The Introduction Of Under Armour Inc Marketing Essay

Published Date: 23 Mar 2015

Our company, Under Armour, Inc., was founded in 1966 by former University of Maryland football player Kevin Plank. Under Armour is known as an advanced sportswear and casual apparel company and the original innovator of performance apparel. They are mainly focused in a market directed towards the general athletic community or individuals with a more active lifestyle. Under Armour is different from other competitors because they offer a more flamboyant approach to supplying athletic apparel. They are unique from their top competitors because they have a high performance line of athletic clothing that absorbs moisture from the away from the athlete's body to enhance their performance in hot or cold conditions.

Under Armour, Inc.'s mission statement is "To make all athletes better through passion, science, and the relentless pursuit of innovation."(xv) Under Armour prides itself in doing something for all of its customers and helping making each them better through the use of their products.

Strengths

Under Armour possesses has numerous strengths that are assisting them in the rise to the top. They offer superior quality and innovative products that are unlike anything other companies have created before. Although they are a newer company, they are already a trusted brand by many. They are established in the apparel field and are continuing to expand with average growth rate of 13.3% per year. Under Armour's products are not only stylish and durable, but they are a professionally recognized brand with collegiate and national level sports teams. Under Armour offers a wide range of apparel from T-shirts to shoes and everything in between. They have excellent product placement in TV shows, movies, and even awards shows. They have excellent leadership in the company by CEO Kevin Plank and he explains that in order to have a successful business team, you have to have happy employees, so he does everything he can to keep it an exciting and happy environment. Under Armour even has a 'green' collection that is ecofriendly, which gives them a leg up over some of the competition. Their attractive logo and newly improved slogan are only a few of the things that are keeping this company headed towards top success.

Weaknesses

Although Under Armour has countless strengths in their company, there are also some weaknesses to go hand-in -hand with them. First of all, Under Armour is not the most inexpensive company to purchase sports apparel from. The materials used in their products are not patented so generic labels are able to make similar products and sell them at a much cheaper price. They have a weak marketing strategy and rely on chain stores such as Dicks Sporting Goods and Sports Authority to sell most of their products. They have a somewhat limited product line because they started out targeting towards men or professional athletes, but are increasingly adding in more options geared towards women, teens, and kids. They are a new company of only 8 years old, so they have a lot of maturing to do in order to catch up to their top competitors and strong customer base like Nike and Adidas.

Opportunities

Despite an economic recession, Under Armour finds ways to thrive and prosper. This can be credited to the company's ability to take advantage of sprouting opportunities. With the introduction of footwear to add to Under Armour's product line, they have been able to appeal to another sector of their market. NFL's contract with Under Armour as their official footwear will supply a plethora of opportunities to sponsor more popular athletes. Also, as Under Armour becomes more desirable and in demand, they will have an opportunity to expand into foreign markets. Stretching into Europe and Asia will have a colossal impact on the growth of the company, as well as threatening Nike and Adidas as number one. Due to demand growth in Under Armour's products, they have the option to lower its prices to aid in attracting even more customers. In the long run, this will help sustain the company and grow. In order to attract the younger generation, Under Armour could host sporting camps for kids who are in high school and below. This can be a camp where high school students can show off their talents to college recruiters and act as a form of advertising for the company. Also, as the company grows they have the ability to build more outlet stores throughout the United States. This will make it easier for customers to be able to walk in and immediately get the effect that Under Amour has.

Threats

Under Armour is a fairly new company paralleled to their competitors, Nike and Adidas; therefore, sales and profit margins are much higher for Under Armour's competitors. This makes it much more difficult to tap into the market. Competition in this market is lofty, meaning that only the best and innovative companies survive. Economic conditions are not assisting the aspiring company because the expensive clothing could turn loyal customers away from the brand. The fabric and material that is woven into Under Armour's materials are being duplicated by generic brand names and are being sold at a much lower price. This could be detrimental to Under Armour's niche of people who buy their products.

Organizational Structure

The organizational structure of Under Armour comprises of 20 main executives. The main three executives comprise of Kevin Plank, Brad Dickerson, and Kip Fulks. The CEO (Chief Executive Office) of Under Armour is Kevin Plank is the superior boss of the company. His mission is to provide financial results expected by the shareholders. The CFO (Chief Financial Officer) is Brad Dickerson; his mission is to provide the company with the right financial resources for its development. The COO (Chief Operating Officer) is Kip Fulks; his mission is to execute the strategy of the company or a part of the company under the leadership of the President or CEO. Although Kevin Plank is at the top of the executive pyramid, it is actually the Board of Directors who is responsible for many of the decision making opportunities associated with Under Armour.

Capabilities and Processes

Some of Under Armour's capabilities and processes include the use of SAP enterprise systems, which is a well-known software program that many fortune 500 companies use to manage their company databases for financial, accounting, personnel, documents, and more. Under Armour specifically uses the SAP enterprise system for improving their sales projections, planning more in advance for inventory, and coordinating the supply more closely with the demand of their products. Under Armour chose SAP because it is one of their trusted business partners. Using SAP gives the company access to real-time data and master and transactional data. It also makes it easier for them to easily navigate and get detailed information of their company data. By using SAP, Under Armour has reduced inventory to 20%. They have increased forecast precision and improved cooperation among sales, planning, and operations. SAP helps to continuously improve Under Armour's planning and reporting functionality.

