// TABLE OF CONTENTS BACKGROUND……………………………………………. 03 STRATEGY…………………………………………..…...... 04 FIVE FORCES…………………………………...…........... 06 DRIVING FORCES…………………………….…….......... 09 KEY SUCCESS FACTORS…………….……………....... 12 SWOT ANALYSIS……………………….……………....... 14 FINANCIAL PERFORMANCE………………………........ 18 KEY MANAGERIAL ISSUES…………..……………....... 20 RECOMEMENDATIONS……………….……………........ 21 APPENDIX……………………………….……………........ 23 BIBLIOGRAPHY………..……………….……………........ 31       2 // BACKGROUND   Under  Armour  was  founded  in  1996  by  Kevin  Plank,  a  former  football  player  with   the  University  of  Maryland.  Plank  came  up  with  a  synthetic  textile  design  which   enabled   sweat   to   be   "wicked-­‐away"   during   high   levels   of   physical   activity.   The   company  was  originally  named  KP  Sports  and  changed  their  name  in  2005  when   they   went   public.   Plank   believed   that   Under   Armour’s   potential   for   long-­‐term   growth  was  achievable  due  to  the  company’s  ability  to  build  an  incredibly  powerful   brand  in  a  relatively  short  time,  significant  opportunities  to  expand,  and  the  fact  that   company  was  only  in  the  early  stages  of  establishing  its  brand  and  penetrating   markets  outside  North  America  (Thompson,  C-­‐42).     Under  Armour  is  the  pioneer  of  performance  apparel.  Their  gear  is  designed  to  keep   athletes  cool,  dry  and  light  throughout  the  course  of  a  game,  practice  or  workout.   The   technology   behind   Under   Armour's   diverse   product   assortment   for   men,   women  and  youth  is  complex,  but  the  idea  behind  it  is  simple:  wear  HeatGear®   when  it's  hot,  ColdGear®  when  it's  cold,  and  AllSeasonGear®  for  all  seasons  in   between.  Under  Armour's  brand  mission  is  to  make  all  athletes  better  through   passion,  design  and  the  relentless  pursuit  of  innovation  (Under  Armour,  n.p.).  Since   the  introduction  of  this  type  of  sports  apparel  technology,  the  concept  has  been   widely  copied  by  all  the  major  sportswear  brands  (Riley,  n.p.).       3 // STRATEGY A   company’s   strategy   is   the   action   plan   for   outperforming   its   competitors   and   achieving  superior  profitability  through  actions  to  gain  sales  and  market  share  via   more  performance  features,  more  appealing  design,  better  quality  or  wider  product   selection.  The  goal  is  to  achieve  the  competitive  advantage  of  outcompeting  rivals  on   the  basis  of  differentiation  features,  such  as  higher  quality,  wider  product  selection,   added  performance,  value  added  services,  more  attractive  styling,  and  technological   superiority  (Thompson,  5).  The  Under  Armour  brand  is  positioned  as  the  highest   quality  and  best  available.  Under  Armour  is  advertised  as  higher  quality  and  can   enjoy  the  advantage  of  higher  price  points.  Their  new  running  shoe  line  will  be   marketed  to  adhere  to  the  Under  Armour  brand  position  of  quality  and  innovation.   This  is  the  foundation  for  the  marketing  plan  for  the  shoe  line.       Under   Armour   outlines   strategies   for   growth,   product   lines,   marketing   and   distribution.  Under  Armour  pursues  a  growth  strategy  to  continue  to  broaden  the   company’s   product   offerings,   target   additional   consumer   segments,   and   secure   additional   distribution   of   Under   Armour   products.   The   product   line   strategy   consists   of   creating   a   diverse   product   line.   Under   Armour’s   sports   marketing   strategy  includes  entering  into  outfitting  agreements  with  a  variety  of  collegiate  and   professional  sports  teams,  sponsoring  an  assortment  of  collegiate  and  professional   sports   events,   and   selling   Under   Armour   products   directly   to   team   equipment   managers   and   to   individual   athletes   (Thompson,   C-­‐47).   Their   retail   marketing   4 strategy   involves   increasing   floor   space   exclusively   dedicated   to   Under   Armour   products  in  the  stores  of  its  major  retail  accounts.  This  will  enhance  visibility  of   their  products  and  increase  brand  awareness.  Under  Armour  also  strategized  to   maintain  and  increase  sales  in  North  America  as  well  as  to  enter  foreign  country   markets  as  rapidly  as  was  economical  (Thompson,  C-­‐50).       5 // FIVE FORCES MODEL The  Porter’s  Five  Forces  Model  will  be  used  to  analyze  the  long  run  profitability  of   the  sports  apparel  industry.     The  rivalry  among  established  companies  is  intense.  The  sports  apparel  industry  is   very  competitive  and  demand  conditions  are  high.  There  are  a  large  number  of  firms   in  the  sports  apparel  industry  which  increases  rivalry.  Low  switching  costs  also  lead   to  fierce  competition.  Under  Armour’s  key  competitors  have  large  levels  of  capital   and  have  achieved  economies  of  scale.    Low  levels  of  product  differentiation  also   increase  rivalry.       The  threat  of  new  potential  entrants  is  moderately  high.  The  global  sports  and   fitness  clothing  market  has  witnessed  several  new  trends  in  its  market  such  as  rise   in  consumer  appeal  towards  healthy  lifestyles,  emergence  of  new  sports  and  an   increase  in  sports  participation  rates  (Morkel).  Numerous  competitors  would  be   compelled  to  enter  into  the  market.  There  are  low  barriers  to  enter  the  sports   apparel  industry  largely  due  to  common  technology  and  ease  of  brand  switching.   However,  the  branding  and  image  of  the  largest  firms  in  the  industry  raise  the  ease   of  entering  the  market.  