Case Study #1
Under Armour – Challenging Nike in Sports Apparel
Problem Statement
Under Armour is a sport performance apparel brand that is looking to move ahead of its competition and branch out into different sectors of the sporting goods industry. Kevin Plank and his company’s problem is that their footwear only makes up for about 15% of the firms revenue and they only generate about 6% of their revenue in international sales. In order to compete with the top brands in the industry, Under Armour must find a way to raise the revenues on its footwear and enter into the global market.
SWOT Analysis Strengths * Brand Equity * High Profit to Earnings Ratio * Collegiate and Professional Sponsorships * Customer Loyalty –
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When it comes to these sales, there is not much risk for Under Armour. Because of their strong brand recognition and loyal customers, they can make changes when needed. The second buyers are wholesalers. Dick’s Sporting Goods is an example of a wholesaler that buys from Under Armour. In this instance, the wholesaler has some leverage over Under Armour. Wholesale revenue for the firm accounted for about 68% of its total. Dick’s Sporting Goods made up 10% of that number. These wholesalers could move away from Under Armour’s products and place competitors’ products in higher regards in their stores. 3) Bargaining Power of Suppliers Under Armour’s products are manufactured by 27 different manufacturers across 14 different countries. Asia makes up the largest percent at around 55%, South/Central America is next covering about 20% of the manufacturing, and lately the Middle East has covered around 18%. Since Under Armour has such a spread manufacturing group, the bargaining power is relatively low for suppliers. This is favorable for Under Armour in the future and should keep them generating revenue from their current manufacturers. 4) Threat of New Entrants As stated previously, Under Armour does not currently have any patents on its fabrics or products. This opens doors to other sports apparel companies looking to enter into the market. Although it would take a
Under Armour’s rapid rise in the sports apparel industry under its founder and CEO Kevin Plank has surprised many. Plank has turned a company that he started in his grandmother’s basement into a powerful opposing force to Nike. The company’s competitive advantage comes through its focus on performance, and its products have been well received by athletes. The company currently enjoys a strong position as professional athletes and movie and video game creators clamor for its products.
Competitors in the industry can wreak havoc on the bottom line for a company. With rivals, a price competition usually ensues, which benefits the customers but hurts the competing businesses that share a common strategy. In reviewing rival sellers, many competitors exist within the sports apparel and footwear industry, but most of them are unable to compete with the industry giants, Nike and Adidas. They are well seated in the industry and their sales reveal this ultimate strength, however, Under Armour is putting pressure on these mammoths. In 2015, global sales of sports clothing and footwear equated to $250 billion, of which Nike grabbed $30.6 billion, Adidas held in its grasp $18.8 billion and Under Armour had a much smaller piece of the pie, at $3.9 billion globally. In reviewing these numbers, it looks like Under Armour is really subpar to the industry giants, but this is not exactly the case. Under Armour in the past couple of
a. Under Armour’s approach towards innovation is very unique, they think and plan out their projects thoroughly in order to create a one of a kind product that could be appealing to their consumers. The company has been extremely progressive throughout the years in order to stay ahead of the other competitive companies in their targeted industry. By constantly updating and coming up with different product lines, such as compression shirts and cleats, Under Armour is able to compete with other top athletic wear company’s in their market. If
Under Armour’s business strategy towards market segmentation is broken down into three different basis; Age, Gender, Uses. The first major market segmentation is by age, different age groups demand different products and Under Armour has produced certain merchandise to appeal to each generation. The second is Gender, both male and female respectively make up roughly 50% of the market equally.To appeal to females UA produces apparel in brighter colo, as a fashion forward athletic wear. While for males they they cater toward masculine vibe of tight fitting and resistant to wear and tear. Lastly, UA segments by the range of uses for their products.
