Case study: Under Armour

UNDER ARMOUR SUCCESSFUL DEMONSTRATION IN AMERICA IT IS ENTRY IN THE ASIAN MARKET AND SPECULATIONS IF IT WILL PROGRESSIVELY OVERTAKE NIKE IN THE FUTURE

Pei-Yin, Liu N0640216 MA INTERNATIONAL FASHION MANAGEMENT NOTTINGHAM TRENT UNIVERSITY

Figure1: UA-athlete

TABLES OF CONTENTS excusive summary 1 INTRODUCTION 3 methodology 5 disscussion 8 product design and development source and supply chain 16 sales and channels 18 branding 25 MARKETING AND COMMUNICATION financial 33 list of illustrations 39 list of bibliography 41 appendix 44

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excusive summary “In 2014, Under Armour over takes in Adidas in U.S in sportswear market” (The Wall Street Journal, 2015). How could an approximately 20 year-old company overlook another company nearly 90 year-old? What is the next step of this company? As CEO Kevin Plank (2015) told in CCTV “Under Armour has aggressive plans for expansion in the Chinese market.” This report will demonstrate the successful experience that Under Armour has in America, also compared with the major competitor Nike. Finally, it provides recommendations to ensure this brand also success in the future in Asia market.

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Figure2: Bryce Harper

Word counts:5,444

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INTRODUCTION Under Armour was found by Kevin Plank in 1996. The company’s first manufactured products by technology skill to regular physical warm in 1997, the product lines such as ColdGear® and AllSeasonGear®. Furthermore, Under Armour also supports the product to entertainments industry, one compelling instance can be seen in 1999 the company to supply outfits to firms such as Oliver Stone’s Any Given Sunday, and the actor Willie Beamen, also a football player wore Under Armour jockstrap. At same time CEO Kevin Plank realized it would be valuable ways to promote brand by broadcasting AD in Any Given Sunday, an AD in ESPN which magazine has been bought by him (Under Armour, 2015).

It seems this decision was a great opportunity to improve sales as fast as promoting the brand.

Source: UA’s annual report (2015)

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Figure3: UA’s Net Revenue

Under Armour offers apparel, footwear and accessories for men, women and youth via wholesales channel and retailers, also license revenue from sales by third party licensee. Furthermore, the company has developed to many regions, including Asia, Middle East, Europe, Africa, Latin America; in particular North America which is the PDMRU SODFH FRQWULEXWHV WKH PRVW UHYHQXH $GGLWLRQDOO\ LWV QHW UHYHQXH LV VLJQLÀFDQWO\ LQFUHDVHG \HDU E\ \HDU DV ÀJXUH VKRZV SURÀW ZDV LQFUHDVH UHVSHFWLYHO\ 8QGHU $UPRXU

Figure4: UA� I will what I want “ poster

After nearly 20 years of operation, in 2014, Under Armour ranked third of most valuable fashion sports brands in WKH ZRUOG EHKLQG 1LNH DQG $GLGDV )RUEHV )URP LWV SURGXFW SRVLWRQ FRPSDUHG ZLWK FRPSHLWLRUV WKLV ÀUP WDUJHW WR GHYHORSH DGYDQFHG WHFKQLFDO SURGXFWV ZLWK KLJK SULFH WR FDWFK LWV QLFKH PDUNHW ÀJXUH 7KXV WKH PDLQ aim of this case study is to analyse its strategies compared with major compeitor Nike as well as to investigate the future market- Asia.

Figure5: Perceptual mapping of UA and its competitors

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methodology

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In order to understand real-life phenomenon in depth, by using multiple sources and theoretical propositions as method to discuss a contemporary case study (Yin, 2009). Also this report has used both deductive and inductive approaches to investigate the data from secondary research. Furthermore, the collection of primary research adopted quantitative as well as qualitative evaluates the data and clarify understanding of the company.

To the aspect of secondary research mainly information obtained from academic literature regarding marketing and business area, relevant magazine, journals, newspapers and online resources, which can provide potential useful data to understand Under Armour.

Strategic analysis tools have been used to understand the basic strategies in marketing of organization including ronment. For the application of theories, such as three level of products, 3C frame work, BCG Matrix to analyse the product to meet demand of consumer. There is widely acknowledge that deductive approach by developing a theoretical or conceptual framework, also to formulate the research objectives by using theoretical proposition to guide data collection and analysis (Saunders et al, 2009).

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Figure7: 2014-15 UA Kit Wallpaper

disscussion

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product design and development Product segmentation As Blythe (2008) stated that segmentations mainly include four elements, which are demographic, geographic, psychographic, behave, particularly most of international companies commonly use geographic as their marketing strategy.

The geographic, demographic and psychographic segmentations used by Under Armour as its international marketing.

Demographically the company aims for all age groups, athletes and sport teams, the psychographic segmentation of its target consumers is people who with a healthy lifestyle and athletes that have an aspiration for advanced products (EssayUK,2015). Recently people increase of healthy awareness also growth sporting goods industry (appendix5.3.1).

Therefore, the company divides the products to woman, man and kid as well as to develop a variety of brands to different product lines (appendix2).The geographic segmentation of this market are North America, European, Asia-Pacific, Latin America, the majority revenue was come for North America (appendix1.1), although China is new market, which is great growth potential market and can effect around the world (appendix 5.1.3 & 5.1.4 & 5.2.5). Thus, the company aim is apparently to expand market in China as strategy.

Advance technological skill From a macro- environment perspective people’s lifestyles and changing attitudes in society both have huge influence on the apparel industry, and there are more and more technological products in the sports apparel industry (appendix 5.4.2). As Lipsey (2005) reported over 30 years there have been a large growth and technology has gradually played an important role in sporting goods industry. Hence, Under Armour (2015) state their products have been produced by using technical fabrications which are provided by third-party manufactures, to develop in collaboration with the inhouse product development team. For example, in order to save cost as well as work more effectively, Under Armour used three-dimensional software to develop product. Using the latest 3-D technology to create images which are very realistic that the managers do not necessarily to create a physical sample (Rainer and Cegielski, 2011).

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Therefore, Under Armour in order to find the right niche marketing and to displace Nike, it is essential to apply 3C model, as this model developer-Dr. Kenichi Ohmae (1982) stated that company, consumer, competition, these three crucial factors can lead one company to success in competitive market. As figure8 shows, the major competitor Nike’s weakness is lack of technology skill, products designed with unique technology utilizing fabrication, colour and texture. In addition, in order to meet the athletes demand that to deliver advanced performance in all level of products and to help developers and licensees to identify new opportunities to provide products with a clear, overarching direction for the brand (Under Armour, 2015). One compelling example can be seen that Under Armour to provide diverse products for different weather conditions, such as HeatGear®, ColdGear® and AllSeasonGear®. Those merchandise help athletes to keep light and dry throughout the course of a game. Furthermore, the fabric consist of tight-fitting and moisture-wicking which provides muscle support and regulate body temperature. Therefore, it is apparently the growth strategy that the company creates unique technology products and expands a variety of product lines to achieve different market segments.

Figure8: 3C’s Framework

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Process of Under Armour to development the products As CEO-Kevin Plank said in his twitter (2014) “I am challenging every one of our product teams to say they’ve created the next great product.” In order to sale high-performance apparel to achieve the majority of professional and college athletes need. The company build the product development team to forecast the product future trends and to search the demand of marketing, and this team work carefully with sales teams, the sports marketing and professional and collegiate athletes (Under Armour, 2015). For instance, the footwear brand: SpeedForm, the features of the latest arrival running shoe are lightweight as well as supportive, and this product’s ideal came from the company’s manufacturers in China, he thought the same kind of moulded that creates comfort and support in athletic bras could work for shoes. As consequence, the development team find out the crucial element to create the high quality shoe is the heel cup; the middle and outsole was applied different moulded and does not have a stitch in it. There is little doubt it creates a whole new way of making footwear (INC, 2014).

Which reasons that you buy products from Under Armour?

0%

4%

5%

If you buy sporting fashion brands which things you will consider?

10%

0%

5% 20%

16%

Price Style design Price

Brand Product quality and function

9%

Function

39%

Store astmosphere

Design

Store location

Famous athlete endorsement Other

Customer service

Others

56%

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Figure9: Survey of UA

36%

Figure10: Survey of UA

Therefore, as figure11 shows, the products core benefit as same as Under Armour mission, to make all athletes better though passion, design and relentless pursuit of innovation, the strategy which would be effective that the product focus on technology and innovation in order to develop into niche market. More importantly, in 2015 the company cost 475 million to invest health and nutrition app MyFintnessPal (Forbes, 2015). It is evident that 56% of participants purchase Under Armour due to the key element of advanced technology (figure9). While most of people consider product design as important factor when they buying sporting brands (figure10). Thus, in particular Under Armour aim China market which is competitive market (appendix 5.1.2), in order to expand market and meet the demand of consumers, Under Armour need to develop new products which must including design elements.

