Mads Mandrup Andersen
Nikolaj Kristensen
Contents
Introduction ..............................................................................................................................3 Problem statement ....................................................................................................................4 Methodology ..............................................................................................................................5 Delimitation ...............................................................................................................................6 Structure of the thesis ..............................................................................................................7 Company profile .......................................................................................................................8 Segmentation ...........................................................................................................................11 Descriptive characteristics...................................................................................................11 Geographic .......................................................................................................................11 Demographic ....................................................................................................................12 Behavioral characteristics ...................................................................................................13 Benefit sought ..................................................................................................................14 Brand loyalty....................................................................................................................18 Further segmentation of different sports .............................................................................21 Football ................................................................................................................................23 CrossFit ................................................................................................................................27 Fitness ..................................................................................................................................31 Running ................................................................................................................................35 Targeting .................................................................................................................................38 DAMP evaluation of the four sports ....................................................................................38 Distinct .............................................................................................................................38 Accessible ........................................................................................................................38 Measurable .......................................................................................................................39 Profitable ..........................................................................................................................39 Targeting approach ..............................................................................................................41 Positioning ...............................................................................................................................42 Brand Identity.......................................................................................................................42 Brand-as-product .............................................................................................................43 Brand-as-organization ......................................................................................................44 Brand-as-person ...............................................................................................................45 Brand-as-symbol ..............................................................................................................45 Core and extended identity...................................................................................................46 Value proposition .................................................................................................................46 Functional benefits of Under Armour’s compression apparel .........................................47 Emotional benefits of Under Armour’s compression apparel .........................................48 Self-expressive benefits of Under Armour’s compression apparel .................................49 Multiple brand identities ......................................................................................................50 Price .....................................................................................................................................52 Choice of communication channels .......................................................................................54 Print advertisement ..............................................................................................................54 Sponsorships ........................................................................................................................55 Word-of-mouth .....................................................................................................................56 Internet .................................................................................................................................57 Television 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Sales channels..........................................................................................................................58 Expected result from implementation of proposed marketing strategy ............................60 Conclusion ...............................................................................................................................62 List of references .....................................................................................................................65 Characters excl. blanks = 119,103
Standard pages (2200 characters excl. blanks) = 67
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Introduction
The increasingly globalized world is causing culture, people and economic activities
to spread across country boarders. Restrictions to international trade are slowly being
removed aided by the hard work of organizations such as the World Trade
Organization. Many companies have taken the opportunity to expand their business
activities to markets outside their domestic borders in a search for new sources of
revenue. In these foreign markets, the multinational companies face customer needs
and values that can be very different from the ones experienced in their home market.
In order to be successful in these new markets, the companies will need to take
appropriate actions.
The two large global companies, Nike and Adidas, have long dominated the
market for sports apparel. With their large distribution networks and broad range of
product offerings they have been able to serve a wide array of consumer segments,
hereby effectively maintaining their leading position in the market. In the recent years
a trend has emerged in the market, where the demand for performance enhancing
sports apparel has increased. This has caused companies with highly specialized
products to attack Nike and Adidas on segments where they have not served the
consumer needs adequately.
In the United States, the American sports apparel company Under Armour has
been very successful in overtaking market shares from the two industry leaders. In
record time the company has become a major player in the North American sports
apparel market. Under Armour has now reached a point where it needs to expand its
business to new markets. Besides expanding into different product categories at home,
it could prove beneficial for the company to increase its international exposure. The
company has recently shown an increasing interest in the European market, which can
be seen through an intensification of its promotional efforts in this region.
Denmark is a country where a lot of people live an active lifestyle. Since
Danes enjoy a high standard of living, Denmark could prove to be a good target
country for the company. The consumers in the Danish market have certain needs and
values that Under Armour must take into consideration in order to gain a successful
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entry. Therefore, this thesis will focus on how the company should approach the
Danish market.
Problem statement
Despite Under Armour’s success in the American market, it is not a very well known
brand in Denmark. Therefore targeting the entire Danish sports apparel market with a
wide range of products would not be feasible. Instead the company should use its line
of compression apparel to target narrower segments of the market. The thesis will
operate under the assumption that there has to be a demand for compression apparel
in order for the market to be of interest to Under Armour. This assumption has been
made since compression apparel is such a large part of the Under Armour business.
The company should examine the characteristics of certain segments in the
market and determine how their needs are best served. By doing this the company can
work towards creating a stronger reputation for its brand in the market.
Therefore, the purpose of this thesis is to uncover the segments of interest to
Under Armour on the Danish compression apparel market and assess how these
segments should be targeted.
The guiding research question for this thesis is:
How does Under Armour use its compression apparel to gain entry to the Danish
market?
The research question will be answered through the use of an STP-analysis of the
Danish market for compression apparel. On the basis of the segmentation part of the
analysis, certain target segments will be chosen for further consideration. These are
the segments the company will need to position its market offering towards.
The sub-questions below are formulated in order to facilitate the process of answering
the overall research question.
- What are the characteristics of the chosen segments on the market?
- What creates value for consumers in these segments?
- How strong is the competition within these segments?
- How should the company position itself to best serve attractive markets?
- How can this position be communicated to the target segments?
- What is the potential market share Under Armour can gain within the segments of
interest?
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Methodology
In order for a company to successfully establish itself on a new market it must
develop a suitable marketing strategy. A marketing strategy can be planned through
the use of an STP-analysis, which goes through the following stages: segmentation,
targeting, and positioning. Segmentation seeks to discover different needs and groups
within the marketplace. In targeting the company selects the group(s) it can satisfy
competitively. The positioning part deals with how the company should position its
market offering so the target segment(s) will recognize the differentiated offering and
image the company provides (Kotler et. al., 2009).
For the segmentation of the compression apparel market data has been
gathered through the use of three qualitative methods: expert interviews, a focus
group interview, and semi-standardized interviews. These explorative methods will
provide information about the overall market situation as well as an in-depth
knowledge about consumers.
According to Deeke experts are people that are particularly competent as
authorities on a certain matter of facts. Interviewing such experts is very useful for
orientation in a new field. In addition, this type of interview can be used to obtain
information that completes the insight obtained from other sources (from: Flick 2009,
p.165). The experts interviewed for this thesis are sports retail managers. Because of
the expertise these retail managers have within the sports apparel market they will
provide vital information about such things as: competitive intensity on the market,
the position of the various brands, and consumer needs and values.
Morgan (1998) defines a focus group as a group interview. A moderator
guides the discussion on a topic between a small group of people. Focus groups can
be used as an explorative method of gathering research data. The interactions between
the group members can produce insights that would not be obvious otherwise. To gain
insight into a new field it can be beneficial to generate date through the use of focus
group interviews. This type of interview was chosen for its ability to produce large
amounts of data in a short period of time.
Semi-standardized interviews have also been conducted with people that posses the
relevant demographic and geographic characteristics, and who practice one of the
sports of interest. These interviews followed the normal structure of semistandardized interviews by using open and theory-driven questions in a dialogue, thus
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applying the principle of “openness” (Flick, 2009, 155-56,160). The open questions
gave the interviewee a chance to answer freely on the basis of general knowledge,
whereas the theory-driven questions encouraged the interviewee to have an opinion
on certain matters. The combination of these two types of questions resulted in
valuable insight into specific consumer needs and values.
Target markets will be selected on the basis of the DAMP-criteria for
successful segmentation. According to Kotler (1984) segments must be distinct,
accessible, measureable, and profitable in order to be attractive. Using these criteria
ensures that all areas of importance are covered when evaluating the attractiveness of
segments.
For the positioning part of the STP-analysis, elements of Aaker’s brand
identity planning model are used. The model relates the success of a brand to a
strategic analysis of the company and its potential customers. The model is used to
analyze a brand’s identity, from which its value proposition is derived. Parts of the
brand identity and value proposition become the company’s position in the market.
This is the position that needs to be communicated to the target markets (Aaker,
1996).
Delimitation
The most important limitation of the study is that it only focuses on Under Armour’s
compression products. This limitation is necessary because analyzing the Danish
sports apparel market with respect to Under Armour’s entire product range would be
too extensive. Compression apparel is Under Armour’s core product and its main
source of revenue. Therefore it is a natural choice to enter the market through this
product.
Even though an analysis of the entire European compression apparel market
may have been preferred, this thesis will limit itself to only consider the Danish
market. The reason for this limitation is obvious constraints such as the geographical
location of the authors and the time and cost it would take to analyze more than one
country.
One other limitation concerns the segmentation of the Danish compression
apparel market. The segmentation of the market will be based entirely on qualitative
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data. This choice has been made because of the time needed to make a valid and
useful quantitative analysis of the market.
A final limitation of the thesis is the amount of data collected. Further data
collection would be needed in order to ensure validity. In this thesis it is assumed that
the interviewees are suitable representatives of consumers in the segments of
consideration.
Structure of the thesis
This thesis will start with an introductory section containing: introduction, problem
statement, methodology, delimitation, and structure. This section sets out the main
purpose of the thesis and the tools that are to be used in the process of answering the
research question. A company profile will then be presented, in order to give the
reader an insight into Under Armour and its current domestic and international
situation. The main part of the thesis is the STP-analysis, which consists of four
sections:
1. Overall segmentation based on descriptive and behavioral characteristics.
2. Analysis of the needs for the target consumer in four different markets –
Football, CrossFit, Fitness and Running.
3. Choice of target markets
4. Positioning of the Under Armour brand towards the target markets
The next section describes different media channels the company can use to
communicate a value proposition to the target markets based on the result of the STPanalysis. This section also provides recommendation on appropriate sales channels for
the products. After this section predictions will be made about Under Armour’s future
position on the market.
Finally, the conclusion of the thesis and conclude on the main findings.
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Company profile
It is difficult to build a business within the sports apparel industry because of the
intense competition and the firmly established companies such as Nike and Adidas.
However, in recent years a new company has started gaining market share in the
North American market. This is the producer of high quality sports apparel products
Under Armour.
“The idea behind Under Armour’s first product – the 0039 compression shirt – was
born on a football field.” (Under Armour annual report, 2011, letter to shareholders).
That is the opening sentence of Kevin Plank’s 2011 letter to his shareholders, and the
sentence truly illustrates the origin of the Under Armour idea. As an American
football player, Kevin Plank eventually grew tired of his cotton shirts and all the
sweat they accumulated. After testing different types of fabric he came up with the
0039 compression shirt. It was a synthetic moisture wicking shirt that did not get
soaked in sweat (sportsillustrated.cnn.com 2009).
In order to get his products out to potential customers he utilized his NFL
connections by giving them free samples to share with teammates. This helped raise
the awareness of the brand as these NFL players got a lot of media attention. Kevin
Plank also targeted college teams by approaching equipment managers (Roberts,
2011). By word-of-mouth and spreading the products on professional and college
teams, the Under Armour brand slowly started growing. The expansion of the brand
has since skyrocketed mainly because of promotion efforts and a broadening of the
product line covering several sports. Today Under Armour offers three different gear
lines, all of which come in three different fits. The gear lines are:
HEATGEAR – The first gear line of Under Armour. It is designed to keep moisture
from the body, which will help the body stay cool, dry and light.
COLDGEAR – This design ensures a core body temperature during cold weather by
circulating heat from certain areas of the body.
ALLSEASONGEAR – It works well in between extremes, both ensuring a core body
temperature and preventing the body from overheating.
All the gear lines come in three different fits: compression (tight), fitted (athletic fit)
and loose (relaxed).
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Under Armour has grown rapidly in terms of revenues. In 1996 Under Armour was a
one-man company based in the humble settings of Kevin Plank’s grandmother’s
basement. Nine years later, in 2005, Under Armour had grown to become a $281
million dollar company with 600 employees. The growth of the company has
increased steadily since then. From 2007 to 2011 the company has more than doubled
in terms of net revenues from $606 million to $1.47 billion and today there are 5,400
Under Armour employees globally (Under Armour annual report, 2011, letter to
shareholders). However, this enormous growth has almost entirely been created in
North America. As of 2011 93,9% of the company’s net revenues came from within
that region of the world. Only 6,1% of net revenues, which translates into a mere
$89.3 million, was generated in foreign countries (Under Armour annual report, 2011,
p. 4). The lack of international presence is also one of the reasons why Under
Armour, despite its growth, is still a very small company compared to Nike and
Adidas who have net revenues of $20.8 and $13.3 billions respectively (Adidas Group
annual report 2011; Nike annual report 2011). Of the $20.8 billion, Nike generates
51% outside of the United States, and European Adidas generates 59% of its $13.3
billion revenue outside of Europe (Adidas Group annual report 2011; Nike annual
report 2011). These numbers clearly show that Under Armour is seriously lacking
behind in terms of generating revenue outside of its home market. Under Armour has
realized this, and believes that its future is dependent on expanding its business
activities outside of North America. Currently, Under Armour sells its products in
Japan through a license agreement with Dome Corporation. This is the foreign market
in which Under Armour has the highest revenue. Recently Under Armour opened a
specialty store in Shanghai to gain information about the Chinese market, which could
be the next big source of revenue. Additionally, Under Armour sells its products on
the European market either through direct operations or through independent
distributors. The main focus has thus far been on the French, Spanish, and English
markets.
In Denmark Under Armour is sold through an independent distributor, the Swedish
fashion distribution company MNO International. It has the rights to sell Under
Armour products on the Scandinavian market. MNO International has partnered with
Mansur Agencies in Denmark, which is run by Finn Mansur. He has the rights to
promote the Under Armour brand and sell the products in Denmark since 2012. The
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brand has been available on the Danish market for some years. However, the agency
previously in charge of handling the Danish market did very little to promote the
brand. Therefore the development of the Under Armour business in Denmark has not
progressed in the same rapid way as in the United States.