Under Armour has also integrated SAP with Microsoft SharePoint. The integration of this program helps to streamline the processes and improve their access to their current SAP data. Using this process helps to ease the abilities and access the company information more efficiently, in return saving the company millions of dollars in training and other costs. Using SharePoint has helped the Under Armour Company more successfully transfer job roles more easily, rather than having to retrain employees individually on certain jobs.

Industry Environment

The principal competitors of Under Armour are Nike, Adidas, and Russell Athletic. Our competitors challenge us on a daily basis by being well known in our industry environment. The reason they are principal competitors is because; they bring many years of experience, and provide a trusted brand. A few of Nike strengths consist of, a strong research and development team and are very recognizable brand. They are a globally recognized company offering their products worldwide. They offer a wide range of products at a low price. A few of Adidas consist of, being one of the biggest sponsors of sporting events worldwide. Have been around since 1924 and they employee over 45,000 people. Russell athletics strengths consist of, being supported by a strong parent company; Berkshire Hathaway. They are one of the largest producers of sports uniforms and accessories in the United States. Also have excellent brand visibility. Although this is a fierce market Under Armour brings much strength to the table, which motivates Under Armour to be innovative and progress in expanding their target market. In result Under Armour's strengths consist of, a wide range of apparel, which is very durable and reliable products, with excellent service, is a professionally recognized brand. Also have an excellent growth rate exceeding 133% per year. Most importantly Under Armour has an outstanding customer service team which keeps our loyal customers coming back, and also helps to expand our product line to different demographic markets.

Customers

Under Armour engineered the company to supply and distribute hi-tech athletic gear not only to individuals, but athletic teams domestically and globally. The gear is aimed at a multitude of sports like football, basketball, soccer, baseball, etc. During their campaign to gain market share, Under Armour relied heavily on the 18-35 sport orientated male and less on females. Under Armour targeted a segmentation of the market that has wealth, active lifestyles, and a desire for a high quality product on a global scale. Competitive, ambitious, and fashionable people are likely to purchase Under Armour products. Serious athletes who want to gain an athletic edge on the field are common among Under Armour consumers. To drive up future market share, Under Armour has started to chase elusive youth athletes by exposing them to the product at an early age.

Early in the company's development female clothing lines were nearly obsolete; males were the dominant focus to charge up the company. As of recent, Under Armour has started a full-on marketing campaign to entice females to start buying their products. Now because of massive development and marketing efforts, "Women's wear now represents 30 percent of Under Armour's overall business, up from 20 percent three-and-a-half years ago, and our growth is eclipsing men's" (Palmieri 1). Creating gear and apparel for athletes to wear under their equipment or jersey is Under Armour's niche that has been unsatisfied by producers for years. Now as the company moves forward, they are broadening their product line to allure a more general market by producing items like sweatshirts, running shorts, and casual t-shirts. Customer attitude is oscillating from athlete only gear, to a more general consumer.

Under Armour's focus was to appeal to the athlete by offering tightly fitting clothing that is fashionably attractive and provided athletic excellence. To appeal to every facet of athletic clothing, Under Armour manufactures HEATGEAR to keep athletes cooler during activities, COLDGEAR to keep them warmer, RECOVERYGEAR to help reduces aches and pains after a workout, and ALLSEASONGEAR for the season round athlete. Footwear and general clothing have also been added to Under Armour's repertoire of items consumers buy. The NFL has signed an agreement with Under Armour for it to become its official footwear dealer.

Customers purchase Under Armour because of the durable and quality products they have to offer. The "Super-lightweight micro-pique fabric" assists in forming the shirt to the customer's comfortably level. Customers value the innovative hi-tech clothing and equipment that is offered by Under Armour and the Brand ideology of dominance.

To attract consumers, Under Armour uses professional athletes as a medium to market how their products look and feel. Popular athletes such as Devin Hester, Ray Lewis, AJ Hawk, Patrick Willis and many more all have endorsement deals with Under Armour to help boost customer awareness. Under Armour has also reached out to collegiate teams like Auburn, Texas Tech, and South Carolina in an attempt to show that Under Armour products are superior.

Context

Industry

Under Armour started out as a "basement project (1)," with hopes of becoming an extremely well known and successful business and as a main competitor in the sports market. "Today Under Armour is well known for introducing a different type of fabric and material to the market. The fabric and material is designed so that as the athlete wears the clothing it absorbs the sweat from the skin and transfers to the clothing apparel leaving the person dry and comfortable in wearing the apparel (2)." The industry that Under Armour is involved with is very competitive, with competing against companies such as Nike, or Adidas but customers want to have the highest quality apparel therefore they turn to Under Armour. Under Armour stays in the competition by having a high quality product, and also by signing endorsements deals with major athletes. By having major athletes represent Under Armour, means the company will be bringing in "big money (1)."

Economic

Under Armour, even during economic recession, has experienced significant growth rates. This can be credited to the innovation and management of the Under Armour Company. On December 31, 2012, Under Armour's net income was 33 million compared to the 23 million that was reported in the fourth quarter in 2010. Also, net revenues soared from 301 million in 2010 to 403 million in 2012. Under Armour reports a 38% net revenue increase from 2007. One of the primary reasons for the economic boost during strenuous times is Under Armour continually produces creative and exciting new products that tap into markets. The company also reports a 43% gain in footwear net revenue from the introduction of running shoes revenue of 22 million, to 31 million in one year. (BaltimoreSun.com)

Kevin Plank, CEO of Under Armour, doesn't address the issue of the current economy playing a role in his success. When referring to the economy Plank says, "We never refer to things as the current economy, there's just one economy and we live through it and fight it" (Bizjournals.com).