Figure11: Three levels of product

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Nike

Under Armour 3% 9%

6%

6% Footwear

Apparel

14%

Footwear

50%

Accessories Licensing and other Revenues

38%

Apparel Equipment Other

74% Figure12: Survey of UA

Under Armour should have well diversities product portfolio As INC (2014) that Under Armour CEO said “Under Armour wasn’t about the compression T-shirt; it was about the essence of it: performance.” In 1997, Under Armour first introduced ColdGear fabric, which can keep warm in cold weather. As consequence, with high technology skill to build strong development in apparel product line (Under Armour, 2015). According to BCG Matrix theory, although the sale of apparel not the market leader, but it increased significantly, it is apparently one of largest revenue in company (figure12), in terms of product lines of footwear and accessories are the low market share, but it seems these portfolio have potential to gain market share, and becoming start or even cash cow in the future. It is evident that nearly 66% of people purchase apparel as their first choice, following is footwear 23% (figure13). Additionally, the growth rate of footwear from 2011 to 2014 is 43%, 31.5%, 25%, 44% respectively. Thus, apply to BCG Matrix theory that apparel is start, footwear and accessories are question mark. Bruce Henderson (1970) stated in order to ensure future cast generation the well-diversity portfolio company should always have stars, in terms of question mark, company should carefully operate this product due to if it does not become market leader otherwise it will degenerate into a dog(figure14).

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In particular, from macro environment footwear market growth recently (appendix 5.2.4), Under Armour entered the footwear market in 2006, it is apparently not the major player in the market, but it has well performance in the beginning. For example, it captured 23% of market share in first year (Under Armour, 2014). However, compared with the strong competitor Nike the proportion of products revenues, footwear and apparel accounted 50% and 38% respectively as shown in figure12, it seems Under Armour over-reliance on one product line. Furthermore, the issue of footwear’s raw material affect environment might decrease revenue of footwear market (appendix 5.6.1).

Therefore, in order to gain revenue and market share, Under Armour might consider on taking more resources to develop question mark product lines, such as footwear and accessories, or to expand new product line rather than just to concentrate on providing specific product portfolio, they are careful in choosing product resource in supply chain.

If you buy product from Under Armour, which product you like the most?

High

Market growth

11%

Low

Accessories

High

23%

Apparel

Apparel

Footwear

Start

Question mark

Cash cow

Dog

Market growth

Footwear Accessories

66%

Figure13: Survey of UA

Low

Figure14: BCG matrix

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source and supply chain Sourcing It is widely acknowledged that most of manufacturers in the sportswear industry are used to outsourcing to third-party manufactures. Particularly Under Armour brand due to a limited number of sources that the specialty fabrics and other raw materials which need technology, nearly 65% of the fabric used in products came from five suppliers, and one of them comes from Taiwan (Under Armour, 2015). As Huang & Lu state (2015) Toung Loong textile factory which is located in the middle of Taiwan, it provides the advanced material-dyed yarns. In order to produce the flexible, fashionable clothes, these stretchable and brightly colored dyed yams as its material. Hence, this is the main element to maintain the quality of Under Armour’s products.

Furthermore, Under Armour (2015) reports the materials and manufacturing are sourced from 19 countries, mainly from Asia, which is 66%. In 2014, Under Armour’s the materials and manufacturing services were sourced from 14 countries, by 29 principal industrialists, and with almost 65% of its products manufactured in Indonesia, Vietnam, Jordan and China (Under Armour, 2015). Also compared to U.S or European the labor costs are cheaper in China as well as the raw materials in China is more accessible and cheaper (appendix 5.2.3). However, as CNN news (2015) reports that international brands which have supplier factories in china, the profit started to decrease in several of them due to the increasing of China’s labor rate recently, also there are some issues of employees rights(appendix5.2.1&5.2.2). Therefore, Under Armour should consider to explore other countries as supplier factories in order to save cost.

Additionally, As Wu and Olson stated (2008) there are some problems of outsourcing developing countries, and one of solution to reduce these risk is to build the long-term relationship with participants; according Morgan (2015) reports approximately 70% Under Amour’s products is outsourced from long-term partners.

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SAP system Compared with the major competitors, such as Nike and Adidas, which certainly are the largest players in sporting goods industry, in order to save cost they also need to outsource oversea. For example, Nike outsource almost 100% of products overseas but it can lead the market margins as well as the highest profitability, the major reasons are that Nike not only has enough financial resources but also the significant experience and know-how which comes from 51- year history (Nike, 2015). Therefore, in order to develop stronger supply chain management, the company recently has increased their budget for supply chain and distributions by 52% (Under Armour, 2012). The SAP system is one of useful strategies, HANA database represents the first step towards a new generation of database systems designed specifically to provide answers to questions raised by demanding enterprise applications. The different engines within the distributed data processing framework provide an adequate solution for different application requirements (Kurbel, 2014). Additionally, the company also selected employees from a number of different departments and tasked them with forecasting and responding to consumer needs (see appendix 3.1.8).

However, there are lots of room to improve in Asia market, the company do not work effective in this system due to there are some opinions come from Asia’s consumers who complain sometime products could not be find in physical stores, online shops either, or even several shops do not provide the suitable size to consumer (see figure 16). An interview conducted for this case study with a retailer showed that Asia is a new market for Under Armour, and the brand needs time to gain more experience in order to correctly forecast trends in this market, also to expand more shops to make transfer more efficiently (appendix 6.4).

What your opinion about Under Armour store?

Not good impression! There are no big size!

Hope can more choice. For example, sometime some shops have the product I need, some shops do not have, even some products only can find from the online shop.

I am athlete! I need 2XL size!

Figure16: Survey of UA

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sales and channels Majority of sales are generally through a combination of wholesale and retail sales, which involve department store chains, specialty retailers, independent, institutional athletic department and leagues and teams, national and regional sporting good chains. The section focuses on America and Asia market.

Wholesale channels Under Armour uses three different types of sales channels.

These are Wholesale, Direct-to-customer and Licensing channels (Market Realist, 2015). According to Lipsey (2005) the majority of sales are made by wholesalers in commercial market in sporting goods industry. Therefore, the most sales made

by Under Armour is through wholesale channels, it generated 67% of the revenue in 2014 (Under Armour, 2015). This is exemplified by the two of Under Armour major customers, which are Dick’s Sporting Goods and The Sporting Authority, both of them created 22% of its net revenues in 2013 (Market Realist, 2015).

Figure17: Colo-Colo 2015 UA Home Jersey Wallpaper

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Over –reliance on two of major Wholesale channels in America market However, as SAP (2014) suggested, one essential factors in a supply chain is to determine whether it is too dependent on small number of customers or distribution centre. It seems Under Armour relies too much on two wholesalers. $V .RWOHU DQG $UPVWURQJ VWDWHG VHWWLQJ FKDQQHO REMHFWLYHV DV EUDQG·V WDUJHWHG OHYHOV RI FXVWRPHU VHUYLFH is the company key element in marketing. Hence, Under Armour should explore new potential wholesalers as well as PDLQWDLQ UHODWLRQVKLS ZLWK ZKROHVDOH SDUWQHUV )RU H[DPSOH 1LNH DOORZV GLIIHUHQW ZKROHVDOHUV WR VHOO VSHFLÀF SURGXFWV ZLWK SUHPLXP SULFLQJ VXFK DV WKH +RXVH RI +RRSV IRU EDVNHWEDOO ZLWK )RRW /RFNHU ,1& 0DUNHW 5HDOLVW

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Do you think Under Armour has a strong presence in your country? (America) Would you recommend your friend to buy Under Armour? (America) 0%

10%

20%

80%

Figure18: Survey of UA

19

90%

Figure19: Survey of UA

How would you to describe Under Armour?

1.Expensive, quality, famous athletic 2.Easy, comfortable, good to wear 3.Support clothing for muscles and bones and sporty 4. Came to know about it here in UK. It has its strong presence in the market with a wide variety of sportswear and shoes to choose from and for everyone under one umbrella.

5. It is a pretty cool brand.

6.Underwear, performance, value 7. Performance, quality, design 8. Sporty, Functional, Diverse 9. Younger cheaper unpopular 10. Functional, fashionable

How would you describe Under Armour physical store as branding imagine?

1. High class 2. Easy, not so many promoting event (discount) 3. Appealing 4. I have no buy this brand before 5. It is excellent with its customer service which upholds the image broadly 6. Typical 7. Strong marketing 8. Unsure 9. Bright colours

What your opinion about Under Armour store?

1. Too expensive 2. Neutral 3. Love it! Especially the football boots. Cant get enough of footwear from here. Clothes are awesome too.

