Case Study Of Under Armour: Issues, Solutions, And Strategies

You are required to conduct an integrated project to reflect your knowledge and skills.

Your project can be a real world situation, e.g., your current or previous employer, or any company that you are familiar with. 

The market is growing day by day; competition within the market is high in the current situation as compared to the previous. The reason behind this enhancing competitive environment is innovativeness for meeting the needs of the people. Time to time, companies face some issues in the market for maintaining their sustainability. Multinational companies are seeking competent and innovative strategies and approaches for increasing their demand and popularity across the world (Fraga, 2016). Concerning this, a case study of Under Armour is taken into consideration. The file consists of the information regarding the background of the firm, issues faced by the company and appropriate solutions for handling them effectively.

Background of the company

Under Armour, Inc is a well-known company in America which manufactures footwear, sports and casual appeal. The firm was established 22 years ago in 1996 by Kevin Plank. Headquarter of the company is located in Baltimore, Maryland, United States. Additional offices of the firm are situated in Amsterdam, Austin, London, Jakarta, New York, Panama City and many more. Initially, the name of the organization was KP Sports which was later changed by the Plank in the year 2005 (Grady, 2016). The key people of Under Armour include Chairman and CEO, Kevin Plank and President and COO, Patrik Frisk. In 2017, the revenue of the company was US$ 4,977 million with the total assets of US$ 4,006 million. The tagline of the firm is “I Will” which represents the origin of the organization. According to the founder of the firm Plank, the potential for the long-term growth of the Under Armour is achieved due to its ability to develop and build an extraordinary powerful brand in a short period. The organization is working from its early stages for establishing its brand within the market with substantial value and image (Holt, 2016).

The products of Under Armour such as gear are designed for keeping the athletes cool, dry and light during their entire course of game, practice or workout. The technology used by the company for manufacturing the products for men, women and youth is however difficult, but the idea behind this diversified approach is simple, i.e. wear HeatGear when it is hot and ColdGear when it is cold. There is AllSeasonGear are available for the people who love to wear footwear in all seasons. The mission of the Under Armour is to develop effective and innovative footwear for all athletes. There are various other firms offering sports shoes and footwear are available within the market like Nike and Adidas. Thus, Under Armour is searching for an innovative and creative way of developing and marketing the shoes among the people for gaining competitive advantages at the international level (Whitehead and et al., 2018).

Issues/ Problems that being analyzed

According to the provided case study, the company is facing issues for identifying the appropriate strategy for becoming more geographically diverse for surviving within the competition in the global market. The firm is making continuous efforts for moving into the other geographic locations like Europe and Asia. In context to this, the organization will have to diversify their product offerings while expanding their business in the new places. This factor can enhance the problem for the company as they will have to minimize the risk associated with the majority of the sales. There are highly competitive and top companies available at the international level which includes Nike and Adidas. Both the organizations are available across the different nations of the world and offering high-quality footwear to the customers. The popularity of Under Armour is less as compared to the other competitors. Due to this, the firm is looking for better ways of increasing its brand awareness at the global level (Strauss & Frost, 2016).

Along with this, the firm is also finding innovative and creative ways for surviving within the competition. Another major issue is how to grab the attention of the people towards the brand and to make them purchase the products. All these problems every company faces while competing with the top level of MNCs.On the other hand, the raw materials which are used by the Under Armour are developed and manufactured by the third parties and are only present from a restricted number of sources. Thus, development and manufacturing of the speciality fabrics from the third party can create risk for the Under Armour’s core competencies (Heroux, 2017).

For understanding the issues and actual situation of the Under Armour within the market, the different methods and approaches are as follows:

This method is used for analyzing the actual situation of the sports apparel industry. Porter’s Five Forces Model is as follows:

The competition among the developed companies like Nike is intense. The sports apparel sector is highly competitive along with the highly demanding conditions. The low switching cost of the industry also increases the competition. The competitors of Under Armour like Nike, Adidas include the massive level of capital. On the other hand, the threat of new potential entry is moderately high in the sports industry. The sports apparel sector at the global level has seen various new trends within the market line increase in the people’s appeal towards the healthy lifestyle, addition of new sports, raising some participation in games and many more (Jensen and et al., 2016).

Detailed analysis of the identified issues

Along with this, there is a low barrier to enter within the sports sector due to the use of conventional technology and ease of brand switching. The principal competitors of the Under Armour consist of Reebok, Adidas, Nike and Puma. However, new entrants will have to invest lots of money in marketing and advertisement strategies for developing a strong position within the market and becoming competitive with the top level firms like Nike and Adidas (Wheeler, 2017).