Currently Under Armour’s products are mainly found in online retail stores. The only
physical store that the brand is available in is the Swedish-owned chain Stadium,
which has no connection to the operations of Under Armour in Denmark. There are
still no ongoing promotion efforts on the Danish market, and in a recent
correspondence with Finn Mansur it was mentioned that the only planned promotion
will happen at the annual sports fair Sportex. Under Armour recently signed a
sponsorship agreement with the Danish Superliga team FC Nordsjælland
(www.fcn.dk 2012). The sponsorship agreement with FC Nordsjælland is the only
official sponsorship on the Danish market, which is untypical for the Under Armour
brand since this is the way they normally get exposure to new markets. The lack of
physical store presence and sponsorship agreements has resulted in the brand being
practically unknown on the Danish market.
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Segmentation
A segmentation process will be carried out in order to examine which segments are of
interest to Under Armour in the Danish compression apparel market. Philip Kotler et.
al. (2009) define a market segment as a group of customers who share a similar set of
needs and wants. They go on to suggests two groups of variables that can be used for
segmentation of consumer markets. The first group bases its analysis on descriptive
characteristics such as geographic and demographic variables. The latter group
defines segments by examining behavioral characteristics of consumer response to
things such as product use, brand and benefits. Behavioral variables are known to
focus more on the needs the consumers have than the characteristics that describe
them as individuals (Armstrong & Kotler, 2005). The two approaches can be
combined in order to gain a better understanding of the segments. The information
gathered in expert interviews with the sporting goods retailers will be used as a base
for the analysis, along with data from the focus group interview with the students of
Aalborg Sportshøjskole.
Expert interviews where conducted with the following people:
Karsten Spaabæk, retail manager at Sportmaster Fredriksgade in Aarhus
Søren Ebdrup, retail manager at Stadium Aarhus
Thomas Fisker, CEO of Bodyman
Descriptive characteristics
Geographic
In geographic segmentation a market is divided into different geographical units that
are of interest to the company. Søren Ebdrup explains that Under Armour is not large
enough for the broad public to know of the brand. He goes on to say that they will
need to increase their exposure if this is to happen. Because the brand is not very well
known among Danes, Under Armour will need to target geographical regions that are
highly populated. Smaller cities will not have enough people to form a customer base
large enough to be economically attractive to Under Armour. Besides having a higher
number of inhabitants, larger cities tend to attract shoppers from more rural areas to
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their shopping centers. This is especially the case in Denmark since it is such a small
country. This means that people are willing to make the trip to a larger city in order to
get more products to choose from. A city with a larger amount of people will also
make physical advertising more efficient, as more people can be exposed to it in a
shorter period of time.
In order for a city to be of interest to Under Armour a minimum threshold of
50,000 inhabitants has been set. Denmark has nine cities that fulfill this criterion:
City:
Inhabitants
København 1,199,224
Aarhus
249,709
Odense
167,615
Aalborg
103,545
Esbjerg
71,576
Randers
60,656
Kolding
57,197
Horsens
53,807
Vejle
51,341
Total:
2,014,670
The nine cities have a combined total population of 2,014,670 people (Dansk statistic,
2012). Even though the majority of the cities are located in Jylland, the largest
proportion of the people still resides in København. Since Denmark is such a small
country in terms of size, there is no significant difference in the climate between the
cities that needs to be taken into account.
Demographic
Demographic variables help place people into groups based on descriptive
characteristics such as gender, income, age, etc. These variables are often associated
with the needs and wants of the customer (Kotler et. al., 2009). As people get older
their demographic variables will inevitably change, and so will their needs and wants.
Under Armour should focus on the consumers in the market that have already
shown an interest in the brand. Karsten Spaabæk describes the typical customer that
inquires about Under Armour with the following characteristics: They are typically
male, age wise they are in their twenties, and they normally play football, American
Football or go to fitness centers. Therefore the focus should be on a 20 to 29 year old
male who participates in a sport.
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The nine largest cities in Denmark contain the following number of males
from the age of 20 to 29 (Dansk statistik, 2012):
Year:
Inhabitants
Copenhagen
117,363
Aarhus
34,102
Aalborg
17,899
Odense
16,294
Esbjerg
7,118
Randers
5,330
Kolding
5,147
Horsens
5,388
Vejle
5,468
Total:
214,109
The occupation of these 214,109 males can be difficult to determine. In
Denmark people often finish their education later than they do in other countries.
Therefore a large proportion of the males in this age group will still be students. This
means that the income for Danish males between the ages 20 and 29 can vary a lot.
The ones who are taking a university degree will often be on the government student
aid until their late twenties, while others will start working a lot earlier. Danish males
between 20 and 24 have an average monthly income of 22,214.47 DKK. The average
income level increases as the males get older because a higher percentage will have
entered the workforce. Danish males between the age of 25 and 29 have a monthly
income of 30,149.73 DKK (Dansk statistik, 2012).
People at different stages in life need different products or services. Therefore
another interesting demographic characteristic that describes these young males is
their marriage status. According to Dansk Statistik (2012) 94% of them are
unmarried, meaning that a large proportion of their disposable income can be spent on
themself. However, it must be kept in mind that even though the males are unmarried,
they can still have a family that needs to be provided for.
Behavioral characteristics
When segmenting the market on the basis of behavioral characteristics a productrelated method is used. The process sorts people into groups on the basis of their
attitudes towards a product or a brand. A number of different variables can be
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examined such as: benefits sought in a product, frequency of use, and brand loyalty
(Kotler et. al., 2009).
Besides the description of a typical person inquiring about Under Armour
given by Karsten Spaabæk, Line from Stadium explained that, “Under Armour
appeals to people who value functionality.” In order to get a deeper understanding of
the consumers who value functionality a focus group interview was conducted. The
respondents were asked a series of questions about their attitudes towards sports
apparel. All of them attend Aalborg Sportshøjskole, which is a school where the
students live, study and train 24 hours a day. Since they all live in Aalborg, which is
the third largest city in Denmark, they fit into a geographic region of a substantial
size. The students attend the school either to obtain a degree as an elite coach, as
preparation for the entrance examination at the police academy, or to improve their
skills in certain sports. This means that these people are serious about the sport they
do. Therefore they are able to provide great insight into the behavioral characteristics
of the segment. The members of the focus group interview range from the age of 19 to
27, hence making them all fit into the age group that was found to be of interest. The
respondents include five males and one female. Combined they have special
knowledge about various different sports.
It must be kept in mind that the members of the focus group all knew each
other beforehand. Morgan (1988) suggests that this can cause the members not to
express things they take for granted verbally. In addition, only one focus group
interview has been conducted. Therefore the answers from the interview could not be
compared to answers from an additional interview, hereby confirming the validity of
the statements.
Overview of the members of the focus group interview:
Respondent #1: Male, 26 years, Football, Weight Lifting
Respondent #2: Male, 21 years, Power Trembling, Gymnastics
Respondent #3: Male, 27 years, American Football, Weight Lifting
Respondent #4: Female, 24 years, Spinning, Crossfit, Running.
Respondent #5: Male, 19, Weight Lifting
Respondent #6: Male, 22, Power Lifting
Benefit sought
Not everyone seeks the same benefit from using a product. This is also the case in the
market for sports apparel. Through the expert- and focus group interviews it was
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found that three predominant benefits are sought by users of sports apparel: basic
functionality, enhanced functionality, and appearance.
1. Basic functionality:
The benefit this group of people seeks from purchasing sports apparel is to have some
clothes that are suitable to wear while doing sports. They do not value the difference
between the products available in the market. The clothes simply have to be different
from the ones they wear in their everyday life. Therefore they do not care about the
brand of the product, or which additional attributes it might possess. Søren Ebdrup
recounts that this type of consumer will choose to purchase two products from private
label brands instead of buying one product from a well-known brand. This indicates
that consumers in this segment base their choice of product on price. Therefore these
consumers will often end up purchasing a private label product from a sports retail
chain. These products are produced for the chain, which makes them sellable at a
lower price, than the products that must pass through a larger supply chain to reach
the end consumer. These consumers will rarely buy products from established brands
unless they are offered a discount.
Under Armour is a brand that delivers high quality products with functional
attributes. As these benefits do not create value for the members of this segment, it is
not of interest to Under Armour.
2. Enhanced functionality:
This group of consumers cares a lot about the functionality of the products they
purchase. An increase in the functionality usually results in an increase in terms of
price as well. However, the benefit of increased product functionality is something the
members of this segment are willing to spend additional money on. Karsten Spaabæk
describes this phenomenon through the following quote: “People who work out a lot
are also willing to pay for the products…they know that the products they need are
expensive.” The members of the category are generally people who are more serious
about their sport than the average user of sports apparel. They wish to own products
they believe will provide them with the best chance of enhancing their performance.
They consider a marginal increase in performance as something worth paying extra
for. This means that they will look to purchase the best products available on the
market. Luckily for these consumers price and quality often go hand in hand.
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In the focus group interview there were clear indications that some members
seek the benefit of enhanced functionality benefit in sports apparel.
R3: “I have the best things in each product category. I do not prefer one specific
brand.” The quote shows that the respondent is willing to spend money on products
that will enhance his performance. It is also worth noting that the respondent is
concerned about performance instead of which brand the product is from. Therefore
he could end up wearing Nike shoes, Adidas shorts and an Under Armour T-shirt, if
those brands were the best in each respective category.
R2: “If I got 2 % less strain on my ankles or knees then I’d think it was worth the
extra money.” Through the quote it can be seen that the consumer is willing to spend
money on a marginal increase in functionality. If a new product is found to be better
than the one currently owned, the consumer could also be willing to make a purchase
even though the current product did not need to be replaced.
3. Appearance:
The consumers within this category are mainly concerned about the brand name of the
products they purchase. The benefit they seek from buying sports apparel is to
communicate certain values. These values are communicated through the brands they
wear, and can involve variables such as wealth, lifestyle, personality, etc. The
consumers in this category are very aware of which brands are available in the
market, and what they represent respectively. They tend to be very loyal towards the
brands they choose. Looking good is very important for this segment. They will often
try to imitate the people they look up to. The members of this category will purchase
a product based on the brand name it possess, even though a seemingly similar
product from a less known brand is available at a cheaper price. This means that the
consumers within this segment are not very price sensitive. Karsten Spaabæk
illustrates this by using the brand Fusion as an example: “I have customers that ask
about Fusion. Fusion has created an elitist image, as being a brand for the triathlete
and the good runner. The product itself is no better than Under Armour or Nike’s, but
it is still considered to be cooler. They have created a name for themselves.” This
quote supports the notion that the consumers make their product choice based on the
brand name. Instead of asking the shop assistant for advice on different products, they
only seek the products of a single brand.
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The responses from the focus group interview showed that most of the
respondents value their appearance highly.
R5: “When I buy shorts and shoes I prefer a decent brand.” The quote shows that the
respondent recognizes that there is a difference between brands, and that some are
preferred to others. A brand name is associated with certain positive and negative
attributes. A combination of these will result in a negative or positive attitude being
formed towards the brand. This specific respondent was interested in a brand he had
positive associations with when buying shorts and shoes. Less visible items such as
socks were mentioned as a product where the brand did not matter.
R4:”I think all my sports apparel is pretty pricy. That’s because the brands I
purchase are pretty expensive. I don’t consider price very much when I make a
purchase.” The quote supports the notion that the consumer is willing to pay the
additional money a more expensive brand costs. It also shows that expensive brands
are sought in multiple product categories.
From the answers received by respondents in the focus group interview it
became apparent that most of the members sought a mixture of the benefits found in
the enhanced functionality and appearance categories. That this type of consumers are
of interested to Under Armour is supported by the following quote by Line from
Stadium: “They (Under Armour) appeal more to those who expect the product to
perform and that a brand name is visible.”
Since the members of the focus group interview use sports apparel every day
they are all categorized as heavy users in terms of frequency of use. When being a
heavy user of sports apparel you look for different attributes in products than people
who use the products less frequently.
Question: What do you attach the highest importance to when buying new sports
apparel?
The respondents provided mixed answers about what they put the greatest emphasis
on. Some preferred to have products that looked good, while others put more
emphasis on functional attributes. Body fit and comfort when wearing the sports
apparel where the two main preferences. The respondents generally agreed that when
dealing with a product that would enhance their performance in a given sport they
would make their selection based on quality and functionality. An example of this
could be the use of a weight lifting shoe, which all the respondents owned and used
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instead of regular athletic footwear. The shoe looks out of the ordinary since it has a
raised heel, which makes it something people probably would avoid being seen
wearing in public. The raised heel serves the function of increasing the support for the
body during heavy lifts. The respondents also mentioned that if the product was not
considered to have a positive influence on physical performance, they would tend to
base their product selection on looks. This supports the weight lifting shoe example
because if the shoe had not increased the performance for the respondents they would
most likely have chosen something more stylish to wear. It was also noted that no
matter how good a product looked it would not be chosen if it had a negative effect on
the physical performance. Product quality in terms of durability was also something
that was given great importance. The respondents generally wanted things that did not
break easily.
Typical comments by respondents included:
R4: “Fits the body, and comfortable to wear.”
R1: “If it’s a running jacket or something where the functionality is only keeping
wind out or being breathable, then I will probably look more towards appearance.”
R4:“Quality is important, but it also has to look nice.”
R6:”I prefer if things that last for a long time. Looks are secondary. Of course looks
mean something but if it breaks or hinders the functionality then it doesn’t work.”
R5: “If it fits my body well and I can move freely in it, then I’ll just purchase what
looks best.”
