Analysis of Under Armour Inc.

free essayThis analysis characterizes the essence of the external environment of the marketing domain where Under Armour operates. The evaluation of the aspects of the selected market is done with the help of Porter’s 5-Forces tools and strategic mapping. They demonstrate that Nike, adidas and Under Armour are the biggest players of the selected business. Moreover, this sphere of operation is characterized with high rivalry created because of the easy establishment of the business and non-difficult regulations. Furthermore, the paper focuses on firm analysis presenting Under Armor value chain and competitive strength assessment. As a result, Under Armour is characterized as a strong brand, which is recognizable because of advertising campaigns and advanced pricing strategy. At the same time, the company may lack power for entering the European market, which can be solved by means of endorsement and brand promotion through professional soccer leagues.

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Sustainability, competitiveness and profitability of business organizations depend on various factors, which should be analyzed by company’s executives to make sure the business will perform well. The current paper investigates the case of Under Armour Company, which is a sports apparel brand; the industry of sportswear is being analyzed as a whole. The application of Porter’s 5-Forces analysis, strategic group mapping and key success factors analysis were all helpful in making a detailed review of the company’s performance. Moreover, the paper evaluates the inner potential of the company by analyzing its value chain and competitive strengths. This procedure allows future managers and economists to obtain the skills in company and market strength assessment, which are important in any job, related to the business.

Market Analysis

In order to adequately address all issues relevant to Under Armour on the global market, it is important to characterize the external environment of sports apparel industry, as well as provide its definition. Thus, the sports apparel industry is the sphere of business, where companies create and sell sportswear, athletic footwear, and the related accessories. The industry’s contemporary global market consists of about 25 brands with diverse product lines with the estimated $125 billion revenues in 2012 and predicted to reach $181 billion in 2018 (Thompson, 2013).. The clear global market leader is Nike, having a global footwear share of 17% and sports apparel share of about 4.4% (Thompson, 2013). Along with Nike, the prominent competitors of the industry are Under Armour, Puma, Columbia, Fila, Polo Ralph Lauren and others (Thompson, 2013). As a result, these companies have to constantly modernize and update their strategic approaches to all aspects of the business, in order to save the competitiveness and influence on the local and global markets.

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Furthermore, it is important to analyze the industry regarding the strength of the presented competitive forces by the means of applying of Porter’s 5-Forces analysis (Appendix A). The analysis defines that among forces for consideration are buyer bargaining power, substitute products, supplier bargaining power, potential new entrants and competing sellers (Gamble & Peteraf, 2015). Thus, one can see that the buyer power may be defined as moderate because the consumers have a wide choice of sports footwear, apparel and accessories, the total amount of which is $125 billion in 2012, as it was indicated above. Similarly, supplier’s bargaining power is moderate because of low prices of raw materials and flexibility of the business, which can supply materials to any domain of sport clothing and accessories industry. Moreover, the presence of high quantity of global market players indicates that this business is comparatively easy to establish and regulate, which results in high risk of new entrants emergence. Substitute products power is also high because of the increased competitiveness on the market, which results in the presence of rivalries that have different analogues of similar products.

Taking into account the strategic mapping tool is very important, as it should be used in order to depict the presence and influence of the main competitors on the market of sports apparel (Appendix B). The most important aspect of this tool is the identification of similarly positioned brands, which indicate stronger rivalry when exposed through closer presence on the map (Gamble & Peteraf, 2015). The criterion that should be represented on the map is the presence of companies in such segments of the industry as sportswear, athletic footwear, fitness clothing, lifestyle apparel, skiwear and golf apparel. Therefore, the strongest competitors on the market are Nike and Adidas because they share four similar domains, which include apparel for sports, footwear, fitness clothing and golf apparel (Thompson, 2013). Under Armour is a comparatively weaker brand, which is also presented within the mentioned domains, except for golf apparel. Furthermore, a strong rival is Reebok, but it focuses mainly on footwear, which narrows its competitiveness. Simialrly, Salomon, Footjoy and Paul Ralph Lauren are strong competitors strictly within their sectors, which are skiwear, golf apparel, and lifestyle apparel (Thompson, 2013). Despite the fact that they are strong within their domains, their competitiveness significantly weakens in case they enter other brands’ sectors. Therefore, the three strongest brands on the sportswear market are Nike, Adidas and Under Armour, with Reebok having strong positions in footwear sales.