The threat of substitute items is high within the market which limits the price which a firm can charge for its elements and services. Technology has also enhanced the danger of alternative products as due to this; there are around 25 brand name competitors are available across the different parts of the world. Along with the enhancing utilisation of social media, people used to search the price, sales and read reviews on the internet (Su & Tong, 2015). On the other hand, the bargaining power of the buyers is high. There are no switching costs and clients have various options regarding the items they want to choose. The bargaining power regarding the suppliers is moderately high. Usually, suppliers impose long processes on the items or reduce the quality of the products which increases the risk for the firms. But in the sports appeal sector, there is an enormous amount of the suppliers available which generally equate to the lower costs (James & Whitney, 2018).

Thus, from the above analysis, it is found that Under Armour is facing the major issue of less advertisement and marketing of the sports shoes and appeals among the people. Due to this, the company faces the problem of less brand awareness and recognition as compared to the brands like Nike. Product differentiation is another barrier which creates a problem for the firm in becoming as popular as the other companies. High level of advertising and promotions are required for informing people about the diversified products. The range of products in Under Armour is limited, and due to this, it becomes complex for the company to retain the customers (Ghanbarnejad & Steinberg, 2017). 

Societal or Fashion Trends: Changing attitudes and lifestyles of the people in society impacts directly on the apparel sector. In the developed society, sports industry gets tremendously influenced by the societal changes. The increasing consciousness of the individuals towards their health is making them run and walk on a daily basis. Due to this, the demand for sports shoes is increasing. However, changing sports affects the available sports apparel and make firms to improve their product designs for meeting the needs. To this, Under Armour is offering a limited range of footwear to the people. It is necessary for the firm to increase the diversified products for the changing societal trends. In context to remain relevant, the firm needs to stay cognizant of the relational impacts of changing lifestyle trends (Fan, Lau & Zhao, 2015).

Driving Forces

Innovation within the product: In the present time, technology is changing with time, and due to this, methods of producing sports apparel are also upgrading. From the lighter footwear to performance under the garments to grip, the sports sector is offering new, innovative and more evolved products to the customers. Product differentiation is directly proportional to the improvement and innovation of the products. New and innovative products are increasing the demand for sports apparels among the individuals. With respect to this, it is necessary for the Under Armour to understand the impact of the product innovation, as it needs proper focus on production of the new and improved products (White, White & White, 2017).

Marketing Innovation: Competition in the sports industry is extraordinarily high, and due to this, each company is trying innovative and creative strategies for promoting their products and services. Firms like Nike, Puma, etc. are using different methods like digital marketing for grabbing the attention of the people towards their footwear and making them purchase. Creative content about the products and attractive images informs people about the new products and their benefits (Touchette, Schanski & Lee, 2015). With respect to this, Under Armour needs to use effective marketing innovative techniques for promoting their products among the individuals at the global level. Due to the less marketing, the company is facing the problem of less brand awareness and recognition. For gaining the competitive advantages, it is necessary for the organization to use some innovative ideas, develop the professional team and endorse footwear for all the athletes (Woodside & Sood, 2017).

Globalization: The market for the sports apparel has become global, and companies are promoting their products at the international level. For gaining competitive advantages and accomplishing the objectives of increasing sales and profit, it is necessary for the enterprises to target global customer markets. Moreover, any impact within the international market like the organization of the Olympic games, etc. (Keegan & Green, 2015). Have real positive or negative effects on the sales and profitability of the sports apparels. For increasing the sales, firms like Nike, Adidas promote their footwear in such games for grabbing the attention of the customers. With respect to this, it is also necessary for Under Armour to invest more in the marketing of its products and services.

Along with this, the company is also facing the problem of expanding its business in the different regions of the world. The firm can take advantages of the low labour cost of the developing countries like India, Bangladesh and many more. The labour cost differences among the nations and geographic regions can help Under Armour to pay attention to their production activities for gaining cost and competitive advantages (McCullough & Melton, 2017).

Before taking any action for increasing the promotion of the products and services, it is necessary for the company to understand the actual situation of its working environment. The internal analysis with the help of SWOT of the Under Armour is as follows:

Strengths: The strong points of the firm are as follows:

Innovation: UA from the beginning is paying attention to the needs and demands of the customers. The company is using innovative technology for gaining competitive advantages. Diversified product mix, new product offerings and different market segment are making company to meet the changing demands of the customers (Krueger & Storlie, 2015).

Product Portfolio: Under Armour has become a strong competitor of Nike, Addidas and many other firms working in the athlete industry. As a primary growth strategy, the firm is expanding its product offerings among the additional market segments. Initially, the focus of the firm was on the football, but later it moves to the baseball, basketball, rugby, golf, soccer and many more (Vicente, 2016).

Lack of geographically diverse: The company is offering its services and products to the limited regions. Due to the lack of geographical diversification, most of the people are unaware of its products and brand.

Limited Marketing: The Company is conducting limited promotions of its products as compared to the Nike, Adidas, Puma and many more. Nowadays, organizations are marketing their items and services at a considerable range for increasing the sales and brand awareness. Concerning this, the efforts of UA are less (Burgelman, 2017).