Brand loyalty
Having loyal customers can be very profitable for a business. As an example of this,
Kotler et. al. (2009) describe the 20-80 rule, which claims that 20% of the customers
often generate 80% of the company’s profit. If a customer is very loyal to a certain
brand he will often speak positively about it to the people he interacts with on a daily
basis. Products from the same brand typically perform consistently across the product
lines. Because of this the users who value enhanced functionality will often end up
using the same brands. Søren Ebdrup describes these people by saying: “There are
also people who choose certain brands because they feel that they are better.”
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Question: Have you ever switched preference from one brand to another?
The respondents from the focus group interview gave clear indications that certain
brands were preferred to others. They know what the different brands stand for, and
will often look to the preferred ones first when they need new sports apparel. If a
consumer already knows a certain brand and what to expect from its products, less
information will need to be sought before a purchase can be made. The preference for
a brand does not have to be grounded on any factual evidence, but can instead be
based on personal experiences with the product or stories heard from others. The
consumer does not shy away from switching brand if they find out another brand is
outperforming the one they are currently using. Indication was also given that they are
willing to make a switch from one brand to another based solely on the design.
However, if the quality of the new product does not live up to the expectations set by
the consumer he will quickly switch back. From the responses it could also be seen,
that the consumers can tell the difference between a gimmick and something that
actually adds value to a product.
Typical answers from the respondents included:
R2: “In running shoes I only believe Asics are good enough. It’s based on personal
experience.”
R3: “In gloves I started using Under Armour, but we’ve changed completely and
gone back to Nike. We think it is crap. Smart design, but it broke too easily.”
R4: “I most often find a brand that I find works well, and then I’ll buy that.”
R3: “You kind of know what’s what, because there is a lot of junk. E.g. Nike using air
cousins or some other junk that doesn’t work anyway.”
When the consumer decides to change his brand loyalty the switch needs to be
stimulated somehow. Through the focus group interview several different sources of
influence on this process could be identified.
Question: Where do you get information about products?
The respondents agree that much information is generally sought before a purchase is
made. The respondents all agree that the Internet is a great source of information.
Studies, reviews and opinions on pretty much everything can be found online. The
respondents share much information about products with each other. If they need
information about a certain brand or product they will often seek out people they
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know to have more experience than themselves. Kotler et. al. (2009) define these
people as opinion leaders. An opinion leader is a person who offers information about
specific products or product categories. Because they do not stand to gain anything
personally from offering advice they are considered to be a highly credible source of
information. The opinion leader uses his own experience to base his advice upon. At
the very least they will be able to provide indication on which attributes should be of
focus in the search for the best option. Another source of information mentioned is
personnel from specialty stores. However, distrust in the intention of the sales
personnel was mentioned as a reason to why the Internet is preferred. Several of the
respondents feel that the sales personnel are biased and will often try to persuade the
customer into buying the most expensive product.
Typical answers from the respondents included:
R2: ”If you need information then you Google it.”
R5: “The first step will be if you know someone you have trust in, who you know have
a certain amount of experience. You often ask that person even before using Google.
You can get some pointers about which things you should prioritize in your search.”
R4:”When I needed spinning shoes I initially asked the other instructors, then I went
to a special bike store to ask what they could recommend.”
R1:”I think it’s more people you know that have already tried it. Otherwise you just
look for information on the internet.”
The result of the initial segmentation of the market is a profile of the typical consumer
that is of interest to Under Armour. To sum up the typical consumer posses the
following characteristics:
•
Male
•
20-29 years old
•
High disposable income
•
Value high functionality in products
•
Cares about the brand reputation of the products he wears
•
Heavy user of sports apparel because it is needed at the level he plays on
This typical consumer will throughout the remainder of the thesis be referred to as a
serious athlete.
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Further segmentation of different sports
Four different sports will be further analyzed in order to determine the presence of a
serious athlete and describe his specific needs within each. This will help Under
Armour better understand what creates value for this particular consumer, hence
enabling them to adjust their business activities exclusively towards attractive
segments. The sports in question are football, CrossFit, fitness, and running. These
sports have been chosen because they are either of a sufficient size, or are expected to
possess certain characteristics of interest, or a combination of the two. The analysis of
the sports and the serious athlete will be based on the following three areas:
identification, needs of the athletes, and segment attractiveness.
Interviews have been conducted with the following people in order to gain insight into
the four different sports:
Football:
Morten Bertolt, professional football player at Lyngby BK
Nathan Coe, professional football player at Sønderjyske
Daniel Pedersen, equipment manager at FC Nordsjælland
Michael Madsen, account manager at Sønderjyske
CrossFit:
Dorte Kusk, manager and owner of Aarhus CrossFit
Mikkel Stilling, instructor at Aarhus CrossFit
Fitness:
Students from Aalborg Sportshøjskole
Running:
Henrik Hinge, manager at Løberen
Uwe Eisenhut, athletic trainer at Aarhus 1900
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It can be difficult to find the exact number of serious athletes within a sport.
Therefore the calculation of this number will be based on an assumption.
Everett M. Rogers (1983) introduced two categories of consumers called
innovators and early adopters. He made a timeline of the adoption of innovations,
which shows categories of consumers in relation to how quickly they go through the
process of adopting a new product. There are five categories of consumers:
innovators, early adopters, early majority, late majority, and laggards. Innovators are
consumers that are willing to try out the new products in exchange for feedback. Early
adopters are consumers that are not price sensitive and are carefully looking for
products that can give them a competitive advantage. These two types of consumers
move through the adoption process the quickest, and make up for 16% of the market
size in any given market. The innovators make up for 2,5% and the early adopters
make up 13,5%. As Under Armour’s products are still new to the Danish market it
would be beneficial for the company to initially target consumers who posses these
characteristics. It is therefore assumed that the amount of innovators and early
adopters on a market corresponds very well with the market size of serious athletes.
This assumption will be used for calculating the amount of serious athletes within the
different sports.
The compression market as a whole is fairly new to the Danish consumers.
Karsten Spaabæk emphasizes this point with the following comment: “Compression
apparel is still very new. Even though it has existed for many years, it is still very new
to a lot of consumers.”
Relating this to the Product life cycle (PLC) this type of product is still in the
introduction phase of its life cycle. This is a period of slow growth as only few people
have been introduced to the product (Kotler et. al., 2009). Thus, those most likely to
be interested in the product will be innovators and early adopters.
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Football
Identification
Football is a very popular and large sport in Denmark. It is played at amateur levels
on worn-down fields and all the way up to a professional level in front of thousand of
fans in large stadiums. As of today there are 356,754 footballers in Denmark
(www.dbujylland.dk 2012). Only the serious footballers are of interest to Under
Armour. In this thesis, a serious footballer is considered as one playing in a club from
the higher-level regional series1 to Superligaen. These players play a lot of games and
have many weekly practices. In addition most of them workout as well. Some are
required to do it as part of their team schedule, whereas others see it as a natural part
of their lifestyle. They feel they need to stay in shape in order to compete at this level.
Because they train so often they require products that are of a high quality. The
segment has already shown an interest in compression apparel. On this topic, Daniel
Pedersen, FC Nordsjællands equipment manager explains: “They (the players) always
wear compression shorts, both Superliga and youth players. Especially some short
shorts that is helpful for the groin. They use those both at practice, games and in the
gym when working out.”
This quote also illustrates that serious footballers have shown an interest in
compression apparel and that they are heavy users of this type of product.
The serious footballers are considered to be innovators or early adopters on
the football market. Because they play football at a serious level they are looking for
the best products and for gaining competitive advantages. The Superliga player
Morten Bertolt explains: “There are a lot of players that care about the products they
use. No matter if it is shin pads, cleats, or under garments then we like that the
products are highly functional. If we have good products, then we feel the
circumstances are the best possible for training.”
The professional players can serve as the link between the amateur players and
a brand. According to Daniel Pedersen the Superliga players have a clear influence on
what the amateur footballers buy: “It is obviously easier to sell when people see our
Superliga players wearing the brand.”
1
higher-level regional series: jyllands, fyns, and sjællandsserien up to 1st division.
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Needs of the athletes
Footballers on a higher level all care about the functionality and quality of the sports
apparel they use. Since football is a game that is played year-round, also when it is
freezing cold, players sometimes struggle to keep warm. Thus, for footballers it is
important that compression apparel can facilitate blood circulation, hereby
maintaining a high body temperature. Both Nathan Coe and Morten Bertolt explain
that it is important for them that their compression apparel is able keep them warm.
Morten Bertolt specifically says: “When we are talking about a long sleeved shirt
then it is important that it keeps you warm, but also that you can sweat properly in
it.” This quote also shows that the moist wicking ability is important for footballers
as it prevents the shirt from becoming heavy and thereby weighing down the player.
This will add to the ability of the tight fit to reduce muscle vibration, and result in a
benefit to the player in the final part of the games, since it extends the time it takes for
muscle cramps to occur.
Footballers also have other needs in terms of the compression apparel they
wear. Football is a sport in which players must be able to make quick changes of
direction. Morten Bertolt therefore believes that the comfort and mobility of
compression apparel are some of the most important features: “The notion of a slight
pressure on the muscles, so that you get some support from it, but still feel that it is
elastic in a way that makes you move freely around when wearing it.” Nathan Coe
agrees: “It (a compression shirt) was not bulky. It was not as if you were wearing
heavy clothing. It was a light piece of clothing that did not feel uncomfortable.”
Additionally, this quote shows that it is preferred if the material feels natural to wear.
The materials should therefore be light so it does not weigh down the player.
One important characteristic of the more serious footballer is that he also lifts
weights besides playing football. It is not only the professionals as part of their
routine, but amateurs as well. Thus, they have the same needs as those in the fitness
segment. The general need for compression apparel when working out is that it
facilitates a stable posture and its ability to facilitate faster restitution. The restitution
aspect is important for footballers, as they must recover from their workout in order to
practice at a 100%, which the following statement by Nathan Coe illustrates: “I just
feel comfortable wearing it (compression apparel). I’ve noticed some recovery ones
that I think are fantastic... I wear them at the gym. Sometimes when my legs feel really
heavy I put them on straight after training and my legs will then feel better.”
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One additional, very specific need felt by players and clubs from
Danmarksserien (4th best league) to Superligaen is for their compression apparel to be
of the same color as their team kit. They only have this need because of restrictions
put on the clubs from the Danish Football Association (DBU) in Fodboldlovens §4
about the equipment of players (www.dbu.dk 2012). This rule is important when
targeting serious footballers since clubs have this rule in mind when looking for
suppliers of under garments. When asked why Under Armour became the preferred
brand in Sønderjydske Michael Madsen explains: “It is because the under garments
you use must be of the same color as your team kit. Under Armour is really strong
within this market.” Daniel Pedersen agrees and mentions Under Armours range of
colors in compression apparel as one of the reasons why FC Nordsjælland has entered
into a sponsor agreement with them.
Segment attractiveness
The football market is very attractive because of its sheer size, both in terms of the
number of footballers and the media apparatus that follows the professionals
constantly. As mentioned, there is a total market size of 356,754 footballers. Out of
them there are 30,400 male footballers between the ages of 19-24. There are 62,119
footballers between the ages of 25 and 60, of which 15,000 are assumed to be
between the ages of 25-29. This makes for a market of approximately 45,000
footballers between the ages of 19-29 (www.dbujylland.dk 2012). As only the serious
athlete is of initial interest to Under Armour further division of the market size is
necessary. Using the assumption defined in the introduction to the segmentation
process gives a market size of 7,200 serious 20-29 year old male footballers.
The football market is very large so naturally it is highly competitive. Adidas
and Nike especially dominate the market in Denmark, and have done so for many
years (Euromonitor, 2011a). These brands have their main focus on this market, and
the majority of their commercials are also aimed towards this market. They sponsor
the biggest football stars such as Cristiano Ronaldo and Lionel Messi. Søren Ebdrup
explains that associations with football stars can help boost the sales of a brand’s
product: “We of course have Messi up on the wall for Adidas. It is obvious, that is
what is selling.”
Puma and Hummel are two other brands that have a large market share within
football. They have gained this market share by targeting a different part of the
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football market than Nike and Adidas. Hummel and Puma is oriented towards the
more price sensitive consumer, and that has made the brands very big within club
football in lower leagues. This position has been achieved through agreements with
local sports retailers and clubs. Karsten Spaabæk explains: “Almost all the club
contracts made with us are about Hummel…. Hummel is huge on this market,
together with Puma. If you play football on a lower level you never meet a team
playing in Nike or Adidas. Almost 10 out of 10 times they play in Hummel or Puma.”
Many footballers start their season by purchasing an expensive pair of football
cleats. Compression apparel is also becoming a popular purchase. Clubs on amateur
level does not supply this type of apparel, and therefore it is an increasing seller on
Internet retail stores. Thomas Fisker recounts that the typical buyer of Under
Armour’s compression products in the beginning was footballers.
Even though there by now are a lot of different brands on the compression
apparel market within football (www.unisport.dk 2012) there are still lots of
possibilities to take market share, as no brand is currently dominating this product
category. When looking at the compression apparel section of the unisport.dk website
it is seen that Under Armour products are highly represented on the ‘highest selling’
page and in a news section on the website Under Armours products are also described
as highly demanded (www.unisport.dk 2012). Thus, there are already signs of a
strong demand for Under Armour’s products in the market.
One additional aspect that makes the segment attractive is the actions
taken by Under Armour UK in the Premier League. Under Armour UK has signed a
five-year contract with Tottenham Hotspur to become their official team kit sponsor
starting in the 2012/13 season (www.sportspromedia.com 2011). Tottemham Hotspur
has 20 million fans. Because they are in the top of the Premier League their games are
often shown on international television providing them with a global audience of over
4 billion people (Under Armour annual report, 2011, letter to shareholders). This
sponsorship agreement ensures that Under Armour will be seen by a massive amount
of people worldwide. In addition, they have also signed personal sponsorship deals
with the influential Premier League players Michael Dawson and Bobby Zamora.
