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Flipboard Friday: Under Armour's Ugly Fumble

Source: https://www.wte.net/Blog/August-2023/Flipboard-Friday-Under-Armours-Ugly-Fumble
Date: August 2023
Author: Martin W Smith

The ModernMBA video offers insights into Under Armour's failures, though it overlooks challenges affecting many WTE customers regarding two critical areas:

  • Why — Understanding your business purpose and reason for existing
  • Target Audience — Identifying whom you serve and why they value you

Losing Under Armour's Why

Drawing from Malcolm Gladwell's David and Goliath, the author illustrates how underdogs like Under Armour initially succeeded against giants Nike and Adidas. Gladwell demonstrates that "power is only sometimes where you think it" — smaller competitors can outmaneuver established leaders through strategic focus.

Under Armour's foundational strength lay in their "why": creating quality sportswear for elite athletes. However, the company lost this compass through what the author terms "squirrel marketing" — pursuing ventures distant from core competencies. The company's venture into connected fitness and the Internet of Things (IoT) exemplifies this drift.

The author parallels this with his M&M/Mars experience, where the company considered acquiring a trucking firm but ultimately purchased an ice cream company (Dove) instead, remaining true to their core business.

Key Point: "A 'Why' isn't just words, but a compass helping to direct every step." Under Armour's $700 million investment in connected fitness distanced them from customers and core expertise.

Losing Your Target Audiences

Moving From Luxury to Mass Is Tough

Under Armour began as a luxury sportswear brand emphasizing quality over mass-market accessibility. This positioning created challenges when attempting to scale to broader audiences.

Two critical market shifts occurred:

  1. Sportswear as Fashion — Kanye West's Yeezy collaboration with Adidas demonstrated how sneakers became fashion statements rather than purely functional athletic wear. The strategy employed scarcity and cultural relevance to attract non-traditional customers.
  2. Shoes as Sportswear Tentpoles — Footwear became the primary vehicle for brand differentiation and fashion identity. Under Armour's lackluster shoe designs failed to compete with emerging fashion-forward competitors.

How You Can Use These Ideas

Three actionable lessons emerge from Under Armour's missteps:

Your Purpose: Purpose transcends mission statements. It represents where capital and resources flow. Straying from core identity while chasing distant opportunities drains resources and customer loyalty simultaneously.

Fashion: Every brand eventually intersects with fashion. When craftsmanship becomes assumed and voices homogenize, style differentiation becomes necessary. Recognize these market inflection points.

Tactics: Understand competitive terrain before engaging established players. Don't challenge giants on their native ground. Instead, create distinctive positioning in uncontested markets.

Under Armour's Innovator's Dilemma

Drawing from Clayton Christensen's The Innovator's Dilemma, the author identifies two innovation categories:

Sustaining Innovations refine existing offerings for premium customers without disrupting market dynamics. They're profitable and safe but may cause companies to overlook transformative shifts.

Disruptive Innovations create new markets and dethrone incumbents. Initially simpler and cheaper, they serve previously ignored customer segments.

The trap: Established firms prioritize sustaining innovations because they promise proven returns, preventing disruptive concepts from receiving necessary resources and development.

The Allure of Big Markets

Giants chase large markets, leaving niches undefended. Disruption typically emerges in small, overlooked spaces where established companies dismiss emerging opportunities.

Under Armour's Specific Dilemma

Under Armour disrupted sportswear with moisture-wicking technology. As growth accelerated, they broadened offerings to compete directly with Nike and Adidas rather than defending their niche.

Critical missed opportunities include:

  • Athleisure trend: Lululemon captured the fashion-athletic wear intersection while Under Armour remained anchored to pure athletics
  • Technology ventures: Acquisitions like MyFitnessPal consumed resources without generating proportional returns
  • Distance from customers: Growth initiatives created separation from core constituents

Conclusion: What About You?

The author concludes by inviting reader reflection on Under Armour's trajectory and asks which sportswear brands earn customer loyalty today.