Under Armour is an American organization that produces footwear, sports, and easygoing clothing. It is the leading designer, advertiser, and merchant of marked execution clothing, footwear, and adornments. Under Armour's headquarters are situated in Baltimore, Maryland. The vision proclamation of Under Armor is to enable competitors all over. The statement of purpose of the organization is to improve all competitors through energy, plan, and the persistent quest for advancement. The four pillars are to influence an extraordinary item, to recount a remarkable story, give the astounding administration, and fabricate an incredible group. At long last, the wills of Under Armor are: act like a typical subject, think like a business visionary, make like a pioneer, and perform like a colleague.
It was set up in 1996 by Kevin Plank, a then 23-year-old past skipper of the University of Maryland football gathering. He at first began the business from his grandmother's flat in Washington, D.C. He put his vitality by offering in the East Coast with just clothing in the capacity compartment of his auto. His first gathering bargain came toward the completion of 1996 with a $17,000 contract. From his grandmother's loft, Plank moved to Baltimore.
Back in the days as a football captain and a player plank was disturbed by the idea of changing a sweat-soaked T-shirt worn under his jersey. However, he noted that the shorts he wore remained dry and this inspired him to make a T-shirt using moisture-wicking synthetic fabric. In the wake of moving on from the University of Maryland, Plank-built up his first model of the shirt, which he provided for his Maryland partners and companions who had gone ahead to play in the NFL. Plank soon consummated the plan of another T-shirt made from microfibers that absorbed dampness and kept players cool, dry, and light. Major contending brands including Nike, Adidas and Reebok would soon emulate Plank's example with their dampness wicking apparel.
Individuals started to pay heed to the brand when the first-page photograph of USA Today highlighted Oakland Raiders quarterback Jeff George wearing an Under Armor deride turtleneck. Following that first page, Under Armor's first significant deal came, when a hardware director from Georgia Tech asked for ten shirts from Plank. This arrangement opened the way to an agreement with NC State, Arizona State, and other Division I football groups. With positive audits from players, word started to spread, and requests began to increase. That same year, Under Armor, propelled with a few new clothing lines including Cold Gear, Turf Gear, All season Gear, and Street Gear. By the finish of 1996, Under Armor had sold 500 Under Armor Heat Gear shirts, producing $17,000 for the company. In 1997, Plank had $100,000 in requests to fill and found a processing plant in Ohio to make the shirts.
Due to its continuous innovation and growth strategy under Armour Company was ranked the 3rd position by share of lifestyle consumer goods in 2014. Also, it was listed among top 50 best sporting business brands worldwide in 2016. And as of 2017 statistics shows that the company has an estimated brand value of 4.4 billion U.S. dollars. This makes Under Armour the third best company after Nike and Adidas despite being the youngest in the sporting market (Anon, 2018).
Competitive advantage
Organizations can encourage a competitive surrounding in three diverse ways. Keeping creation costs low, higher quality generation and accommodation for customers. Under Armour prevails with regards to offering a top-notch item that is superior to the point that a decent number of buyers favor over similar or substitute products. This enables Under Armour to raise costs and appreciate better than expected benefits. Attire is offered in an assortment of styles and fits planned to upgrade solace and portability, manage body temperature and enhance execution paying little respect to climate conditions. These attire items are built with conventional non-execution textures in the realm of games and wellness with execution choices planned and promoted along equip lines. The clothing items are grouped into three rigging lines which incorporate warmth provide frosty apparatus and all season outfit this makes under Armour items to be one of a kind and pull in more steadfast clients when contrasted with its rivals.
Under Armour, marketing strategy gives it an upper hand as compared to other companies that manufacture apparel. By signing in prominent stars in the company sales improve day in day out given that most of the customer are willing to associate themselves with a brand used by a particular actor. Moreover under Armour has focused on motivating their stars to work hard and achieve the goals they do this by helping the sportsmen in sustaining the effort needed to succeed in their careers. The company has an in-house market team that sponsors everything and everyone ready to be sponsored to improve its image among the consumers. It sponsors youth programs both local and televised making its brand more visible among its consumers.
