Problem Statement

Under Armour is a athletics public presentation dress trade name that is looking to travel in front of its competition and subdivision out into different sectors of the featuring goods industry. Kevin Plank and his company’s job is that their footwear merely makes up for approximately 15 % of the houses gross and they merely generate about 6 % of their gross in international gross revenues. In order to vie with the top trade names in the industry. Under Armour must happen a manner to raise the grosss on its footwear and enter into the planetary market.

SWOT Analysis

Strengths * Brand Equity * High Net income to Net incomes Ratio * Collegiate and Professional Sponsorships * Customer Loyalty – ( U. S. ) * Innovated| Weaknesses * Price * Limited Product Line * Product Focus is Narrowed * Not outstanding internationally| Opportunities * Branch out internationally * Expand merchandise line * More competitory pricing * Joint Ventures to maximise net incomes * Specialty Stores| Threats * Competition * Economic Recession * Substitute Products|

Company Overview

Under Armour is the conceiver of public presentation athleticss dress. Kevin Plank and his company wanted to make a merchandise that was able to maintain jocks cool. dry. and light throughout featuring competition and exercises. Plank began marketing his merchandises by giving them out to consumers to prove out. As popularity grew. Plank created the name Under Armour and gross began coming in. The company’s market portion in the athleticss dress industry is at 2. 8 % ; approximately 4 % lower than Nike and 2. 5 % lower than Adidas. There are approximately 25 trade names that compete in this market that generates $ 60 billion in the US. Under Armour’s one-year gross growing from 2000-2005 rose at 127 % . while the operating income grew at 124 % during that same clip. Under Armour has three chief merchandise lines that it generates gross from.

The first is the dress part. This contains HeatGear. ColdGear. and All-SeasonGear. Apparel generates about 75 % of the company’s entire gross. This is 45 % higher than Nike branded dress. The 2nd line of merchandise is footwear. Footwear makes up for less than 15 % of Under Armour’s entire gross. This figure is drastically lower than Nike’s 64 % gross from footwear. The concluding merchandise line is accoutrements. This includes chapeaus. bags. baseball mitts. and other specialised equipment.

Under Armour Strategic Initiatives for Future Growth

1. Targeting extra consumer sections for the company’s ever-expanding batting order of public presentation merchandises. 2. Continuing to broaden the company’s merchandise offerings to work forces. adult females. and young persons for wear in a widening assortment of athleticss and recreational activities. 3. Turning planetary consciousness of the Under Armour trade name name and beef uping the entreaty of Under Armour merchandises worldwide. 4. Procuring extra distribution of Under Armour merchandises in the retail market place in North America via non merely shop retail merchants and catalog retail merchants but besides through Under Armour mill mercantile establishment and forte shops and gross revenues at the company’s web site. 5. Expanding the sale of Under Armour merchandises in foreign states and going a planetary rival in the universe market for athleticss dress and public presentation merchandises.

Porter’s Five Forces

1 ) Competitive Competition in the Industry

As mentioned. Under Armour is in tough competition with Nike and Adidas. along with other athletics dress trade names. The thing these two companies hold over Under Armour is their international presence. Under Armour merely generates 6 % of its gross from international markets. Nike and Adidas could look to increase their trade name acknowledgment and construct up their selling attempts internationally. Besides Under Armour does non presently have and fabric patents on their merchandises. which could let for other companies to travel in and utilize similar cloths to do similar merchandises.

2 ) Dickering Power of Buyers

There are two types of purchasers that Under Armour sells to. The first is direct-to-consumer gross revenues. The firm’s direct-to-consumer gross revenues accounted for about 30 % of entire gross in 2012. When it comes to these gross revenues. there is non much hazard for Under Armour. Because of their strong trade name acknowledgment
and loyal clients. they can do alterations when needed. The 2nd purchasers are jobbers. Dick’s Sporting Goods is an illustration of a jobber that buys from Under Armour. In this case. the jobber has some purchase over Under Armour. Wholesale gross for the house accounted for about 68 % of its sum. Dick’s Sporting Goods made up 10 % of that figure. These jobbers could travel off from Under Armour’s merchandises and topographic point competitors’ merchandises in higher respects in their shops.

3 ) Dickering Power of Suppliers

Under Armour’s merchandises are manufactured by 27 different makers across 14 different states. Asia makes up the largest per centum at around 55 % . South/Central America is following covering approximately 20 % of the fabrication. and recently the Middle East has covered around 18 % . Since Under Armour has such a spread fabrication group. the bargaining power is comparatively low for providers. This is favourable for Under Armour in the hereafter and should maintain them bring forthing gross from their current makers.

4 ) Menace of New Entrants

As stated antecedently. Under Armour does non presently have any patents on its cloths or merchandises. This opens doors to other athleticss dress companies looking to come in into the market. Although it would take a batch. marketing/advertising and publicity wise. there is still a slender opportunity of possible new entrants. In order for Under Armour to procure their merchandise manners. they must patent the stuffs used to stay entirely in public presentation dress.

5 ) Menace of Substitute Merchandises

The athletics dress industry has been turning over the old ages and is forecasted to go on to better into the hereafter. With all of engineering and invention happening. there is opportunity for similar or utility merchandises to vie against Under Armour. The positive note is that Under Armour has such a strong trade name acknowledgment and loyal client base that it is extremely improbable for a utility public presentation dress merchandise to impede Under Armour’s net incomes.

