Download Under Armour Project ( Final Copy)

Table of Contents
Executive Summary 2
Situational Analysis 2-4
Company Analysis
Customer Analysis
Collaborator Analysis
Competitor Analysis
Context
SWOT Analysis
3-4
Summary of Problems 4
Quantitative Marketing Objectives 4
Current Marketing Plan 5-6
Overview 5
Marketing strategy 5
Tactics 5
Measurement Plan 5
Marketing Research 5
Marketing Tactics/Budget and Current Costs 5
Current Marketing Plan Problems 5-6
Recommended Marketing Plan 6-8
Overview 6
Porter’s Generic Strategy 6
Core Strategy Recommendations 6
Performance Measurement 7
Marketing Mix Recommendations 7
Price
Place
Product
Promotion
People
Implication for Marketing Ecosystem 8
Contingency Plan 8
Summary 8
References 9
Executive Summary
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After completing our research on Under Armour, we found many ways in which they could work
to increase their market share. Under Armour first, needs to work on supplying a wider variety of
shoes, such as casual wear, to keep up with their current competitors such as Nike. They also
must focus more of their attention on the female market and allowing customers to more easily
access the brand, increasing distribution through new store locations. Their use of endorsements
has been beneficial in targeted areas for Under Armour so far, so an increase in endorsement
efforts in other sports will help to not only spread brand awareness but also increase brand
equity.
Situational Analysis
Company Analysis
Under Armour was started by Kevin Plank in his grandmother’s basement based on the need of a
better shirt for athletes. After creating and improving his first product he sold it to his first
football team, Georgia Tech. After this the company expanded to include many NCAA football
teams, several NFL teams and is starting to leak into other sports and other markets around the
world.
Today the company has grown to employ 1900 people based around its Baltimore headquarters.
It sells products under the UNDER ARMOUR, COLDGEAR, HEATGEAR, and
ALLSEASONGEAR brands. In 2008 it expanded with the footwear and accessory product lines.
Under Armour’s product lines relate to baseball, football, lacrosse, soccer, and softball sports. It
operates in the United States, Netherlands, UK and Hong Kong.
Target Market/ Customer Analysis
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When analyzing the survey data, we found that our target market is between the ages of 15 and
25 years of age. This is due to the high activity level of that age range which is targeting the
college community. Many of our target market customers rate Under Armour superior or equal
compared to our competitors when it comes to apparel. When you look at footwear however,
Under Armour is equal but mostly inferior to other competitors. This brand is well known
throughout the United States and is starting to penetrate the UK market.
Collaborators Analysis
Since UA is formed under the athletic umbrella of apparel, it would only be fitting that one of
their main collaborators be one of the leading athletic retailer stores, Dick’s Sporting Goods.
Under Armour has teamed up with Dick’s in order to expand their merchandise to the everyday
“athletic” consumer. With collaborations already with major college sports teams and famous
athletes such as Cam Newton, Tom Brady and Brandon Jennings; Under Armour is still trying to
tap into the female clientele niche, which they are hoping their collaboration with Dick’s will do
by making merchandise more available for women. Under Armour has also started to expand
internationally by signing a five-year deal as the uniform sponsor of the English Premier League
club, Tottenham Hotspur. They hope this will show the potential market success abroad as their
first international collaboration.
Competitors
The biggest competitors for Under Armour are Nike, Adidas, and Reebok. Nike is the worldsleading brand in athletic footwear and holds 16% of the market share in the industry. The
company operates in the Americas, Europe, the Middle East, Africa, and Asia Pacific. They have
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wide product lines with strong marketing and strong innovation. Nike is also known for their
popular spokespeople such as Tiger Woods and Michael Jordan, who even has his own line
within Nike called “Jordan.” Nike has in the past come under scrutiny about how their products
are made in other countries. They have had acquisitions of using sweatshops to produce their
products, which has slightly affected their brand image.
Context Analysis
Economic: The economy is getting better and because of this consumers have more disposable
income. Also, the performance apparel industry is growing and shows no sign of slowing down.
Social: Under Armour is very involved with society through programs such as Big Brothers and
Big Sisters. One event they host is a, Power in Pink campaign, which celebrates women who
exercise in the fight against breast cancer. Profits from this event go to non-profit breast cancer
charities.
