Under Armour Crisis Response

8/10/2019 Under Armour Crisis Response

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Natalie Rabb, Eric Camardelle, Alyssa Bordelon, Rachel Smith


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EXECUTIVE SUMMARY


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EXECUTIVE SUMMARY Under Armour is the pioneer of the performance

apparel market, producing innovative lines ofclothing and shoes and promising to make youbetter.

Under Armour partners with the U.S. OlympicSpeed Skating team and paired up withLockheed Martin in order . Under Armourboasted that these suits would guaranteevictory for an American team with sky-highexpectations.

As competition in Sochi began, the U.S.Speedskating team found themselvesconsistently underperforming, failing to placeany higher than seventh among all races. A WallStreet Journal report began a blame game inwhich the Mach 39 suits were held accountable.

Although Shani Davis and Heather Richardsonstill failed to to place higher than seventh evenafter switching to older model suits, UnderArmour still faces a crisis because they failed tolive up to their own expectations on aninternational stage and doubt has been set into

the mind of consumers.

NEAR has come up with two strategies to dealwith this crisis. A defensive strategy could beused to deny the false claims about the speedskating suits and debunk the sources used togain the information. The second option is theuse of accommodative strategy to expresscondolences about the failure of the team and

investigate how Under Armour can be improved.

With an overall recommendation for the use ofthe accommodative strategy, NEAR will takeimmediate action in order to rectify UnderAmours brand image. Print ads, social media,outdoor advertising, radio and Television spotswill be used in a three month media campaignbetween March and May.

An Under Armour winter sports camp programfor youth held throughout the month of May andthe announcement of a sponsorship deal for the2018 Winter Paralympics will aid in creatingboth immediate and long-lasting positive PR forthe brand and repairing Under Armours imagein the eye of the public.


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CRISIS


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CRISISThe U.S. Speedskating team was heavily favored to win big at the 2014 WinterOlympics, but when it came time to compete, the athletes has disastrousresults. Four-time speedskating medalist Shani Davis finished 8 th in the 1,000-meter race. Number 1 ranked female U.S. speedskater Heather Richardsonfinished 7 th in her race. After six long-track speedskating events, no Americanfinished better than 7 th. Americans won four medals in 2010 and a combined 19medals over the previous three Winter Games. Team USA athletes, fans and themedia began searching for reasons why these unexpected failures werehappening. One convenient suspect began to emerge: Under Armours brandnew scientifically advanced Mach 39 speedskating suits.

Before the games, Under Armour partnered with Lockheed Martin to developthe Mach 39 speedskating suit. For weeks, they boasted that the outfit was thefastest speedskating suit in the world. The suit had been tested under specificconditions for Sochi and went through 300 hours of wind-tunnel testing. Eventhe zippers were a special design. But once the athletes started competing, theMach 39 suits did not live up to the hype. The Wall Street Journal reported thatvents on the back of the suit were creating a parachute effect that kept theracers from reaching their maximum speed. The next day, a whirlwind of mediaspeculation blamed Under Armour for the speedskaterss lack of performance.


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CRISIS


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CRISISThe company went on the defense to say that all uniformswere tested rigorously to make sure that the needs of theathletes were met with zero distractions. The athletes eventrained in the suits and made adjustments for fit and comfort,

but never formally competed in them. The athletes wereallowed to switch to old suits without the ventilation, but stillcontinued to lose. None of the athletes or U.S. speedskatingcoaches officially blamed the suits outright for their loses, butinstead said it was a combination of too much travel and lackof proper training. Regardless of this fact, Under Armoursstock dropped 2.38%.


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PROBLEM


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PROBLEMUnder Armour has received the brunt of the blameregarding the U.S. Speedskating Teams performance inthe 2014 Sochi Winter Olympics. Under Armours stockprice fell 2.38% in the aftermath of the Wall Street Journalarticle that originally put the Under Armour Mach 39 suitunder fire. Perception is reality in this situation. In thewake of this crisis, public perception of Under Armour asan authentic, reliable, performance-enhancing product isbeing put into doubt. We must create a sound, cohesivecrisis management strategy where cost-effectivenessand immediacy is key in order to remain within ourbudget and address the problem before the UnderArmour brand perception is tarnished further.