Key  players  in  the  industry  include  Reebok,  Adidas,  Puma   and  Nike.  A  new  entrant  would  have  to  spend  a  lot  of  money  on  marketing  and   advertising  to  become  competitive  with  Nike  and  Adidas.  Product  differentiation   6 can  create  a  barrier  to  entry  because  of  a  high  level  of  advertising  and  promotion   (Hunger,  40).       The  threat  of  substitute  products  is  high  and  it  can  limit  the  price  a  company  can   charge  for  its  products  and  services.  The  multi  segment  global  market  for  sports   apparel,  athletic  footwear,  and  related  accessories  was  fragmented  among  at  least   25  brand  name  competitors  (Morkel,  n.p.).  Technology  has  tremendously  aided  to   increase  the  threat  of  substitute  products.  More  consumers  are  using  the  web  to   research  prices,  find  sales  and  read  reviews  (Gaille,  n.p.).     The  bargaining  power  of  buyers  is  high.  Highly  price  sensitive  customers  have  a  lot   of  power.    There  are  no  switching  costs  and  customers  have  several  options  on   which  products  to  choose.  Buyers  are  able  to  force  down  prices  and/or  demand   higher  quality  services,  which  may  increase  a  company’s  operating  costs  (Andriotis,   2004).  Although  buyers  are  fragmented  and  no  singular  buyer  has  the  ability  to   influence  a  product  or  price,  their  diminishing  brand  loyalty  give  them  a  reasonable   amount  of  power.  Overall,  there  are  plenty  of  choices  for  the  end  user  to  choose   from  low  costs  to  highly  differentiated.  Price  points  tend  to  be  pretty  uniform  across   similar  products.       The  bargaining  power  of  suppliers  is  moderately  high.  Normally  suppliers  are  able   to  impose  a  price  increase  on  their  products  or  reduce  the  quality  of  products   supplied   which   may   decrease   a   company’s   overall   profitability   (Andriotis,   7 2004).    However,  in  this  industry  there  is  a  large  amount  of  suppliers  which  will   usually  equate  to  lower  costs.    High  quality  suppliers  such  as  Under  Armour,  Nike   and  Adidas  have  more  leverage.         8 // DRIVING FORCES   Societal/Lifestyle/Fashion  Trends  –  Ever-­‐changing  attitudes  and  lifestyles  across   society  directly  impact  the  apparel  industry  from  a  macro-­‐environment  perspective.     The  sports  apparel  industry  is  not  immune  to  this  driving  force.    The  sports  industry   wields   tremendous   influence   upon   society,   and   arguably   even   more   so   within   developed   countries.     The   relative   pervasiveness   of   sports   and   sport-­‐related   influences  across  society  arguably,  at  times,  make  it  difficult  to  even  differentiate   society  and  its  attitudes  and  lifestyles  from  sports  and  sports’  influences  themselves.     This  intertwining  of  sports  across  society,  and  the  related  influences  of  sports  upon   society,  create  a  tricky  web  of  relational  effects  –  sports  impact  society,  but  so  too   does  society  impact  sports.       Fashion  becomes  intermixed  into  this  relationship,  and  trending  fashion  overlaps   into  the  sports  arena,  and  particularly  into  the  sports  apparel  industry.    As  an   example,  80’s  style  fashion,  with  its  utilization  of  bright  colors,  appears  to  have  crept   back  into  the  fashion  forefront.    In  reaction,  many  college  football  teams,  such  the   Universities  of  Oregon  and  Baylor,  have  amended  their  respective  team’s  uniforms   to  incorporate  80’s-­‐related  design  features  into  their  respective  team’s  uniforms.     Therefore,   in   order   to   remain   relevant,   competitors   within   the   sports   apparel   industry  must  remain  cognizant  of  the  relational  impacts  of  lifestyle  and  fashion   trends  and  tailor  their  operations  accordingly.     9 Product  Innovation  –  As  technology  evolves,  the  sports  apparel  industry  seems  to   continually   advance   its   products.     From   lighter   shoes   to   performance   under   garments  to  grip-­‐enhancing  gloves,  the  industry  continues  to  churn  out  newer,  more   evolved  products,  and  product  line  breadths  grow  accordingly.    Industry  players   that  cannot  keep  pace  with  the  products,  and  more  importantly,  the  new  norms  that   the  new  products  establish,  risk  becoming  irrelevant.    Product  differentiation  is   directly  supported  for  product  innovation  and  improvement.    Put  simply,  demand  is   typically  enhanced  by  product  innovation.    Certainly,  Under  Armour  appears  to   understand  the  impact  of  this  driving  force,  as  it  places  a  deliberate  focus  on  new   and  improved  products.     Marketing  Innovation  –  As  product  innovation  spearheads  an  increase  in  industry   participants’  product  lines,  opportunities  for  new  customers  emerge.    For  example,   the  tactical/military  customer  segment  has  emerged  as  a  viable,  sustainable  target   audience  for  sports  apparel  products.    Cognizant  firms  can  recognize  such  potential   new  customer  segments  and  gain  a  first-­‐mover  advantage  and  substantially  alter  the   competitive   landscape   within   the   industry.     Also,   from   a   sports   marketing   perspective,   professional   team   and   athlete   endorsements   brandish   considerable   influence  upon  the  industry.    And,  their  impact  is  continually  shifting,  as  different   teams   rise   in   dominance   (and   others   slide   backwards)   year   to   year   in   their   respective  sports  and  different  professional  rise  (and  fall)  in  favor  and  influence.     10