UNDERARMOUR

To be on the top is an endeavor all athletes strive for in their sporting involvement. In an
industry where being the best is very profitable, Under Armour aims to achieve what the
consumers of its products desire. Under Armour’s objective is to be the market share
leader in sporting apparel. The goal is to achieve this objective through a high-quality
product. An elite status is exactly what Under Armour® intends to provide - setting a high
price but not to the expense of sales volume because the products’ excellence makes the
consumers willing to pay an additional cost.

Under Armour uses a selective distribution strategy. It chooses its retailers based on the
characteristics of the retailer. Using a hybrid channel, consumers can purchase Heat
Gear from Under Armour® or any retailer distributing the product.

I n terms of its product pricing, Under Armour have been effective in implementing its
value-based pricing strategy, reflecting a notable supposition of consumers that high price
is equivalent to high quality. Its pricing is right in line with buyer expectation. It
compensates the greater value buyers get when they purchase Under Armour®’s
products. While it is true that Under Armour® faces competition with large competitors
such as Nike and Adidas/Reebok, the superior quality of its products allows them to price
products outside of competitors’. The prices are not based on competitor prices, they are
consumer-based − they manifest consumer expectations but still within the boundary of
what the consumers deem acceptable pricing. Consumers are aware of the advantages
of the product over its rivals and do not need any explanation or help purchasing it.

In addition to the quality of Under Armour products, the company has done an excellent
job enticing the public to purchase its products. It uses a pull marketing communication
mix strategy. It is a softer, but potentially more costly approach, where Under Armour®
encourages customer demand by tactics like advertising and promotions, such as
sponsorships and competitions. This is a good strategy for Under Armour® since the
demand for its products is high, buyers use the brand as part of their purchase decision,
and also taking into consideration that it uses differentiation strategy that focuses on the
uniqueness of its products.
The year 2009 was a turning point for Under Armour. This year posed many marketing
and strategic challenges for the company. "Under Armour’s success in 2010 and beyond
will be significantly impacted by the decisions we make in 2009," said Kevin Plank,
founder and CEO of Under Armour. Under Armour will be competing with Nike, Adidas,
Reebok, Puma, and other sports apparel manufacturer. The challenges that Under
Armour and all of its competitors face are stiff competition from one another and very high
expectations from current and potential customers. In order for Under Armour to continue
its success in the sports apparel industry and rise above competition with rival firms, it
must program and execute a strategic game plan.
Under Armour must lay effective strategies for the company to overcome the challenges
it is bound to face. How does Under Armour stay on top of its game? Their decision may
determine the future of Under Armour.

Company Background

“Founded in 1996 by former University of Maryland football player Kevin Plank, a

then 23-year old former special teams captain of the University of Maryland football team,
Under Armour is an American sports clothing and accessories company. The company is
a supplier of sportswear and casual apparel. Under Armour is the originator of
performance apparel - gear engineered 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 program for reaping
the benefits is simple: wear HeatGear® when it's hot, ColdGear® when it's cold, and
AllSeasonGear® between the extremes. Under Armour's mission is to provide the world
with technically advanced products engineered with our superior fabric construction,
exclusive moisture management, and proven innovation. Every Under Armour product is
doing something for you; it's making you better” (aubiz.com, 2009).Under Armour®
received its big break in 1999 when Warner Brothers contacted Under Armour to outfit its
two upcoming films. The following year, Under Armour became the outfitter of a new
football league, gaining even more attention during the league's debut on national
television. In 2003, the company launched its first television commercial, which centered
in their motto, “Protect this House.” In late 2007, Under Armour opened its full-line, full-
price retail location at a mall in Maryland.
The Under Armour brand is positioned as the highest quality and best available. Under
Armour is advertised as higher quality thus demanding higher price points. It is an
expanding company/brand that is trying to take on the giants of Sports Apparel Industry,
that is, Nike and Adidas. Even though it is considered an upstart compared to its
competitors, Under Armour is quickly becoming a leader in this industry, and with its
widespread popularity amongst top name athletes and sports programs and teams, it is
a major player in the market.

Strategic Challenges

Under Armour is faced with three tough problems since the commencement of its
operations – lack of proprietary product rights, concentration on domestic sales, and too
much dependence on few third-party suppliers. Lack of proprietary product rights could
adversely affect the long-term sustainability of the firm. Under Armour runs the risk of
exposing their innovative ideas to competitors since their suppliers and producers are not
bound only to them. Concentration on domestic sales, on the other hand, accounts for
Under Armour®’s smaller sales volume and net income compared to large competitors
who already had established an international market across different countries. Whereas
too much dependence on few third-party suppliers, gives the suppliers the ability to
demand higher prices from Under Armour and if ever demand of the suppliers’ products
exceed their supply, it could affect Under Armour’s operations due to lack of supplies and
raw materials.

These strategic challenges create several important questions that need to be answered
to ensure continued success at Under Armour. Questions such as: Should Under
Armour® pursue acquiring property rights such as patent to secure its innovative ideas?
Will this move serve as defense for the company or just another investment that runs a
risk? Will Under Armour® be ready, financially and strategically, to further expand its
operations outside US and have a decent share in the international market? What should
Under Armour do to lessen the control its suppliers have over the company’s cost of
goods? And lastly, what must Under Armour® undertake to stay on top of its game?