Under Armour Report
Andres Romero
MAN4720
Dr. Marifé Méndez

To: Kevin Plank, CEO, Under Armour
From:
Re: UnderArmour Report and Recommendations
Date: February 18, 2014
In keeping with UnderArmour’s never ending pursuit to success, it is highly indispensable that necessary steps are to be taken in order to achieve a stronger position than existing competitors.
Through the years, the company is rapidly emerging as a competitive sports brand. Now almost at par with Nike and Adidas in terms of sponsorships, innovations, inter alia, some sports fans and the youth are being influenced by this new brand that gives them the equal athletic and durable feel they had with brands they previously patronized. The future is looking bright for Under Armour in this regard considering the fact that there are unlimited avenues and still unchartered waters waiting to be explored for the company to grow.
Verily, premises considered, respectfully indicated herein are three top priority issues that the Under Armour management needs to address. Included also are the recommended actions under each priority issue, viz:
Aggressive and Expansive Marketing
UnderArmour is a globally emerging brand that can now be seen just about anywhere, most especially in the US. Starting with its appealing logo, customers more often than not find the whole idea behind the brand attractive because of its aggressive but somewhat quaint looks that appeals directly to the masses. The fact that each product manufactured by Under Armour is of high quality allows it to go at par with the best brands on the planet. This is proven by the trust elite athletes give on the brand like the popular Tom Brady, baseball star Bryce Harper, Georges St-Pierre, the former undisputed UFC Welterweight Champion, Canelo Alvarez, a boxing champion, Stephen Curry, an NBA star playing for the Golden State Warriors (who, from being well paid in Nike, preferred Under Armour), and other pros. People can also see the brand being worn by sports teams like Tottenham Hotspur, Maryland Terrapins, and so on. All of these, by itself, market the brand. But its sufficiency remains to be the question since Nike is still at the top.
Regarding the Maryland Terrapin deal, which occurred in the year 2011, it is notable to state that the Google search on the brand alone increased by a drastic 60% (exclusive of the wrong-spelled “Under Armor”), as compared from the immediately preceding month from its debut at the Maryland game. During such rise, Nike’s search fell at about 20% (but still searched four times more than Under Armour). The graph (shown in Gaines, 2011) illustrates the 2011 search statistics.

Though the illustrated graph shows that Nike still has more searches, it is to be noted that when it was taken, Under Armour was relatively new and the drop for Nike was 20%. This would show that Under Armour is exceptional in terms of marketing their brand. Hence, if the public reception was good at that milieu, all the more that it can have better significance if marketing would be conducted aggressively at status quo. Under Armour’s potential must be fulfilled therefore, if it seeks to beat Nike as the top brand.
It should be additionally noted, however, that the above-stated data applies to the USA alone and there are still foreign countries that are not aware of the brand. This poses another issue since it is rare for a new brand to get accepted overseas like And1, K1X and PEAK, who are all known to perform poorly on international market. Although Under Armour hired Karl-Heinz Maurath, a former executive of Adidas, to manage its international market (Dreier, 2012) just last 2012, a concrete and reliable source as to Under Armour’s international impact remains to be at scarcity.
Recommendation:
Marketing the brand can be made by several means like print media or TV ads. While the company does this already, a steady and a far more aggressive approach like Nike’s should be made – both nationally and internationally. It bears stressing that the recently unveiled Under Armour ad regarding the “I will” anthem has made a significant impact that caused great attention to the brand. That, plus the increased search after the Terrapin debut would most likely show a prospective positive result. A hyper aggressive marketing through different forms of media is a nice and ideal point to start with since the company, now more known, can venture into more public appearances to gradually enter into mainstream.
Second is going with the trend. It is probably now of common knowledge that Nike’s crazy colored footwear is currently taking the shoe trend like wildfire. The youth are wearing each shoe, albeit not matching at times, with pride since all star players like LeBron James, Kevin Durant and Kobe Bryant wears the same type of shoe. The good thing about Under Armour is that it went with the flow. Seeing Steph Curry, a relatively young player more within the age bracket of young fans, wearing the fun-colored Anatomix Spawn in the NBA surely appeals to consumers who might want to venture with a new and less expensive brand aside from Nikes (as an alternative shoe or as a completely new patronage).