4. Think it's ok 5. Well laid out 6. Overall good 7. It's okay.

Figure20: Survey of UA

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They need to expand retail stores in Asia market As Hood and Vahlne (2013) stated in terms of geographical marketing in global industry that one firm marketing position is influenced by its competitors. Appendix 6.5 shows that the major competitor Nike still play market leader in Asia, additionally, nearly 63% people have not been Under Armour physical shop before (figure 21). According to Rosenbloom (2013) “Channel strategy should guide channel design so as to help the firm attain a differential advantage.�This brand in U.S market has a successful experience; to apply Mix market mode, as shown in figure 22, the brand sells directly to consumers through two types of store which are brand house and factory-house store, also the company well organizing discounted products have been sold in factory store, first-hand were allowed to access in brand house shops (appenidx2.2). In order to gain more market share in Asia, the company should plan appropriately strategy, Under Armour can establish more retail accounts such as department stores and sporting good chains due to most of people prefer to purchase sporting goods via these shops (figure23 & 24).

When it comes to online shops, as figure 23 and 24 show, both for UA products and for products sold by a range of other brands online, these percentage are lower, 7% and 10% respectively. It seems this channel not so popular among Asian, as Rosenbloom (2013) argued the online shop become more and more popular in recent years, while there are some weaknesses that could limit growth rate of online shops in the future. For instance, compared with physical shops, consumers can not have same experience of purchasing products and then to get it immediately when they ordered online.

21

Have you been shop in Under Armour physical before?(Asia)

43%

57%

Figure21: Survey of UA

From which channel do you buy Under Armour products?(Asia)

Figure22: Marketing mix

Which channels you prefer to buy the sporting products?(Asia)

21%

Both in store and online shops

33%

10%

29%

32%

Online shops 7%

Retail (department store) Sporting goods chain

32%

36%

Figure23: Survey of UA

Figure24: Survey of UA

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Thy need to expand retail accounts and develop middle price products According to Under Armour report (2015) that direct to customer channels generated 30% in 2014. However, people ‘s shopping hobbies have a slight change of looking for the products which are similar and cheaper in a store due to the issue of economy becoming more and more weak in recent years (appendix5.2.5). Most of people think this brand rarely has price discount in retail accounts(appendix 6.5) and some customers think the price is too high(figure 25). In order to maintain sales in the future, Under Armour might consider developing a middle price of product portfolio campaign in retailing stores to attract customers to visit.

As Lipsey (2005) stated expanding department stores and discounted stores play an important role to impact customer segments in the sporting goods industry. In recent years Under Armour and Nike both have the same strategy to increase direct to consumer channels due to this can provide higher margins than sell products to wholesalers (figure26).

Increase other foreign countries is essential way Under Armour is to rely on North America as their major revenue, as figure 27 shows, compared to Nike, the most of sales come from North America, as CEO (2015) said the next step they will aim at the Asia market. On the other hand, figure 28 shows that the major competitor is grown quicker than Under Armour, it seems the firm needs to open stores more quicker in order to increase market share in this hard competition market.

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How do you think the price of Under Armour?

13%

Nike

Under Armour 32%

9%

Overvalue 47.00%

North America Other foreign countries

Reasonable

North America

53.00%

Other foreign countries

Value added 91%

55%

Figure25: Survey of UA

Figure27: Survey of UA

90% 80%

70%

180% 160%

60%

140%

50%

120% 100%

40%

80%

30%

60% 40%

20%

20% 0%

10%

2013 North America(UA)

0%

2012 Direct to Customer(UA)

2013

2014 Other Countries(UA)

North America(Nike)

Other Countries(Nike)

2014

Direct to Customer(Nike)

Wholesale(UA)

Wholesale(Nike)

Figure26: UA v.s NIKE Sales Mix

Figure28: UAv.s NIKE Revenue Growth By Geography

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branding Under Armour branding personality and value As Kotler and Armstrong suggest (2008) brands play a vital role of relationship between company and customer, it is not just names or symbols. And it can communicate to audiences of brand’s perceptions and feelings or the customer’s minds. The most successful strategy of Under Armour is word-of-mouth communication (WOM) to promote the brand. For example, most of customers willing to purchase items again or even recommend friends to visit shops due to high quality products. Therefore, it seems Under Armour already has built branding loyalty (see appendix 6.4 & 6.5).

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Figure29: UA’s store in Shanghai

According to Mullin, Hard and Sutton (2014) marketers are required to communicate with customers and must guarantee the branding message is clear, specific and targeted to segments. And the brand position of Under Armour is clear as the highest quality and best available (Bowen and Daigle et al, 2014). Furthermore, the advertisement emphasis” I will what I want”- this message just match the brand’s culture.

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)LJXUH 0DVORZ·V KLUHUDUFK\ RI QHHGV 0DVORZ·V

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MARKETING AND COMMUNICATION Social media In terms of social media, it is apparent that Facebook is the most popular tool to promote brands and products (appendix5.4.1). In comparsion, Under Armour and Nike, the number of fans are 4.1 million and 23 million respectively.

While quantity is not the most essential part to evaluate these two brands promotional strategy. Under Armour targets its segments by using specific pages to communicate with different audiences, for example, women, football fans and basketball fans. Recently, the brand has promoted well by posting 12 campaigns on Facebook (Facebook, 2015).

However, Nike separate out different categories for each product lines by comparison, including Nike baseball, Nike football, Nike running. Furthermore, Nike’s official website posts half of their webpage to connect with social media. Presenting that different product portfolio which customers can easily search online. In contrast, Under Armour has not established enough for people to surf internet, especially connect with social media and home page.

As Kotler and Armstrong (2008) suggests the concept of Integrating marketing communications in order to deliver clear and coordinating messages by integrating many communications carefully. For example, in Taiwan websites, Nike home page can link to its social media, such as face book and you tube. Conversely, Under Armour’s home page link to wechat which is not a popular communication app in this area (figure 32). Therefore, Under Armour should include several of their social tools in their homepage in order to meet customer demand.

27 Figure31: Product Lifecycle

Figure32: UA & NIKE Official websites

Marketing campaigns specific to target customers Applying product lifecycle, as figure31 shows, within growth stateg the product quality is maintained but also aimed at a broader consumer as its company marketing plan. Thus. Under Armour is using different marketing strategies to cater particularly the customer’s demand. It is evident that there are two main commercial advertisements namely ”Click Clack” and the “ Protect this House” which communicate with customers who are football players. Additionally, the “Athletes Run” campaign specifically talks to all athletes who run. While the “BoomBoom-TAP” campaign is only targeted to the female athletes.

Endorsement As Mullin and Hardy et al (2014) suggest that sponsorship agreement is a combination of mixing marketing elements, and the brand’s objective is ultimately to achieve the goal of increasing market share and profitability. A successful marketing campaigns that Under Armour made a sponsorship agreement with several organizations and clubs. For example, becoming an official outfitter for the professional, popular and large teams, such as the company became a supplier of the Auburn University, South Florida and University of Maryland as well as increasing additional sales by selling apparel to fans (Under Armour, 2015).

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Figure33: UA’s store in Shanghai

29

Retail represent According to Kotler and Armstrong (2008) the store’s atmosphere is one of an essential element to let customers make a decision whether to move in or not. And every shop should have a physical layout, the retailer should design an appropriate atmosphere to target customer and even let them make decisions to purchase.

In order to attract customer attention efficiently, UA in particular need to increase the floor space in order to present the products which are exclusive as well as enhance brand’s presentation within retail accounts. Even more importantly, though, is the fact that majority of social websites were blocked by China government (appendix5.7.1), for international brands the strategy of promoting by physical shop become more important. One particularly salient example of this is Under Armour opened the first- ever store in Shanghai; in order to provide an unforgettable experience to visitors, this shop by building multidimensional film and outstanding technology design (figure33).

This type of shop is very unusual in the Chinese market. Hence, it is evident Under Armour to reduce cultural differences by creating a unique retail experience as strategy to enter China market.

30 30

Growth rate of woman's participation in sports

Source:National Sporting Goods Association (n.d) in Washinton poster (October 14, 2014) online

Figure34: Growth rates of woman’s participation in sports

Improve woman market The woman’s apparel is 30% of overall revenue in the firm (Under Armour, 2015), also the women’s market growing dramatically recently (appendix 3.3.1), it is evident that proportion of women’s participation has been increasing as shown in figure34. Thus, Under Armour understands the global trend as it launch women’s campaign” I will what I want” to attract attention from women. Furthermore, Under Armour might consider to promote product which focus on design the meet the fashion trend as the majority of woman take this factor account when they making decision to buy sporting product (figure35).

31

Woman buy sporting fashion brands which things they will consider Design 50% 45% 40% 35% 30%

25% 20% 15% 10% 5% 0%

Price

Function

Figure35: Survey of UA

Figure36: Marketing mix

Adopting Marketing Mix As Rosenbloom (2013) stated the feature of a product might require an increase of price, as consequence, it may also require change in promotion to communicate new products element, and then distribution need to explain the changed of product features. Thus, applying marketing mix model, as shown in figure 36, in order to catch women’s market, besides to maintain hight price(appendix6.4), the company should emphasis the moisture transferring and quick drying function products as key element to communicate with consumers due to it always hot weathers in some Asia. Moreover, to expand regular chains rather than franchise chains in Asia market, because consumers prefer regular stores due to it provdie higher quality of products and service (appendix6.4).