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CRITICAL FACTORS


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SALES Synthetic Performance Apparel

Market is $3 Billion Under Armour holds 70% market

share Footwear is 13% of UA net revenue

UA holds 2.7% of running shoesmarket share and 2.1% footwearmarket share Compared to Nike, Adidas,

and Reebok Women are 30% of UA net revenues,

up 18% from 8 years ago Predicted to be $1 billion by 2016 Hope to become No. 1 womens

athletic apparel brand in theworld

Youth are $220 million of companyrevenue Hope to grow more than 100% to

$470 million in 2016

48.6%

19.2%

12.38%

8.17%

4.89%3.74%3.03%

TOP ATHLETIC APPAREL MAKERS, 2010The industry generated revenues of $10.1 billion in 2010 and could reach $11.8 billion in 2015.

NIKE

ADIDASUNDER ARMOUR

VF CORP.

ASICS

PUMA

OTHER

Sources: Forbes, Medill, Market Share Reporter


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INTERNATIONAL

EXPANSION International revenues are only 6% of UA net revenues

Predicted growth of 12% by 2016

8-year extension deal with US Speedskating through 2022 Olympics Gymnastics deal for 2016 Summer Olympics in Rio de Janeiro and

2020 Games in Tokyo Deals with professional soccer teams, including Tottenham Hotspur

of the English Premier League and Colo-Colo in Chile Direct sales to consumers in Mexico, Brazil and Chile

13 brand house stores in China, but will grow to more than 50 by theend of this year

Sources: Medill


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PROFIT Predicted to earn $4 billion in revenue by 2016

Tripled its revenue in the last 5 years to $2billion in 2013

Cost reduction in athletic wear

STOCK PRICE After crisis incident, stocks dropped 2.38% Currently, shares are up 62% year-to-date in

2014

Stocks up about 200% since early 2013 17th consecutive quarter of 20%-plus revenuegrowth More than 20% growth each quarter when

compared with the same period a year ago Nikes market cap is $68 billion; Under

Armours is only $15 billion

BUDGETCONSTRAINTS

Only $15 Million to fix UnderArmours biggestcommunications crisis yet

One that was global, far-reaching and requiredimmediate action

Sources: Forbes, Medill, Investor Place, UA Case


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CORPORATE

IMAGE Under Armour is known as the highest quality, best available athleticbrand. Their mission is to provide the world with technicallyadvanced products engineered with superior fabric construction,

exclusive moisture management, and proven innovation. Under Armour pioneered the performance apparel industry , and thisis why it rises above the rest in this category. Under Armoursmoisture-wicking microfibers keep athletes cool, dry, and light understrenuous conditions. The technology and science used in the creationof the Under Armour product helps you to perform your absolute best.

Every Under Armour product is doing something for you; itsmaking you better.

Sources: UA Case, WSJ


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TARGET AUDIENCE

ATHLETE

AGES 18-44 PARTICIPATING IN WINTER SPORTS

playsports/

exercises atleast once a

week154

wants toprovide for

children110

it isimportant

that companiesact ethically

104

willingto volunteer

time for a

good cause117

adventurous154

likesto share

knowledgewith others

114

it isworth paying

extra for betterquality

113

tendto act in thespur of the

moment123

it isimportant to

be well-informed

110

willingto help others

even when thereis no benefit for

themselves116

Sources: SimmonsOneView


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OLYMPICVIEWER

TARGET AUDIENCE

AGES 45-65+ WATCHING/VERY INTERESTED IN WINTER OLYMPICS

it isworth paying

extra for betterquality

135

importantthat a

company actsethically

143

tendto act in thespur of the

moment121

it isimportant to

be well-informed

129

willing tohelp others

event when thereis no benefit to

myself132

adventurous

110

willingto volunteer

time for agood cause

131

likesto share myknowledgewith others

123

youshould seize

opportunity inlife when it

arises

128

plays

sports/exercises atleast once a

week151

Sources: SimmonsOneView


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ADVERTISINGOBJECTIVE

Maintain public perception of Under Armours brand imageof being the top performance apparel maker

Increase awareness among the public of the correct factssurrounding the crisis situation and control the mediamessage being spread


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CRY ME A RIVER


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DENIALUnder Armour should deny that the problem exists, and denythat they had an role in the crisis. There is no evidential proof that Under Armour was the direct cause for

the loses. The breaking Wall Street Journal article has no reliable sources.

