Differences Between Distribution Channels Of Nike And Under Armour

            Both Nike and Under Armour are successful brands in their own right when it comes to the athletic wear industry. Each has similar products and promotions, but how these two things translate to the customers is quiet different.

            A distribution channel is defined as the following, “the chain of businesses or intermediaries through which a good or service passes until it reaches the end consumer.” These channels can include wholesalers, retailers, distributors and even the Internet. In the case of Nike, the company distributes its products through three main channels. These three channels include selling products to wholesalers both in the U.S. and internationally, by direct-to-customer (DTC) that include line and factory retail outlets as well as e-commerce sales, and sales to global brand divisions. Nike is in fact focusing much more on the direct selling to consumers with its DTC initiative, as this type of distribution provides higher margins in general for Nike. In Nike’s effort, the company is looking to expand this type of distribution channel.

            Shifting our focus to Under Armour, who has a similar tactic as Nike but is slightly different. Under Armour, just like Nike, has been aggressively pursuing expansion on all fronts in the number of wholesale doors and the number of store openings in the U.S. and abroad. Just like Nike, DTC sales are more profitable for Under Armour, but their focus isn’t on DTC sales as of now. As I said before, Under Armour wants to get into more wholesale stores as well as expand their own stores. Also, Under Armour is more focused on the North American market, and not necessarily on the global market, as it isn’t as developed as Nike’s.                          With this said, the differences of Nike and Under Armour are slight, but important. Nike is a bigger company and has more exposure and experience than Under Armour, and this allows for different distribution tactics. While Under Armour is a relatively new company compared to Nike, it does focus more on developing channels domestically, and acquiring more wholesalers for their necessary consumer exposure.

Nike and Under Armour distribution differences

What Has Led Under Armour To Becoming The #2 Brand In The US

Under Armour is a rising athletic wear company, and is to not to be underestimated. Recently Under Armour has overtaken Adidas in combined apparel and footwear sales. With this said, Under Armour has surpassed Adidas, and is now the second biggest athletic wear brand in the United States.
               As said by Sam Poser, a managing director and research analyst with Sterne Agee, “Under Armour and Nike are constantly dissatisfied, and Adidas hasn't had the same sense of urgency.” He continued to explain that, “Adidas sometimes sits back on their laurels too much and the other folks pass them by. What we're seeing now is an example of that.” In this quote, Mr. Poster is referring to Adidas, and how Under Armour is now surpassing them with new and innovative products.
               To exemplify this, Under Armour has made huge progress in women’s wear in recent years. In the early 2000s, Under Armour was not doing well in attracting women, as men conceded much of their original clothing line. With this in consideration, the company revamped and now the company’s sales have risen. Under Armour as a brand targets the women’s apparel and footwear markets, all in an effort to expand its retail outlets and brand around the world to gain more market shares. This had been and still is due to their women’s campaign and smart PR actions.
               Under Armour’s drive to be at the top has shown. While Nike’s sales are ten times larger, Under Armour has been increasing revenue at three times Nike’s pace. This pace eventually toppled Adidas, and pushed Adidas to the third spot in the top athletic brands. This showed in the year-to-date report, where it had Under Armour’s apparel sales growing while Adidas’ were declining. This has lead to Adidas’ market share to become whittled down day by day. With these factors posed by Under Armour and the actions that Adidas has not taken, it is no wonder why Under Armour has jumped to that number two spot in the athletic wear industry.

Under Armour's symbol 

What Has Led Nike To Becoming The #1 Brand

Many factors can influence a company’s future, and can make or break the company as a whole. In respects to Nike, it is clear that this company has really fine-tuned their marketing, management, and product skills. This is obvious, especially in the sports category, as many athletes and colleges around the world are displayed with that crest known as the Nike Swoosh. These accomplishments are not all so obvious, and a deeper investigation into the topic of becoming the number one brand is necessary.

Nike is always coming out with new products, and promotions to get new customers (primary demand), conversion customers (secondary demand), and for existing customers (tertiary demand) to all buy their products. This is why Nike is the number one brand, because people are concerned with their health and fashion, Nike targets this to create what appeals to their customers. This rolling out of innovative products, paired with a strong brand and marketing presence, which Nike has created with athletes, allows Nike to charge more for its products. This allows for higher margin products, and because of their marketing presence they can now use these profits to consume and acquire more of the market share and of the share of wallet of consumers and athletes. With this said, Nike now can dominant the athletic wear industry, and that’s exactly what they have done.

Having your brand recognizable does not alone allow a company such as Nike to have become the number one brand. In fact, logistics is a key aspect that consumers everywhere consider when buying from distributors. Nike uses a tactic known as direct-to-consumers, or DTC. DTC is when sales are made through the company’s websites, or through the company’s retail outlets. The reason why this is popular with athletic gear firms is that it allows more contact with the consumers. This is relevant because e-commerce channels are a very significant part of the total retail sales worldwide. With DTC, it has allowed Nike to earn higher revenues on products, and this expands Nike’s margin of profit. This profit, as I said before, allows Nike to acquire “hero” athletes to help promote them-selves even further. And according to the video, this is exactly what Nike did. Professional athletes like Michael Jordan and LeBron James, were and are a huge part of boosting Nike sales, as people look to these athletes as role models.

    In conclusion, the three biggest weapons that Nike uses for its marketing strategy are the Nike Swoosh logo. This logo appears on the uniforms of athletes and their gear, and in turn creates more attention, as it is visually prominent while the athletes perform on media. Second, Nike promotes itself with its strong brand and marketing strategies with the help of focusing on “hero” athletes, such as Michael Jordan and LeBron James. Third, Nike created commerce that has benefited the consumer to want to keep buying from Nike, which creates benefits for Nike as a company. These factors have lead to Nike becoming the number one athletic brand as well as a market leader.

Nike's logo and symbol known worldwide

Types of Demand Examples

Primary Demand: Tesla Motors

Tesla Motors is attempting to generate awareness for their company, in order to educate consumers about the benefits of their products. They are accomplishing this by opening stores and designing a website about the safety and benefits of their vehicles. Tesla is now taking orders for their newest models.

Secondary Demand: Apple

Apple is promoting its phones compared to Samsung’s, on the benefits and functionality overall. This is an attempt to get Samsung users to switch to Apple. The goal is to create more market shares for Apple as a company.

Tertiary Demand: Bounty

Bounty paper towels offers a value pack that contains a dozen paper towel rolls to its consumers, which have tips on the back on how one should do spring cleaning. This is to encourage consumers to use more of the product by displaying additional ways the product can be used.