Additional marketing on smaller products can also prove effective. A good example is to produce an innovative sports jug, arm band, or even head bands that could set the Under Armour brand apart (aside from its own apparels) from same items coming from competitors. Apropos to this additional marketing proposal is Nike’s Elite Socks. Nike’s socks alone earned $1 billion last 2012. It was reported that from that staggering amount, most of it was earned through the sales of Nike Elite socks, which currently sells for about $14-20 a pair (cited in Siemers, 2013). Therefore, if Under Armour can target a specific item that it can innovate to a level so as to be considered as highly unique as Nike Elite socks are, it can generate a substantial amount of income from that additional market. But this does not imply that the company veers away from sock production, since its designed socks are as effective as Nike’s and can be sold well considering the brand name.
Innovations and Technologies
As it stands, Under Armour’s most expensive shoe costs roughly at around $100 up and never reaches $200, as compared to Nike’s, whose signature kicks pegs at an average price of $200 or more. While the price difference might be glaringly different, it might be susceptible to two interpretations:
First, more customers might shift to Under Armour since it offers cheap, innovative and aesthetically pleasing shoes. This is very likely since a shoe for the masses is sought for by the collective consciousness of urban lifestyle. Second, some might find it too cheap that it can be labeled as something “cheap.” The second aspect might be a source of conflict and issue, but why and how? The foregoing graph (YCharts Staff, 2012) would show the following figures:

The graph shows that last 2012, Under Armour’s P&E Ratio were higher than that of Nike’s. This, at first sight, is promising. But a closer look would reveal that as time passes, Under Armour, while still higher than Nike, cooled its hype down subsequently. What might the cause be?
A case at point is Starbury, the sports brand of the basketball star, Stephon Marbury. The said brand sold shoes for a very cheap price of $15 a pair. At first, public reception was nice and the brand sold very well, even acquiring sponsors like Steve Francis and Luis Da Silva. But a subsequent quality test conducted in 2007 showed that Starbury is of inferior quality (Consumer Reports, 2007), contrary to its owner’s claim that each Starbury shoe is made using the same materials that high-end sneaker companies use. All negative speculations and conjectures regarding Starbury were then confirmed. The said test is only one of those that caused a sudden reverse on Starbury’s promising future as a price-friendly shoe.
Applying the stated premises and graph on Under Armour, it might be possible that the relatively “un-noisy” features of Under Armour are the culprit to the slowing of its growth. Because unlike Nike’s flywire, flyknit, lunar foam, hyperfuse technologies, Under Armour’s Micro G, Zephyr Technology, etc. sounds less familiar to a reasonably knowledgeable person. Worse, a simple and isolated case of an unsatisfied customer can prove fatal to Under Armour’s name since public knowledge regarding its technologies is wanting.
Another issue that might show possible criticism to Under Armour’s capacity to innovate is the suit Adidas filed just this year regarding the alleged infringement by the former company. It involves the so-called MapMyFitness technology. Adidas claims that Under Armour’s new release contained its patented features from a previous workout technology.
Recommendation:
At a 2013 interview, Steve Battista, the VP-brand creative of Under Armour, disclosed that the company increased its expenditure at a rate of roughly 20% to keep up with its growth and further boost the campaign to show its innovation, that time through the anthem “I will” (Zmuda, 2013). While the said video somewhat increased awareness to the brand’s innovations, an additional spice of marketing will bring Under Armour’s technologies in a better position. A good example is the usual practice of Nike conducting huge press releases, with all the athletes and media, lecturing what specifics a particular technology has. One of the main reasons as to why the public knew of Nike and Adidas’ main technologies is that they were informed of it through athletes sitting down with the shoe creator, both of them sharing the features of the shoe. If Under Armour can do this consistently with one of its fairly popular athlete, a substantial portion of the public will surely know.
