Case 5: UNDER ARMOUR
1.What is your assessment of the strength of competitive pressures stemming from rivalry among Under Armour, Nike and Adidas-Reebok?
The Rivalry among competing sellers of sporting goods such as Under Armour, Nike, and Adidas-Reebok is strong and likely to intensify. The rivalry among sporting good sellers of energy will keep growing and will become stronger in coming years. Under Armour. Nike, and Adidas-Reebok have similar or competing product offerings and that is why competition among them is so high. If these companies want to stay in business they need to come up with different strategies that will set them apart from the opposition. Competition is intense and revolves around performance,
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A newcomer is going to have to build its way up the same way all the famous sporting goods brands have done it. Under Armour, Nike and Adidas/Reebok are aware of the possibility of new entrants in the market and that is why they keep advertising, establishing distribution channels, making marketing agreements, and keeping up brand loyalty in their customers.
3. What is your assessment of the strength of competitive pressures stemming from substitutes for performance sports apparel?
Companies like Under Armour, Nike and Adidas/Reebok have high threats of substitute´s products. These companies share the sport apparel industry and are vulnerable to competitive pressure from the actions of buyers whenever they view that their products can be substituted for others. The availability of substitutes invites the costumer to compare performance, features, and ease of use as well as price. Under Armour’s major competitors are Nike and Adidas/Reebok because they have a similar or competing product offerings. The top sport apparel brands offer similar products and that is why each one of them needs to keep a high standard and produce good quality products in order for customers to keep buying their product.
4. What is your assessment of the strength of competitive pressures stemming from suppliers to the marketers of performance sports apparel?
Although Under Armour is a market leader and
Competitive analysis is an essential part of strategic marketing where companies continuously monitor the business activities of its competitors gathering and analyzing industry information keeping up with the current trends and developments providing a perspective on the probabilities and possibilities of the future (Brannon and Divita, 2015). Athletics Supreme faces competition from its top three competitors. Dick’s Sporting Goods has made adjustments and shifted sales to meet changing trends in the area of sports now catering to serious athletes and children, and young adults at all levels of play. Foot Locker, Inc. is a leading retailer in athletic shoes and apparel mostly operating specialty stores malls across the United States. Walmart
4. Further Research—Gather information on Nike’s recent moves and accomplishments, and those of its rival Adidas. Are both firms following the same strategies and using the same structures to support them? Or, is one doing something quite different from the other? Based on what you learn, what do you predict for the future? Will Nike stay on top, or is Adidas the next industry leader?
How strong are the competitive forces confronting Under Armour, Nike, and The Adidas Group? Do a five-forces analysis to support your answer.
Customers make purchasing decisions based on the information they have among products and the values of goods a company offers. For that reason, companies have to promote their products to increase products awareness. In order to achieve organizational goals, companies must understand the market’s needs to ensure the success of their businesses. Such information can be gained through research. The industry that will form the basis of this paper is Western Canadian Shoe Association. The three brands under study are Reebok, Adidas, and Nike.
The sportswear industry is growing and becoming more competitive so the will be new producers and entries in the market with new ‘’aces up their sleeves’’. More competition in the market
1. Considering the five forces of competition and how they direct the profit potential for a given industry, discuss how the forces help explain Lululemon’s performance.
3. What do you see as the key success factors in the market for performance-based yoga and fitness apparel?
As the brand name of Nike continue to soar, other companies in the industry; learning from the success Nike has experienced, start focusing more on brand development to keep up with the increasing levels of competition. These companies resort to brand maintenance, which has become the main target in this industry due to product differentiation made by Nike. Nike, being market-advantaged, produces an extensive range of products, through which it gains a balanced level of profits. This has influenced rival companies to initiate a new range of products in their businesses too. Previously these companies had high risks of failing in business, if their single products did not appeal to the market. Due to the impact of Nike’s business strategy, the other companies are also enlarging their product range,
2. Evidence from case: “The emergence of a New Formidable Competitor Specializing in sports and Fitness Apparel for women.” This represents the growth and emergence of new competition.
Past Corporate Performance Indexes (2009-2010) Strategic Posture Mission – “To make all athletes better through passion, science, and the relentless pursuit of innovation” Objectives – Become “The athletic brand of this generation. And Next.” Current Strategies Decline in footwear sales by 4.5% Increase in apparel sales by 32.3% & Accessories by 28% Offensive tactics Outsourcing to lower manufacturing costs Competitive pricing. Current Polices Never too small to take on industry leaders Full retail pricing,
After 2006, Nike caught up with the Adidas in global market share. It’s all thanks to Nike’s ability to find new alternative ways of brand management such as digital distribution with YouTube or individual partnerships with players that lead to Nike catching up when it did not have the rights to market extensively on the worlds biggest stage.
As shown in Figure 2 of the Appendix, a Porter Five Force Analysis makes it clear that the overall rivalry within the athletic apparel industry is medium to high. Because Nike and Adidas already have a substantial amount of capital resources and other assets, Under Armour struggles against them to gain market share. 8Also, private labels of retailers and newer sports apparel companies could potentially pose a threat to Under Armour, but mostly due to the fact that Under Armour does not hold any fabric or process patents. This makes it extremely easy for any competitor to duplicate a product or process with no consequence. However, the threat of new entrants is not too troublesome within the industry because of the great capital cost required for branding, advertising, and meeting product demand. Furthermore, the sports apparel industry is in the maturity phase of the industry life cycle. This means that each company included in the oligopoly must
Competition is very fierce due to the number of companies competing for sales. Lots of money goes to marketing and promotions using various channels to reach the young demographic group of consumers who spend the most money on Nike’s products. Growth is slowing down in the athletic footwear industry. But new markets are emerging with high growth rates. These markets include extreme sports market and the corporate merchandise market.
The sportswear industry is very price sensitive and most competitors prices are about the same. Nike sells its products in Nike shops and the selling of its products direct to the consumers conflicts with other resellers of the brand. Most of Nike’s earnings are derived from selling into retailers.
Companies in this industry also attempt to differentiate themselves by technical advancements in the apparel. Companies compete to find the technology that consumers believe will help their overall performance in sports and activities; whether it’s a sweat wicking shirt or lighter shoe, consumers seek the product they believe will give them the greatest advantage. Overall, the rivalry amongst competitors is a strong force that ultimately lowers the profitability of the industry.