SlideShare a Scribd company logo
1 of 63
ARMOUR
MARKETING
UNDER ARMOUR, INC.
Marketing Strategy Management
PSU MKTG 464
Professor TC Dale
Fall 2016
Abdul Alwisali,
Brett Carter,
Heather McGee,
Kimberly Riness
& Megan Stacey
Table of Contents
1
Executive Summary……………………………………………………………………………….…...2
Situation Analysis………………………………………………………………………………....……4
Market Analysis...………………………………………………….…………………………….…….13
Competitive Analysis………………………………………………………….……………………….19
SWOT Analysis………………………………………………….…………………………………….23
Strategic Market Plan………………………………………………………………………….……...31
Marketing Program Strategies…………………………………………………….………………….37
Implementation and Control…………………………………………………….…………………....42
Bibliography…………………………………………………………………………………….………..
Appendices…………………………………………………….…………………………………………
Executive Summary
2
Under Armour has the opportunity to grow their business through personalization. Since
UA’s inception they’ve excelled in innovative sportswear textiles. Founder Kevin Plank
capitalized on the opportunity to create sweat wicking and body temperature regulating fabrics.
While playing collegiate football, Kevin realized how uncomfortable cotton was during workouts.
He envisioned a lightweight shirt that would absorb sweat, while leaving the wearer feeling
comfortable and dry. Kevin Plank chased his vision, running through the streets of New York’s
fashion district, looking for that perfect material. Once he found it, Kevin constructed shirts and
gave the shirts to former college teammates, who were then, playing in the NFL. With the
succession of the brand, Under Armour became the newest leading sportswear company in the
USA.
This marketing plan is a thorough discussion of Under Armour itself, the industries Under
Armour operates in, the condition of the market and its segments, Under Armour’s direct
competition, as well as a discussion of Under Armour’s relevant strengths, weaknesses,
opportunities, and threats. By introducing a customization platform for consumers, Under
Armour is allowing themselves to capitalize on particular opportunities, while offsetting some
adverse effects from any potential threats. Our goal is capture an additional 0.5% of the entire
North American apparel and footwear market within the first year of the customization offering.
This industry captures the general apparel industry, not exclusive to performance sportswear.
Under Armour currently holds 1% of this market. From 2013-2014, Under Armour experienced a
32% sales growth rate. Our projection is to increase this annual sales growth rate to 35% within
the first year of the customization launch. Our goal is to attract an exponential amount of
customers to Under Armour by providing opportunities for them to get more involved with the
brand. Direct to consumer sales were $3 billion in 2014 with a goal of hitting $4 billion by 2016
(marketrealist).
Our objective is to introduce customizable Under Armour apparel through the UA Record
app and through UnderArmour.com. We will differentiate ourselves in the marketplace by
3
offering apparel only, as opposed to our competitors who only offer customizable footwear. We
will be providing a service differentiation, bringing our customers into the product development
process. The two main market segments we will be targeting are the Urban Athlete and the
Achiever. Both segments together represent about 59.4 million consumers.
Annual sales are predicted to equal an average of 162 million dollars; totalling 486
million dollars in the first three years of operation. Program expenses for the first three years
include: 10 million dollar SAP budget, near 2 million dollars in new hire salaries, and 58 million
dollar marketing budget; equating to about 70 million dollars invested.
We will measure the success of Custom Armour by using the following metrics: forward-
looking internal performance metrics (i.e. app downloads), backward-looking internal
performance metrics (i.e. sales revenue), forward-looking external performance metrics (i.e.
perceived performance), and backward-looking external metrics (i.e. market share). Our
program’s progression will be assessed using check-ins after one month, three months, and six
months. These check-ins will be guided through Under Armour Connected Fitness, SAP Mobile
application development platform solutions. Customization platform makes consumers feel like
they are part of the value creation process (value co-creation). This, as Under Armour will see,
leads to increased customer loyalty and retention, increased brand awareness, and an increase
in market share, while still being able to work towards their long-term goals: becoming a more
international brand, and gaining ground on Nike in the athletic apparel industry.
Situation Analysis
Company Analysis
Founded in 1996 by Kevin Plank, former special teams captain for University of
Maryland, Under Armour, Inc. (UA) had grown to be the 39th
largest apparel and footwear
company worldwide in 2013 (Euromonitor International). Under Armour specializes in athletic
4
apparel, shoes, and accessories designed for excellent performance in physical activities. The
company is based in the United States, with headquarters in Maryland, but also operates in
Latin America, Europe, Asia, the Middle East and Africa. In North America, UA manages 125
factory stores and five brand stores (MarketLine). The company primarily sells its products
through wholesale channels, but is working to increase growth in selling directly to consumers.
Under Armour experienced 32.3% growth in net revenues, from $2,332.1 million in 2013
to $3,084.4 million in 2014, a $752.3 million increase. Net revenues by product can be broken
down into four categories: apparel, footwear, accessories, and licensing and other revenues.
For the 2014 fiscal year, Under Armour’s apparel category was responsible for 74.3% of total
net revenue, footwear accounted for 14%, accessories were 8.9%, and the remaining 2.8% was
generated from the licensing and other revenues category (see Appendix A for further
information). Lastly, accounting for 2.8% of net revenue, or $86.4 million, is the licensing and
other revenues category. Furthermore, the company experienced a one-year sales growth rate
of 32.3% and an income growth rate of 28.2% for the 2014 fiscal year. Overall, Under Armour
has experienced impressive growth over the past few years, and according to Market Realist,
“the company has been able to grow revenue at 20%+ growth rates for 19 consecutive
quarters.” (See Appendix B for financial information)
Under Armour primarily targets the sportswear market, which was a $268 billion market,
worldwide in 2014. North America generates 36% of that income, or $96.5 billion. Under Armour
holds 3.9% of the sportswear market in North America, and 1.6% worldwide. It is actually the
fourth-ranked company for the North American sportswear market, following Nike, as the market
leader at 20.6%, VF Corp. with 5.7%, and Adidas at 4.7%, for the 2014 year. (see Appendix C).
UA’s products can also be classified on a larger scale in the general apparel and footwear
market. In 2014, apparel and footwear had a market size of $1,749.5 billion globally, and $364.3
billion within North America. Of that, Under Armour, Inc. accounted for 0.2%, and 1.0%,
respectively (see Appendix D).
5
Under Armour’s market orientation focuses on the superior engineering of their apparel
and how their assorted designs fulfill various customer needs, which would be expanded
through the implementation of Custom Armour. Under Armour apparel is designed for active
performance, with an emphasis on comfort and mobility while providing aid in regulating body
temperature in any weather condition. Many products also contain moisture-wicking
technologies. Products are primarily marketed based on customer needs through the company’s
trademarked gear lines: HEATGEAR for hot weather conditions, COLDGEAR for cold weather,
and ALLSEASONGEAR. In addition, each line is available in three different fits for customers to
choose from: loose/relaxed fit, fitted/athletic fit, and compression/tight fit.
Products in the sportswear market are also segmented based on the end-user by
apparel for men, women, and children. According to Euromonitor International, menswear
dominated 49% of Under Armour’s sales in 2013. However, the company also has a strategy to
nurture young players and underdogs (Market Realist), so they are starting to focus more on
orienting their business in a way that fosters lifelong customers that will provide the most value
to their company.
Environmental Analysis
Operating a business as large as Under Armour and being somewhat of a global brand,
where they are outsourcing labor and shipping to areas outside of the U.S., Under Armour is
subject to several environmental forces and trends. Most simply, these trends can be
categorized into 4 different market forces: Political (legal/regulatory) trends, Economic trends,
Socio-cultural trends, and Technological trends. Below will be a discussion of several trends
under each category.
Political Trends:
Labor Laws in Manufacturing Countries:Under Armour outsources most of its manufacturing
processes to countries outside of the United States. This means that they will have to adhere to
6
certain labor standards and labor regulations that may be different going from country to country
and continent to continent.
Rising Labor Wages: In the United States and elsewhere, labor wages have been steadily
rising, with many states looking to make $15 per hour the new minimum wage standard. In fact,
in April, the Employment Cost Index (ECI, which measures price of labor) was up .7%. It may
not seem like much but is the largest gain in the last year, and the trend is only going up steadily
(reuters.com). What this means for Under Armour is basically an increase in investment for their
employees. Now, employees will seek higher wages and, conversely, Under Armour will seek
better performance from these employees.
Tariffs, Quotas, etc.: Being a commodity driven company and manufacturing in several
different countries, Under Armour is subject to different tariffs and quotas that change daily it
seems, which can prevent them from being able to meet customer demand.
Economic Trends:
Currency Exchange: Currency exchange is always an issue for a country selling products to
several countries. In reality, the value of the US dollar is going to fluctuate daily, as well as
values of other currencies around the world like the Japanese Yen, the British pound, etc. In just
5 days, the exchange values from the pound to the dollar fluctuated between 3 cents (and
fractions of cents) hundreds of times (CNNMoney).
Fluctuating Commodity Prices: The foundation of Under Armour’s product manufacturing is
based on commodities: rubber for shoe soles, cotton for their clothes, etc. This means that as
they purchase their materials, they are going to have to be aware of times to buy and times to
not buy. Currently, cotton prices are historically lower now than they have been in the past and
appear to remain steady (TradingEconomics). However, these prices can literally change over
the next few days and Under Armour must be prepared. This could give Under Armour issues in
terms of meeting customer demand when the customization platform launches.
7
Economic Conditions: As economic conditions improve or become worse in different
countries, customers will have more or less disposable income to spend. Under Armour is
considered one of the pricier options; so if members of an economy, in general, are losing their
spending power, Under Armour may not be the first option for consumers. Vice versa; if an
economy is performing well, those customers have increased spending power and may
consider Under Armour a more likely source for performance apparel.
Socio-Cultural Trends:
Endorsement Deals: Today, endorsing celebrities is one of the most powerful ways to increase
brand exposure and eventually market share. People, in general, have become borderline
obsessive about vicariously following celebrities regardless of if they are actors, prominent
business people, athletes, etc. Participating in this movement, as they are with endorsement
deals NBA all-star Steph Curry, NFL all-star Tom Brady, etc., Under Armour is able to increase
their brand equity and awareness among people who follow athletes ruthlessly. A customization
platform will allow consumers to adjust color, text, etc. for their favorites athlete’s signature
apparel, and being able to endorse highly recognized professional athletes means more interest
in the customization platform.
Fitness Movement:Something that is somewhat old but still relevant and growing is the fitness
movement, which means more and more people are looking for ways to improve their fitness
condition. In fact, according to a Gallup survey of over 300,000 American adults, over half of
them report exercising 3 or more times a week for at least 30 minutes a day and, in recent
years, this number has only gone up (Gallup).
Casual Movement:Converse to the above idea, people are also wearing more performance
apparel in casual settings, especially for women. It is not so much about wearing any sort of
flashy clothing, it is now about feeling comfortable with what you are wearing, and for women, it
is becoming “trendy” to wear athletic apparel is casual settings. This represents an opportunity
8
for Under Armour to create apparel that appeals to this segment of consumers (Weingus).
According to fashion psychologist Dawnn Karen, “people want to be healthy. They want people
to know they live a healthy lifestyle, exercise and take pride in themselves. You want people to
know you live a healthy lifestyle". What this means for a customization platform is that
consumers can take items that may not be highly fashionable and turn them into highly
fashionable by adjusting fit, color, etc.
Sustainability: Another socio-cultural trend is based on the idea of sustainability. Not so much
from a company standpoint, but rather a consumer standpoint. Today, more people prefer to
buy clothes from companies that they know were sustainably created through things like “green
manufacturing”. A study done by Neilsen found that about two-thirds of consumers around the
world (based on 28,000 consumers), prefer to buy products from an environmentally friendly
company and also think that these companies should work to support the environment
(Neilsen).
Technological Trends:
Smart Technology/Apparel: It is no secret that technology is booming and new inventions are
literally being created on a daily basis. Recently, Under Armour put out its E39 compression
shirt and has introduced it to a few NFL athletes. Basically, this compression shirt has features
that allow the wearer to monitor breathing and heart rate levels while athletes are working out
using a removable apparatus built into the shirt itself (Engadget). More often, athletes will be
looking for ways to monitor things like this without having to worry about any excessive
equipment or scientists that are studying their every move.
eCommerce Growth: An obvious trend is the growth of eCommerce. According to the United
States Census Bureau, of all retail sales in the United States, in the second quarter of 2015,
eCommerce contributed to more than 7% of those sales (83 billion of 1.2 trillion); up 1.5% from
the previous year People around the world, every day, are spending millions of dollars using the
9
internet as means to make purchases (USCB). Under Armour has already taken its eCommerce
growth international where people from all around the world are able to purchase Under Armour
products. Also, with the recent understanding as traditional brick and mortar stores becoming
more of showrooms than anything else, establishing an online presence early can be incredibly
beneficial for Under Armour and its future growth (10K).
Demand for Mobile Applications: Moving with the technology trend is also a mobile trend,
based on the fact that almost two-thirds (62%) of American adults actively use a smartphone
(Pew Research Center). People are becoming fascinated with their mobile devices and all of its
capabilities, and seek to increase the levels of convenience by adding new applications to their
already capable devices. Being a performance apparel company appealing to the mid to
hardcore athletes, Under Armour has the opportunity to match their focus on athletic
performance with the demand for mobile applications. They have already somewhat done so by
purchasing rights to fitness apps like MyFitnessPal and Endomondo but still have the
opportunity to expand this part of the business.
Industry Analysis
Industry Profile:
Under Armour’s performance apparel, footwear and accessories participate in the world
sportswear industry. As stated in Under Armour’s 10-K filing, UA performs in four segments:
North America, Europe, the Middle East and Africa (EMEA), Asia-Pacific, and Latin America,
each of which function principally in the “design, development, marketing, and distribution of
performance apparel, footwear, and accessories” industry (Edgar Online). Their products
operate within five industries defined by the North American Industry Classification System as:
1) Sporting and Athletic Goods Manufacturing (NAICS 339920), 2) Men’s and Boy’s Cut and
Sew Apparel Manufacturing (315220), 3) Women’s, Girl’s, and Infants’ Cut and Sew Apparel
10
Manufacturing (315240), 4) Apparel Accessories and Other Apparel Manufacturing (315990),
and 5) Footwear Manufacturing (316210).
The sporting and athletic goods manufacturing is a $39.2 billion industry. This industry is
involved with manufacturing of athletic and sporting goods that do not include apparel and
footwear, but includes other products offered by Under Armour. Therefore, Under Armour’s
apparel products are classified under the men’s and boy’s cut and sew apparel manufacturing,
and women’s, girls’ and infants’ cut and sew apparel manufacturing industries. The women’s
apparel industry generates higher annual revenue than the men’s apparel industry, but the
United States contributes to the men’s industry substantially more. Women’s apparel is an $83.5
billion industry, but the U.S. only contributes 5.2% of that, or $4.3 billion in annual revenue. In
comparison, men’s apparel is a $72.2 billion industry. The United States is actually the top
contributor to in men’s and boys’ apparel manufacturing, providing 37.1%, or $26.8 billion, in
annual revenue.
The apparel accessories and other apparel manufacturing industry revolves around
manufacturing of apparel and accessories, and therefore includes UA’s other miscellaneous
products. The apparel accessories and other apparel is an $18.8 billion industry. Lastly, Under
Armour also operates in the footwear industry, which generated $59.8 billion in annual revenue.
The United States leads the industry with $35.6 billion in revenue, which is 59.6% of the total
industry. All together, these five industry categories cover the various performance products
offered by Under Armour. (See APPENDIX for further information)
Industry Growth:
Due to the variety of products, which fall into different industries, there are various
growth rates within the industry environment pertaining to Under Armour, Inc. According to
Euromonitor International, World apparel and footwear value grew at a rate of 23.9% during
2012 to 2013. However, sales of specifically activewear have outgrown the general apparel
11
industry all together. Demand for athletic apparel has greatly increased due to current trends in
the industry, such as the desire for comfort and versatility while still being chic and fashionable,
which sportswear has been attempting to fulfill through things such as “athleisure” trends. By
2020, the World sportswear market is estimated to generate revenue of $184.5 billion, with a
forecasted compound aggregate growth rate of 4.3% during the 2015-2020 period (Allied
Market Research).
Major Issues:
The variety of products and technologies within the sportswear segment causes issues
for companies due to overlapping industry involvement. There is not a specific sportswear
apparel industry, so companies must analyze multiple industries in which they are involved, in
order to get a clear understanding of the environment. This also makes operations more
complex to manage, and even more so when taking international business into consideration.
One problem for the industry will likely be becoming more sustainable, especially with
outsourcing. As the industry expands, it will leave behind a larger carbon footprint. The industry
will need to adapt in order to fulfill demand in a sustainable and efficient way.
An assortment of product offerings in sportswear also provides for a multitude of
opportunities, particularly with innovation. Many simple innovations, such as a small, hidden
pocket in a waistband of running pants, can greatly enhance the experience associated with
sportswear. The plentiful innovation opportunities can cause issues in the manufacturing
industries, but also in the general fashion industry. Sportswear has been disrupting the fashion
industry with its comfortable, yet growingly chic apparel. This has greatly contributed to industry
growth, but makes the sportswear industry much more dynamic and forces creativity to think
outside just performance and functionality aspects of products.
Market Analysis
Market segmentation:
12
Research among these segments was done by Egg Strategy a market strategy firm
based in Boulder, Colorado, for the Outdoor Industry Association in 2014. Through the data
given calculations were made to determine the following. The numbers are based on the United
States only, where 198 million consumers between 19-65, are athletic apparel consumers
(Outdoor Industry Association). To be considered an athletic apparel consumer, one most
spend at least one hour a week outdoors, has participated in one traditional or non-traditional
outdoor activity in the last year, and purchase equipment, apparel or technology for their
respective activities. Of these 198 million 67.3 million live in highly populated urban cities; and,
are more likely to spend a greater amount of money on athletic apparel. With 85.2 million of the
original 198 million who have kids at home which they purchase the same for their kids as
themselves . From there, 60 million of this 198 million consumers are women between the ages
of 25-44 years old. With 138 million consumers who shop for their outdoor products online,
these consumers are are total potential market for Under Armours customization platform.
These consumers integrate technology with their activities to better achieve their needs and
values (Outdoor Industry Association). (Due to rounding the Outdoor Consumer population does
not equal 100%. See Appendix One for Market Segmentation)
● The Achiever is 10% of the United States athletic consumer population but spends 17%
of the total spending (Outdoor Industry Association). The Achiever is the participation
consumer, who spend most of their time outdoors. They can be rock climbers, long
distance runners, or mountain bikers. These are the consumers who thrive on
competition and performing to the highest standard. These customers have medium
loyalty. They base value within the functionality and durability of their apparel. They tend
to be males in their 20-30’s who live a highly active lifestyle.
13
● The Outdoor Native makes up 12% of the United States athletic consumer population
and 16% outdoor spending (Outdoor Industry Association). These consumers are active
and spend most their time outdoors for the enjoyment and adventure. They can be
hikers, kayakers, and campers. They take a more family and friends point of view on
activities looking to share the experience. They are medium to high loyalty. These
consumers value apparel that can transition between actives and is universal, and
affordable. They tend to also be males in their 30-40’s with kids.
● The Urban Athlete is 20% of the United States athletic consumer population and 33%
of spending (Outdoor Industry Association). These consumers are about the game. They
are social members of the athletic community with a love of competition. They tend to be
basketball players, CrossFit enthusiast, or yogis. These consumers are the most style
conscious and have a high loyalty rate to their respective brands. They incorporate
technology into their lifestyles. They tend to be educated men or women with a high
income in their 20-30’s.
● The Aspirational Core is 14% of the United States athletic consumer population and
accounts for 14% of spending (Outdoor Industry Association). These consumers tend
focus on one major activity. Wither trail running, or camping they stick to that activity and
look for apparel tailored to their activity. These customers take time to find the right
apparel and go through many items till they find the right one. They enjoy fashion athletic
clothing, but brand recognition is extremely important. They are medium to high loyalty
consumers. These consumers tend to be single men and women who are in their 20-
30’s.
● The Athleisure is 20% of the United States athletic consumer population and makes up
12% of spending (Outdoor Industry Association). These consumers are not necessarily
active they prefer going outdoors for relaxation purposes. They may spend time tending
to their garden or walking around a park. They are content with their leisurely outdoor
14
activates. They buy apparel from brands with a long standing name recognition, with a
low price tag. They have medium customer loyalty. They are generally women in their
30-50’s who live in less developed areas.
● The Sideliner is 12% of the United States athletic consumer population but only 4% of
spending (Outdoor Industry Association). They consumers have limited abilities to
physical limitations. They tend to spend their time outside relaxing or walking their dog in
a park. They are money conscious consumers. Looking for apparel that they can be
comfortable. With low brand loyalty. These consumers tend to be men and women in
their 50-60’s with relatively low incomes.
● The Complacent makes up 14% of the United States athletic consumer population and
much like the Sideliner they are 4% of the spending (Outdoor Industry Association).
They prefer to be indoors rather than outdoors. They were more than likely never
participant in any outdoor actives growing up and tend to go outdoors when needed.
Such as to walk to a friend’s house, or get mail. They are budget shoppers and prefer a
lower price over brand recognition; making them a low loyalty customer. They tend to be
men and women in their 50-70’s who live in suburbs.
Target Market Customer Profiles
Customer Needs, Value Drivers, And Adoption:
The main target market for Under Armour will be The Achiever and the Urban Athlete. Together
they account for about 59.4 million consumers, with 50% of the total spending. If you take into
account that the average outdoor consumer will spend $465 annually, $123 annually for shoes
and $137 on apparel; this target group has the potential of spending $15.4 billion at Under
Armour annually if they only buy Under Armour apparel and footwear in the United States
(Outdoor Industry Association). These are men and women in their 20-30’s with a higher income
and a higher amount of brand loyalty. Both of these segments value brand name, durability,
15
comfort and functionality. The Achiever values products with both style and function geared
towards all activities they participate in. The Urban Athlete values style and incorporating
technology into their activities. These two segments are also the early adopters due to their love
of functional clothing, fashion, and incorporating technology into their daily lives. Under Armour
use of professional athletes gives the everyday consumer, “this exposure to consumers helps
establish on-field authenticity as consumers can see products being worn by high-performing
athletes” (10K). Giving consumers a product in which they know they can trust and falls within
their needs from athletic apparel and footwear. By integrating customization Under Armour can
capture more potential customers from these segments by adding the stylization they desire in
their athletic apparel.
Market Demand
Forecast Size, Growth, and Potential of Each Segment
● The Achiever these consumers have 17% of total spending, we estimate that this
segment will continue to grow at a steady pace. The segment has the potential of
growing even more in the upcoming year due to the expansion of the high performance
achievers category. By being apart of many different activities barriers that were their
before are less now with the expansion of rental equipment. The rental equipment
industry is expected to grow from 34.5 billion in 2015, to 50 billion in 2016 (Statista). The
projected growth in rental equipment corresponds with the expected growth in The
Achiever Market. With the noncommittal ease of access to multiple sport equipment
there is greater potential that consumers will try different sports more frequently growing
both the spending and population for The Achieve’s.
● The Outdoor Native segment has 16% of the number of total spending, we estimate
that The Outdoor Native will have stagnated growth. These consumers are in their mid to
late 30s with the population in that age range that is not changing over the next few
years the segment size and spending will also see no change. This is a segment that will
16
become more brand loyal over the years as they perfect their outdoor needs and what
products work best in their environments. Potential to build on previous product offerings
breath will allow for a mass appeal in this segment.
● The Urban Athlete is 33% of the total spending in the industry come from Urban
Athlete’s, we estimate that this segment will continue to grow with the expansion of
urbanization in the United States, along with the growth in fit technology. Urbanization is
growing at a steady rate in the United States on average of 1.02% a year (The World
Factbook). With this growth in Urbanization there can be an expected match of rate for
Urban Athlete’s. This segment is the biggest spenders with technological innovations for
the athletic industry growing they are the first adopters of a product. Their use of
technology also allows them to be vocal about their thoughts on a product through digital
media, giving an advantage when it comes to perfecting a product for this market.
● The Aspirational Core since this segment accounts for 14% of total spending. This
segment will see a decrease as many of The Aspirational Core consumers will move and
become part of The Achiever market. The ease of participating in more than one activity
is becoming easier for consumers with rental options and cross functionality in clothing.
The Aspirational Core consumers will become more selective in brands and gain higher
brand loyalty for those specialized companies with products in their respective outdoor
activities.
● The Athleisure this segment accounts for 12% of outdoor spending and is about the
consumers that go outdoors for relaxation purposes, we estimate that the growth will be
stagnant. Between 2013 to 2014 inactivity between the ages of 30 to 40 saw a decrease
while 40 to 50 saw an increase in inactivity by nearly the same amount (Physical Activity
Council). This segment doesn’t necessarily have a huge potential since the customers in
this segment are using the product for a different reason than what the product is
17
intended for. However, Athleisure is becoming a new idea for many segments where it is
becoming a secondary segment added onto consumers primary segments.
● The Sideliner this segment is 4% of spending. Growth for the sideliner will see a little
increase as price is the main driver for their apparel choices. These consumers will opt
for store brands or even everyday clothing in place of name brand athletic gear. This age
group is seeing an increase in daily activity which will translate to an increase in active
wear needs (Physical Activity Council). The potential for this market is low cost clothing
that can transition from activewear to daily wear.
● The Complacent is 4% of outdoor consumer spending. They will see a decrease due to
the markup for athletic clothes, and opt for everyday clothes to replace athletic gear for
their outdoor activities. These customers who prefer indoor rather than outdoors, they
have a low brand loyalty, prefer low prices over brand recognition. These consumers are
older but still have buying power for gifts. Their potential is in creating a product that they
can give as a gift rather than wear themselves.
Competitive Analysis
Competitive Environment:
As previously mentioned, Under Armor competes in five major industries: the shoe and
footwear manufacturing, athletic and sporting goods industry, men’s and boy’s cut and sew
apparel manufacturing, women’s girls’ and infants’ cut and sew manufacturing, and the apparel
