Under Armour

Company overview

Founder: Kevin Plank was a football player with University of

Maryland. He was tired of having to change out of sweat soaked t-
shirts he wore under his jersey. He started the company on January
29th 1996.

Under Armour is based in United States.

Known for introduction of form-fitting, moisture soaking clothing

design to be worn under sportswear. Created performance Apparel
Armour developed to enhance consumers performance offering
greater comfort.

The company is a supplier of a much wider range of sportswear and

casual apparel. Under Armour began offering footwear in 2006, and
continues to expand its offerings.

In late 2007, Under Armour opened its first retail location, at the
Westfield Annapolis mall in Annapolis, Maryland.

First-mover advantage has allowed UA to gain 70% of the U.S.

market and about 15% of the global market

Performance Apparel has evolved from niche to mainstream in terms

of target market and competition (Nike and Adidas)

Under armours public image

Positive due to being first to the market

Produce an innovative and quality product
Partner with high schools and universities all across the country
Company Situational Analysis
Financial Situation

Liquidity Ratios 2007 2006

Current Ratio 3.4:1 3.4:1
(UA is very capable of
paying back its short
term debt compared to
industry average of
2:1)
Acid Test ratio 1.6:1 2.3:1
( Reduced by .7 is 2007
not a good sign
however the company
still have $1.6 for every
$1 they owe without
turning their stock into
cash)
Inventory to Working 73% 46%
Capital( shows high
liquidity in UA and has
increased in 2007)
Strong liquidity makes UA less venerable to short term creditor
demands
Better credit rating
Profitability Ratios
Return on equity 0.19% 0.18%
Return on 0.13% 0.13%
assets/investment
Net Profit margin 0.87% 0.09%
Organizational Structure
Name: Title: Key Qualities
Kevin Plank Founder & CEO Innovative, Team
Player, Headworker,
Ambitious
Peter Mahreer Experience in the
Industry( came from
Puma & Adidas)
Bill Kraus SVP Marketing
Kevin's impressive leadership skills and capabilities to produce ideas
that are best for the business is a core competency for Under
Armour. Kevin's key qualities show a distinctive management style
Since day one Under Armour has sought input from athletes on how
to improve the apparel they wear. This shows Under Armour wants
to satisfy the consumers and not just make money.
UA brand image is Authenticity and Quality. The company is
ambitious and did expand into Europe however they went with the
same strategy in Europe as they did in America.
UA's product, marketing and sales teams were involved in all steps
of the design process. This is a good management decision to make
sure they are all involved as they all have insights into the
customers needs and wants. It also helps maintain the brand
standards and consistency.
UA had in-house marketing and promotions department design and
produce all the marketing campaigns. This is how it maintained
strict control over its brand image.
Marketing system
Product: Sports performance apparel and performance footwear for
men, women and youth. Also offers: Gloves, hats, bags, wristbands
and performance socks. High performance technologically advanced
products. Products have extensive benefits and are all differently
designed depending on what sport is played.
Price: charge premium prices, obviously working well sold over
1Million pairs in one year. Dont reduce their price, charge above
basic but slightly below competitors. Developing great relationships
with key seller. Kept high price by Do not discount but products
are priced at different levels. Pricing strategy Good, Better, Best
Place: uses SAP software to manage inventory. Catalogues via
retail doors. Retail stores, direct to consumers via web. Sales
teams direct selling to colleges, schools sports teams. Outlet stores.
Selling in US, Japan, Europe markets.
Promotion: agreement with Sports Robe, a movie studio, to
promote UA in American football film Any Liven Sunday, this
resulted in huge promotion boost. Celebrity endorsements, e.g.
Julian Peterson, NFL star Eddie George, player of the year 2007 Bob
Sanders, wearing the UA shirts. Sponsored college/football All Star
challenge which was broadcast nationally, this targeted youths all
over the globe. Also partnered with baseball factory to outfit the
nations top high schools athletes, AJ Hawks, Welsh Rugby Union,
Womens soccer star Heather Mitts and the German soccer time
Hanover 96. This leads to word of mouth promotions and improving
sales.
Major Problems
1. No Fixed product Supply Chain. Suppliers can bock off supply at
any stage. Suppliers have leverage
2. Fierce existing competition and threat of new entrants due to
large capital costs
3. Over reliant on male apparel