Also under Armour has invested a lot in research and development to oust its competitors it has done these by hiring a team of highly dedicated researchers who work throughout to identify what gap exists in the market and how they can develop their products to suit the rising needs of the consumers. It has enabled UA to survive in this market where products substitutes are high and made it stand out as a global apparel company.
Manufacturing of under Armour products is not done in America it's carried out in Mexico and China where labor is cheap. It enables the company to save on the cost of production which allows them to supply their products at competitive prices and still make a profit to sustain day to day running of the company (Chapman, 2018).
The main reason why Under Armour has been able to gain the competitive advantage is the fact that the company has embraced and integrated technology and innovation in the day to day product development of the company. It has adopted the technology by opening up a lighthouse in Baltimore, Maryland, USA. This UA Lighthouse is a beacon to make the product better, faster, and more efficiently, ultimately solving real problems for athletes and making them better around the world." This lighthouse being fully equipped with 3D scanning and printing machines position under Armour as the best company using technology to manufacture sports attire products. With the continued pursuit of innovation in making and designing of sporting, apparel that makes players cool and dry under Armour is made unique thus gaining more loyal customers and maintaining brand loyalty.
Technology system
In 2011, Under Armour decided that its online store required to be upgraded to market the product better. The company was using Version 4 since 2007, and there was a need to look at the system in so that to redesign its interface to make the brand appear more superior. Also, with the high growth, the company needed to be able to address the scalability of the site which the primary concern was the SQL Server database.
Deciding to go with a custom solution to fit the timeline goals they went with mongoDB. The company decided to go custom because of advantages like the chance to recycle specific functionalities of the former platform and the capability to directly control execution while being able to course correct along the way. It was considered to be an 18-month project and Under Armour was attempting to complete in less than half the time, so they wanted to maintain a high degree of control.
They considered a range of NoSQL systems because of its ability to support multi-datacenter replication and sharding. (Adding more servers to the database is like adding more floors to the same building vs. adding more buildings to the neighborhood. Since SQL scaling requires adding things like CPU RAM or SSD) the organization addressed their calamity recuperation and adaptability needs of the company. MongoDB likewise empowers a flexible information framework for Under Armor enabling the organization to change its store to meet moving requests quickly.
MongoDB can address new information difficulties that are troublesome (if undoubtedly feasible) to achieve well with social databases. MongoDB was relevant in under Armour because it enables one to store large volumes of unstructured data like customers preferences, location, past purchases without limitations. With MongoDB under Armour can add different types of data as needs changes. With mongoDB one can store data without having to define what types of data is being stored in advance (Hawkins, 2010).
MongoDB can load large volumes of data in a cloud-based environment with a lot of flexibility and also can enable the company to divide and share data across multiple servers. It is also easy to develop and release frequent updates without a lot of downtime between versions at a cheaper cost without requiring additional software. Mongo DB technology can give real-time analysis of customer that can enable companies and businesses to harvest data like browsing history, demographics, behaviors, and interactions which are very necessary for product development by companies like Under Armour (Hows,2015).
MongoDB is well equipped with backups and recovery to enable restoration of business operations without data loss and enable companies like under Armour to meet regulatory and compliance requirement (Francia, 2012). This technology has helped Armour to regularly update its system to be able to satisfy changing needs of its business and also the achievement of a more flexible data infrastructure. By use of the technology, Under Armour can carry out its operations smoothly without failure of its database system making it one of the most reputable companies in the apparel market to use this technology. This technology has also enabled under Armour to lay down plans of acquiring health fitness apps such as San Francisco-based MyFitnessPal and European app Endomondo so that to expand its market to social media users which will help analyze consumer patterns in the apparel market to enable design better outfits.
Value chain analysis
The value chain is an accumulation of activities that are performed by a company to create value for its clients. Value Creation makes added benefits which lead to absolute advantage generating high profits for a company. In Michael Porter's Value Chain. A margin is used as the distinction between the aggregate value and the cost of playing out the value exercises.