All of the quotes used in the article are hearsay or taken out of context According to three people familiar with the U.S. team One skater

said team members felt they were fighting the suit to maintain correctform. (WSJ) No direct mention of any names

Bert van der Tuuk, the designer of the Dutch Olympic team's suits,said Thursday he had tried a similar ventilation panel on the back of aprototype three years ago, but it slowed his skaters by letting in air andcreating drag. The suit was blowing itself up, he said. (WSJ) Speaking about his skaters and their suits, NOT the U.S. Under

Armour suits Overhearing a conversation about them, a Dutch coach shouted, Are

you talking about the suits? They're slower! (WSJ) Again, no direct names mentioned and only information is hearsay


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EXCUSEUnder Armour should deny that they did any harm, and say thatthey had no control over the events that took place. There were many other factors that could have been the reason why the

U.S. speedskating team was performing so poorly U.S. Olympic Committee CEO Scott Blackmun said earlier this week: We

do not believe the suits were the problem. (USA Today) Shani Davis and Heather Richardson both failed in the 1500 even after

switching out of the new bodysuits. So maybe its not the suits, maybe itsthe athletes. (WSJ)

The U.S. team trained at higher altitudes on an outdoor track in Collalbo,Italy, with ice conditions different from the track in Sochi. (USA Today)

Mr. Davis said his start in Wednesday's losing 1,000-meter race was oneof the fastest of his career. (WSJ)

The athletes simply weren't comfortable racing in a suit without priorexperience. (USA Today)

(U.S. Speedskating Executive Director) Ted Morris said exhaustive travelwas identified as the most significant factor in the team's struggles. (USAToday)

As the governing body focused on the project with Under Armour andextolled its cutting edge technology, it failed to prepare the team for theconditions in Sochi. (USA Today)


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PROS Discrediting the Wall Street Journal

will kill the original source of therumors surrounding the Mach 39 suit

Under Armour strongly emphasizesthat they are not at fault

Relies on actual facts and quotes thatcan be attributed by name to Olympic

personnel involved in the situation

CONS Attacking the Wall Street Journal

may seem tacky in the eyes of thepublic and press and create a badrelationship between Under Armourand the publication

Not admitting guilt or emphasizingwith the athletes may be taken as

subtle implication that the athletesare to blame Relying on other sources to

substantiate Under Armoursinnocence rather than their own mayimply a lack of interest in actuallyaddressing the crisis head-on

EXPECTED OUTCOMESUnder Armour wont be held responsible for the incidents happening in Sochi, but themedia and the public may find that they are trying to distance themselves and not takeaction of the situation by denying their association with the problem and makingexcuses while dragging the Wall Street Journals name through the mud.


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YOUR CRYING SHOULDER


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CONDOLENCEUnder Armour will give a formal vocal response that shows deepconcern for the situation at hand. They will recognize sorrow andempathize with the athletes for the misfortune they haveexperienced, but they will not admit guilt. There is no evidential proof that the Under Armour suits are the direct

reason for the losses Under Armour will show its unending support for the athletes during these

disappointing losses and continuously stand behind the athletes as theymove forward in the U.S. Winter Olympics.


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INVESTIGATIONUnder Armour will send a team to Sochi to immediately examinethe facts that led to this situation and if the suits are to blame. Is it the vents? Is there another problem with the suits causing them to slow down? How and why did the suits not live up to their promise? Are the athletes distressed in any way? Are there distractions in the competition? By gathering the correct facts directly in Sochi, Under Armour can

properly examine the problem to find the best solution.


