Five Forces Analysis of Under Armour
Under Armour is a leading brand of athletic gear. Since its foundation, the brand has brought so many innovative products targeted at the sports market. The brand has continued to expand its international footprint. It has built an impressive presence over these years even outside US. Its main competitors include Adidas, Nike and Reebok. The focus of the brand is innovation for making sports a better experience. It has made cold gear, heat gear and all season gear so the athletes can have season proof gear.
Now, it has released charged cotton, another innovation for empowering the athletes. Here is a five forces analysis of Under Armour that highlights the factors which affect its competitive position in the market. The five forces model was developed by Michael E Porter at whose core are five important forces that affect the competitive position of any business. These forces are there in every market and industry. This analysis helps managers understand how they can achieve a competitive advantage and a stronger position in the market.
Bargaining power of suppliers:
Big and well known brand names like Under Armour have to fear very little for their suppliers’ bargaining power. Having a partnership with big brands like Under Armour is always profitable for the suppliers. Moreover the number of suppliers is large and generally they are not indispensable for brands like Under Armour which can always switch to a new one. the bargaining power of the suppliers is also reduced by the fact that forward integration is not possible for them. While they can supply raw materials and manufacturer products, the research and innovation that Under Armour undertakes is not their job. Moreover, building a kind of brand like Under Armour is very difficult if not impossible for them. So, under Armour holds significant clout over its suppliers that have top depend upon it and follow its prescribed code of conduct for the suppliers.
Bargaining power of buyers:
Under Armour has built a great reputation over time through marketing campaigns and by sponsorship. This has helped it acquire superior brand reputation. However, apart from superior brand recognition, the focus is also on innovation and product quality. The brand conducts a lot of research to produce innovative products. Its premium quality products help it attract and retain customers. This is a major competitive advantage for the brand which helps it achieve superior sales. Overall, the brand has been able to build customer loyalty through its marketing efforts and focus on quality. This works in the favor of the brand and acts to limit the bargaining power of the buyers. Overall, the bargaining power of buyers is moderate.
Threat of Substitutes:
The threat of substitute products is high for Under Armour. It is because while the number of competitors may be limited most of them are influential brands that make products of similar quality and have acquired a good brand recognition and image. Adidas, Nike, Columbia Sports etc brands make similar products that are good substitutes for Under Armour’s athletic gear and apparel. So, overall the threat of substitutes for Under Armour is high. the smaller brands can also be a small threat. The only factor that acts to moderate this threat to some extent is the research and innovation that Under Armour carries out.
Threat of new entrants:
The threat of new entrants is moderate for it requires a large investment to start production lines and manage a huge supply chain and distribution network. Moreover, to create the type of brand image and recognition as well as customer loyalty that Under Armour has generated is a difficult task that will require time, efforts and capital. Overall, these factors make it difficult for the new entrants to enter this sector of the industry. However, the threat is still there because some fashion brands also make sports apparel. Any existing large and recognized clothings brand can enter this sector and gain popularity after some research and marketing. So, the threat of new entrants for Under Armour becomes moderate.
Rivalry among the existing brands:
It is because the rival brands are large names that hold significant influence and have a string brand image. The number of its main competitors is low but all of them are big players in the industry that hold significant clout. So, the competition for market share is always intense among the existing players. these brands offer similar product quality and also have an impressive presence in the market. Based upon these factors the rivalry among the existing brands is high.