Under Armour & Market Segmentation

From humble beginnings in a basement, to a 4 billion dollar company, the brand Under Armour has grown considerably through the clever use of market segmentation. This is the process of "dividing the large and diverse mass market into subsets of consumers who share common needs, characteristics, or behaviors, and then targeting one or more of those segments with a distinct marketing mix (Kardes, 2020)." 

In the case study article, what market segments were identified and what segmentation strategies were implemented?

Originally the brand used their breathable sweat-wicking material to appeal to tough guy football types. However, with companies like Adidas and Nike dominating that market, competition was fierce. Under Armour had to get creative and focused in on a new segment through the use of a bold new campaign titled "I Will What I Want." This campaign targeted a new demographic of women, specifically those “who had the physical and mental strength to tune out the external pressures and turn inward and chart their own course (Saghian, 2016).” Using this strategy of psychographics, which measures consumer's lifestyles, attitudes, beliefs, and social values, enabled the brand to tap into a specific segment that they were able to emotionally connect with. Non-traditional athletes like Misty Copeland, a ballerina that was rejected from a top ballet academy for having the "wrong body," were used in the campaign and ended up resonating deeply with the average every-day woman. Giselle Bundchen, another unorthodox athlete given her supermodel status, was also used. In her ad, she was featured enduring a grueling boxing session whilst ignoring negative commentary written on the walls. These strategies were overwhelmingly successful in getting people talking, as audiences "spent an average of four minutes on the site during the campaign’s peak (Saghian, 2016)." This ultimately led to a major increase in sales and revenue for the brand.

What are some key points to remember when implementing segmentation strategies?

1. Consumer preferences vary. We live in a very diverse world, and the things that make us different are what make us interesting. One size fits all is not a common occurrence, because people come in all different shapes and sizes, and so do their tastes. I for one love pistachio ice-cream, but my best friend is allergic to nuts! As the common saying goes, variety is the spice of life.
   
   
2. The majority doesn't always rule. "Pursuing the majority segment is considered a fallacy because the largest segment, where competition tends to be most intense, is not always the most profitable (Kardes, 2020)." One might assume that the size of a potential market segment correlates to profit, but in fact it is often the smaller, less typical segments that can produce more dollars due to the space being less competitive.
   
   
3. There is a sales-cost trade-off. This means that "as market segmentation increases, sales increase because a firm’s offerings align more closely to consumers’ preferences (Kardes, 2020)." However, costs simultaneously increase because implementing a multi-product strategy is more complex and uses more resources than a one-product strategy.
   
   
4. Beware of cannibalization. When products offered by a company are too similar to each other, it creates a competition amongst themselves. Over-segmentation results in consumers having almost too many choices, and favoring one product at the expense of another.  Striking a balance between effective market coverage and too many offerings is important. Imagine if Oreos tried to take on selling chocolate chip cookies, as well as oatmeal and gingersnaps. 

Identify a new market segment that you have noticed recently that you believe would be a great market to explore. How might you create a segmentation strategy to reach this new market segment?

As housing becomes more expensive and difficult to own, people are finding alternative living situations such as converting their vans and buses into livable spaces. Many dream of traveling and are able to accomplish this with a home that is mobile. I have a close friend that recently sold off many of their possessions in order to accommodate a small living space and travel around the country to scenic locations. I think this would be an interesting and niche market segment to target. I would use psychographics to appeal to consumer's desires for travel, as well as their need for efficient multi-use products that fit a minimalist lifestyle. Demographics could be used to determine household income. I would also use geographic strategies and hone in on where these types of consumers typically set up camp, such as RV lots and national parks.

References:

Kardes, F., Cronley, M., & Cline, T. (2020). Consumer Behavior (2nd Edition). Cengage Learning US. https://mbsdirect.vitalsource.com/books/9781305161689


Saghian, M., & Murray, M. (2016). Under Armour’s Willful Digital Moves. Darden Business Publishing Cases, 1–5. 

https://doi.org/10.1108/case.darden.2021.000025