Thomas Sibert
Professor Dr. Ecklund
MGMT 401
October 21, 2015
Question 1
The competitive forces compared to competitors in the industry are strong. There are twenty five major competitors involved in the sportswear and apparel industry, which can be found throughout different geographic locations across the world. In addition, competitors are constantly looking for new and innovative products that are priced accurately. Competitors in the sportswear and apparel industry are very involved when it comes to sponsoring events and endorsing athletes. Competitors create contracts with sports teams that are classified as professional, college, and non -professional teams. It is not uncommon to see companies such as Under Armour, Nike, and Adidas
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However, as the organization grew over time, they began to offer more products in following categories: apparel, heat gear, all season gear, footwear, and accessories. These products were created for men, women, and children.
• In 2013, Under Armour reached revenues as high as 2.3 billion, which focused on “sports apparel, active wear, and athletic footwear in the United States” (Thompson, 1). The brand had become so well-known that it could easily be compared to Nike or other large sports apparel organizations. Under Amour’s market share increased significantly from originally 1.1 percent in 2011 to 12.7 percent in 2012, and 14.7 percent in 2013 (Thompson, 1). Compared to Nike and Adidas, it was ranked number two between both companies.
• Under Armour was able to expand its operations worldwide, which allowed the organization to further strengthen its brand.
• Under Armour expanded its operations by utilizing its distribution centers along with offering products that were accessible through retailers, catalog retailers, Under Armour factory outlet and specialty stores, and sales through the company’s website.
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However, there are several front burner issues such as outsourcing, brand name, and differentiation between competitors. First, the company outsources the majority of its raw materials for manufacturing. One of the potential issues Under Armour faces is supplier bargaining power. As a result, suppliers as well as the raw materials used to produce materials could increase substantially. This could result in fewer sales based upon the consumers desire to purchase the product or not. Second, Under Armour faces issues with its brand recognition. Several commonly known products such as Kleenex, Zipper, and Dumpster are terms which are becoming classified as generic terms. Surprisingly, Under Armour has not done anything at this point in time. However, if they want to secure the brand name, they need to react and do something quickly. Lastly, the organization suffers from brand differentiation with other competitors such as Nike and Adidas. Consumers are mixing up certain attributes of Under Armour with Nike or Adidas. For example, Nike refers to its technology within its products as “Dri-Fit.” However, they in reality are buying Under Armour clothing which is referred to as heat gear, cold gear, or all season gear. The company needs to look into ways of making their brand stronger, which could be by developing something new or utilize materials that are not easily accessible to all
Under Armour’s product is swim gear. They sell their product by doing what Adidas did, used motivation, emotion, and a message to connect with the audience. But, Under Armour used a famous celebrity named Michael Phelps. The audience starts to pay attention to the ad and either feels connected or wants to be a better athlete like Phelps. Under Armour finally manipulated their audience into buying their
Market Analysis Summary The global sports and fitness clothing market is expected to soon reach over $125 billion dollars (PR Newswire, 2015, June 26) and individuals across the U.S. are becoming more active (Institute for Health Metric and Evaluation, 2013, Jul 10). The breadth of the overall market covers many subsets of products and consumer groups. Target segment. There are two primary segments in the market; sports apparel and fitness clothing.
My topic of choice was pretty tough. As I concluded my research on Under Armour, I can assure you that they have many areas to improve in to even be considered a major threat to Nike or Adidas. Their products are heading in the right direction, but more guidance is needed from senior correspondents that have more experience in the field of marketing and strategy. Under Armour revenues are increasing, but at the current pace, Nike will double their net gross in a year. Athletes and universities are contributing in branding Under Armour along with remaining loyal, but their apparel to me is not attractive. For starters, every major football team that I have noticed supporting them has very bland uniforms or very flashy uniforms. As the saying goes, “bad publicity is better than no publicity”; at least we are discussing them along side Nike and Adidas.
Under Armour provides innovatively designed performance products that incorporated a variety of technologically advanced fabrics and specialized manufacturing techniques, all in attempt to make the wearer feel “drier, lighter, and more comfortable.” This is Under Armour’s core competitive strength.
