Presented By: Stephen Fishel Kaitlin Arbogast Grafton Elliott

One of the leaders today in the sporting clothes and accessories industry. Based out of Baltimore, MD. Annual sales around $2.25 billion dollars and continuing to grow. Biggest competitor is Nike (Reebok, Adidas, Puma) Annual revenue of around $25 billion (Yahoo Finance, 2014) Company Profile: Background

Under Armour offers a total of five product lines: Cold Gear Loose Gear Turf Gear All-Season Gear Heat Gear Firm focuses on innovative products Shirts that monitor heart rate Shoes that mimic the human spine Tape-replacing cleat Company Profile Cont…

Industry is expected to exceed $126 billion by Market is driven by a trend toward healthier, more active lifestyles. Older demographics and women becoming more active. Consumers are demanding more versatile wear with wider functionality. Retailers continue producing new styles of sports apparel. Challenges faced by companies include fashion trends, tough competition, and more price-conscious shoppers. Industry is highly fragmented with many brands competing with each other. (Report Linker, 2014) Sporting Apparel Industry

Main Target- Athletes of both genders and all ages. Also cater to every-day person Loose Gear product line is catered to every-day casual wear. Target Market

Today, UA uses a selective distribution strategy (multi-channel design). Sell to both wholesale and retail as well as directly Principal customers: Dick’s Sporting Goods, Eastbay, and Sports Authority. Approximately 90.5% of net revenues are made from wholesale distribution. Stage #1: Need for Channel Design Decision

Selling directly= competitive advantage. E-commerce is growing and becoming the preferred way to shop by consumers. Online retail sales expected to grow from $225.5 billion today to $434.2 billion in 2017 (U.S. E-commerce Sales). Focus more on e-tailing while still selling wholesale. Selling Directly

UA could find a niche provided customers with personalized and customized products. UA must keep up with competitors such as Nike and offer similar options. Nike ID Selling Directly

Change is not necessarily needed but more focus on directly selling to consumer. Overall distribution objective: Be the market share leader in the sporting apparel industry (UA Executive Summary, 2014). Stage #2: Distribution Objectives

Product, price, and promotion must be congruent with overall distribution objective. Raised prices due to the nature of the product. Customized and personalized products cost more to manufacture. Promotion needs to be ramped up to raise awareness to consumers. Congruency in Marketing Mix

Effective distribution= sustainable advantage in online retail market. Customization is a value co-creation method for consumers. Involving customer in production process= attachment to company. Stage #3: Specifying Distribution Tasks

First task: Gathering marketing research on buying habits of target market. Identification of products to customize. Explore customization options. Second Task: Promoting online sales/customization to target market. Promotion in sporting goods stores and other retail locations. Advertising (Internet and TV) Distribution Tasks

Third Task: Maintaining inventory storage Customization option leads to new manufacturing methods and materials. Maintaining inventory=ability to keep up with demand. Fourth and Fifth Tasks: Successfully selling the product to consumers. Fulfilling online orders Staying ahead of the competition. Distribution Tasks

Everything begins with manufacturing plants. UA’s products are primarily manufactured in Asia, Central and South America, and Mexico (Under Armour, 2014) UA channel members MUST have the ability to perform multiple manufacturing steps. Reduces costs “Quick-Turn Special Make-Up” manufacturing shop in Glen Burnie, Maryland. Stage #4: Alternative Channel Structures

Two-level Channel Design: Exclusive Distribution Customers purchase products directly from Under Armour website. Products are shipped using facilitating organization s (ship, plane, truck). Three-level Channel Design: Selective Distribution Flow of products from manufacturer to wholesaler/retailer to end user. Customers are encouraged to but at “Under Armour Brand Houses” Only 5 brand houses on east coast making accessibility limited. Under Armour seeks middle men who can perform a various number of production taks Alternative Channel Structures

Four-level Channel Design: Most profitable channel structure used by Under Armour. Intensive form of distribution. Main benefit= increased level of customer service. Channel Structures Cont… ManufacturerWholesalerRetailerEnd-user

Market Geography: Under Armour has approximately 120 US “Brand Houses” within 49 states. Speciality stores in Maryland, Massachusettes, and Illinois. Factory House locations in 34 states from Maine to California also California. International Locations: Hong Kong, Toronto, and the Netherlands. Market Size: Domestic and International operations. Opportunity to reach customers all over the world making their market size substantially large. Stage #5: Evaluating Variables

Market Density: Areas with higher density need less channel member support I.e. Hong Kong, New York Market Behavior: Refers to customer buying behaviors. Under Armour divides their target market between high level sports teams and individual consumers. Individuals typically buy in small quantities based on sporting season. Team orders are in bulk. Under Armour sponsors many college athletic teams as well as professional teams such as the Baltimore Orioles and Baltimore Ravens. Evaluating Variables

Market Behavior: Repeat purchases come from customers that need different attire according to sporting season. Purchases can be made directly or from a variety of retail locations. Who does the buying? Parents purchase for children College Institutions/athletes Well accomplished athletes Individuals themselves Evaluating Variables

Product Variables: Degree of Standardization: Less need for intermediaries for customizable/personalized products. Company Variables: Most important are size, financial capacity, managerial expertise, and objectives and strategies. Under Armour has high degree of flexibility in choosing channel structures due to their size. Under Armour also has power bases: Reward Coercion Expertise Evaluating Variables

Objectives and strategies: UA needs a higher level of control over products since they are customized. Limits the use of intermediaries. Objectives include promotion. Intermediary Variables: Availability: Custom channel will be needed to provide strong technical expertise as well as custom-designed apparel and footwear. Evaluating Variables

Environmental Variables: Competitive Environment Under Armour must be concerned about horizontal competition with companies such as Nike, Adidas, and Reebok. Intertype competition with intermediaries such as Dick’s Sporting Goods and UA retail brand outlets. Channel design should directly sell to consumer due to efficiency and effectiveness. Competitive edge Technological Environment: Technology allows for customization to exist. Internet provides Under Armour access to organizing and sharing unlimited amounts of information for consumers. Evaluating Variables

Behavioral Variables: Use of legitimate power Under Armour has to be able to control its distribution objectives. The company will have most, if not all, control over distribution when selling customized/personalized products. Evaluating Variables

Best design for individual customized products is a two-level design selling directly to the consumer. Warehousing is necessary to store products before being shipped (similar to Amazon). Bulk orders can be manufactured at facilities such as the one in Glen Burnie, Maryland. Stage #6: Choosing “Best” Channel Structure

Selling directly to consumer, for the most part, does not necessarily require the need for channel members. Current Under Armour distributors have: Sales Strength -Dick’s Sporting Goods Revenue 2013: $6 Billion. (Market Watch) Large Size- Large volumes of sales, established, profitable. Market Coverage Inducements from Under Armour: Strong Product Lines. Ability to provide advertising and promotional support. Stage #7: Selecting Channel Members

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