Technology: With the increased use of internet and mobile applications, the market has become technologically advanced. In context to this, UA can develop its mobile app along with the fitness feature for providing information regarding the products. Wearable fitness devices will also help in enhancing the profit and product offerings of the firm (Naraine, Séguin & MacIntosh, 2015).

High Labor cost: China is the largest supplier of textiles, and an increase in the labour cost along with the private sector wages is affecting its market. Raising fees and price can have an impact on the apparel industry which can affect the working process of UA (Funk, Alexandris & McDonald, 2016).

Low Barriers to Entry: The capital investment for entering into the apparel sector is low which provides new players with an opportunity to take advantage of it by coming to the market. Along with this, there is significant price control and power of the suppliers within the industry which can limit the market share to the existing firms (Melancon & Dalakas, 2018).

Thus, it is necessary for UA to handle its weaknesses for enhancing the sales, market position and profit within the apparel sector.

Under Armour is using limited corporate diversification strategy. The maximum business activities of the firm come under the single industry which is sport’s performance sector. The firm earns revenue as a dominant venture, i.e. around 70 and 95 per cent of the clothing business. While categorizing the various products of the company, one can found that the firm is engineered at removing the sweat and offering the comfortable workout for the professional and general athlete (Mahdi and et al., 2015). Diversification strategy of UA can be understood via its mission statement which is “To make all the athletes better with the help of science, passion and relentless use of innovation”. UA diversifies through selling its new items to the available customers. The firm keeps stuck to their core customers and produces new products within the area of sports performance apparel. This strategy of UA is entirely different from the Nike which has categorized its different markets in the sports sector. It is clear that the niche of UA is tiny. With the help of innovation, effective marketing and market, the firm can be a premium one within the sports industry. On the other hand, the competitors of UA are expanding their business over various markets (Bolos and et al., 2016).

According to the case study, for handling the issue of limited marketing, Under Armour has recently used digital technology. Now Under Armour has become the second largest athletics brand in the United States, and it is all due to the use of digital marketing. The firm uses the concept of will in its every role. For example, one of the ads of UA features the brand’s select “Women of Will” which includes the pro-soccer player Kelley O’Hara. This advertisement defines the “Will” depending upon the ability to handle the pressure and win the different degrees of adversity which women athlete players usually faced in their game (Flynn, 2015).

Along with this, the firm also started a campaign named “Rule Yourself” which features the “Will” in the form of ability to be disciplined within the training sessions. Similarly, the new Slay Your Challenge campaign “will” is defined as the manner to win the next challenge. Thus, it is clear from this, that UA has used effective ways to promote its sports along with the tagline. The advertisements emotionally connect players to the brand which helps it in enhancing the sales and number of customers (Grady, 2016).  

Difference between the new marketing approach of Nike and Under Armour is as follows:

• Nike represents it as a mighty king whereas UA acts like an underdog
• Nike pays attention to the democratizes fitness whereas UA focuses on the professional athletes
• Nike helps in proving yourself right, and UA helps in proving others wrong (Tuten & Solomon, 2017).

Under Armour now does not have a shortage of stars partners as it includes Tom Brady, Gisele Bundchen, who contributes to the growth and development of the company. The tagline of Nike is “Just Do it”, Under Armour targets this tagline by showing the brand as how to do it. So the company is selecting effective strategies for handling its issue of limited geographical diversification and marketing of products. Apart from it, UA needs to target and explore the new market segment for expanding its target market. The endorsement contracts of the celebrities used by the firm need to be adequately researched and re-evaluated for developing the best potential endorsement contracts which can increase the brand awareness and decrease the risk related with the unknown future payouts (Wear, Heere & Clopton, 2016).

On the other hand, with respect to the issue of global growth, the company possesses significant potential for earning the profit within the international market and which can also help it in increasing the profit margin in future. Along with this, the firm needs to expand its product line. This will not only improve the potential for profits but also decrease the risk related to the limited offerings. The diversification of products will lead to enhancing the reach of UA to the new markets of the consumers (Grady, 2017). Another recommendation for the issue of third-party manufacturing products is, the company needs to explore the options of acquiring or integrating the production of their raw materials inside the workplace. However, more research needs to be done for identifying whether this suggestion can be financially feasible and worth the cost long-term or not (Fraga, 2016).

With respect to my future research, I would like to do a diploma in marketing subject. The present assessment has developed my interest in the marketing area, and due to this, I want to do further courses in this. Along with this, I will develop skills and knowledge which are necessary within the vital area for getting a job in a well-repudiated firm.

Conclusion

From the study, it is concluded that Under Armour is a well-known company in the United States. The firm is offering products related to the sports to all type of athletes. UA is facing the issue in the field of limited marketing, no geographical diversification and many more. Along with this, the competition of the firm is with top brands like Nike and Adidas. To this, UA has recently used digital marketing strategy for enhancing its brand awareness and recognition which helped it in gaining competitive advantages against Nike. On the other hand, there are other solutions as well which UA can use for handling its issues.

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