accessories and other accessories.The customization entry barrier is moderate because the
customization market is easy to enter and there are a lot of players that want to partake in
customization. However, the competition is extremely intense amongst globally renowned
industry giants.
18
All five industries Under Armour competes in, have extremely high buyer power
because; there are many product alternatives available. Under Armour and its competitors hold
a lot of power over their foreign suppliers. Sourcing overseas means low production and labor
costs. Suppliers have relatively low power in the industry because the apparel companies fund
their factory’s business and have complete control over their financials.
Brand substitutes for Under Armour apparel or footwear include four main players: Nike,
Adidas AG, PUMA, and New Balance. However, there are smaller companies such as: Lulu
Lemon, PUMA, Wilson, Russell, Champion, Lucy, Mizuno, Fila, Asics, Saucony, Athleta, Starter,
and Brooks (see appendix 3). All five industries that UA competes in have a low concentration
level, but the rivalry amongst key players is extremely high and increasing rapidly. The net
overall scan of the industry looks healthy for Under Armour. Recapping the moderate threat of
new market entrants, high buyer power, low exact product product substitutes, Under Armour’s
strong power over suppliers, and low competitive rivalry. See appendix 6 for Porter’s Five
Forces visual.
Competitive Landscape:
In the early years of the 21st
century, technology connected sports apparel
manufacturers closer than ever before to retailers, extensive internet searches, e-commerce
tools and highly innovative POS systems. This tech boom created tremendous growth and
brand recognition amongst industry giants (Gale Business Insights). The four main category
competitors of UA are: Nike, Adidas, PUMA, and New Balance.
Indirect competitors of UA are Columbia, Gildan, Gap, VF Corp, Billabong,
Hanesbrands, and Quicksilver (Market Share Reporter). Customers could potentially substitute
our product for these apparel companies. These companies are the budget competitors. If
customers only have a certain amount to spend on activewear, then they could potentially
switch to these competitors as they typically have lower price points.
19
Columbia’s offerings are geared towards hiking, skiing, outdoor activities as well as
after-ski and leisurewear. Customers have the option to purchase casual wear from Columbia,
which could pull from sales under the Under Armour leisurewear. Gap, VF Corp, Billabong,
Hanesbrand and Quicksilver all provide leisurewear to consumers. Our brand loyal customers
could switch to these competitors if cost became an issue. The cost sensitive customers should
be considered during economic downturns, for the potential flight, to the competitors that offer
goods with higher mark-downs.
One major concern for all direct and indirect competitors in the athletic shoe and apparel
industry are the constant fashion trend swings. The instantaneous trend changes cause volatility
in the marketplace.
Another grouping of budget competitors are companies who specialize in customization.
Some of our customers are coming to Under Armour solely to receive a customizable product,
under $100 dollars. Therefore, companies ranging from customizable Yankee candles,
Starbucks mugs, monogrammed apparel, and beyond are all considered competitors.
Key Competitors Profiles:
Nike’s position currently holds 8.2% of the athletic and sporting goods manufacturing market
share. Largest shoe company in the world and controls about 40% share of the US athletic
footwear market. In Greek translation, Nike means “The Goddess of Victory.” The company was
founded in Oregon in 1968 by Phil Knight. Nike originally went to market selling shoes under the
name of Blue Ribbon Sports. Today, Nike excels in shoe, apparel, accessory, and equipment
manufacturing within the athletic industry across the globe. They sell product in over 180
countries around the world. Currently, Nike employs near 63,000 people. Nike’s headquarters
are in Beaverton, Oregon. Their sales per employee are $448,834. They own Converse, Hurley,
Manchester United Merchandising Ltd, and many NIKE offshoots. Nike was ranked #1 in the
Fortune’s Top 500 Companies in Apparel, 2014 (Business Ranking Annual). The ranking was
20
judged off of profits, profits as a percentage of revenue, and stockholders’ equity. Nike’s current
net worth is $30.601 billion. All information sourced from Gale Business Insights.
Nike’s strength is their strong financial performance, creating a 13.24% operating profit margin.
Adidas AG creates athletic and sports lifestyle products ranging from footwear, apparel,
accessories, sport balls, and bags. Founded by Adi Dassler in Germany. In 1924 Adi and Rudolf
Dassler founded what was called, Dassler Brothers Shoe Factory. In 1948 a family feud
separated the shoe company. That is when Adi created Adidas and Rudolf created PUMA.
Today, Adidas AG encompasses four main brands: Adidas, Reebok, TaylorMade-adidas, and
Rockport. Adidas sells product in over 170 countries around the globe and employs over 45,000
people. Their sales average per employee is $383,322. Adidas current net worth is about
$17.601 billion. The global presence and product diversity (i.e. tennis, hockey, golf, basketball,
soccer, running, etc) are Adidas two main strengths. A couple major concerns for adidas are the
counterfeit goods on the market and the extremely competitive apparel and shoe market.
Sourced from Gale Business Insights. One major advantage Adidas has over global competitors
is their German international headquarters. Adidas sponsors many professional soccer teams
and has a large international fan following. One major threat for Adidas is the increase in price
of raw materials. According to Adidas SWAT report, “About 70% of the Group’s total cost of
sales was due to raw material and labor costs.”
PUMA’s sells and markets footwear, apparel and accessories. It started from The Dassler
Brothers Shoe Factory. Rudolf Dassler split the company in 1948 to create PUMA, while his
brother Adi, went off to create Adidas. Currently, PUMA has 11,267 employees and their sales
per employee is $319,443 (Gale Business Insights). In 2007, French luxury group PPR S.A.
PPR purchased a majority stake of PUMA for $7 billion dollars. This acquisition put PUMA on
the map as a “sportslifestyle manufacturer” and elevated PUMA’s brand image, creating more
value to their customers (Gale Business Insights). PUMA’s brand portfolio consists of: Cobra
Golf, Tretorn, Dobotex and Brandon.The recession in 2009, caused sales to drastically drop,
21
and since then, PUMA has working to revamp the brand and grow sales. Currently, PUMA is
worth $13.433 billion. Above information sourced from Gale Business Insights.
New Balance was founded in Boston, Massachusetts in 1906. New Balance was an arch
support company that transformed, over the years, into a specialized shoe manufacturer. They
create a wide variety of active shoes for women, men, and children. They also manufacture
accessories, sports monitors, sports recovery products, jackets and apparel for running and
sports teams. As of 2014, New Balance employed near 4,000 people. Their sales per employee
are $445,000, which is a very high ratio for the industry. Today, New Balance is worth $1.78
billion. Data sourced from Gale Business Insights. It holds 6.7% of the shoe & footwear
manufacturing market share in the USA. New Balance manufactures near 25% of their products
in the USA. Giving them a competitive advantage over Under Armour and Nike. Along with
Nike’s ID customization offering, New Balance also provides customization. New Balance has a
net worth of $1.78 billion dollars (IBIS World).
The threat for the industry as a whole is the foreign exchange risks. For foreign
conversion, profits are often loss, due to factories operating on the Yen, Euro, Yuan, Canadian
Dollar, Australian Dollar or other common forms of foreign money. Another industry-wide threat
is the increase and inflation of labor costs in Asia.
SWOT Analysis
A big part in understanding the validity of developing a platform where customers will be able to
customize particular Under Armour apparel is being able to understand the associated
strengths, weaknesses, opportunities, and threats. Below will be a list of each as well as a small
discussion on how it can affect Under Armour’s success with launching this new offering.
Internal to Under Armour
Strengths:
22
1. Diverse Product Portfolio: Although Under Armour started as a small apparel company
specializing in under shirts for serious football players, they have turned into a
performance apparel giant, as previously discussed. Now, their product portfolio features
their original under shirts to, graphic tees, sweatshirts, pants, sweatpants, and numerous
accessories. What this means for Under Armour’s potential customization platform is
that it will attract more customers to the platform itself. Although it is starting at just
apparel, which is already a niche, Under Armour’s diverse product portfolio will give
customers many more options to create something they can wear and call their own.
2. Endorsements with Pro Athletes: Hundreds of athletes around the world have been
signed to some sort of deal with some sort of big name company, regardless of the
industry the company operates in. Household names like Tiger Woods, LeBron James,
Tom Brady, and Steph Curry all have deals with large corporations (two of which are
Under Armour athletes; Steph Curry and Tom Brady). These sorts of deals promote both
the athlete and the brand because of the outrageous number of “followers” these
athletes have. By endorsing professional athletes, Under Armour has connected their
brand with these consumers (or “followers”) to increase their brand awareness, and have
created a way to promote specific products: basketball apparel with Steph Curry, football
apparel with Tom Brady, for example. What this means for a customization platform is
more consumers wanting to go in and personalize the things they see their favorite
athletes wear, as well as create their own twist on any signature apparel from the
athlete, like the Steph Curry II’s (McCormic, Karla).
3. Focus on Innovation: A relentless pursuit of innovation by Under Armour is by far one
of the main ways they have been able to create a multi-billion dollar brand. Their apparel
lines feature patented technology like Coldgear, Heatgear, and more, all of which have
been essential to creating appealing and new technology in apparel for consumers
(Aaker, David). This focus on innovation gives Under Armour the ability to facilitate much
23
more customization options; not only is it just text, graphics, colors, etc., but also
different technologies in different parts of the clothes. For example, there could be
someone who really likes how the Heatgear technologies keeps their body warm when
they sweat during cold football practices, but does not like how it feels. What they can
then do in the customization platform is get the Heatgear technology only on the sleeves
while the chest and back portion of the shirt could be simple cotton. In this case, the
consumer would get the best of both worlds.
4. Effective SupplyChain Management: In 2014, Bill Neinburg, Vice President of Global
Merchandise & Sales Planning at Under Armour, introduced this idea called 4D
Collaboration. Basically, 4D Collaboration brought channel partners together and put
data at the center of interaction in order to streamline production to get product to
consumers more efficiently, more timely, and more often (Supply Chain Digest).
Although this greatly affects Under Armour as a whole, it is also a strength of the
customization platform. 4D Collaboration will enable Under Armour to constantly improve
the lead times of getting customized product to consumers. Because the sales will be
direct to consumer through the website, the lead times are already reduced. However,
the customization aspect of it increases lead times because of all the necessary steps.
But, in the end, with an already effective strategy like 4D Collaboration, Under Armour
will have the ability to again bring lead times down in order to get product quickly out to
consumers and free of any error.
Weaknesses:
1. Reliance on U.S. Market: At the start, the customization platform will only be available
in the U.S. A heavy reliance on the U.S. market like this could make the customization
platform seem like it may not be performing so well, but in actuality could be a hit in
international markets. To put some numbers in perspective, roughly 80% of Under
24
Armour’s revenues come from the U.S. market alone (EdgarOnline). This, in the end,
may limit the reach of the customization platform.
2. Non-Contractual Agreements with Suppliers: Although the previously discussed 4D
collaboration has facilitated a strong supply chain management philosophy for Under
Armour, some of their third-party suppliers are not bound to any sort of contract. This
could prove to be an issue with Under Armour because, at any time, a supplier may
choose to end its business relationship with Under Armour. Not only could this increase
lead times, it may cause customer dissatisfaction. It should be noted here that effective
supply chain management is still a strength, however. When all pieces are aligned,
Under Armour’s supply chain management is extremely effective, but the idea of
suppliers being able to permanently end a relationship could still be an issue, if it were to
happen.
3. Matching Quality with Scale of Operations: With a focus on innovation, another one
of Under Armour’s main brand attributes is associated with quality. With a customization
platform, consumers are going to expect the same quality they see in Under Armour’s
non-customized apparel. This could be an issue for Under Armour because of their
excessive growth and additional revenue stream. Increased revenue means increased
number of consumers. Thus, as Under Armour’s scale of operations continues to grow
and their focus is expansion, matching quality to a larger scale of operations could be
problematic if the focus is taken away from quality assurance; because a larger scale
means higher demand to put out a lot of product that may not be as good as it should. If
the focus moves from quality, the brand could erode, and customer dissatisfaction could
increase (Passport).
External to Under Armour
Opportunities:
25
1. Growing Market for Women: In recent years, the athletic apparel market has been
growing substantially, particularly for women. Now, instead of people buying
performance apparel clothes because they hit the gym everyday, they buy in order to be
comfortable and look good. This trend is called the “Athleisure” market segment,
previously mentioned in target market analysis. According to the Huffington Post and
fashion psychologist Dawnn Karen, the “expectations of women’s bodies have shifted”.
The focus is now on fitness and being toned, and although not everyone works out
regularly, wearing athletic apparel out and about makes people think to themselves they
are indeed fit and healthy although they may not be (Weingus). This idea of women’s
perspectives on performance apparel, as well as society’s expectations of a woman’s
body, contribute to a growing female market. Being able to supply these female
consumers with a personalization outlet allows them to add their own twist to Under
Armour’s apparel that they can show off while working out, or not while working out.
2. Growing Footwear Market: Not only is the athletic footwear market expected to grow in
the upcoming years, there is an expected increase in demand for innovative footwear
(Research and Markets). Although the customization platform is not going to support the
customization of footwear initially, a growing athletic footwear market, as well as a place
where consumers can basically create their own shoes, will provide Under Armour an
opportunity to gain a more prominent position in the athletic footwear marketplace. As of
2014, footwear accounted for $430 million of total revenue (about 18%). With a
customization platform and a growing footwear market, Under Armour has the
opportunity to greatly increase this number.
3. Strategic Partnerships: By introducing a customization platform, Under Armour has the
opportunity to leverage strategic partnerships with other companies, in order to improve
public relations, increase brand awareness, and increase customer engagement and
loyalty. For example, Under Armour has the opportunity to reach out to companies like
26
Dick’s Sporting Goods to be a part of the Sports Matters campaign. What Dick’s does is
raise money for city sports teams that are having problems getting enough funding to
keep the teams alive. One thing Under Armour could do is team up with Dick’s and
provide these teams with some or all equipment. Where the customization platform
comes into play could be allowing the players to embroider their initials, their number,
their names, or anything that adds a personal touch to the jerseys, under shirts, pants,
shorts, etc. Not only will this improve public relations and brand awareness/recognition,
but it could also be a catalyst to future purchases from the athletes and their families
(sportsmatter.org).
Threats
1. Pressure from Consumers: As previously stated, Under Armour has created a brand
centered around providing new and innovative performance apparel, footwear, and
accessories. With that comes pressure from consumers to keep that innovative drive
going so that they get new stuff to potentially buy, or losing these consumers (Passport).
This obvious brand association will clearly leak into the expectations of a customization
platform. Consumers will be constantly expecting new ways to personalize their apparel
with different designs, colors, and other options, which means Under Armour must be
prepared to constantly innovate and improve the customization platform. If not, Under
Armour risks decreasing brand equity through bad public relations, decreased customer
loyalty, decreased market share, and more.
2. Imitative Offerings:Under Armour’s customization platform will initially be significantly
different from current competitors; NikeID only allows for the customization of shoes and
bags, and Adidas only allows for the customization of soccer cleats. What may become
a threat to Under Armour is their ability to differentiate their offering from competitors like
Nike and Adidas, specifically in the customization platform market. According to Small
Business Week, in 2013 alone, “nearly 75% of consumers claimed to want personalized
27
products and services”. This means that apparel companies in general, once they catch
on to the mass customization trend will end up developing their own platforms and
interfaces that will be similar to Under Armour. Thus, it will be a challenge for Under
Armour to keep their differentiation strategy relevant.
3. Few Barriers to Entry: The mass customization market is on pace to be the future of
retail and retail consumers. However, with the onslaught of technological advances, as
well as regular people being able to code user interfaces or develop their own apps, it is
clear that there are very few barriers to entry into the customization market. All a
company really needs is someone with basic coding experience, a good user interface
design, and something to customize. Now, suddenly, Under Armour is threatened with a
new competitor in the customized performance apparel marketplace.
Implications and Conclusions
Obviously for Under Armour there are many positive and negative, internal and external
forces to consider when developing a customization platform (strengths, weaknesses,
opportunities, threats). The company itself has created a brand built around the ideas of product
diversity, exceptional quality, and made to make a person perform better; per their website, “to
make all athletes better through passion, design, and the relentless pursuit of innovation”. This
sort of keen focus is what enabled Under Armour to influence a significant number of
consumers to buy from their brand, in a highly competitive marketplace, in what seems a few
years. Through their massive success, Under Armour has become a household name, with the
likes of Nike, Adidas, Puma, and more. Many of which started many years before Under Armour
did. With a strong focus on their core competencies and staying true to their brand, Under
Armour has developed a large and loyal customer base. To be specific, their target market
includes the “achiever” and the “urban athlete”. With that being said, it is difficult to make a
suggestion to a company that seems to be doing everything so right and is growing so fast.
However, where Under Armour, and many similar companies, fault is the ability to engage
28
consumers and keep them buying the same brand over and over. This can be argued for any
company really, but in a highly competitive industry like apparel, a potential consumer can
literally walk in a certain direction and can quickly find a substitute.
All things considered (company, industry, competitors, consumers, and marketplace) a
very viable option for Under Armour to gain market share, sales revenues, and more would be
creating a customization platform for consumers. Now, consumers are not only seeing value
through the performance attributes of Under Armour’s performance apparel (durability, quality,
style, etc.), but they are also becoming involved in the value creation process and enhancing
their association with the brand. What this means for Under Armour goes beyond business
performance measurements, but also results in increased brand awareness, brand recognition,
customer loyalty, customer engagement and more. All these things ultimately contribute to the
bottom line. What is featured in the following section is a discussion of the final steps and
strategies of the marketing plan. This includes the overall strategic marketing plan (market
focus, competitive strategy, and goals), marketing program strategies (product, distribution,
pricing, and promotional strategies), and finally a discussion of how the plan will work, how it will
be controlled, and what the likely results will be.
Strategic Market Plan
Marketing Missions and Goals
Although Under Armour has the opportunity to develop an entirely new customization
platform to get their consumers involved in the value creation process, there needs to be a
focused marketing strategy to be able to effectively bring the offering to consumers. Now,
instead of the value derived by the consumers coming from the products themselves, the
consumers will have a say in the product development process. Customers can contribute
personal creativity and ideas to the existing product, which increases the perceived value of the
good. Custom Armour will be designed for the style conscious consumers.
29
Our marketing mission, is to facilitate a customization platform to get consumers
interacting with the products, the website, the app, and, under all of this, Under Armour as a
whole, in order to increase the lifetime value of consumers. The goals of this marketing mission
are outlined as follows: increased customer loyalty and retention, increased brand awareness,
and increased customer engagement. However, in order to meet these general goals outlined
by the marketing mission, there needs to be specific and measurable objectives in place to
measure progress and success; these will be outlined later. First, will be a discussion of Under
Armour’s marketing strategy, the target market the offering is predominantly reaching out to with
the new service offering, and a list of measurable, achievable, and time-oriented goals.
Marketing Strategy
As previously mentioned, simply developing a stand alone customization platform will
not be a good enough offering to bring to consumers, especially considering they are not the
only company offering consumers with a platform that allows for the customization of particular
products. What will be a challenge for Under Armour is planning out a strategy that keeps their
offering separate from competing offers and the best way to do this is to use a differentiation
strategy. Below is a list of how Under Armour’s customization platform will be different than
competitors’ customization platforms:
● Customization Options: By simply giving consumers different customization options
will allow Under Armour to position their offering separate from competitors. Currently,
competing service offerings only allow for the manipulation of colors. Under Armour’s
customization platform will be much more diversified; consumers will be able to not only
alter color, but can add patterns, fabrics, different apparel technologies, text, and
particular graphics that may be uploaded by the user.
● Product Offerings:Initially, the customization platform will be limited to apparel.
Competing customization platforms limit their customization to just shoes, whereas
30
Under Armour will start with apparel (tops and bottoms) and will eventually have the
ability to add shoes and accessories to the customizable product offerings.
● Multi-Platform Availability: Under Armour’s customization platform will be available
through more than one medium. Instead of having to log onto a site through a web
browser, as consumers do through competing platforms, Under Armour’s platform will be
available on the web and through the UA Record app. This then allows customers to
play with the customization process on the go.
● Consistent Updates: Often times, competitors will offer a new shoe that is available for
customization. However, what is not offered through competitors is updates in terms of
available patterns, colors, fonts, text options, and more. Under Armour will provide
consumers will consistently updated options, which means new ways for consumers to
express themselves onto Under Armour’s apparel.
Target Market
Our primary target market is The Urban Athlete. This segment consists of highly social,
active members of the athletic community. They strongly identify with athletic brands and are
highly competitive individuals. Their competitive nature is something that is likely to attract them
to Custom Armour, especially since The Urban Athlete is rather style-conscious. The Connected
Fitness network will be in alignment with Custom Armour, which will also draw the attention of
the Urban Athlete, because it fits in with their busy, urban lifestyles, and the competition within
the Apps’ community provides incentive. They can also be very intense in their activities and
personality, which can be seen as coherent with the Under Armour Brand.
Our secondary target market is the Achiever. This market segment is filled with
competitive athletes than enjoy outdoor activities like running, hiking, and mountain biking. They
hold medium loyalty, but are responsible for 17% of buying in the industry. Adding the Achiever
and Urban Athlete, total amounts to about 59.4 million consumers, with 50% of the total
spending.
31
Objectives
Now that Under Armour has a specific marketing strategy, they know how their offering
will be different than competitors, and who they will be targeting, it is important to establish a
baseline understanding of how this new offering is going to benefit Under Armour as a business.
Below is a number of objectives and a brief discussion on each:
1. Increase website traffic/users by 30%: This objective is a process objective because it
is an indicator of the success of the actual use of the platform and people being more
engaged with the digital presence of Under Armour.
2. Increase annual sales by an additional 10%: This is an obvious end objective
because it is a direct measure of the success of the project overall. Under Armour is an
already growing company, so beyond their expected growth, the goal is to be an
additional 10%.
3. Increase market share 5% in the sports apparel market: Another obvious end
objective that shows how Under Armour is progressing in the sports apparel market
place. Although not necessarily attributable to the success of Custom Armour, it is an
indicator of overall success.
4. Increase performance apparel revenue 15%: This is an end objective pertaining
specifically to performance apparel because the customization platform will only initially
be available for apparel instead of apparel, shoes, etc.
5. Increase UA app users by 20%: This is a process objective that indicates people are
spending more time engaging with Under Armour through the means of a mobile
application.
6. Reach project profitability in 1 year: Clearly an end objective that is meant to measure
how long it will take to become profitable and provides a benchmark for later
observations.
32
7. Gain a 5% ROI (return on marketing investment) by year 3: This is another end
objective that will inform Under Armour about whether or not the project was worth the
investment in terms of how much was spent in the marketing budget.
8. Expand offering into footwear and accessories by year 2: A process objective that
shows the continued success of the customization platform. If the offering becomes
successful after year one, it may be worth at least looking into moving towards other
customization offerings.
9. Increase second purchases by 35% after year 1: One of the main purposes of
developing a customization platform such as this, is to engage the consumer and get
them involved in the value co-creation process. What this leads to is an increased
likelihood that consumers will repurchase particular products.
Market positioning
Positioning Custom Armour with the differentiating strategy, will be the most successful
strategy when introducing this new product to the market. Custom Armour’s differentiators
include the already established function performance oriented apparel and footwear already
sold by the company being leveraged to include personal style and preferences. This allows the
user to be in charge of the product they receive, allowing them to get their needs and want out
of the product. Along with that customization of athletic apparel is a relatively untapped market.
Many direct competitors in the market are focused mainly on mass customizable footwear. A
few small competitors will customize specific types of sportswear, such as secondskin who
customized competitive swimsuits. Custom Armour consumers will also have the ability to
incorporate Under Armour’s technology, such as their innovative GEAR™ line. This allows the
user to best fit their needs depending on climate and activity. As well as continuing Under
Armours stance on consumers learning about what they need and who to best achieve their
desired outcomes. Consumers will also be encouraged to download the UA Record app for
33
purchasing and seeing their friends or favorite athletes creations. This incorporation of the app
will allow Under Armour to better serve its customers and gain brand recognition.
The Perceptual map seen in Appendix 11 shows Under Armours desired position
compared to other players in the customization market. When looking at large companies with
a relatively low degree of customization there is Polo who offers customizable mens shirts, as
well as women's bikinis, but only with the option of adding a monogram and choosing from basic
colors. Along with Polo, Puma is also in the first sector who offers customized shoes at select
locations. Moving on to small companies with still a relatively low degree of customization is
Threadless. They offers custom designs on T-Shirts, which a consumer can choose the shirt
they want their choice of graphic on. Another small company with a higher degree of
customization is Euro Shoes. A european company that offers customizable shoes isolated to
that region. Lastly there are large companies with a high degree of customization, Nike, and
Adidas. Nike has their NikeID platform which allows users to customize both shoes and selected
accessories. Then Adidas who has Miadidas specializing in custom shoes for running, soccer,
tennis, and basketball. With Custom Armour, Under Armour should find itself in this section of a
perceptual map. Custom Armour’s value proposition is that they will provides you with the ability
to identify yourself uniquely while getting durability and functionality from your performance
Armour.
Brand strategy
Under Armour’s brand identity is a focused on providing new and innovative athletic
apparel to aid in active performance at every level. Custom Armour aids this by adding another
layer to their preexisting identity. The Custom Armour identity is providing new and innovative
athletic apparel, designed by and for the consumer, showcasing their personal style and
customized to their performance needs. Custom Armour will be the name of this addition
