The Rise and Fall of Under Armour
A Modern MBA Case Study
This week on Nuggets we cover Morden MBA's latest episode on Under Armour.
Morden Mba is a YouTube channel that produces documentary videos about various business topics such as companies, markets, industries and innovations. The channel has over 200K subscribers and covers cases such as Airbnb, Casper, KFC, Tinder and more.
The Rise and Fall of Under Armour: A Modern MBA Case Study
Under Armour is a well-known sportswear brand that was founded in 1996 by Kevin Plank, a former college football player. The company started with a simple idea: to create a better shirt that could keep athletes cool and dry. Under Armour soon became popular among athletes and expanded into other product categories, such as footwear, accessories, and smart devices.
However, in recent years, Under Armour has faced many challenges, such as slowing growth, declining profitability, increasing competition, changing consumer preferences, and legal troubles. In this newsletter, we will explore how Under Armour rose to fame, what went wrong, and what it can do to recover.
How Under Armour Became a Success Story
Under Armour's success can be attributed to several factors, such as:
- Innovation: Under Armour was one of the first companies to introduce moisture-wicking fabrics and compression garments that enhanced performance and comfort. It also invested in research and development to create new technologies and materials, such as HeatGear, ColdGear, Storm, Charged Cotton, and UA HOVR.
- Marketing: Under Armour leveraged its founder's story and connections to the sports world to build its brand image and credibility. It also signed endorsement deals with prominent athletes, such as Tom Brady, Stephen Curry, Michael Phelps, and Misty Copeland. It also created catchy slogans, such as "Protect This House" and "I Will", that resonated with consumers.
- Distribution: Under Armour expanded its distribution channels from speciality retailers and online platforms to mass-market retailers, such as Dick's Sporting Goods and Kohl's. It also opened its stores and outlets to showcase its products and enhance its brand awareness.
- Diversification: Under Armour diversified its product portfolio to cater to different segments and occasions, such as women's wear, youth wear, casual wear, outdoor wear, and fitness wear. It also ventured into new categories, such as footwear, accessories, and smart devices.
What Went Wrong for Under Armour
Despite its impressive growth and achievements, Under Armour encountered several problems that hindered its performance and reputation, such as:
- Competition: Under Armour faced intense competition from established rivals, such as Nike and Adidas, as well as emerging players, such as Lululemon and Athleta. These competitors offered similar or superior products at lower or comparable prices. They also had stronger brand recognition and loyalty among consumers.
- Consumer Preferences: Under Armour failed to adapt to the changing consumer preferences and trends in the sportswear industry. Consumers increasingly demanded more fashionable and versatile products that could be worn for both sports and leisure. They also preferred more sustainable and ethical products that aligned with their values.
- Quality Issues: Under Armour suffered from quality issues that damaged its reputation and customer satisfaction. Some of its products were reported to be defective or uncomfortable. For example, some of its shoes were criticized for being too heavy or stiff. Some of its smart devices were discontinued or recalled due to technical glitches or security breaches.
- Legal Troubles: Under Armour faced legal troubles that tarnished its image and credibility. The company was accused of accounting fraud by the U.S. Securities and Exchange Commission (SEC) for allegedly inflating its sales figures between 2015 and 2016. The company was also sued by UCLA for breach of contract after it tried to terminate a $280 million sponsorship deal amid the COVID-19 pandemic.
What Can Under Armour Do to Recover
Under Armour is not doomed yet. It still has some strengths and opportunities that it can leverage to turn things around, such as:
- Brand Equity: Under Armour still has strong brand equity that it can capitalize on. It has a loyal fan base of athletes and fitness enthusiasts who appreciate its products and values. It also has a distinctive logo and colour scheme that make it recognizable and memorable.
- Innovation Potential: Under Armour still has the potential to innovate and differentiate itself from its competitors. It can focus on creating more functional and comfortable products that meet the needs and expectations of consumers. It can also explore new technologies and materials that can enhance its products' performance and appeal.
- International Expansion: Under Armour still has room to grow in international markets where it has less penetration and competition. It can target emerging markets with high demand for sportswear, such as China, India, Brazil, and Southeast Asia. It can also tailor its products and marketing strategies to suit the local cultures and preferences.
- Cost Optimization: Under Armour can improve its profitability by optimizing its costs and operations. It can streamline its product portfolio and focus on its core categories. It can also reduce its inventory levels and overhead expenses. It can also renegotiate its contracts with suppliers, retailers, and endorsers.
To conclude, Under Armour is a case study of how a company can rise and fall in the dynamic and competitive sportswear industry. Under Armour has faced many challenges that have affected its growth and profitability. However, it still has some opportunities and advantages that it can use to recover and regain its position.
I hope you enjoyed this newsletter. If you want to watch the full episode of Modern MBA on the rise and fall of Under Armour, you can watch it here
You can also join the discussion on Reddit or follow the Modern MBA subreddit for more case studies and analysis.
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