These sponsorship deals will definitely raise the awareness of the Under Armour
brand on the European football scene. When considering that 25% of the Danish
population watched a football World Cup qualifying game on TV in 2009
(Euromonitor, 2011, p. 55), or that FCK and Brøndby IF had a higher season total of
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spectators in 2011 than the entire men’s and women’s best handball leagues combined
(www.danskfodbold.com 2012; www.df-h.dk 2012), it is obvious that there are vast
opportunities for brand exposure in football. A lot of Danish footballers also follow
the English Premier League and therefore Under Armour should experience an
increased interest in the brand in Denmark through its Tottenham agreement.
Besides following the sport on television many footballers also spend a lot of time
reading football news online.
In a study about Danes and their sports habits it was shown that a relatively
stable trend in the number of people playing football has been evident from 1993 to
2007 (Pilgaard, 2008, p. 53). This trend is expected to continue in the future.
However, the upcoming European Football Championship in Poland and Ukraine and
the Olympic Games in London this summer might cause an increased interest in
football.
CrossFit
Identification
CrossFit is a sport for competitive people. At training sessions the routines are timed
after which the individual results are ranked on a board. Mikkel Stilling explains that
CrossFitters are people that care about being healthy: “They will typically train 4-5
times a week. They enjoy coming to training sessions and do not see working out as a
burden. Everyone in the training sessions is excited about CrossFit, they all train for
the same reason, and they push each other to the limit every time.”
Dorte Kusk describes the typical CrossFitter as a male between the age of 22
and 30 who has grown tired of his standard workout routine in the fitness center, and
wants an alternative to working the machines all the time. Gaining a lot of muscle
mass is also not important for the typical cross fitter. He cares about staying healthy
and building core strength through the use of simple equipment that can be found
everywhere. CrossFitters are often heavy users of performance enhancing products
such as compression apparel. This is due to the competitive nature of the sport, which
the following quote by Mikkel Stilling illustrates: “You only need a very limited
amount of equipment in order to compete in this sport. However, because people want
to push themselves to do their best, they end up spending money on expensive
equipment such as compression apparel and footwear.”
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The main characteristic of CrossFit is the raw atmosphere at every training
session, and in this regard Dorte Kusk stresses the difference between training with
them and training in a crosstraining2 class at a fitness center: “I have not participated
in their crosstraining classes, but we have a lot of members who have. They get
introduced to the principles of CrossFit, and then when they come down to us to try
the real CrossFit, they realize that there is a big difference… In our training sessions
there are a very raw atmosphere, and that is difficult to create at a place where there
are saunas and spas.”
This raw atmosphere is found in the CrossFit centers, which are full of people who
are soaked in sweat, roaring to squeeze out the last bit of power in their muscles
simply to collapse when having finished the last exercise in a routine.
In CrossFit there is a strong sense of community, which is reflected in the
sharing of information between members, both about the sport and the products used
for it. Mikkel Stilling says that instructors give a lot of advice: “People look at what
the instructors are wearing, and they strongly follow the advice given by us.” Dorte
Kusk explains that the sense of community is also highly evident on the Internet: “We
have a Facebook group site, and there is a lot of discussion about apparel, and shoes
especially. But also about apparel, and you know: Hey, I just started doing cross fit.
What is good (to wear)?” The sense of community in the cross fit environment
extends to other parts of the Internet as well. CrossFitters spend very many hours each
week discussing topics on various forums and watching Youtube videos about
CrossFit. A lot of the forums that Danish CrossFitters read and the Youtube videos
they watch are from the United States. This means that they are highly influenced by
the trends they see in the United States both in terms of types of exercises and new
products. Dorhe Kusk explains: “Very many of the CrossFitters in the United States
have competed in CrossFit competitions wearing Under Armour, and this has created
an interest for the brand among Danish CrossFitters.” Both Dorte Kusk and Mikkel
Stilling emphasize that very many of the CrossFitters in Aarhus buy their CrossFit
apparel online. Because of the lack of availability in Danish retail stores they often
end up purchasing their products on foreign websites.
2
Fitness centers are not allowed to call their form of CrossFit training for CrossFit,
and it is therefore called crosstraining.
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Needs of the athletes
CrossFit is a very versatile/ all-round sport that combines elements from other sports
such as sprint, weightlifting, and gymnastics. Because of the versatility of the sport
there are certain needs and benefits sought from using compression apparel in
CrossFit.
Because of the very intense lifting of barbells, tractor tires, and other heavy
things in CrossFit, injuries are likely to occur if one does not maintain a stable posture
and balance. Another important aspect for a cross fitter is the lactic acid produced in
the muscles. If too much lactic acid is produced, the muscles will become very tired
and they might cramp up. CrossFitters are thus interested in compression apparel that
will facilitate a correct body position and reduce muscle vibration. In relation to these
needs Mikkel Stilling says: “Compression apparel is a vital part of what I am
wearing during a training session. The pressure on my muscles from the compression
apparel gives me a feel of core control, and I could not imagine doing a CrossFit
session without getting the stability from my compression shorts.”
Dorte Kusk mentions the sweat transportation element of compression apparel
as very important. This is due to CrossFit being a very intense sport that resembles
interval training, in which one maintains a very high heart rate causing one to sweat a
lot. Basic cotton t-shirts will be soaked and become heavy within minutes of the
session. Since most workout sessions are timed in CrossFit centers a heavy t-shirt is
not in a CrossFitter’s interest.
Segment attractiveness
CrossFit is very new and must be considered a niche type of sport. During the last
two-three years it has experienced a tremendous growth in Denmark. Aarhus CrossFit
recently expanded its business with a 400-quadrat meter old warehouse building.
Within the past year Aarhus CrossFit has increased their member total from 200 to
having more than 600 members (www.b.dk 2011). This translates into a member
growth of 300%. This is a huge growth rate, but it is not unique. A rapid growth has
also been present in CrossFit Copenhagen, which is the oldest CrossFit center in
Denmark. It opened in 2008 with a member total of 37, and today 3.5 years later, it
has five centers with a combined member total of 3,000 (www.crossfitcopenhagen.dk
2012). According to its website, this actually makes it the largest CrossFit affiliate in
the world, and underlines the increasing popularity of CrossFit in Denmark. There are
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also fairly large centers in Aalborg and Odense (www.obbc.dk 2012;
www.crossfitaalborg.dk 2012). CrossFit centers have also started opening in the
outskirts of Denmark (www.tv2bornholm.dk 2012). The large fitness chains have also
noticed the increasing popularity of the sport and have chosen to add crosstraining to
their line of exercise offerings. This means that there are also CrossFitters in fitness
centers. These people have not fully converted to the CrossFit lifestyle yet, but are
still of interest as they at least have the same functional needs as CrossFitters in
CrossFit centers. Combining the member totals from the CrossFit centers in
Copenhagen, Aarhus, Odense and Aalborg with the people doing crostraining in
fitness centers results in a market size of approximately 7,000 CrossFitters in
Denmark. The assumption used for determining initial market sizes for the other
segments will not be used for CrossFit. Through the comments already cited it was
shown that most of the CrossFitters posses the characteristics of a serious athlete.
They have already shown that they are likely to try new products, which their interest
in Under Armour’s products illustrates. Dorte Kusk explains: “There are not a lot of
people who know either Under Armour or CrossFit, thus CrossFitters find the brand
(Under Armour) very interesting. CrossFitters have found themselves a new sport,
and so they are more open to new brands.” Thomas Fisker has also noted this
trend:“…It (the demand for Under Armour) has increased again because of CrossFit,
MMA and the like. Thus, our sales are double of what they were last spring.”
Therefore, it would make no sense to only consider 16% of this market as initial
target consumers. It is found more likely that 60% of the market share the
characteristics of innovators and early adopters. This will make for an initial market
size of 4,200.
With 4,200 potential customers, the market for CrossFit apparel in Denmark is
naturally very small. However, since CrossFit is very new to Danes, the market for
CrossFit apparel has not become very competitive yet. The main competitors within
the market are Skins and Reebok. Skins is a highly specialized company that only
produces very technical compression apparel targeted towards the consumer who
values functionality and quality. Because of the technicality of its products Skins is in
the higher price range on the market. Skins has not focused much on the Danish
market, and is only available through a few specialized running, cycling and fitness
retail stores. CrossFit is one of the markets, which Nike is not present on. Adidas is
only present on the market through Reebok, which they acquired in 2006. Reebok has
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bought the rights to the CrossFit brand and hereby they sponsor all the official
CrossFit championship games. Despite this its range of CrossFit products in Denmark
is still fairly limited. Evidence of this can be found on the online retail shop
Bodyman, which has a strong selection of CrossFit apparel (www.bodyman.dk 2012).
This means that there is no dominant company on this market as of right now, which
leaves plenty of opportunities for increased action on the market, in particular for
niche companies.
Fitness
Segment identification
Fitness is a very popular sport in Denmark. A recent study showed that 42% of the
20-29 year olds go to fitness centers regularly (Pilgaard, 2008, p. 51). The serious
athlete within fitness is defined as a person that goes to the gym three or more times a
week. He cares about proper execution of exercises and works out with specific goals
in mind. These goals are related to an increase of overall body strength or an increase
in muscle mass.
According to a study, people living in larger cities go to fitness centers more often
than people living in smaller ones (Pilgaard, 2008, p. 62). In Denmark fitness centers
are clustered in larger cities (Kirkegaard, 2007, p. 16). From table 1 it can be seen that
all the large cities considered in this thesis, except for Kolding, have a lot of fitness
centers. Thus, the location of fitness centers fits very well with the geographic focus
of this thesis.
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Table 1
City
20-29 (men)
Fitness
Fitness
Total # of
World
DK
chains
(municipalities)
Copenhagen
100,737
15
11
56
Aarhus
34,102
7
3
30
Odense
16,294
6
2
21
Aalborg
17,899
6
1
17-20
Esbjerg
7,118
2
2
13-16
Randers
5,330
2
1
13-16
Vejle
5,468
1
1
13-16
Kolding
5,147
1
1
5-8
Horsens
5,388
3
1
13-16
Metropolitan
area
Total
197,483
Note: All numbers used in the table are clearly cited under the heading table 1 in the list of references.
A rather high percentage of people going to fitness centers do other kinds of
sports as well. According to a study performed by Idrættens Analyseinstitut, 68% of
the respondents also perform other kinds of activities besides fitness (Kirkegaard,
2010, p. 26). Some of these people use fitness as a supplement to their primary sport,
which could be football, handball and other sports where fitness is relevant. These
findings are very consistent with what was mentioned about footballers earlier.
In fitness centers people often notice which sports apparel brands other
members use. This influences the perception the people have about brands. Fitness
instructors especially have a strong influence on these perceptions, and ultimately on
what people going to fitness centers wear. Karsten Spaabæk underlines the
importance of fitness instructors in terms of what brands are worn: “People really
look at what others are wearing and what the instructors are wearing.”
These instructors tend to be between the age of 20 and 29 (Kirkegaard, 2010, pp.
29.30). Since the athletes in focus are assumed to look more closely at what people
their own age are wearing, the influence of the instructors becomes even more
important.
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Many people within this segment like sharing their experiences with fitness
related products. The sharing of information occurs both in the fitness centers and
online. On forums such as bodybuilding.dk and forum.getbig.dk they feel part of a
fitness community and enjoy sharing product information and news with each other.
The amount of forum members is an indicator of the strong influence of the forums.
Bodybuilding.dk is by far the largest with almost 35,000 members and the second
largest is forum.getbig.dk with almost 9,000 members (www.bodybuilding.dk 2012;
forum.getbig.dk 2012). This online sharing of information is something that is noted
by retailers. When asked how Bodyman started selling Under Armour, Thomas Fisker
recalls: “On our forum and other forums, Under Armour became an increasingly
popular topic of discussion. This is where we find the most of our new brands now…
People that work out a lot always find some brands they believe to be cool.”
Most of the supplements used in fitness are mainly sold online. Therefore the
people within the fitness community have used the Internet for fitness related
purchases for a long time. They are also buying much of their apparel online on
websites such as bodyman.dk and bodylab.dk. However, some of the participants in
the focus group interview underline that the presence of products in physical stores is
important. One of the participants recalls an experience with buying compression
apparel online: “I purchased Under Armour apparel a couple of years ago because it
was cool and nice, but I was surprised because I had not considered that sometimes
there is a difference between American and European measurements. So they are very
short in the t-shirt length. This was an expensive lesson to learn since I cannot use the
clothes anymore. Had I known it was available in the Bodyman store then I would
have gone there instead.” Another participant adds: “It must be available (in physical
stores). I really like to try products on, I think it is annoying to just buy on the
Internet.”
Needs of the athletes
In order to execute fitness exercises properly a straight posture and a strong balance
are required. Without a straight posture and a strong balance there is a high risk of
injuries during exercises. Focus group members indicated that this can be facilitated
by compression apparel applying a pressure to the body and keeping it warm.
In most fitness centers there is a certain focus on muscle mass. When looking
around in a fitness center one clearly sees that the majority of younger males work out
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with one objective in mind; gaining muscle mass. Many of these people like to
visually keep track of their improvements and they therefore have a need for tight
fitting clothes. This need can be satisfied by compression apparel. Not only will it
show the swelling muscles during training, it will also apply a pressure on the body,
which makes one feel a bit bigger and stronger.
The serious athlete also likes to look good while working out. Four out of six
participants in the focus group interview all agreed that looking good in their workout
outfit definitely matters a lot. One respondent said: “Quality is important, but it also
has to look nice.” Another respondent added: “It probably has something to do with
the brand. If I go shopping for new clothes I know Under Armour and Nike have some
cool products. They look good and feel good to wear.”
