Introduction
The purpose of this report is to evaluate Under Armour’s marketing communications and formulate a strategy and a plan for their improvement. Due to the current circumstances, the company’s sales have declined despite their prior steady growth. Moreover, there are indications that its marketing may have become inadequate before the onset of the COVID-19 crisis. While Under Armour was able to gain market share rapidly before with its products and marketing, trends changed while it did not.
As a result, the company now requires a realignment of its priorities to keep growing its market share and overall revenue. To achieve this purpose, a marketing audit will be conducted first, including a comparison with Nike, Under Armour’s most significant competitor in the American market. Based on the findings, suggestions for the brand’s further development will be formulated along with a tactical plan outline.
Background
Under Armour is an apparel manufacturer that specializes in sportswear using the latest technologies. It was founded in 1996 and started by selling an innovative shirt design that wicked sweat from athletes. The product’s quality was recognized, and the firm began growing rapidly, becoming the second-largest sports apparel company in the United States behind Nike (Creswell & Draper, 2020). In the process, it expanded its operations and started producing a range of other sports clothing items. However, Creswell and Draper (2020) claim that since then, the company’s revenue growth has slowed dramatically, leading to a massive stock price drop. The COVID-19 pandemic complicated the company’s issues, leading to a nearly 20% drop in its revenue compared to 2019 (Under Armour, 2020b). The company now requires a method of compensating for the losses and increasing its sales.
Marketing Communications Audit
Marketing Communications Use SWOT
Under Armour has established an excellent reputation for itself that makes it popular with many athletes. Its clothes are purpose-built to enhance one’s performance, and the company’s numerous deals with professional teams and star players reflect this quality. As a result of people recognizing the strengths of Under Armour’s products, the firm has been able to expand substantially and increase its presence in North America. With that said, the company’s focus on performance equipment has led it to purposely ignore the growing popularity of the athleisure trend (Wu, 2019). Creswell and Draper (2020) also mention the company’s failed efforts to expand into sports where it had little expertise. As a result, its products did not appeal to athletes’ needs and underperformed compared to the expectations. Lastly, Under Armour is heavily reliant on the North American market and has a weak international presence.
The first and most promising opportunity for growth would be for the company to expand into athleisure apparel. In doing so, it would attract a large demographic of people who are interested in fashion while also remaining somewhat fitness-conscious. However, in doing so, the business risks alienating its current customers, who value the approach of purpose-building each item of clothing for performance rather than looks. Expanding internationally is a significant opportunity that should be considered due to the strong growth in that aspect prior to 2020 (Rossolio, 2019). Moreover, Thomas (2020) identifies direct sales, both in brand stores and online, to be highly promising. With that said, the COVID-19 pandemic and its effects on people’s willingness and ability to go outdoors and participate in fitness have to be considered. Under Armour’s competition is also problematic, as it can imitate the company’s efforts outside of its current niche.
PESTEL Analysis
- Political: medium importance. Generally, the nation’s political climate is unlikely to affect Under Armour’s business. With that said, Under Armour was among the companies affected by President Trump’s 2019 tariffs on imported shoes (Thomas, 2019). Future tensions with China may also damage the company’s operations.
- Economic: medium importance. Under Armour is a premium brand of apparel, and, in conditions of economic uncertainty, people may opt to choose a cheaper alternative. With that said, its prices are not exorbitant, and people looking for quality are likely to resort to its products regardless.
- Social: high importance. Under Armour’s sales are directly dependent on the popularity of fitness and sports. When they become less popular, or trends such as athleisure emerge, the company’s performance suffers accordingly.
- Technological: high importance. Under Armour relies heavily on staying at the forefront of technological innovation, using unique proprietary fabrics and pioneering ideas such as smart sneakers (Stern, 2016). Without continuing to focus on research, the brand will be unable to compete with companies such as Nike and Adidas.
- Environmental: medium importance. As a manufacturer, Under Armour likely has some adverse effects on the environment. With that said, the company expresses a commitment to reducing its waste production and embracing sustainability (Under Armour, 2020a).
- Legal: medium importance. Under Armour’s business is not subject to any particularly unique legal requirements. However, as McCann (2019) notes, it is being investigated for potential accounting fraud by the US government, an accusation that can harm the business substantially if found to be true.