32

financial

Net Income It is evident that Under Armour has significant growth in recent years in the sporting goods industry. In 2014, Under Armour’s net revenue it over $3,000 million, which has increased nearly two times as much as revenue in 2012 (figure 37). Compared with Nike, although who’s net income is higher than Under Armour, considerate with the growth rate, in 2014, it accounted 28% and 8.9%, respectively, which means UA’s growth rate is three times higher than Nike’s. In the future, as CFO Brad Dickerson said “I am extremely proud of being part of this dynamic brand, specifically in driving explosive growth to nearly $4 billion in revenue this year and laying the foundation for $7.5 billion in revenue by 2018.” (THE BALTIMORE SUN, 2015). This information explains the future of Under Armour’s financial positon in the next three years.

33

Source: UA & NIKE annual report, 2015, online

Figure37: Fnancial report of UA & NIKE

34

Free cash flow Free cash flow is one of data to help realize the development between two different companies, and also a better resource for the investors to figure out the company’s operation before deciding to invest or not. As figure 38 shows, it can be seen Under Armour’s FCF is strongly unstable; in 2011, they even run out of the FCF. Conversely, Nike’s FCF gradually increase year by year, which means Nike have more money to pay a dividend.

7000

Nike Under Armour

5100

149 2500

32

2011

35

2012

2013

45

980

2014

2011

2012

2013

2014

-41 Figure38: Cash flow of UA & NIKE

However, applying BCG Matrix, Under Armour is positioned in Star level and Nike is positioned in cash cow level, due to Under Armour being a new company, although cash flow is not stable, but earing growth rate is much higher, it dramatically increased 28%, 26%, 33% between 2014 and 2011.

Conversely, at the same period of time, growth rate of Nike just slightly increased 8.9%, 12%, 4.2%, respectively (figure 39).

ROE-Ks(FCF) Earning growth rate

>0% >15%

=0%

<0%

Start

Question Mark

Cash Cow

Dog

15% <15%

Figure39: BCG Mix

36

conclusion To the sum, since Adidas is just slightly behind Under Armour in the U.S., Nike might start to notice this, and plan some strategies to ensure they become market leader. It seems Under Armour need time to overtake Nike.

Hence, Under Armour should expand into other countries by planning strategies.

As a new company in sporting goods industry, there is one thing to determine this firmâ&#x20AC;&#x2122;s future, which is how to use budget more efficiently. First of all, expand market by opening regular shops in Asia, carefully chose appropriate factories which helping company save material cost as well as maintain productâ&#x20AC;&#x2122;s quality. Secondly, it is absolutely essential to maintain advanced quality of products due to it seems WOM strategy is a successful way to promote in Asia market (appendix6.4&6.5). Also to improve social media to connect with consumers by integrating a variety of social media, in order to engage customer attention. The last but not the least one is to gain more attentions from female consumers by providing more fashionable styles.

Concern of overseas market, although in North America it seems to make good performance in this location, Nike and Adidas are still two major players in the international market. For the majortity of international brands, it is obvious that China has become the first tartget market(BBC NEWS, 2015). In particular, according to the interview of supervisor who work for Under Armour in the Taiwan department, he said that Taiwan has been determined to expand stores before enter to china market for more careful pre-evaluation of the decision to open shops in China. Due to these two countries having similar cultures and lifestyles (Appendix6.4). Two years ago, the company already entered Taiwan market, and the sales increased gradually, it seems this brand is ready to target China. After 30 years, the major player in sporting goods industry might have changed.

37

Figure40: UAâ&#x20AC;&#x2122;s poster

38

list of illustrations Cover image: I will what I want, [image online] Available at: http://www.nookmag.com/under-armour-i-will-what-i-want/ [Accessed 30 November 2015].

Figure1: UA-athlete, [image online] Available at: http://mashable.com/2012/02/24/under-armour-nfl-draft-combine/#mnzDX64DpkqG [Accessed 30 November 2015].

Figure2: Bryce Harper. [image online] Available at: http://toppixgallery.com/bryce-harper-under-armour-shirt/ [Accessed 30 November 2015].

Figure3: UA’s net revenue, image created from online information from UA. Available at: http://files.shareholder.com/downloads/ UARM/918911010x0x816471/3BEBC664-8584-4F22-AC0B-844CB2949814/UA_2014_Annual_Report.PDF [Accessed 30 November 2015].

Figure4: UA”I Will What I Want” poster, [image online] Available at: http://ation.digitalmediauconn.org/blog/page/8/[Accessed 30 November 2015].

Figure5: Sport Performance Tracking Device, [image online] Available at: http://cargocollective.com/madelynlee/Under-Armour-E39[Accessed 30 November 2015].

Figure6: Sport performance tracking device [image online] Available at: http://cargocollective.com/madelynlee/Under-Armour-E39 [Accessed 30 November 2015].

Figure7:2014-15 UA’s Kit wallpaper, [image online] Available at: http://wallpaperspal.com/cruz-azul-2014-15-under-armour-kit-wallpaper/ [Accessed 30 November 2015].

Figure8: 3C’s Framework, image created from online information. Available at: https://www.google.co.uk/search?biw=1600&bih=755&tbm=isch&sa=1&q=3c+modle&oq=3c+modle&gs_l=img.3...52080.54546.0.54782.8.8.0.0.0.0.139.500.7j1.8.0....0...1c.1.64.img..2.6.398.1G4msBh-GCA#imgrc=GAZD2TvDVh83AM%3A [Accessed 30 November 2015].

Figure9: Survey of UA Figure10: Survey of UA Figure11: Three levels of product, image created from online information. Available at: http://www.marketingteacher.com/three-levels-ofa-product/[Accessed 30 November 2015].

Figure12: Survey of UA Figure13: Survey of UA Figure14: BCG matrix, image created from online information. Available at: http://www.netmba.com/strategy/matrix/bcg/ [Accessed 30 November 2015].

Figure15: UA footwear-SpeedForm Gemini, [image online] Available at:http://weartesters.com/armour-speedform-gemini-performance-review/[Accessed 30 November 2015].

Figure16: Survey of UA Figure17: Colo-Colo 2015 UA Home Jersey Wallpaper, [image online] Available at:http://wallpaperspal.com/colo-colo-2015-under-armour-home-jersey-wallpaper/[Accessed 30 November 2015].

Figure18: Survey of UA 39

Figure19: Survey of UA Figure20: Survey of UA Figure21: Survey of UA Figure22: Marketing mix. [image online] Available at: https://www.google.co.uk/search?biw=1600&bih=755&tbm=isch&sa=1&q=marketing+mix&oq=marketing+mix&gs_l=img.3..0l3j0i30l7.95773.98708.0.98987.13.10.0.3.3.0.87.510.10.10.0....0...1c.1.64.img..0.13.519.xIQIcoFtsC4#imgrc=4W1u7UcX2_cSYM%3A[Accessed 30 November 2015].

Figure23: Survey of UA Figure24: Survey of UA Figure25: Survey of UA Figure26: UA v.s NIKE Sales Mix, image created from online information from UA and NIKE. Available at: http://files.shareholder.com/ downloads/UARM/918911010x0x816471/3BEBC664-8584-4F22-AC0B-844CB2949814/UA_2014_Annual_Report.PDF & http://s1.q4cdn. com/806093406/files/doc_financials/2015/ar/docs/nike-2015-form-10K.pdf [Accessed 30 November 2015].

Figure27: Survey of UA Figure28: UA v.s NIKE Revenue Growth By Geography, image created from online information from UA and NIKE. Available at:http:// files.shareholder.com/downloads/UARM/918911010x0x816471/3BEBC664-8584-4F22-AC0B-844CB2949814/UA_2014_Annual_Report.

PDF &http://s1.q4cdn.com/806093406/files/doc_financials/2015/ar/docs/nike-2015-form-10K.pd [Accessed 30 November 2015].

Figure 29: UA’s store in Shanghai [image online] Available at:http://designsity.com.previewdns.com/under-armour-marc-thorpe-design/ [Accessed 30 November 2015].

Figure 30: Maslow’s hierarchy of needs. [image online] Available at: https://www.google.co.uk/search?biw=1600&bih=755&tbm=isch&sa=1&q=maslow%27s+hierarchy+of+needs&oq=maslow&gs_l=img.1.0.0l10.21203.22879.0.24946.6.4.0.2.2.0.57.180.4.4.0....0...1c.1.64. img..0.6.182.rnkBsogG3Rw#imgrc=cOn8cNeDtmbsfM%3A [Accessed 30 November 2015].

