BrandDunk

Branding the World of Sports

Under Armour too aggressive in footwear?

Posted by ZA on November 3, 2009

Under Armour has been a favorite brand in the sports world for over a decade.  The Under Armour story has been a case study in success; a tiny company that makes good competing against the giants in their space (i.e.- Nike & Adidas).  They’ve grown up a lot from those early days in founder Kevin Plank’s basement; Under Armour is now a publicly traded company (NYSE: UA) with almost a billion dollars in revenue.

One of the characteristics that has made Under Armour successful is their aggressive attitude towards growth.  They quickly diversified from an innovative apparel company into many other facets of the sportswear industry, including athletic footwear.  With each new expansion of their business they seemed to thumb their nose at the established players in that space and set their sights on domination.  Under Armour’s bravado was never more obvious then when they used the tagline “The future is ours” during their 2008 Super Bowl spot.  But these days Under Armour is discovering that being one of the biggest brands in their space, a successful publicly traded company, has some downside.

Under Armour expansion into footwear has not gone as smoothly as planned, which has caused analysts and investors to loudly criticize UA’s moves thereby pummeling their stock price.  This AdAge article says that analysts have characterized Under Armour’s moves as “weak”; particularly the decision by the company to pull back on how aggressively they plan to expand their shoe line.    The negative attention has caused Under Armour’s stock price to drop dramatically to $26 per share from its previous 52-week high of $33 per share (Source: Yahoo Finance).  It also means that Under Armour has some tough sledding ahead if it wants to continue to live up to its aggressive brand image.

Their are still big opportunities available to Under Armour in the athletic footwear category, but they might need to be a little more conservative.  Perhaps they should follow the advice one expert said and grow things a little slower.  Try to develop their niche in the shoe market organically, rather than forcing their way with a big media blitz (i.e.- Super Bowl commercial).  There is a lot of established competition in shoes and Under Armour isn’t entering the space with anything revolutionary like they did in sports apparel with their moisture wicking shirts.  If I was Under Armour I would try to focus on a certain niche in shoes, like: football cleats, workout shoes or casual shoes.  Once successful in that space, then I would grow their product line into the more competitive categories like running shoes.  Sometimes bigger isn’t better, even for big brands like Under Armour.

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Under Armour

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3 Responses to “Under Armour too aggressive in footwear?”

  1. I am not sure if I agree with you or the AdAge piece. I think UA was making a clear declaration to Nike with regards to running shoes and shoes more generally. Openly taking the battle with nike to their corporation foundation (running/footwear). Whats funny is there are still a lot of ‘serious’ runners who won’t wear nikes.

    This is going to get more interesting as it plays out.

    • ZA said

      I agree that Under Armour’s move into footwear is definitely firing a shot across the bow of Nike (& Adidas). Also, agree that Nike is not the shoe of choice among serious runners – although I think Nike will continue to work hard to fix that.

      My point is that Under Armour jumped into the heavily populated running shoe category with two feet before they were ready to compete. Under Armour is the one delaying the release of their subsequent product lines because they aren’t ready for primetime. Because of that I think they are foolish to pour so much money into the space until the development side is ready to release the product they need. They are making statements with marketing that their development side cannot back up.

      I definitely appreciate that Under Armour is attacking that segment because the added competition will make everyone step up their game. It just sounds like Under Armour was too aggressive (i.e.- spent too many marketing dollars), which is now causing investors to hammer them. Long term, their development will catch up and they’ll right the ship. But I would have preferred to see them enter the category with superior product (like they did in apparel), which would become the story they market. Under Armour instead choose to spend to grab market share and now is suffering because their development pipeline wasn’t in place to support that spending.

      ZA

  2. Rico said

    I think the problem that was overshot was that the original product UA came out with was basically underwear. They should have changed the name of their footwear to “battle armor” or “training armor”. When you wear UA shoes, in a mindset you are wearing underwear on your feet. Had they had a name change for their shoes and then gone out with their marketing campaign it might be sticking around longer than the thought of wearing underwear on your feet. I know it is just cosmetic having the UA logo on your feet, but unless their market research proves that it doesn’t matter, I think it does. People like to wear Nike because of the Swoosh or the 3 stripes, etc.

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