Minor Problems
1. Over reliance on American market
2. Seasonal sales August to November
3. Intellectual property is damaged by not securing a patent on new
technologies. Too many companies can copy and enter the
market

Problem Focus
Over reliant on male apparel
Solutions
Diversify the market. Make products more aimed at female and
youth market.
Increase product range for other audiences.
More female celebrity endorsements
Increase advertisements to target the wider market
Look at companies to acquisition with, who would have knowledge
of the female sports market
Recommendations
Under Armours primary focus should be to increase their U.S
market share in other products such as footwear and accessories
while maintaining market leadership in PA.

Under Armour should move into international and emerging markets

with caution to assure they do not expand too quickly.

Under Armour needs to continue to provide value to consumers

through innovation and research and development.
Under Armour needs to integrate their marketing plan and make
sure than all sponsorships and endorsements contribute to the value
of the brand.
 SWOT Analysis
Strengths
Kevin Plank leadership
and motivation skills,
entrepreneurial
characteristics are a core
competency
Innovation of technology
advanced product
Marketing strategy
sponsorship, celebrity
endorsement
Customer loyalty through
high quality
Financial strong
SAP software
Product development
based on consumer wants
and needs
Dont pay people to wear
their clothes, athletes want
to wear them
Opportunities
Expand into other
segments such as women
youths
Expand product range
sports equipment
Lower prices
Create alliances with fabric
manufacturers
Intensity of womens
sports is increasing
Increase number of retail
outlets
Broaden product offerings
winter sports, extreme
sports
Recruitment of
experienced international
industry experts
Weaknesses
Heavily dependent on male
market
Heavily dependent on US
market
Pricing dont reduce price
for sales like competitors
Seasonality of sales
Limited product range
Perceived as male targeted
brand
No patents
Limited suppliers 75% of
supply are from 6
suppliers, can block them
out at any time
Offer too high margins to
retailers
Threats
Looming recession
Substitute products
Long standing competition
Nike, Addidas
Bargaining power with
suppliers
Lack of protection - Patents
Economic fluctuation
Few suppliers, limited
capacity to produce
Changing consumer
patterns
Political
FDI Policies - Some foreign
countries have policies in
place that prohibit 100%
ownership of retail stores
which poses threat to
internationalization
Social
Obesity rates in U.S. show
people not physically active
Consumers focus on quality
more than price
Increase in physically active
women
Increase in health conscious
consumers = more
exercise/physical activity
Sport participation is a key
aspect of U.S. culture
Aging population and increase
in physically active seniors
Increase in sports
participation in emerging
Environmental
Costs of international labor
are on the rise.
Increase in Cost of Raw
Materials/Resources
Adapting to different market
conditions
Employees, Hire appropriate
people that fit culture and
success
Policies in other countries can
change.
Technological
Technical and Manufacturing
Skills are strong
Resource and Personnel
Utilization are strong
Level of Technology Used in
products is strong
Strength of patents is weak
Production effectiveness and
delivery schedules is strong
Value added to Product is
strong
Intensity of Labor to produce
the product is strong
Newness of Plant and
 markets equipment is strong

PEST Analysis
 With the expected growth of
the performance apparel
Threat of new entrant (High) industry, there will be new
entrants in the industry from
all over the world.

Most companies who enter the

performance apparel industry
are unable to compete due to
existing brand loyalty and the
high barriers to entry.

Many different options

available in sports apparel and
Threat of substitutes(Medium) footwear however comfort
levels

Substitutes can be found in

discount stores such as
Walmart and Aldi

Core athletes and professional

teams
Bargaining powers of
buyers(Medium) Non-core athletes, non-
professional teams and
recreational buyers
(moderate)

The bargaining power of

buyers depends on the
consumers skill level and the
level of the team

Athletes dont mind paying for

quality

Small number of different

suppliers (very high)

Product uniqueness
Bargaining powers of
suppliers(High) The use of third party
 suppliers allows performance
apparel companies to choose
their suppliers based on
highest quality and lowest
production cost.