Figure 31: Product Lifecycle. [image online] Available at: https://www.google.co.uk/search?q=product+life+cycle&source=lnms&tbm=isch&sa=X&ved=0ahUKEwjWrbnrqNzJAhXMAxoKHQIsAMMQ_AUICCgB&biw=1600&bih=755#imgrc=9nf9I1WXqmj1qM%3A [Accessed 30 November 2015].

Figure 32: UA & NIKE official websites. [image online] Available at: http://www.nike.com/gb/engb/?ref=https%253A%252F%252Fwww. google.co.uk%252F & http://www.underarmour.tw/[Accessed 30 November 2015].

Figure 33: UA’s store in Shanghai. [imagine online] Available at:http://www.forbes.com/sites/monteburke/2013/10/17/under-armours-aggressive-plan-to-expand-overseas/ [Accessed 30 November 2015].

Figure 34: Growth rates of woman’s participations in sports, image created from online information. Available at:https://www.washingtonpost.com/news/business/wp/2014/10/14/a-12-year-old-basketball-player-complained-about-there-being-no-girls-in-her-sports-catalog-the-problem-was-even-worse/[Accessed 30 November 2015].

Figure 35: Survey of UA.

40

Figure 36: Marketing mix. [image online] Available at: https://www.google.co.uk/search?q=marketing+mix&espv=2&tbm=isch&source=lnt&tbs=isz:lt,islt:xga&sa=X&ved=0ahUKEwiW3YvbqtzJAhWBVBoKHXwBDxUQpwUIFQ&dpr=1&biw=1600&bih=755#imgrc=yTU1P-LQu_ikIM%3A [Accessed 30 November 2015].

Figure 37: Financial report of UA & NIKE, [image online] Available at:http://files.shareholder.com/downloadsUARM/918911010x0x816471/3BEBC664-8584-4F22-AC0B-844CB2949814/UA_2014_Annual_Report.PDF &http://s1.q4cdn.com/806093406/files/doc_financials/2015/ar/docs/nike-2015-form-10K.pd [Accessed 30 November 2015].

Figure 38: Cash flow of UA & NIKE, image created from online information from UA and NIKE. Available at: http://files.shareholder. com/downloads/UARM/918911010x0x816471/3BEBC664-8584-4F22-AC0B-844CB2949814/UA_2014_Annual_Report.PDF & http:// s1.q4cdn.com/806093406/files/doc_financials/2015/ar/docs/nike-2015-form-10K.pd [Accessed 30 November 2015].

Figure 39: BCG Mix. image created from online information. Available at: [Accessed 30 November 2015].

Figure 40: UAâ&#x20AC;&#x2122;s poster, [image online] available at: http://www.bloomberg.com/bw/articles/2014-01-30/under-armour-goes-on-pointe-inits-bid-for-women [Accessed 30 November 2015].

Figure 41: UA store at Taiwan. Own images Figure 42: UA &NIKE Facebook +

41

list of bibliography Barker, J. & Mirabella, L., 2015, THE BALTIMORE SUN, 2015 Google: baltimoresun.com. Available at: http://www.baltimoresun.com/business/under-armour-blog/bal-dickerson-under-armour-chief-operating-officer-to-step-down-20151013-story. html [Accessed 11 November 2015].

Bowen and Daigle et al., 2014, Under Armour case study [online].

Google: robertdaigle.com. Available at: http://robertdaigle.com/wp-content/uploads/2014/01/BowenDaigleDionValentine_UnderArmour_CaseStudy.pdf [Accessed 28 October 2015].

BBCNEWS, 2015, Trans-Pacific free trade deal agreed creating vast partnership Google: BBCNEWS.com. Available at: http://www.bbc.co.uk/news/business-34444799 [Accessed 26 November 2015].

Blythe, J., 2006, Principles & Practice of Marketing, Bath Saunder, M. & Lewis, P. & Thornhill, A., 2009, Research methods for business students , Edinburgh Gate Google: Facebook.com. Available at: https://www.facebook-studio.com/awards/winners/2015 [Accessed 11 December 2015].

Blythe, J., 2008, Essentials of marketing, Edinburgh Essay UK., 2015, Free Marketing Essay [online].

Google: Essay UK.com. Available at: http://www.essay.uk.com/free-essays/marketing/what-is-under-armour-clothing.php [Accessed 30 November 2015].

Forbes, 2014 [online].

Google: Forbes.com. Available at: http://www.forbes.com/sites/mikeozanian/2014/10/07/the-forbes-fab-40-the-worlds-most-valuable-sports-brands-2014/Accessed 30 November 2015].

Gracie. C., 2015, China seeks ‘new model’ for relations with US [online].

Google: BBCNEWS .com. Available at: http://www.bbc.co.uk/news/world-asia-china-34290960 [Accessed 26 November 2015].

Hood, N. & Vahlne. J. E., 2013, Strategies in global competition, New York Rosenbloom, B., 2013, Marketing channels A Management view, Boston Harwell, 2014, Women are one of the sporting goods industry’s biggest-growing markets-and one of its most ignored [online].

Google: The Washington Post.com. Available at:https://www.washingtonpost.com/news/business/wp/2014/10/14/a-12-year-old-basketball-player-complained-about-there-being-no-girls-in-her-sports-catalog-the-problem-was-even-worse/ [Accessed 12 December 2015].

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Hush Studios, INC, 2015, [online].

Google: heyhush.com. Available at: http://heyhush.com/work/ua-china/ [Accessed 05 November 2015].

Huang, K.C., & Lu, E., 2015, Toung Loong Textile Stretchable Textiles in Vibrant Colors Journal of Common wealth [online]. Available at: http://english.cw.com.tw/article.do?action=show&id=14927&offset=0 [Accessed 11 November 2015].

Leers. A., 2014, Social Media strategic plan for Under Armour [online].

Google: http://digitalcommons.liberty.edu/[Accessed 04 Novermber 2015].

Lipsey, R.A., 2005, The sporting goods industry. Channels of distribution: Consumer Retail, Consumer Online, Team Dealers and Distributors, London.

Linda, 2015, free marketing essays [online].

Google: essay UK.com. Available at: http://www.essay.uk.com/free-essays/marketing/what-is-under-armour-clothing.php [Accessed 28 November 2015].

Market Realist, 2015, High-Performance Winner? You Must-Know Guide To Under Armour [online].

Google: marketrealist.com. Available at: http://marketrealist.com/2014/12/understanding-armour-growth-story/[Accessed 29 October 2015].

Mullin, J. B. & Hardy S. & Sutton, A. W., 2014, Sporting Marketing. Promotion and Paid Media, United States of America.

Morgan. J., 2015, Supply Chain World [online].

Google: scw-mag.com. Available at: http://scw-mag.com/index.php/sections/manufacturing-retail/205-under-armour-inc[Accessed 01 November 2015].

Wu, D. & Olson, D. L., 2008, Supply chain risk, simulation, and vendor selection. International journal of production economics, Lincoln NIKE, INC, 2015, Annual report [online]. Google: Nike.com. Available at:http://investors.nike.com/files/doc_financials/2015/ar/docs/ nike-2015-form-10K.pdf [Accessed 07 November 2015].

Silverman, D., The quality of qualitative research, 1999, London PR Newswire., 2015, Footwear Market - Global Industry Analysis, Size, Share, Growth, Trends and Forecast 2014 â&#x20AC;&#x201C; 2020 [online].

Google: PR Newswire.com. Available at: http://www.prnewswire.com/news-releases/footwear-market---global-industry-analysis-size-share-growth-trends-and-forecast-2014---2020-300150372.html [Accessed 30 November 2015].

Rainer, K. R. & Cegielski, G. C., 2011, Information systems-supporting and transforming business, United States of America.

Robert, K., R., Case study research design and methods, 2009, New York SAP AG or an SAP affiliate company, 2014, Planing for disruption-supply chain management for wholesale distribution companies [online]. Google: SAP.com Available at: http://www.sap.com/bin/sapcom/en_us/downloadasset.2014-01-jan-24-17.planning-for-disruption-supply-chain-risk-management-for-wholesale-distribution-companies-pdf.html [Accessed 04 November 2015].

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Saunders, K. & Lewis, P. & Thornhill, A., 2009, Research methods for business students, Edingurgh UNDER ARMOUR, INC, 2015, Annual report [online].

Google: underarmour.com. Available at: http://files.shareholder.com/downloads/UARM/918911056x0xS1336917-15-6/1336917/filing.pdf [Accessed 29 October 2015].

Somers, R., 2013, Under Armour: Enhancing Your Performance the Right Way with SAP HANA [online].

Google: SAP.com. Available at: http://scn.sap.com/community/business-trends/blog/2013/08/12/under-armour-performance-products-the-right-way-with-sap-hana [Accessed 30 November 2015].

