MKTG 441 Final Paper.docx



Under Armour New Product Analysis:The Introduction of Snowboarding Boots & Helmets828675333375Report Created By:Grafton ElliotNicole LiebmanOwen CoaleSelim DemirkanExecutive SummaryThe report is an analysis on Under Armour’s position in the marketplace and their growing trend to expand their product lines. Due to major sporting events such as the 2014 Sochi Olympics there is a growing trend it the action sports industry. Companies such as Nike have entered the snowboarding industry in hopes of receiving a high growth potential. In order to remain competitive and appeal to this emerging market, Under Armour must develop products to penetrate the snowboarding industry.Under Armour’s development of innovative technologies is what separates them from others in the sporting apparel industry. By developing innovative technologies Under Armour will be able to develop product that will succeed in this new market. Using the trademarked ColdGear technology Under Armour will design helmets and boards to be implemented in the snowboarding market. Nike currently introduced snowboarding boots to gain a favorable position in this new market. Following in the footsteps of their highest competition our company will be able to continue to compete with the highest levels of competition.Our new products will provide customers with a warm, reliable, and trustworthy product that customers have come to expect from Under Armour. In order to gain customer interest, our marketing team will use popular sporting events such as the 2014 Sochi Olympics and Winter X games to market are new product lines. Sporting events such as the Winter X games are non-affiliate organizations that will allow Under Armour to gain great marketing potential.Table of ContentsCompany Background ……………………………………………………………………….4Issues Under Armour Faces…………………………………………………………………5Industry Analysis…………………………………………………………………………….6-7Competitive Environment……………………………………………………………………7Issues Facing Under Armour’s Competitors………………………………………..8Under Armour SWOTT Analysis……………………………………………………………8-10Research Methodology……………………………………………………………………...10-12Analysis of Interview…………...………………………………………………………...12-14Recommended Strategies and Tactics………………………………………………………14-15AppendicesReferencesCompany BackgroundUnder Armour was founded in 1995 by Kevin Plank who played on the University of Maryland’s football team. Plank wanted to create a shirt for his teammates that would not be soaked in sweat after every single practice and game. Plank researched different fabrics to minimize this problem, which led to the revolutionary t-shirt built from microfibers that absorb moisture to keep athlete cool and sweat free. Plank’s company that started in his grandmother’s basements shortly became one of the most successful sports line in the world. “ Under Armour makes the world’s most innovative performance footwear, apparel, and accessories and is a mainstay on the athletic fields, courts, pitches, gyms, and rinks everywhere (Under Armour Performance Sports Company History, 2012)”. Under Armour is a constantly producing innovative product lines to change the sports world. There most famous compression t-shirt helps boosts muscle performance and minimize sweat while keeping the athletes cool and dry.As of today, Under Armour’s growth as a company is expanding rapidly. The company currently sponsors the NFL with their collection of apparel and innovative shirts. Under Armour has opened several stores and factory outlets all over the United State and Canada. Under Armour even opened their first store outside of the United State which is the Scottland store. This company identifies current trends within the sporting market and is able to keep up with the demand for their products. Under Armour is a young company with a lot of financial and market growth in their future. (Under Armour Peformance Sports Company History, 2012)Issues Under Armour FacesIn a free market there are a number of factors that can pose as an issue facing a company such as declining sales, changing economic conditions, changing political or environmental landscape, and negative publicity to name a few.With the Olympics being seen across the entire world, all sorts of sports vendors are in competition to represent their home country and if possible other nations as well. Needless to say, negative publicity about the performance of one of the sports product by an athlete could have minimal or detrimental effects on a company’s image. A prime example of this was portrayed in the speed skating events for American’s wearing Under Armour suits. Shani Davis, a highly anticipated U.S. speed skater, was one of a few U.S. Olympic speed skaters that blamed the new Under Armour uniforms for the poor performance by the athletes (Horovitz, 2014). Negative repercussions of this statement has yet to really show any effect in the market with Under Armour, but for such a negative comment as that to have been made on a global level could really affect the image and credibility of the product.What could be an enormous opportunity for growth for Under Armour could also pose as an issue for the image of the brand. It is apparent that men’s products more so dominate the market than do women’s products in the sporting industry. Under Armour wants to be known for having a broader product line for women than just things that are tight fitting and bright pink so they are creating a marketing campaign to show women new products they have to offer that are not stereotypical. The company also has to work on distribution which