Analyzing and Evaluating the Strategic Situation of Under Armour
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This assignment focuses on analyzing and evaluating the strategic situation of Under Armour company by considering its overall strategy, responsiveness towards differences among nations, presence only in specific markets along with the key challenges faced by it.
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Running Head: MARKETING AND STRATEGY Marketing and Strategy
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MARKETING AND STRATEGY1 Contents Introduction......................................................................................................................................2 Overall Strategy of The Company...................................................................................................2 Responsiveness of the Company to Differences among Nations....................................................3 Presence of Company in Specific Markets......................................................................................3 Key Challenges Faced by The Company.........................................................................................4 Suggestions relating to Alternative Strategy...................................................................................4 Conclusion.......................................................................................................................................6 References........................................................................................................................................7
MARKETING AND STRATEGY2 Introduction Under Armour Inc. is a company from America which is engaged in the manufacturing of sports and casual apparel, and footwear. The global headquarters of the company is situated in Baltimore, Maryland while the other offices are located in New York City, Mexico City, Hong Kong, Austin, etc. Under Armour was founded in the year 1996 by Kevin Plank. The vision of Under Armour is to inspire others with their performance solutions. They aim at meeting the requirements of the customers such that they cannot imagine living without it (Under Armour, 2019). The focus of this assignment is on analyzing and evaluating the strategic situation of Under Armour company by considering its overall strategy, responsiveness towards differences among nations, presence only in specific markets along with the key challenges faced by it. Overall Strategy of The Company Under Armour is known for its innovative brand image. This is due to the fact that it keeps on bringing innovation in its products since its inception. Differentiation is the generic level strategy which has been adopted by Under Armour. The brand has completely differentiated its products from the strong competitors like Adidas and Nike. This innovation also makes the products of this company superior to that of its competitors. The main focus of the company is to produce the products which can fulfill the needs and requirements of the athletes. One of the most important requirements of the athletes is to remain season proof. This has been taken into consideration by Under Armour by producing the heat gear, cold gear and all season gear such that the athletes are not affected by the effect of season.This type of innovation has assisted in creating a unique identity of the brand and in acquiring a greater market share (Lasserre, 2017). Market penetration, market development, and product development have been adopted as the part of an intensive strategy by Under Armour. As the part of market penetration, the company added more products to its product line by way of selling more to its existing customers. Market development has been assured by the company by expanding its market outside US. This strategy has helped the company in entering new markets and increasing its global revenue and
MARKETING AND STRATEGY3 sales (Zhao, Park and Zhou, 2014). Under Armour has also used the product development strategy by continuously offering innovative products to the customers (Doz, 2017). Responsiveness of the Company to Differences among Nations When a company expands its business in a number of countries, it has to take into account the differences among the nations in order to meet the requirements of the customers in the best possible manner. For this purpose, Under Armour has entered into several strategic partnerships and alliances with smaller corporations such as JR286 in order to gain competitive advantage in the accessories department. Lack of differences is noticed in the products offered by Under Armour in various nations. In other words, Under Armour has adopted a global strategy due to which it has sacrificed the responsiveness towards the local requirements of different customers across the globe. In this way, the company aims at attaining the economies of scale by providing the same products to the customers in each and every market. Global strategy can be defined as an action plan which is adopted by the companies in which they develop and sell a standardized product in different markets or nations (Peng, 2013). The products offered by Under Armour in United States are similar to the products offered by the company in other markets. Moreover, importance is not given by the company to variances in the local preferences (Ghemawat, 2007). Presence of Company in Specific Markets The presence of the Under Armour company is only in specific countries and not in others. The competitors Adidas and Nike have been able to maintain an effective balance between the international and domestic business while Under Armour has set its major focus on its North American business for the purpose of gaining a significant market share. The international sales of the company are also strong in China and Europe. However, the data for the year 2017 highlights that the total sales of Under Armour in NorthernAmerica were 3.8 billion U.S. dollars while the total international sales of the company were just equal to 1.08 billion U.S. dollars (Statista, 2019). After analyzing this data, it can be predicted that the company is not able to perform well in the international market. The international entry has been made by the company after proper analysis of the market but still it has not been able to perform well. Since the company was not able to achieve the desired success from its expansion in the international market, it may be hesitating in further expanding its market in other countries. The other possible
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MARKETING AND STRATEGY4 reasons for the presence of the company in specific markets are struggle against FDI policies in various countries (Hill, 2011). Key Challenges Faced by The Company The key challenges faced by the company include factors related to its expansion in the global markets. Approximately 90% of the sales of the company are made from North America which implies that it is not able to meet its objectives in other regions. This may be due to the fact that there are limited distribution channels of the company abroad (Whittington, 2001). Moreover, the distribution channels of Adidas and Nike are already well- established across the globe which, in turn, makes it difficult for Under Armour to reach a wide range of customers. Another challenge faced by the company is related to the establishment of larger market share in the female market. However, from the beginning, Under Armour is perceived as a male- oriented brand. The focus of the brand is also on football and its ad campaigns are also in a very aggressive tone. This makes it difficult for the brand to achieve success in the female market. The company is also facing challenge in keeping itself successful and organized with accelerated growth. This is due to the fact that it needs ability for anticipating and responding towards the changing preferences of the customers. Strategic challenges are also being faced by the company in product line expansion of its footwear. In the basketball shoe market, the market is dominated by Nike. On the contrary, Under Armour suffers from the lack of experience and marketing/ advertising in basketball division. Suggestions relating to Alternative Strategy As the alternative strategy, Under Armour should make the use of Bowman’s strategic clock which will provide options for the strategic positioning of the brand. It will allow the brand to position its products in a manner such that they attain the most competitive position in the market. Bowman’s strategic clock will provide options relating to the positioning of its products on the basis of two dimensions namely perceived value and price (BPP Learning Media, 2015).