making it clear to the user what they would be doing, “customizing”. As well as keeping in line
with Under Armour’s naming, through the addition of Armour at the end of the name. The
34
personality of Under Armour is bold and strong. Their tag line of “I will”, showcases the athlete's
desire to be better, stronger, and powerful. They have built the fact that they are the underdog
into their brand personality, making them always striving to be better, bigger, and greater. At its
core Under Armour is about improved athletic performance. The next step for Under Armour is
allowing users to customize their apparel.
Under Armour builds and leverages their equity by their name and brand recognition.
Under Armour’s main tools for brand recognition are their Connected Fitness apps; UA Record,
MyFitnessPal, MapMyFitness, and Endomondo with over 140 million athletes using the app.
The brand equity that Connected Fitness provides for Under Armour is immeasurable.
“Ultimately, the more people exercise, the more athletic footwear and apparel they will buy,”
reported Aditi Pai from mobilehealthnews.com. This is a huge opportunity for the company. “We
are growing our community at more than 30 percent year over year and so far in 2015 these
users have voluntarily logged over 1 billion workouts and more than 5 billion foods,” said Aditi
Pai from mobilehealthnews.com. The brand is globally recognized and is worth more than 3.7
billion dollars, according to Forbes 400, forbes.com. Under Armour will leverage equity of
Custom Armour mainly through the Connected Fitness app, long side their powerful online
presence.
Marketing Program Strategies
Product Strategy
Our product strategy begins with providing a service differentiation. Our objectives are
to enhance customer experience through creating a new personalized service, create a more
diverse product assortment, grow market share, and improve stakeholder relationships. With the
addition of a personalized service customers will have the chance to be apart of the design
process. By being apart of the process consumers will have a greater connection and loyalty to
both the Under Armour brand and their product offerings. The diverse product assortment will
35
come from the ability to choose which apparel will best fit personal needs and tailor it to best fit
the consumer's activities. Both of these aspects will increase market share within the athletic
apparel industry. As well as, improving shareholder relations, though the increase in sales with
the custom addition to Under Armour's product offerings.
We will be providing a whole product offer. Customers will have the ability to use a
customization platform on the website or through an app to develop performance apparel to suit
their own personal needs, desires, and wants. Customization options would include colors, text,
fabric, different technologies, and graphics all available to all consumers. The platform will
provide a simple way for consumers to upload pictures or personally designed graphics that can
be put onto different articles of clothing. Customers will be able to choose between a wide array
of Under Armour’s trademarked fabrics, including their GEAR™ line. Customers will be limited
in their ability to print graphics onto different materials (i.e. graphics will not print on fleece,
polyester, etc.) and different product offerings; initially, to minimize costs and tests waters, the
customization platform will be available for only athletic apparel and not shoes/accessories.
Product development pathway:
● The product development stage will start with sketching a visual layout of what the
platforms will look like.
● Simultaneously, we will have to decide which products will be customizable. The
products that can be customized will start with apparel; items will include shirts, pants,
shorts, and jackets.
● Next step will involve communicating with our partners at SAP, and informing them of
our needs, wants, ideas, etc.
○ Develop user-friendly interface across all devices. This will include the Under
Armour website, and Record Under Armour’s fitness application. The website
design will need to be accessible and easy to uses by computers as well as
mobile devices and tablets, when on the brand's website. The application will
36
need to be both user-friendly and easy to read on both android and apple
devices.
○ Develop options for customization. This includes the product offering selections,
along with fabrics and designs for the consumer to choose from. Determining
which fabrics will be able to have design elements such as patterns and text or
image placement on them to ensure the integrity and longevity of the clothing
and the user's custom creation.
○ Develop a way for consumers to save their designs for future purchase. Record
is a hybrid application integrating social media and fitness tracking. Through the
ability of saving designs users can share their creations on social media. As well
as save for purchase in the future or other can purchase for the creator as a gift.
● SAP will code, develop, and build Custom Armour app and the extension to Under
Armour website. This will allow for cohesion and flow between customers products
inwhich they use to customize. While keeping intact the design and look Under Armour
has already established in its website and application.
● Once the platforms are built, Under Armour and SAP will have to do a test run to make
sure all the parts are linked correctly, and there aren’t any glitches in the system. This
testing will be extensive so customers do not encounter and problems when creating
and receiving their customized apparel.
● Once the app and new web platform are finished, we will launch the new offerings.
● Records will be retained from the very start of the launch. Those annotations will tell us:
○ Who is buying (demographics)
○ How much they’re buying
○ How frequently they’re buying
○ What they’re buying
○ When they’re buying
37
○ What patterns and colors sell the best/ worst
○ If they’re sharing their purchases, which leads to additional traffic on the website
and potential new buyers
○ If product was left in the checkout carts on the app or website
○ Where the product is in the development stage
○ When the product is being shipping back to Under Armour
○ When the product leaves the warehouse, and tracking of the product
● After records have been analyzed, we will make changes to the app and website as
needed. Along with changing the products or fabrics that did not sell during the launch.
Pricing Strategy
Our objective is to increase market share by developing a pricing strategy that makes
our offerings affordable, but yet valued and unique. We will be addressing both internal and
external orientations. Internal factors affecting price strategy include things like manufacturing
costs, research and development costs, internal strategy, brand equity, and budgeting. Under
Armour should at least understand the internal factors affecting their pricing decisions
regardless of orientation. Ultimately, UA’s price orientation should be based externally. Being in
a market driven by consumers’ tastes and wants, and all of the competition as well, Under
Armour should orientate their pricing strategy based on the external environment because their
market is mostly driven by external factors.
Our strategy is Customerization Value Pricing. Overall would be value in use for UA.
The customizable product offering is elastic. Elastic goods are goods that have a drastic
demand change when a change in price occurs. If pricing soars or drops, the demand will
drastically change.
At Under Armour, we price our product at a medium level in comparison to competitors
in the market place. The high quality of our goods are reflected in the pricing strategy. However,
we do not overcharge. We value of customers and their experience using our products.
38
Distribution Strategy
Our objective is to reach our customers through the Connected Fitness apps we
developed with SAP and our Under Armour website that will offer customizable products.
Currently, we use our mobile apps for customers to purchase product, report exercise and food
consumption. As well as connecting with friends and athletes challenging them in fitness games
and the social media outlet created on the app. A recent Forbes article, written by Derek
Klobusher reported, “The Baltimore-based sports apparel company offers data-enabled
garments that feed information to users via multiple channels, helping them improve
performance, build community or connect with the company.” This is our goal for the
customizable platform. Building and connecting members through performance and
personalizing each person's own inner athlete.
Our sales channels for the customization offering is direct to consumers through Under
Armour Connected Fitness apps. Eventually we will offer direct to consumer through Under
Armour store kiosks.
Since our market is very large, inclusive of web 2.0, and mobile app users; our
distribution intensity will be very strong. Product will be easily accessible to all Under Armour
digital customers.
The channel is relatively short, starting with the customer creating the product on the
Under Armour retail app, which is recorded on Under Armour’s data base. From there, Under
Armour will send the custom design to the manufacturer, that will produce and send back to
Under Armour. Under Armour will then ship the finished goods to the consumer. See channel
map Appendix 11.
Under Armour’s 3rd quarter results reported an 8.34% profit margin (YCharts.com). This
is calculated by taking the quarter’s net income and dividing it by the quarter’s revenue. The
lowest profit margin Under Armour has ever experienced was second quarter of 2008, earning
0.88% (YCharts). Our goal with the customization launch is to increase the annual profit margin
39
to 11%. This will be achievable, due to the low cost of goods and price mark-up on custom
apparel.
Promotional Strategy
Our promotional strategy objectives are to generate awareness of our new customizable
offering, make our customers to interact with platform, support our customers through each
stage of the ordering process, increase website traffic, multiply our lifetime customer number,
and increase brand awareness. This will drive sales and increase awareness of Record. Along
with allowing customers to be apart of the building process, creating fashionable, durable, high
performance sports wear that is one of a kind.
For the Custom Armour mobile app and web platform launch, we’re creating a unique
advertising campaign. We will be placing digital billboards in major cities like: New York, Boston,
LA, Las Vegas, Chicago, Houston, Seattle, Portland and Philadelphia. These billboards will link
to the Custom Armour, Connected Fitness app, so that customers can go on their app in the city
they’re located, create their custom apparel, request to post their creation on the billboard, and
then the gear will be placed on an avatar on the screen. The screen will hold the image for 10
seconds, and then another custom image will be uploaded. Our plan is to have the billboards
operating for the first 4 months of the app and website launch. Within stores customers will be
able to see live what others are creating, in order to drive the Custom Armour experience.
Under Armour PR team will create a press release for the launch of the app and web
platform. The press release will be announced two weeks prior to the actual product launch.
This will get a buzz going around before the product can be launched and the billboards start
operating. In addition, we will release an official press release the first day of the launch.
A hashtag will be created for social media sites; facebook, Instagram, tumblr, Twitter,
etc. Customers will create their customized products, take screen snaps of their virtual
developments, or photographs of their physical product creations and post online to social
media sites using the hashtag #CustomArmour.
40
To increase awareness of the new offering, we will also launch commercials, magazine
ads, and addition (non-digital) billboards of our sponsored athletes (i.e. Stephen Curry, Lindsey
Vonn) in customized gear. As well as having or sponsored athletes post their own personal
creations to the social media part of the Record app.
Implementation and Control
The first step in putting the plan together and bringing it to consumers is to forecast the
success of the project. To do so, several things have to be considered such as the actual sales
forecast, the marketing budget, and final profits of the projects after the costs of the project are
also realized. Also important are the assumptions that led to how the numbers were conceived;
see below for a discussion of each of the previously stated elements.
Financial Projections
Sales Forecast
Sales forecasts for Custom Armour were calculated using a top-down approach,
primarily based on historical data from Under Armour’s 10-K SEC filing for the 2014 fiscal year.
For the best case, expected, and worst case scenarios, the annual revenues were determined
using a compound aggregate growth rate of 25%. We then determined the sales derived from
solely apparel based on the existing 74.3% of sales. Since Custom Armour would be a
contribution to the company’s direct-to-consumer (DTC) sales, we then further narrowed our
sales down using the 30% of sales coming from DTC. Under Armour’s goal to increase DTC
sales to 35% by 2018 was also accounted for. We then incorporated the 9% contribution from e-
commerce sales, due to Custom Armour being offered only through web and app platforms
(MarketRealist). Lastly, we accounted for the demand for custom apparel, which we established
60% of consumers would have a desire for custom apparel.
Worst-CaseForecast:$253.7 million in salesfromCustomArmourin 3 years
41
For the worst-case scenario, top-line CAGR maintained 25% and supports direct-to-
consumer growth. Revenue generated from apparel, e-commerce sales, and customization
demand remains constant. The results are as follows:
Operational Requirements
Now that Under Armour has an understanding on what kind of return this sort of
investment can facilitate, it becomes prudent to establish how exactly the service offering is
going to be brought to consumers. In order to do so, many factors have to be considered. Such
as, operational requirements - including headcount and added infrastructure - and controls and
management - including action plans, schedules, metrics, risks, and contingency plans. First,
operational requirements will be considered, and then control and management concepts.
Headcount
Under Armour is a company with over 10,000 employees spread apart between main
office, retail stores, distribution centers, etc. That said, the strategy Under Armour should take
for headcount is to leverage their current expertise and current personnel. In terms of actual
numbers and jobs, Under Armour should first hire a team of 5 designers. These designers will
take the customized product, come up with a mock-up of the apparel, and then submit it to the
manufacturer who will actually make the product based on the design from the designer. In
addition to a small team of designers, there will also be a need for additional IT support. In this
case, 3 extra IT people will be sufficient in order to keep track of the performance of the
platform, do updates, etc. Again, for the IT department, most of the man power will come from
the people Under Armour already has on staff. Finally, there will be 2 overseers of the Custom
Armour project, also considered project managers, and cleverly named Custom Armour
42
Specialists. These people will be the people who overview the numbers at several check-in
periods that will be discussed later. Basically they will take any significant numbers, attach some
sort of analysis, and take any sort of action if necessary. For example, if the social media
campaign outlined in the promotional strategy falls flat and does not get many people involved,
the Custom Armour Specialist may see this trend and reach out to the social media department
to get them to do a new campaign, or come up with a new campaign his/herself. In total, there
will be ten additional people on staff in order to ensure the positive performance of the Custom
Armour campaign. As stated previously however, the main strategy is to leverage current man
power (see financial projections for wage estimates).
Infrastructure
Although the customization process involves a more careful manufacturing of Under
Armour’s apparel, there will be no significant need for any kind of large investment in additional
machinery. Instead however, the main investment in infrastructure will be in the technology of
the customization platform. That said, necessary infrastructure will be limited to servers in order
to support the added traffic and busy customization platform, in and of itself. The strategy of
leveraging Under Armour’s current state holds true moving from headcount to infrastructure.
Under Armour’s wide network of manufacturers allows them to produce any sort of textile, so
adding the possibility of customizing a particular piece of apparel will not cause any significant
problems in the manufacturing process. The potential problem lies in Under Armour servers
being able to support the platform and added traffic. Instead of waiting to see if there will be a
problem with Under Armour’s current servers, it will be best if there is an investment into larger
and more capable servers to ensure there are no issues at launch.
Another large consideration has to do with the customization and app platforms
themselves. Although the actual creation of the two platforms will be outsourced to SAP, the
platforms will then become part of Under Armour’s necessary added infrastructure. Again, the
major category of infrastructure investment is through technology rather than actual machinery.
43
Control and Management
The overall implementation plan follows a distinct sequence comparing what is needed,
how Under Armour is going to get it, and lastly what follows is an understanding about how the
new service offering will be brought to consumers. What follows is a discussion about the action
plan for Custom Armour, schedules associated with the action plan, metrics to measure and
keep track of through the process, risks of the plan and several contingency plans in place in
order to ensure the success of Custom Armour, even in the face of adversity.
Action Plans and Schedule
The action plans for the launch of the Custom Armor customization platform will be
broken up into four different categories: initial stage, preparatory stage, launch stage, and
evaluation stage. The initial stage will feature tasks that have to do with minor but important
things Under Armour will have to do first for the plan. It includes things like hiring personnel,
developing an ad campaign, the actual development of the customization platform, etc.
The preparatory stage is all about preparing to actually launch the new offering; although
small, it is still important, featuring tasks like press releases and the launch of the ad campaign.
Considering any ad campaign is designed to generate awareness and build hype, thus Under
Armour’s ad campaign takes place a couple weeks before the actual launch of the platform to
ensure consumers are aware of the new offering before it is actually released.
The third stage is the actual launch stage where the customization platform is actually
launch, as well as the social media campaign. The actual launch of the platform happens
officially on March 1st.
The final stage is probably the most important; the evaluation stage. At the end of the
first month, third month, and sixth month, there will be an evaluation of the progress of the
campaign. The evaluation process will be designed to see where the platform has gone, how it
has gotten there, as well as an examination of the success of the marketing and advertising
44
plans, and lastly a check-in to see if the offering is on-track to complete its goals. If there exists
any hiccup in the plan, it is designed to have enough time in between each stage in order to
give sufficient amount of time to re-do or adjust accordingly. See below for a gantt chart
representing the flow of events from start to finish, and see appendix ? for a table representing
the stages as well another visual representation to show how the plan will be implemented.
Metrics
Metrics are an incredibly important consideration in order to ensure that the project is on-
track and producing at a rate that it should. The most logical way to organize a group of metrics
is those that are internal vs. external, and forward looking vs. backward looking metrics.
Obviously internal metrics are those that pertain to Under Armour and the Custom Armour
project. Forward looking metrics are the metrics that have to do with a measure of future
performance and usually are viewed at regular intervals (these may include things like late
deliveries and customer satisfaction). Backward looking metrics look at measureable things that
45
measure past performance rather than indicating some kind of future goal (these may include
things like sales revenue, net marketing contribution and more). Regardless of the relationship
or differences, each are equally important when it comes to measuring the success of a new
project.
For Under Armour in particular, internal forward looking metrics include app downloads,
delivery efficiency, product defects, inventory turnover, Connected Fitness user activity, and
order accuracy. Internal backward looking metrics include sales revenue, direct-to-consumer
sales, net marketing contribution, return on marketing investment, and return on investment.
External forward looking metrics include customer awareness, customer satisfaction, perceived
performance, and intent to repurchase. Finally, external backward looking metrics include
market share, market growth rate, customer retention, customer lifetime value, and revenue per
customer.
Risks and Contingency Plan
Developing a contingency plan for each possible risk associated with the Custom
Armour platform would be excessive and quite redundant. For simplicity purposes, featured
below are risks and two different major possible scenarios regarding the possible negative
events having to do with Custom Armour: negative responses to Custom Armour, and
insufficient production due to incorrect order processing, manufacturing or software
malfunctions, or customer dissatisfaction.
Risks
The risks associated with the customization platform can be most logically broken up
between internal and external risks. These kinds of risks are thus classified into the two different
kinds of contingency plans, previously listed, and they are as follows in a numbered list from
most important and significant to least:
● Internal Risks:
46
○ Technical Malfunctions: From server disruption to bugs in the platform, technical
malfunctions could become a major issue for this advanced platform.
○ Supply Chain Disruption: Members of the supply chain main run into their own
problems that could affect Under Armour.
○ Quality Insufficiencies: Not meeting consumers expected quality could lead to
significant amounts of customer dissatisfaction.
○ Manufacturer Malfunctions: Issues with machinery during the manufacturing
process could significantly disrupt operations.
○ Changes in Key Personnel: Losing key personnel may set back operations.
○ Insufficient Strategies: If something in the strategy is insufficient, Under Armour
may have to spend a lot of unnecessary time coming up with new strategies.
● External Risks:
○ Competition Imitations: Although a differentiation strategy is effective, Under
Armour may miss an opportunity to differentiate themselves and could end up
losing out on certain opportunities.
○ Pressure from Consumers: Consumers expect Under Armour to constantly
produce innovative products. Not doing so may erode the brand’s reputation.
○ Technological Advances: Not staying up to date on new available technologies
may cause Under Armour to become a market follower instead of a market
leader.
○ Changes in Economic Conditions: Customized product is priced at a premium
which may mean that if disposable income decreases, consumers may opt out of
the personalized apparel market.
○ Legal Changes: Legal issues may significantly disrupt Under Armour’s operations
in the United States and overseas.
Contingency Plan 1: Negative Responses to Custom Armour
47
A potential risk for Under Armour’s Custom Armour implementation is that it could garner
negative responses from the industry or consumers that have the potential to damage the
brand’s reputation. However, we believe that most negative responses would be due to
inadequate knowledge regarding the customization industry. For example, consumers may
assume that Custom Armour is like NikeID, but that is not the case. NikeID primarily focuses on
footwear and offers a few bags for their customization services, whereas Custom Armour is
entering the relatively untapped market of customizing their apparel products. Providing
adaptive customization to apparel is a challenging segment of the mass customization industry,
but Under Armour’s brand encourages the challenge. We also encourage friendly competition.
Therefore, any negative responses provides our company with an excellent opportunity to
address why Custom Armour is vastly different and fuel competition, reinforcing our strong
brand image. Our contingency plan for such a scenario would be to provide some sort of press
release or response to any criticism, where appropriate, to defend our stance and reinforce our
differentiation. If in fact the 1-month, 3-month, or 6-month evaluation shows any sort of issues
for the Custom Armour initiative, proper action must be taken. Beyond giving a press release,
Under Armour can redo several things to make the offering more appealing; such as a new
social media campaign, email drip campaigns, sales promotions, or any other promotional
decisions aimed at increasing awareness, or getting consumers to finalize a sale, depending on
what the issue actually is.
Contingency Plan 2: Insufficient Production Due to Incorrect Order Processing, Manufacturing
or Software Malfunctions, or Customer Dissatisfaction.
Another major risk for Custom Armour is that there is increased complexity in the supply
chain by offering customization services, leading to a higher risk of dissatisfaction with the end
product from the consumer. If the consumer is dissatisfied with their product for any reason,
they can return the product as per our return policy (non-refundable customization fee), and
48
Under Armour will then place the non-defective products in their factory and brand stores to
resell. However, ideally, the product would be sent back to Under Armour with the necessary
changes known to the manufacturer. Also, in the event that a consumer is unhappy with how
their product turned out and takes necessary action to voice their displeasure to the public,
Under Armour will have people in place to reach out to the consumer, hear what their complaint
is, zero in on where the issue took place, and take corrective action to ensure that it does not
happen again. Under Armour may also decide to make the platform inaccessible for a period of
time in order to go through updates on the platform to optimize the performance. Overall, Under
Armour will have to take a proactive stance on any issues and voice their concern for the
consumers, rather than assuming they will get over it eventually. Having a consumer be a part
of the value co-creation process is a huge deal and makes the consumer feel special. In turn,
Under Armour must have a consumer-centric focus in order to facilitate a positive relationship
between consumer and company.
Conclusion
Under Armour is an enormous company, and is arguably a household name around the
world that all people recognize or have heard of. Essentially, the have become the company
that does everything right. What becomes difficult with that is the idea of ending up in the
maturity side of the marketplace where people have received the products and do not feel like
the relationship should be anything more than transactional. Under Armour has thus facilitated a
brand personality that consumers can relate to in order to improve this relationship, making the
consumers feel like they are actually an extension of the brand. One way to make the
relationship less transactional is to develop some kind of service offering where the consumers
become involved in the value creation process as a value co-creator. For Under Armour, given
the reputation they have built, a fitting service offering would be a customization platform. With a
customization platform, consumers become part of the value creation process; no longer are
49
they a simple person contributing to a company’s bottom line, they become an extension of the
brand, with their own ideas and creations embodied in things they can wear around anywhere.
Overall, the customization market is a new market and has become increasingly popular
with people looking for personalized products and services. Under Armour then has the
opportunity to fill this market and differentiate themselves from the competition by allowing
consumers to customize apparel, rather than shoes and accessories like some competitors
offer. The numbers clearly back up the legitimacy of the plan; revenues go up, marketing return
on sales, and marketing return on investment are both at significantly impressive levels and it
requires a relatively small investment considering the revenues it can potentially increase. By
following the general guidelines for the opportunity listed in this report, Under Armour has a
good basis for developing a service offering such as this. The market is growing, consumers
want it, and there simple steps that can be taken to bring the opportunity to Under Armour, all
that is needed is the investment.
Bibliography
● Anderson, David. “Mass Customization, the proactive management of variety” 2015.
http://www.build-to-order-consulting.com/mc.htm
● “Apparel accessories and other apparel manufacturing.” Business Insights. 2015.
http://bi.galegroup.com.proxy.lib.pdx.edu/global/industry/315990?u=s1185784
50
● “Armoured for Growth; Potential Opportunities for Under Armour” Dec. 17, 2013. Forbes.
http://www.forbes.com/sites/greatspeculations/2013/12/17/armoured-for-growth-
potential-opportunities-for-under-armour/
● "Athletic Footwear Market in the US 2015-2019." - Research and Markets. TechNavio,
Mar. 2015. Web. 19 Oct. 2015.
<http://www.researchandmarkets.com/research/r28j5p/athletic_footwear>.
● Boyer, Kenneth Karel, and Rohit Verma. Operations & Supply Chain Management for
the 21st Century. Mason, OH: South-Western, 2010. Print.
● Briggs, Bill. “Under Armour’s online sales sprint ahead by 28% in Q3” Internet
Retailer. Oct. 27 2015. https://www.internetretailer.com/2015/10/27/under-armours-
online-sales-sprint-ahead-28-q3
● Briggs, Richard P. "10 Reasons to Go International." Atlandtric International Growth
Consultants (2013): n. pag. Print.
● "Can You Name the Logos of These Sporting Equipment Companies?" Quiz. USA
TODAY, n.d. Web. 01 Nov. 2015.
<http://www.sporcle.com/games/bhurtik/sportequipmentlogos>.
● Cheng, Andria. "Nike Was Awarded 540 Patents in 2013: Here’s What That Means for
Investors." Market Watch. Market Watch Inc., 17 Apr. 2014. Web. 16 Oct. 2015.
<http://blogs.marketwatch.com/behindthestorefront/2014/04/17/nike-was-awarded-540-
patents-in-2013-heres-what-that-means-for-investors/>.
● Cochran, Megan. "No Major Change in Americans' Exercise Habits in 2011."
Gallup.com. Gallup Inc., 15 Mar. 2012. Web. 17 Oct. 2015.
<http://www.gallup.com/poll/153251/no-major-change-americans-exercise-habits-
2011.aspx>.
● "U.S. Equipment Rental Market Size 2016 | Forecast." Statista. The Statistics Portal,
2015. Web. 15 Nov. 2015. <http://www.statista.com/statistics/248725/us-equipment-
rental-market-size/>.
● "CONSUMER SEGMENTATION EXECUTIVE SUMMARY." Outdoorindustry. Outdoor
Industry Association, 2015. Web. 17 Oct. 2015.
<https://outdoorindustry.org/consumervue/Downloads/ConsumerVue_Summary_02.pdf>
.
● "Cotton Commodity Prices." TradingEconomics.com. Trading Economics, 2015. Web. 18
Oct. 2015. <http://www.tradingeconomics.com/commodity/cotton>.
● "Forbes 400." Forbes. Forbes Magazine, 23 Nov. 2015. Web. 23 Nov. 2015.
<http://www.forbes.com/profile/kevin-plank/>.
● "Foreign Exchange Rates and Currency Exchange Rate Calculator."CNNMoney. Cable
News Network, n.d. Web. 29 Oct. 2015. <http://money.cnn.com/data/currencies/>.
MarketingPlanOutlinePt2 (1)
MarketingPlanOutlinePt2 (1)
MarketingPlanOutlinePt2 (1)
MarketingPlanOutlinePt2 (1)
MarketingPlanOutlinePt2 (1)
MarketingPlanOutlinePt2 (1)
MarketingPlanOutlinePt2 (1)
MarketingPlanOutlinePt2 (1)
MarketingPlanOutlinePt2 (1)
MarketingPlanOutlinePt2 (1)
MarketingPlanOutlinePt2 (1)
MarketingPlanOutlinePt2 (1)