Inbound coordination is the exercises that are concerned about accepting the materials from providers, lodging these materials, and taking care of them inside the organization. So for Under Armour, the concentration is the materials and textures that make the dampness wicking garments. Under Armour does not manufacture its raw materials it relies on the third party manufactures overseas that must be approved by under Armour before commencing the supply. This manufacturing of its products overseas gives it a cost advantage but makes it vulnerable to macroeconomic factors affecting production in this countries. These suppliers are based in countries like China, Malaysia, Mexico, Taiwan and Vietnam
Operations which helps in organizing from crude materials to completed items. While the more significant part of the means in the model is similarly essential, this is presumably one of the more particular activities that guide with the inbound coordination period of the model. Tasks are exercises identified with the generation of items and administrations. It can be part of more offices depending on the company. With Under Armour headquartered in Baltimore and its European HQ in Amsterdam. All Operations exercises are coordinated out of one of these two workplaces and dispersed down to other local offices.
Outbound logistics is every one of the exercises worried about conveying Under Armor's last items and administration to clients. Garments producers tend to dispatch completed products to either retail chains or office and retail locations that offer stock for them like Sports Authority, Dick's Sporting Goods, and other stores. There are also situations where specific products are distributed through e-commerce only, and they are housing in the production stores up to the time they are delivered to their customers. Competence is essential for supply just as having the inventory to meet the customer demand. The locality of the warehouses plays an important factor and should have an effective way to make delivery possible promptly. The company has distribution channels in California and Maryland which distributes apparels to their wholesale and retail networks in North America. The company also uses other distributors in countries like Canada, New Jersey, and Florida. Outside North America, the company employs other distributors but has even started selling directly to some international markets such as Mexico.
Marketing and sales agents analyze the client's preference and want to make them directly responsible for generating situation responsiveness among the aimed consumer of the corporation. Producing sports apparel, Under Armour is endorsed by well-recognized athletes of all sports and levels. It does endorsement by having famous basketball player Stephen curry being its brand marketer. Since Under Armour leads the market in application of modern technology of active dampness control they try to advertise this benefits to other athletes. Athletes are always looking for advantages to help them perform better. Secondary school understudies who are engaged with high development games will likewise profit by these items. Under Armour has also ventured into social media by buying some well-established social media fitness apps and created fitness community with over 165 million users.
Services like guarantees or client care through the purchasing and offering procedure can demonstrate to a significant degree useful. Keeping your real market aware of items alongside their lifespan and client care can pull in a considerable measure of business. Having a staff promptly accessible to contact assumes a vital part. Having a site that is additionally easy to use, helps clients making it likewise a noteworthy actuality in the administration segment of a company (Dwayne Johnson Project Rock user-friendly site) Under Armour has been able to come up with a subscription box that gives customers 20% discount when they purchase all products in the box. It has also boosted customers experience by opening up stores with digital signage like Chicago store which improve customers shopping experience.
SWOT analysis
Strength
Under Armour's' biggest strength is the fact that they are constantly seeking Innovation. Their main goal is to provide consumers with the best products which lead them to produce higher engineered products for their end customers. Under Armour's products have been proven to be useful and good enough that professional athletes want to wear them which also provides them with excellent marketing power. They have also been successful in positioning itself in movies and shows and video games so much so that movies are asking them to use their brand as opposed to the company having to pay for placement time. Under Armour has an active community involvement with programs like UA Give Back. It helps their public appearance as well as improve brand recognition.
Under Armour can recognize opportunities it has been able to position itself by not only being an apparel company but also by taking other chances of creating a fitness community with over 165 million users. It has also integrated social media users in by acquiring well-established apps that helps it to be among the leading social media promoters. Marketing strategy employed by under Armour proves to be a strength. Marketing agreements with big stars such as Stephen Curry and other athletes have provided a tremendous opportunity for growth of the company.
