
In April 2026, employees at fictional UK healthcare technology firm Northstar HealthTech were waiting for an announcement that many believed would determine the company’s future.
For nearly a decade, founder and CEO Jonathan Hale had led Northstar from a small university spinout into one of the UK’s fastest-growing healthcare software providers. The company specialised in AI-supported patient scheduling systems used by NHS trusts and private healthcare providers.
But after months of internal tension, rising employee turnover, and declining morale, the board decided leadership changes were necessary.
The immediate challenge was not financial performance. Revenue had grown consistently, and the company remained profitable. Instead, Northstar faced a deeper organisational issue:
Could a high-growth business built around a charismatic founder successfully transition to a more collaborative leadership model without losing performance?
Students are placed in the role of Amelia Grant, the newly appointed Chief Operating Officer, who has been tasked with advising the board on:
• leadership structure
• organisational culture
• management systems
• employee engagement
• long-term strategic stability
The case explores tensions between entrepreneurial leadership and professional management in rapidly scaling organisations.
Company Background
Northstar HealthTech was founded in 2017 in Leeds, England.
The company developed scheduling software designed to reduce patient waiting times and improve resource allocation within healthcare systems.
By 2026, Northstar employed:
• 480 staff
• across three UK offices
• with clients in:
• England
• Scotland
• Ireland
• Scandinavia
Growth Timeline
Year Milestone
2017 Company founded
2019 First NHS regional contract
2021 £12m venture capital investment
2023 Expansion into Europe
2025 Revenue exceeded £85m
2026 Leadership restructuring discussions begin
The Founder’s Leadership Style
Jonathan Hale was widely respected for his intelligence, ambition, and ability to inspire investors and clients.
Former employees often described him as:
• visionary
• demanding
• charismatic
• unpredictable
The company’s culture reflected Hale’s personality:
• rapid decision-making
• long working hours
• aggressive targets
• minimal hierarchy
• constant urgency
For years, this style appeared highly effective.
However, as the company grew larger and more complex, cracks began to appear.
Warning Signs
Employee Turnover
During 2025, employee turnover increased sharply.
Exhibit 1: Employee Turnover Rates
Department 2023 2025
Software Engineering 11% 29%
Sales 14% 33%
Customer Support 18% 41%
Senior Management 8% 26%
Exit interviews repeatedly referenced:
• burnout
• unclear priorities
• inconsistent communication
• fear of making mistakes
One departing manager commented:
“Everything depended on Jonathan. Decisions changed daily depending on his mood.”
Organisational Challenges
As Northstar expanded internationally, operational complexity increased significantly.
Managers reported problems including:
• duplicated work
• conflicting priorities
• weak delegation
• unclear accountability
• excessive executive intervention
Middle managers struggled to make decisions independently because major decisions frequently required CEO approval.
The Leadership Team Divide
The executive team became divided into two broad camps.
Group A: Founder Loyalists
This group believed Northstar’s success depended on Hale’s:
• intensity
• speed
• entrepreneurial instincts
They argued that:
• bureaucracy would reduce innovation
• slower decisions would weaken competitiveness
• the company needed “founder energy”
One executive stated:
“You cannot build a disruptive company using committee-style leadership.”
Group B: Organisational Reformers
This group believed the company had outgrown founder-centric leadership.
They argued Northstar needed:
• formal management systems
• stronger delegation
• greater employee empowerment
• clearer organisational structures
Amelia Grant increasingly supported this position.
She warned:
“The company is scaling faster than its leadership systems.”
Employee Survey Results
In January 2026, HR conducted an internal employee engagement survey.
Exhibit 2: Employee Engagement Results
Question Positive Response
“I understand company priorities.” 42%
“Senior leadership communicates effectively.” 31%
“I feel psychologically safe sharing concerns.” 28%
“I trust executive decision-making.” 37%
“I see myself at Northstar in two years.” 34%
Leadership Crisis
The situation escalated when three senior engineering leaders resigned within six weeks.
At the same time:
• product delays increased
• customer complaints rose
• cross-functional conflict intensified
The board commissioned an external consultancy review.