More Related Content

What's hot

Under Armour Strategic Analysis & Recommendations
Under Armour Strategic Analysis & RecommendationsUnder Armour Strategic Analysis & Recommendations
Under Armour Strategic Analysis & RecommendationsJonathan Levitt
 
The North Face - Advertising Strategy Plan
The North Face - Advertising Strategy PlanThe North Face - Advertising Strategy Plan
The North Face - Advertising Strategy PlanAshley Patterson
 
North Face Brand Marketing Pitch
North Face Brand Marketing PitchNorth Face Brand Marketing Pitch
North Face Brand Marketing Pitchkwhite810
 
Strategic Management in a Global Context: Under Armour
Strategic Management in a Global Context: Under ArmourStrategic Management in a Global Context: Under Armour
Strategic Management in a Global Context: Under ArmourRonantonnoel
 
Mark strat simulation( firm presentation)
Mark strat simulation( firm presentation)Mark strat simulation( firm presentation)
Mark strat simulation( firm presentation)Evelyne Otto
 
UA Final Presentation
UA Final PresentationUA Final Presentation
UA Final PresentationZachary Davis
 
Clique Pens Pricing: The Writing Implements Division of U.S. Home
Clique Pens Pricing: The Writing Implements Division of U.S. Home Clique Pens Pricing: The Writing Implements Division of U.S. Home
Clique Pens Pricing: The Writing Implements Division of U.S. Home Demin Wang
 
The North Face Case Study
The North Face Case StudyThe North Face Case Study
The North Face Case StudyMariam Shahab
 
How to do Under Armour's SWOT Analysis? Strengths, Weaknesses, Opportunities ...
How to do Under Armour's SWOT Analysis? Strengths, Weaknesses, Opportunities ...How to do Under Armour's SWOT Analysis? Strengths, Weaknesses, Opportunities ...
How to do Under Armour's SWOT Analysis? Strengths, Weaknesses, Opportunities ...SWOT & PESTLE.com
 
Under Armour Case Study
Under Armour Case StudyUnder Armour Case Study
Under Armour Case Studykmn3973
 
Athletic Footwear Industry
Athletic Footwear IndustryAthletic Footwear Industry
Athletic Footwear IndustryFNian
 
Marketing Strategy Simulation Learning Note
Marketing Strategy Simulation Learning NoteMarketing Strategy Simulation Learning Note
Marketing Strategy Simulation Learning NotePrajakta Talathi
 
Under Armour Inc Strategic Outlook
Under Armour Inc Strategic OutlookUnder Armour Inc Strategic Outlook
Under Armour Inc Strategic OutlookAziz Ghani
 
Under Armour Marketing Analysis Report
Under Armour Marketing Analysis ReportUnder Armour Marketing Analysis Report
Under Armour Marketing Analysis ReportIsamar Miranda
 

What's hot (20)

Under Armour Strategic Analysis & Recommendations
Under Armour Strategic Analysis & RecommendationsUnder Armour Strategic Analysis & Recommendations
Under Armour Strategic Analysis & Recommendations
 
The North Face - Advertising Strategy Plan
The North Face - Advertising Strategy PlanThe North Face - Advertising Strategy Plan
The North Face - Advertising Strategy Plan
 
North Face Brand Marketing Pitch
North Face Brand Marketing PitchNorth Face Brand Marketing Pitch
North Face Brand Marketing Pitch
 
Aqualisa quartz
Aqualisa quartzAqualisa quartz
Aqualisa quartz
 
Under Armour BCG Matrix
Under Armour BCG MatrixUnder Armour BCG Matrix
Under Armour BCG Matrix
 
Group 01 case analysis_aqualisa
Group 01 case analysis_aqualisaGroup 01 case analysis_aqualisa
Group 01 case analysis_aqualisa
 
Strategic Management in a Global Context: Under Armour
Strategic Management in a Global Context: Under ArmourStrategic Management in a Global Context: Under Armour
Strategic Management in a Global Context: Under Armour
 
Mark strat simulation( firm presentation)
Mark strat simulation( firm presentation)Mark strat simulation( firm presentation)
Mark strat simulation( firm presentation)
 
UA Final Presentation
UA Final PresentationUA Final Presentation
UA Final Presentation
 
Clique Pens Pricing: The Writing Implements Division of U.S. Home
Clique Pens Pricing: The Writing Implements Division of U.S. Home Clique Pens Pricing: The Writing Implements Division of U.S. Home
Clique Pens Pricing: The Writing Implements Division of U.S. Home
 
The North Face Case Study
The North Face Case StudyThe North Face Case Study
The North Face Case Study
 
How to do Under Armour's SWOT Analysis? Strengths, Weaknesses, Opportunities ...
How to do Under Armour's SWOT Analysis? Strengths, Weaknesses, Opportunities ...How to do Under Armour's SWOT Analysis? Strengths, Weaknesses, Opportunities ...
How to do Under Armour's SWOT Analysis? Strengths, Weaknesses, Opportunities ...
 
