Under Armour Case Analysis
Under Armour is a sports apparel, footwear, and accessories company that is quickly becoming a global force to be reckoned with. The company is competing in a saturated market and has maintained the ability to grow. Analysis of the company shows that it should: look for alternative sources of materials and suppliers; continue a marketing campaign using athlete endorsements; and, model expansion into new foreign countries after the successful entrances into areas such as Europe. Reasoning behind these recommendations is shown in the analysis below. Background
Under Armour was established in 1996 by Kevin Plank, a former football player with the University of Maryland. Plank saw the potential for the need of comfortable and lightweight workout gear to be produced. The company was originally named KP Sports, after Plank. When the company went public in 2005 the name was changed to Under Armour. Under Armour is considered a pioneer of performance apparel created from complex synthetic materials. Their gear is designed to keep athletes cool and dry throughout the course of a game, practice or workout in various conditions. The apparel product line for Under Armour consists of HeatGear, ColdGear, and AllSeasonGear. Since the introduction of this type of sports apparel fabric, the concept has been widely copied by all the major sportswear brands. Strategy
Under Armour segments different strategies for growth, product lines, marketing and distribution. The growth strategy of the company has the focus of continuing to broaden the company’s product offerings, target additional consumer segments, and secure additional distribution of Under Armour products. The product line strategy consists of creating a diverse product line to reach multiple market segments. This carries into their marketing strategy of putting Under Armour products in positions to be seen by the public. To do this Under Armour enters into agreements with a variety of collegiate and professional sports teams, sponsors both collegiate and professional sport related events, and sells Under Armour products to both teams and to individual athletes. To market in the retail sector Under Armour works to dedicate floor space exclusively to their products in the stores of its major retail clients as well as introducing Under Armour stores. Under Armour has also worked to maintain and increase sales in the United States as well as expand into foreign markets of different Asian countries. Five Forces
Porter’s Five Forces Model can be used to analyze the sports apparel industry. The rivalry among established companies is high. The sports apparel industry is very competitive for multiple reasons. There are a large number of companies and a high volume of demand, both factors increases rivalry. Low switching costs for customers also increases the competition. Under Armour’s main competitors have large levels of capital at their disposal. Key players in the industry include Nike, Adidas and Reebok. Generally lower levels of product differentiation also increase the rivalry between these companies. The threat of new potential entrants is moderately high. The sports apparel market has been subject to continuous changes of trends that have increased its popularity. These trends include: a rise in concern for healthier living, and higher participation in sports.. Any attempt at a new entrant would have to put out a lot of capital on marketing and advertising to prove as competition for these companies. The threat of substitute products is high. The market for sports apparel, athletic footwear, and sports accessories is large and fragmented with more than 25 companies. Nike, who is an industry leader, only has about 4% of the market share of sports apparel and 17% of the footwear market. These numbers support the evidence that gaining market share is extremely difficult. The bargaining power of buyers is high. Price sensitive...
Please join StudyMode to read the full document