Technological

Under Armour is known for making high quality athletic gear that helps keep the consumer warm but also comfortable. Stemming from their simple idea of T-shirts made of a special material that could keep you comfortable while staying active, Under Armour continues to progress in the technological field. They have implemented their original ideas into various types of clothes, shoes, gloves and various types of athletic gear. Technology for gloves and shoes include properties of increased grip, and also enhanced weather insulation for their clothes which are great for people in colder environments. Under Armour is known for coming out with the latest and greatest technological advancements. Under Armour has a product called the E39 Sensor, which is similar to a computer chip in a skin tight jersey. . It is able to measure the athletes' heart rate and acceleration and the data is able to be uploaded to a computer to be analyzed which can be great for professional athletes and strength training. They have also implemented locker tag technology which gets rid of annoying size tags on garments and gives a space where ID or unit numbers can be displayed for teams to keep track of jerseys. While rapidly coming up with the newest technologies, Under Armour is going to continue to stay ahead of their competitors.

Societal

Under Armour is an inspiring and innovative business/company in the sports apparel industry. They have been producing and will continue producing some of the world's highest quality products. They aspire and put effort into making our apparel to be able to improve the users experience while participating in an active lifestyle and keeping the user comfortable at the same time. Over the past decade Under Armour has substantially grown to become one of the biggest competitors in the sports market/industry. With a strong belief in creating the best product for the customer/user will then with a doubt inspire that person to becoming a loyal Under Armour customer. "Under Armour's passion for service extends into each of the communities we inhabit. Under Armour is interested in what is best for our community and are deeply engaged in a variety of community service organizations. Under Armour "GiveBack" stands behind its 4 Pillars of Giving, Legacy Partners, and 911 Disaster Relief efforts with our people, products, and spirit (1)." We make it easy for our employees to get involved with their communities, as well as participating in programs that are devoted to finding a cure for breast cancer, decreasing the environmental impact, supporting our military and law enforcement, and supporting young athletes. Therefore, Under Armour developed their "GiveBack" program to increase awareness and leave a lasting impact on the community.

Legal

Under Armour was founded on four core values: reliability, innovation, inspiration, and integrity. They seek to do business with their subcontractors and suppliers that conform to those practices and follow enacted work place processes that comply with their code of conduct. "Under Armour suppliers' and their subcontractors' must deal with their employees in a legal, ethical and equitable manner. Any violation of these laws or the code of conduct may be viewed as a breach of the Manufacturing Agreement and could lead to the termination of the business relationship between Under Armour and the supplier." They have many rules and regulations that deal with forced labor, child labor, harassment or abuse, nondiscrimination, health and safety, wages and benefits, hours of work, overtime compensation, the environment, and legal/ethical business practices. At Under Armour, obeying legality issues is the foundation for their ethical standards.

Competitors

Nike

Nike, Inc. is a major publicly traded company known for their footwear, clothing, sportswear, and equipment line of products. Phil Knight and Bill Bowerman co-founded the company in Beaverton, Oregon in 1964. At this time, the company was known as Blue Ribbon Sports until 1978 when it officially became Nike, Inc. They are the main competitor for Under Armour as they are the world's leading supplier of apparel and athletic shoes, as well as a major manufacturer of sporting equipment. Nike sponsors many high-profile athletes as well as sports teams around the world. Their swoosh logo and "just do it" slogan are highly recognized.

Adidas

Adidas is a publicly traded German company known for their footwear and apparel line. They also produce bags, watches, eyewear, and other clothing and sports related products. Adolf Dassler founded the company in 1948 in Herzogenaurach, Germany. In Europe, they are the largest manufacturer of sportswear, and second in the world next to Nike. Adidas is known for their famous "three stripes" brand logo.

Russell Athletic

Athletic is the main brand of the Russell Brands that specialize in producing uniforms for numerous sports such as football, baseball, basketball, volleyball, and softball. The company has sponsored a number of professional football, baseball, and basketball teams, as well as many college football programs. It was founded in 1902 by Benjamin Russell in Alexander City, Alabama and is currently headquartered in Bowling Green, Kentucky. In 2006, a deal was set up and the gigantic American holding company, Berkshire Hathaway purchased 100% of Russell.

Nike SWOT Analysis

STRENGTHS

-Very professionally competitive organization

-Phil Knight is an excellent leader

-Strong research and development team

-Extensive product line

-High quality products at very low prices

-Globally recognized company & offer their products worldwide

-Offices in 45 different -countries

-Employer of over 30,000 employees

-Very strong marketing team to increase brand familiarity

-Very recognizable logo (Nike Swoosh)

-No physical factories, so production can be moved to a more cost effective location if/when necessary

-Fortune 500 company

WEAKNESSES

-Most income comes from selling into retailers& profits are very dependent on the footwear line

-Company has a history of violations of overtime laws/ minimum wage (sweatshops in foreign countries)

-Poor working conditions (in foreign countries)

-Anti-globalization groups are constantly criticizing them

OPPORTUNITIES

-Product development

-International development (China, India, etc.)

