Under Armour Business Strategy’s External Analysis in 2013

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Under Armour (UA) is one of the largest producers of the sportive apparel and accessories in the world. It was founded in 1996 by a former football player, Kevin Plank who conceptualized an idea of producing high-tech garments for the professional players (Bowen et al. 3). UA apparel gained popularity among the members of the University of Maryland football team where Plank used to play. From that point, the mass promotion of UA brand has begun. The innovative and technological approach towards the garment manufacturing made the brand a top leader in the production of apparel for the professional sportsmen and made it highly competitive in the dynamically changing market.

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UA Economic Indicators

The success of the company in the period of a few past years may be visually shown by the economic figures. Since the moment of foundation, the company’s annual sales increased from US $18.000 to $3 billion (“Event Brief of Q1 2013 Under Armour” par. 2). In 2013, the company’s assets had grown in price by fifty percent comparing to the previous years. After five years after the brand was developed, Kevin Plank launched the first advertising campaign on television. In ten years he successfully entered to IPO, and the company’s stocks value increased in two times during twenty-four hours after placement. In 2013, UA launched a line for women and introduced the shoes line to the marked.

The drastic increase in the company’s value and profit provoked a threat for Nike and Adidas’s hegemony on the market. Nevertheless, in 2013 UA’s sales and profit were still significantly lower than Nike’s indicators. But the sportive apparel industry continues its development, and UA has a great potential to reveal. The key aspects of the brand’s success are the development of the athletic shoes and women apparel lines, the contracts with professional sportsmen, targeting the global market, and the use of technology. These aspects may be regarded as main contributors to the further growth of UA.

Athletic Shoes

In 2013, the sale of sneakers was yet one of the weakest spots of UA. It comprised only one-fifth of the company’s total revenue. For example, Nike earns over 50% of its profit by selling its sportive shoes, and the company thus may is regarded as a monopolist on the market (Singh 431).

It can be explained by the fact that UA is merely a sportive brand primarily oriented on the professional athletes. In contrast to UA rivals, it doesn’t have a link to the lifestyle, street style and popular culture apparel. The main marketing resources of the company are focused on other goals.

However, UA continued to grow in the segment of sportive shoes and put pressure on the competitors. First of all, the main part of UA’s marketing strategy included the contracts with the stars of the professional sport. In 2013, the brand had just started to explore the market segment but through the collaboration with the prominent professional athletes, they attempted to attain progress and brand products’ recognition (Ciro 7).

Sportsmen

In 2013, UA conceded to Nike and Adidas in the collaboration with the famous athletes. Nevertheless, UA’s portfolio included the big starts as well. UA make a big bet on the young athletes. Kevin Plank received his first big contracts for the garment supply and design from the college teams, and since then he continues to invest in the university sports. Every season, the university and college matches gain a lot of public attention. Therefore, the collaboration with over 20 colleges in the USA helps UA to promote the brand, attain popularity and, in this way, achieve positive financial results.

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The Global Market

The brand’s introduction to the global market may be regarded as a key element of the company’s development in the future. In 2013, the international sales brought UA merely 6% of the total revenues. At the same time, Nike’s sales outside the USA were nearly 50% (Singh 432). Therefore, it is hard to talk about UA as a global brand. The brand is hardly known in the majority of the European and Asian countries, and it is difficult for the customers to find UA garments even in the multi-brand stores.

Nevertheless, in former times, UA’s main rival, Nike, also was an exclusively American band. UA follows the footsteps of its competitors, and, sooner or later, the brand will find its place in the global market.

In past years, the company started the active expansion the sales geography – UA brand stores were launched in the largest cities of Europe, South America, Asia, and Australia. The internalization strategy includes signing of contracts with the professional athletic teams of Europe and Latin America (“Under Armour, Inc.” 2). The localization strategy may increase the chance of the company’s success in the new markets. The effective integration of the brand into the regional market requires the investigation of the consumer interests and preferences. The collaboration with the sportsmen who are more familiar to the local consumers of the sportive apparel helps to create a stronger link between the brand and advertisement recipients.

