By 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.