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
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
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 worlds-leading 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 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 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 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 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, 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 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 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 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 techniques to build awareness and credibility, so that consumers know that they are a legitimate player in these markets.