Under Armour Case Study
This created a major threat to Under Armour as it had to improve their marketing strategies so as to beat their competitors (Magretta, 2012). This essay aims at analyzing the supplier’s bargaining power in reference to Under Armour Company using the Porter’s Five Force Model. The Sports Apparel industry is considered as a growing industry in the business environment as it leads to innovation and technological improvement. In the sports apparel industries, rivalry is seen to be intense as most companies are able to come up with unique products to capture a certain group in the market. Due to the technological advancement, most companies are able to design unique products with the aim of filling a gap that has been left by other existing companies.
One of the major strategies that Under Armour adopted was to increase the number of stores in the country. This way, they would be in a position to cover more grounds in terms of distributing their products as well as increasing their annual sales. Also, they would be in a position to increase their levels of capital so as to achieve economies of scale. Their production and distribution costs would go down and their products would be competitive and affordable when compared to other products that have existed in the sports apparel market. Under Armour would also be in a position to increase the supplier bargaining power thus controlling a larger size of the market in which they target. Thus the need for a company such as Under Armour to create more appealing products as well as improve their overall marketing strategies.
The products created for buyers in the sports apparel industry may be considered to be a relatively important part of the customer’s way of living. The fact that these products are relatively crucial for these athletes as well as individuals seeking fitness, then, the bargaining power of the suppliers in the industry can be considered as moderate. Suppliers in the sports apparel industry are able to create products that are slightly differentiated, in that, each company is able to advance their products depending on the level of customer satisfaction they aim at achieving. These slight differences make it possible for these suppliers to have control over the prices of their products depending on the level of satisfaction. The niche that has grown over the years where people are now able and willing to indulge in games and other sporting activities have created a market for these companies.
The diverse sporting activities have made sure that each company is able to target a certain group of people with specific needs of the kind of products they need. So as to compete in such an industry, companies have to possess a high level of capital thus the reason why companies in this field are considered as large. Production of attire, and other sporting gears may also require a large sum of capital so that they are able to meet economies of scale. This means that these companies have to produce as well as try to push their products into the market as each product is unique from what their competitors produce. Another contributing factor to this is the fact that there is high level of imitation in the industry.
When Under Armour was able to introduce a product that maintained body temperatures even when undertaking physical exercise, its competitors imitated a similar product and branded it differently. The prices varied due to the varying costs of production. Consumers can now get a similar suit from a different company other than Under Armour at different prices as well as at the convenience of the customer. This means that in the long run, suppliers would have to locate their stores at convenient locations for their consumers in order to have an upper hand in the market. With costs maintained in the minimum companies are able to compete fairly in the market. Also, consumers are able to save while still purchasing items from companies such as Under Armour.
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