Case Analysis: Underarmour

Theo Johnson

8/8/2020

Marketing 3052

Case Analysis: Underarmour

 

            Under Armour recently surpassed Adidas as the number 2 athletic apparel company.  It was able to surpass Under Armour on the strength of its massively successful “I Wil What I Want” campaign that grew their sales revenue from woman by $140 million on a $16 million dollar marketing spend.  The founder, Robert Plank, would not be complacent with his success with the goal of surpassing Nike to control the number one position in the athletic apparel market.  In a time when viral online marketing has proven successful, most viral online videos do not feature celebrities and major brands have been damaged when their celebrity endorsers face public relations crisis, Robert Plank has to decide on his next marketing campaign.  

            In planning its next marketing campaign, Under Armour has several decisions to make. It needs to decide whether it should it should continue focusing on targeting woman, target men or devise a broader campaign targeting both.  Robert Plank needed to decide whether to continue paying celebrity athletes to be part of their campaign and also whether to market on their traditiona mediums of tv and radio, focus their campaign online or go omni-channel.  Robert Plank would need to get each of these decisions correct if he was going to achieve his ambitious goal of becoming a $10 billion brand.  

            Under Armour found rapid and immediate sales growth targeting their underdeveloped female segment and so building on the momentum made logical sense as the company could not afford to lose ground on other rivals like Lululemon.  Afterall, this segment was highly engaged and offered a high lifetime value if they could turn these recent converts to the brand to loyal return shoppers.  Without high-switching costs, Under Armour would need to continue appealing to the female segment without question.  Under Armour had built its brand; however, appealing to male athletes with a tough gridiron image and couldn’t afford to abandon the segment that still contributed to the largest portion of the company’s sales revenue.  Under Armour’s main competitor, Nike had forged a formula for sports apparel success, paying big time mega-stars like Michael Jordan huge sums of money to wear their product, building brand equity and paying off with greater brand awareness, higher sales prices, larger sales volumes and in the end, higher profits.  These contracts were not cheap with major sneaker endorsement deals costing tens of millions of dollars.  These endorsement deals carried the risk of backfiring if the celebrity athlete became injured and irrelevant or had off field issues resulting in a public relations crisis.  Going with less prominent athletes lowered these advertising costs and could communicate a different message to consumers that was not rooted in elitism, rather on providing a message that their brand is for the weekend warrior, endorsed by weekend warriors like you.

            While Television Ads and Radio were valuable tools for positioning campaigns, raising brand awareness by placing the brand visibility at major sporting events or in commercial breaks where  their sponsored athletes were competing while wearing their apparel, online marketing could be more precisely targeted, carry lower impression costs and offer two-way engagement that drives higher conversion rates.  Viral success provides an even lower cost per impression. 

            For Under Armour to achieve its founder’s goal, it could not afford to focus on just one segment of the market, it had to grow sales revenue with both men and woman actively engaged in athletics (either by participating in recreation sports, having fitness memberships or as fans) able, willing and/or needing to spend money on upper mid-tier performance athletic attire.  Their brand emphasized performance, with science behind the design differentiating their product. Their next campaign could build on their previous ad campaigns success in self-acceptance while appealing to the competitive drive and grit common to both athletes and regular workout warriors of both sexes. To position themselves as a major brand competing with Nike for the number one spot they absolutely have to continue investing in celebrity athletes who align with their unique brand position through intriguing personas, textured backgrounds and reputations for high-integrity and drive (underdogs) that augment their pure athletic ability.  Under Armour cannot under invest in marketing and while it will need to get there incrementally over time, it has to be realistic about the fact that $10 billion in sales revenue will likely require an investment of more than $800 million dollars on an omni-channel marketing campaign featuring celebrity athletes with a core campaign speaking to both sexes, with thematically related off shoots from the campaign tailored for specific target segments.