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UNDER ARMOUR IN AUSTRALIA Brian Casiano Cheyne Statezny Katie Rutkowski Rajiv Mahay Suzan Hamdan Thomas Gores Thomas Weber

Under armour in_australia_complete[1]

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Page 1: Under armour in_australia_complete[1]

UNDER ARMOUR IN AUSTRALIA

Brian CasianoCheyne StateznyKatie Rutkowski

Rajiv MahaySuzan HamdanThomas GoresThomas Weber

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Commercial

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Environmental Analysis

Economy $1 Australian Dollar = $1.05 US Dollar GDP per capita very close to US

Business Environment $13.47 minimum wage Skilled workforce Lower-than-average business start-up

time

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Environmental Analysis

Demographic Trends Population grew 3m last ten years 1.04 males per female (under 65)

Culture Very similar to US (per Hofstede’s Five

Dimensions) No language barrier Sports are a key aspect

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Why Australia?

Educated workforce

Ease of doing business

Athletic orientation

Individualistic culture

Stable economy

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Industry Analysis

Sales History Industry Revenues (in millions):

2010 2009 2008

Nike 19,014.00 19,176.10 18,627.00

Columbia 1,483.52 1,244.02 1,317.84

Under Armour 1,063.93 856.41 725.24

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Industry Trends

Australian retail industry

Grew 2.9% in 2009

Forecasted to increase 16% by 2014

Seasonality has an effect on sales

Comparable to global fashion trends

Women’s wear is largest segment

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Competitive AnalysisMain Competitors

• Nike– World’s leading athletic apparel company– Sold in 100 countries worldwide– Extensive use of primetime advertising &

celebrities• Adidas

– Sold in 96 countries worldwide– Extensive use of primetime advertising – Comparable to Nike; has pervaded American

culture beyond the bounds of athletics

 Price Marketing

BudgetSales Quality

Perception

Sales Return on Mktg. Spending

Nike High $2.3b $19.2b Highest 8.34:1

Columbia Moderately High $77m $1.24b High 16.1:1

Adidas Moderately High $1.9b $14.32b Highest 7.54:1  

*note here that sales numbers are 2009, while marketing budget is 2010; as a result, sales return on marketing spending is a ballpark estimate

Comparative Analysis

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Company Analysis Products

Athletic footwear, weather specific apparel, fan gear, golf apparel, swimwear, etc.

ColdGear / HeatGear

Under Armour has seen an increase in net revenues to $856.4 million in 2009 Up from $281.1 million in 2005

Future Introducing new high-tech product lines (2012) Growth by…

Expansion into int’l markets Increasing wholesale distribution Increasing growth in D2C channel

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SWOT Analysis

Strengths Innovation Affiliation with Professional athletes Stable Profitability

Weaknesses High Cost of production/innovation Narrow focus on certain sports Lack of advertising compared to market Some product line perceived as too

expensive

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SWOT Analysis

Opportunities Untapped markets of major ball sports Possible market outside of sports Competitors receive bad reputation for

outsource Consumer loyalty

Threats Economy in recession Powerful competitors Male dominant focus Distribution lacking compared to competitors

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Target Market

Regular athletic participants Athletics fan or participants Fashion seeking individuals Demographics of target market

- Age, Gender, and Income Comprises 8,000,000 Australians

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Modes of Entry

Exporting Pros:

No need for new manufacturing plant in Australia

Short lead time on shipments Cons:

Shipping via ocean is timelyAir Freight is expensive

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Modes of Entry

Licensing: Sell temporary usage rights for Under Armour brand name to Australian company Pros:

No shipping or manufacturing costs Reduced lead time over exporting

Cons: Less quality control Risk associated allowing outside

firm to use brand names

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Objectives

Sales $50 million by Dec 31, 2012

Profits 4% or $2 million net by Dec 31, 2012

Distribution by Dec 31, 2012 Online store Partner with one department store and

one athletic apparel store

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Objectives Consumer Awareness

75% brand awareness across all Australian consumers by 12/31/2012

90% brand awareness among Australian athletics-oriented consumers by 12/31/2012

Advertising partnership Australian sports league by 3/31/2012

Customer Satisfaction 95% by 12/31/2012 Functioning customer service operation

by 12/31/2012

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Strategies

Sales & Profits

Price breaks on HeatGear line for first buyers

Incentive to be early adopter

Initiate driven advertising campaign

Control costs to enhance profits

Competitive pricing compared to existing firms

Mid-level pricing

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Strategies

Distribution Establish efficient supply chain Sell in department store chains,

sporting goods stores, athletic apparel stores

Discount price to retailers stocking UA products Push strategy

Partner with existing internet distribution and logistics company Create successful UA online store

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Strategies

Consumer Awareness Partner with Australian Football League Television advertisements

Major sporting events Sports news programs

Celebrity endorsements Sponsor youth sports programs and

social benefit athletic events

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Tactics

Establish online store Signage and appearances Enter 3 year partnership with

Collingwood FC Magpies (of Melbourne)

Banner ads Search engine optimization Create customer satisfaction surveys

& call center

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Financial Analysis

Sales $1,000,000Cost of goods sold $450,000Gross profit $550,000Marketing expense $5,235,060Net marketing contribution ($4,685,060) Break-even point: 28,500 units at average cost of $50 Note that this is unlikely in first year of

operations, but most definitely attainable in future years

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Financial Analysis

Return on Investment= Net marketing contribution / Investment= 4,685,060 / 5,235,060= -89.4%

Large first year loss reflects high cost of marketing competitively in our industry