Journalism Teaching Note Homework Evaluate the strategy used by Under Armour to enter the basketball shoe market and compete against Nike as well as adidas and Reebok

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Case Teaching Note

Under Armour Enters The Basketball Shoe Market

Case Overview

This case examines Under Armour (UA), the highly successful athletic apparel and footwear company

that was founded in 1996 and is now approaching $1 billion in sales. The case discusses the factors that

have led to the rapid growth of Under Amour, the company’s marketing strategy, and the important role

integrated marketing communications has played in helping build UA into one of the most valuable

brands in the sports industry. A major focus of the case is Under Armour’s efforts to enter the athletic

footwear market. UA has been successful in marketing cleated footwear for football, baseball, softball,

lacrosse and soccer. However, the company’s efforts to enter the mainstream athletic shoe market with

Under Armour launched its new Micro G product line and despite his future potential as an up and

coming player in the league, one can question whether this was an effective way to compete against Nike

and its stable of NBA stars such as Kobe Bryant, LeBron James, Dwayne Wade and Kevin Durant.

This case can be used as a basis for analyzing the factors that have led to the tremendous success

of Under Armour and the important role IMC has played in this process. It can also be used to discuss

issues such as sponsorships, the use of athletes as endorsers and branding, as well as the consumer

Discussion Questions

1. What are the reasons for the success of Under Armour since its founding by Kevin

Plank? What do you view the most important factors that have contributed to the

growth of the company?

There are a number of factors that account for the tremendous success of Under Armour. The

company had a first-mover advantage in the performance apparel market as UA pioneered this

category by developing compression clothing that wicks sweat away from the body and provides

athletes and fitness buffs a way to stay cool and dry during workouts, practices, and games. Under

2. What are the key components of Under Armour’s integrated marketing communications

program? Discuss the role IMC has played in helping build the Under Armour brand.

Under Armour has used a full repertoire of integrated marketing communications tools to build its

brand. The components of the IMC program include:

• Media advertising – UA developed a very effective advertising campaign based on the “Protect

This House” theme. The initial advertising tapped into the raw emotion of football and helped

position UA as a high performance brand for serious athletes as well as those who train for and

• Athlete endorsers – Under Armour has also signed a number of high profile athletes to

endorsement deals including numerous NFL athletes as well as Major League Baseball players.

The company also has endorsement deals with a variety of athletes who compete in individual

sports such as swimmer Michael Phelps, skier Lindsey Vonn, UFC champion Georges St. Pierre,

and freestyle skier Jen Hudak among others.

All of these IMC tools play a very important role in building and maintaining Under Armour’s brand

identity. It is important to note that product quality is a key component to the strong brand image of

UA as IMC programs are more effective when they are promoting a quality product that enjoys a

loyal customer base. However, Under Armour has been able to create a very unique brand image that

resonates well with both men and women who are competitive and confident.

3. Evaluate Under Armour’s decision to enter the mainstream athletic shoe market and compete

in product/market segments such as cross training, running and basketball shoes?

One of the challenges Under Armour has faced since going public in 2005 is that the company must

continue to grow revenue as well as profits to satisfy the demands of the investment community. As

can be seen in Figure 1 of the case, UA has a 33% compounded growth rate over the past 5 years and

is approaching $1 billion in sales. The company has a 70% market share in compression apparel and

now faces strong competition from other sports apparel companies in this market including Nike’s

It is worth noting the success UA has had in cleated footwear such as football, baseball, softball,

soccer and lacrosse. However, these markets are closer to UA’s core business and brand image and

Balance, Saucony and others. A major challenge they will face in the basketball shoe market is the

presence of Nike which has a 95% market share. Nike has dominated the basketball shoe market in

the U.S. for years dating back to when they signed Michael Jordan as an endorser and created the Air

4. Evaluate the strategy used by Under Armour to enter the basketball shoe market and compete

against Nike as well as adidas and Reebok. Discuss the pros and cons of the company’s decision

to use Brandon Jennings as their primary endorser for its new basketball shoe line.

It should be noted that Under Armour is taking a very cautious and measured approach to entering the

basketball shoe market. While the company did debut the shoes at an exclusive media party in

penthouse of hotel in New York, they did not utilize a major public relations campaign for the

launch. The company is working closely with retailers to determine where the shoes will be sold as

UA’s decision to use Jennings as the primary endorser for its new basketball shoe line is interesting

and can be viewed as somewhat risky. The pros of using Jennings is that he appears to be an up and

coming NBA star as he had a very successful rookie season and started out well in his second season

before being injured. UA was also able to sign him to a four year endorsement deal for $2 million

while he was playing in Europe which is relatively low by NBA standards. Note that Reebok recently

paid John Wall $25 million for a 5 year deal which is more than 10 times what UA is spending for

Jennings. Under Armour rarely signs high profile athletes to endorsement deals, as the company does

5. Do you think Under Armour will be successful in entering the basketball shoe market? Why or

why not?

A major challenge UA faces in entering the basketball shoe market is to seen as a legitimate brand in

this space. UA feels that their brand image and strong presence in performance apparel, as well as

cleated footwear, may help them be perceived a viable competitor in this market. A key determinant

of success in this market will be the quality of the UA Micro G line as companies such as Nike,

adidas and Reebok all have quality basketball shoes. Under Armour feels that they have a quality