The also place a big emphasizes on the Under Armour logo and pushed for brand recognition. Under Armour became the official uniform sponsor for many colleges and sport teams. Under Armour’s strategy was to design and make varies styles of sports apparel with their moisture-wicking fabrics to satisfy the needs of athletes of all levels and all sports. Their growth strategy was to continue to expand on the products they offered their consumers. They wanted to create more products that encompassed several sports and activities. By doing this they would be targeting additional consumers with their new performance products. Part of the growth strategy was to expand sales in foreign countries, become a global competitor in sports apparel and strengthening the appeal of their products and brand
Under Armour’s (UA) current CEO Kevin Kant founded the company in 1996, which has witnessed the company grow in recent years to become a key player in the sporting gear and apparel industry. UA focuses its products and marketing efforts towards the youth, men, and women. The amount of resources that are allocated to each group of customers differs in that initially, UA primary source of revenue was from men even if youth and women products were also produced and sold. The specificity of UA’s products and their sporting activities selectivity can be attributed to UA’s limited global market share in the sporting gear and apparel industry. The company’s mission statement is inspiring, but in order to gain competitive advantages against larger
Most of Under Armour's sales were in North America they have reached 90 percent, even the international sales were growing by retailers. The company growth strategy are continuing broaden the company's product, increasing its breakthrough of the market for athletic footwear, expand their sales on foreign countries and growing global awareness.
Under Armour is continually improving their apparel line and broadening there market. The company has been growing at a substantial rate, 30.5% annually over a 5-year period, largely due to the ambition of Kevin Plank, founder, and also to heavy marketing and promotions. Plank attributes the success of the company to brand recognition and the ability to market to all consumers. Under Armour makes “head-to-toe” apparel for anyone during any season. It has pushed its image into as many stores as it can,
When deciding between us and our competitors, when choosing which performance apparel producer you want to invest into, we know the marketplace for performance apparel, footwear and accessories is highly competitive and includes many new competitors as well as increased completion from established companies expanding their production and marketing of performance products (pg. 6, 10k). We believe we have been successful in competing with others for limited retailer floor space because of the relationships we have developed as a direct result of the strong sales of our products. Under Armour is the official sponsor of the National Football League Combine. They are also the official footwear supplier of Major League Baseball (5 Things You Didn’t
Under Armour provides sports clothing, casual apparel and footwear. It faces intense competition from Nike, Adidas, and Puma.
Under Armour is in the Textile- Apparel Clothing industry, in the consumer goods sector. The market has been driven by economic recovery, new product offerings and a
Consistency tends to be the best assets that Under Armour has to their advantage. According to Plank, he states that the success of a business, "starts with a good product," and he continued to say that after you have a good product, "use front-end hustle with back-end muscle." Due to this consistent product that Under Armour produces, it has obtained a heavy customer loyalty. Sales and revenue speak for themselves. In 1996, Under Armour had revenues of fifty thousand dollars compared to 200 million in 2004.
Since the evolution of the company, Under Armour rapidly expands their business while some internal problems still exist. For example, unprotected intellectual property right issue and supplier relationship management. Also, the current business strategy was focusing on marketing, international expansion, product differentiation, and other expenses while they have weak financial management. These will certainly pose future problems to the company.
The rapid success of Under Armour is not a mistake. The company dominates the performance apparel category. According to Founder Kevin Plank, “The mission of Under Armour is to make technically advanced products that are engineered with superior fabric construction, to provide proven innovation available to the masses-aimed at making athletes perform better” (UnderArmour.com). Under Armour uses many marketing initiatives including athlete endorsement, product placement, and popular culture which illustrates the success of Under Armour.
Under Armour is currently one of the leading companies in the sports apparel industry whose mission is to “Make all athletes better through passion, science, and the relentless pursuit of innovation”.1 When Under Armour first broke into the sports apparel industry it was a disruptive pioneer that initially made the two giants, Nike and Adidas, a little weary. Under Armour revolutionized the sports apparel industry by creating apparel that used synthetic materials as an alternative to natural fibers, such as cotton, or other materials, such as polyester. This all-important switch to these materials resulted in a 2“shirt that provided compression and wicked perspiration off your skin rather than absorb it. A