Under Armour Case - Assignment Example

Under Armour Case Assignment Describe the major components of the company’s strategy in the following areas: a Product Line The company is consistently expanding the product line to avail as many choices as possible to the customers. The company’s product line is centered on its three main divisions; apparel, footwear and accessories. Each of these product lines has a breadth of two to five products. For example, the apparel line has a breadth of three products that differ in comfort, mobility and weather conditions. Also, the company makes footwear for various types of sports such as football, basketball, running and training. The points indicate that the company values a wider product line and also wider product line breadth. b Marketing/Promotion & Brand Management Company data shows that marketing expense increased from $108.9 million in 2009 to $246.5 in 2013. The increase in marketing expenditure is the result of the adoption of a robust marketing and promotion strategies. The company used a variety of promotion strategies. First, the company sought to promote is product visibility in the sports sector by signing outfitting contracts with schools and colleges. By so doing, people can see the products of the company. Second, the company increased its retail shops and also the product presentation at the shops to attract shoppers. Third, the company made extensive use of the media to advertise its products. c Distribution The company uses three main distribution strategies. The company sells in wholesales terms to retailers who then resell the product to the final consumers. Under Armour also engages in direct sales to its consumers. In fact, direct sales accounted for 30.4% of the sales in 2013 (Thompson 244). Finally, the company sells licenses to enable distributors sell its products in areas where it has no presence. Product Licensing gives distributors exclusive rights to sell Under Armour products. Thus, they act on behalf of the company. The strategy has enabled Under Armour to have a presence in areas where it does not have operations. d Product Design and Development High-quality products are responsible for the growth of the company. The company has a product development team that works with third party suppliers to ensure that materials are of high quality. The team also ensures that the manufacturing process adds the required features such as comfort and design (Thompson 246). The marketing team also collects opinions and reviews from customers and potential customers to identify the customer’s perspective towards the product, and how the products can be improved to fit the needs of the target customers. e Sourcing/Manufacturing/QA To ensure quality of their products, Under Armour used raw materials from approved suppliers only. The company examines the production capability of suppliers, the quality of the materials and the production technology before entering into a contract. The aim is to ensure the raw materials are of the desired quality. Moreover, the company outsources its production to manufacturers outside the United States. The manufacturers are constantly assessed by a quality assurance team from Under Armour. The assessment covers the financial position of the manufacturer, social compliance and manufacturing systems. All manufacturers adhere to a strict code of conduct and an assurance of quality (Thompson 247). f Distribution Facilities and Inventory Management Under Armour has three packaging and distribution facilities in United States; 2 in Maryland and one in California. The company uses the centers to pack and release products to wholesalers and directly to customers. Further, customers can access the company’s products online through the company’s website. Online purchases are controlled by a contractor. The company maintains a sizeable amount of inventory to satisfy incoming orders. Also, seasonal items are ordered based on customer bookings to avoid overstocking (Thompson 247). 2 How was UnderArmour able to grow in 15 years to become a significant player in the market for sports apparel, active wear and athletic footwear in the United States? Why do you think they were able to achieve this success? Under Armours growth is a consequence of its robust growth strategy. Expansion of the product line increased the brand presence and by transitivity, sales. The widened variety ensured that the company could satisfy a wider variety of tastes and preferences (237). In addition to widening the product line, the company made products targeting specific and untapped segments. Products specifications that related to the environment of a sportsperson, for example, cold gear and hot gear, were a boost to the company prospects among sportspersons. The company also increased its distribution network in the world. The company opened more retail outlets in the United States. The company also issued product licenses to distributors in areas where it could not reach such as Far East. 3 What do you think is/are the competitive advantage(s) of UnderArmour vs. the competition such as Nike and Adidas? Explain. The main competitive advantage of Under Armour is that it has an efficient research team that design products to suit the emerging needs of people and athletes. The situation implies that athletes can get all the products they desire such as training gear, sports gear, and accessories that are consistent with current trends. For example, athletes can have a cold gear or a hot gear depending on the weather. The innovation and quality assurance also boosts the product prospects of the company. 4 Perform a SWOT analysis on UnderArmour Strengths The company has recorded a steady growth for a period of more than five years. Under Armour has growing product line and product line breadth. The company has been successful in targeted marketing campaigns. The company brands are recognized worldwide and endorsed by institutions and sports clubs. Weaknesses The cost of production is high, and hence the company financial power is extremely low compared to major competitors. The business is risky and vulnerable to an economic crisis, seasons and business cycles. The company has no presence in major developing economies. This limits brand penetration and hence low sales. The company does not own production plants; thus, it is vulnerable to changing relationships between the United States and supplier countries. The company does not have a robust online presence to cope up with the current online marketing trend. Opportunities There are chances of expansion to newer markets if efficient distribution mechanisms are put in place. The company has a good brand name that is known in the sports world. Improving economic conditions means that sales are expected to increase. The company has a chance of expanding its product line to attract more customers. Threats Competition is stiff in the industry. The company faces strong and fierce competitors such as Nike and Adidas. Increasing substitutes in the industry. Vulnerability to economic aspects such as fluctuating interest rates, legislation on taxes and inflation. Using the exhibits 1-3 in the case, answer the following questions: 5 For the company in 2013, what were the: a. Net Revenues $2332051 b. Net Profit and $162330 c. Net Profit % Net profit %= 6.96% 6 How much cash/cash equivalents did the company have on hand at the end of 2013? $347489 7 Of the Net Revenue in 2013, what percentage came from each of the following categories? a Apparel: 75.6% b Footwear: 12.8 c Accessories: 9.3 d Licensing: 2.4 Work cited Thompson, Arthur A. "Under Armour Strategy in 2014: Potent Enough to Win Market Share from Nike and Adidas?" University of Alabama, 2014. 234-256. Print. Read More