Under Armour’s biggest and riskiest product launch
The teasers started weeks ago: 15-second commercials starring muscular athletes and an Under Armour shoe box with a mysterious red glow.
Viewers can’t see what’s inside the box. The Baltimore sports apparel company is keeping that a secret until Sunday’s Super Bowl.
That’s when Under Armour will air a 60-second commercial - costs this year are reported to be $2.7 million for 30 seconds - in the first quarter of the football game to unveil its new cross-training sneaker.
The commercial, to run on the most-watched sporting event of the year, is just one piece of what will be the biggest - and riskiest - product launch ever for Under Armour Inc.
Launch Clinic’s Take - The risk to Under Armour is that if their product bombs they take a bath on the development, inventory and promotional costs. I don’t think that’s too likely.
My teenage son is an athlete who plays baseball. He and his buddies have as much Under Armour gear as we can afford. Why? The products are very good and Under Armour did more than create great products. They created a "look" that we want.
This product launch is a logical move for Under Armour to capitalize on their brand and significantly grow their market share, although launch costs could impact near-term financials.
"It’s a defining moment for Under Armour," said Wayne A. Marino, the company’s chief financial officer. "We’re a growth company, and this is an opportunity to enter into a market that is very large and very scaleable. Once you launch into performance trainers, there could be other footwear that could follow in the future. It sets an entire new platform for Under Armour."
Not so surprisingly, Nike is a little freaked out. But they should be. Nike’s lost a lot of their coolness to Under Armour.
So when Under Armour began shopping a cross-trainer prototype a year ago, Nike reacted, analysts said.
"It will be an extensive launch program for Nike," said John Shanley, a footwear and sports apparel analyst for Susquehanna Financial Group LLP. "It is clearly an effort to blunt some of the efforts of Under Armour when it enters the market."
Nike didn’t return phone calls seeking comment about its new shoe.
And Under Armour is smart, going after niche markets where they can dominate.
The company is also using a strategy that has worked for it in the past, targeting categories where there is room for growth. Under Armour entered the football cleat market in 2006 because it thought there was room for innovation. Cleat styles hadn’t changed in two decades. It captured 20 percent of the market in one season.
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