is another large hurdle because if they want a larger female customer base than they need to have their items in locations other than male dominated athletic stores (Townsend, 2013).Industry AnalysisWhile examining the snowboarding industry for any particular trends, there are a few that have a noticeable correlation to snowboarding, and winter sports in general. The first and most impactful trend being the winter Olympics, another trend being stricter border regulation between the U.S. and Canada, and the third trend being the overall decline in the U.S. economy.Every four years there is a noticeable increase in winter sports participation. For 2009 the amount of winter sports participants was 7.4 million (SIA, 2013), then for the 2010/2011 year following Vancouver winter Olympics in early 2010 that number grew to almost 8.2 million (SIA, 2013). Then for the next three years those numbers slowly tapered. The winter Olympics greatly increases overall interest in winter sports, and particularly snowboarding in the U.S. because of their dominance in the sport with the likes of icons such as Shaun White. Because of the 2014 winter Olympics in Sochi, right now is the ideal time to profit off of winter sports. Canada is home to numerous quality snowboarding locations and millions of snowboarders, so Canada will be a large targeted market for our product. Unfortunately new regulations have only further separated the U.S. and Canada. It is now required for anyone traveling between the two countries to have a passport (Homeland, Security, 2014) making it more difficult to travel north for a quick snowboarding trip. Canada is an appealing market, and their steadily increasing interest in the NFL creates an interesting possibility for our brand when marketing to them.The overall decline the U.S. economy can negatively affect Under Armour’s success in the industry. Fewer people are taking vacations and planning snowboarding trips. However while there are slightly fewer snowboarding participants this past year, when compared to 2009 (the year just before the Vancouver winter Olympics), sales for snowboarding equipment and apparel have decreased less, so people are still buying the products. Competitive EnvironmentBurton:· Currently the leading Brand in the Industry.· Sets the trends for new styles and designs.· Well designed website and online presence geared towards snowboarders and winter sports enthusiasts specifically (, 2014). Nike:· The largest sports apparel company in the world with the most resources at their disposal.· Operates on a global scale.· A very well designed website that is easy to navigate; however Snowboarding is only a small portion (Nike, Inc., 2014). Smith:· A well-established brand in the industry.· Specializes on helmets and is well trusted.· Offers a wide range of products including low, mid, and high price points.· A well designed website but a minimal online presence (, 2014).Issue Facing Under Armour CompetitorsUnder Armours closest competitors include Nike, Columbia Sportswear, and Adidas. These prestigious companies are driving the sports apparel market. Nike, being the industry leader, is currently facing problems keeping their products up to date and relevant to the market. Constant growth has pushed Nike into new product lines such as Snowboarding and Skiing. These product line extensions require increased labor and research methods. Outsourcing the production of Nikes products have caused excess inventory issues in China. The low demand and excess supply has caused Nike to slow production on products. According to this hindrance has caused Nike to “lower its inventory, enhancing its marketing activities, creating a differentiated product portfolio, and improving the productivity of its store base” (2013, Trefis Team). Other concerns of Nike include the vast growth of Under Armour. Under Armour’s niche marketing has enabled them to dominate the sports apparel market in recent years. This domination has caused Nike to expand its marketing efforts to regain their once dominant market position. According to Stuart Elliott of the New York Times, Nike has increased its marketing budget by 20 percent compared to the previous fiscal year. This marketing jump will hopefully enable Nike to resolve its lowering demand issue. SWOTT AnalysisStrengths:- Innovative brand with many product lines- Strong brand awareness- Loyal Customers- Celebrity Endorsements- Strong marketing team- Quality products Weaknesses:- Has yet to establish products regarding snow recreation-Tends to focus on the apparel of sporting activities rather than equipment- There have been no safety devices produced by Under Armour Opportunities-With the winter Olympics currently happening interest in winter sports should increase-Tom Brady is one of our celebrity endorsers an New England is a big market for winter sports- No Under Armour Product is in the snowboarding niche market Threats-Nikes domination of the market-Research costs of developing unfamiliar products-Burton’s large presence in snowboarding marketTrends- Most teams in NFL wear Under Armour shirts- Cooling shirts- Used by all athletesResearch MethodologyUnder Armour’s extremely fast rise to the top of the sporting apparel industry was no accident. Combining the most innovative and revolutionary products to fit the needs of all age groups, they have been able to have success in almost every target market. Whether you are a child going to your first football practice or going on a hiking trip to celebrate your retirement, Under Armour can fit your apparel needs.Under