Under Armour, Under Performing

Under Armour global strategyBy Gael Marchal, Hardy Drackett, Kali Poza, Robert Bigot, Venkat Srinivasan and Veronica Borrowdale

“We must protect this house” is Under Armour’s rally cry; however, in broadening its brand the company has failed to protect the market it created. Under Armour recently has made several strategic missteps compromising its unique position. Its failure to make difficult trade-offs and CEO Kevin Plank’s inability to articulate a clear strategic focus will ultimately dilute the Under Armour brand and hurt the bottom line.

Since its inception in 1996, Under Armour has been seen as an improbable success story in an extremely developed and competitive industry.  It effectively created the performance apparel market, a blue ocean within the sports apparel industry.  In this market, Under Armour’s focus was centered on compression fit and moisture wicking fabrics, a product that filled the needs of many athletes unhappy with the standard cotton t-shirt.  This blue ocean allowed for tremendous company growth, expanding from $17,000 in sales in 1996 to $856.4 million in revenues in 2009. (2009 Annual Report)  Along with this growth came a very strong and recognizable brand.  In fact, according to a survey of teenagers, Under Armour “is now the #2 brand among teens, behind Nike”.  (Lefton) Naturally, this success has bred imitation and, together with Under Armour’s failure to protect their position, the blue ocean has turned red.

Coach takes risk with men's line

Coach men's lineBy Susannah Ware, Kshitij Shetty, Laura Haslee, Brian Bizjack and Juliana Figueiredo

As Coach Inc. launches its men’s-only shop in New York City, it is taking a big risk by deviating from its established image in affordable women’s luxury goods. However, its efforts seem to be paying off at least in the eyes of one reviewer responding to the new store, “I really like this shop because … it’s perfect for gift-giving purchases. … Who’s gonna argue with a nifty Coach card holder or bucket hat?”[1]

With the launch of a new men’s line, Coach is acknowledging changing market trends within the fashion industry. In the last five years, men’s designer clothing has sold at twice the rate of women’s clothing.[2] Also, sales of men’s designer products are expected to increase by about 35% in developing countries like India and China, which shows the potential for future international growth.[3] There is also research strengthening Coach’s decision to venture into the men’s segment that suggests men plan to spend 3% more on consumer goods than they did in the previous year.[4] In contrast, women intend to spend 1% less than they did previous year.  This year’s Black Friday spending research confirmed an average increase in male spending of $100 compared to female spending.[5]

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