Under Armour: Case 1
The following is an environmental analysis of the “performance apparel” business sector of the athletic apparel industry, with an analysis on Under Armour, the 3rd largest athletic apparel company. The company is clearly rapidly growing, touching markets that have been dominated before, but continues to pride themselves on the performance of their products. The first section of this analysis will cover the trends in technology, economics, demographics, socialites and culture, as well as politics and legalities. It also includes coverage over Porter’s 5 forces and analysis’ of the industry and competitors. It will be concluded with strategies of success of the company as well as alternative strategies. Demographics
In the terms of the overall athletic market, Under Armour claims 31% of the market share, Nike 36%, and Adidas and other athletic companies claiming the remainder. In their specific products, Under Armour claims 75% of performance apparel market share, with Nike and Adidas struggling to catch up. The company targets consumers of all ages and all demographics. Their consumers include men, women, and children; athletes, coaches, fans, active people, athletic staff, and anyone who lives an active life style. Their consumers can attain their products through their website, 15,000 retail stores across the country, regional retail chains like Academy and Dick’s sporting goods, and as of 2007, 17 retail outlet stores. Approximately 94% of Under Armour’ sales in 2010 were in North America, with the remaining 6% split in international markets that included Latin America, Europe, the Middle East, Africa and Asia. Under Armour’s products appeal to people of all ages and areas and priding themselves on performing apparel that can be used in multiple sports, climates, fits and any life style. The price of Under Armour products are considered to be premium quality with premium performance and consumers with considerable disposable income continue to purchase premium prices for their products. Economics
The U.S. economy has not had a trade surplus since 1975 but has recorded in April 2012 that the goods deficit decreased $2.7 billion from March to $64.8 billion. Retailers are poised to boost prices on athletic footwear, apparel and sports equipment as they join other industries in passing along rising costs for commodities, foreign labor and freight. A certain consistent message has emerged from vendors and retailers that cotton, fuel and wage costs are starting to go up, and they’re slowly going to come through on the retail side, certainly in 2012. Prices manufacturers paid for imported sporting goods grew 3.3 percent in 2008 and retail price tags increased 3 percent, according to data from the Bureau of Labor Statistics. The U.S. budget deficit in March totaled $198.2 billion, a record for that month which left the gap through the first half of 2012 at $779 billion, down 6.1 percent from a year ago. The U.S. athletic apparel market grew an estimated 8.5% from 2003 to 2008, from $13.0 billion to $14.1 billion, and is projected to grow another 8.5% by 2014, to $15.3 billion. Over 2/3 of U.S. consumer’s exercise at least once a week, and consumers also appreciate the versatility of athletic apparel, wearing it for non-athletic purposes as well. Studies show that U.S. consumers are willing to pay full price for its functionality and found that athletic apparel was significantly less likely to be offered “on sale” than non-athletic clothing. Political/Legal
The political and legal environment of the athletic apparel is greatly dependent and influenced by the United States. In the most recent years there has been an increasing push for state legislators to pass laws concerning the physical education, health, and breakfast/lunch consumption among students in elementaries, middle schools, and high schools across the nation. Laws have been enforced with required state legislation in regards to PE times that...
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