Knolmayer, G., 2002, Supply chain management based on SAP System, New York Mooij, d. M., 2014, Global marketing and advertising, New York Smith,S., 2015, Footwear Market- Global industry analysis, size, share, growth, trends and forecast 2014-2020 [online].

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appendix 1. STP ANALYSIS 1.1 Segmentation 1.1.1 North America The majority of net revenues come from North America sales. As the Under Armour (2015) report shows North America sales generated 94.1% of the revenue in 2012 and 2013 and 90.7% in 2014. The major client, wholesaler Dickâ&#x20AC;&#x2122;s Sporting Goods, accounted for 14.4% of the companyâ&#x20AC;&#x2122;s net revenue in 2014 (Under Armour, 2015).

The main channels used by the company are wholesale and direct-to-customer. As Under Armour (2015) report there were 125 factory house stores in most of them located in outlet centers in the United States. In the same year, there are five brand house stores in North America. Furthermore, people can purchase products through online shops.

1.1.2 Europe, Middle East and Africa (EMEA) In several European and Asian countries, products are sold by retailers and online and independent distributors (Under Armou, 2015).

However, Sales in certain countries have not increase significantly, as stated by market realist (2015). While the company plans some strategies and investing programs for future in these countries. One strategy is to keep selling products to sports clubs in Europe. For instance, according to Under Armour reports (2015) it sells Tottenham Hotspur Football Club replica jerseys to fans around the world.

1.1.3 China Recently the company opened new stores to sell accessories, apparel and footwear via two factory house and seven brand in China, and these stores were operated by franchisees and its own (Under Armour, 2015).

1.1.4 Taiwan, Australia, New Zealand and Hong Kong On the other hand, in Taiwan, Australia, New Zealand and Hong Kong where Under Armour sell products to independent distributors instead of operating to sell by themselves (Under Armour, 2015).

1.1.5 Japan and South Korea In Asia the majority of markets are located in Japan and South Korea, and it base on Hong Kong via third-party logistics providers that help the company to distribute most of products in these countries (Under Armour, 2015).

In Japan and South Korea, Under Armour have relationship with Dome Corporation licensee that has rights to sell, product and market its branded accessories, footwear and apparel in Korea and Japan. It is interesting to note that it actively to develop with this licensee to provide diversity of merchandise, such as different size, a variety of style, in order to meet the regionâ&#x20AC;&#x2122;s unique demand of customers.

Furthermore, not only the company got cost-based minority investment from Dome Corporation, but also Sales are made via large sporting merchandise retailers, professional sports teams, independent specialty stores and retail stores that operated by Dome Corporation 45

(Under Armour, 2015).

1.1.6 Latin America Basically the sales though wholesale distributors are lowers margin compared to direct-to-customer sales. While according Under Armour (2015) reports the company began selling products directly via an independent distributor in Mexico in 2014, and this also helped brand promotion in Chile and Brazil. These strategies have apparently improved sales in these countries. In addition, Under Armour’s products also via independent distributors that through its international distribution hubs in Hong Kong to create sale in other Latin America countries sated by Under Armour (2015).

1.2 Target Professional athletes and persons with active lifestyles 1.3 Position “Best available and highest quality” which is the same as their mission (Under Armour, 2015).

2. 4P ANALYSIS 2.1 PRICE & PRODUCT Demographic

Product type

Brand name

Porduct type

Price

cold gear

Tops

heat gear Apparel

all season gear

35-50 GBP

Charged cotton storm Bottom

Infrared Powered by Micro Shoes

SPINE VENT

Accessories

Armour 39 Cold black

Shoes Men's product

Demographic

Porduct type

Long Sleeves

Long Sleeves Short Sleeves Sports Bras

Tops

Jackets

Sleeveless & Tanks

Sleeveless & Tanks Trousers

Jackets Trousers

Leggings & Tights Shorts Underwear

Bottoms Woman's product

Training Shoes

Shoes

Football Boots

Accessories

Technologies

Running shoes Training shoes Backpacks & Bags

Accessories

Backpacks & Bags Headwear Socks Gloves Belts Storm ColdGear HeatGear

Technologies

Speedform Armourvent Coldblack

Leggings & Tights Capris Shorts Underwear

Basketball Shoes

10-110GBP

Product detail Hoodies

Short Sleeves Polos

Running Shoes

110-160 GBP

Speed form

Product detail Hoodies

Tops Kid's product Bottoms

Headwear Socks Gloves ColdGear HeatGear Storm Speedform Sunblock Short Sleeves Long Sleeves Hoodies Shorts Leggings & Tights Trousers

46

2.2 PLACE & PROMOTION Place: direct-to-customer Under Armour to sell products to customers directly by building strong network, which can be divided to two different channels, such as brand house stores and factory-house stores in North America as well as in the overseas, for example Latin America, Brazil, Mexico City, Panama City, Philippines and Asia-Pacific operating segments: Greater China, Japan. Particularly, Direct-to-customer channel also through websites globally and it to operate in Europe, Asia, Latin America and North America, and customers can make shopping experience through its portal at www.unerarmour.com.

Additionally, these factory house stores play a significant role of company’s inventory management due to the majority percentage of products that are in oversupply, out of season and discontinued have been sale to customers directly by factory house stores. As a result, at the same time it also maintaining the brand pricing integrity in their distribution channels. On the other hand, the brand house stores play a vital role to enhance brand experience by allowing products to sell first-hand and broader access to Under Armour’s products.

Promotion: Word-of-mouth communication, social media, endorsement, marketing campaigns to target customers 3. SWOT ANALYSE 3.1 Strengths 3.1.1 Appropriate use of unique technology to produce innovate products There is little doubt that Under Armour make good example about providing the products which include factors about functional and diverse products to customers. One compelling example can be seen that Business Case Journal (2012, cited in Quamme and Maurer et al, 2014, pg3) indicate UA particularly professional on the e apparel which synthetic compression shorts and moisture wicking fabrics.

In addition, there are three different product line that particular for diverse climate change, such as Cold Gear® for the cold season to wear, HotGear® for the wear season to wear, and AllGear® for the middle of temperature to wear. Therefore, UA not only popular in young age groups but also individual athletes due to it offer high quality and advanced technology products.

3.1.2 Create the Visible brand In the retail stores, UA particularly aim to increase the floor space in order to present the products which are exclusive products, from this case, it can be an efficient way to attract customer attention clam by Bowen and Daigle et al (2014).

3.1.3 Marketing campaigns specific to target customers UA succeeding in applying different marketing strategies to particular customers. It is evident that there are two commercial advertisements namely “ Click Clack” and “ Protect this House” for customers who are football players. Additionally, the “ Athletes Run” campaign is aimed specially at all athletes who run. However, the “BoomBoom-TAP” campaign is targeted at the women athletes.

3.1.4 Duopoly with Nike

47

J.P. Morgan analyst Matthew Boss (2013) commented“ We believe athletic/active apparel may be in the early innings of a multi-year lifestyle cycle with our field work highlighting Under Armour as a primary beneficiary (along with Nike),” for example, Dick’s sporting goods and Inc. DKS which are the sporting good retailers in America, these stores showcasing Nike and Under Armour “domestic duopoly” (market watch, 2013).

3.1.5 Cash Niche market Compared to the major competitors such as Nike, Adidas, UA set apparently of its position, that it is to provide innovative and high quality products. Especially to produce professional products rather than casual ones.

3.1.6 Effective financial control (increase sale yearly) Under Armour has demonstrated steady growth in the past five years, particularly the revenue and earning per share grew of over 30% from 2005 to 2013 (Under Armour, 2014). Furthermore, Under Armour-CFO Dickerson, he leaded the athletic apparel brand, to transform into a business with $4 billion yearly revenue (Business inside UK, 2015).

3.1.7 Leader’s style is to motivate employees CEO-Kevin Plank, prefers face to face meeting so that he can hear a variety voice from employees, in addition, his personality including high-risk, ambitious vision, with especial emphasis team-work. These features in combination reflect a high level of entrepreneurial leadership (INC, 2009).

3.1.8 Integrate Supply Chain According to Marshall and Janice et al (1994) the leader of group who dominant decisions frequently has huge impact of outcome of consensus forecast. In order to make communication more effectively. In Under Armour supply chain, the consolidation in many functional sections has given just one leader and it can be integrate more in one supply chain. With the strategy of using normal scorecard and normal metrics to improve the operation of the team, it can achieve the high standard efficiently; by holding the meeting once a month, using strategy of letting members to plan whole blueprint about its supple chain operates rather than just knowing a piece of portion of its supply the chain. From this case, every participant can easily know what the connection between each sections, helping them to forecast the correct information of customer’s need and find the problems much faster as well as saving more time to deal with them (SUPPLY CHAIN WORLD, 2015).