Nike Marketing Communications SWOT Analysis
Nike’s customer base is massive, and the brand’s name is a household name worldwide. With its broad range of products, it appeals to a diverse customer audience that exhibits a range of attitudes toward fitness. With that said, this broad appeal also means that many of Nike’s products are not as adapted to specific purposes as those of the competition. Nike’s deals are also a substantial source of popularity, with Badenhausen (2020) claiming that it’s Michael Jordan partnership has generated a massive amount of revenue for both parties. With that said, like Under Armour, Nike focuses heavily on the North American region despite its global presence, and the area represents a substantial portion of its sales.
The company’s labor scandals, as described by Mosher (2020), are also notable because they damage the company’s reputation and discourage people from buying its products. Time and effort will need to be dedicated to efforts to restore Nike’s reputation.
Nike’s primary opportunity is in the expansion of its direct sales channels. Russell (2019) claims that the company is already working on bypassing its traditional distribution channel of wholesale retailers. The integration of new technologies, especially smart ones, is another potential avenue for change that can help Nike differentiate itself from the competition and offer customers unique value. Lastly, emerging markets such as China and India are increasingly able to afford Nike’s products, presenting an opportunity to expand into new markets (Kim, 2020). With that said, as a market leader, Nike has to contend with challenges from most or all competitors, which will actively target it and its customer base.
The economic downturn associated with COVID-19 has also reduced the purchasing power of people worldwide, reducing their likelihood of choosing Nike products. Lastly, according to Kim (2016), the popularity of Nike makes it a preferred target for counterfeiters, creating customer doubts. Since these fakes are costed substantially lower than genuine Nike shoes, some people may choose them instead.
Key Customer Groups and Personas
The critical customer group for Under Armour is athletes and people who engage heavily in fitness. They appreciate the quality of the company’s products and the comfort they provide during physical activity. Due to the brand’s original focus on sports predominantly played by men, such as football, many of the customers in this group are likely to be male. They will typically be aged 20-40, and their primary relevant interest will be fitness.
Their income is substantial, and they can afford to invest in specialized sports clothing. Their goal is to continue exercising and playing sports while staying comfortable at all times. They will be unmarried if fitness is a hobby for them, but marriage is possible if they are a professional athlete. They often use social media, and their other hobbies include traveling and engaging in extreme experiences, among others.
The second customer group would be women who play sports or engage in fitness. Per LoRé (2020), prior to 2006, Under Armour had not considered trying to appeal to women’s needs, but its efforts since have expanded this segment of the customer base. Customers in this category will be aged 20-30 and earn considerable income from their jobs. They will be interested in fashion and fitness as a method of improving their appearance. As such, similar to men, their primary interest will be in clothing that is comfortable to wear while exercising, though a fashionable appearance is also crucial. They are likely to be extensive users of social media, especially photo-focused platforms such as Instagram. Their other hobbies are likely to include traveling, visiting various locations and restaurants, and shopping.
Marketing Communications Strategy
TOWS Matrix
Strengths-Opportunities Strategies
The first strategy that uses Under Armour’s strengths to capitalize on its opportunities is international expansion. Shahbahdeh (2020a) highlights how, despite growing sales worldwide, non-North American sales still only constitute a minority of Under Armour’s revenue. However, as competing brands such as Nike and Adidas show, demand for fitness products exists worldwide and can be capitalized on. The second strategy would be to expand Under Armour’s adoption of e-commerce, as in doing so, it can increase its ability to sell directly. With a substantial number of people loyal to the brand, an initial customer base can be established and expanded over time as new buyers discover the brand. The third and final approach would be using the company’s current promotion deals to have athletes promote Under Armour’s athleisure products if it chooses to create them. The endorsement will demonstrate that the clothing is fashionable while remaining comfortable enough for sports use.
Strengths-Threats Strategies
Under Armor’s first option to use its strengths to address threats is to emphasize the convenience of exercising using its apparel. Scheerder, Vehmas, and Helsen (2020) find that the most popular sports are cycling, walking, running, and participating in fitness sessions. All of these activities are less demanding than those emphasized in Under Armour’s lineup, which are typically more conventional sports such as basketball.
To persuade potential buyers to participate in these sports, Under Armour needs to emphasize the comfort its products provide compared to the competition. The second strategy would be to increase athlete involvement in the design process and promote doing so. In doing so, even if the brand designs athleisure clothing, brand dilution can be minimized. The third approach is to emphasize the messaging regarding the company’s innovative products. If it does so, it can differentiate its products from competing imitations by demonstrating that, despite a similar appearance, there are substantial performance differences.