Critical Issues

1. Expanding in Global Markets

The planetary market gross in athletic footwear is $ 65 billion. Nike makes up 17 % of this market. Presently. Under Armour’s grosss come from 90 % of North America gross revenues. They have a high acknowledgment in football. The merchandising of most ware in retail shops hurts its distribution channel. Its rivals. Nike and Adidas have distribution channels worldwide and keep trade name acknowledgment across the Earth.

2. Establishing market presence with females

Because of the company’s strong focal point in football. the house is looked at as ‘male oriented’ . Under Armour’s advertisement techniques prove this by their aggressive impression. In order to vie. at that place has to be a major focal point on the female market.

3. Sport enlargement ( hoops and association football )

Nike presently holds about 95 % of the hoops shoe market. This is a sector that Under Armour is comparatively new at come ining. Besides Under Armour has small value in the association football industry. Soccer is the most globally known athletics and rivals have a much stronger presence in the major association football conferences in the universe. Under Armour merely have jersey sponsorships in four of the major conferences around the universe.

Company Options

Alternate # 1 – Maintain Current Pace in Performance Apparel and non do any alterations. Under Armour has been at a consistent growing over the past decennary and looks as if it will go on this growing. Their strong trade name acknowledgment in the North American market will let them to increase gross and increasing single shops will bring forth more gross. The lone job with this option is that they will hold problem catching their competition ( Nike/Adidas ) . because of their deficiency of presence globally and in the footwear industry. Alternate # 2 – Increase Awareness Globally and Grow Footwear Brand Recognition in Asia Global consciousness and the footwear industry are two cardinal elements that make Under Armour’s rivals so attractive.

Under Armour’s international gross revenues merely make up approximately 6 % of their entire net gross revenues. By perforating these markets ferociously and turning their trade name acknowledgment. Under Armour has a opportunity to go tops in athleticss dress and footwear. A few cons with this are that Nike and Adidas already have a strong. loyal client base globally. Besides Nike’s hoops places entirely ( including Jordan ) have such a strong popularity among consumers.

Alternate # 3 – Focus on the Female Industry

There is a batch to be made by ruling the female industry of athleticss dress. With the society’s consciousness of remaining healthy and going more active. it is a great industry to perforate. Under Armour is looking to do females a precedence in the hereafter and expression to supply a more direct merchandising experience for them. The menace of replacement merchandises can impact this option. Besides it is tough to state if deriving the female athletics dress industry will do you vie closer to the current competition.

Recommendation

I believe the best option for Under Armour to derive purchase over its current rivals would be to utilize alternate # 2: addition planetary consciousness and turn its footwear trade name acknowledgment in Asia. First. I want to touch on Under Armour spread outing globally. As mentioned. Under Armour’s gross comes from 90 % of North American gross revenues. The company has done a great occupation by of latching onto jocks in the United States to better their image. The most popular athletics in the universe is soccer. Under Armour’s competition have long-run contracts with many of the conferences and squads around the universe. In order to increase trade name awareness globally. the merchandise or logo must been seen foremost. A major manner for Under Armour to perforate globally would be to subscribe more association football squads in the major association football conferences.

They presently sponsor Tottenham Hotspurs. but that is merely one squad in a major market. To be successful Under Armour would necessitate to develop more association football inspired merchandises to travel along with their sponsorships. A good manner to acquire their merchandises out to the international market more would be to utilize the same construct Kevin Plank used when get downing up the company. Give out samples of their merchandise to demo how good it is for the mundane and professional jock. This would necessitate to increase their advertisement and publicity costs. In 2011. Under Armour spent $ 167. 9 million on selling and advertisement. Their rival. Nike. spent $ 2. 45 billion during the same twelvemonth. Signing outstanding international jocks could be a cardinal to constructing their trade name image. The 2nd facet Under Armour demands to make to vie with Nike and Adidas is to make more gross in the footwear industry.

In 2011. Under Armour’s footwear merely made up about 12 % of its entire gross. The same twelvemonth. Nike’s footwear accounted for about 55 % of its entire gross. Although Under Armour began as a public presentation dress company. the key to these successful companies is their footwear presence in the market. The cardinal mark market to better gross and consciousness for their footwear would be in Asia. Asia is presently the leader of the athletic footwear market. In the following 5-10 old ages. Asia is projected to do up approximately 40 % of the entire market. This is cardinal for Under Armour because approximately 60 % of their fabrication is done in Asia. With additions in labour costs. it could take to increased import costs for the company. which could take to negative gross borders. By holding the footwear merchandises manufactured straight in the part they’re looking to work. it would assist cut costs to perforate the market.

Mentions
Thompson. A. . Peteraf. M. . Gamble. J. . & A ; Strickland III. A. J. ( 2014 ) . Crafting and put to deathing scheme: The quest for competitory advantage. ( 19th erectile dysfunction. . pp. C-42-C-58 ) . New York. New york: McGraw-Hill Irwin. hypertext transfer protocol: //www. trefis. com/company? hm=UA. trefis #

( 2013 ) . New planetary athletic footwear market research study. PRWeb. Retrieved from hypertext transfer protocol: //www. prweb. com/releases/2013/11/prweb11284300. htm Finance. yokel. com