Overall, Under Armor did an outstanding job targeting young, aspiring athletes to do what they want to do with their life. They used logic to show how hard the athletes work along with emotion to show how serious they take their training. Finally, Under Armor used the credibility of the athletes to sell their new training shoe. This commercial will make anyone want to purchase a pair of shoes and workout themselves. Since the commercial is on such a serious level, viewers emotionally connect with it which makes Under Armor seem like the best brand
Place: They opened discount factory outlet stores in rural areas and retail stores in urban shopping center. By selling different kind of product in different places help them to meet the different need of the customers. On the other hand, they also sell their product online, where customer can purchase their product at anywhere and anytime. All this make them be able to maximize their gain.
Under Armour’s target market is consumers that are involved in physical activities. The demographic age groups that they cater to varies from youth to adults. Their products can with stand any weather condition from cold weather to warm weather, which means their product can be used in any geographic location. These consumers can be either light user like walkers or heavy users like football players.
Under Armour is a leading athletic clothing line directed towards the overall athlete who is looking for the most comfort during extracurricular activities. The mission of the company is, "to provide the world with technically advanced products engineered with exclusive fabric construction, supreme moisture management, and proven innovation. In short, every Under Armour product is doing something for you; it's making you better."
Under Amour Company ventured into a market segment that was overcrowded, it had thousands of companies that competed against each other. Out of the many companies involved in the trade, the two most formidable threats seemed to be orchestrated by Nike and Adidas. These are two giant sports apparel and footwear, which pride themselves as having been long term veterans in the industry. Nike in particular was christened as the ultimate shoe and athletic apparel company with revenues of $18.6 billion, net income of $1.9 billion and more than thirty two thousand employees globally in the year 2008. This makes it the largest athletic shoe and apparel seller in the world. This company has seen major expansions in outlets throughout the world over the years. Adidas on its part has managed to build a powerful brand through its technological innovations and aggressive marketing where they spend up to thirteen per cent of their revenue besides offering high quality services. These scenarios seem to present Under Armour with a massive competitive disadvantage.
The sports apparel and accessories industry has a highly competitive market. Businesses are constantly competing for elite athletes to sponsor, raw materials, and every opportunity to expand. Under Armour is able to not only survive but thrive in this market because of their ability to think outside of the box. They are constantly creating new and exciting products that help athletes everywhere.
The corporation should invest more money in research and innovation since this is what has helped them to make a product that rivals their competitors. At the same time, it is imperative for them to improve their machinery for cheap labor costs which will help the company increase its production allowing it to meet the demand in the market. By improving production leading to lower costs of making shoes, apparel, and equipment, Nike will achieve higher demand assuming a quality product is maintained in that process. They will stand a better chance of competing in the industry (Hill, 2009). The organization is already in a better position for meeting the demand, customer taste, and needs. The company should improve quality by focusing on developing lightweight products that are more durable compared to those offered by the competitors. Also, Nike can keep up their success by continuing to reinvent and improve their items and continue to meet the current demand by using new technology. It can also use the Internet to communicate with consumers (Hill, 2009). By developing new technology, Nike will allow the customers to suggest and design their shoes online. To achieve this goal, it is fundamental to enhance areas such as their website to make it more user-friendly. Finally, the company should pay attention to small startup organizations that enter the
The current market for footwear particularly sneakers is booming, fueled by millennial demand and the organization 's strategic business approach. The international sneaker market has also grown by approximately 40% since 2014 to an estimated $55 billion. In 2015 the athletic footwear industry in the United States grew by 8% generating about $17.2 billion in sales. Out of that number, Nike sales are approximately 3% with the average selling price increasing by 5% which translates to $61.15 (Hill, 2009). The millennials alone are driving the market as they spent approximately $21 billion on footwear in 2014. In Japan alone, the organization has boosted the market by about $2.6 billion. Furthermore, the footwear industry is expected to be one
Nike American Sportswear generated revenue of 7495 million US dollars in 2014, which was almost double of 2009 revenue of Nike Sportswear (Statista, 2015).The sales of (Athletic) Sportswear of Nike 90 million US dollars, however, the sale of Adidas Sportswear (Competitor of Nike) was 25 million US dollars, which was not even one third of Nike Sportswear sales (Statista, 2015).Nonetheless, the return on assets and equity are 13.41% and 26.43% respectively (Yahoo Finanace, 2015).
the shoe industry has are making shoes that all people wear such as setting a
Under Armour has always set aggressive targets for themselves and they should not change that now. The leadership team believes that “a 3% share of the (athletic footwear) market would nearly double UA’s total revenue” (Wheelen, Hunger, Hoffman, & Bamford, 2015, 2012, 2010), and this should be another one of the metrics that Under Armour monitors and grows.