Technology: The company can improve on building the brand identity of the shoe line on the
website. The website does not have a shoe tab, so that it can advertise the different shoe types.
Another suggestion is building a customer list to send out discounts and new products offered in
stores and online.
SWOT Analysis
Strengths -- A Strong brand image is a key strength of Under Armour as it is recognized and
respected. Under Armour’s strong brand equity is linked to its ability to establish a unique
identity from its competitors, which allows it to attract a solid and loyal consumer base. Another
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advantage is its strong financial performance and stability, this allows to it weather dips in profits
and still stay competitive. This is displayed in high profits to earnings ratios. Establishing
themselves as the official outfitter of high schools and universities across the nation has been
very successful tactic. Other key strengths include; ability to provide a wide range of casual and
sportswear, product innovation, and attractive logo and image.
Weakness -- Under Armour’s lack of an effective marketing strategy hampers their ability to
reach their full potential as a brand. They lack the focus on areas of production such as footwear
where competitors are killing them. Also the lack of availability when it comes to their physical
retail stores hurts their revenue by causing customers to search out their brand. Other important
weaknesses include; their narrow focus,The style, quality, and price of footwear, limited product
line, and lack of online presence.
Opportunities -- There are multiple areas where Under Armour could either improve or take
advantage of opportunities for success. To lose the stigma of being over priced, they could
pursue cost cutting tactics in order to reduce price or they could focus on increasing benefits
while maintaining the same pricing. They can see gains by widening their focus and emphasizing
a variety of sports. They could also branch out outside of sports and emphasize the causal
clothing and shoe markets. One final opportunity is the size of the untapped female market that
they are missing out on.
Threats -- When scanning the environment of threats surrounding Under Armour, there are many
and from all directions. Key threats include; hard competition from companies like Nike and
Adidas, the presence of low cost substitutes in the market, and economic recessions. Other
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threats include the company’s male dominant focus, recently becoming a publicly traded
company, and the added financial burden of increasing taxes and interest rates.
Summary of problems/opportunities-leverage
One of the most important problems Under Armour needs to address is its narrow and male
dominate focus. There are numerous opportunities waiting to be exploited that can increase their
competitiveness with the likes of Nike and Adidas. One of the pressing opportunities that Under
Armour should pursue with more vigor is diversification of its Footwear lines. They have seen
considerable success with its line on cleats and use of endorsers, but Under Armor should
diversify into other sports footwear lines with the same commitment of resources. This would
insure that Under Armour is a serious contender in athletic shoe market increasing their overall
competitive advantage.
Quantified Marketing objectives
When reviewing the key revenue from Under Armour sales, 80.2% of sales are apparel and 12%
of sales come from footwear. Most of their sales are through a wholesale distribution from North
America. Only ¼ of the revenue comes from Sports Authority, Dicks, and other sporting goods
stores.
Current Marketing Plan
Overview
The tactics that Under Armour uses involve website, magazine, and television advertising. They
advertise/sell their products in magazines such as Eastbay and through retailers like Dick’s
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Sporting Goods. Under Armour also releases new commercials every so often showing their
products being used by athletes, whether they are known athletes or actors.
Marketing Strategy
The marketing strategy that is going to be used more is market online through social media
mainly. Our target market is online and communicating through medias like Facebook, Twitter,
and Instagram. Under Armour will have ads on the side of the screen on Facebook as well as
within the news feed. Twitter will post sales that are coming up that week/month and advertise
new products released. Instagram will show pictures of the new product line and new items
released for each season. The sales seasons to advertise towards can be back to school in the fall,
Thanksgiving/Christmas in the winter, and Spring/Summer clothing.
Marketing Tactics/Budget and current costs
Under Armour forecast a marketing budget in the range of about 12 percent to 13 percent of net
revenue for this year. Under Armour will invest more in its innovation and design teams and
information technology. According to Businessweek.com their they pulled in revenues of a little
over 1.83 billion which would place their marketing budget at around 220 million.
The Footwear Industry for Under Armour has had success in the 3rd quarter with net revenues
growing 97% from $26.5 Million to $52 million in sales. This is based on an overall market of
$19 billion.