Weaknesses-Opportunities Strategies
Under Armour can attempt to address its difficulties with excessive sports emphasis by creating an athleisure line of clothing. The first step in doing so would be to draw attention to the fashionable aspects of its current items instead of focusing strictly on performance. Another approach would be to adjust communications to appeal to international markets and increase sales there. Sports such as American football are substantially less popular in most regions than in North America (Crothers, 2017), and marketing that emphasizes activities that are more popular there may be more successful.
Lastly, crowdsourcing may be a viable option to improve the brand’s connections with its customers and design superior products. With that said, the Information Resources Management Association (2019) highlights a number of issues that can prevent this approach from being effective, such as a lack of heterogeneity and malicious behaviors. The advantages of doing so are substantial, but the risks have to be taken into consideration before implementation.
Weaknesses-Threats Strategies
As was mentioned above, Under Armour, struggles with an excessive focus of its messaging on athletes that engage in a number of specific sports. As a result, it may not be reaching a substantial section of buyers who are potentially interested in buying its products, a weakness that can be rectified by increasing the scope of its marketing. A second strategy would be to consider expanding into new sports that are popular outside of North America.
According to Creswell and Draper (2020), a portion of Under Armour’s difficulties is related to its moving into sports with limited expertise. By engaging leading athletes worldwide, the company can try to rectify that issue while reinforcing its global popularity. Lastly, to avoid brand dilution, Chernev (2020) suggests switching to a multi-brand strategy, creating a separate athleisure line while maintaining the performance-focused mainline Under Armour products. With that said, this benefit is also associated with drawbacks, as Under Armour’s reputation for quality may not carry over to the new line, creating the need for extensive marketing to attract customers.
Recommended Marketing Communications Strategy
Based on the audit results and the TOWS matrix, this report recommends that Under Armour move to more international markets, primarily through the adoption of e-commerce. To do so, it will use the 4Cs framework proposed by Lauterborn as a digital marketing-focused alternative to the 4Ps model. According to Sponholz, Kotler, and Pfoertsch (2020), it consists of consumer wants and needs, consumers’ costs to satisfy their wants and needs, convenience to buy, and communication. The first element will be apparel that makes exercising comfortable and convenient through both clothings that helps avoid discomfort and track one’s progress via smart features.
Consumers want to achieve some goal through fitness while still enjoying themselves and knowing that they are progressing and Under Armour aims to satisfy both of these goals. The cost to satisfy the wants and needs is moderate, as the company’s offerings are not budget-oriented but also not necessarily premium. However, outside North America, the additional time costs of researching and acquiring the product may be high, creating an image of exclusivity and prestige.
The e-commerce aspect of the proposed expansion will contribute substantially to the “convenience to buy” items in the 4Cs. The customers will not need to search for Under Armour apparel internationally or visit a distant store to obtain the clothing that they would like to purchase. Instead, it will be delivered to them directly once they have made a choice at their leisure and with the ability to compare different brands and products. With that said, Margalina and Lavin (2019) mention multiple barriers to e-commerce adoption in developing countries such as Brazil, which will need to be taken into consideration. Lastly, the increased adoption of digital marketing can help the company communicate with its customers more directly, receiving feedback and sharing information about new products and features with people who are likely to be interested. To that end, the company should increase its usage of social media and engagement with people there.
SMART Goals
The first goal that Under Armour should adopt will be to increase the proportion of its sales made online through the company’s website to 25% within two years. Per Shabahdeh (2020b), 34% of its total sales are currently direct, which includes both online orders and purchases made at the company’s physical outlets. Under the assumption that digital sales constitute less than half of this figure, as they are newer and less heavily emphasized by the company, the goal should be achievable within the timeframe with an aggressive marketing campaign.
The second goal would be to increase the proportion of Under Armour’s international sales in its overall revenue to 50% within the next five years. Shabahdeh (2020a) demonstrates that it has been able to grow from 15.6% in 2016 to 28.4% in 2019, though it should be noted that the company’s North American revenue dropped in that period. It should be possible to retain this trend, particularly with an increased amount of effort put into international marketing.
Marketing Communications Plan
Insights into the Central Proposition
Under Armour’s central proposition will not change under the new marketing plan, as its products will retain the same appeal. The company sells clothing that makes sports safe and comfortable while enabling one to maximize their performance. This proposition primarily appeals to athletes who try to outperform themselves and others and look for every avenue through which they can accomplish this goal. However, it can also be valuable to people who participate in sports more casually. These potential buyers look for comfort and durability in their apparel, both of which Under Armour is highly capable of providing. With that said, it may be lacking compared to the competition in terms of fashion, which will not change under the new approach. For this reason, athletes will be prioritized over casual buyers, as the central proposition is better suited for their needs.