Under Armour Case Study
Under Armour Case StudyUnder Armour Case Study
Under Armour Case Study
 
Athletic Footwear Industry
Athletic Footwear IndustryAthletic Footwear Industry
Athletic Footwear Industry
 
Marketing Strategy Simulation Learning Note
Marketing Strategy Simulation Learning NoteMarketing Strategy Simulation Learning Note
Marketing Strategy Simulation Learning Note
 
Under Armour Inc Strategic Outlook
Under Armour Inc Strategic OutlookUnder Armour Inc Strategic Outlook
Under Armour Inc Strategic Outlook
 
NIKE CASE STUDY
NIKE CASE STUDYNIKE CASE STUDY
NIKE CASE STUDY
 
Brand Management: Nike
Brand Management: NikeBrand Management: Nike
Brand Management: Nike
 
Under Armour Marketing Analysis Report
Under Armour Marketing Analysis ReportUnder Armour Marketing Analysis Report
Under Armour Marketing Analysis Report
 
Under armour
Under armour Under armour
Under armour
 

Viewers also liked

Sample Mekko4 Presentation
Sample Mekko4 PresentationSample Mekko4 Presentation
Sample Mekko4 PresentationMekko Graphics
 
Under Armour- Strategic Marketing Plan By Zoe Suffety
Under Armour- Strategic Marketing Plan By Zoe SuffetyUnder Armour- Strategic Marketing Plan By Zoe Suffety
Under Armour- Strategic Marketing Plan By Zoe Suffetysuffetyz
 
structure of Apparel Industry
structure of Apparel Industrystructure of Apparel Industry
structure of Apparel IndustryManish Kumar
 
Create a Content Marketing Strategy Your Customers will LOVE, in 7 Steps
Create a Content Marketing Strategy Your Customers will LOVE, in 7 StepsCreate a Content Marketing Strategy Your Customers will LOVE, in 7 Steps
Create a Content Marketing Strategy Your Customers will LOVE, in 7 StepsJay Baer
 
Snapchat Visual Marketing Strategy
Snapchat Visual Marketing StrategySnapchat Visual Marketing Strategy
Snapchat Visual Marketing StrategyKatai Robert
 

Viewers also liked (6)

Sample Mekko4 Presentation
Sample Mekko4 PresentationSample Mekko4 Presentation
Sample Mekko4 Presentation
 
Under Armour- Strategic Marketing Plan By Zoe Suffety
Under Armour- Strategic Marketing Plan By Zoe SuffetyUnder Armour- Strategic Marketing Plan By Zoe Suffety
Under Armour- Strategic Marketing Plan By Zoe Suffety
 
structure of Apparel Industry
structure of Apparel Industrystructure of Apparel Industry
structure of Apparel Industry
 
Create a Content Marketing Strategy Your Customers will LOVE, in 7 Steps
Create a Content Marketing Strategy Your Customers will LOVE, in 7 StepsCreate a Content Marketing Strategy Your Customers will LOVE, in 7 Steps
Create a Content Marketing Strategy Your Customers will LOVE, in 7 Steps
 
Snapchat Visual Marketing Strategy
Snapchat Visual Marketing StrategySnapchat Visual Marketing Strategy
Snapchat Visual Marketing Strategy
 
Marketing Strategy
Marketing StrategyMarketing Strategy
Marketing Strategy
 

Similar to MarketingPlanOutlinePt2 (1)

Under armour case analysis by Njinyah Ciro
Under armour case analysis by Njinyah CiroUnder armour case analysis by Njinyah Ciro
Under armour case analysis by Njinyah CiroCiro Njinyah
 
Under armour case analysis by Njinyah Ciro
Under armour case analysis by Njinyah CiroUnder armour case analysis by Njinyah Ciro
Under armour case analysis by Njinyah CiroCiro Njinyah
 
UA Internal Analysis
UA Internal AnalysisUA Internal Analysis
UA Internal AnalysisZach Johnk
 
Under Armour Marketing Analysis
Under Armour Marketing Analysis Under Armour Marketing Analysis
Under Armour Marketing Analysis Marsha Smith
 
Lululemon vs under armour business strategy analysis
Lululemon vs under armour business strategy analysisLululemon vs under armour business strategy analysis
Lululemon vs under armour business strategy analysisSophie Michelot
 
COMM 200 Gaming Experiential Learning (10 pts.)Throughout thi.docx
COMM 200 Gaming Experiential Learning (10 pts.)Throughout thi.docxCOMM 200 Gaming Experiential Learning (10 pts.)Throughout thi.docx
COMM 200 Gaming Experiential Learning (10 pts.)Throughout thi.docxclarebernice
 
Running Head MARKETING1MARKETING14P.docx
Running Head MARKETING1MARKETING14P.docxRunning Head MARKETING1MARKETING14P.docx
Running Head MARKETING1MARKETING14P.docxglendar3
 
Running Head MARKETING1MARKETING14P.docx
Running Head MARKETING1MARKETING14P.docxRunning Head MARKETING1MARKETING14P.docx
Running Head MARKETING1MARKETING14P.docxjeanettehully
 
Running Head MARKETING1MARKETING14P.docx
Running Head MARKETING1MARKETING14P.docxRunning Head MARKETING1MARKETING14P.docx
Running Head MARKETING1MARKETING14P.docxtodd581
 
Under Armour Inc. Final Report
Under Armour Inc. Final ReportUnder Armour Inc. Final Report
Under Armour Inc. Final ReportAndrew Buryak
 
Under Armour IMC Campaign
Under Armour IMC CampaignUnder Armour IMC Campaign
Under Armour IMC CampaignTeSeanMcGaney
 
grob.valproject2pdf
grob.valproject2pdfgrob.valproject2pdf
grob.valproject2pdfNathan Grob
 
Running Head MARKETING ANALYSIS OF UNDER ARMOUR (UA)1MARKET.docx
Running Head MARKETING ANALYSIS OF UNDER ARMOUR (UA)1MARKET.docxRunning Head MARKETING ANALYSIS OF UNDER ARMOUR (UA)1MARKET.docx
Running Head MARKETING ANALYSIS OF UNDER ARMOUR (UA)1MARKET.docxjeanettehully
 
Men's wear global market report 2018
Men's wear global market report 2018Men's wear global market report 2018
Men's wear global market report 2018lakshmipraneethganti
 
Brong environmental analysis
Brong environmental analysis Brong environmental analysis
Brong environmental analysis JordanBrong
 
Global sportwear sector m&a update. spring 2013. norgestion mergers alliance
Global sportwear sector m&a update. spring 2013. norgestion mergers allianceGlobal sportwear sector m&a update. spring 2013. norgestion mergers alliance
Global sportwear sector m&a update. spring 2013. norgestion mergers allianceNORGESTION
 
Andrew McDonald UA Strategic Analysis
Andrew McDonald UA Strategic AnalysisAndrew McDonald UA Strategic Analysis
Andrew McDonald UA Strategic AnalysisAndrew McDonald
 
A4 market analysis_diazcales
A4 market analysis_diazcalesA4 market analysis_diazcales
A4 market analysis_diazcalesGerardoDiaz90
 

Similar to MarketingPlanOutlinePt2 (1) (20)

Under armour case analysis by Njinyah Ciro
Under armour case analysis by Njinyah CiroUnder armour case analysis by Njinyah Ciro
Under armour case analysis by Njinyah Ciro
 
Under armour case analysis by Njinyah Ciro
Under armour case analysis by Njinyah CiroUnder armour case analysis by Njinyah Ciro
Under armour case analysis by Njinyah Ciro
 
UA Internal Analysis
UA Internal AnalysisUA Internal Analysis
UA Internal Analysis
 
Under Armour Marketing Analysis
Under Armour Marketing Analysis Under Armour Marketing Analysis
Under Armour Marketing Analysis
 
Lululemon vs under armour business strategy analysis
Lululemon vs under armour business strategy analysisLululemon vs under armour business strategy analysis
Lululemon vs under armour business strategy analysis
 
COMM 200 Gaming Experiential Learning (10 pts.)Throughout thi.docx
COMM 200 Gaming Experiential Learning (10 pts.)Throughout thi.docxCOMM 200 Gaming Experiential Learning (10 pts.)Throughout thi.docx
COMM 200 Gaming Experiential Learning (10 pts.)Throughout thi.docx
 
Running Head MARKETING1MARKETING14P.docx
Running Head MARKETING1MARKETING14P.docxRunning Head MARKETING1MARKETING14P.docx
Running Head MARKETING1MARKETING14P.docx
 
Running Head MARKETING1MARKETING14P.docx
Running Head MARKETING1MARKETING14P.docxRunning Head MARKETING1MARKETING14P.docx
Running Head MARKETING1MARKETING14P.docx
 
Running Head MARKETING1MARKETING14P.docx
Running Head MARKETING1MARKETING14P.docxRunning Head MARKETING1MARKETING14P.docx
Running Head MARKETING1MARKETING14P.docx
 
Under Armour Inc. Final Report
Under Armour Inc. Final ReportUnder Armour Inc. Final Report
Under Armour Inc. Final Report
 
Under Armour IMC Campaign
Under Armour IMC CampaignUnder Armour IMC Campaign
Under Armour IMC Campaign
 
grob.valproject2pdf
grob.valproject2pdfgrob.valproject2pdf
grob.valproject2pdf
 
Running Head MARKETING ANALYSIS OF UNDER ARMOUR (UA)1MARKET.docx
Running Head MARKETING ANALYSIS OF UNDER ARMOUR (UA)1MARKET.docxRunning Head MARKETING ANALYSIS OF UNDER ARMOUR (UA)1MARKET.docx
Running Head MARKETING ANALYSIS OF UNDER ARMOUR (UA)1MARKET.docx
 
Men's wear global market report 2018
Men's wear global market report 2018Men's wear global market report 2018
Men's wear global market report 2018
 
Brong environmental analysis
Brong environmental analysis Brong environmental analysis
Brong environmental analysis
 
Under Armour Paper
Under Armour PaperUnder Armour Paper
Under Armour Paper
 
Global sportwear sector m&a update. spring 2013. norgestion mergers alliance
Global sportwear sector m&a update. spring 2013. norgestion mergers allianceGlobal sportwear sector m&a update. spring 2013. norgestion mergers alliance
Global sportwear sector m&a update. spring 2013. norgestion mergers alliance
 
Andrew McDonald UA Strategic Analysis
Andrew McDonald UA Strategic AnalysisAndrew McDonald UA Strategic Analysis
Andrew McDonald UA Strategic Analysis
 
A4 market analysis_diazcales
A4 market analysis_diazcalesA4 market analysis_diazcales
A4 market analysis_diazcales
 
Nike valuation report
Nike valuation reportNike valuation report
Nike valuation report
 

MarketingPlanOutlinePt2 (1)