-"greener" product development

-Attempting to reduce controversy that surrounds their production/ trade practices

THREATS

-Buy & sell products in different currencies (costs & margins not stable over long periods)

-Shoe & apparel market is very competitive

-Competitors are creating high quality products that are tapping into their profits

-The current state of the economy

-Keeping up with an eco-friendly reputation

-Threat of counterfeit products

Adidas SWOT Analysis

STRENGTHS

- One of the biggest sponsors of sporting events

-Sponsors the Olympics and many high-profile athletes

-Financially stable organization

-Excellent marketing strategies

-Strong brand with a highly recognizable logo

-Huge online presence

-Globally recognized company

-Very competitive pricing

-Company has been around for over eight decades

-Employer of over 45,000 people

WEAKNESSES

-Somewhat limited product line

-Online customer service is lacking

-Tend to overprice some products (due to innovative technologies)

-High cost structure

-Third party manufacturing dependent

OPPORTUNITIES

-Entering into new markets

-Expanding their customer base

-Product Development

-Diversify their market

-Technological innovations

-Change in consumers lifestyles

-Improving efficiency

-Producing more stylish designs

-Setting up sport camps to increase brand recognition

THREATS

-Very competitive market

-Growing power of customers and suppliers ability to set the price

-Current state of the economy

-New competitors entering into the market who produce products cheaper

-Taxation hikes

-Foreign market competition

-Threat of counterfeit products

Russell Athletics SWOT Analysis

STRENGTHS

- Very strong brand for American sports

-Berkshire Hathaway is the parent company which helps to make it a well stabilized brand (BH is one of the largest conglomerate holding companies in the world)

-Hold contracts with numerous sports teams across the U.S.

-Largest producer of sports uniforms & accessories in the U.S.

-Manufacturing is outsourced outside the U.S. which maintains economies of scale

-Excellent brand visibility

-Strong interactions with university's & high schools

WEAKNESSES

- Difficulties in expanding outside of the U.S. market

-Difficulties sustaining its own retail fronts

-Lacking cost control system

-Distribution system is not the greatest

OPPORTUNITIES

- Product development

-Entering into foreign markets

- Increase marketing upon college campuses

THREATS

- Intense market competition (Nike/Adidas)

-Threat of counterfeit products (knock-off designs)

-Current state of the economy

-Rising cotton prices

-Price hikes from suppliers

Competitive Analysis

Nike

Innovation is the key aspect to Nike's competitive advantage. According to an article posted in Chicago Now, Nike President Charlie Denson said, "Our ability to be authentic, stay connected, and remain distinctive through innovating across all areas of our business is a definitive competitive advantage." The Nike Corporation prides itself in being a leader in their industry because of their innovation, and protecting these ideas with patents. Nike currently has over 3,700 patents to this date, which annihilates Adidas', Russell Athletics, and Under Armour's patent count.

Adidas

Adidas prides itself in innovation as well, but it cannot stack up to the sheer size of Nike. An article in Knoji states, "While technological superiority of its products is the primary factor of market penetration for Adidas, intense and targeted marketing promotion is the second most important ingredient of its recipe for success." A huge source of competitive advantage for Adidas is promoting its products through sports idols and popular celebrities. This marketing strategy generates a reliable source of income and sales for the company. Consumers tend to appreciate the quality of Adidas' products more when they associate the company with influential individuals. Another source of competitive advantage is the matter that Adidas' customer support team is highly involved in the company and they listen to their customer's feedback. This strategy helps them to stay ahead of competitors and to maintain long-term relationships with its customers.

Russell Athletics

Russell Athletics key to its competitive advantage is their intense marketing efforts as sports apparel demand increases. The company completely restructured in 1998 into six strategic business units that transformed the company from a highly manufacturing driven organization to a consumer-oriented marketing corporation. According to an article in Apparel magazine, "Russell Athletics recent push under new ownership is sharpening its brand image through new marketing initiatives, the launch of high-tech apparel products and aggressively pursued licensing agreements with sports leagues and teams." They are intensifying their marketing emphasis in order to let the consumer know exactly what they are made up of. Russell Athletics are marketing offerings that integrate qualities of performance with comfortable attributes, as demand increases for sporting apparel with technical advantages.

Key Ratios (2011)

Under Armour

Nike

Adidas

Profit Margin

7.00

10.00

5.00

Return on Assets

11.00

14.00

6.00

Return on Equity

15.00

22.00

13.00

Current Ratio

3.76

2.85

1.50

Cash Ratio

0.96

0.49

0.21

Inventory Turnover

2.34

4.18

2.82

Days' Sales in Inventory

155.85

87.28

129.43

Receivables Turnover

10.99

6.65

10.12

Days' Sales in Receivables

33.21

54.90

36.07

Net Working Capital

506.10

7339.00

2789.20

Fixed Asset Turnover

9.26

4.25

13.86

Total Asset Turnover

1.60

1.39

1.17

Total Debt Ratio

0.31

0.34

0.53

Debt-to-Equity

0.44

0.52

1.14

Long-term Debt

0.10

0.03

0.16

Times Interest Earned

74.71

0.00

0.00

Cash Coverage

92.00

0.00

0.00

Earnings Per Share

1.05

4.56

4.15

Price Per Share

35.90

96.37

52.59

Key Ratios (2010)