Another recommendation is an added and improved research and development center. The current technologies of Under Armour are beneficial to athletes, yes, but it could be supplemented and augmented with more technologies. Pertinent investments can always be made for the overall improvement of the brand. One simple way (out of the many ways) to do this is to create adaptations of a technology made by a competitor, without having to infringe upon their intellectual property rights. For example, when Nike sought to improve the light shoe trend with its lunar foam and fywire technology, Adidas complemented this with their Crazy Lights line. Under Armour, in turn, can invent or come up something that would complement the two technologies.
Creativity on the part of the research and development department is the key here to avoid lawsuits like that filed by Adidas.
Sponsorships
Under Armour, like all sports companies, promotes the brand by sponsoring athletes. Its notable acquisitions include Canelo Alvarez, Bryce Harper, Tom Brady, Ray Lewis, Georges St-Pierre, Stephy Curry and Lindest Vonn. But other than the stated high profile names, some sponsors of Under Armour are athletes that are non-household names like rookies, journeymen of the league, bench warmers, and whatnot. This is of course a reality most emerging brands encounter. But in its current position, Under Armour is in a situation where it can sustain a great number of athletes that can help the brand develop into something bigger.
Another issue is the tendency of some athletes not to commit with the brand, like DeAndre Jordan, who recently returned to Nike after a brief stint with Under Armour (Schalk, 2013). Though it does not directly imply the brand’s quality and whatnot, the fact that an emerging star immediately shifts takes some shine away from the brand because it can serve as a subjective factor consumers might take into account in purchasing the brand, e.g., while purchasing, a buyer might ask himself, “If DeAndre, my hero, shifted to Nike from UA, then why should I purchase this Anatomix?”
Recommendation:
The recommendation from this aspect is fairly predictable. Under Armour should actively engage into sponsorship agreements with various players and give fair compensation and perks to maintain commitment with the brand. On the other side of the spectrum, the brand can also nurture young talents by engaging into close relationship with up and coming young stars as an ulterior motive to secure a future deal with them.
To further enhance with their sponsorships and prospective market, Under Armour can release a signature line for a specific sponsor athlete who achieves a certain level of popularity, like Canelo Alvarez or Georges St-Pierre, who are both champions – of boxing and MMA, respectively. Fans of both athletes are sure to patronize the signature line considering the fact that it bears the champion’s (or a highly popular athlete) name. Once a specific line gains enough hype, then the brand can expand the product of that specific athlete by manufacturing trainer shoes, shirts, hoodies, even socks bearing the athlete’s name.
This last recommendation has a two-fold purpose – it makes the sponsor even more loyal to the brand and at the same time, it encourages other athletes to consider Under Armour as a sponsor since like Nike or Adidas, it can effectively sustain a signature line.

References
Consumer Reports. (2007). A Cheap Chic Shoe Scores Points. Retrieved February 18, 2014 from http://www.consumerreports.org/cro/home-garden/sports-exercise-equipment/starbury-one-basketball-shoe-10-07/overview/star-ov.htm?resultPageIndex=1&resultIndex=1&searchTerm=starbury
Gaines, C. (2011). CHART OF THE DAY: Maryland's Uniform Gamble Was A Hit For Under Armour. Business Insider. Retrieved February 18, 2014 from http://www.businessinsider.com/under-armour-maryland-uniforms-2011-9
Siemers, E. (2013). Nike Capitalized on Athletic Sock Trend. Portland Business Journal. Retrieved February 18, 2014 from http://www.bizjournals.com/portland/print-edition/print-edition/2013/02/08/nike-is-capitalizes-on-athletic-socks.html?page=all
Schalk, Y. (2013). DeAndre Jordan Back to Nike at Clippers Media Day. CounterKicks. Retrieved February 18, 2014 from counterkicks.com/2013/09/deandre-jordan-back-to-nike-at-clippers-media-day/
YCharts Staff (2012). Nike Seems Pricey -- Unless Compared to Lululemon and Under Armour. YCharts. Retrieved February, 2014 from https://ycharts.com/analysis/story/nike_is_running_on_all_cylinders
Zmuda, N. (2013). Under Armour Unveils Anthem to Kick Off Its Biggest Ad Push. Advertising Age. Retrieved February 18, 2014 from adage.com/article/see-the-spot/armour-unveils-biggest-global-advertising-campaign/239769/