  • 1. ARMOUR MARKETING UNDER ARMOUR, INC. Marketing Strategy Management PSU MKTG 464 Professor TC Dale Fall 2016 Abdul Alwisali, Brett Carter, Heather McGee, Kimberly Riness & Megan Stacey Table of Contents
  • 2. 1 Executive Summary……………………………………………………………………………….…...2 Situation Analysis………………………………………………………………………………....……4 Market Analysis...………………………………………………….…………………………….…….13 Competitive Analysis………………………………………………………….……………………….19 SWOT Analysis………………………………………………….…………………………………….23 Strategic Market Plan………………………………………………………………………….……...31 Marketing Program Strategies…………………………………………………….………………….37 Implementation and Control…………………………………………………….…………………....42 Bibliography…………………………………………………………………………………….……….. Appendices…………………………………………………….………………………………………… Executive Summary
  • 3. 2 Under Armour has the opportunity to grow their business through personalization. Since UA’s inception they’ve excelled in innovative sportswear textiles. Founder Kevin Plank capitalized on the opportunity to create sweat wicking and body temperature regulating fabrics. While playing collegiate football, Kevin realized how uncomfortable cotton was during workouts. He envisioned a lightweight shirt that would absorb sweat, while leaving the wearer feeling comfortable and dry. Kevin Plank chased his vision, running through the streets of New York’s fashion district, looking for that perfect material. Once he found it, Kevin constructed shirts and gave the shirts to former college teammates, who were then, playing in the NFL. With the succession of the brand, Under Armour became the newest leading sportswear company in the USA. This marketing plan is a thorough discussion of Under Armour itself, the industries Under Armour operates in, the condition of the market and its segments, Under Armour’s direct competition, as well as a discussion of Under Armour’s relevant strengths, weaknesses, opportunities, and threats. By introducing a customization platform for consumers, Under Armour is allowing themselves to capitalize on particular opportunities, while offsetting some adverse effects from any potential threats. Our goal is capture an additional 0.5% of the entire North American apparel and footwear market within the first year of the customization offering. This industry captures the general apparel industry, not exclusive to performance sportswear. Under Armour currently holds 1% of this market. From 2013-2014, Under Armour experienced a 32% sales growth rate. Our projection is to increase this annual sales growth rate to 35% within the first year of the customization launch. Our goal is to attract an exponential amount of customers to Under Armour by providing opportunities for them to get more involved with the brand. Direct to consumer sales were $3 billion in 2014 with a goal of hitting $4 billion by 2016 (marketrealist). Our objective is to introduce customizable Under Armour apparel through the UA Record app and through UnderArmour.com. We will differentiate ourselves in the marketplace by
  • 4. 3 offering apparel only, as opposed to our competitors who only offer customizable footwear. We will be providing a service differentiation, bringing our customers into the product development process. The two main market segments we will be targeting are the Urban Athlete and the Achiever. Both segments together represent about 59.4 million consumers. Annual sales are predicted to equal an average of 162 million dollars; totalling 486 million dollars in the first three years of operation. Program expenses for the first three years include: 10 million dollar SAP budget, near 2 million dollars in new hire salaries, and 58 million dollar marketing budget; equating to about 70 million dollars invested. We will measure the success of Custom Armour by using the following metrics: forward- looking internal performance metrics (i.e. app downloads), backward-looking internal performance metrics (i.e. sales revenue), forward-looking external performance metrics (i.e. perceived performance), and backward-looking external metrics (i.e. market share). Our program’s progression will be assessed using check-ins after one month, three months, and six months. These check-ins will be guided through Under Armour Connected Fitness, SAP Mobile application development platform solutions. Customization platform makes consumers feel like they are part of the value creation process (value co-creation). This, as Under Armour will see, leads to increased customer loyalty and retention, increased brand awareness, and an increase in market share, while still being able to work towards their long-term goals: becoming a more international brand, and gaining ground on Nike in the athletic apparel industry. Situation Analysis Company Analysis Founded in 1996 by Kevin Plank, former special teams captain for University of Maryland, Under Armour, Inc. (UA) had grown to be the 39th largest apparel and footwear company worldwide in 2013 (Euromonitor International). Under Armour specializes in athletic
  • 5. 4 apparel, shoes, and accessories designed for excellent performance in physical activities. The company is based in the United States, with headquarters in Maryland, but also operates in Latin America, Europe, Asia, the Middle East and Africa. In North America, UA manages 125 factory stores and five brand stores (MarketLine). The company primarily sells its products through wholesale channels, but is working to increase growth in selling directly to consumers. Under Armour experienced 32.3% growth in net revenues, from $2,332.1 million in 2013 to $3,084.4 million in 2014, a $752.3 million increase. Net revenues by product can be broken down into four categories: apparel, footwear, accessories, and licensing and other revenues. For the 2014 fiscal year, Under Armour’s apparel category was responsible for 74.3% of total net revenue, footwear accounted for 14%, accessories were 8.9%, and the remaining 2.8% was generated from the licensing and other revenues category (see Appendix A for further information). Lastly, accounting for 2.8% of net revenue, or $86.4 million, is the licensing and other revenues category. Furthermore, the company experienced a one-year sales growth rate of 32.3% and an income growth rate of 28.2% for the 2014 fiscal year. Overall, Under Armour has experienced impressive growth over the past few years, and according to Market Realist, “the company has been able to grow revenue at 20%+ growth rates for 19 consecutive quarters.” (See Appendix B for financial information) Under Armour primarily targets the sportswear market, which was a $268 billion market, worldwide in 2014. North America generates 36% of that income, or $96.5 billion. Under Armour holds 3.9% of the sportswear market in North America, and 1.6% worldwide. It is actually the fourth-ranked company for the North American sportswear market, following Nike, as the market leader at 20.6%, VF Corp. with 5.7%, and Adidas at 4.7%, for the 2014 year. (see Appendix C). UA’s products can also be classified on a larger scale in the general apparel and footwear market. In 2014, apparel and footwear had a market size of $1,749.5 billion globally, and $364.3 billion within North America. Of that, Under Armour, Inc. accounted for 0.2%, and 1.0%, respectively (see Appendix D).
  • 6. 5 Under Armour’s market orientation focuses on the superior engineering of their apparel and how their assorted designs fulfill various customer needs, which would be expanded through the implementation of Custom Armour. Under Armour apparel is designed for active performance, with an emphasis on comfort and mobility while providing aid in regulating body temperature in any weather condition. Many products also contain moisture-wicking technologies. Products are primarily marketed based on customer needs through the company’s trademarked gear lines: HEATGEAR for hot weather conditions, COLDGEAR for cold weather, and ALLSEASONGEAR. In addition, each line is available in three different fits for customers to choose from: loose/relaxed fit, fitted/athletic fit, and compression/tight fit. Products in the sportswear market are also segmented based on the end-user by apparel for men, women, and children. According to Euromonitor International, menswear dominated 49% of Under Armour’s sales in 2013. However, the company also has a strategy to nurture young players and underdogs (Market Realist), so they are starting to focus more on orienting their business in a way that fosters lifelong customers that will provide the most value to their company. Environmental Analysis Operating a business as large as Under Armour and being somewhat of a global brand, where they are outsourcing labor and shipping to areas outside of the U.S., Under Armour is subject to several environmental forces and trends. Most simply, these trends can be categorized into 4 different market forces: Political (legal/regulatory) trends, Economic trends, Socio-cultural trends, and Technological trends. Below will be a discussion of several trends under each category. Political Trends: Labor Laws in Manufacturing Countries:Under Armour outsources most of its manufacturing processes to countries outside of the United States. This means that they will have to adhere to
  • 7. 6 certain labor standards and labor regulations that may be different going from country to country and continent to continent. Rising Labor Wages: In the United States and elsewhere, labor wages have been steadily rising, with many states looking to make $15 per hour the new minimum wage standard. In fact, in April, the Employment Cost Index (ECI, which measures price of labor) was up .7%. It may not seem like much but is the largest gain in the last year, and the trend is only going up steadily (reuters.com). What this means for Under Armour is basically an increase in investment for their employees. Now, employees will seek higher wages and, conversely, Under Armour will seek better performance from these employees. Tariffs, Quotas, etc.: Being a commodity driven company and manufacturing in several different countries, Under Armour is subject to different tariffs and quotas that change daily it seems, which can prevent them from being able to meet customer demand. Economic Trends: Currency Exchange: Currency exchange is always an issue for a country selling products to several countries. In reality, the value of the US dollar is going to fluctuate daily, as well as values of other currencies around the world like the Japanese Yen, the British pound, etc. In just 5 days, the exchange values from the pound to the dollar fluctuated between 3 cents (and fractions of cents) hundreds of times (CNNMoney). Fluctuating Commodity Prices: The foundation of Under Armour’s product manufacturing is based on commodities: rubber for shoe soles, cotton for their clothes, etc. This means that as they purchase their materials, they are going to have to be aware of times to buy and times to not buy. Currently, cotton prices are historically lower now than they have been in the past and appear to remain steady (TradingEconomics). However, these prices can literally change over the next few days and Under Armour must be prepared. This could give Under Armour issues in terms of meeting customer demand when the customization platform launches.
  • 8. 7 Economic Conditions: As economic conditions improve or become worse in different countries, customers will have more or less disposable income to spend. Under Armour is considered one of the pricier options; so if members of an economy, in general, are losing their spending power, Under Armour may not be the first option for consumers. Vice versa; if an economy is performing well, those customers have increased spending power and may consider Under Armour a more likely source for performance apparel. Socio-Cultural Trends: Endorsement Deals: Today, endorsing celebrities is one of the most powerful ways to increase brand exposure and eventually market share. People, in general, have become borderline obsessive about vicariously following celebrities regardless of if they are actors, prominent business people, athletes, etc. Participating in this movement, as they are with endorsement deals NBA all-star Steph Curry, NFL all-star Tom Brady, etc., Under Armour is able to increase their brand equity and awareness among people who follow athletes ruthlessly. A customization platform will allow consumers to adjust color, text, etc. for their favorites athlete’s signature apparel, and being able to endorse highly recognized professional athletes means more interest in the customization platform. Fitness Movement:Something that is somewhat old but still relevant and growing is the fitness movement, which means more and more people are looking for ways to improve their fitness condition. In fact, according to a Gallup survey of over 300,000 American adults, over half of them report exercising 3 or more times a week for at least 30 minutes a day and, in recent years, this number has only gone up (Gallup). Casual Movement:Converse to the above idea, people are also wearing more performance apparel in casual settings, especially for women. It is not so much about wearing any sort of flashy clothing, it is now about feeling comfortable with what you are wearing, and for women, it is becoming “trendy” to wear athletic apparel is casual settings. This represents an opportunity
  • 9. 8 for Under Armour to create apparel that appeals to this segment of consumers (Weingus). According to fashion psychologist Dawnn Karen, “people want to be healthy. They want people to know they live a healthy lifestyle, exercise and take pride in themselves. You want people to know you live a healthy lifestyle". What this means for a customization platform is that consumers can take items that may not be highly fashionable and turn them into highly fashionable by adjusting fit, color, etc. Sustainability: Another socio-cultural trend is based on the idea of sustainability. Not so much from a company standpoint, but rather a consumer standpoint. Today, more people prefer to buy clothes from companies that they know were sustainably created through things like “green manufacturing”. A study done by Neilsen found that about two-thirds of consumers around the world (based on 28,000 consumers), prefer to buy products from an environmentally friendly company and also think that these companies should work to support the environment (Neilsen). Technological Trends: Smart Technology/Apparel: It is no secret that technology is booming and new inventions are literally being created on a daily basis. Recently, Under Armour put out its E39 compression shirt and has introduced it to a few NFL athletes. Basically, this compression shirt has features that allow the wearer to monitor breathing and heart rate levels while athletes are working out using a removable apparatus built into the shirt itself (Engadget). More often, athletes will be looking for ways to monitor things like this without having to worry about any excessive equipment or scientists that are studying their every move. eCommerce Growth: An obvious trend is the growth of eCommerce. According to the United States Census Bureau, of all retail sales in the United States, in the second quarter of 2015, eCommerce contributed to more than 7% of those sales (83 billion of 1.2 trillion); up 1.5% from the previous year People around the world, every day, are spending millions of dollars using the
  • 10. 9 internet as means to make purchases (USCB). Under Armour has already taken its eCommerce growth international where people from all around the world are able to purchase Under Armour products. Also, with the recent understanding as traditional brick and mortar stores becoming more of showrooms than anything else, establishing an online presence early can be incredibly beneficial for Under Armour and its future growth (10K). Demand for Mobile Applications: Moving with the technology trend is also a mobile trend, based on the fact that almost two-thirds (62%) of American adults actively use a smartphone (Pew Research Center). People are becoming fascinated with their mobile devices and all of its capabilities, and seek to increase the levels of convenience by adding new applications to their already capable devices. Being a performance apparel company appealing to the mid to hardcore athletes, Under Armour has the opportunity to match their focus on athletic performance with the demand for mobile applications. They have already somewhat done so by purchasing rights to fitness apps like MyFitnessPal and Endomondo but still have the opportunity to expand this part of the business. Industry Analysis Industry Profile: Under Armour’s performance apparel, footwear and accessories participate in the world sportswear industry. As stated in Under Armour’s 10-K filing, UA performs in four segments: North America, Europe, the Middle East and Africa (EMEA), Asia-Pacific, and Latin America, each of which function principally in the “design, development, marketing, and distribution of performance apparel, footwear, and accessories” industry (Edgar Online). Their products operate within five industries defined by the North American Industry Classification System as: 1) Sporting and Athletic Goods Manufacturing (NAICS 339920), 2) Men’s and Boy’s Cut and Sew Apparel Manufacturing (315220), 3) Women’s, Girl’s, and Infants’ Cut and Sew Apparel
  • 11. 10 Manufacturing (315240), 4) Apparel Accessories and Other Apparel Manufacturing (315990), and 5) Footwear Manufacturing (316210). The sporting and athletic goods manufacturing is a $39.2 billion industry. This industry is involved with manufacturing of athletic and sporting goods that do not include apparel and footwear, but includes other products offered by Under Armour. Therefore, Under Armour’s apparel products are classified under the men’s and boy’s cut and sew apparel manufacturing, and women’s, girls’ and infants’ cut and sew apparel manufacturing industries. The women’s apparel industry generates higher annual revenue than the men’s apparel industry, but the United States contributes to the men’s industry substantially more. Women’s apparel is an $83.5 billion industry, but the U.S. only contributes 5.2% of that, or $4.3 billion in annual revenue. In comparison, men’s apparel is a $72.2 billion industry. The United States is actually the top contributor to in men’s and boys’ apparel manufacturing, providing 37.1%, or $26.8 billion, in annual revenue. The apparel accessories and other apparel manufacturing industry revolves around manufacturing of apparel and accessories, and therefore includes UA’s other miscellaneous products. The apparel accessories and other apparel is an $18.8 billion industry. Lastly, Under Armour also operates in the footwear industry, which generated $59.8 billion in annual revenue. The United States leads the industry with $35.6 billion in revenue, which is 59.6% of the total industry. All together, these five industry categories cover the various performance products offered by Under Armour. (See APPENDIX for further information) Industry Growth: Due to the variety of products, which fall into different industries, there are various growth rates within the industry environment pertaining to Under Armour, Inc. According to Euromonitor International, World apparel and footwear value grew at a rate of 23.9% during 2012 to 2013. However, sales of specifically activewear have outgrown the general apparel
  • 12. 11 industry all together. Demand for athletic apparel has greatly increased due to current trends in the industry, such as the desire for comfort and versatility while still being chic and fashionable, which sportswear has been attempting to fulfill through things such as “athleisure” trends. By 2020, the World sportswear market is estimated to generate revenue of $184.5 billion, with a forecasted compound aggregate growth rate of 4.3% during the 2015-2020 period (Allied Market Research). Major Issues: The variety of products and technologies within the sportswear segment causes issues for companies due to overlapping industry involvement. There is not a specific sportswear apparel industry, so companies must analyze multiple industries in which they are involved, in order to get a clear understanding of the environment. This also makes operations more complex to manage, and even more so when taking international business into consideration. One problem for the industry will likely be becoming more sustainable, especially with outsourcing. As the industry expands, it will leave behind a larger carbon footprint. The industry will need to adapt in order to fulfill demand in a sustainable and efficient way. An assortment of product offerings in sportswear also provides for a multitude of opportunities, particularly with innovation. Many simple innovations, such as a small, hidden pocket in a waistband of running pants, can greatly enhance the experience associated with sportswear. The plentiful innovation opportunities can cause issues in the manufacturing industries, but also in the general fashion industry. Sportswear has been disrupting the fashion industry with its comfortable, yet growingly chic apparel. This has greatly contributed to industry growth, but makes the sportswear industry much more dynamic and forces creativity to think outside just performance and functionality aspects of products. Market Analysis Market segmentation:
  • 13. 12 Research among these segments was done by Egg Strategy a market strategy firm based in Boulder, Colorado, for the Outdoor Industry Association in 2014. Through the data given calculations were made to determine the following. The numbers are based on the United States only, where 198 million consumers between 19-65, are athletic apparel consumers (Outdoor Industry Association). To be considered an athletic apparel consumer, one most spend at least one hour a week outdoors, has participated in one traditional or non-traditional outdoor activity in the last year, and purchase equipment, apparel or technology for their respective activities. Of these 198 million 67.3 million live in highly populated urban cities; and, are more likely to spend a greater amount of money on athletic apparel. With 85.2 million of the original 198 million who have kids at home which they purchase the same for their kids as themselves . From there, 60 million of this 198 million consumers are women between the ages of 25-44 years old. With 138 million consumers who shop for their outdoor products online, these consumers are are total potential market for Under Armours customization platform. These consumers integrate technology with their activities to better achieve their needs and values (Outdoor Industry Association). (Due to rounding the Outdoor Consumer population does not equal 100%. See Appendix One for Market Segmentation) ● The Achiever is 10% of the United States athletic consumer population but spends 17% of the total spending (Outdoor Industry Association). The Achiever is the participation consumer, who spend most of their time outdoors. They can be rock climbers, long distance runners, or mountain bikers. These are the consumers who thrive on competition and performing to the highest standard. These customers have medium loyalty. They base value within the functionality and durability of their apparel. They tend to be males in their 20-30’s who live a highly active lifestyle.
  • 14. 13 ● The Outdoor Native makes up 12% of the United States athletic consumer population and 16% outdoor spending (Outdoor Industry Association). These consumers are active and spend most their time outdoors for the enjoyment and adventure. They can be hikers, kayakers, and campers. They take a more family and friends point of view on activities looking to share the experience. They are medium to high loyalty. These consumers value apparel that can transition between actives and is universal, and affordable. They tend to also be males in their 30-40’s with kids. ● The Urban Athlete is 20% of the United States athletic consumer population and 33% of spending (Outdoor Industry Association). These consumers are about the game. They are social members of the athletic community with a love of competition. They tend to be basketball players, CrossFit enthusiast, or yogis. These consumers are the most style conscious and have a high loyalty rate to their respective brands. They incorporate technology into their lifestyles. They tend to be educated men or women with a high income in their 20-30’s. ● The Aspirational Core is 14% of the United States athletic consumer population and accounts for 14% of spending (Outdoor Industry Association). These consumers tend focus on one major activity. Wither trail running, or camping they stick to that activity and look for apparel tailored to their activity. These customers take time to find the right apparel and go through many items till they find the right one. They enjoy fashion athletic clothing, but brand recognition is extremely important. They are medium to high loyalty consumers. These consumers tend to be single men and women who are in their 20- 30’s. ● The Athleisure is 20% of the United States athletic consumer population and makes up 12% of spending (Outdoor Industry Association). These consumers are not necessarily active they prefer going outdoors for relaxation purposes. They may spend time tending to their garden or walking around a park. They are content with their leisurely outdoor
  • 15. 14 activates. They buy apparel from brands with a long standing name recognition, with a low price tag. They have medium customer loyalty. They are generally women in their 30-50’s who live in less developed areas. ● The Sideliner is 12% of the United States athletic consumer population but only 4% of spending (Outdoor Industry Association). They consumers have limited abilities to physical limitations. They tend to spend their time outside relaxing or walking their dog in a park. They are money conscious consumers. Looking for apparel that they can be comfortable. With low brand loyalty. These consumers tend to be men and women in their 50-60’s with relatively low incomes. ● The Complacent makes up 14% of the United States athletic consumer population and much like the Sideliner they are 4% of the spending (Outdoor Industry Association). They prefer to be indoors rather than outdoors. They were more than likely never participant in any outdoor actives growing up and tend to go outdoors when needed. Such as to walk to a friend’s house, or get mail. They are budget shoppers and prefer a lower price over brand recognition; making them a low loyalty customer. They tend to be men and women in their 50-70’s who live in suburbs. Target Market Customer Profiles Customer Needs, Value Drivers, And Adoption: The main target market for Under Armour will be The Achiever and the Urban Athlete. Together they account for about 59.4 million consumers, with 50% of the total spending. If you take into account that the average outdoor consumer will spend $465 annually, $123 annually for shoes and $137 on apparel; this target group has the potential of spending $15.4 billion at Under Armour annually if they only buy Under Armour apparel and footwear in the United States (Outdoor Industry Association). These are men and women in their 20-30’s with a higher income and a higher amount of brand loyalty. Both of these segments value brand name, durability,
  • 16. 15 comfort and functionality. The Achiever values products with both style and function geared towards all activities they participate in. The Urban Athlete values style and incorporating technology into their activities. These two segments are also the early adopters due to their love of functional clothing, fashion, and incorporating technology into their daily lives. Under Armour use of professional athletes gives the everyday consumer, “this exposure to consumers helps establish on-field authenticity as consumers can see products being worn by high-performing athletes” (10K). Giving consumers a product in which they know they can trust and falls within their needs from athletic apparel and footwear. By integrating customization Under Armour can capture more potential customers from these segments by adding the stylization they desire in their athletic apparel. Market Demand Forecast Size, Growth, and Potential of Each Segment ● The Achiever these consumers have 17% of total spending, we estimate that this segment will continue to grow at a steady pace. The segment has the potential of growing even more in the upcoming year due to the expansion of the high performance achievers category. By being apart of many different activities barriers that were their before are less now with the expansion of rental equipment. The rental equipment industry is expected to grow from 34.5 billion in 2015, to 50 billion in 2016 (Statista). The projected growth in rental equipment corresponds with the expected growth in The Achiever Market. With the noncommittal ease of access to multiple sport equipment there is greater potential that consumers will try different sports more frequently growing both the spending and population for The Achieve’s. ● The Outdoor Native segment has 16% of the number of total spending, we estimate that The Outdoor Native will have stagnated growth. These consumers are in their mid to late 30s with the population in that age range that is not changing over the next few years the segment size and spending will also see no change. This is a segment that will
  • 17. 16 become more brand loyal over the years as they perfect their outdoor needs and what products work best in their environments. Potential to build on previous product offerings breath will allow for a mass appeal in this segment. ● The Urban Athlete is 33% of the total spending in the industry come from Urban Athlete’s, we estimate that this segment will continue to grow with the expansion of urbanization in the United States, along with the growth in fit technology. Urbanization is growing at a steady rate in the United States on average of 1.02% a year (The World Factbook). With this growth in Urbanization there can be an expected match of rate for Urban Athlete’s. This segment is the biggest spenders with technological innovations for the athletic industry growing they are the first adopters of a product. Their use of technology also allows them to be vocal about their thoughts on a product through digital media, giving an advantage when it comes to perfecting a product for this market. ● The Aspirational Core since this segment accounts for 14% of total spending. This segment will see a decrease as many of The Aspirational Core consumers will move and become part of The Achiever market. The ease of participating in more than one activity is becoming easier for consumers with rental options and cross functionality in clothing. The Aspirational Core consumers will become more selective in brands and gain higher brand loyalty for those specialized companies with products in their respective outdoor activities. ● The Athleisure this segment accounts for 12% of outdoor spending and is about the consumers that go outdoors for relaxation purposes, we estimate that the growth will be stagnant. Between 2013 to 2014 inactivity between the ages of 30 to 40 saw a decrease while 40 to 50 saw an increase in inactivity by nearly the same amount (Physical Activity Council). This segment doesn’t necessarily have a huge potential since the customers in this segment are using the product for a different reason than what the product is
  • 18. 17 intended for. However, Athleisure is becoming a new idea for many segments where it is becoming a secondary segment added onto consumers primary segments. ● The Sideliner this segment is 4% of spending. Growth for the sideliner will see a little increase as price is the main driver for their apparel choices. These consumers will opt for store brands or even everyday clothing in place of name brand athletic gear. This age group is seeing an increase in daily activity which will translate to an increase in active wear needs (Physical Activity Council). The potential for this market is low cost clothing that can transition from activewear to daily wear. ● The Complacent is 4% of outdoor consumer spending. They will see a decrease due to the markup for athletic clothes, and opt for everyday clothes to replace athletic gear for their outdoor activities. These customers who prefer indoor rather than outdoors, they have a low brand loyalty, prefer low prices over brand recognition. These consumers are older but still have buying power for gifts. Their potential is in creating a product that they can give as a gift rather than wear themselves. Competitive Analysis Competitive Environment: As previously mentioned, Under Armor competes in five major industries: the shoe and footwear manufacturing, athletic and sporting goods industry, men’s and boy’s cut and sew apparel manufacturing, women’s girls’ and infants’ cut and sew manufacturing, and the apparel accessories and other accessories.The customization entry barrier is moderate because the customization market is easy to enter and there are a lot of players that want to partake in customization. However, the competition is extremely intense amongst globally renowned industry giants.