Armour’s new boots and helmets will expand this ever changing target market. Incorporating segmentation methods such as Demographics, Social/Cultural/Lifestyle, Geographic and Psychographics our team will be able to develop the perfect target market.1. Demographics· Age- Under Armour will target users from the ages of 12 to 44 which would be a segment with much more brand recognition of Under Armour than the older generations. In most case when children/ adults are learning how to snowboard they will rent equipment from the resort. Once the consumer has become more experienced they will then purchase equipment, including boots and helmets.Sex- Both male and female. We will be able to market are boots to both men and women the same way. We can market our Over Armour helmets by using gender specific marketing:Male/ Female- Boots- Under Armour’s newest ColdGear technology “Infrared” will keep your feet warm in the coldest of mountain conditions.Male- Over Armour Helmet- Use a professional snowboarder fresh of the Olympics to advertise new helmet.Female- Use snowboarder Sarka Pancochova, a women’s snowboarder that recently seriously cracked her helmet in the Sochi 2014 Olympics (Branch, 2014).Occupation- Under Armour’s target market will be anyone that is familiar with the snowboarding industry. With snowboarding gear being a high involvement good, we hope to target parents and grandparents that are looking for the perfect gift. College students that have a decent among of free time with also be targeted.Income- The sport of snowboarding, along with lacrosse and hockey is one the most expensive sports. This will cause are marketing efforts to be directed to middle, upper- middle, and upper class citizens. With income levels ranging from 65 to 100 thousand dollars a year these citizens will be able to allocate the capital to purchase our products for a gift.Ethnicity- Under Armour products target all ethnicities. Barriers such as language will not affect the purchase of this universal product.Education- Under Armour does not target a specific educational background. While certain educations could influence the income levels of customers, if you have the money to purchase the product there will be no questions asked.2. Social/ Cultural/ LifestyleUnder Armour Boots and Helmets will be able to fit the needs of an extremely diverse and highly motivated group of customers. Snowboarding has been on a constant uphill rise in the recent years and this has no sign of slowing down. The typical customers of this industry are young, adventurous, healthy individuals that understand how to work hard and play harder. The customers of this industry are also very rarely brand faithful. Looking for the best technologies and prices regardless the brand, this market is perfect for new market entries.3. GeographicUnder Armour’s geographic segmentation is worldwide. The company holds six headquarters, with locations in the US, China, Indonesia, and Canada (). This headquarter separation allows Under Armour to sell their products to customers all around the world. The entry of our new product line extension with first be sold in the United States to “test the waters”, but if success continues the product will be sold globally in the future.4. PsychographicsPsychographics is the study of personality, attitudes, interests, and lifestyle. Under Armour’s target market contains a fairly specialized psychographic segment. While there is an occasional mom or dad that wants to try snowboarding, most of the target market will be adventurous young adults. Analysis of the interviewsWe performed a telephone interview where we would administer our survey that would take nearly fifteen minutes per person. After calling 300 people, there was a 50% incidence rate lowering our potential respondents to 150, then there was a 33% refusal rate narrowing our list of respondents to 100 qualified and willing people. Once we had finished administering our survey to the respondents, we had a lot of raw data that we interpreted with graphs, tables, and charts.In our line graph titled “Who Would Buy?”comparing likelihood to purchase Under Armour, and the frequency of snowboarding/skiing, there showed to be a steady negative relationship which meant that people who were more avid snowboarders/skiers were less likely to purchase the new UA snow equipment. Finding that negative relationship helped us realize that marketing to less avid snow recreation enthusiasts would be much more affective.Our bar chart titled “Mean Scores for Product Ratings,” showed the mean scores for products ratings such as quality, price rating, aesthetics and other product traits demonstrated to us that quality was the highest rated category by consumers for UA products. Being perceived to have high quality by the respondents was great, but it also showed areas where we could use some work such as safety and comfort. UA does not really have a safety focused product so we anticipate that creating the helmets and boots that will enhance safety on the slopes will also boost our safety ratings.We constructed a pie chart titled “Sample Variance” that showed the variations amongst the ratings respondents gave each product trait. Price Rating had the largest variance illustrating that there were a lot of mixed results for how people perceived UA’s pricing for their products. We thought this might happen anyway because of how snow equipment can be pricey and some of these respondents showed to be more price sensitive than others who might be more avid snowboarding/skiers who do not paying