Current Marketing Plan Problems
Issues affecting the Under Armour marketing plan include the lack of strength targeting
women. “Currently women’s apparel sales account for 30 percent of Under Armour’s business,
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up 18 percent from eight years ago” (Meehan). This growth means that there is an opportunity
for Under Armour to take advantage of. This information is supported by the findings of Alisa
Jessop, a contributor to Forbes Magazine. She writes, “that sales of college sport apparel has
grown by 148% in the last five years. She identifies the cause of this increase in sales to the
increased number of women who can self-identify themselves as college sport fans” (Jessop).
Previous stats do not discuss professional sports, where there is even more women who purchase
clothing.
The other main issue that affects Under Armour’s marketing plan, is the risk of using celebrity
endorsements. The New York Times has wrote an issue that describes how many corporate
marketing entities will cut a celebrity's endorsement campaign after they say or do things that are
against the views of the company. Some of their cited examples include, Whoopi Goldberg,
Olsen twins, and Kobe Bryant (Ives).
Using celebrities has proved very beneficial to Under Armour. Currently it is going head to head
with Nike trying to get as much exposure with the new Lindsey Vonn and Tiger Woods
relationship. Vonn has been a long time endorser of Under Armour, contrary to Tiger Woods
who has been an endorser for Nike (Sharrow). The actions of the two people may reflect back on
the companies
Recommended Marketing Plan
Overview- Marketing Mix
All of Under Armour’s competitors have the same products to offer to consumers. Every
company out there focuses on having the best quality shoe, which offers the best performance
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while wearing them. Under Armour, since being new to the shoe market, needs to do the same in
order to compete with the already established shoe companies.
Porter’s Generic Strategies Model
Under Armour faces high intensity among its main rivals of. The generally have similar products
and prices which is why is important for them to be creative with marketing efforts in order for
them to stand out. The threat of new entry is low to medium, considering that Under Armour was
one of these new entries not to long ago. Its difficult for newer companies to compete on the
same level with the rising cost of trying to maintain marketing efforts and differentiate
themselves from the competition. Supplier power is also low to medium, this is because of an
abundance of textile producers but in order for Under Armour to brand itself on quality it needs
high quality and technologically advance suppliers. Buyer Power is considerably high, because
of the tough competition and the availability of many different options and low cost substitutes.
With similar products and similar prices in the market the company can differentiate only its
brand image with consumers such as a warranty program on all products. UA must focus its
efforts on creating a relationship between the brand and consumer.
Core Strategy Recommendations
Under Armour’s currently utilizes a Focus Strategy, directing most of their resources on general
sports apparel and equipment, and covering just the basics of the athletic footwear market. Based
on Porter’s Generic strategies we believe that Under Armour should broaden its focus through
the diversification of its footwear offering and also focus on differentiating themselves from the
competitions by focusing on the female market and increasing store locations. Once store
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locations go up, Under Armour can work on creating a competitive advantage by focusing their
efforts on making their stores more interactive than competitors.
Performance Measurement:
Currently there are only 17 retail outlet stores. Under Armour should aim at expanding their
locations by 10 locations by the end of the 2014 fiscal year, and after evaluating the effectiveness
of these locations another 10 in the 2015 fiscal year. The stores should be evaluated in
comparison to the original locations.
The expansion efforts should be complemented with an increased market share. The footwear
industry is currently dominated by Nike, Under Armour should aim to take a 6% market share or
higher by 2015. Achieving this will follow more with the diversification strategy.
Marketing Mix Recommendations:
Price: Under Armour’s current pricing strategy is very similar to all of their competitors’ prices.
The company has shoes ranging from 39 dollars to well over 100 dollars. Our group believes
Under Armour should continue to follow this pricing strategy. If they charge any less for shoes
the company will look as if they make cheap shoes and if they charge more the company will
look as if their shoes are too expensive. They want to increase the variety of shoes not the prices.
Place: We feel Under Armour needs to focus on creating their own retail stores in places such as
indoor malls. Our research found that 59 percent of people surveyed shop in store. They have
large stores in some locations, such as Legends Outlet mall in Kansas City, Kansas, but they do
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not have their own retail stores in malls. We recommend Under Armour creates puts their own
stores in select malls across the country to see if they could be successful. This would separate
them from their competitors such as Nike or Adidas because they do not have a lot of these retail
stores in malls either.
Product: Under Armour is newer to the shoe market out of most of their competitors. Entering an
already competitive market and trying to gain market share can be difficult. We recommend
Under Armour offer similar options for consumers as their competitors. An example of this
would be a program like Nike ID in which a consumer can get online and customize their shoes.