  • 19. 18 All five industries Under Armour competes in, have extremely high buyer power because; there are many product alternatives available. Under Armour and its competitors hold a lot of power over their foreign suppliers. Sourcing overseas means low production and labor costs. Suppliers have relatively low power in the industry because the apparel companies fund their factory’s business and have complete control over their financials. Brand substitutes for Under Armour apparel or footwear include four main players: Nike, Adidas AG, PUMA, and New Balance. However, there are smaller companies such as: Lulu Lemon, PUMA, Wilson, Russell, Champion, Lucy, Mizuno, Fila, Asics, Saucony, Athleta, Starter, and Brooks (see appendix 3). All five industries that UA competes in have a low concentration level, but the rivalry amongst key players is extremely high and increasing rapidly. The net overall scan of the industry looks healthy for Under Armour. Recapping the moderate threat of new market entrants, high buyer power, low exact product product substitutes, Under Armour’s strong power over suppliers, and low competitive rivalry. See appendix 6 for Porter’s Five Forces visual. Competitive Landscape: In the early years of the 21st century, technology connected sports apparel manufacturers closer than ever before to retailers, extensive internet searches, e-commerce tools and highly innovative POS systems. This tech boom created tremendous growth and brand recognition amongst industry giants (Gale Business Insights). The four main category competitors of UA are: Nike, Adidas, PUMA, and New Balance. Indirect competitors of UA are Columbia, Gildan, Gap, VF Corp, Billabong, Hanesbrands, and Quicksilver (Market Share Reporter). Customers could potentially substitute our product for these apparel companies. These companies are the budget competitors. If customers only have a certain amount to spend on activewear, then they could potentially switch to these competitors as they typically have lower price points.
  • 20. 19 Columbia’s offerings are geared towards hiking, skiing, outdoor activities as well as after-ski and leisurewear. Customers have the option to purchase casual wear from Columbia, which could pull from sales under the Under Armour leisurewear. Gap, VF Corp, Billabong, Hanesbrand and Quicksilver all provide leisurewear to consumers. Our brand loyal customers could switch to these competitors if cost became an issue. The cost sensitive customers should be considered during economic downturns, for the potential flight, to the competitors that offer goods with higher mark-downs. One major concern for all direct and indirect competitors in the athletic shoe and apparel industry are the constant fashion trend swings. The instantaneous trend changes cause volatility in the marketplace. Another grouping of budget competitors are companies who specialize in customization. Some of our customers are coming to Under Armour solely to receive a customizable product, under $100 dollars. Therefore, companies ranging from customizable Yankee candles, Starbucks mugs, monogrammed apparel, and beyond are all considered competitors. Key Competitors Profiles: Nike’s position currently holds 8.2% of the athletic and sporting goods manufacturing market share. Largest shoe company in the world and controls about 40% share of the US athletic footwear market. In Greek translation, Nike means “The Goddess of Victory.” The company was founded in Oregon in 1968 by Phil Knight. Nike originally went to market selling shoes under the name of Blue Ribbon Sports. Today, Nike excels in shoe, apparel, accessory, and equipment manufacturing within the athletic industry across the globe. They sell product in over 180 countries around the world. Currently, Nike employs near 63,000 people. Nike’s headquarters are in Beaverton, Oregon. Their sales per employee are $448,834. They own Converse, Hurley, Manchester United Merchandising Ltd, and many NIKE offshoots. Nike was ranked #1 in the Fortune’s Top 500 Companies in Apparel, 2014 (Business Ranking Annual). The ranking was
  • 21. 20 judged off of profits, profits as a percentage of revenue, and stockholders’ equity. Nike’s current net worth is $30.601 billion. All information sourced from Gale Business Insights. Nike’s strength is their strong financial performance, creating a 13.24% operating profit margin. Adidas AG creates athletic and sports lifestyle products ranging from footwear, apparel, accessories, sport balls, and bags. Founded by Adi Dassler in Germany. In 1924 Adi and Rudolf Dassler founded what was called, Dassler Brothers Shoe Factory. In 1948 a family feud separated the shoe company. That is when Adi created Adidas and Rudolf created PUMA. Today, Adidas AG encompasses four main brands: Adidas, Reebok, TaylorMade-adidas, and Rockport. Adidas sells product in over 170 countries around the globe and employs over 45,000 people. Their sales average per employee is $383,322. Adidas current net worth is about $17.601 billion. The global presence and product diversity (i.e. tennis, hockey, golf, basketball, soccer, running, etc) are Adidas two main strengths. A couple major concerns for adidas are the counterfeit goods on the market and the extremely competitive apparel and shoe market. Sourced from Gale Business Insights. One major advantage Adidas has over global competitors is their German international headquarters. Adidas sponsors many professional soccer teams and has a large international fan following. One major threat for Adidas is the increase in price of raw materials. According to Adidas SWAT report, “About 70% of the Group’s total cost of sales was due to raw material and labor costs.” PUMA’s sells and markets footwear, apparel and accessories. It started from The Dassler Brothers Shoe Factory. Rudolf Dassler split the company in 1948 to create PUMA, while his brother Adi, went off to create Adidas. Currently, PUMA has 11,267 employees and their sales per employee is $319,443 (Gale Business Insights). In 2007, French luxury group PPR S.A. PPR purchased a majority stake of PUMA for $7 billion dollars. This acquisition put PUMA on the map as a “sportslifestyle manufacturer” and elevated PUMA’s brand image, creating more value to their customers (Gale Business Insights). PUMA’s brand portfolio consists of: Cobra Golf, Tretorn, Dobotex and Brandon.The recession in 2009, caused sales to drastically drop,
  • 22. 21 and since then, PUMA has working to revamp the brand and grow sales. Currently, PUMA is worth $13.433 billion. Above information sourced from Gale Business Insights. New Balance was founded in Boston, Massachusetts in 1906. New Balance was an arch support company that transformed, over the years, into a specialized shoe manufacturer. They create a wide variety of active shoes for women, men, and children. They also manufacture accessories, sports monitors, sports recovery products, jackets and apparel for running and sports teams. As of 2014, New Balance employed near 4,000 people. Their sales per employee are $445,000, which is a very high ratio for the industry. Today, New Balance is worth $1.78 billion. Data sourced from Gale Business Insights. It holds 6.7% of the shoe & footwear manufacturing market share in the USA. New Balance manufactures near 25% of their products in the USA. Giving them a competitive advantage over Under Armour and Nike. Along with Nike’s ID customization offering, New Balance also provides customization. New Balance has a net worth of $1.78 billion dollars (IBIS World). The threat for the industry as a whole is the foreign exchange risks. For foreign conversion, profits are often loss, due to factories operating on the Yen, Euro, Yuan, Canadian Dollar, Australian Dollar or other common forms of foreign money. Another industry-wide threat is the increase and inflation of labor costs in Asia. SWOT Analysis A big part in understanding the validity of developing a platform where customers will be able to customize particular Under Armour apparel is being able to understand the associated strengths, weaknesses, opportunities, and threats. Below will be a list of each as well as a small discussion on how it can affect Under Armour’s success with launching this new offering. Internal to Under Armour Strengths:
  • 23. 22 1. Diverse Product Portfolio: Although Under Armour started as a small apparel company specializing in under shirts for serious football players, they have turned into a performance apparel giant, as previously discussed. Now, their product portfolio features their original under shirts to, graphic tees, sweatshirts, pants, sweatpants, and numerous accessories. What this means for Under Armour’s potential customization platform is that it will attract more customers to the platform itself. Although it is starting at just apparel, which is already a niche, Under Armour’s diverse product portfolio will give customers many more options to create something they can wear and call their own. 2. Endorsements with Pro Athletes: Hundreds of athletes around the world have been signed to some sort of deal with some sort of big name company, regardless of the industry the company operates in. Household names like Tiger Woods, LeBron James, Tom Brady, and Steph Curry all have deals with large corporations (two of which are Under Armour athletes; Steph Curry and Tom Brady). These sorts of deals promote both the athlete and the brand because of the outrageous number of “followers” these athletes have. By endorsing professional athletes, Under Armour has connected their brand with these consumers (or “followers”) to increase their brand awareness, and have created a way to promote specific products: basketball apparel with Steph Curry, football apparel with Tom Brady, for example. What this means for a customization platform is more consumers wanting to go in and personalize the things they see their favorite athletes wear, as well as create their own twist on any signature apparel from the athlete, like the Steph Curry II’s (McCormic, Karla). 3. Focus on Innovation: A relentless pursuit of innovation by Under Armour is by far one of the main ways they have been able to create a multi-billion dollar brand. Their apparel lines feature patented technology like Coldgear, Heatgear, and more, all of which have been essential to creating appealing and new technology in apparel for consumers (Aaker, David). This focus on innovation gives Under Armour the ability to facilitate much
  • 24. 23 more customization options; not only is it just text, graphics, colors, etc., but also different technologies in different parts of the clothes. For example, there could be someone who really likes how the Heatgear technologies keeps their body warm when they sweat during cold football practices, but does not like how it feels. What they can then do in the customization platform is get the Heatgear technology only on the sleeves while the chest and back portion of the shirt could be simple cotton. In this case, the consumer would get the best of both worlds. 4. Effective SupplyChain Management: In 2014, Bill Neinburg, Vice President of Global Merchandise & Sales Planning at Under Armour, introduced this idea called 4D Collaboration. Basically, 4D Collaboration brought channel partners together and put data at the center of interaction in order to streamline production to get product to consumers more efficiently, more timely, and more often (Supply Chain Digest). Although this greatly affects Under Armour as a whole, it is also a strength of the customization platform. 4D Collaboration will enable Under Armour to constantly improve the lead times of getting customized product to consumers. Because the sales will be direct to consumer through the website, the lead times are already reduced. However, the customization aspect of it increases lead times because of all the necessary steps. But, in the end, with an already effective strategy like 4D Collaboration, Under Armour will have the ability to again bring lead times down in order to get product quickly out to consumers and free of any error. Weaknesses: 1. Reliance on U.S. Market: At the start, the customization platform will only be available in the U.S. A heavy reliance on the U.S. market like this could make the customization platform seem like it may not be performing so well, but in actuality could be a hit in international markets. To put some numbers in perspective, roughly 80% of Under
  • 25. 24 Armour’s revenues come from the U.S. market alone (EdgarOnline). This, in the end, may limit the reach of the customization platform. 2. Non-Contractual Agreements with Suppliers: Although the previously discussed 4D collaboration has facilitated a strong supply chain management philosophy for Under Armour, some of their third-party suppliers are not bound to any sort of contract. This could prove to be an issue with Under Armour because, at any time, a supplier may choose to end its business relationship with Under Armour. Not only could this increase lead times, it may cause customer dissatisfaction. It should be noted here that effective supply chain management is still a strength, however. When all pieces are aligned, Under Armour’s supply chain management is extremely effective, but the idea of suppliers being able to permanently end a relationship could still be an issue, if it were to happen. 3. Matching Quality with Scale of Operations: With a focus on innovation, another one of Under Armour’s main brand attributes is associated with quality. With a customization platform, consumers are going to expect the same quality they see in Under Armour’s non-customized apparel. This could be an issue for Under Armour because of their excessive growth and additional revenue stream. Increased revenue means increased number of consumers. Thus, as Under Armour’s scale of operations continues to grow and their focus is expansion, matching quality to a larger scale of operations could be problematic if the focus is taken away from quality assurance; because a larger scale means higher demand to put out a lot of product that may not be as good as it should. If the focus moves from quality, the brand could erode, and customer dissatisfaction could increase (Passport). External to Under Armour Opportunities:
  • 26. 25 1. Growing Market for Women: In recent years, the athletic apparel market has been growing substantially, particularly for women. Now, instead of people buying performance apparel clothes because they hit the gym everyday, they buy in order to be comfortable and look good. This trend is called the “Athleisure” market segment, previously mentioned in target market analysis. According to the Huffington Post and fashion psychologist Dawnn Karen, the “expectations of women’s bodies have shifted”. The focus is now on fitness and being toned, and although not everyone works out regularly, wearing athletic apparel out and about makes people think to themselves they are indeed fit and healthy although they may not be (Weingus). This idea of women’s perspectives on performance apparel, as well as society’s expectations of a woman’s body, contribute to a growing female market. Being able to supply these female consumers with a personalization outlet allows them to add their own twist to Under Armour’s apparel that they can show off while working out, or not while working out. 2. Growing Footwear Market: Not only is the athletic footwear market expected to grow in the upcoming years, there is an expected increase in demand for innovative footwear (Research and Markets). Although the customization platform is not going to support the customization of footwear initially, a growing athletic footwear market, as well as a place where consumers can basically create their own shoes, will provide Under Armour an opportunity to gain a more prominent position in the athletic footwear marketplace. As of 2014, footwear accounted for $430 million of total revenue (about 18%). With a customization platform and a growing footwear market, Under Armour has the opportunity to greatly increase this number. 3. Strategic Partnerships: By introducing a customization platform, Under Armour has the opportunity to leverage strategic partnerships with other companies, in order to improve public relations, increase brand awareness, and increase customer engagement and loyalty. For example, Under Armour has the opportunity to reach out to companies like
  • 27. 26 Dick’s Sporting Goods to be a part of the Sports Matters campaign. What Dick’s does is raise money for city sports teams that are having problems getting enough funding to keep the teams alive. One thing Under Armour could do is team up with Dick’s and provide these teams with some or all equipment. Where the customization platform comes into play could be allowing the players to embroider their initials, their number, their names, or anything that adds a personal touch to the jerseys, under shirts, pants, shorts, etc. Not only will this improve public relations and brand awareness/recognition, but it could also be a catalyst to future purchases from the athletes and their families (sportsmatter.org). Threats 1. Pressure from Consumers: As previously stated, Under Armour has created a brand centered around providing new and innovative performance apparel, footwear, and accessories. With that comes pressure from consumers to keep that innovative drive going so that they get new stuff to potentially buy, or losing these consumers (Passport). This obvious brand association will clearly leak into the expectations of a customization platform. Consumers will be constantly expecting new ways to personalize their apparel with different designs, colors, and other options, which means Under Armour must be prepared to constantly innovate and improve the customization platform. If not, Under Armour risks decreasing brand equity through bad public relations, decreased customer loyalty, decreased market share, and more. 2. Imitative Offerings:Under Armour’s customization platform will initially be significantly different from current competitors; NikeID only allows for the customization of shoes and bags, and Adidas only allows for the customization of soccer cleats. What may become a threat to Under Armour is their ability to differentiate their offering from competitors like Nike and Adidas, specifically in the customization platform market. According to Small Business Week, in 2013 alone, “nearly 75% of consumers claimed to want personalized
  • 28. 27 products and services”. This means that apparel companies in general, once they catch on to the mass customization trend will end up developing their own platforms and interfaces that will be similar to Under Armour. Thus, it will be a challenge for Under Armour to keep their differentiation strategy relevant. 3. Few Barriers to Entry: The mass customization market is on pace to be the future of retail and retail consumers. However, with the onslaught of technological advances, as well as regular people being able to code user interfaces or develop their own apps, it is clear that there are very few barriers to entry into the customization market. All a company really needs is someone with basic coding experience, a good user interface design, and something to customize. Now, suddenly, Under Armour is threatened with a new competitor in the customized performance apparel marketplace. Implications and Conclusions Obviously for Under Armour there are many positive and negative, internal and external forces to consider when developing a customization platform (strengths, weaknesses, opportunities, threats). The company itself has created a brand built around the ideas of product diversity, exceptional quality, and made to make a person perform better; per their website, “to make all athletes better through passion, design, and the relentless pursuit of innovation”. This sort of keen focus is what enabled Under Armour to influence a significant number of consumers to buy from their brand, in a highly competitive marketplace, in what seems a few years. Through their massive success, Under Armour has become a household name, with the likes of Nike, Adidas, Puma, and more. Many of which started many years before Under Armour did. With a strong focus on their core competencies and staying true to their brand, Under Armour has developed a large and loyal customer base. To be specific, their target market includes the “achiever” and the “urban athlete”. With that being said, it is difficult to make a suggestion to a company that seems to be doing everything so right and is growing so fast. However, where Under Armour, and many similar companies, fault is the ability to engage
  • 29. 28 consumers and keep them buying the same brand over and over. This can be argued for any company really, but in a highly competitive industry like apparel, a potential consumer can literally walk in a certain direction and can quickly find a substitute. All things considered (company, industry, competitors, consumers, and marketplace) a very viable option for Under Armour to gain market share, sales revenues, and more would be creating a customization platform for consumers. Now, consumers are not only seeing value through the performance attributes of Under Armour’s performance apparel (durability, quality, style, etc.), but they are also becoming involved in the value creation process and enhancing their association with the brand. What this means for Under Armour goes beyond business performance measurements, but also results in increased brand awareness, brand recognition, customer loyalty, customer engagement and more. All these things ultimately contribute to the bottom line. What is featured in the following section is a discussion of the final steps and strategies of the marketing plan. This includes the overall strategic marketing plan (market focus, competitive strategy, and goals), marketing program strategies (product, distribution, pricing, and promotional strategies), and finally a discussion of how the plan will work, how it will be controlled, and what the likely results will be. Strategic Market Plan Marketing Missions and Goals Although Under Armour has the opportunity to develop an entirely new customization platform to get their consumers involved in the value creation process, there needs to be a focused marketing strategy to be able to effectively bring the offering to consumers. Now, instead of the value derived by the consumers coming from the products themselves, the consumers will have a say in the product development process. Customers can contribute personal creativity and ideas to the existing product, which increases the perceived value of the good. Custom Armour will be designed for the style conscious consumers.
  • 30. 29 Our marketing mission, is to facilitate a customization platform to get consumers interacting with the products, the website, the app, and, under all of this, Under Armour as a whole, in order to increase the lifetime value of consumers. The goals of this marketing mission are outlined as follows: increased customer loyalty and retention, increased brand awareness, and increased customer engagement. However, in order to meet these general goals outlined by the marketing mission, there needs to be specific and measurable objectives in place to measure progress and success; these will be outlined later. First, will be a discussion of Under Armour’s marketing strategy, the target market the offering is predominantly reaching out to with the new service offering, and a list of measurable, achievable, and time-oriented goals. Marketing Strategy As previously mentioned, simply developing a stand alone customization platform will not be a good enough offering to bring to consumers, especially considering they are not the only company offering consumers with a platform that allows for the customization of particular products. What will be a challenge for Under Armour is planning out a strategy that keeps their offering separate from competing offers and the best way to do this is to use a differentiation strategy. Below is a list of how Under Armour’s customization platform will be different than competitors’ customization platforms: ● Customization Options: By simply giving consumers different customization options will allow Under Armour to position their offering separate from competitors. Currently, competing service offerings only allow for the manipulation of colors. Under Armour’s customization platform will be much more diversified; consumers will be able to not only alter color, but can add patterns, fabrics, different apparel technologies, text, and particular graphics that may be uploaded by the user. ● Product Offerings:Initially, the customization platform will be limited to apparel. Competing customization platforms limit their customization to just shoes, whereas
  • 31. 30 Under Armour will start with apparel (tops and bottoms) and will eventually have the ability to add shoes and accessories to the customizable product offerings. ● Multi-Platform Availability: Under Armour’s customization platform will be available through more than one medium. Instead of having to log onto a site through a web browser, as consumers do through competing platforms, Under Armour’s platform will be available on the web and through the UA Record app. This then allows customers to play with the customization process on the go. ● Consistent Updates: Often times, competitors will offer a new shoe that is available for customization. However, what is not offered through competitors is updates in terms of available patterns, colors, fonts, text options, and more. Under Armour will provide consumers will consistently updated options, which means new ways for consumers to express themselves onto Under Armour’s apparel. Target Market Our primary target market is The Urban Athlete. This segment consists of highly social, active members of the athletic community. They strongly identify with athletic brands and are highly competitive individuals. Their competitive nature is something that is likely to attract them to Custom Armour, especially since The Urban Athlete is rather style-conscious. The Connected Fitness network will be in alignment with Custom Armour, which will also draw the attention of the Urban Athlete, because it fits in with their busy, urban lifestyles, and the competition within the Apps’ community provides incentive. They can also be very intense in their activities and personality, which can be seen as coherent with the Under Armour Brand. Our secondary target market is the Achiever. This market segment is filled with competitive athletes than enjoy outdoor activities like running, hiking, and mountain biking. They hold medium loyalty, but are responsible for 17% of buying in the industry. Adding the Achiever and Urban Athlete, total amounts to about 59.4 million consumers, with 50% of the total spending.
  • 32. 31 Objectives Now that Under Armour has a specific marketing strategy, they know how their offering will be different than competitors, and who they will be targeting, it is important to establish a baseline understanding of how this new offering is going to benefit Under Armour as a business. Below is a number of objectives and a brief discussion on each: 1. Increase website traffic/users by 30%: This objective is a process objective because it is an indicator of the success of the actual use of the platform and people being more engaged with the digital presence of Under Armour. 2. Increase annual sales by an additional 10%: This is an obvious end objective because it is a direct measure of the success of the project overall. Under Armour is an already growing company, so beyond their expected growth, the goal is to be an additional 10%. 3. Increase market share 5% in the sports apparel market: Another obvious end objective that shows how Under Armour is progressing in the sports apparel market place. Although not necessarily attributable to the success of Custom Armour, it is an indicator of overall success. 4. Increase performance apparel revenue 15%: This is an end objective pertaining specifically to performance apparel because the customization platform will only initially be available for apparel instead of apparel, shoes, etc. 5. Increase UA app users by 20%: This is a process objective that indicates people are spending more time engaging with Under Armour through the means of a mobile application. 6. Reach project profitability in 1 year: Clearly an end objective that is meant to measure how long it will take to become profitable and provides a benchmark for later observations.
  • 33. 32 7. Gain a 5% ROI (return on marketing investment) by year 3: This is another end objective that will inform Under Armour about whether or not the project was worth the investment in terms of how much was spent in the marketing budget. 8. Expand offering into footwear and accessories by year 2: A process objective that shows the continued success of the customization platform. If the offering becomes successful after year one, it may be worth at least looking into moving towards other customization offerings. 9. Increase second purchases by 35% after year 1: One of the main purposes of developing a customization platform such as this, is to engage the consumer and get them involved in the value co-creation process. What this leads to is an increased likelihood that consumers will repurchase particular products. Market positioning Positioning Custom Armour with the differentiating strategy, will be the most successful strategy when introducing this new product to the market. Custom Armour’s differentiators include the already established function performance oriented apparel and footwear already sold by the company being leveraged to include personal style and preferences. This allows the user to be in charge of the product they receive, allowing them to get their needs and want out of the product. Along with that customization of athletic apparel is a relatively untapped market. Many direct competitors in the market are focused mainly on mass customizable footwear. A few small competitors will customize specific types of sportswear, such as secondskin who customized competitive swimsuits. Custom Armour consumers will also have the ability to incorporate Under Armour’s technology, such as their innovative GEAR™ line. This allows the user to best fit their needs depending on climate and activity. As well as continuing Under Armours stance on consumers learning about what they need and who to best achieve their desired outcomes. Consumers will also be encouraged to download the UA Record app for
  • 34. 33 purchasing and seeing their friends or favorite athletes creations. This incorporation of the app will allow Under Armour to better serve its customers and gain brand recognition. The Perceptual map seen in Appendix 11 shows Under Armours desired position compared to other players in the customization market. When looking at large companies with a relatively low degree of customization there is Polo who offers customizable mens shirts, as well as women's bikinis, but only with the option of adding a monogram and choosing from basic colors. Along with Polo, Puma is also in the first sector who offers customized shoes at select locations. Moving on to small companies with still a relatively low degree of customization is Threadless. They offers custom designs on T-Shirts, which a consumer can choose the shirt they want their choice of graphic on. Another small company with a higher degree of customization is Euro Shoes. A european company that offers customizable shoes isolated to that region. Lastly there are large companies with a high degree of customization, Nike, and Adidas. Nike has their NikeID platform which allows users to customize both shoes and selected accessories. Then Adidas who has Miadidas specializing in custom shoes for running, soccer, tennis, and basketball. With Custom Armour, Under Armour should find itself in this section of a perceptual map. Custom Armour’s value proposition is that they will provides you with the ability to identify yourself uniquely while getting durability and functionality from your performance Armour. Brand strategy Under Armour’s brand identity is a focused on providing new and innovative athletic apparel to aid in active performance at every level. Custom Armour aids this by adding another layer to their preexisting identity. The Custom Armour identity is providing new and innovative athletic apparel, designed by and for the consumer, showcasing their personal style and customized to their performance needs. Custom Armour will be the name of this addition making it clear to the user what they would be doing, “customizing”. As well as keeping in line with Under Armour’s naming, through the addition of Armour at the end of the name. The
