Under Armour (UA) was founded in 1996 by Kevin Plank, a former University of Maryland football player,
Question:
Under Armour (UA) was founded in 1996 by Kevin Plank, a former University of Maryland football player, who began by selling compression shirts that could “wick” sweat away from the body to college sports teams out of the trunk of his car.
From the very beginning Under Armour’s value proposition was based on selling athletic apparel that is functional and comfortable and enhances performance. However, the challenge facing Plank as an entrepreneur was how to build awareness of his innovative product and get athletes to wear it As a former high school and college player, Plank had friends who were playing for more than a dozen National Football League (NFL) teams whom he would send shirts to wear as well as encourage them to get their teammates to do the same.
As part of his grassroots approach, he emphasized that if an Under Armour shirt helped them improve their performance even a little they would earn more money, thus positioning his pitch as a way to help the athletes rather than asking them to do him a favor. Thus, even in the nascent stages of the company, Kevin Plank was learning how to negotiate with athletes to get them to endorse Under Armour products. Plank’s first big break came in 1997 when the Miami Dolphins NFL team wore his product under their uniforms in a nationally televised game with the Under Armour logo visible on the neck of every shirt. The following year the football-oriented movie Any Given Sunday was being filmed in Baltimore where Under Armour is based. The producers of the movie were looking for a product that would represent the athletic nature of the movie and be comfortable to wear during filming. Under Armour agreed to provide products and its shirts were used throughout the filming and appeared in the movie itself, resulting in national exposure for the brand. A similar situation arose in 2003. This time it was sports cable giant ESPN that came calling, asking Under Armour to be part of its new HBO series about football players called Playmakers Under Armour achieved great success and grew very quickly in its early years by forming a brand identity that was associated with the raw emotion and muscle-filled world of football and other predominantly male team sports. The company developed a unique brand identity through its television advertising campaign that began in 2003 and used the slogan “Protect This House.” Under Armour went public in 2005 and the stock price nearly doubled the first day it was traded. Since going public the company has averaged more than 25 percent annual growth and reached $4 billion in revenue in 2016, and expects to hit $7 billion by 2018.
The keys to Under Armour’s success have included quality products, strong branding and positioning, and an incredible roster of athletes as endorsers, a number of whom it signed for much less money than its major competitors such as Nike and Adidas. Even with its incredible growth, Under Armour is still only about an eighth the size of Nike, which had sales over of over $30 billion in 2016 and less than a quarter the size of Adidas whose global revenue was nearly $20 billion. Nike spends nearly $1 billion a year on endorsement deals while Adidas recently announced that it planned to sign 500 athletes in North America alone to deals. Nike’s endorsers include basketball legend Michael Jordan and NBA superstars LeBron James and Kevin Durant, golfers Tiger Woods and Rory McIlroy, and soccer star Cristiano Rinaldo. Adidas' top endorsers include soccer star Lionel Messi and Derrick Rose who plays for the New York Knicks in the NBA. While Under Armour may not be able to spend as lavishly as its larger competitors on endorsement deals, most industry experts argue the company is spending its money more wisely Under Armour recognizes that having the right athletes and other celebrities endorsing its products is a key success factor in the athletic shoe and apparel market. They not only help build the brand but also are catalysts for sales. Kevin Plank notes that the success the company has had with Curry, Spieth, and Copeland has taught the company a valuable lesson regarding the need to think bigger, as all three have transcended their sports and become known by just their first names. In 2015 Under Armour overtook Adidas, which also owns Reebok, to become the second most popular sportswear manufacturer in the United States and it has set its sights on the rest of the world. Watch out, Nike!
REQUIRED
i. Discuss how Under Armour has been very successful in its use of athletes as endorsers for the company/brand.
ii. Identify and discuss three strategies used by Under Armour in selecting and signing athletes to endorsement deals.
iii. Identify four key factors that have made Under Amour so successful in the midst of stiff competition from larger companies such as Nike and Adidas. 8 marks
iv. What was the unique selling proposition of Under Amour when it started?
v. What was Under Amour’s initial problem the company had to overcome in order to succeed?
vi. What strategy decision agreed upon and implemented by Under Armour made the brand so visible to its target market?
Note:
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