Constants growth in revenues with revenues totaling up to $1.2 billion in third-quarter revenue has made the share prices to escalate this helps to boost investors' confidence and also woo more investors to invest in this company since they are guaranteed of a return in the amount spent. The management has also been useful in laying down the proper framework of how this growth will be achieved thus providing more hope for the growth of this company in the future. All these factors have made under Armour become a recognized brand, not just a regular brand.
The free endorsement has boosted the growth of under Armour the company does not have to pay athletes millions of dollars to wear their brand they do it by themselves because their products prove to be workable. Also under Armour enjoys high consumer loyalty compared to their competitors their customers are willing to pay the extra cost for them to enjoy their products. Although price fluctuation, Under Armour, is still assured of having a pool of loyal customers who won't change their taste to consume competitors' products.
Weaknesses
Since Under Armour is, for the most part, all sportswear related, the company faces a sort of regularity in deals and sees the most exceptional sales amid football and basketball seasons and the holiday seasons for gifts. These pose a significant danger to the operation of the company making it unable to sustain business all year round. During the low seasons, the company has to struggle with minimal sales which affect the revenues of the company directly.
Under Armour has a heavy reliance on products from suppliers abroad. Most of the raw materials and products are supplied by the third party from other countries who have to be approved by Under Armour. About 70% of their assembling items originate from eight suppliers abandoning them in a powerless position on issues concerning supplier variety. Also, the company price of commodities is always vulnerable to the macroeconomic factors affecting suppliers in this countries thus making them have no control over prices fluctuations of their product.
Unlike its competitors who struggle to strike a balance between their domestic and international markets Under Armour has a fragile presence outside of the United States. It has focused more on gaining North America market share which proved to be effective in earlier years but as the company expanded more this strategy no longer works. This makes them unable to earn more revenue from the international market when business in North America slows down.
Under Armour incurs high shipping cost of transporting their manufactured products from their overseas suppliers to North America. This together with a high investment spending by focusing more on endorsement deals and acquiring nutrition tracking apps at the cost of $710 million has increased its operational value. Without reducing costs like their rivals under Armour risks losing more profits because of their goods being more costly than those of their competitors.
Opportunities
Amid the central quarter in 2017 UA started offering stock at Kohl's. Kohl's CEO announced that the association had been a win with Under Armour conveying a strong execution that beat the business design crosswise over all classes. Under Armour could conceivably keep on growing its incomes by putting its items on much more retailers' racks.
Under Armour has still an enormous potential of exploiting the vast un-tapped international market which can help boost its sales in second-quarter sales in 2017 grew from 57% of the prior year. It still makes up a significantly small portion of the company's total revenues but shows that they have potential to grow. Strong international presence will help boost its growth and profits because of the strong customer base. Expansion into global market will help the company become more financially stable because while one country may have economic problems it others may not have similar issues.
Under Armour should focus more on the variety of sports to help build a broad, broad base of demand which will assist in the achievement of stability of growth. If Under Armour were to concentrate more on games, for example, baseball and furthermore unique games it could diminish the regularity in its deals. Expanding its business to accommodate as many games as possible will mean that the company will be in store throughout the year hence giving their competitors a problematic time overcoming them.
Since most of under Armour products do not have design elements, it should consider adding more design fabrics which will make their products to be more appealing to consumers hence attract more loyal consumers. It will also help the company to add value to their products continually. Also, direct consumer's sale will increase because consumers who are not necessarily sportsmen will start identifying themselves with the brand.
Threats
With the fact that Under Armor products are not too cheap implies that any unfriendly vacillation in the US economy could influence deals extensively. Another US subsidence and the suggestion for the organization could be terrible since their items are not a necessity. There is also the factor that Under Armour's' signature lightweight moisture wicking material has been carefully remade by Nike with their DriFit line of products and the consumers won't see the difference.
Another downside could be that with Under Armour selling a wide variety of products that its brand could get diluted. Based off of performance the brand also includes sports bras, wireless headphones, socks, backpacks and duffle bags. All these products to help generate revenue but over time they could diminish the company's performance-oriented image and competitive advantage.