  • 35. 34 personality of Under Armour is bold and strong. Their tag line of “I will”, showcases the athlete's desire to be better, stronger, and powerful. They have built the fact that they are the underdog into their brand personality, making them always striving to be better, bigger, and greater. At its core Under Armour is about improved athletic performance. The next step for Under Armour is allowing users to customize their apparel. Under Armour builds and leverages their equity by their name and brand recognition. Under Armour’s main tools for brand recognition are their Connected Fitness apps; UA Record, MyFitnessPal, MapMyFitness, and Endomondo with over 140 million athletes using the app. The brand equity that Connected Fitness provides for Under Armour is immeasurable. “Ultimately, the more people exercise, the more athletic footwear and apparel they will buy,” reported Aditi Pai from mobilehealthnews.com. This is a huge opportunity for the company. “We are growing our community at more than 30 percent year over year and so far in 2015 these users have voluntarily logged over 1 billion workouts and more than 5 billion foods,” said Aditi Pai from mobilehealthnews.com. The brand is globally recognized and is worth more than 3.7 billion dollars, according to Forbes 400, forbes.com. Under Armour will leverage equity of Custom Armour mainly through the Connected Fitness app, long side their powerful online presence. Marketing Program Strategies Product Strategy Our product strategy begins with providing a service differentiation. Our objectives are to enhance customer experience through creating a new personalized service, create a more diverse product assortment, grow market share, and improve stakeholder relationships. With the addition of a personalized service customers will have the chance to be apart of the design process. By being apart of the process consumers will have a greater connection and loyalty to both the Under Armour brand and their product offerings. The diverse product assortment will
  • 36. 35 come from the ability to choose which apparel will best fit personal needs and tailor it to best fit the consumer's activities. Both of these aspects will increase market share within the athletic apparel industry. As well as, improving shareholder relations, though the increase in sales with the custom addition to Under Armour's product offerings. We will be providing a whole product offer. Customers will have the ability to use a customization platform on the website or through an app to develop performance apparel to suit their own personal needs, desires, and wants. Customization options would include colors, text, fabric, different technologies, and graphics all available to all consumers. The platform will provide a simple way for consumers to upload pictures or personally designed graphics that can be put onto different articles of clothing. Customers will be able to choose between a wide array of Under Armour’s trademarked fabrics, including their GEAR™ line. Customers will be limited in their ability to print graphics onto different materials (i.e. graphics will not print on fleece, polyester, etc.) and different product offerings; initially, to minimize costs and tests waters, the customization platform will be available for only athletic apparel and not shoes/accessories. Product development pathway: ● The product development stage will start with sketching a visual layout of what the platforms will look like. ● Simultaneously, we will have to decide which products will be customizable. The products that can be customized will start with apparel; items will include shirts, pants, shorts, and jackets. ● Next step will involve communicating with our partners at SAP, and informing them of our needs, wants, ideas, etc. ○ Develop user-friendly interface across all devices. This will include the Under Armour website, and Record Under Armour’s fitness application. The website design will need to be accessible and easy to uses by computers as well as mobile devices and tablets, when on the brand's website. The application will
  • 37. 36 need to be both user-friendly and easy to read on both android and apple devices. ○ Develop options for customization. This includes the product offering selections, along with fabrics and designs for the consumer to choose from. Determining which fabrics will be able to have design elements such as patterns and text or image placement on them to ensure the integrity and longevity of the clothing and the user's custom creation. ○ Develop a way for consumers to save their designs for future purchase. Record is a hybrid application integrating social media and fitness tracking. Through the ability of saving designs users can share their creations on social media. As well as save for purchase in the future or other can purchase for the creator as a gift. ● SAP will code, develop, and build Custom Armour app and the extension to Under Armour website. This will allow for cohesion and flow between customers products inwhich they use to customize. While keeping intact the design and look Under Armour has already established in its website and application. ● Once the platforms are built, Under Armour and SAP will have to do a test run to make sure all the parts are linked correctly, and there aren’t any glitches in the system. This testing will be extensive so customers do not encounter and problems when creating and receiving their customized apparel. ● Once the app and new web platform are finished, we will launch the new offerings. ● Records will be retained from the very start of the launch. Those annotations will tell us: ○ Who is buying (demographics) ○ How much they’re buying ○ How frequently they’re buying ○ What they’re buying ○ When they’re buying
  • 38. 37 ○ What patterns and colors sell the best/ worst ○ If they’re sharing their purchases, which leads to additional traffic on the website and potential new buyers ○ If product was left in the checkout carts on the app or website ○ Where the product is in the development stage ○ When the product is being shipping back to Under Armour ○ When the product leaves the warehouse, and tracking of the product ● After records have been analyzed, we will make changes to the app and website as needed. Along with changing the products or fabrics that did not sell during the launch. Pricing Strategy Our objective is to increase market share by developing a pricing strategy that makes our offerings affordable, but yet valued and unique. We will be addressing both internal and external orientations. Internal factors affecting price strategy include things like manufacturing costs, research and development costs, internal strategy, brand equity, and budgeting. Under Armour should at least understand the internal factors affecting their pricing decisions regardless of orientation. Ultimately, UA’s price orientation should be based externally. Being in a market driven by consumers’ tastes and wants, and all of the competition as well, Under Armour should orientate their pricing strategy based on the external environment because their market is mostly driven by external factors. Our strategy is Customerization Value Pricing. Overall would be value in use for UA. The customizable product offering is elastic. Elastic goods are goods that have a drastic demand change when a change in price occurs. If pricing soars or drops, the demand will drastically change. At Under Armour, we price our product at a medium level in comparison to competitors in the market place. The high quality of our goods are reflected in the pricing strategy. However, we do not overcharge. We value of customers and their experience using our products.
  • 39. 38 Distribution Strategy Our objective is to reach our customers through the Connected Fitness apps we developed with SAP and our Under Armour website that will offer customizable products. Currently, we use our mobile apps for customers to purchase product, report exercise and food consumption. As well as connecting with friends and athletes challenging them in fitness games and the social media outlet created on the app. A recent Forbes article, written by Derek Klobusher reported, “The Baltimore-based sports apparel company offers data-enabled garments that feed information to users via multiple channels, helping them improve performance, build community or connect with the company.” This is our goal for the customizable platform. Building and connecting members through performance and personalizing each person's own inner athlete. Our sales channels for the customization offering is direct to consumers through Under Armour Connected Fitness apps. Eventually we will offer direct to consumer through Under Armour store kiosks. Since our market is very large, inclusive of web 2.0, and mobile app users; our distribution intensity will be very strong. Product will be easily accessible to all Under Armour digital customers. The channel is relatively short, starting with the customer creating the product on the Under Armour retail app, which is recorded on Under Armour’s data base. From there, Under Armour will send the custom design to the manufacturer, that will produce and send back to Under Armour. Under Armour will then ship the finished goods to the consumer. See channel map Appendix 11. Under Armour’s 3rd quarter results reported an 8.34% profit margin (YCharts.com). This is calculated by taking the quarter’s net income and dividing it by the quarter’s revenue. The lowest profit margin Under Armour has ever experienced was second quarter of 2008, earning 0.88% (YCharts). Our goal with the customization launch is to increase the annual profit margin
  • 40. 39 to 11%. This will be achievable, due to the low cost of goods and price mark-up on custom apparel. Promotional Strategy Our promotional strategy objectives are to generate awareness of our new customizable offering, make our customers to interact with platform, support our customers through each stage of the ordering process, increase website traffic, multiply our lifetime customer number, and increase brand awareness. This will drive sales and increase awareness of Record. Along with allowing customers to be apart of the building process, creating fashionable, durable, high performance sports wear that is one of a kind. For the Custom Armour mobile app and web platform launch, we’re creating a unique advertising campaign. We will be placing digital billboards in major cities like: New York, Boston, LA, Las Vegas, Chicago, Houston, Seattle, Portland and Philadelphia. These billboards will link to the Custom Armour, Connected Fitness app, so that customers can go on their app in the city they’re located, create their custom apparel, request to post their creation on the billboard, and then the gear will be placed on an avatar on the screen. The screen will hold the image for 10 seconds, and then another custom image will be uploaded. Our plan is to have the billboards operating for the first 4 months of the app and website launch. Within stores customers will be able to see live what others are creating, in order to drive the Custom Armour experience. Under Armour PR team will create a press release for the launch of the app and web platform. The press release will be announced two weeks prior to the actual product launch. This will get a buzz going around before the product can be launched and the billboards start operating. In addition, we will release an official press release the first day of the launch. A hashtag will be created for social media sites; facebook, Instagram, tumblr, Twitter, etc. Customers will create their customized products, take screen snaps of their virtual developments, or photographs of their physical product creations and post online to social media sites using the hashtag #CustomArmour.
  • 41. 40 To increase awareness of the new offering, we will also launch commercials, magazine ads, and addition (non-digital) billboards of our sponsored athletes (i.e. Stephen Curry, Lindsey Vonn) in customized gear. As well as having or sponsored athletes post their own personal creations to the social media part of the Record app. Implementation and Control The first step in putting the plan together and bringing it to consumers is to forecast the success of the project. To do so, several things have to be considered such as the actual sales forecast, the marketing budget, and final profits of the projects after the costs of the project are also realized. Also important are the assumptions that led to how the numbers were conceived; see below for a discussion of each of the previously stated elements. Financial Projections Sales Forecast Sales forecasts for Custom Armour were calculated using a top-down approach, primarily based on historical data from Under Armour’s 10-K SEC filing for the 2014 fiscal year. For the best case, expected, and worst case scenarios, the annual revenues were determined using a compound aggregate growth rate of 25%. We then determined the sales derived from solely apparel based on the existing 74.3% of sales. Since Custom Armour would be a contribution to the company’s direct-to-consumer (DTC) sales, we then further narrowed our sales down using the 30% of sales coming from DTC. Under Armour’s goal to increase DTC sales to 35% by 2018 was also accounted for. We then incorporated the 9% contribution from e- commerce sales, due to Custom Armour being offered only through web and app platforms (MarketRealist). Lastly, we accounted for the demand for custom apparel, which we established 60% of consumers would have a desire for custom apparel. Worst-CaseForecast:$253.7 million in salesfromCustomArmourin 3 years
  • 42. 41 For the worst-case scenario, top-line CAGR maintained 25% and supports direct-to- consumer growth. Revenue generated from apparel, e-commerce sales, and customization demand remains constant. The results are as follows: Operational Requirements Now that Under Armour has an understanding on what kind of return this sort of investment can facilitate, it becomes prudent to establish how exactly the service offering is going to be brought to consumers. In order to do so, many factors have to be considered. Such as, operational requirements - including headcount and added infrastructure - and controls and management - including action plans, schedules, metrics, risks, and contingency plans. First, operational requirements will be considered, and then control and management concepts. Headcount Under Armour is a company with over 10,000 employees spread apart between main office, retail stores, distribution centers, etc. That said, the strategy Under Armour should take for headcount is to leverage their current expertise and current personnel. In terms of actual numbers and jobs, Under Armour should first hire a team of 5 designers. These designers will take the customized product, come up with a mock-up of the apparel, and then submit it to the manufacturer who will actually make the product based on the design from the designer. In addition to a small team of designers, there will also be a need for additional IT support. In this case, 3 extra IT people will be sufficient in order to keep track of the performance of the platform, do updates, etc. Again, for the IT department, most of the man power will come from the people Under Armour already has on staff. Finally, there will be 2 overseers of the Custom Armour project, also considered project managers, and cleverly named Custom Armour
  • 43. 42 Specialists. These people will be the people who overview the numbers at several check-in periods that will be discussed later. Basically they will take any significant numbers, attach some sort of analysis, and take any sort of action if necessary. For example, if the social media campaign outlined in the promotional strategy falls flat and does not get many people involved, the Custom Armour Specialist may see this trend and reach out to the social media department to get them to do a new campaign, or come up with a new campaign his/herself. In total, there will be ten additional people on staff in order to ensure the positive performance of the Custom Armour campaign. As stated previously however, the main strategy is to leverage current man power (see financial projections for wage estimates). Infrastructure Although the customization process involves a more careful manufacturing of Under Armour’s apparel, there will be no significant need for any kind of large investment in additional machinery. Instead however, the main investment in infrastructure will be in the technology of the customization platform. That said, necessary infrastructure will be limited to servers in order to support the added traffic and busy customization platform, in and of itself. The strategy of leveraging Under Armour’s current state holds true moving from headcount to infrastructure. Under Armour’s wide network of manufacturers allows them to produce any sort of textile, so adding the possibility of customizing a particular piece of apparel will not cause any significant problems in the manufacturing process. The potential problem lies in Under Armour servers being able to support the platform and added traffic. Instead of waiting to see if there will be a problem with Under Armour’s current servers, it will be best if there is an investment into larger and more capable servers to ensure there are no issues at launch. Another large consideration has to do with the customization and app platforms themselves. Although the actual creation of the two platforms will be outsourced to SAP, the platforms will then become part of Under Armour’s necessary added infrastructure. Again, the major category of infrastructure investment is through technology rather than actual machinery.
  • 44. 43 Control and Management The overall implementation plan follows a distinct sequence comparing what is needed, how Under Armour is going to get it, and lastly what follows is an understanding about how the new service offering will be brought to consumers. What follows is a discussion about the action plan for Custom Armour, schedules associated with the action plan, metrics to measure and keep track of through the process, risks of the plan and several contingency plans in place in order to ensure the success of Custom Armour, even in the face of adversity. Action Plans and Schedule The action plans for the launch of the Custom Armor customization platform will be broken up into four different categories: initial stage, preparatory stage, launch stage, and evaluation stage. The initial stage will feature tasks that have to do with minor but important things Under Armour will have to do first for the plan. It includes things like hiring personnel, developing an ad campaign, the actual development of the customization platform, etc. The preparatory stage is all about preparing to actually launch the new offering; although small, it is still important, featuring tasks like press releases and the launch of the ad campaign. Considering any ad campaign is designed to generate awareness and build hype, thus Under Armour’s ad campaign takes place a couple weeks before the actual launch of the platform to ensure consumers are aware of the new offering before it is actually released. The third stage is the actual launch stage where the customization platform is actually launch, as well as the social media campaign. The actual launch of the platform happens officially on March 1st. The final stage is probably the most important; the evaluation stage. At the end of the first month, third month, and sixth month, there will be an evaluation of the progress of the campaign. The evaluation process will be designed to see where the platform has gone, how it has gotten there, as well as an examination of the success of the marketing and advertising
  • 45. 44 plans, and lastly a check-in to see if the offering is on-track to complete its goals. If there exists any hiccup in the plan, it is designed to have enough time in between each stage in order to give sufficient amount of time to re-do or adjust accordingly. See below for a gantt chart representing the flow of events from start to finish, and see appendix ? for a table representing the stages as well another visual representation to show how the plan will be implemented. Metrics Metrics are an incredibly important consideration in order to ensure that the project is on- track and producing at a rate that it should. The most logical way to organize a group of metrics is those that are internal vs. external, and forward looking vs. backward looking metrics. Obviously internal metrics are those that pertain to Under Armour and the Custom Armour project. Forward looking metrics are the metrics that have to do with a measure of future performance and usually are viewed at regular intervals (these may include things like late deliveries and customer satisfaction). Backward looking metrics look at measureable things that
  • 46. 45 measure past performance rather than indicating some kind of future goal (these may include things like sales revenue, net marketing contribution and more). Regardless of the relationship or differences, each are equally important when it comes to measuring the success of a new project. For Under Armour in particular, internal forward looking metrics include app downloads, delivery efficiency, product defects, inventory turnover, Connected Fitness user activity, and order accuracy. Internal backward looking metrics include sales revenue, direct-to-consumer sales, net marketing contribution, return on marketing investment, and return on investment. External forward looking metrics include customer awareness, customer satisfaction, perceived performance, and intent to repurchase. Finally, external backward looking metrics include market share, market growth rate, customer retention, customer lifetime value, and revenue per customer. Risks and Contingency Plan Developing a contingency plan for each possible risk associated with the Custom Armour platform would be excessive and quite redundant. For simplicity purposes, featured below are risks and two different major possible scenarios regarding the possible negative events having to do with Custom Armour: negative responses to Custom Armour, and insufficient production due to incorrect order processing, manufacturing or software malfunctions, or customer dissatisfaction. Risks The risks associated with the customization platform can be most logically broken up between internal and external risks. These kinds of risks are thus classified into the two different kinds of contingency plans, previously listed, and they are as follows in a numbered list from most important and significant to least: ● Internal Risks:
  • 47. 46 ○ Technical Malfunctions: From server disruption to bugs in the platform, technical malfunctions could become a major issue for this advanced platform. ○ Supply Chain Disruption: Members of the supply chain main run into their own problems that could affect Under Armour. ○ Quality Insufficiencies: Not meeting consumers expected quality could lead to significant amounts of customer dissatisfaction. ○ Manufacturer Malfunctions: Issues with machinery during the manufacturing process could significantly disrupt operations. ○ Changes in Key Personnel: Losing key personnel may set back operations. ○ Insufficient Strategies: If something in the strategy is insufficient, Under Armour may have to spend a lot of unnecessary time coming up with new strategies. ● External Risks: ○ Competition Imitations: Although a differentiation strategy is effective, Under Armour may miss an opportunity to differentiate themselves and could end up losing out on certain opportunities. ○ Pressure from Consumers: Consumers expect Under Armour to constantly produce innovative products. Not doing so may erode the brand’s reputation. ○ Technological Advances: Not staying up to date on new available technologies may cause Under Armour to become a market follower instead of a market leader. ○ Changes in Economic Conditions: Customized product is priced at a premium which may mean that if disposable income decreases, consumers may opt out of the personalized apparel market. ○ Legal Changes: Legal issues may significantly disrupt Under Armour’s operations in the United States and overseas. Contingency Plan 1: Negative Responses to Custom Armour
  • 48. 47 A potential risk for Under Armour’s Custom Armour implementation is that it could garner negative responses from the industry or consumers that have the potential to damage the brand’s reputation. However, we believe that most negative responses would be due to inadequate knowledge regarding the customization industry. For example, consumers may assume that Custom Armour is like NikeID, but that is not the case. NikeID primarily focuses on footwear and offers a few bags for their customization services, whereas Custom Armour is entering the relatively untapped market of customizing their apparel products. Providing adaptive customization to apparel is a challenging segment of the mass customization industry, but Under Armour’s brand encourages the challenge. We also encourage friendly competition. Therefore, any negative responses provides our company with an excellent opportunity to address why Custom Armour is vastly different and fuel competition, reinforcing our strong brand image. Our contingency plan for such a scenario would be to provide some sort of press release or response to any criticism, where appropriate, to defend our stance and reinforce our differentiation. If in fact the 1-month, 3-month, or 6-month evaluation shows any sort of issues for the Custom Armour initiative, proper action must be taken. Beyond giving a press release, Under Armour can redo several things to make the offering more appealing; such as a new social media campaign, email drip campaigns, sales promotions, or any other promotional decisions aimed at increasing awareness, or getting consumers to finalize a sale, depending on what the issue actually is. Contingency Plan 2: Insufficient Production Due to Incorrect Order Processing, Manufacturing or Software Malfunctions, or Customer Dissatisfaction. Another major risk for Custom Armour is that there is increased complexity in the supply chain by offering customization services, leading to a higher risk of dissatisfaction with the end product from the consumer. If the consumer is dissatisfied with their product for any reason, they can return the product as per our return policy (non-refundable customization fee), and
  • 49. 48 Under Armour will then place the non-defective products in their factory and brand stores to resell. However, ideally, the product would be sent back to Under Armour with the necessary changes known to the manufacturer. Also, in the event that a consumer is unhappy with how their product turned out and takes necessary action to voice their displeasure to the public, Under Armour will have people in place to reach out to the consumer, hear what their complaint is, zero in on where the issue took place, and take corrective action to ensure that it does not happen again. Under Armour may also decide to make the platform inaccessible for a period of time in order to go through updates on the platform to optimize the performance. Overall, Under Armour will have to take a proactive stance on any issues and voice their concern for the consumers, rather than assuming they will get over it eventually. Having a consumer be a part of the value co-creation process is a huge deal and makes the consumer feel special. In turn, Under Armour must have a consumer-centric focus in order to facilitate a positive relationship between consumer and company. Conclusion Under Armour is an enormous company, and is arguably a household name around the world that all people recognize or have heard of. Essentially, the have become the company that does everything right. What becomes difficult with that is the idea of ending up in the maturity side of the marketplace where people have received the products and do not feel like the relationship should be anything more than transactional. Under Armour has thus facilitated a brand personality that consumers can relate to in order to improve this relationship, making the consumers feel like they are actually an extension of the brand. One way to make the relationship less transactional is to develop some kind of service offering where the consumers become involved in the value creation process as a value co-creator. For Under Armour, given the reputation they have built, a fitting service offering would be a customization platform. With a customization platform, consumers become part of the value creation process; no longer are
  • 50. 49 they a simple person contributing to a company’s bottom line, they become an extension of the brand, with their own ideas and creations embodied in things they can wear around anywhere. Overall, the customization market is a new market and has become increasingly popular with people looking for personalized products and services. Under Armour then has the opportunity to fill this market and differentiate themselves from the competition by allowing consumers to customize apparel, rather than shoes and accessories like some competitors offer. The numbers clearly back up the legitimacy of the plan; revenues go up, marketing return on sales, and marketing return on investment are both at significantly impressive levels and it requires a relatively small investment considering the revenues it can potentially increase. By following the general guidelines for the opportunity listed in this report, Under Armour has a good basis for developing a service offering such as this. The market is growing, consumers want it, and there simple steps that can be taken to bring the opportunity to Under Armour, all that is needed is the investment. Bibliography ● Anderson, David. “Mass Customization, the proactive management of variety” 2015. http://www.build-to-order-consulting.com/mc.htm ● “Apparel accessories and other apparel manufacturing.” Business Insights. 2015. http://bi.galegroup.com.proxy.lib.pdx.edu/global/industry/315990?u=s1185784
  • 51. 50 ● “Armoured for Growth; Potential Opportunities for Under Armour” Dec. 17, 2013. Forbes. http://www.forbes.com/sites/greatspeculations/2013/12/17/armoured-for-growth- potential-opportunities-for-under-armour/ ● "Athletic Footwear Market in the US 2015-2019." - Research and Markets. TechNavio, Mar. 2015. Web. 19 Oct. 2015. <http://www.researchandmarkets.com/research/r28j5p/athletic_footwear>. ● Boyer, Kenneth Karel, and Rohit Verma. Operations & Supply Chain Management for the 21st Century. Mason, OH: South-Western, 2010. Print. ● Briggs, Bill. “Under Armour’s online sales sprint ahead by 28% in Q3” Internet Retailer. Oct. 27 2015. https://www.internetretailer.com/2015/10/27/under-armours- online-sales-sprint-ahead-28-q3 ● Briggs, Richard P. "10 Reasons to Go International." Atlandtric International Growth Consultants (2013): n. pag. Print. ● "Can You Name the Logos of These Sporting Equipment Companies?" Quiz. USA TODAY, n.d. Web. 01 Nov. 2015. <http://www.sporcle.com/games/bhurtik/sportequipmentlogos>. ● Cheng, Andria. "Nike Was Awarded 540 Patents in 2013: Here’s What That Means for Investors." Market Watch. Market Watch Inc., 17 Apr. 2014. Web. 16 Oct. 2015. <http://blogs.marketwatch.com/behindthestorefront/2014/04/17/nike-was-awarded-540- patents-in-2013-heres-what-that-means-for-investors/>. ● Cochran, Megan. "No Major Change in Americans' Exercise Habits in 2011." Gallup.com. Gallup Inc., 15 Mar. 2012. Web. 17 Oct. 2015. <http://www.gallup.com/poll/153251/no-major-change-americans-exercise-habits- 2011.aspx>. ● "U.S. Equipment Rental Market Size 2016 | Forecast." Statista. The Statistics Portal, 2015. Web. 15 Nov. 2015. <http://www.statista.com/statistics/248725/us-equipment- rental-market-size/>. ● "CONSUMER SEGMENTATION EXECUTIVE SUMMARY." Outdoorindustry. Outdoor Industry Association, 2015. Web. 17 Oct. 2015. <https://outdoorindustry.org/consumervue/Downloads/ConsumerVue_Summary_02.pdf> . ● "Cotton Commodity Prices." TradingEconomics.com. Trading Economics, 2015. Web. 18 Oct. 2015. <http://www.tradingeconomics.com/commodity/cotton>. ● "Forbes 400." Forbes. Forbes Magazine, 23 Nov. 2015. Web. 23 Nov. 2015. <http://www.forbes.com/profile/kevin-plank/>. ● "Foreign Exchange Rates and Currency Exchange Rate Calculator."CNNMoney. Cable News Network, n.d. Web. 29 Oct. 2015. <http://money.cnn.com/data/currencies/>.