The communications and messaging from Under Armour will also stay consistent, aiming to express the proposition described above. As Palmieri (2020) highlights, the company’s promotional campaigns typically communicate a message of athleticism and pushing one’s limits to succeed, with the recent initiative in question focusing on overcoming difficulties through hard work. Under Armour’s proposed solution to problems that one may encounter is improving oneself until one can overcome the hurdle. To that end, its apparel is intended to let the athlete work on themselves without holding them back, being designed for comfort and performance. Instead of calling attention to itself, Under Armour’s clothing focuses on the athlete wearing it, which is also the reason for its emphasis on star sports players. This degree of focus exceeds that of most of its significant competition, ensuring that the proposition is unique.
The brand’s current story focuses on overcoming adversity on both personal and organizational levels. Palmieri (2020) highlights how the “The Only Way Is Through” campaign refers to Under Armour’s struggles in recent years as well as the troubles that any athlete will encounter in their career. Instead of changing itself to suit the current market and potentially losing its brand identity in the process, the company will choose to retain its prior alignment and serve athletes. As a result, due to the shifting focus of other companies, it will be able to excel as a superior performance brand for the people who treat fitness and sports seriously. As such, the message conveyed will ultimately be one of resilience and reliability combined with continuous innovation and improvement.
Outline Tactical Plan
- Set short-term business objectives
- Grow revenue by 5%
- Increase direct online sale proportion to 20%
- Increase sales outside of North America by 10%
- Increase follower counts on major social media platforms by 20%
- Create the overall strategy
- Refine the message conveyed to the customers
- Select the media that will be the central focus of the promotion
- Design a marketing campaign that conveys the message effectively
- Implement tactical marketing decisions to promote the product
- Increase the amount of paid online advertising for Under Armour’s website
- Adapt the company’s social media strategy to improve engagement
- Create promotional initiatives that appeal to the international market
- Implement measures to collect feedback and crowdsource design proposals
Key Insights into the Value Proposition
The creative process will begin with a collection of ideas and the selection of the one that is most suitable for current purposes. Suggestions will be collected from both company employees and its customers through crowdsourcing on social media. The concept that is selected will then be processed and refined by the creative team. Oversight will be conducted at all levels, up to and including the CEO of the company. The primary appeal of the advertising will be personal, as the core of the brand is self-improvement. Testimonials and endorsements will be the preferred execution styles, as they have been used extensively by the brand in the past. People who purchase Under Armour products seek to achieve a goal, and the examples of people who have succeeded in doing so can help motivate them.
The brand’s tone of voice will be aggressive, expressing confidence and willpower to achieve one’s goals. Ross et al. (2020) provide examples of hashtags such as #IWILL, demonstrating a commitment to a purpose and insistence on staying on the path to it despite the obstacles that may arise. With that said, the brand’s marketing will need to be tailored so that its expressions aim toward positive purposes to reinforce this narrative. Additionally, it will have to appeal to men and women as well as the priorities of both. The strategic benefit of taking the actions listed above is that they will attract a loyal and engaged customer base whose purposes align with those promoted by Under Armour. Additionally, the message is universal and will likely be popular in the nations where the company is planning to increase its sales.
Effectiveness Evaluation
The primary measure through which the success of the marketing plan will be evaluated is its ability to fulfill the objectives listed above. It will be considered satisfactory if the targets set there are completed within the time limits allotted. Otherwise, it will be necessary to identify the aspects of the marketing campaign that have failed to deliver according to expectations. With that said, this investigation will need to be performed regardless of the outcome of the plan with the purpose of gathering insights. As part of the process, a number of specific metrics will be collected for each marketing medium and analyzed for the industry standards for these items. Both reasons why specific channels overperformed and why others failed will need to be taken into account.
The knowledge gained in the analysis process will be incorporated into Under Armour’s knowledge base and used for future advertising. Campaigns will focus on effective media, though not to the exclusion of others. A marketing success may be the result of a short-term trend rather than a successful long-term decision. As such, overreliance on a particular approach may lead to an overall failure if it underperforms (Schlegelmilch and Winer, 2020). Problematic areas will be analyzed for specific issues, which will then be addressed to improve their performance. Under Armour will look to the examples of other companies for this purpose, looking to replicate and adapt the successful strategies. Over time, it will be able to refine its marketing approaches and adjust them to maximize performance without compromising its values.
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Appendix: Print Advert