a little more. The other traits had smaller variations which means that the other traits were areas where respondents for the most part agreed on.A pivot tabled we constructed titled “Race and Likelihood” was able to shed some light on who would be most willing to purchase our UA snowboard boots and helmets. We were able to conclude that people of Asian descent are least likely to purchase our newly developed products while Hispanics are most likely to purchase our products. What is positive for our results is that most respondents answered “4” for likelihood indicating a strong interest in purchasing our developing UA snow equipment.Also we used a correlation table that helped us determine if there were any relationships amongst the variables worth looking into. Though there were not any strong correlations of .8 or above, there was a positive and moderate relationship between Apparel Brand and Likelihood to purchase. We were able to determine that most people preferred Smith products from that correlation. City and the item purchased also had an impact on each other where people in Aspen preferred Burton products. The strongest correlation was between Apparel Brand purchased and Type of Apparel Purchased where most people buying strictly helmets prefer to go with a Smith product. Also most men buying boots tend to lean in the direction of a Burton product. What looks great for UA is that Women, who make up over 30% of the market, favored the idea of buying boots from UA.Through the use of these tables, charts, and graphs, we were able to turn our raw data from the survey into understandable and helpful numbers that were able to help up further narrow our target market and our potential in the market.Recommended Strategy and TacticsDue to Under Armours strong position within sports market, it makes sense for Under Armour to launch these products for their consumers. Under Armour’s products are trusted by consumers worldwide. By effectively introducing these products to the market, it will give Under Armour a chance to gain market share from markets that the company is not yet established in. The launch of snowboard boots and helmets will reach consumers that Under Armour was not able to reach before. Although Under Armour already has an established name within the sporting industry, it does not have any share in the snowboarding niche market. Consumers, who trust the brand, will be more prone to buy this product when it hits the market. There are low entry-barriers in the snowboarding market that it will be easy for Under Armour to gain market share from their competitors. Due to Under Armours strong brand name recognition and loyal consumers, it will be easy to acquire new customers who are interested in buying snow boots or helmets.The target market for this product is spilt up into two different groups. The groups consist of ages 12-24 and then ages 25-40. Ultimately, the common consumer who is interested in purchasing an Under Armour item is someone who enjoys sports. Consumers who regularly purchase Under Armour will trust the brand and new product that is coming out. Under Armour can reach these consumers via commercials, billboards, in-store promotions and through magazines. A commercial can be ran on TV channels that are mostly watched by consumers who are interested in sports.All in all, snowboarding boots and helmets will be a great product line for Under Armour to introduce. By introducing these products, it will help Under Armour expand their product lines and gain more consumers’ attention. Under Armour will also develop stronger brand recognition by entering this market. Apendices: 3505200457200-1142990-1904992143125References: Under Armour Peformance Sports Company History. (2012). Retrieved Febuary 10, 2014, from: Under Armour: , H. (2014, February 17). Under armour's crisis management on target. Retrieved from: , W. D., Macinnis, D. J., & Pieters, R. (n.d.). Consumer Behavior.Williams, S. (2012, June 12). How High Can Under Armour Fly? Retrieved Febuary 21, 2014, from Daily Finance: "2013 SIA Snow Sports Fact Sheet." SIA Snow Sports Fact Sheet. N.p., n.d. Web. 19 Feb. 2014. <"Homeland Security." Crossing U.S. Borders. N.p., n.d. Web. 20 Feb. 2014. <, Stuart. (2013, April 14).Losing a Step, Nike Seeks to Regain Its Edge. Retrieved from <, M. (2013, February 15). Under armour finds feminine side to go beyong $2 billion. Retrieved from: Trefis Team. (2013, August 21). Key Trends Impacting Nike’s Performance In 2013.Retrieved from < sia snow sports fact sheet. (2013, August). Retrieved from Armourd For Growth; Potential Opportunities For Under Arour. (2013, December 17). Retrieved Febuary 25, 2014, from Forbes: , M. (2011, May 2). No Sweat for Under Armour as Sponsorships, Margins and Profits Grow. Retrieved March 2, 2014, from Seeking Alpha: statitstics. (2012, June 20). Retrieved from:, John. (2014, February 18). The Harder They Fall: Shared Slopes Bigger Toll on Women. Retrieved from: )"Under Armour, Inc. - Who Makes Our Products." Under Armour, Inc. - Who Makes Our Products. N.p., n.d. Web. 27 Feb. 2014. "Snowboard Helmets (43 matches)." Snowboard Helmets at REI. N.p., n.d. Web. 27 Feb. 2014."." . N.p., n.d. Web. 27 Feb. 2014."Features + Video." . N.p., n.d. Web. 27 Feb. 2014. <;."NIKE, Inc.— Inspiration and Innovation for Every Athlete in the World.." NIKE, Inc.— Inspiration and Innovation for Every Athlete in the World.. N.p., n.d. Web. 26 Feb. 2014. <;."Smith Optics." Smith Optics. N.p., n.d. Web. 28 Feb. 2014. <;. ................
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