3.2 Weakness 3.2.1 Bad sale performance in footwear sales In terms of footwear market, compared with major players, such as Nike and Adidas and Puma, Under Armour is relative weak performance. For instance, Nike footwear sale in fiscal 2015 is $18.3 billion, approximately 2.2% of Under Armour footwear sales in 2014 (market realist, 2015).

3.2.2 Price not flexibility (no sales discount) In recent years due to weak of global economy, other brands in order to attract customers to purchase their brands, from this situation, UA facing to affect its sales.

3.2.3 Not play an important role in international market UA too rely on domestic market, should more geographically diverse.

3.2.4 Advertisement too focus on male than female 48

It is apparently most of UA’s advertisements are targeted to athletic men. However, recently UA has start to develop the woman market, for example the advertisement namely “I WILL WHANT I WANT” is focus on female customer.

3.2.5 Compared to compeitiors the total sales and net income is more smaller Compared the net revenue of Nike and Under Armour, that Under Armour obviously still need to improve their sale a lot.

3.2.6 Outsource of manufacturing Because of innovation and technology are the vital factors to provide UA products so unique, UA uses the majority of specific raw materials which are only available from limited amount of source come from third party (Under Armour,2015).

3.3 Opportunity 3.3.1 Women are one of the sporting –goods industry biggest growing market Recently woman to participant has been increase, also the mjority of buying decisions was account by woman. Thus, in order to attract feamal consumers the retailers particularly to focus women’s apparel marketing campagin.(The Washington Post, 2014).

3.3.2 Healthy aware have been developed in recent year The growing demand for sporting goods industry across the global market, the market is driven by factors such as people growing awareness about healthy and active life style, in addition, there is a tremendous opportunities for retailers to lead healthy movment by offering the sporting products that consumers need.(PRNEWSWIRE, 2015).

3.3.3 Social media have impact customers a lot (app) “Sports is a fun business with an engaged, passionate fan base,” says Spinello. “As new technologies continue to emerge, it’s important to take chances and try new things. If social media and technology can help you facilitate engagement and deeper relationships, it’s a win-win” (MashableUK, 2011).Especial in the sporting goods industry, The company can use the social media as strategy to promote in modern generation.

3.3.4 Technological clotheS will be the future trend Because of increasing awareness of consumer attention on the technology level that used in sportswear. More and more people are willing to pay more money to purchase advanced performance products, such as friction regulation, moisture management and water resistance (Headwaters, 2014).

3.4Threat 3.4.1 Labor cost becoming higher As Rosa Dada who is Chinese garments manufacturer said in BBC NEWS” factories in China are not competitive anymore because of increasing wages of labourers and a sharp hike in overall production costs.”

3.4.2 Wosening of global economy gradually in recent years The wider story is that China’s economic growth is slowing and there are concerns that the transition to a slower and more sustainable rate of growth might be disruptive.

Views vary about how healthy the Chinese economy is but a crisis there would be serious for the rest of the world, particularly countries and firms that export to China, which is especially important as a buyer of industrial commodities such as oil, copper and iron ore (BBC NEWS, 2015).

49

4.PETER FIVE FORCE

Porter Five Force

Intensity

Competitive Rivalry Within The Industry Bargaining Power Of Customers

Medium

Bargaining Power Of Suppliers

Medium

Threat Of New Entrants

Medium

Threat Of Substitute Product

Low

High

Explain The major player: Nike, Adidas which are strong competitors. However, recently the healthy awareness was enhance, it attract several companies to operate business to gain market share.

In terms of wholesalers, Under Armour too rely on two major companies. As result, it is easy to negotiate price with Under Armour.

In Under Armour supply chain, Asia accounted the major proportion of manufacturers due to the it can save cost of raw material and labour. While in recent years the china labour cost increase, in the future Under Armour need to think other areas to develop supply chain.

The sporting good industry is obviously are the major players are Nike, Adidas. It is not easy to be replace due to these brands have a variety of resource as well as customers have deep loyalty in this industry.

The unique technology skill is not easy to copy, and the patent can protect the product to avoid plagiarism issue.

5.PESTEL 5.1 Political 5.1.1 China not involved of Trans-Pacific Partnership (TPP) As America president Obama said â&#x20AC;&#x153;When more than 95% of our potential customers live outside our borders, we canâ&#x20AC;&#x2122;t let countries like China write the rules of the global economy. Thus, some companies might consider the decision of cooperating with Chinaâ&#x20AC;&#x2122;s companies due to China not the member of TPP (BBC NEWS, 2015).

5.1.2 International system is competitive Many foreign players have learn it is not easy to lead china market, on the other hand, it is essential to win china market first if companies want to successful globally( Harvard business review, 2007).

5.1.3 China and America have deep relationship in economy Recently, china want to build military force and diplomatic clout to improve its economic situation. The cheapest ways to meet these demand is to cooperate with America (BBC NEWS, 2015). Therefore, it is little doubt without American help, china is hard to achieve economy level today.

5.1.4 Many chinese companies start to seek western brands to increase opportunities to win the market.

Many chinese companies believe that by buying westerns brands or distribution system regardless of whether the companies have management tools or not to handle them (Harvard business review, 2007). Thus, it is an effective way for foreign players to invest in the chinese market, for example, to set the shops in department stores to promote the brands imagine.

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5.2 Economic 5.2.1 Labor costs in China have been increased As Rosa Dada who is Chinese garments manufacturer said in BBC NEWS” factories in China are not competitive anymore because of increasing wages of labourers and a sharp hike in overall production costs.”

5.2.2 Outsourcing other nations result in the issue of employee rights for those who work in developing countries Workers have shown displeasure at the deteriorating standard of working conditions. Often, they work many hours and receive low wages, especially in the manufacturing sector. Many factories in China do not provide good working conditions and they do not abide by standards like the U.S. and others. Also, the methods and principles of regulation regarding workers’ health and safety are not the same in China, due to different land and labor laws. Apple originates in Cupertino, California in the U.S., where they employ strict rules for workers and working conditions. Outsourcing their employee base abroad means employment for the same company but these employees do not have same rights (Daily Sabah, 2014).

5.2.3 Outsourcing to China offers a lot of benefits, the major is financial There are some benefits of outsourcing China. Firstly, compared to the U.S the labor costs are cheaper. Secondly, it is easier to gain access to certain market due to the manufacturing is undergone in a certain country, Asian markets also become more accessible. The last one, raw materials in China are cheaper. (Daily Sabah, 2014).

5.2.4 The shoe industry has increased recently The global footwear market has been significantly growth recently due to the diversity new design of footwear and the increase of healthy awareness. It is increasing population of people to spend time in retail shops to purchase the running shoes (PRNEWSWIRE, 2015).

5.2.5 China’s economy slump has recently affected the rest of world economy It is widerly acknowledged that China’s economic growth is slowing, futhermore, the situation of Chinese economy is a crisis there would be serious for the rest of the world, particularly countries and firms that export to China (BBC NEWS, 2015).

5.2.6 Increase in price of raw materials in footwear market There are certain issues that might be slowing down the increase of international footwear market. The key factor is the rising prices of raw material (PR Newswire, 2015).

5.3 Social 5.3.1 Increased awareness of health.

The growing demand for sporitng goods in global market, the major reason is people increase healthy awareness. Thus, there are tremendous opportunities for retailers to promote its products by offering the sporting products to meet consumer’s demand. (PRNEWSWIRE, 2015).

5.4 Technology 5.4.1 Social media help sporting industry to promote to customer. Eg, facebook “Sports is a fun business with an engaged, passionate fan base,” says Spinello. “As new technologies continue to emerge, it’s important to take chances and try new things. If social media and technology can help you facilitate engagement and deeper relationships, it’s a win-win”

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(MashableUK, 2011). Especially in the sporting goods industrythe company can use social media as a promotion strategy in modern generation.

5.4.2 Development of innovative technological products Because of increasing awareness of consumer attention on the technology level that used in sportswear. More and more people are willing to pay more money to purchase advanced performance products, such as friction regulation, moisture management and water resistance (Headwaters, 2014).

5.6 Environment 5.6.1 The issue of environmental protection, the raw material of footwear might affect footwear market Concern over the increasing environmental awarness, it might restrict the growth of the global footwear (PR Newswire, 2015).

5.6.2 Glogal warming effect workers Global warming might negatively affect the employee work situation, for example, uncommon weather might cause some risk of danger.

5.7Legal 5.7.1 China government block social media Most of social media websites have been blocked in China due to China government made the policy about prohibiting people to surf internet (BBCNEWS, 2015). China is the targeted market that Under Armour looking at, the company need to think about other ways to promote the brand.

