FIRM DELIVERABLE
The Interim Firm Deliverable
Robert Bonelli, Kirsten Brandenburg, Alana Hermann,
Hanul Moon, Connor Smith
IP Team Under Armour
Under Armour’s primary business activities are the production and distribution of activewear, specialized clothing for professional athletes and other people interested in physical
fitness. Under Armour is also involved in footwear and accessories. The brand is known for its
microfiber technology, which is regarded to be superior in performance compared to traditional
active-wear. Under Armour’s apparel department is organized into three sub-divisions referred to
as gearlines. The gearlines consist of HeatGear for hot weather, ColdGear for cold weather, and
AllSeasonGear for anywhere within the two extremes. Under Armour’s footwear department
offers basketball footwear, performance training footwear, running footwear, cleats for a variety
of different sports, and hunting boots. The Under Armour accessories line includes headwear,
bags, and gloves (Under Armour Inc.,10-K, 2013). Expanding into non-athletic apparel, Under
Armour Inc. even manufactures its own clothing line that includes chinos (Under Armour Inc.,
Home Page, 2014).
Net revenues, for the fiscal year ending December 31, 2012, were $1.83 billion. More
than 75% of Under Armour’s revenue comes from their apparel department, bringing in
approximately $1.39 billion. Following behind are the footwear and accessories departments,
bringing in $239 and $166 million, respectively. This equates to a total net sales of $1.79 billion.
With the addition of $44 million in license revenues, total revenue reached 1.83 billion dollars
(Under Armour Inc., 10-K, 2013) (See Appendix A).
One of the forces that is changing the active wear industry is the increase in demand for
women’s sports apparel. This is occurring because women’s purchasing power is increasing as
more women earn college degrees and an increase in stylish workout clothes (Sherman, Business
of Fashion; Wiseman, USA Today). In a trend unimaginable at the founding of Under Armour,
workout clothes have become highly fashionable outside of the gym. As one journalist remarked,
“Sporty moisture-wicking zip-up jackets are layered between wool coats and cashmere sweaters”
(Sherman, Business of Fashion). As a result, Under Armour CEO Kevin Plank himself predicts
that women’s Under Armour merchandise sales will be $1 billion by 2016 and “has the potential
to be larger than the men’s” (Sherman, Business of Fashion).
In order to capture this increasing market, Under Armour has addressed this issue starting
with the “What’s Beautiful” campaign in 2012. Also, there is a corresponding website where
women set athletic goals, and upon completion announce to the world that they’ve accomplished
their goal (Under Armour, Inc., What’s Beautiful, 2014). The empowering video on the “What’s
Beautiful” campaign website, highlights why Under Armour’s favorability among women rose
steadily throughout 2012 to a peak of 49 points in October from 20 points in Month (YouGov
Brand Index, 2012). In addition, Under Armour has added more activewear for women beyond
sports bras and compression shorts. On Under Armour’s website, there are listings for stylish
workout capris with Under Armour’s signature sweat wicking material, as well as a variety of
women’s shirts. These pictures are portrayed in Appendix C below to show recent additions to
Under Armour’s women’s line.
While the active wear industry has addressed its inability to appeal to women, no
activewear producer has addressed one of America’s most rapidly growing demographics, the
obese. According to a study of the US obesity rates, by 2020 almost half of the nation’s
population is estimated to be obese (Patterson, XM Performance) (See Appendix D). Americans
will start to become more health conscious; they will eat healthier and start healthier life habits
such as consistent excercise. Americans have already started to become more health conscious.
This can be seen in healthier food options at resturants like Subway and McDonalds, as well as
popular health shows like The Doctors. The active wear industry will benefit greatly from this
increasing trend because people will need to invest in athletic wear and technology to aid in
weight loss.
Under Armour will reap the benefits from this trend because of its market share in this
industry, estimating around 31% following close behind number one, Nike at 36% (Wikinvest).
If the performance wear industry does well, so will Under Armour. However, Under Armor can
take advantage of this trend with different programs, campaigns, and marketing strategies. A few
things Under Armor can implement are making performance wear more suitable for larger
consumers, market their clothes with benefits of weight loss, offer plans to help consumers get in
shape, and even have a cause-marketing campaign to help fight childhood obesity.
Under Armour’s opportunities to expand have recently increased exponentially because
of Lululemon Athletica’s anti-obese policies. Lululemon deliberately began to remove clothing
for plus-sized women (women that are size 14 or larger) from their customer base by distributing
clothing with a maximum size of only 12. Lululemon’s CEO has gone so far as to say “some
women's bodies just actually don't work”. Sixty-seven percent of American women are plussized and plus-sized women hold 28% of American women’s overall purchasing power (Baker,
Newsweek Global). By tailoring new women-friendly marketing strategies to appeal to plussized women, Under Armour can easily pick up the customers that Lululemon intentionally
pushes away.
Under Armour also has found success against other competitors. “Under Armour took on
Nike and Adidas — and won. Beating out much bigger rivals to partner with the University of
Notre Dame and its athletic teams catapulted the Baltimore-based sports brand onto an elite
playing field, marketing experts say.” These experts spoke out in regards to the endorsement deal
that will be signed, officially recognizing Under Armour and Notre Dame’s relationship.