Segment attractiveness
The market for fitness is huge. From the table above it can be seen that there is a total
of 186,868 20-29 year old males in the nine biggest cities in Denmark. 42% of people
in this age group go to fitness centers regularly (Pilgaard, 2008, p. 51). This makes for
a market total of 78,484. Using the assumption about the serious athlete gives a
market size of 12,557 20-29 year old males.
In Denmark there is currently a focus on health and well-being. The
government is actively encouraging people to exercise more (Euromonitor, 2011, pp.
4 and 57). One study shows that there has been a steady increase over the years of the
percentage of people who go to fitness centers. From 2004 to 2007 this number
increased by 8 percentage (Pilgaard, 2008, p. 53). This has resulted in a surge of
fitness centers. There are currently 444 registered centers in Denmark, which is an
increase of 19 centers from the previous year (www.idan.dk 2012). Today fitness is
the second most preferred form of exercise among the 20-29 year olds, lacking behind
running as the most preferred (Pilgaard, 2008, p. 50). All this means that growth in
sales of fitness-related products is expected to rise throughout the coming years
(Euromonitor, 2011, p. 55).
The dominating brands on the fitness market are Nike and Adidas. They both
try to target as much of the market as possible through their broad product offerings.
The private label brands of the various retail stores are also popular. Because of the
high profit margins that the retail stores have on their own brands they prefer to sell
those. Therefore they also keep a wide range of private label products, which is
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evident on the online shops of Stadium Denmark and Sportmaster
(www.sportmaster.dk 2012; www.stadium.dk 2012). The competitors of main interest
are Nike and Adidas, as the private label brands serve the more price sensitive
consumers of the market
The fact that instructors have such a big influence on people in this market
makes it especially attractive. Most fitness centers today offer a variety of team
training sessions appealing to both men and women. Through increased sales, Karsten
Spaabæk has felt the positive impact of fitness dk’s agreement with Nike: “When all
the girls see an instructor in a pair of Nike Capri tights that fits perfectly, then they go
directly to the (his) store and buy the product.”
Running
Identification
Running is the most popular form of exercise in Denmark (Euromonitor, 2011, p. 55;
Pilgaard, 2008, p. 53). A reason for this could be its individual nature, which means
that the athlete is not reliant on the having team members or affiliation with a club.
Running can take place anywhere, anytime without the need for any particular
equipment. Running often serve as a way of improving ones performance in another
sport. This is also one of the reasons why such a broad range of people does it.
The serious runner is a person who sets certain goals for himself when
running. This could be goals such as improving ones time on a certain distance or
completing a marathon. The serious runner is assumed to run 3 or more times a week,
and runs for longer distances each time. Because the serious runner has ongoing goals
he stays in shape all year around, which means he will run during the cold periods of
the year as well.
As with the other sports, there is an Internet community around running.
However, when browsing the Internet it becomes evident that there are not a lot of
well-established forums devoted completely to running. The website
www.dourun.com is the only forum devoted to running with a noteworthy member
number of 19,491. There are also other forums available for runners, but these are not
focused exclusively towards running.
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Needs of the athletes
According to Uwe Eisenhut, there is also a need for compression apparel in the
running market. But the running market is very diverse in terms of what runners like
to wear. Retail manager at Løberen explains: “It is very different from runner to
runner. A lot of runners like that their apparel is tight fitting, and use compression
tights, socks and shirts. Then there are others who like a looser fit. It has nothing to
do with whether you run a lot or not.”
A natural need of the serious runner is for apparel that is sweat transporting.
When running 5 kilometers or more one naturally sweats quite a lot. In a regular
cotton t-shirt the sweat will accumulate and soak the material. Since the serious
runner is perceived to be timing his runs, a heavy feel from a t-shirt is not in his
interest.
The serious runner runs both when the weather is cold and hot. Therefore he
needs compression apparel that is temperature regulating. The temperature-regulating
element is especially important during cold weather, as injuries are more likely to
occur during this time.
Running is a sport where endurance is important because of the long distances
the athletes run. Therefore the athlete has a high need for compression apparel that
keeps the muscles in place, which will lengthen the time before cramps occur. Having
muscles locked in place will also ensure a faster restitution, which will make the
athlete able to run again sooner.
Segment attractiveness
The yearly statement of member numbers at DGI illustrates that running is not
typically a club sport. Running comes under the category “exercise and outdoor life”,
which is comprised of running, cycling and kayaking. The total member number for
this category is 77,664 (www.dgi.dk 2012). This means that the total number of
running club members in Denmark is likely to be somewhere in between 20-50,000.
Since running is one of the most popular forms of exercise the above numbers far
from paints a clear picture of how many Danes that actually runs regularly. According
to a study 44% of the 20-29 year olds run regularly (Pilgaard, 2008, p. 51).
Multiplying this percentage with the total amount of 20-29 year old males presented
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in the table earlier gives a market total of 86,892 runners. Narrowing the market on
the basis of the assumption about the serious athlete the total market size is 13,902.
The running market is very competitive, and it can therefore be difficult to gain
foothold within it. Henrik Hinge says that there are an endless number of brands that
try to get their products into specialty stores: “It is obvious that a brand gets approval
when entering a specialty store. Thus, it is a vast number of all kinds of well-known
and lesser known brands that is tried out and presented to us at all times.” It can be
quite though for a brand to fight its way into a specialty store on a market where there
are lots of brands. Henrik Hinge explains the considerations they have when presented
with a new brand:“If we have to take a new brand in, then we have to consider if we
have store space for a new product, and whether it will make another brand sell less
or just add to the total sales. Or should we take out a product? If we take out a
product then the new product has to be better.”
When a market gets flooded with brands, then price often becomes an
important dimension. The number of brands and the effects of the financial crisis have
taken its toll on the running market. Henrik Hinge explains: “We have to think
differently and we cannot only focus on high-end products even though that is often
times what we enjoy the most.” Athletic trainer Uwe Eisenhut is also very aware of
prices when buying new running apparel. He explains: “I never buy sports apparel
and footwear at full price anymore. I find that the cycle of brand collection renewal is
really short, which means that you can find the product you bought at full price, on
discount no more than 4-5 months after you bought it.”
The dominating brands on the running market according to Henrik Hinge are
Nike, Adidas, Salomon, Gore and Fusion. Nike, in particular, is very visible in the
running sections of the various physical sports retailers.
The running market is very large and following the ongoing health focus in
Denmark it is likely that it will increase further because of the fact that running is a
very simple form of exercise (Euromonitor, 2011, p. 4). People would then be more
likely to inquire more products for running.
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Targeting
DAMP evaluation of the four sports
In order for market segmentation to be effective, Philip Kotler (1984) suggested that
each segments of consideration must be distinct, accessible, measurable, and
profitable. These criteria are known under the acronym DAMP and will lay the base
for the evaluation of the segments discussed in the previous section of the thesis. This
framework has been chosen because, besides serving as an evaluative tool, it also
provides a structured overview of each segment.
Distinct
The serious athletes found in the four sports share a lot of common characteristics.
However, they are distinct in the sense that they all seek to excel in one particular
sport. Some of the sports are team sports whereas others are individual. This
inevitably leads to different needs and values sought by the athletes. The fact that the
sports take place in various settings also influences the needs of the segments.
Accessible
The ease of access to the athletes differs from sport to sport. This is an important
consideration for a marketer when assessing the possible effect of market
communication.
Footballers are very accessible as the sport gets a lot of media coverage from
almost all possible medias. This means that there exists a vast array of possible ways
of promoting a brand in football. Amateur footballers can for instance be reached
through TV commercials or professional footballers. Footballers also read a lot of
news related to their sport on websites, which means that they can also be reached by
adds on such websites. It is easy for the marketer to access the athletes as they are all
members of a club and therefore practice their sport in one particular place.
This is also the case in CrossFit and fitness. The centers of both sports are
highly concentrated around the larger cities, which makes it possible to access many
athletes at one place. Promotional efforts can easily be made at these centers, where
competitions most likely will be held. Forums and Internet retailers are highly used
within CrossFit and fitness. These websites also provides for many ways of reaching
the CrossFitter or the person working out it in a fitness center.
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Running is different than the other markets because it is not a sport that gets a
lot of media coverage. Because the club culture is very limited it is hard to access
runners with a concentrated promotional campaign. It might be possible to reach the
runner of interest through forums or magazines. However, currently there is only one
Danish running forum of a significant size and very few magazines focus exclusively
on running. Thus, it would be hard to reach the serious runner through promotional
campaigns.
A lot of people buy their apparel online today, which was strongly indicated in
the focus group interview. Internet retailers are especially vital on the CrossFit market
since there are practically none of the big physical sports retailers that devote store
space to this niche sport. Internet retailers are also important on the fitness market
since a lot of people buy their supplements online and are thus used to shopping for
fitness related products online. However, it was indicated that it can be beneficial for
products to be present in physical stores as well. Many consumers still prefer to try
out products before buying them.
Measurable
In the segmentation process all the vital characteristics of the serious athlete in each
sport have been identified. As these consumers all possess different characteristics
and come in different sports environments they are identifiable. Measuring the exact
size of the segments, however, is more complex. Numbers are available for
calculating very general market sizes, but when the target consumer is narrowed down
to a serious male athlete between the age of 20 and 29, there are not a lot of data
available for making calculations. The data available for the amount of runners could
be questionable. Since one does not have to be a member of a club in order to run,
there is no official data available on the number of runners. The market sizes have
been calculated on the basis of a suitable assumption, and the initial market sizes are
found to be fairly reliable in the three other sports.
Profitable
The market sizes for the four segments are all very small when only considering the
serious athlete, and will therefore not provide Under Armour with a lot of revenue.
But it is not the intentions that these are the market sizes that Under Armour will rely
on in the long-term. These market sizes only account for the innovators and early
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adopters of the markets. They are naturally the first priority for Under Armour
because they are easily persuaded to try new products and most likely to become loyal
customers. They are expected to help Under Armour raise the awareness of and
interest in the brand, and thereby increase the number of possible customers. In other
words, the market of 7,200 serious footballers will help Under Armour to eventually
expand into other consumer groups within the football market. Thus, when
considering the economic prospects of the segments it must be kept in mind that the
small market sizes are just initial markets that work as stepping-stones towards the
goal of reaching the entire market.
The competition within each of the sports markets is different, and thus the
profitability of the segments will also be different. In football there are some very
established competitors, but they do not have their main focus on compression
apparel. There are also a couple of dominating brands within fitness, which serve a
broad range of the market. In CrossFit there are very few competitors, and the
intensity of the competition is not high. The running market has a lot of different
brands that serve the functional area of the market, and there is an intense competition
between these brands.
Based on the above evaluation three of four market segments have been chosen for
further consideration. Football, fitness, and CrossFit have all been chosen as target
markets for various reasons. The football market has been chosen because it is very
large, and there are a lot of promotional options. Fitness is also an interesting market
because of its large size and the ease of access to its members. CrossFit is highly
interesting because of the specialized nature of the sport and the interest that has
already been shown in Under Armour by CrossFitters. Running is not considered a
primary target market. The market is very large and could therefore be a huge source
of revenue. However, the market has been found to be too competitive and price
sensitive. It is also believed that it would be too hard to reach the serious runner
through promotional efforts.
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Targeting approach
Nike and Adidas are the two biggest companies on the Danish sports apparel market.
Because of their size there are certain areas of the market that these two companies
focus less on than others. Under Armour should attempt to penetrate the Danish
market through the use of a sequencing strategy. In a sequencing strategy the
company initially attacks the leader(s) by focusing on a small part of the market. This
focus can later be broadened to cover wider segments once the company has a
foothold in the market (Porter, 1985). Under Armour should attempt to compete
against Nike and Adidas by focusing on serving the uncovered needs of the segments
found in the previous segmentation process. Once the company has made a name for
itself in the market it will be able to bring in a wider range of products, and thus
compete full force on the market.
In the initial attack on the market leaders, the fitness, CrossFit and football
segments will be targeted individually by recognizing their differing needs and
values. According to Michael Porter’s (1985) proposed framework of generic
strategies, Under Armour will use a focused differentiation strategy where one type of
product serves three narrow segments. This generic strategy has been chosen because
of the current market situation on the sports apparel market. When following a
focused strategy a company takes advantage of a broadly targeted company’s sub
optimization. Sub optimization in the sense that these companies are not focusing
enough on the needs of a certain segment (Porter, 1985). The overall market leaders
on the market, Nike and Adidas, do not have compression apparel as their main focus.
On the football market they are mainly focused on providing customers with the best
football cleats. On the fitness market they have a very broad focus and try to serve
most of the market. Adidas is the only company that is present on the CrossFit
market, and they are only present indirectly through Reebok. Reebok, however, has
not made serious efforts in Denmark thus far and are currently not serving the needs
of this market.
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Positioning
Even though a few of Under Armour’s products have been available to the Danish
market for some time now, the brand is still not properly positioned. Very few people
from the broader masses of the population are aware of the brand’s existence. The
lack of awareness means that the customers are more likely to select a product from a
competitor since they already know what these brands stand for. Under Armour does
not have a clear position in the mind of the consumers, which naturally has a negative
effect on the demand of its products. This is one of the reasons why the physical
retailers who do trade Under Armour’s products give them a secondary placement
within the stores. To raise the demand for its products, Under Armour will need to
increase awareness for the brand. The company will need to communicate what its
products are able to deliver and how the brand creates value for the target segments,
through the use of the proper media channels. Before choosing which media channels
to use the company needs to position its offering within the marketplace.