1. Third party suppliers have

high bargaining power by
being able to choose the
companies that they want to
supply for.

number of competitors (high)

Brand loyalty (high)

Intensity rivalry(High) Industry growth rate (high)

Quality difference between

competitors (moderate to
high)

1. Currently, the performance

apparel industry is growing
rapidly at 15%;
Access both companies in terms of their level of marketing orientation
Marketing-orientated Nike Under Armour
businesses: criteria
Customer concern More bureaucratic(bigger Less bureaucratic, more
throughout business company), more broadly customer focused
customer focused
Know customer choice Fast at responding to Slow response to
criteria and match with customers wants and customer orders, fast with
marketing mix (product) needs and plan to be first special orders via store
in all areas of sports
Segment by customer Faster to respond to Not as fast in the womens
differences growing markets and and youth markets
changes in consumers
needs
Invest in Market research High High
Welcome Change Yes Yes
Try to understand Not at all Not at all
competition
Marketing spend regarded High High
as an investment
Innovation High High
Search for new markets High Moderate
Being fast First mover First Mover
Strive for competitive Market Leader Market Challenger
advantage
 Profession Active Coaching School Non-
al Young Staf Kids Athletes
Athletes Adults
Age 21-35 16-21 25-50 5-16 18-60
Sex Male Male/Femal Male Male/Femal Male/Femal
e e e
Use of High High High Low Medium
Product
Personalit Strong Ambitious Authoritaria Idolise Health
y n Conscious
Buyer Sponsored Buy Buy in Bulk Parents Buy Buy
Themselves for them Themselves

Lifestyle Achievers Believers Teachers Strivers Fitness

Freaks
Income High Medium- High Low All Levels
Low
Motivatio Extrinsic Intrinsic Extrinsic Enjoyment Fashion
n Conscious
Purchase Regularly Regularly Annually Special Rarely
Occasion Occasion
Benefits Service and Service and Quality of Quality Look and
Sought How they to look like Gear Feel Good
Look Professiona
ls
Media Brand TV and Newspaper TV and Magazines
Usage Ambassado Social s Social and
rs Media Media Advertising
Attitude UA is Free Achieveme Interested Want to Health
Towards to them. nt Driven. in best wear same Oriented.
UA Usually product for gear as Will wear
getting players and their other
paid to teams heroes. products as
wear the long as it
gear. feels and
looks good.

Market Segmentation of Under Armour;

Competitors
Nike Market Leader
Mission: to be the leading sports and fitness company

Largest athletic shoe and apparel seller in the world

Used Olympic events and celebrity endorsements to promote its

products and portray them as high performance goods.

Aggressive marketing campaigns just do it; and bo knows

propelled nike into a household name adding legitimacy and
authenticity to the brand

Michael Jordan most influential sports person ever

Principal business activity was the design, development and

worldwide marketing of its high quality footwear, apparel,
equipment and accessory products

Relied heavily on Asia for manufacturing

Heavy spending of expansion in the 80s

Extensive distribution around the world 262 outlet store, 60 nike

stores, 15 nike town stores

High global penetration with over 58% of sales coming from

worldwide sales outside US

Nike has global appeal

One of the most recognizable logos in the world

Clever marketing portrayed Nike as a way of life

Very good relationships with retailers allowing them to purchase up

to 6 months in advance at fixed prices

Adidas Market challenger

Mission: offer technological innovation and cutting edge designs to
athletes of all skill levels who aspire to achieve peak performance

Developed soccer boots first

 Built a powerful brand image

800 patents kitted Olympic teams

13% of revenues spent on marketing and promotions

Athlete endorsements and sponsorship

Products made in asia

Built powerful brand through technological innovation, successful

marketing, high quality products

Strategies
Under Armour originally used the Bypass strategy by going into niche markets
such as:
Compression tops and shorts

Football boots

Over the years as competitors got bigger the strategies changed to

the following

Frontal Attack
Head on attack and matches the opponent on everything
Main focus on price of the product and gaining more customers

Spends large sums of money

New product innovations

Flanking Attack
Focus on the weaker side of the competition
Good flanking moves include:
Going into unconsented areas

Tactical surprise

The pursuit is just as important

This strategy is used by a company that does not have an overwhelming

superiority but have an advantage in one particular area.
Geographical Segmented
Attacks firms More powerful that geographical
Different areas Satisfies market needs that
competitors ignored

Flanking strategy is to bring a broader coverage of a markets varied needs