Presented By: Stephen Fishel Kaitlin Arbogast Grafton Elliott.
-
Upload
cassandra-mckinney -
Category
Documents
-
view
217 -
download
0
Transcript of Presented By: Stephen Fishel Kaitlin Arbogast Grafton Elliott.
Presented By:
Stephen Fishel
Kaitlin Arbogast
Grafton Elliott
Marketing Channels Report:Under Armour
• 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
http://www.youtube.com/watch?v=oYCvIr0fWnM
Company Profile Cont…
• Industry is expected to exceed $126 billion by 2015.
• 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…
Manufacture
r
Wholesaler
Retailer
End-
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
Questions?
• http://money.cnn.com/magazines/fortune/fortune500/2013/snapshots/11068.html (Market Watch)
• http://www.underarmour.com/shop/us/en (Under Armour)
• http://finance.yahoo.com/ (Yahoo Finance)
• http://www.reportlinker.com/ci02121/Sport-Clothing-and-Accessories.html (Report Linker)
Sources