Aaker defines a brand position as: “The part of the brand identity and value
proposition that is to be actively communicated to the target audiences that
demonstrate an advantage over competing brands”(Aaker, 1996, p.176). The result
should be a customer-focused value proposition, which gives the target market a
convincing reason to purchase the product. Before the brand position can be
implemented, Aaker (1996) suggests that the company should have a brand identity in
place and a value proposition properly specified. Elements of the brand identity and
the value proposition can then be selected to match the specific needs of the target
markets.
Brand Identity
Aaker (1996) defines brand identity as a unique set of brand associations that the
brand strategist aspires to create or maintain. The brand identity will be used as a base
for the creation of the value proposition that is to be positioned in the market. In his
Brand Identity Planning Model, Aaker suggests looking at the firm’s brand from four
different perspectives: As a product, an organization, a person and a symbol. All the
perspectives do not need to be part of Under Armour’s brand identity. However, each
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perspective should be analyzed in relation to the company in order to figure out which
ones are important for positioning the brand in the mind of the consumers.
Brand-as-product
The Brand-as-product perspective can be analyzed from six different angles:
The first angle, product scope, tells something about which products the brand
is associated with. Under Armour has gone from being a producer of moisturewicking T-shirts to producing a wide assortment of performance apparel for a number
of different sports. However, the product that the brand is mainly associated with is
still the tight fitting synthetic compression apparel. The brand especially enjoys a high
amount of brand recall from consumers in the United States when compression
apparel is discussed. This means that it is the brand people normally associate with
this product category.
The second angle of this perspective is product-related attributes. These
additional attributes create value to the customer. Since Under Armour’s products are
highly technical they offer their customers a lot of added benefits that create value.
The specific product related attributes that compression apparel has will be discussed
in the value proposition.
The third angle of the brand-as-product perspective deals with how the brand
is evaluated in terms of quality and value. The Under Armour brand is associated with
producing high quality products. This is due to the technical and durable nature of the
products. In terms of price the products of Under Armour are placed in the mid-range
of the market alongside the products from the largest competitors Nike and Adidas.
The fourth angle is called associations with use occasions, and looks into the
use situations the brand is associated with. The Under Armour brand is highly
associated with athletes looking to sustain a high level of athletic performances. The
brand has shifted from being mostly associated with American football players, to
being linked to a multitude of sports where top performances are needed from the
athletes.
Association with users is the fifth angle, and it looks at what type of users the
brand targets. Under Armour targets people who have an active lifestyle and strive to
be the best. It is for the people who are willing to go the extra mile. The products can
be used by both professional athletes and people who use them for exercise. Under
Armour expresses this through their vision: “Empowering athletes everywhere”
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(www.underarmour.com 2012). Great emphasis is put on the performance of the
individual.
The sixth and final angle is called link to a country or region. Here you
attempt to add credibility to a brand by linking it to its country of origin. Since Under
Armour is an American company it is associated with American values. The United
States being known as the land of opportunity is something that fits well with the
brand history of Under Armour. The story of Kevin Plank taking the firm from being
a one-man company to having a status as a serious challenger for market shares
against the larger companies in the industry. The United States is generally known for
producing products of high quality, especially in the sportswear industry where Nike
is the forerunner. Both the members of the focus group interview and the CrossFitters
mentioned the United States as the country they would look to for inspiration. This is
where most of the workout videos come from, and where most of the new fitness
trends originate.
Brand-as-organization
This perspective looks more at the attributes of the organization behind the brand
instead of the product it produces. Aaker (1996) suggests that these attributes are
created by the people, culture, values and programs that the company has. Under
Armour’s stated brand mission is: “To make athletes better through passion, design,
and the relentless pursuit of innovation” (www.underarmour.com 2012). When Kevin
Plank had his first polyester compression shirt produced in 1996, he knew what he
and his teammates needed. He was not the person to invent the fabric, but he was the
first to recognize the need for a base layer with moisture-management abilities (Salter,
2005). Since then Under Armour has let the needs of the customers drive the product
innovation that aims to provide the athletes with a competitive edge. The product
development team works closely with professional athletes, sales and sports
marketing teams to be the first to discover new market trends that can be exploited
(Under Armour annual report, 2011).
Another thing that Under Armour emphasizes is the high quality of the
products it produces. Its suppliers must all go through a strict evaluation process
where quality systems, social compliance and financial strength are checked. This is
done in order to ensure that the product that reaches the end consumer is of the
highest quality (Under Armour annual report, 2011).
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Brand-as-person
In this perspective Aaker (1996) suggests that the brand can be viewed as a person,
and thus have certain human attributes associated with its personality. These attributes
can become a way for the customer to express their own personality. If the brand
Under Armour is considered as a person, it can be described as being active, tough,
strong, driven, raw, determined and standing out in the crowd. The brand is very
aspirational in the sense that wearing it represents what the consumer aspires to be.
Famous athletes are often used as celebrity endorsers in the company’s advertising
campaigns, because they are seen as representing the highest level of performance
that can be achieved. The personality of the brand shines through in its advertisement,
which typically displays the athletes in some sort of intense exercise situation, where
they are working hard to better themselves. The personal traits that are attributed to
the brand can also tell something about the products that the brand represents.
Therefore when Under Armour is described as being tough, strong, and standing out it
suggests that the products are durable, of a high quality and easily noticeable.
Brand-as-symbol
This perspective looks at the symbolism that is attached to the brand through visual
imagery, metaphors and the heritage of the brand (Aaker 1996).
The visual imagery that Under Armour is known for is the two connected U’s,
one being upside down to represent the A for Armour. The symbol is placed visibly
on all their products. Because the symbol is an abbreviation of the name of the brand
it makes brand recall easier for people who are new to it. In 2011 Forbes placed
Under Armour as the fourth most valuable sports apparel brand in the world with an
estimated brand value of $1,000,000,000. Nike, Adidas and Reebok were the only
other producers of sports apparel to rank higher than the company (www.forbes.com
2011).
Symbols can be attached more meaning if they involve a metaphor (Aaker
1996). The Under Armour name functions as a metaphor. It implies that the athlete is
wearing a piece of armour. A piece of armour is used to protect the body, and wearing
one symbolizes that the person is ready for battle.
The heritage, which is the third part of the symbolism, is also highly attached
to Under Armour’s brand. It is the story of Kevin Plank going from singlehandedly
running the business to turning it into a multi-national company that generates
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millions of dollars in revenue each year. It is about the small company that suddenly
became a threat to the large companies in the industry. The constant use of the slogan
“We will protect this house!” underlines that the company is willing to fight to
protect their share of the market, and shows that they are not easily defeated.
Core and extended identity
The information found in the four perspectives can be used to identify the core
identity and the extended identity that combines to form the brand identity. The core
identity contains elements that make the brand unique and valuable at the same time.
These are the elements that are kept consistent when the brand enters new markets
(Aaker, 1996). For Under Armour the core identity should be based on the innovative
nature of the company. Innovation is what has gotten the company to where it is
today, and is also what should drive future growth. The innovation makes the
company able to create products that feel great to wear and at the same time has
performance enhancing attributes.
The extended identity helps fill in the gaps the core identity has left behind,
when portraying what the brand stands for. The things that should be included in
Under Armour’s extended identity should be some of the personal traits that the brand
represents. Getting the personal traits communicated to the target markets will help
the consumers understand what the company is all about. These are the traits that the
consumers should ideally associate with the brand. It is also the values the consumers
will represent when they wear the products.
Value proposition
Aaker defines a brand’s value proposition as: “A statement of the functional,
emotional and self-expressive benefits delivered by the brand that provide value to the
customer” (Aaker, 1996, p. 95). The value proposition is directly derived from the
identity of the brand, so with that in place, Under Armour can start looking for things
to include in its value proposition to the target segments on the Danish market. The
functional benefits of the value proposition is based on the product attributes that
provide functional value for the customer. Emotional benefits are provided when the
customer associates positive feelings to the purchase or use of a particular brand. Selfexpressive benefits give a person a way to communicate his self-image. The three
benefit categories are related to the relative price of the brand’s products. In order to
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design the market communication to fit the target segments, it is important to know
what parts of the value proposition the segments each value separately. Therefore the
benefits of Under Armour’s compression apparel will be analyzed, after which they
will be related to the target markets they create value for.
Functional benefits of Under Armour’s compression apparel
The compression apparel from Under Armour is designed to give the athletes comfort
through the regulation of body temperature. The product has the ability to retain and
circulate body heat, which keeps the muscles warm. At the same time the fabric wicks
away sweat and moisture from the body, leaving it dry and keeping the clothes from
weighing the athlete down. The product is very stretchy, which increases the mobility
of the athlete. The compression fit keeps the muscles locked in place, which reduces
muscle vibration. This reduced vibration will help the body by reducing the time
needed for restitution. The compression products also cause the direction of the
muscle to be more focused, which will boost muscle performance. The product also
has some additional benefits through anti odor technology and sun protection. Due to
the tight fit on the body the compression apparel feels like a natural extra layer of
skin. The tight fit also means that the tone and size of the muscles is easily noticeable
through the product (www.underarmour.com 2012).
Functional benefits valued by segments
Football:
In the football segment the functional benefits that create value were found to be:
Temperature regulation, mobility, restitution, moist wicking, and reduced muscle
vibration.
CrossFit:
In the CrossFit segment reduced muscle vibration and stability were mentioned as
important functional attributes. The sweat transportation ability was also valued.
Fitness:
In the fitness segment compression apparel’s ability to facilitate a straight posture and
body stability was found to be important.
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Even though Under Armour’s compression apparel is highly technical and has some
great functional benefits this is not enough to provide the full value proposition. The
functional attributes are too easily imitated by competing companies. Both Nike and
Adidas have developed their own line of compression apparel after seeing the success
Under Armour enjoyed within the category. Therefore additional benefits will need to
be part of Under Armour’s value proposition.
Emotional benefits of Under Armour’s compression apparel
When the customer purchases a piece of compression apparel from Under Armour,
they get an emotional feeling of taking an active part in bettering themselves. The
athlete will get a feeling of providing his body with better conditions for achieving
results. People purchase the product because they know it will enhance their
performance and increase the comfort during a workout. The moist wicking ability
will provide a feeling of comfort for the athlete since the skin will remain dry.
Comfort can also occur when the compression apparel has a proper body fit. When
the athlete knows he is using a high quality product that will protect him, it gives an
emotional sense of safety. This means that the focus can be held on the performance.
Another attribute that provides an emotional benefit is the pressure the muscles get
when the athlete puts on a piece of compression apparel. This squeeze can give the
athlete an emotional feeling of being stronger.
Emotional benefits valued by segments
Football:
Comfort is one of the things the professional football players interviewed valued the
most. The lightness of the compression apparel and the way it fits the body makes it
feel as a natural piece of extra skin that the athlete barely notices wearing. This sense
of being free is also something that is experienced with the high level of mobility the
stretchy material provides. A feeling of being stronger can provide the athlete with a
mental upper hand, which can be crucial in the dying minutes of a game. The reduced
recovery period will also give a positive mental emotion, as the athlete will feel his
body is in a better shape.
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CrossFit/Fitness:
The emotional benefit of taking an active part in bettering yourself is very important
in the fitness and CrossFit segments. This is essentially what the two sports are all
about. The athlete seeks to better himself as an individual by working hard to improve
the physical ability and visual appearance of his body.
The feeling of being stronger can result in a competitive advantage for the
athlete. This is important since much of the performance in CrossFit and fitness relies
on the mental state of mind and power of will. The increased stability of the body will
provide the athlete with a feeling of safety, since he will be less likely to get an injury.
Self-expressive benefits of Under Armour’s compression apparel
Aaker (1996) implies that certain groups of people use brands as a vehicle for their
self-identity. This can be either their actual identity or an ideal self they aspire to be.
When wearing a product from a brand such as Under Armour the user attempts to
represent and communicate affiliation with the values that can be identified when
looking at the brand-as-person perspective. The values found in Under Armour’s case
was being active, tough, strong, driven, raw, determined and standing out in the
crowd. These are the values the user attempts to attach to their own self-image. The
user expresses a connection to a certain group of people when wearing the Under
Armour logo. This group of people likes to have the Under Armour values associated
with their personality. Under Armour has cleverly used its “Protect this house”
campaign to create an emotional feeling of belonging to a group of people. The
inspirational ad shows various athletes training hard to overcome different obstacles,
and creates an “us vs. them” mentality that gives the receiver of the message a strong
sense of unity.
The brand must ensure that its product can be visually distinguished from
those made by competing companies. In order to express the values the user wishes to
represent, people must be able to see which band is worn. The self-expressive benefits
can also be based on using a piece of equipment, which is endorsed by a celebrity
athlete. Then using the brand becomes a way of expressing who you look up to and
aspire to be.
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Self-expressive benefits valued by segments
Football:
In football and most other teams sports the athletes wear a team uniform on top of the
compression apparel. This means that the brand becomes less noticeable. Since the
product is not visible to others it can be harder to express certain values through the
use of it. The product can still be noticed in the dressing rooms before and after the
physical activity.
CrossFit/Fitness:
The athletes in fitness and CrossFit tend to use the compression products without any
other garments to cover them. This means that a noticeable logo placed on products is
easily visible to the surroundings. Therefore the product can be used as a means of
communicating ones self-identity to other people. Many of the values that Under
Armour represents as a brand values that people who do fitness and CrossFit would
like to have attached to their personality. CrossFit has a raw and tough image where
sweaty guys use primitive tools in their workout. Under Armour also appeals to
certain values in fitness such as being strong, driven, and determined. The tireless
pursuit of an improved performance is something that fits well with the history of
Under Armour. The athletes in both segments like to show their surrounding that they
are living an active way of life.