Under Armour

Nike

Adidas

Profit Margin

6.00

10.00

5.00

Return on Assets

10.00

13.00

5.00

Return on Equity

14.00

20.00

12.00

Current Ratio

3.73

3.26

1.51

Cash Ratio

1.37

0.92

0.30

Inventory Turnover

2.48

5.01

2.95

Days' Sales in Inventory

147.42

72.93

123.56

Receivables Turnover

10.43

7.18

9.53

Days' Sales in Receivables

35.00

50.86

38.30

Net Working Capital

406.80

7595.00

2613.30

Fixed Asset Turnover

13.98

4.33

14.02

Total Asset Turnover

1.58

1.32

1.13

Total Debt Ratio

0.26

0.32

0.57

Debt-to-Equity

0.36

0.48

1.30

Long-term Debt

0.02

0.04

0.22

Times Interest Earned

90.75

0.00

0.00

Cash Coverage

116.83

0.00

0.00

Earnings Per Share

0.76

3.94

3.60

Price Per Share

27.42

85.42

51.55

Key Ratios (2009)

Under Armour

Nike

Adidas

Profit Margin

6.00

8.00

2.00

Return on Assets

9.00

11.00

3.00

Return on Equity

12.00

17.00

7.00

Current Ratio

3.73

2.97

1.58

Cash Ratio

1.56

0.70

0.27

Inventory Turnover

2.99

4.49

3.85

Days' Sales in Inventory

122.20

81.38

94.71

Receivables Turnover

10.79

6.65

10.41

Days' Sales in Receivables

33.84

54.90

35.06

Net Working Capital

67.10

6457.00

2363.30

Fixed Asset Turnover

11.75

4.51

14.36

Total Asset Turnover

1.57

1.45

1.17

Total Debt Ratio

0.27

0.34

0.58

Debt-to-Equity

0.36

0.52

1.35

Long-term Debt

0.03

0.05

0.29

Times Interest Earned

164.80

0.00

0.00

Cash Coverage

221.20

0.00

0.00

Earnings Per Share

0.53

3.06

1.68

Price Per Share

13.64

66.07

39.30

Many strengths and weaknesses of Under Armour are analyzed when compared to their top competitors- Nike and Adidas. Under Armour's strengths consist of the current ratio, cash ratio, and receivables turnover. Under Armour has a higher ability to pay back its short term liabilities as compared to Nike and Adidas, which is a critical asset for a company to have because if the economy dramatically worsens in one year, Under Armour will have the ability to avoid debt and pay off its short term liabilities. Similarly, Under Armour has a high cash ratio. Cash is the most liquid asset, so this ratio means that our company has enough cash on hand to pay off their short term liabilities. Under Armour also has a high receivables turnover as compared to their competitors, which indicates that they collect debts at a quicker rate.

Some weaknesses of Under Armour consist of days' sales in inventory and net working capital. Under Armour's inventory sits on the shelf and takes longer to sell than both, Nike's and Adidas'. Under Armour also needs to drastically improve their net working capital. They need to increase the value of their current assets and decrease the value of their current liabilities in order to survive in the long run.

There are also many internal positive and negative trends observed in Under Armour's financial position and operating results. Some positive trends are current ratio, return on assets, net working capital, total debt and long-term debt ratios, and earnings per share. Returns on assets have been steadily increasing over the past three years. Under Armour's current ratio is not only in a better position than their competitors, but it is also holding steady. Along with current ratio, return on assets is a positive trend within the company. For every dollar in assets, the company earns eleven cents of revenue as compared to only nine cents of revenue in 2009. Net working capital also has a positive trend. Although Under Armour's net working capital is weak compared to Nike and Adidas, Under Armour's net working capital has been dramatically increasing over the years. Net working capital is reported as 506.10 in 2011 as compared to 67.10 in 2009, which is an outstanding improvement. The total debt ratio may be low, but it has been increasing at a steady rate. This means that the company has more assets than debt. Another dramatic increase is revealed in earnings per share. Earnings per share nearly doubled from 2009 to 2011. Shareholders receive $1.05 per share rather than $0.53 per share in 2009.

Negative trends of Under Armour are inventory turnover, long-term debt, and times interest earned. Over the years, Under Armour has increased their inventory turnover and days' sales in inventory. Inventory is now sitting on the shelf longer and taking a longer period to sell. Also, by drastically increasing their long-term debt ratio, Under Armour is known as being a riskier company to invest in. Times interest earned is another indicator of Under Armour being a riskier company. Decreasing the times interest earned means that the company has a lesser ability of paying off all of their obligations because they cannot afford to pay off the interest on all of their debt.

In conclusion, Under Armour has many operating strengths and weaknesses as compared to their main competitors, Nike and Adidas. They also have many positive and negative trends that can be identified within the company. Under Armour is well positioned for being a new company, and by implementing product development as the growth strategy that we are proposing in our project should help Under Armour to increase their competitiveness with Nike and Adidas. It is our intent to develop an Under Armour business suit that will increase profit margin, inventory turnover days' sales in inventory, and other financial ratios.