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Analyzing the key success factors (KSFs), one has to mention that they are of significant importance for the stakeholders of any business. Scholars claim that they affect industry members’ ability to prosper in the marketplace (Gamble & Peteraf, 2015). Despite, they may be completely different, specific spheres of business may depend on certain KSFs. For instance, in ready-to-wear apparel industry, there are appealing design and color combinations, low-cost manufacturing, a strong work of retailers or companies’ stores, distribution features and good advertising (Gamble & Peteraf, 2015). Judging from the fact that production-lines of the industry are not that expensive and combined with high competitiveness, the most significant aspect of the industry is advertising.

Firm Analysis

Under Armour is a company with the history of moderate length, which means that it is younger than the biggest rivals, but older than upcoming competitors in the analyzed sphere. Thus, the company was established in 1996 and was mainly focused on performance apparel, gradually spreading to such sectors as footwear and fitness clothing. The performed analysis with the help of strategic mapping demonstrated that the brand is characterized by a considerable presence at the three major market segments, which are sports apparel, footwear and fitness apparel. Such results have become real because of the successful product line strategy, advertising and brand promotion in media (Thompson, 2013). At the same time, it is important to characterize the value chain analysis of the company in order to present the developed competencies (Appendix C). Thus, the performed analysis demonstrates that the critical domains for the company constituting its value chain are design and R&D, manufacturing, marketing, distribution, media and promotion. The aspects of design and R&D are highly valued by the company’s leaders because it initiates partnerships with technological companies aiming to present new products. The aspects of manufacturing allow the company to produce high-quality products at comparatively low prices. Thus, raw materials are supplied by China, Malaysia, Mexico, Taiwan, and Vietnam whereas the company’s quality control monitors the quality of the fabric (Thompson, 2013). The analysis of the aspects of marketing indicates that starting from focusing on professional athletes the brand has become friendlier towards casual clothing and fitness sportswear, which increased its popularity. Also, the distribution strategy focuses mostly on wholesale distribution having its proportion of 70% compared to 30% of direct-to-consumer sales in 2012 (Thompson, 2013). Lastly, Under Armour devotes significant amount of time and resources promoting the brand. One of the strategies, which are successfully practiced by Under Armour in this sense are different campaigns. Among them are “Protect the House” and “Click-Clack” featuring NFL players, introduction of “I WILL” trademark and other (Thompson, 2013). As a result, Under Armour has become a famous brand, which is attractive to the customers due to its positioning and price policies.

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Furthermore, analyzing the key success factor impact of Under Armour and the closest competing rivals, Nike and adidas, one has to notice that Under Armor has higher overall strength rating (Appendix D). This fact can be explained by stronger relative cost positioning comparing to other brands. As a result of higher availability of the brand because of slightly lover brands, it outperforms such companies the closest rivals despite they have higher dealer network, reputation and financial resources (Thompson, 2013).Therefore, the performed analysis demonstrates that Under Armour is a company with the strong position in the sportswear, footwear and fitness clothing sectors. Its strategies and value chain allow the brand assuring its strong presence on the global market being compatible and profitable.

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Analysis Summary

Summarizing the presented information, the paper concludes that Under Armour is a competitive and profitable sportswear brand, which achieved a global success because of relevant strategies in pricing, product placement and promotion. At the same time, its managers should focus on the question “How well the presented strategy allows the company entering new markets?” The reason for considering this question is that the brand has a considerable presence in North America whereas its presence in other parts of the world is weaker than Nike’s or Adidas’s. Among the possible solutions, which allow overcoming the problem are promotion through the athlete representatives of other countries, partnership with professional sports leagues and endorsement. Similarly, it may participate in charity campaigns associated with professional athletes. It is presumed that Under Armour may want to be a sponsor of European soccer championships, which are very popular in Europe. As a result, this approach would allow the brand becoming popular and raise the interest of the consumers. Similarly, the company may select professional soccer players for endorsement, but their popularity may not be bound with the brand because of its weak presence in Europe. At the same time, participation in charity campaigns would possibly be non-productive because of the public, which is unfamiliar with the brand. Therefore, the most successful way of promoting Under Armour in Europe is advertisements and endorsement of professional soccer teams and leagues. This way of market entrance would boost the binding of the brand with professional sports and raise the interest of potential customers.