MARKETING AND STRATEGY5 Figure1Bowman's Strategic Clock (Source: BPP Learning Media, 2015) Currently, the company has adopted the differentiation strategy (Position 4). It is suggested that Under Armour should adopt focused differentiation which is position 5. The reason behind recommending focused differentiation strategy is that the company is able to offer innovative products to the company. Therefore, the company can also charge a bit higher for their innovation. Focused differentiation strategy will aim at the positioning of the product at higher price levels, where the purchases will be made by the customers based on the high perceived value (Cavusgil and Knight, 2015). The strategy will further assist the brand in achieving premium pricing by highly targeted segmentation, distribution and promotion. If this will be adopted in a successful manner, the company will be able to attain high profit margins and will be able to sustain in the market for a longer period of time (Echchakoui, 2018).
MARKETING AND STRATEGY6 Conclusion Therefore, it can be concluded that strategy plays an important role in the success of any business. This assignment focused on analyzing and evaluating the strategic situation of Under Armour company by considering its overall strategy, responsiveness towards differences among nations, presence only in specific markets along with the key challenges faced by it. The company has adopted a differentiation strategy and is suggested to shift to focused differentiation for attaining competitive advantage. Focused differentiation strategy will aim at the positioning of the product at higher price levels, where the purchases will be made by the customers based on the high perceived value The company is not responsive to the differences among nations and has adopted a global strategy. The presence of the company is also limited to specific markets. The company is facing challenges in expanding its business in the global markets, establishment of larger market share in the female market and in footwear product line expansion.
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MARKETING AND STRATEGY7 References BPP Learning Media. 2015.CIMA- E3 Strategic Management.BPP Learning Media. Cavusgil, S.T. and Knight, G., 2015. The born global firm: An entrepreneurial and capabilities perspectiveonearlyandrapidinternationalization.JournalofInternationalBusiness Studies,46(1), pp.3-16. Doz,Y.L.,2017.Strategicmanagementinmultinationalcompanies.InInternational Business(pp. 229-248). Routledge. Echchakoui, S., 2018. An analytical model that links customer-perceived value and competitive strategies.Journal of Marketing Analytics,6(4), pp.138-149. Ghemawat, P., 2007.Redefining global strategy: Crossing borders in a world where differences still matter. Harvard Business Press. Hill, C. W. L. 2011.International Business: Competing in the Global Marketplace.McGraw- Hill/ Irwin. Lasserre, P., 2017.Global strategic management. Macmillan International Higher Education. Peng, M.W., 2013.Global strategy. Cengage learning. Statista. 2019.Net revenues of Under Armour worldwide from 2013 to 2017, by geographical region(inmillionU.S.dollars),[Online].Availableat: https://www.statista.com/statistics/518422/global-net-sales-of-under-armour-by-region/ [Accessed on: 7 January 2019]. Under Armour. 2019.About UA,[Online]. Available at:https://about.underarmour.com/about [Accessed on: 7 January 2019]. Whittington, R., 2001.What is strategy-and does it matter?. Cengage Learning EMEA. Zhao, M., Park, S.H. and Zhou, N., 2014. MNC strategy and social adaptation in emerging markets.Journal of International Business Studies,45(7), pp.842-861.