{"id":14856,"date":"2016-11-16T13:14:41","date_gmt":"2016-11-16T18:14:41","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/the-business-of-sweat-goes-digital\/"},"modified":"2016-11-18T08:08:19","modified_gmt":"2016-11-18T13:08:19","slug":"under-armour-the-business-of-sweat-goes-digital","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/under-armour-the-business-of-sweat-goes-digital\/","title":{"rendered":"Under Armour: The Business of Sweat Goes Digital"},"content":{"rendered":"<p><span style=\"font-weight: 400\">Today\u2019s user has evolved: we toggle between physical and virtual worlds effortlessly, made possible by the ubiquity of handheld and accessible technology. Adapting to the user\u2019s connected world is now the industry toll to compete.[1]<\/span><span style=\"font-weight: 400\"> This have never been more salient than for the fitness industry, with athletes craving more ways to be better, faster, stronger. With this changing tide, Under Armour (UA) is embracing digital transformation to create, capture, and deliver more meaningful value for the connected athlete.[2]<\/span><\/p>\n<p><b><i>UA\u2019s Business Model Evolves to \u201cMake Athletes <\/i><\/b><span style=\"text-decoration: underline\"><b><i>Even<\/i><\/b><\/span><b><i> Better\u201d<\/i><\/b><\/p>\n<p><span style=\"font-weight: 400\">For over 20 years, UA created value for their customers and captured that value by being a shirts-and-shoes company that simply wanted to \u201cmake athletes better.\u201d UA saw 23 consecutive quarters of growth under this business model [3],<\/span><span style=\"font-weight: 400\"> but UA\u2019s CEO Kevin Plank recognizes that the shirts-and-shoes company will not suffice in a world where <\/span><i><span style=\"font-weight: 400\">making athletes better<\/span><\/i><span style=\"font-weight: 400\"> has evolved beyond apparel sales. UA is now focused on a digital innovation strategy that optimizes for the athletes of tomorrow, as showcased by UA\u2019s CES 2016 presentation of <\/span><i><span style=\"font-weight: 400\">Future Girl<\/span><\/i><span style=\"font-weight: 400\"> (<\/span><b>Exhibit 1<\/b><span style=\"font-weight: 400\">). We see from the video that UA\u2019s digital innovation strategy is predicated on connecting athletes\u2019 devices and daily apparel, deciphering that dataset, and providing actionable insights to produce better and healthier performers.[4]<\/span><\/p>\n<p><b>Exhibit 1: <\/b><b><i>Future Girl Ad <\/i><\/b><i>[5]<\/i><\/p>\n<p><iframe loading=\"lazy\" title=\"Under Armour Future Girl\" src=\"https:\/\/player.vimeo.com\/video\/66195683?dnt=1&amp;app_id=122963\" width=\"640\" height=\"360\" frameborder=\"0\" allow=\"autoplay; fullscreen; picture-in-picture; clipboard-write\"><\/iframe><\/p>\n<p><b>Creating Value with Integrated Applications<\/b><span style=\"font-weight: 400\">: Gone are the days of an Under Armour that makes only shirts and shoes, selling product through brick and mortar and a standalone website. Over the last several years, UA has invested $710M acquiring and developing three mobile applications to build their connected fitness platform: MapMyFitness, Endomondo, and MyFitnessPal.[6]<\/span><span style=\"font-weight: 400\"> Fully integrated into UA\u2019s proprietary UA Record application, this collection of personal data tracking apps enables users to optimize activity levels, sync wearables, and analyze aggregated personal metrics. Altogether, these applications create value in excess of UA\u2019s historical business model, giving users access to an action-oriented, comprehensive dashboard of their biometric statistics. As such, users are now armed with personalized tools needed to become better athletes.[7]<\/span><\/p>\n<p><b>Capturing Value from a Connected User Base<\/b><span style=\"font-weight: 400\">: With UA\u2019s latest app acquisitions, the company\u2019s digital community tops 120M unique members worldwide.