Collaborators

Under Armour has over 5,400 employees and has been working globally and manufacturing products since 2006. Under Armour's products have been mainly manufactured in Dominican Republic, Honduras, Asia, Central and South America and Mexico. All of their manufacturers have a complete evaluation to make sure they are using "quality systems, social compliance, and financial strength," a quality assistance team before they go ahead with choosing which manufacturers they are going to associate with their products. They search for high quality vendors that are capable of completing tasks such as, "procuring fabrics and providing finished products." By finding high quality vendors, it is going to help Under Armour's overall success by decreasing their cost of goods sold.

The Under Armour Company has multiple key relationships dominantly in the United States and Canada. "78% of our net revenues were generated from wholesale distribution . . . Dick's Sporting Goods, Hibbett Sporting Goods, Modell's Sporting Goods, The Sports Authority; hunting and fishing, and Cabela's" (Seekingalpha.com). Also, additional wholesale distribution was comprised of leagues and teams, specialty retailers, and independent sales which includes, ". . . sales to military specialists, fitness specialists, outdoor retailers and other specialty channels." Under Armour launched the footwear campaign in 2008 and distributes it through retailers such as Finish Line and Foot Locker. The campaign also achieved the title of the NFL's official footwear.

Under Armour's key distribution retail chains are critical to their success and future. About 78% of their net revenue comes from these retail chains, without them Under Armour would have to look for smaller and less popular stores to sell its items. Additionally, the NFL contract with Under Amour's footwear will have a significant impact in gaining market share with that respected area.

Growth Strategy

Overview

Under Armour is going to implement product development as their growth strategy, in order to introduce a new line of fashionable business attire that incorporates a moisture removing technology. This quick dry technology helps to extract sweat from the human body and keep the individual cool under extreme circumstances. Our new product line will be known as XtremeWear. It will be introduced nationwide and available to order online or ordered through a representative at a local Under Armour retail outlet.

Goals/Objectives

Goals and objectives of our business attire line include: incorporating our moisture eliminating technology. We want to deliver an affordable line that the general public will be able to purchase. We also want to become a main competitor in the business suit market, in order to diversify our company.

Market Segmentation

Before Under Armour can implement a product into the market, Under Armour must meet four basic standards, including: substantiality, identifiability, measurability, and accessibility. The key is for the criteria to show the different response patterns and to be able to show the marketing mixes and how they interact. After obtaining this information, we can then successfully segment to our target market. We are going to segment our business attire to males between the ages of 22-35 who lead an active lifestyle. We are working hard at introducing this new product line into the market and we believe many of our customers will be ecstatic before and after purchasing their brand new Under Armour XtremeWear suits. We already know that our customers will shop around and consider other brands for business suits, because they want to know that they will be receiving a great product. This is to our advantage, because we will be the first in the industry to incorporate our famous moisture removing technologies into our suits, which will help to keep you cool under extreme circumstances.

Specifically, our customer segment is towards males between the ages of 22-35 who lead an active lifestyle. This way, it targets our loyal professional athletic customers, as well as the average individual who leads a healthy lifestyle. We specialize in one-on-one marketing, by aiming to build long-term relationships with each of our customers. After they have purchased one item from Under Armour, we know they will be coming back for more of our products we have to offer. It is important to create a relationship that will be long lasting with our customers. Each customer is very valuable to our company and they help us to prosper in hard financial times and become a better company.

Targeting

For our business strategy, we are going to target our business attire nationwide to males ranging in ages from 22-35 years old who lead an active lifestyle. The types of people will range from college graduates working in the business world, all the way to schoolteachers. These customers fall in the range of upper- middle class incomes, which are those who make $70,000- $120,000+ annual income. This range will include those with an active lifestyle, including, but not limited to: professional businessmen, upper-level managers, medium-sized business owners, college educated entrepreneurs, as well as professional athletes.

Positioning

Under Armour's position in the eyes of the consumer is a company that provides high quality products at a reasonable price. Consumer's have all of their needs fulfilled through technology that supports and transforms to the body's changes, such as movement, temperature, elasticity, and fit. The new line, XtremeWear will be another high quality product that will be sold at a reasonable price. Middle to upper class consumers will have the financial ability to buy the Under Armour business suits with the result of experiencing the feel of a luxurious suit. Under Armour is viewed as a new, innovative company that provides excellent service to their consumers and stylish products as compared to their competitors. Under Armour's prices are similar to competitors, as well as high quality products. In result, Under Armour is positioned as a lead competitor in their industry.

Internal & Sustainable Growth Rates

Internal growth rate of sales:

2011: 366.2/919.2 = 0.40

2010: 270.0/675.4 = 0.40

2009: 202.2/545.6 = 0.37

Sustainable growth rate of sales:

2011: 0.15 x (1 - 0) = 0.15

2010: 0.14 x (1 - 0) = 0.14

2009: 0.12 x (1 - 0) = 0.12

Actual growth in sales over the past three years:

(1,472.7 - 1,063.9)/1,063.9 = 0.38

Average actual growth rate over the past three years:

[(1,472.7 - 1,063.9/1,063.9) + (1,063.9 - 856.4/856.4)/2] = 0.31

Under Armour experienced consistency in their internal growth rate of sales. In the year 2009, they had an internal growth rate of sales of 37%. This percentage grew to 40% in 2010 and remained the same in the year 2011. This means that Under Armour is able to expand on projects within their company by 40% without requiring external financing. Although the percentage of 40% from 2010 to 2011 did not show any growth, Under Armour proves to be a secure company by showing consistency in their internal growth rate of sales.