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6. PRIMARY RESEARCH

6.1 PHYSICAL SHOP OBSERVATION Store Location: South of Taiwan Retailing type: Shopping Mall Shopping Mall’s name: Dream Mall Date:20/06/2015 Price: £ 20-£ 170 Demographic: Family and Tourists (age between 20-40) Store presentation: majority of prodcut have been present are menswear and woman’s wear, the footwear was located in one corner of stores. The brand’s logo was show infront of shop. Digital screen was show the latest collection Promotion: no discount, just new arrival Staff: 25 year old store manager

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Store Location: South of Taiwan Retailing type: Department sotre Departmenstore’s name: Shingkong Mitshkoshi Store’s type: Regular chains Date:25/06/2015 Price: £ 20-£ 170 Demographic: Tourists and Business people (age between 28-40) Store presentation: footwear show inside of the store, woman’s wear have been present in frot of store, the majority of products has been present is men’s wear Promotion: no discount, just new arrival Staff:30 year old store manager

Figure41: UA’s store in Taiwan

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6.2 ONLINE OBSERVATION Date observed: 15 December 2015

Date observed: 14 December 2015

Facebook Page:4,071,118

Facebook Page:23,473,657

Twitter:557,732

Twitter:5,636,914

Instagram:1.7m

Instagram:31.2m

Youtube: 89,875 Subscribers

Youtube: 329,082 Subscribers

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Figure42: UA & NIKE Facebook

6.3 ETHICAL CLEARANCE FORM

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6.4 INTERVIEW

Retailer Interview Interview with: UA manager in south of Taiwan market 1) How would you describe your target consumer? Age, life style, gender, social status of customer?

All age and both men or women who like to be active, or who want to find some sporting wear to do exercise, such as yoga, jogging and so on.

2) Does the target customer match the actual customer?

I think so, but our price is more higher than the competitor brands, so i will say the age group is between 25 and 40, and the people who have financially capable of buying high quality products.

I think so, but as more teenagers start to pay attention to this brand, I can feel the age become younger.

3) Do more men or women shop in your shop, or its fairly even?

The precentage of male and female who shop in our store is 60% and 40% respectively.

4) What promotional activity does the store engage in?

Generally speak, we use WOM as markting strateg, we have confidence of our product, so we dont have discount, also we can not have the word of “on sale” on the flyer or posters, this is the policy of establishing by the headquarter.

5) What do you think influences your customers buying decisions?

I think as we know the economy not very well, some of consumer or even the employees who work in shop ask for discount. So, I can say recently people consider price more.

6) Who would you consider to be store competitors?

Certainly the major player in this market, which are Nike, Adidas, but recently in terms of footwear market, the sketchers growth very quick, so we still wait and see.

7) How do sales to collect the goods? And some consumer talking about the sometime they couldn’t find the product they need in shops.

Well, we have the system that sales can search the products in other chains if consumer want to buy some items but this shop do not provide, or staff can mail the order to the head quarter in Taipei. In terms of issue of outing of stock, there are not so many stores that we can transfer among retailers, more importantly, as franchise chains we can’t transfer products from regular chains. Moreover, as you know we operate the shops just for two year, we need time to learn some experience, in order to forecast which products is hot sales which products maybe not so popular in this market.

8) Do you adapt product offering specifically for local consumers?

Well, I don’t think so, because our products have been design for world wild, so we don’t necessary to product special product to specific market.

9) In terms of marketing of relationship between Taiwan and China, any opinion about these two countries?

Well...as you know, some international brands like to set the shops in Taiwan in advance, to learn some experiences, and next step well aim China market.

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Customer Interview Interview with: Floor Manager in Dream Mall (one of the biggest shopping Mall in South of Taiwan) 1).How dose brand gain your custom and keep your loyalty?

Its stability of the quality is the main point. Furthermore, the price is reasonable, it won’t be too high to afford even if this brand become more popular.

2).What factors influence your buying decisions?

Quality, price and function.

3).Which items you like most in Under Armour’s collection?

ArmourVent, it really makes me feel the t-shirt is “breathable.” Wearing ArmourVent when running, I can feel it helps to transport moisture away from the skin and comfortable.

4).Could you describe what the differences are between Under Armour and Nike and Adidas?

Both Nike and Adidas know how to make their products look trendy. Compare with them, Under Armour looks simple and even boring on its design.

5).Could you describe the Under Armour brand imagine when you shop in the physical shop?

Professional, I feel. As I just mentioned, it’s not good at appearance but the quality is quite stable and awesome. What I need is comfortable sport wearing, and UA hardly makes me disappointment.

6).Do you think Under Armour should specific provide product for this market? If so, what product your will recommend this brand can provide to attract consumers?

Taiwan is hotter and more humid than USA. We need better moisture transferring and quick drying products and if UA can provide for tropical country like us, it must be more popular.

7).Do you think Under Armour should do more marketing campaigns? If so, what promotional events you would recommend them to do?

I don’t think they need. There are too much advertisement about sport brands, it may confuse customers and wondering if they are really useful. Word-of-mouth marketing is much more effective to me and I will rather to listen to my friends’ suggestions than what bloggers say.

8).Have you shopped in Under Armour regular chains and franchise chains? What do you feel the differences are in terms of sale service or products?

I never buy UA in franchise chains because in Dream Mall, UA is regular chain. I feel shop in regular chain won’t need to worry about the quality and after-sales service. So I never consider to shop in franchise chain.

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6.5 Questionniare

59

60

61

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How would you to describe Under Armour?

Sporting, function, muscle clothe Fashion, quality, function, Comfy Active, new wave, function Sporting brand, footwear which appropriate to climb also to wear to estimate heart beat rate Comfortable Practical comfy cheap Infamous Innovation, male, new brand Very tight, function, fashion Athletic, functional, performance New, techinal, sport Tight,fitting,good looking Trend, Fashion, comfortable Sporting brand, new power, strong man Support clothing for muscles and bones Functional products, endorsement, innovative design Powerful, strong, male Function, no design, no fashion, no their brand colour Expensive,sporty,fuctional Underwear, performance, value Simple, easy, comfortable to wear Comfortable, function, design Expensive, quality, famous athletic Keep dry, lack of design, cool Came to know about it here in UK. It has its strong presence in the market with a wide variety of Sportingwear and shoes to choose from and for everyone under one umbrella. It is a pretty cool brand.

Innovation, new brand, strong Comfortable to wear, fashion, advanced technology Sporty, Functional, Diverse Fancy expensive new Young, sporty, specialty Curry Heavy duty, for strong guys, big

Functional, fashionable High technology, comfortable, high price Tight, keep warm, high price Function, comfortable, male Functional Pricey Simple Quick to become famous, high function, overtake NIKE OK,GOOD,NICE Comfort, fashionable and reasonable Functional, stylish, cozy Comfortable, valuable price, high function Nice wear, good look, the items that everyone have Just know it today Younger cheaper unpopular Unfamiliar cool fit I have not buy before Performance, quality, design Functional, innovative, unique Comfortable young colour Strong, simple, colourful U.S.A, strong, Taiwan endorsements-zhi sheng, Lin Performance, fashion and expensive Fashion, Gorgeous, functional Function, high function, good look Muscles professional determined Function, high price, good design Profession, high function, good sense Sport mature functional Performance, fit and comfort Technology Breathable, flexible, cool Function Expensive, quality, popular Sporting Functionally, fashion, comfortable 64

How would you describe Under Armour physical store as branding imagine?

Don't really know the brand Not good impression, did not provide big size Uniqlo I do not try before Energy Not enough presence in the UK to comment Unsure Professional, a lot of choice, Fashion Nothing special Comfortable Bright colours Sporting goods leader for certain product like work out outfit It is excellent with its customer service which upholds the image broadly Professional Noting impressive Have not purchase before It is UA Cool Appealing COOL Nice Man Eye-catching, spacious, well-lighted Simple Nothing Innovation There are various quality products I can choose.

Simple and professional Fashion Professional Great Design to keep dry 65

Different from current mainstream brands Mesmerizing Very organize company High class Simple NOT SURE When I entry the shop there is a big logo to show brand imagine Good I have not buy before Big logo Not shopping before Easy not too much marketing event Not pay attention of this brand High street level Sporty Have not go to this shop before Efficient Normal, sport, orgaizne Have no idea It is a new brand in Taiwan Sale introduce their products very clearly Strong marketing Typical Innovation branding imagine Branding image very powerful Good, but higher price OK Very expensive, but the service very normal No discount fashion sporting brand, but still many people willing to purchase Innovation asmosphere

What your opinion about Under Armour store?

Love it! easpecially the football boots. Cant get enough of footwear from here. Clothes are awesome too.

Tooexpensivw I am a athlete, I need big size expand more shops so so More available sizes I hope Under Armour could have more promotion. so far so good Store have nothing memorisable point Recommend provide discount I don't know It's okay.

Great Neutral NOT SURE Can focus on different sport have clear present Can have more girl stuff no store nearby Overall good More discounts Diversity Think it's ok Can present by different topic Well laid out It is a common situation of lack of stock or no suitable size Hope provide a waide selection of colours and design. And sometimes products cant not find in every store Good

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6.6 UA & NIKE FINANCIAL REPORT

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6.7 GANTT CHART

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