Women Apparel

For a long time, UA’s marketing strategy was based on the image of a male athlete, and the sales of women garment were rather small on this background. The rebranding process has started with the change of the creative direction. The rebranding was mainly focused on targeting women in an attempt to increase sales and profit. UA started to attract female sportsmen in its team, and, as a result, the orientation towards the auditory of the female consumers expanded (Bowen et al. 6).

Targeting is an effective strategy that based on differentiation of products and its efficient promotion. With the participation of females in UA advertising campaigns, it is expected that the sales of the apparel for women will significantly increase in the future.

Technology

The brand’s growth has started from the idea of technology-based garments for athletes. Since then, technology remained a significant element of UA strategy. The development of new hi-tech products and concepts largely contributes to the differentiation of the merchandise.

The technologic approach helps to increase the quality of products, and it supports the creation of the brand’s authenticity. Many researchers in marketing recognize that product quality is regarded as one of the main factors influencing the purchase decision (Cavicchi 75). Moreover, UA products’ exclusive features attract those customers who seek for individualization and distinction from others. The attraction of customers with different needs and interests may be regarded as a positive sign that will allow the brand to improve its financial indicators and increase the competitiveness in the market.

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Internal Analysis

UA develops its core competencies by expanding the product lines and operations. The efficient use of resources and the accumulated experience may be considered an advantage in the market. Moreover, the focus on the principles of the technology and innovation regarding the creation of materials and marketing strategies help UA to outstand among the rivals in the sportive apparel industry.

The brand offers a wide range of items; UA’s customers may purchase anything they need for sports: sneakers, socks, accessories, garments, etc. The merchandise is distributed and supplied in both online and offline formats. In this way, the company allows the customers to access the products easily.

The inner corporate culture may be regarded as the major strength of UA. The values that are laid in the foundation of the organizational culture are innovation, reliability, integrity, and inspiration (Ciro 16). According to the previous research findings, a well-developed corporate culture provokes favorable effects on the employees’ productivity and attraction of new customers (Kosfeld and Siemens 25). Thus, it is possible to say that UA’s principles of business conduct play a significant role in the employees’ motivation. These values help the company to increase brand awareness and the stores’ attendance frequency, and, consequently, they impact the profitability growth in a positive way.

Conclusion

In 2013, UA strategic moves included differentiation of products, proactive promotion, technologic development, and internationalization. The company focused on the promotion of women apparel and collaboration with professional athletes on the global scale. As a result, UA obtained an opportunity to increase brand awareness among international public and attract new customers. Moreover, the production of the hi-tech apparel is a distinctive feature of the brand that contributes to the development of its identity characterized by high quality and innovation. All aspects of strategic approach may help UA to develop the competitive advantages and become a leader in the industry in the nearest future.

Works Cited

Bowen, Richard, Robert Daigle, Tara Dion, and Sarah Valentine 2014, Under Armour Case Study. PDF file. Web.

Cavicchi, Alessio. “Shopper Marketing. How to Increase Purchase Decisions at the Point of Sale.” Journal of Consumer Marketing 29.1 (2012): 74-75. Print.

Ciro, Njinyah. “Under Armour Case Analysis.” Business March 2014: 26. SlideShare. Web.

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Event Brief of Q1 2013 Under Armour, Inc Earnings Conference Call – Final. Web.

Kosfeld, Michael, and Ferdinand von Siemens. “Competition, Cooperation, and Corporate Culture.” The Rand Journal of Economics 42.1 (2011): 23-43.

Singh, Suresh. “Under Armour’s Lawsuit against Nike: Worth Breaking a Sweat?” Journal of Business Case Studies 9.6 (2013): 429-432. Web.

Under Armour, Inc. Form 10-K: Annual Report 2013. Web.

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