Under Armour could offer the same option allowing customers to create their own shoes and
could possibly take cut into Nike’s market share. When it comes to product we also believe that
Under Armour needs to diversify its offerings of shoes that it has available. They currently have
a presence in the staple athletic shoe markets like running, cross training, basketball, football,
and soccer. But we believe that in order to gain a significant share of the shoe market Under
Armour should also focus on penetrating the casual shoe markets.
Promotion: Cam Newton, who is a professional football player in the National Football League,
endorses Under Armour cleats and has his own pair of cleats available for purchase. Under
Armour needs to repeat this strategy for their basketball shoes, in order to create brand awareness
and to build credibility. They should take a risk and sign a young NBA player with a bright
future to make a shoe for. This player should be a popular one considering they are trying to sell
a product. Under Armour should also start to make commercials showing people using their
shoes, such as showing people playing basketball on an outdoor court wearing Under Armour
shoes. We also feel that Under Armour should increase promotions of the niche shoe markets.
For example for their line of hunting boots Under Armour should use target marketing
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techniques to build awareness and credibility, so that consumers know that they are a legitimate
player in these markets.
Implications
Possible problems that may arise will be around the celebrities that are used. Stakeholders in the
Brand may have issues with the hired celebrities that could represent. There are also the
implications of expanding storefronts. This may adversely affect the stakeholders in terms of
how they view the company. The initial cost of increasing Under Armour retail locations may
scare the stakeholders. Under Armour has just recently started to open retail locations, none of
which are in the high traffic mall locations.
Contingency Plan
If one of our recommended tactics above does not work, then Under Armour will branch out
even further by having apps for Apple and Android smart phones. This would allow consumers
to locate retail stores around them, search the latest products, and order easily via their
Smartphone.
Another recommendation is to provide a warranty program available for all Under Armour
footwear, which would valid for up to a year with add option for extended warranties. If the
customer is not satisfied with the quality of the shoes, then they can send them back and get a
new replacement. This would help establish Under Armour as a high quality competitive that
provides better benefits than their competition.
Summary
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Our group suggested the above recommendations because we feel these will help to increase
Under Armour’s market share. We feel Under Armour needs to continue to work on promotions
in order to be as effective as its leading competitor, Nike. Increasing the number of store
locations combined with diversification of the footwear and looking to form a presence in the
female market will help increase the brand’s equity. Our group supports Under Armour’s current
social efforts to increase the activity in youths and supporting charitable/anthropic organizations
nationwide. With the help of increasing endorsers, Under Armour can spread brand awareness in
other sports besides football. If Under Armour follows our recommendations for their marketing
strategy we feel they will be able to better compete on an even playing field with Nike and
increase their overall revenue.
References
Corporate Strategies - Nike and Under Armour." Corporate Strategies - Nike and Under
Armour. N.p., n.d. Web. 18 Nov. 2013.
Ives, Nat. "Media Business." 16 July 2004. New York Times. Web. 28 October 2013.
<http://www.nytimes.com/2004/07/16/business/media-business-advertising-marketersrun-pull-plug-when-celebrity-endorsers-say.html>.
Meehan, Sarah. "How Under Armour plans to grow its women's line into a $1B business."
Baltimore Business Journal Morning Edition Newsletter (2013). Web. 28 October
2013.http://www.bizjournals.com/baltimore/news/2013/10/28/under-armour-womensapparel-business.html?page=all>."Meet Our Leadership Team - Under Armour Careers."
Meet Our Leadership Team - Under Armour Careers. N.p., n.d. Web. 18 Nov. 2013.
Sharrow, Ryan. Baltimore Business Journals. March 18 2013. Web. 28 October 2013.
<http://www.bizjournals.com/baltimore/news/2013/03/18/tiger-woods-lindsey-vonnrelationship.html>.
"Under Armour Gets Serious." Fortune Management Career Blog RSS. N.p., n.d. Web. 18 Nov.
2013.
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"Under Armour Sports Clothing, Athletic Shoes & Accessories | Free Shipping Available | US."
Under Armour®. N.p., n.d. Web. 18 Nov. 2013.
"Under Armour Strategic Analysis & Recommendations." Under Armour Strategic Analysis &
Recommendations. N.p., n.d. Web. 18 Nov. 2013.
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