Similarly, sustainable growth rate of sales have shown positive results. Sustainable growth rate of sales have experienced a steady increase over the previous three years. The current sustainable growth rate of 15% is the maximum percentage that Under Armour can increase revenue without increasing their financial leverage, such as borrowing additional funds. This percentage is a significant current sustainable growth rate and predicts steady increases. Due to these stable growth rates and the high actual growth rate in sales over the past three years of 38% and average actual growth rate over the past three years of 31%, Under Armour may implement the XtremeWear project without seeking external financing as long as the project does not exceed 40% expansion within the company and 15% of increased revenue.

Strategy Execution

Product

Our line of XtremeWear is designed to incorporate a quick dry technology that helps to extract sweat from the human body and keep the individual cool in a typical business environment. Under Amour's well known fiber- wicking material will be incorporated into the inner lining of our XtremeWear suit jacket and pants. It will be the first business suit to keep you comfortable all day long during your most anxious moments, whereas other suits will cause you to overheat and negatively affect your performance. This Under Armour suit will be very sleek and stylish, and will conform to every curve of your body. Incorporating these technologies will lead to increased comfort and a level of confidence that will help you to excel with your daily routine.

Our newly designed suits will include a jacket and pants, and will be offered in a variety of colors including: black, white, navy blue, brown, charcoal, olive, tan, and taupe. Multiple pattern options will also be available starting with solids, and expanding through pin-stripe, check, and even plaid. All of the suits will also be created using our popular Under Armour light, moisture absorbent material. A discrete Under Armour logo will be stitched to the back collar of the shirt as well as the inside pocket of the pants. Measurements will be attained through your local Under Armour outlet store. Our suits are custom fit, for any height, size, or length. Customers also have the option to order with their measurements online at their convenience. These services will be free of charge to any customer interested in purchasing one of our top of the line business suits. Our suits will range in price starting at $475 to $550.

Process Map

Detailed description of our processes used to make our product (include process map, constraint identification, and lean applicators)

For our line of Under Armour XtremeWear suits, the core components that are incorporated into them are fabric, a zipper for the pants, and buttons for the suit jacket. We will have our suits manufactured in our current facilities in Asia, Central/South America, and Mexico. If we need to manufacture a suit for our high-profiled sponsored athletes, we will manufacture them at our distribution facility in Glen Burnie, Maryland in order to ensure

We will analyze the acknowledgment of our product throughout its product life cycle (PLC), which is comprised of four stages. These four stages are known as the introductory stage, the growth stage, the maturity stage, and the decline stage. We plan to use the product life cycle as a management and marketing apparatus, which will serve as guidance when we go about making marketing related decisions within our organization. Our new line of XtremeWear business attire will be in the introductory stage when we initially launch it into the market. Typically, when a new product is launched in the introductory stage, elevated marketing expenses and continual product modification tends to take place. We will attempt to eliminate this trait because we have a reputation for bringing the highest quality products into the market for our customers. Developing strong product awareness and acquainting our consumers the benefits of our new product is our main focus of bringing our line of XtremeWear business attire into the market during the introductory stage. In order to create an awareness of our product, we do realize this will increase marketing costs. However, we find these costs to be absolutely integral to the success of our new product. We intend to have a relatively short introductory stage because it will signify that our consumers are acquainted with our line of XtremeWear and that it is welcomed in the market. Incorporating the suits in our current retail locations will assist in lowering marketing costs.

For our introductory product we will be offering a one year manufacturing warranty on our suits to guarantee customer satisfaction and ensure the Under Armour brand. With this warranty any unexpected wear will be repaired by Under Armour. We will also be offering a limited-time dry cleaning service to our first time suit purchasing customers. This service will offer our customers up to five free dry cleaning sessions. For this service the customer will bring their suit into an under Armour outlet and we will personally ship it to our dry-cleaning facility.

Promotion

We will begin our marketing beginning with our internet subscribers by sending out a detailed newsletter including the launch of our new suits. This will be an interactive newsletter featuring the look of our suit in the center with detailed links that you are able to click on to get more specific information on our new product launch.

At Under Armour we target those in the community who live an active lifestyle. We aim to show our customers that our products will surpass the competition in uniqueness and top of the line quality. Our business suits will aim for high quality, yet are still going to be affordable in comparison to top designer suits such as Armani or Dolce and Gabbana. We aim to make sure our customers are aware of the products they want to purchase from us will be available in a timely fashion, and that we are going to continue to be one of the premier suppliers of top of the line apparel and accessories.

Our main event where we will be introducing our new Under Armour XtremeWear suits will be at the NFL draft on April 25, 2013 through April 27, 2013where it can be viewed on the ESPN and NFL Network as well as live streaming at NFL.com featuring our sponsored athletes modeling our new product line. The NFL draft is one of the most viewed and anticipated TV sports viewing shows. During the draft our sponsored athletes will be modeling our promotion suits and when announced for what team they will be playing for you will see them modeling our suits. Our social media experts have collaborated with Facebook and twitter in order to promote the newest trends as well as create a heightened awareness of our new product. Facebook and twitter will both be announcing through our social media about our sponsored athletes modeling our new suits. Leading up to the 2013 NFL draft, we will show sneak previews of our new products before its official release via social media. Customers can follow us on our twitter account at @UnderArmour or find us on facebook.com/UnderArmour or visit our official website UA.com. Proceeding the NFL draft, will also have previews of our product in advertisements on YouTube promotions in sports related videos, as well as the sidebar on Google search with advertisements of our new suits for when anyone searches in relation to Under Armour.