[8]<\/span><span style=\"font-weight: 400\"> This user base provides UA two value capture opportunities in excess of their historical business model: 1) accessing new markets, and 2) leveraging their existing customer base. Prior to UA\u2019s connected fitness platform, women accounted for 30% of company sales. UA now sees 60% female users across its apps. This connected fitness platform provides UA with a new captive female audience from which to access previously unrealized dollars. Additionally, the average underarmour.com order that comes in through the connected fitness community is 26% higher than orders from external referral sources.[9]<\/span><span style=\"font-weight: 400\"> Here, UA\u2019s vast user base enables the company to optimize value capture by leveraging existing customers\u2019 self-reported data to send targeted customer offers.<\/span><\/p>\n<p><b><i>Operationally, UA Hits a Home Run<\/i><\/b><\/p>\n<p><span style=\"font-weight: 400\">UA\u2019s digital transformation has evolved how the company delivers on its\u00a0promise to \u201cmake all athletes better.\u201d Previously a standalone website with brick-and-mortars, UA did not deliver customer value in a meaningfully differentiated way from competitors. Digital tech has made UA\u2019s value delivery smarter and user-focused. User-reported data within UA apps is spurring product innovation tailored to athlete needs. For example, UA learned from MapMyFitness data that the average run is 3.1 miles. When designing the 2016 Speedform Gemini running shoe \u2014 one of UA\u2019s most popular running products \u2014 the company added Charged Foam padding to optimize for short-distance runs.[10]<\/span><span style=\"font-weight: 400\"> From their database of user activity habits, UA can see fitness trends emerge in real-time. This competitive advantage equips UA to design for, and proactively identify, customer needs.<\/span><\/p>\n<p><b><i>At Bat: UA\u2019s Next Steps <\/i><\/b><\/p>\n<p><span style=\"font-weight: 400\">UA has bigger ambitions than simply selling more workout shirts than Nike, they aspire to be <\/span><i><span style=\"font-weight: 400\">the<\/span><\/i><span style=\"font-weight: 400\"> go-to fitness brand. To be this, UA has room to meaningfully own the market by:<\/span><\/p>\n<ul>\n<li><b>Disrupting Apparel Wearables<span style=\"font-weight: 400\">: UA introduced HealthBox at CES this year \u2014 this kit includes a collection of wearables that sync with UA Record.[11]<\/span><span style=\"font-weight: 400\"> To prevent a replay of the Nike FuelBand flop of 2014, UA must supplement its hardware offering with connected clothing. These apparel wearables should have biometric tracking capabilities and seamlessly connect with UA apps.[12]<\/span><span style=\"font-weight: 400\"> As first-mover in connected clothing, UA will move closer to its vision of a <\/span><i><span style=\"font-weight: 400\">Future Girl<\/span><\/i><span style=\"font-weight: 400\"> world.<\/span><\/b><\/li>\n<\/ul>\n<ul>\n<li><strong>Leveraging Apple\u2019s Fitness Focus<\/strong><span style=\"font-weight: 400\">: UA is digitally competing with Nike and their Nike+ apps, and also faces the formidable Nike-Apple partnership.[13]<\/span><span style=\"font-weight: 400\"> But, Nike does not completely own Apple\u2019s fitness mindshare. UA will be the first-mover in connected clothing, and the rapid adoption of Apple\u2019s HealthKit developer platform provides an opportunity for a UA-Apple collaboration. This could materialize as UA developing clothing wearables that connect to Apple devices.[14]<\/span><span style=\"font-weight: 400\"> A partnership with Apple would expose UA to a new population of users.<\/span><\/li>\n<\/ul>\n<p><strong>Word Count<\/strong><strong>: 798\u00a0<\/strong>(excluding citations)<\/p>\n<p><span style=\"font-weight: 400\">[1] Marco Iansiti and Karim R. Lakhani, \u201cDigital Ubiquity: How Connections, Sensors, and Data are Revolutionizing Business,\u201d <\/span><i><span style=\"font-weight: 400\">性视界 Business Review<\/span><\/i><span style=\"font-weight: 400\"> (November 2014 Issue), pg. 3-5.<\/span><\/p>\n<p><span style=\"font-weight: 400\">[2] David Trites, &#8220;How Under Armour&#8217;s Digital Transformation Will Improve Your Health,&#8221; SAP News Center, February 15, 2016,\u00a0https:\/\/news.sap.com\/how-under-armours-digital-transformation-will-improve-your-health\/, accessed November 2016.