Multiple brand identities
Aaker (1996) suggests that a brand can benefit from operating with multiple brand
identities. It is often the case that brands will need to adopt its identity to a new
market or a different product context. The brand should aim at having some common
brand associations, while focusing on different elements in each market. The common
associations will most often revolve around the core identity of the brand. These
associations should remain consistent in the market communication in order to avoid
confusion about what the brand represents. In order to have a higher impact on the
Danish market, it could be beneficial for Under Armour to take on multiple identities.
An obvious choice would be for Under Armour to distinguish between the team sports
and the individual side of its business.
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The common associations should be focused on the brand’s core identity of
being innovative, which is also what the brand’s position should be based on. This
needs to be consistent in the market communication across the different target
segments. A focus on innovation will also give the brand an identity and a position in
the market that has the potential to be long lasting.
The other elements that should be focused on in the market communications
for the different target segments should be found in the value proposition. From the
analysis it is apparent what parts of the value proposition Under Armour should
emphasize in their market communication for the three target segments. The football
segment values things that are very different from the ones valued in CrossFit and
fitness. For the communication aimed at the football segment the focus should mainly
be on the functional benefits of using the compression apparel and which emotional
benefits that are experienced as a result of these. In the individual segments, CrossFit
and fitness, Under Armour’s market communication should give more attention to the
emotional and self-expressive benefits the product provides, while still highlighting
the functional ones it possesses. This opens up for multiple execution alternatives in
the communication strategy since different parts of the value proposition should be
emphasized.
Basing a brand’s position on innovation means that the consumers should see Under
Armour’s products as being of durable quality with innovative attributes and design.
In order to position their brand against the right competitors, Under Armour needs to
communicate which product category it belongs to. The company will be competing
against other producers of compression apparel in the Danish market. The company
needs to be perceived as being differentiated from its competitors in the market in
order to successfully gain market shares.
Since the compression apparel from Under Armour comes with a lot of added
functional, emotional and self-expressive benefits, the company will easily be able to
differentiate itself from private brand labels such as Master or SOC. Under Armour
will eventually want to expand their market offering on the Danish market. Therefore
the company will need to position itself close to the main competitors Adidas and
Nike. These two companies are known for delivering high quality products to a broad
range of the market. The compression apparel that the two companies offer is very
close to Under Armour’s in terms of functional benefits and quality. However, since
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the companies have not emphasized the communication of those benefits to the three
chosen segments, and because compression apparel is still in the early stages of the
product life cycle, Under Armour will be able to differentiate its brand by putting
emphasis on the innovative nature of its products. Because Nike and Adidas could
also start communicating the functional benefits of their products to the target
segments, it is important that Under Armour also emphasizes the strong personality
that the brand has. This personality is also what Under Armour must use to
differentiate its brand from the highly specialized competitors such as Skins. It will be
hard for Under Armour to beat Skins on functional attributes, as Skins only produces
compression apparel, and therefore have all their focus on this type of product.
Functional attributes are also what Skins try to emphasize in their market
communication. Under Armour should therefore attempt to add the brand personality
to its position in the market. In compression apparel Under Armour is able to deliver
products in different styles and colors making the products stand more out than the
tedious black ones from Skins. Once Under Armour has created a name for itself in
the Danish market, it will be able to differentiate itself from Skins by being a
company that can provide a wider range of products, hereby outfitting the athlete
from top to toe.
Price
The price that Under Armour is able to charge for its product is very much dependent
on the benefits the brand is able to offer its customers. Therefore a higher price must
be justified by an equal amount of benefits. Many consumers relate price to the
quality of the product. Having a low price would thus signal a product of inferior
quality, which is not something Under Armour is interested in. Because of the added
benefits that come along with Under Armour’s products, the price Under Armour
should charge for its compression apparel must be higher than the ones charged for
SOC or Master products. Compression pants from those two labels costs around 250
DKK. Despite the functional attributes of Under Armour’s compression apparel not
being very different from the ones Skins’ has, a price in their range would not be
feasible. This is because Under Armour will want to bring in additional products to
the market, once their position in the market has been established. However, charging
a slightly lower price could provide the company with a competitive advantage, if the
consumers acknowledge the closeness of the product attributes. Skins charges around
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750 DKK for a piece of compression apparel. Because Under Armour will want to
bring in additional high quality products once their position in the market has been
established, the price of their products should be closer to Adidas and Nike’s. If
Under Armour were to charge a higher premium they could easily become victims of
reference prices. Kotler et. al. (2009) describe the use of reference prices as a situation
where the consumer will use the price of a brand they remember to evaluate the price
of new products. Since Nike and Adidas are the two leading companies on the Danish
market, their prices will often be used to evaluate the offerings from new companies.
Because the two brands are already in the market, and thus are more recognized, it
would be hard for Under Armour to gain market shares by charging a higher price for
their products. A piece of compression apparel from Nike and Adidas costs around
500 DKK.
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Choice of communication channels
Aaker defines brand awareness as: “The strength of a brand’s presence in the
consumer’s mind” (Aaker, 1996, p.10). There are two parts to brand awareness: brand
recognition and brand recall. Brand recognition occurs when the consumer remembers
a past exposure to the brand. The consumer does not necessarily have to remember
where and when the exposure happened, just the fact that the brand is recognized is
enough. Brand recall occurs if a brand comes into the mind of the consumer when a
certain product category is mentioned. Brand recognition and recall can both have a
high influence on the consumer’s choice between products from different brands.
Under Armour has not managed to create high brand awareness in the Danish market
thus far. The brand recognition is especially low in the football segment, whereas it is
a bit higher in the fitness and CrossFit segments. This is due to the exposure the
company receives in the United States. The company’s brand recall is very low, since
very few people think of Under Armour as the first company when compression
apparel is mentioned.
In the process of selecting the proper communication channels Under Armour
should use to reach the target consumers, the company must keep in mind that
compression apparel is still in the introduction stage of the PLC-curve on the Danish
market. Kotler et. al. (2009) suggest that when a product is in the introduction stage of
the product life cycle it should focus on the following things: Informing potential
customers of the market offering, persuade customers to try the offering, and ensure a
proper sales channel. When the marketing objective is to create product awareness
and trial, the advertising should focus on innovators and early adopters. Heavy sales
promotions should be used to encourage the athletes to try the products. There are a
number of different communication channels Under Armour could make use of in the
Danish market:
Print advertisement
Advertising in magazines gives the possibility to communicate user imagery and
product information effectively. Therefore it could be a good way for Under Armour
to inform the potential customers about the market offering. The use of magazine
advertising also gives the company a precise way of reaching the target market
(Kotler et. al., 2009). The publishers of the magazines know the characteristics of
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their readers, and therefore Under Armour will be able select the magazines where the
reader profile best fit the target consumers. Advertising in magazines could be a great
opportunity for Under Armour. Fitness chains will often have their own magazine that
is available free of charge to all its members. Under Armour could decide to take out
an add themselves or they could do so in collaboration with the physical or online
retail stores that sell the company’s products. These adds could both be used to
provide information about the products and contain aspirational visual imagery to
connect with the right user profile. In order to target the football segment,
advertisement could be placed in the match programs that are available at the
Superliga games.
Sponsorships
Sponsoring events can be used as a way for the company to broaden and deepen the
relationship with the target market. It will provide the company with the exposure that
is needed to increase the brand awareness. Event sponsorship will also give the
company the opportunity to have the associations of the event attached to the brand. It
can also give the company the opportunity to sell products to the participants of the
event and spectators attending. An ideal opportunity for Under Armour would be to
sponsor a CrossFit event in collaboration with one of the larger CrossFit centers. The
associations of such an event would match Under Armour’s brand identity perfectly
and the target audience could effectively be reached. The company would be able to
put up a stand where participants and spectators could try the products and get
answers to questions they might have. Event sponsorship in the larger cities should
especially be encouraged, as more people will be reached through the advertising.
Taking an active part in the community would also be something that would generate
a positive response from its members. It would also be a great way to increase the
awareness for the brand in the target segment. Advertising at events would allow the
company to inform about the product offering and encourage people to try it.
CrossFit centers will often have their own clothing line which bears the name
of the club. A good way for Under Armour to be associated with a CrossFit center and
its members could be by making a sponsorship agreement with the center. Under
Armour could become the official supplier of the center’s official apparel, hereby
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selling its products to the members. Additional exposure would be gained when the
members of the CrossFit center wear the products at competitions elsewhere.
Word-of-mouth
Kotler et. al. (2009) suggest that consumers are highly influenced by family and
friends when making a decision to use new brands. He goes on to define WOM as:
“An interpersonal communication of market offerings where the receiver regards the
communicator as impartial” (Kotler et. al., 2009, p. 703). The impartial
communicator is very believable since he does not stand to gain anything from
speaking positively about the product.
In order for Under Armour to gain positive WOM for its products it could be
beneficial for the company to identify certain innovators that could be targeted.
Innovators are generally enthusiastic about trying new products, and will happily
provide feedback. Providing the innovators with free samples of the products would
be a very inexpensive way of gaining some positive feedback. Using team equipment
managers as a link to these innovators would be a great strategy in football, as they
have a high influence on what the players end up wearing. Daniel Pedersen explains:
“I choose some players who will try out the product. … Then I will receive some
feedback from them, and make a decision regarding a possible sponsorship
agreement.” Professional players often ask each other for advice on different types of
products. Morten Bertolt explains: “People look at what new products enter the
locker room, and players will let others know if a product is good. For instance with
cleats, if someone says a particular cleat is very good, then others will try it out as
well.” Targeting these teams and players could eventually lead to permanent
sponsorship agreements, which will ensure Under Armour constant exposure in the
media.
Opinion leaders that could easily be targeted in the CrossFit and fitness
segments are the instructors. These are the people who can influence their reference
group in a purchase situation. In both segments the members look a lot at what the
instructors wear and ask them for product recommendations. One option could be to
make a deal about equipping the instructors of a fitness chain. A cheaper way that
could also be effective would be to offer the instructors a discount on the products. As
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explained by Karsten Spaabæk earlier, this kind of agreement can have a positive
effect on the sales of a brand.
Internet
Presence on the Internet can be a very powerful tool for a company. Among other
things it can be used to convey information, interact with customers, and increase
sales. The brand should therefore ensure that it has a properly designed website that
does well in expressing the history, purpose, product and vision of the brand. Under
Armour of course has its American site that does this excellently. However, it could
be beneficial to have a Danish counterpart as well. Interested consumers could see
which products are available in the Danish market and where the products could be
purchased. Currently the Underarmour.dk domain is owned and operated by Kikuni
sport Aps, which is the agency that previously handled the Under Armour brand on
the Danish market.
Social media sites are also a place where it would be beneficial for Under
Armour have a larger presence.. Under Armour’s young target consumers are heavy
users of these social media sites, and therefore it would be a great place for the
company to interact with them. Currently the Danish Under Armour site on Facebook
only has 27 people who like the site. This is a very low number if compared to the
Icelandic site. Despite being situated in a very small country, the Icelandic Under
Armour representatives have been able to get 6,413 people to follow their Facebook
page. This high number of people has been achieved through a couple of advertising
campaigns offering a chance to win some Under Armour clothes in return for sharing
the page with their friends. This goes to show how inexpensively a company can
create a large interest in the brand. Thus, it would certainly be a possibility for Under
Armour to do so in the Danish as well.
Through online forums that are related to either fitness, CrossFit or football
Under Armour would also be able to increase the interaction with its target segments.
Aarhus CrossFit has a Facebook site with 1,231 members who use the page to discuss
everything from supplements to workout apparel. This type of discussion also takes
place in various other online communities that are available in each segment. Having
a presence in those communities and interacting with the members would provide
Under Armour with a great deal of information about the members of the target
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segments. Under Armour taking an active part in the community would also create
value to the customers.
Television
Television is an extremely powerful advertising medium due to the large amount of
people it is able to reach. Despite being an expensive medium to use for
advertisement it gives a low cost per exposure. Kotler et. al. (2009) suggest two main
strengths to TV advertising: product attributes can be vividly demonstrated and
hereby linked to consumer benefits, and user, usage, brand personality and other
intangibles can be dramatically portrayed.
It was previously noted that advertising in television would be very effect full in
football. However, TV advertisement would not have the same effect in fitness and
CrossFit, since they are not sports that are broadcasted on TV very often. Therefore it
would be hard to ensure that the right people are on the receiving end of the
advertisement. Because of the expensive nature of doing an advertising campaign in
television, it is not recommendable for the agency that handles Under Armour’s brand
on the Danish market to pursue this method without the support from either MNO or
the American part of Under Armour.
Sales channels
A vital part of introducing a brand to a new market is to choose the appropriate type
of sales channel. The choice of sales channel will affect how often, by whom and how
many see the brand.
Currently Under Armour’s products are mainly present in Internet retail stores
such as unisport.dk, bodyman.dk, outlet.dk etc. This is a great type of sales channel,
which Under Armour should continue to make use of primarily for two reasons. First,
most of the Internet retailers selling Under Armour products are all focused on
specific types of sports such as CrossFit, fitness, golf, American football or football.
Under Armour must therefore make sure that it sells its products in online stores that
match the company profile. Second, purchasing products through the Internet is
becoming increasingly popular. The respondents in the focus group interviewees gave
clear indications that they like the ease of purchasing products online. In addition,
Thomas Fisker explained the demand for Under Armour’s products has increased on
his website.
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Using the Internet as a sales channel has drawbacks as well. Compression
apparel is a product that a lot of people prefer to try on before purchasing due to the
tight fit. This option is naturally not available when purchasing the product online.