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CORRECTIVE ACTIONUsing what they learned from the Investigation, Under Armourwill take steps to repair the damage from the crisis and preventit from happening again. Under Armour will work with the coaches and athletes to make

adjustments to the suits so the athletes can feel more comfortable andperform better.

Under Armour will use the facts they found during the investigation to gostraight to the frontline of the media and control the message that is beingspread.

Top Under Armour executives will be the ones to face the media and putthe rumours to a halt.

Under Armour will take responsibility for the fact that the suits did notgive the athletes the competitive edge they were hoping for, but they willwork tirelessly and do what they can to enable the athletes to performtheir absolute best.


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PROS Under Armours relying on

empathizing with those involved inthe situation gives the brand a senseof humanity, while not admitting guilt

The proceeding investigation andcorrective action will show the publichow invested Under Armour is willingto be in order to solve the crisis

Not placing blame on anyone inparticular will

CONS Public may not believe that the

investigation is providing authenticresults due to Under Armourcontrolling it themselves

The lack of addressal toward theWall Street Journal report may beseen as a silent admittance of the

suits technologically failing Running our own investigation maybe time lengthy and stretch thebudget

EXPECTED OUTCOMESAlthough Under Armour is not accepting blame or full responsibility for the eventshappening in Sochi, they are still making positive strides to rectify the situation. Themedia and public will see this as them taking action and not trying to place the blame onsomeone else. By being on the frontline and controlling the message of the media withthe correct facts, the public will stay informed with a positive outlook on the situation

and continue to stand with Under Armour is supporting the U.S. Speedskating team.


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REGIONALITY


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TIMELINE


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MEDIA MIX


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INTERNET AT HOME/WORKATHLETE

QUINTILES

214

1 2 3 4 5

83

98

95

127

S O C I A L

ME D I A

U S E R

3 O R M

O R E

T I ME

S

1 -2 T I ME

S

A D A Y

SOCIAL MEDIA ATHLETE

139

172

208

1 2 3 4 5

QUINTILES

TV EARLY/LATE FRINGEOLYMPIC VIEWER

128

100

87

65

120

A B C

F O X

NB C

ATHLETE

TARGET

OLYMPICS

VIEWER T

ARGET

LATE EVENING NEWS

131

175

130133

NY T I ME S

U S A T

O D A Y

W S J

ATHLETETARGET

OLYMPICSVIEWER TARGET

NATIONAL NEWSPAPER QUINTILES

149

134

198

158 156152

E S P N

R U NNE R S

W O R L D

A A R P

T H E NE W

Y O R K E R

NE W

S WE E K

ATHLETETARGET

OLYMPICSVIEWER TARGET

MAGAZINE QUINTILES

195

221

248

183

326


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40%$6M

6.7%$1M

20%$3M

13.3%$2M

20%

$3MMAGAZINE

SPOT TV

NATIONAL NEWSPAPER

PROMOTION

DIGITAL

MEDIA MIX


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PRINT & SOCIAL MEDIA ADS


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SPONSORSHIPS& PROMOTIONS

Partner with SOS Outreach, youth development non-profitorganization serving 5,000 at-risk youth aged 8-18 annually

Use outdoor sports to engage underserved studentsin long-term mentor based relationshipsTop UnderArmour executives will be the ones to face the mediaand put the rumors to a halt.

Core value curriculum integrates outdoor experientiallearning, character development, community service,values-based leadership development, social justiceadvocacy, and peer mentoring

Runs various programs for youth to encourageparticipants to transform themselves and others forthe better

Under Armour sponsors a two-day SOS OutreachAdventure program for the month of May

Different city each weekend (NYC, Detroit, CA,Chicago) with an emphasis on cities with impoverishedyouth

Ice rink with EZ Glide 350 synthetic ice and ski slopeand bunny slope made with Snowflex technology

Free admission for kids Under Armour sponsored Olympic teams (U.S.