We believe that this type of promotion will allow us to reach a vast amount of potential customers, and be able to spread the word of our new line nationwide.

Place

To produce a successful new product, setting reasonable and achievable goals is necessary. We as a team and company have implemented the goals of:

Being financially secure to expand into foreign markets and make an immediate impact

Maintaining an overall company image in regards to quality and goodwill

Have an extremely effective procurement and payment system

Developing multiple and sustaining relationships with suppliers, customers, and distributers

When introducing our new line of business suits into the market, we will be marketing and taking opinion polls in popular cities that accommodate our designated demographics of: active lifestyles, ages 22-35, wealthy, and the desire for a high quality product. During the test run, the product will be promoted in large cities consisting of, but not limited to: Boulder, Colorado, Santé Fe, New Mexico, Boise, Idaho, Santa Cruz, California, Chicago, Illinois, New York City, New York, and Minneapolis-St. Paul, Minnesota. By doing this, Under Armour will capture the feelings of their demographics across a good portion of the United States. Creating a high market exposure will educate consumers of our product and aid in boosting sales.

We will use our current channels of distribution such as Dick's Sporting Goods, Sports Authority, and Sportmart; as well as Eastbay for online sales. Under Armour distributes their products in a variety of different ways, therefore they would be described as using a Hybrid channel. They sell directly to their customers by using their online website. Under Armour also sells to wholesale and sporting goods stores who in turn sell to their customers. Under Armour mainly uses Under Armour's products are considered shopping products, since they are not available at just any store and they use a selective strategy.

Also, we will use our active transportation system, facilities, and suppliers to accommodate all of the new product's requirements. The three main facilities that Under Armour outsources raw materials from are located in Mexico, Latin America, and China. We are doing this because it will be more efficient and cost effective to already use existing systems and this will ultimately drive down the cost of our new product.

Price

Pricing is a very competitive component of our new product when compared to other high quality suits on the market today. If our pricing is not customer friendly and realistically possible to afford then our suits will not be market friendly and will not be a popular item. For us to seize part of the market and take control with getting the public focused on our suits and how they are better than the competition is very important to the success of our product. Our suits prices will be a constant and economical price to match with the market competitions products. With our company expanding its product line this will allow us to create new relationships with new suppliers and help create a "buzz" throughout the market on what is coming in 2014.

With our new product line our loyal customers and our current and future customers will be ranting about it and be very impatient with the awaiting it's highly anticipated release. Our suits will be able to outperform the competition and be unique from what other suits are missing. With our suits being a custom fit to each individual and keeping you "cool" while the competitions doesn't is a main beneficial factor that we offer that we believe will push us to the top. The customers will be astounded after wearing one of our suits and will never want to wear a different brand of suit.

Our new suit incorporating the Under Armour moisture absorbing material is a new technology to our customers, since there are no other business suits of its kind. Its uniqueness will definitely set it apart from the competition and give it an edge that will make it stand out. Our suits are also highly customizable to satisfy the specific needs of the customer. Our suits will come in multiple colors, fits, and design based on what the customer wants. The suit gets the job done by keeping the customer cool in all conditions and all environments. It will be convenient to order online or in a local Under Armour store. Also, since Under Armour is a highly recognized brand, we feel that we will have many current customers looking to expand their current Under Armour wardrobe and be on top of the newest product advancements. When dealing with the customer's price sensitivity regarding the new Under Armour suit, the customer will need to make sure they are financially able to invest in one of our suits, as well as evaluating the market compared to our current economic conditions. We want individuals in the income range of $70,000- $120,000+ annual income to be able to afford our Under Armour suits without having to worry about any financial burdens. Our suits will be durable and resistant to premature wear, therefore giving the customer the best value for their money.

Our pricing strategy for the short-term goal of our company will begin by having competitively priced suits that are affordable to our current target market. Starting out at a base rate of about $560 per suit, customers will also be able to add specifications which will be at an additional cost. To compute the average price per suit, we took a regular Under Armour-like T-shirt, called "CoolMax" and compared it to the actual price of a regular Under Armour brand T-Shirt. The percentage markup that was calculated and equal to be approximately a 60% markup price. Additionally, we took a non-name brand top of the line suit from Men's Warehouse and marked it up by 60%. This strategy concluded the final price of $560 per suit that we will be using to introduce our suits to the market. As for our long-term price strategy, we plan to incorporate discounts to reward our loyal customers and also to attract customers who have not yet heard of our Under Armour suit innovation. We will strive to lower prices once we have increased our market share and we will be able to implement future promotional offers such as buy one suit, get your second at a reduced price. We want to be able to keep on top of the competition, so we will be adjusting our prices in accordance to the competition and current market prices.

Implementation & Control

Conclusions

Appendix A: Financial Statements (2009-2011)

Under Armour (UA)

Nike

Adidas

Russell

Appendix B: Market Price per Share

Appendix C: Works Cited