Under Armour — Industry Analysis

Only four years since Its founding Under Armor had become a globally recognized brand, and was still looking for areas to branch Into thin the performance apparel industry and introduced a women’s and youth line. Technological – Founder, Kevin Plank found a niche, an undershirt that could control the body temperature of the athlete and that would also enhance performance by keeping them cool, warm, dry when on the field. Under Armor uses synthetic, high tech fibers that provide temperature control comfort and flexibility.

After it went public In 2006, under Armor Invested In a new SAP system which has allowed the company to add to its list of offerings. Economic – under Armor has had a intuiting trend of increased sales in the third and fourth quarters of each year aligning with the football and basketball season as well as gift-giving season in the U. S. Some supplies used by AU are commodities, such as petroleum-based materials, and therefore are subject to potential price fluctuations. Environmental/Geographic – approximately 94 percent of AU sales in 2010 were In North America with the remaining 6 percent split among International markets.

Political/Legal – NINA B. Industry Analysis – Porter’s five force model. Barriers to Entry Barriers to entry in this market are relatively high, there are competitors that have en established for years and are still competing for endorsements and investing large amounts of money for product Innovation. Under Armor was able to find a niche In the apparel sector of athletic gear and through that gained plenty sponsorship and brand imaging to move into developing athletic footwear. Power of Suppliers Under Armor has only a few third-party suppliers and manufacturers which are located outside of the U.

S. Making the power of the supplier high. 70-75 percent of under Armor products come from only 8 suppliers that manufacture and distribute their product. Making a product such as athletic shoes Is the least difficult part of being in this industry, making a product worth buying and competing at the global level is where most fail when attempting to enter the market. Power of Buyers Buyers want to reduce their costs and purchase a product at a lower or more convenient price for the best quality and service. Buyers have the choice to switch to another product at no cost.

Under Armor has developed unique products that Its consumers value and are willing to pay more for. Threat of Substitutes – competing with companies such as Nikkei and Ideas who have been around much monger, have the funds to continuously innovate their products and already hold a large market share. Under Armor has used “authenticity’ as it’s guiding principle to grow the company and advertise their products, but if they wish to be the number one brand of athletic gear they will have to appeal to people who are also concerned with the look of the product and not Just performance.

According to research done by NYPD Group, almost 80 percent of activities is used for non-sports activities. “Under Armor will need to find a balance between being fashionable while retaining its credibility with serious athletes. Intensity of Rivalry – Rivalry is high in this sector, companies are looking to be sponsored and introducing the next big product. Analyst believe that Nikkei purposely targeted Under Armor by launching new basketball shoes at the same time Under Armor was attempting to introduce its first basketball footwear in 2010. C.

Competitor Analysis Nikkei is working to stay at the top as the number one footwear brand as well as the number one brand in all other areas of the athletic gear and they are doing so by advertising its brand through high-priced endorsement deals, media advertising, vent sponsorship, partnerships and alliances. Ideas, combined with Rebook is the second largest athletic apparel manufacturer in the world. Ideas became the industry leader in soccer shoes and apparel when the German soccer team won the World Cup while wearing Ideas cleats in 1954.

Columbia also found a niche when it introduced its breathable, waterproof fabrics in the ass the company continues to grow through its innovative product development and acquisition. Columbia is now the top swear seller in the US, specializing in snowboard gear, hunting, fishing, hiking, camping and casual wear. 0 percent of Columbians sales came from outside of the US. D. Under Armor has the potential and most importantly the resources (money, loyal customer/ athletes, sponsors) to move up in the industry and closer to becoming number one in the athletic apparel industry. 3 percent of CIA sales were made in the U. S. And 84 percent of those sales were in apparel with men’s apparel accounting for 57 percent of that. CIA should target women and affluent sports (golf, snow sports) 2. Under Armor should focus on innovating their performance enhancing apparel and penetrating markets abroad to increase their sales outside of the US. If they wish to compete with Nikkei in the shoe sector they should take their time developing their shoe line to produce products that, like their apparel, also improve performance.

Developing a shoe line that is unique to the company and that its consumers value is much more important than having a product out on the market to make a sale or simply compete with Nikkei. 3. An alternative strategy would be to focus on producing athletic shoes other than basketball and football, such as baseball; this would help to increase sales during the first half of the year rather than only during basketball, football and gift-giving season.