The report concluded:
“Northstar exhibits symptoms of founder dependency, leadership concentration, and cultural instability associated with rapid scaling environments.”
The board now faced difficult questions:
• Should Jonathan Hale remain CEO?
• Should operational leadership be separated from visionary leadership?
• Could culture change without damaging performance?
Strategic Options
Amelia identified three possible approaches.
Option A: Maintain Founder-Centric Leadership
Jonathan Hale remains CEO with limited structural changes.
Advantages
• Preserves entrepreneurial culture
• Maintains investor confidence
• Enables rapid decision-making
Risks
• Continued employee turnover
• Leadership bottlenecks
• Cultural deterioration
Option B: Transition to Professionalised Management
Introduce:
• stronger hierarchy
• formal performance systems
• delegated authority
• operational accountability
Potentially appoint a new CEO within 12 months.
Advantages
• Greater organisational stability
• Improved employee retention
• Stronger scalability
Risks
• Slower innovation
• Cultural resistance
• Potential founder conflict
Option C: Shared Leadership Model
Retain Jonathan Hale as:
• Executive Chair or Chief Vision Officer
Appoint a new operational CEO focused on:
• execution
• management systems
• culture
• organisational effectiveness
Advantages
• Balances innovation and structure
• Reduces founder dependency
• Supports leadership continuity
Risks
• Power struggles
• Role ambiguity
• Confused accountability
Additional Information
Exhibit 3: Internal Productivity Indicators
Indicator 2023 2025
Average Product Release Delay 2 weeks 7 weeks
Average Weekly Meeting Hours 9 17
Voluntary Overtime Hours High Extremely High
Customer Escalations 14 61
Exhibit 4: Organisational Structure Concerns
Managers identified:
• overlapping responsibilities
• unclear reporting lines
• inconsistent performance evaluation
• insufficient leadership development
Only 22% of managers reported receiving formal leadership training.
The Decision
Amelia Grant must prepare a recommendation for the board.
Her proposal must address:
1. Leadership structure
2. Organisational culture
3. Employee engagement
4. Management systems
5. Long-term scalability
The board expects:
• evidence-based analysis
• implementation priorities
• risk assessment
• measurable organisational outcomes
Amelia’s final concern remains unresolved:
Can entrepreneurial leadership evolve without destroying the culture that created success?
Discussion Questions
1. What leadership problems are most damaging Northstar?
2. How does founder dependency affect organisational performance?
3. Which leadership theory best explains Jonathan Hale’s style?
4. Should Northstar prioritise innovation or organisational stability?
5. What are the advantages and disadvantages of charismatic leadership?
6. How could Northstar improve employee engagement?
7. What role should middle managers play in scaling organisations?
8. Which strategic option should the board choose?
9. How can leadership transitions be managed effectively?
10. If you were Amelia Grant, what would your action plan include?
Teaching Note (Instructor Summary)
Learning Objectives
Students should be able to:
• evaluate leadership styles
• analyse organisational culture
• assess management structures
• examine scaling challenges
• apply motivation and leadership theories
• recommend organisational change strategies
Suggested Theoretical Frameworks
Students may apply:
• Transformational Leadership Theory
• Transactional Leadership Theory
• Situational Leadership
• McGregor’s Theory X and Theory Y
• Herzberg’s Motivation Theory
• Kotter’s Change Management Model
• Mintzberg’s Organisational Structures
• Tuckman’s Team Development Model
Key Themes
• Founder leadership
• Organisational scaling
• Employee engagement
• Leadership transition
• Corporate culture
• Delegation and empowerment
• Strategic management
Suggested Classroom Structure
Activity Time
Individual analysis 25 mins
Group discussion 30 mins
Leadership debate 35 mins
Instructor debrief 20 mins
Instructor Insight
The case is intentionally ambiguous. There is no single correct solution.
Students should recognise that:
• entrepreneurial leadership may drive early growth
• scaling organisations require different management capabilities
• culture and structure must evolve together
• leadership effectiveness depends on organisational context
The case-study method is designed to develop managerial judgement by confronting students with realistic organisational complexity and competing priorities. (hbs.edu)
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