Although college athletic teams are prime targets for Under Armour, Under Armour has many
other customers, such as professional sports teams and other universities, that they work to
satisfy with their quality of product. (Mirabella, The Baltimore Sun).
Under Armour's global headquarters is located in Baltimore, Maryland. The company’s
European headquarters is located in Amsterdam, and additional offices are located in Colorado,
Hong Kong, China, Jakarta, Indonesia, Toronto, Canada, and Guangzhou, China. The specialty
products found in Under Armour’s products are advanced textile products supplied by third
parties. All products are made by unaffiliated manufacturers from suppliers that are pre-approved
by the firm. Most inputs are manufactured in Asia, Central and South America, and Mexico. All
of these plants have been previously evaluated for quality, compliance, and financial strength
(Under Armour, Inc., The Business of Under Armour, 2013).
Many vendors are chosen because of their ability to process multiple stages involved in
the fabrication process in order to reduce the manufacturing costs of goods. All manufacturers
must enter into agreements to ensure that the plants adhere to a code of conduct and promote safe
social working conditions. A limited number of products are produced in Glen Burnie, Maryland
at Under Armour’s Special Make-up Shop. This facility builds and ships products on tight
deadlines for professional athletes, leagues, and teams (Under Armour, Inc., The Business of
Under Armour, 2014).
References
Baker, Katie J.M. (2013, November). Plus-Sized Women Want Yoga Chic, Too.
NewsweekGlobal Volume 161 (Issue 43). Retrieved from
http://eds.b.ebscohost.com/ehost/detail?sid=e0fe5717-f3c6-4e7e-8167caa06554add1%40sessionmgr198&vid=6&hid=104&bdata=JnNpdGU9ZWhvc3QtbGl2
ZSZzY29wZT1zaXRl#db=bth&AN=92893753
Baltimore Sun. (2014, January). Under Armour Vaults to Bigger Playing Field with Notre Dame,
Naval Academy Deals. Retrieved from http://articles.baltimoresun.com/2014-0125/business/bs-bz-under-armour-notre-dame-20140125_1_armour-ceo-kevin-planknotre-dame-nike
Patterson, Ross (2012, June 27th). Belief is not Enough, XM Performance. Retrieved from
http://www.xmperformance.com/blog/wp-content/uploads/2012/06/Trend-of-obesityamong-US-Adults.png
Squidoo, (2014, January 3rd). The Food We Eat. Retrieved from
http://www.squidoo.com/the-food-we-eat
Sherman, Lauren. (2014, January). For the Activewear Market, There’s No Way Buy Up.
Business of Fashion. Retrieved from
http://www.businessoffashion.com/2014/01/activewear-lululemon-nike-hm-sweatybetty.html
Townsend, Matt. (2013, February). Under Armour Finds Feminine Side to Go Beyond $2
Billion. Bloomberg. Retrieved from http://www.bloomberg.com/news/2013-02-15/underarmour-finds-feminine-side-to-go-beyond-2-billion.html
Under Armour, Inc. (2014). Home Page. Retrieved February 1st, 2014 from
http://www.underarmour.com/shop/us/en?cid=PS%7Cgoogle%7CTrademark%7CUS%7
CIP%7CExact%7Cunder%20armour%7Cx3Bnlx58&gclid=CJ_ArvDtrbwCFStnOgodCg
4ACQ
Under Armour, Inc. (2013). Form 10-K 2013. Retrieved from
http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=9110829-843343534&type=sect&dcn=0001336917-13-000011
Under Armour, Inc. (2014). The Business of Under Armour. Retrieved February 3rd, 2014 from
http://investor.underarmour.com/company/products.cfm
Under Armour, Inc. (2013). What’s Beautiful. [video file]. Retrieved from
http://whatsbeautiful.ua.com
Under Armour, Inc. - Who Makes Our Products. (2014) Retrieved from
http://investor.underarmour.com/company/products.cfm
Under Armour, Inc. (distributor). (2013). What’s Beautiful Collection.
Retrieved February 3rd, 2014 from http://whatsbeautiful.ua.com/gear
The Wall Street Journal. Dow Jones & Company. Under Armour Arrives on Global Stage (2014,
February). Retrieved from
http://online.wsj.com/news/articles/SB10001424127887324866904578515513925827852
?mg=id-wsj
Wikinvest. As of (2014, February 3rd).
Retrieved from http://www.wikinvest.com/stock/Under_Armour_(UA)
Wiseman, Paul (2010, September 2nd). Young, single childless women out-earn male
counter-parts. USA Today. Retrieved February 2nd, 2014 from
http://usatoday30.usatoday.com/money/workplace/2010-09-01-single-women_N.htm
Under Armour, Inc. (distributor). (2013). Women’s UA Bolo Crop Shirt.
Retrieved February 3rd, 2014 from
http://www.underarmour.com/shop/us/en/1243894/pid1243894-786
YouGov Brandindex. (2012, November 10th). Under Armour’s campaign resonates with women.
Retrieved from http://www.brandindex.com/article/under-armour-campaign-resonateswomen-0
Appendix A
Appendix B
Under Armour Impression Scores: women 18-34 and 35+
Appendix C
Appendix D
Appendix E
Obesity Rates
Appendix F
Percentage of Overweight Adults in Different Nations