<\/span><\/p>\n<p><span style=\"font-weight: 400\">[3] Thomas Hobbs, \u201cHow Under Armour plans to become the world\u2019s biggest sports brand,\u201d Marketing Weekly, May 4, 2015, ABI\/INFORM via ProQuest, accessed November 2016.<\/span><\/p>\n<p><span style=\"font-weight: 400\">[4] David Pierce, \u201cHow Under Armour Plans to Turn Your Clothes into Gadgets,\u201d Wired, January 5, 2016, <\/span><a href=\"https:\/\/www.wired.com\/2016\/01\/under-armour-healthbox\/\"><span style=\"font-weight: 400\">https:\/\/www.wired.com\/2016\/01\/under-armour-healthbox\/<\/span><\/a><span style=\"font-weight: 400\">, accessed November 2016.<\/span><\/p>\n<p><span style=\"font-weight: 400\">[5] Under Armour MX, \u201cFuture Girl,\u201d May 14, 2013, video file, hosted on Vimeo, <\/span><a href=\"https:\/\/vimeo.com\/66195683\"><span style=\"font-weight: 400\">https:\/\/vimeo.com\/66195683<\/span><\/a><span style=\"font-weight: 400\">, accessed November 2016.<\/span><\/p>\n<p><span style=\"font-weight: 400\">[6] David Pierce, \u201cHow Under Armour Plans to Turn Your Clothes into Gadgets,\u201d Wired, January 5, 2016, <\/span><a href=\"https:\/\/www.wired.com\/2016\/01\/under-armour-healthbox\/\"><span style=\"font-weight: 400\">https:\/\/www.wired.com\/2016\/01\/under-armour-healthbox\/<\/span><\/a><span style=\"font-weight: 400\">, accessed November 2016.<\/span><\/p>\n<p><span style=\"font-weight: 400\">[7] \u201cUnder Armour Launches UA Record, The Latest Addition To The Definitive Digital Health And Fitness Network,\u201d PR Newswire, January 6, 2015, ABI\/INFORM via ProQuest, accessed November 2016.<\/span><\/p>\n<p><span style=\"font-weight: 400\">[8] \u201cUnder Armour Opens First Digital Headquarters in Austin\u2019s Revitalized Seaholm Power Plant District: Under Armour Connected Fitness Debuts in Iconic Downtown Development,\u201d PR Newswire, March 11, 2015, ABI\/INFORM via ProQuest, accessed November 2016.<\/span><\/p>\n<p><span style=\"font-weight: 400\">[9] Tom Foster, \u201cKevin Plank is Betting Almost $1 Billion That Under Armour Can Beat Nike,\u201d Inc Magazine, February 2016, <\/span><a href=\"http:\/\/www.inc.com\/magazine\/201602\/tom-foster\/kevin-plank-under-armour-spending-1-billion-to-beat-nike.html\"><span style=\"font-weight: 400\">http:\/\/www.inc.com\/magazine\/201602\/tom-foster\/kevin-plank-under-armour-spending-1-billion-to-beat-nike.html<\/span><\/a><span style=\"font-weight: 400\">, accessed November 2016.<\/span><\/p>\n<p><span style=\"font-weight: 400\">[10] Ibid.<\/span><\/p>\n<p><span style=\"font-weight: 400\">[11] Elaine Low, \u201cTech Will Massive Role in Under Armour: UA\u2019s Robin Thurston,\u201d Investor\u2019s Business Daily, January 26, 2016, ABI\/INFORM via ProQuest, accessed November 2016.<\/span><\/p>\n<p><span style=\"font-weight: 400\">[12] Ibid.<\/span><\/p>\n<p><span style=\"font-weight: 400\">[13] CNBC News, &#8220;More from Apple and Nike to come: Nike CEO,&#8221; May 8, 2015, video file,\u00a0http:\/\/video.cnbc.com\/gallery\/?video=3000378000, accessed November 2016.<\/span><\/p>\n<p><span style=\"font-weight: 400\">[14] Thomas Hobbs, \u201cHow Under Armour plans to become the world\u2019s biggest sports brand,\u201d Marketing Weekly, May 4, 2015, ABI\/INFORM via ProQuest, accessed November 2016.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Under Armour is evolving from a shirts-and-shoes company to a pure tech company, making all athletes better performers one connected app at a time.<\/p>\n","protected":false},"author":2570,"featured_media":14871,"comment_status":"open","ping_status":"closed","template":"","categories":[2062,209,565,629,2066,2087],"class_list":["post-14856","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-digital-health","category-fitness","category-health-and-wellness","category-mobile-apps","category-under-armour","category-wearables"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/digitization-challenge-2016\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - 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