Kevin Plank and the Rise of Under Armour |
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In 1991, Plank entered the University of Maryland’s Robert H. Smith School of Business and managed to join the football team in his freshman year. As the National Collegiate Athletic Association (NCAA) football players were barred from employment Plank could not get into a job. Selling was Plank’s innate strength. Plank started a rose-selling business – Cupid’s Valentine Rose Delivery – in his freshman year targeting Valentine’s Day. The business was a runaway success. Plank managed to sell 100 dozen flowers the first year, 250 dozen the second year, and 600 and 1100 dozens in the third and fourth years respectively..... |
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| In light of his disappointing experience, Plank had a couple of issues that deeply engaged his thinking. He was not sure about his future in football; also, he wondered why they did not have a better T-shirt underneath the football uniform that would give a comfortable on-field experience. Plank felt that the footballers’ uniform T-shirts soaked up a lot of sweat, which made them heavy and extremely uncomfortable to wear... |
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| In 1996, Plank, along with Ryan Wood, a former NFL Player, founded the firm Under Armour. Plank initially named the product Body Armour. However, he was disappointed when he realized that the name was already owned by several product makers, body-shops, bullet-proof makers, etc. In a serendipitous incident, Plank paid a visit to the office of his brother Bill, who greeted him with, “How is Under Armour going”, thinking that was the name of the company. The name immediately struck a chord with Plank. He felt as if the name Under Armour was just apt for his product. After ensuring that the name was still unused, Plank finalized it as the name of his company... |
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| Plank had a serious concern. Almost all the equipment managers to whom he offered the T-shirts were not convinced about it. The primary reason, according to Plank, was the price. UA products were priced higher than those of the competition. However, quality and innovation were the two primary components to position the UA brand. The UA brand was positioned as being of the highest quality and the best available... |
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| Kip Fulks (Fulks), who joined UA as a partner in 1997, played a major role in its expansion. Fulks didn’t play football; he played lacrosse. The conditions under which lacrosse players played were even more rigorous than those under which football players played, as they had to run harder, in hotter weather, and for longer stretches. Fulks was convinced that UA’s T-shirt was really needed in lacrosse.... |
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| UA’s product was catching on. By 1998, nearly a dozen NFL teams had started using its T-shirts. The initial experience of the UA costumes wearers was often embarrassing. The NFL athletes who wore the UA costumes were often mocked by teammates. The costumes attracted comments like: ‘What the heck are you wearing?’ ‘Are you kidding me?’ etc... |
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| One of Plank’s friends had referred to an upcoming football movie being shot in Miami. The movie was Any Given Sunday by Oliver Stone that had a huge star cast including Al Pacino, Cameron Diaz et al. On an impulse, Plank called and found out the movie’s production location and couriered to them a box of UA’s gear. A few days later, he received a call from Oliver Stone's office saying that they loved the gear and would pay $30,000 for the box of gear. ... |
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| UA fared very well in its product placement. Its products were placed so effectively that movie makers and ad makers felt that brand UA added value and authenticity to their shows. Many producers didn’t even ask for payment. They just wanted the product. Product placement was a key part of UA's marketing strategy.... |
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| Plank was ambitious about extending the brand, yet he wanted to do it sensibly without going randomly into products which would dilute UA’s image. To Plank, the products had to be in alignment with the company’s mission i.e. ‘to help athletes perform better’. Plank had a maniacal focus on performance. Even initially, his vision was to make the best performance T-shirt rather than making a football T-shirt. The promise to the customer was performance and not just a garment..... |
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| By 2005, UA had amassed a significant amount of brand equity vis-à-vis its archrivals, Nike and Adidas . Its revenues grew from less than US$ 50 million in 2002 to US$ 205 million in 2004. (Refer to Exhibit II for UA’s consolidated financial data between 2001 and 2005) ..... |
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| Despite its stupendous success, UA was still not immune to threats from the competition for various reasons. The competition in the sports apparel industry was fierce and had immense potential to affect UA. The company had a narrow focus while marketing its products. With One Product (T Shirt), One Market (Football) and One Target (Athletes) UA had restricted its scope to a smaller segment than its competitors...... |
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Exhibit I: Under Armour’s Logo
Exhibit II: UA’s Consolidated Financial Data between 2001 and 2005
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