Fluctuating petroleum cost pose a significant threat to the company since most of the apparel products are manufactured using petroleum products. The price of petroleum has a substantial effect on the cost and revenue of because the cost of oil is unstable and is exposed to the threat by other external forces. Also, low barriers to entry in the apparel industry present danger since the company has no control over who enters or leaves the market. This is contributed by the fact that the entrance in the market does not require a massive amount of capital hence small firms come at their discretion.
Tows analysis
Under Armour should utilize its brand recognition to increase its retail presence. With the level of attention coming from them, Under Armour could use this to partner with other retailers in which they do not have any products to leverage that recognition to close deals. This would, in turn, benefit the retailers to have a recognized brand to sell to bring in more or even a different target market into their store and would also help Under Armour by expanding its presence in the retail area which would also generate more revenues for them.
Also under Armours should utilize its trendy advertising and marketing capability to reach international market where it has experienced lower presence to boost its consumer base and expand its international business. Also, marketing should be used to attack its competitors and help create brand awareness among consumers this will create more loyal customers and assist in boosting sales throughout the year.
Under Armour should take advantage of its substantial innovation and technology to come up with more advanced apparel which will help boost its brand among the consumers. By making use of its social media users, under Armour should analyze consumer behaviors and preferences to enable them to come up with a product that suits their consumer's needs. It will make under Armour to stand out as being the leader in the apparel industry, not the follower making it more appealing to athlete's basketball players and consumers in general.
Summary
Under Armour is an apparel manufacturing company whose headquarters are located in Baltimore North America. It was founded by Kelvin plank in 1996. It has an estimated net worth of 4.4 billion USA dollar and ranks the third best in apparel industry after Nike and Adidas. The company uses mongoDB technology which is relevant for big data and can be used to analyze consumer behavior. Under Armour produces quality products which have made it earn a proper brand recognition among the consumers. It enjoys a large number of social media users from its social media application and health fitness community. The company's primary strengths are trendy advertising and marketing, use of modern technology in innovation which has enhanced its brand recognition making it a leader in the apparel industry. However, it still struggles with lower international presence and high manufacturing cost. Also, the company products can be easily substituted, and there is little barrier to entry by new firms which shrink the market share.
Conclusion
Under Armour was founded by Kelvin plank with the aim of producing quality apparel for the athletes which can help improve their performances. This quality products from Under Armour has made the company to stand out and position itself as the third best company in the apparel industry despite being the youngest compared to its competitors such as Nike and Adidas who have been in the industry for many years.
It has experienced exponential growth in the first few years. However, this growth is not likely to continue because of the competitive business environment and the challenges that face its day to day operations. The company needs to focus more on expanding its international market to widen its customer's base and also to be able to attain financial stability is necessary for the future growth of the company.
Moreover, the company needs to reconsider its endorsement to ensure that this deal drives more athletes and sportsmen into the company making this investment spending fruitful. Furthermore, its marketers need to focus on creating good brand loyalty among consumers to ensure continued sustainability of the company in future. It also necessary for the company to come up with new raw materials for manufacturing their products to avoid petroleum materials whose prices are not stable.
Under Armour has more prospects for growth in future but there is a need for the company to focus more on minimizing the challenge threats and weaknesses. Under Armour should also focus on utilizing the strengths and opportunity available to spur more growth and survive in the competitive apparel industry. Otherwise, it will be ousted by its well-established rivals who struggle to expand their market share both domestically and internationally.
Finally under Armour is best placed to be the leading company in the apparel industry. It is contributed by the fact that this industry has many unexploited markets internationally. If proper strategies are put in place to minimize cost, maximize profits, create brand recognition and continuous innovation of new products which will make under Armour to be the pacesetter in the industry of sports. Then under Armour will grow to be the best company with the best solutions for all the sportsmen. This will, in turn, have an impact on the sales and revenues which will affect the company's overall growth.
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