After conducting the focus group interview it became clear that the serious athletes do
not necessarily go to specialty stores when buying sports apparel. This is because they
already know what product they want when going to a sports retailer. Most of them
do not perceive the guidance received in a specialty stores to be better than the one in
a regular sports retail store. Thus, if they want to try out a product before making a
purchase they are just as likely to go to normal sports retailers as they are to specialty
stores. In addition, Henrik Hinge explained that specialty stores are for all kinds of
people and not only the serious athlete. Therefore, the primary goal for Under Armour
should instead be to establish a stronger presence in physical retail stores on a chainlevel. Getting into a chain such as Intersport gives a brand access to 80 stores
throughout the country. This ensures that a vast amount of Danes are exposed to the
brand. To get into a chain might be difficult for Under Armour at the moment, since
the demand for and awareness of the brand is limited. Should the awareness increase
through the use of the communications strategies suggested above, the brand would
eventually become attractive to sports retail chains. One thing Under Armour must
ensure is that their products should not be hidden in a corner, as is currently the case
with Under Armour products in the chain Stadium.
Geographic location is also of importance when considering sales channels. In
order to target the fitness, football and CrossFit segments Under Armour must ensure
that it is present in the cities where the target consumers live. The retail stores should
therefore be located in the nine biggest cities of Denmark. In these cities the demand
for the products will be higher because there are more people. If the product is
available in a retail store in a larger city it will also ensure that more people will see it.
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Expected result from implementation of proposed
marketing strategy
The overall goal for Under Armour is to build the awareness for the brand in the
Danish market. Assuming the marketing strategy suggested in this thesis is followed,
the end result can be evaluated in terms of the market share the company is able to
acquire. Initially the company should be contempt with raising its brand recognition
in the market. The optimal situation for the brand would be to achieve brand recall for
its compression products in the targeted sports. The following estimations deal with
Under Armour’s presence in the market 5 years in the future. At this point the
innovators and early adopters will already have approved of the products, and
therefore the focus has shifted to include all athletes in the targeted sports.
Because of compression apparel’s current position in the introduction stage of
the PLC-curve it is a market where demand is expected to rise in the coming years.
With the implementation of a successful marketing plan on the market, Under Armour
should be able to obtain a position of significant importance in the market.
CrossFit
With an increased presence on the CrossFit market, Under Armour would be able to
increase its brand recognition relatively easily. The athletes in the sport have already
showed an interest in the brand. Due to the small size of the sport most of its members
could be accessed with fairly simple promotional efforts. In terms of brand
recognition it is estimated that 75% of the Danish CrossFitters would be able to
remember a previous exposure to the brand. It is therefore expected that the brand will
have a good chance of achieving brand recall within this segment. In 5 years time
products from specialized brands will still be highly valued by the people in the
segment. In terms of market share 20% seems attainable.
Fitness
Since fitness is a sport where the members notice what each other wear, it would be
beneficial for Under Armour to get its product into the centers. If the company could
make a deal with one of the larger chains about having its instructors dressed in the
brand’s products this would strongly increase its brand recognition within the
segment. In 5 years time 30% brand recognition should be realistic. In terms of
market share it must be kept in mind that the fitness market is very large, and
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therefore consists of people with a wide range of values and needs. Therefore the
attainable market share is assumed to be only 5%.
Football
Because of its large size the football market attracts the attention of the large brands
in the sports apparel industry. Under Armour has recently shown an interest in
competing in the market through its signing of a five-year sponsorship deal with
Tottenham Hotspurs. This deal is going to give the brand a lot of exposure to the
members of the football segment, since Tottenham is a large team whose games are
often broadcasted on Danish television. Additional attention could be obtained by an
increased presence in the Danish football market. Professional players have already
shown an interest in the brand’s products, especially their functional abilities. A fair
estimate of the level of brand recognition in 5 years is 40%. Attaining a high market
share will be harder for the company due to the intense nature of the competition.
Therefore a reasonable estimate is a market share of 8%.
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Conclusion
The purpose of this paper has been to determine how Under Armour should best
penetrate the Danish market through the use of its compression apparel products. The
thesis answers the overall research question by developing a marketing strategy for
Under Armour’s entrance to the market. The result is a suggestion of how Under
Armour should attempt to position its market offering to fit the values of the selected
target segments on the market. Through the analysis it was found that there are
several segments of interest to Under Armour on the Danish market for compression
apparel. During the process of answering the research question, several important
points were noted.
Before a company can decide to expand its reach to a new market, there are
many things that need to be taken into consideration. The findings of the thesis stress
the importance of analyzing a market thoroughly before a decision on method of entry
is made. There are wide arrays of variables that can affect whether a market is of
interest to a company or not.
Through the thesis it was found that Danish consumers on the compression
apparel market differ very much in terms of the things they attribute value to. Even
though they might share a lot of common characteristics, the benefit they seek from a
product and the value it can create for them can vary a lot. In the thesis this was
evident after the segmentation process of the market had resulted in a definition of the
serious athlete. When looking for the serious athlete within different sports segments
it was found that various benefits were sought of the same product. Bringing a brand
to a new market can therefore cause problems, as many things that must be taken into
account. The company cannot expect to be successful by introducing its market
offering in the same way to every segment in every market.
Certain segments in a market may look very interesting to a company at first
glance due their size. However, when the characteristics of their members are
analyzed in depth this perception can be changed. Additional characteristics of a
segment should therefore be examined before the right targets segment can be
selected. This was the case with the running segment of the Danish market for
compression apparel. Initially the segment looked interesting due to the amount of
potential consumers it contained. However, when examined more closely it proved
too hard to actually reach the members of the segment through market
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communication. Smaller segments should also be examined as its members might
possess characteristics and values that make them especially interesting to the
company. This was the case with CrossFit where the concentrated location of the
members ensures an effective market communication. On top of that, the members of
the segment have already shown an interest in the brand. Under Armour is therefore
in a good position to achieve brand recall from the segment members, since the
market leaders have not shown a particular interest in the segment.
Because of the difference in consumer needs it is important how a company
decides to approach its target segments. The way a message is best communicated to
the members of different segments varies a great deal. The thesis highlights the
importance of communicating a company’s category membership and market position
to the target segments, when introducing a product or brand to a new market. This
needs to be done to ensure that the target consumers understand the brand and what
values it stands for. Certain things should be kept constant in this communication,
while others can be changed to match the characteristics of the target segments. Under
Armour’s core personality of being an innovative company should be kept constant in
order to avoid confusion, while different parts of the value proposition can be
emphasized in different sports. Sometimes the members of certain segments in a
market share several needs and values. When this is the case it is possible for the
company to emphasize the same needs in the market communication. This was found
to be the case with the members of the CrossFit and fitness segments in the Danish
market.
In the analysis of the competition within the different market segments, it was
noted that a company can steal market shares from the market leader by attacking
segments through an adjusted value proposition. In order to be perceived as
differentiated, the market proposition must be adjusted to fit the needs of a segment,
which the market leader does not focus on. Evidence of this can be seen in the
estimations of Under Armour’s market shares in various sports in 5-years-time.
In the evaluation of the different media channels it was noted that using
certain ones can be more effectual on specific segments than others. An in depth
knowledge of the target segment is therefore important, so the market communication
can be planned to have a high effect on the intended receiver. An example of this
could be seen when considering the effect of advertising in television. It was easier to
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Nikolaj Kristensen
target footballers through this media channel than it was with the members of the
CrossFit and fitness segment.
Under Armour is a company that seems on the fast track of becoming a global brand.
However, it currently faces some important decisions regarding the future geographic
expansions of the brand. Despite the high popularity of its products, the company
must be careful in selecting the right markets where the demand and needs fits with
the business profile. It will be very exciting to follow Under Armour’s future
endeavors.
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List of references
Full year 2011 results.
www.adidas-group.com/en/investorrelations/events/2012/2012-03-07.aspx, visited on
28th April, 2012.
Armstrong, G; Kotler, P (2005). Marketing: An introduction, 7th ed. Prentice Hall.
Crossfit er det nye hit.
http://www.b.dk/nationalt/crossfit-er-det-nye-hit, visited on 28th April, 2012.
www.bodybuilding.dk, visited on 28th April, 2012.
Reebok selection at Bodyman.
http://www.bodyman.dk/shop/reebok-maend-362c1.html, visited on 28th April, 2012.
Historien bag.
http://www.crossfitcopenhagen.dk/pages/historien, visited on 28th April, 2012.
Rå træning holder nordjyderne til ilden.
http://crossfitaalborg.dk/upload/File/Borsen_Crossfit_aalborg.pdf, visited on 28th
April, 2012.
Statistikbanken.
http://dst.dk/da/Statistik/statistikbanken.aspx, visited on 28th April, 2012.
Danmarksturneringen 2011/12, superligaen, tilskuerstatistik.
http://www.danskfodbold.com/tilskuere.php?ligaid=2001&seasonid=2012, visited on
28th April, 2012.
Love & regler – Fodboldloven.
http://www.dbu.dk/Faelles/turneringer_og_resultater/Love_og_regler/Fodboldloven/_
4_-_spillernes_udstyr.aspx, visited on 28th April, 2012.
Fodbold sætter igen rekord.
http://www.dbujylland.dk/Nyheder/2012/April/Medlemstal_2012.aspx, visited on 28th
April, 2012.
Divisionsforeningen håndbold.
http://www.df-h.dk/media2sitemap.asp, visited on 28th April, 2012.
DGI medlemstal.
http://www.dgi.dk/omdgi/fakta%20og%20tal/medlemstal.aspx, visited on 28th April,
2012.
Euromonitor International (2011a). Apparel in Denmark. Passport.
Euromonitor International (2011). Consumer lifestyles in Denmark. Passport.
Under Armour ny partner i FCN.
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Nikolaj Kristensen
http://www.fcn.dk/singlenews/?tx_ttnews[tt_news]=329&cHash=c72590c29b1de254c2d9adba406bfb29,
visited on 28th April, 2012.
Flick, Uwe (2009). An introduction to qualitative research. SAGE publications.
forum.getbig.dk, visited on 28th April, 2012.
Fitnessåret 2011 bød på store omvæltninger og konsolidering.
http://www.idan.dk/Home/Kommentaren/082fitness2012.aspx, visited on 28th April,
2012.
Nike annual report 2011.
http://investors.nikeinc.com/Theme/Nike/files/doc_financials/AnnualReports/2011/in
dex.html#select_financials, visited on 28th April, 2012.
Under Armour annaul report 2011.
www.investor.underarmour.com, visited on 28th April, 2012.
Kirkegaard, Lund Kasper (2007). Overblik over den danske fitness-sektor – en
undersøgelse af danske fitnesscentre. Idrættens analyseinstitut.
Kirkegaard, Lund Kasper (2010). Foreningsfitness – portræt af de aktive medlemmer.
Træningsmotiver, tilfredshed og selvvurderet sundhed. Idrættens analyseinstitut.
Kotler, Philip; Keller, Lane Kevin; Brady, Mairead; Goodman, Malcolm; Hansen,
Torben (2009). Marketing Management. Pearson Education Limited.
Kotler, Philip. (1984). Marketing Management, international edn., Upper Saddle
River, NJ: Prentice Hall.
MNO – Under Armour.
mno.se/underarmour/default.html, visited on 28th April, 2012.
Morgan, L. David (1998). The focus group guide book. SAGE publications.
Odense CrossFit.
http://www.obbc.dk/page-2/OBBC.html, visited on 28th April, 2012.
Pilgaard, Maja (2008). Danskernes motions- og sportsvaner 2007 nøgletal og
tendenser. Idrættens analyseinstitut m.fl.
Porter, E. Michael (1985). Competitive advantage. Creating and sustaining superior
performance. The Free Press
Rogers, E. M. (1983). Diffusion of Innovations. New York: Free Press.
Roberts, Daniel (2011). Under Armour gets serious. Fortune, 164(7), p. 152-162.
Salter, Chuck (2005). Protect this house. Fast company, 97, p. 70-75.
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From rags to microfiber: inside the rapid rise of Under Armour.
http://sportsillustrated.cnn.com/2009/more/04/09/under.armour/index.html#ixzz1sHc
3KODX, visited on 28th April, 2012.
Tottenham sign kit deal with UA worth $16 million annually.
http://www.sportspromedia.com/news/tottenham_sign_surprise_multimillion_dollar_deal_with_major_american_backe/, visited on 28th April, 2012.
http://www.sportmaster.dk/maerker/nike, visited on 28th April, 2012.
http://www.stadium.dk/sport/traning/traningstoj/1?sort_attribute_1=BrandName&Ma
xItemsPage=30, visited on 28th April, 2012.
Table 1
Column 1: www.dst.dk - statistikbanken
Column 2: http://www.fitnessdk.dk/CENTRE/Pages/find_center_pa_kort.aspx
Column 3: http://www.fitnessworld.dk/find-traeningscenter
Column 4: Kirkegaard, Lund Kasper (2007). Overblik over den danske fitness-sektor
– en undersøgelse af danske fitnesscentre. Idrættens analyseinstitut.
CrossFit hitter.
http://www.tv2bornholm.dk/nettv/nyeste.aspx?videoID=26947&vidLoc=NewDB,
visited on 28th April, 2012.
www.underarmour.com, visited on 28th April, 2012.
Brand mission statement
http://www.underarmour.jobs/our-mission.asp, visited on 28th April, 2012.
Det ekstremt efterspurgte Under Armour base layer er tilbage på lager.
http://www.unisport.dk/nyheder/9163-det-ekstremt-efterspurgte-under-armour-baselayer-er-tilbage-pa-lager/, visited on 28th April, 2012.
Unisport – Fodboldudstyr – Sportsundertøj (Base Layer)
http://www.unisport.dk/fodboldudstyr/1293-sportsundertoj-base-layer/, visited on 28th
April, 2012.
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