Speedskating, U.S. Snowboarding, Lindsey Vonn, andCanadian Snowboarding) coaches and athletes will becamp counselors along with volunteers

Parents will register their children on line during themonth of March and receive an Under Armour Skates &Slopes Camp t-shirt, camp wristband, and a personalizedwelcome video for each kid featuring an Olympic athlete

Under Armour and SOS Outreach will accept limitedamount of participants in order to keep a goodcamper-counselor ratio

Throughout the program, kids will get a chance to learn the

basics of skiing, snowboarding, and ice skating throughprograms coordinated by Olympic coaches, athletes, SOSOutreach staff, and community volunteers

After the two-day program is over, kids will receive anotherpersonalized video featuring an Olympic athletecongratulating them on their participation

After the initial campaign, announce the partnership for theU.S. Winter Paralympic Games in 2018 at PyeongChang.


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EARNED Press coverage of the brands reaction to the crisis, primarily our investigation as part of the

accommodative strategy Press coverage and word-of-mouth of the Skates & Slopes Campto be in order to solve the

crisis Publicity and PR mentions on social networks and blog Build a claim of acceptance for the brand, make the brands claims more credible, and break

through the clutter

OWNED YouTube web series on Under Armours own YouTube channel featuring the making and testing

of Under Armour performance apparel Two new Under Armour official websites: one for our internal investigation into the crisis and

Sochi and another for the Skates & Slopes Camp Under Armour Facebook, Twitter, Instagram, and Snapchat

showing exclusive and behind-the-scenes shots from Skates & Slopes, U.S. WinterParalympic & Olympics training and athletes, and U.S. Speedskating World Cup

Our owned media will be controlled by Under Armour themselves, allowing for completecontrol in a crisis environment and build brand transparency, authenticity, and loyalty


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CONCLUSION/EVALUATION


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CONCLUSION/EVALUATIONNEAR thinks that the second option, "Your Crying Shoulder," will be the most effective andsuccessful crisis management plan for Under Armour to implement. By empathizing witheveryone involved, they become a more human and personal brand that consumers willrelate to and be more willing to forgive. The will be able to control what the media is

saying to disseminate the correct information and put the company's brand image on thefast track to recovery.

We will evaluate the campaign by hosting a crisis management center at Under Armour'sheadquarters that will monitor all social media activity. The social media team will workaround the clock to quickly respond to followers's comments that may be negative or havequestions about the situation. They will be on the very frontline of correcting this situation.

A very detailed PR action plan will be implemented to further monitor media speculationand audit the conversation around Under Armour on social media.


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THANK YOU


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REFERENCEShttp://mashable.com/2014/02/14/speed-skating-uniforms-usa-sochi/

http://www.bloombergview.com/articles/2014-02-14/under-armour-s-sochi-problemhttp://www.cnbc.com/id/101434825#.

http://espn.go.com/olympics/winter/2014/speedskating/story/_/id/10494985/2014-sochi-olympics-armour-outfit-us-speedskating-next-two-olympicshttp://www.bloomberg.com/news/2014-02-17/under-armour-goes-for-damage-control-

instead-of-gold-at-olympics.htmlhttp://www.usatoday.com/story/sports/olympics/sochi/2014/02/17/under-armour-speed-suits-usa-speedskaters/5558843/http://www.usatoday.com/story/sports/olympics/2014/05/01/us-speedskating-under-armour-suits/8589263/

http://online.wsj.com/news/articles/SB10001424052702304703804579381002780722432?

utm_medium=App.net&utm_source=PourOverhttp://adage.com/article/cmo-strategy/armour-s-olympic-experience-shows-handle-crisis/291990/http://www.forbes.com/sites/greatspeculations/2013/12/17/armoured-for-growth-potential-opportunities-for-under-armour/http://news.medill.northwestern.edu/chicago/news.aspx?id=228798http://online.wsj.com/articles/SB10001424052702304315004579384521100344980
http://investorplace.com/2014/08/under-armour-stock-ua-nike/#.VEm9flYipuY

Documents

Under Armour Crisis Response