1. Competitive Advantage in the Athletic Apparel Industry
Parker Mazure
Nike, Under Armour, Puma, Adidas, Reebok, North Face, Abercrombie & Fitch,
Lululemon, H&M Sport, Joe Fresh, Forever 21, etc. all of these companies are huge players in
the athletic apparel market. In recent years the line between athletic and leisure apparel has
blurred leading to a greater onset of competition within the ever-broadening market of clothing.
Due to the large amount of companies in this market there is a fierce competition that is
regularly renewed every time a High Schooler needs a new pair of shoes. All of these
companies market in a specific way so as to appeal to certain audiences. Each company
identifies and exploit what competitive advantages they have when marketing to these specific
audiences -- segments. In an effort to simplify this multi-company brawl, that we call market
competition, Michael Porter created a means by which a company can better identify their
business’ existing strategy, in regards to market competition. Porter focused on five forces that
determine the level of competitiveness within an industry. These forces being: the threat of
substitute products or services, the threat posed by an established rival, the threat posed from a
new entrant, the bargaining power of suppliers, and the bargaining power of consumers. Each
vital in determining whether an industry is a five star (very favorable; the soft drink industry) or a
one star (not favorable; the airline industry).
Using the philosophies preached by Porter, we can see that competitive strategy is
exceedingly important to identify and understand. In each market companies can be split into
several segments; for the purposes of this essay, I will be placing Nike, Under Armour and their
main competitors into the categories of Low Cost Leader, High Quality Brand, and companies
with a niche focus. As well as examining the conditions within the athletic apparel market using
Porter’s Five Forces.
Based on the aforementioned list of companies within the athletic apparel market we can
organize each company into a specific segment -- consisting of a categorical breakdown of the
companies as well as a ranking within that segment.
Company Category Explanation Ranking within
Segment
Nike High Quality Brand Nike’s focus is strictly
on the product and
how it is perceived. If
someone is unhappy
with the product they
can just as easily buy
another brand.
1
(Leader)
Adidas High Quality Brand Adidas’ focus as a
company is fairly
2

2. similar to the other
brands it is competing
with; in that, they
need to continue to
focus on product
superiority as it is
their only marketing
tool.
Under Armour High Quality Brand Under Armour is just
now beginning to
gain explode onto the
scene and record
large scale profits.
They are focused on
high quality products
as they build their
brand.
3
Puma High Quality Brand Puma, a former part
of the Adidas brand,
is currently struggling
in the athletic apparel
market. They were
just overtaken in
profits by Under
Armour in 2014. The
brand is still focused
on producing high
quality products;
however, Puma has
failed to market their
products successfully
to their target market.
4
Abercrombie & Fitch Niche Focus Abercrombie & Fitch
is a company
focusing on the niche
market of thin people
willing to spend a lot
of money on this
specific brand. A&F
refuses to make
clothing in sizes
exceeding a Large.
1
(Leader)
Lululemon Niche Focus Lululemon is a
company devoted to
producing high end
athletic yoga apparel
2

3. for women. Popular
for their Yoga Pants
as well as athletic
accessories.
H&M Sport Low Cost H&M Sport is a
relatively newer
brand that markets
athletic apparel at
extremely low prices.
Their motto is,
‘Athletic apparel at
the lowest price.’
Having the added
stability of the H&M
brand only helps
H&M Sport moving
forward.
1
(Leader)
Joe Fresh Low Cost Joe Fresh prides
themselves in their
ability to sell athletic
apparel at a low cost
for consumers.
2
Forever 21 Low Cost Forever 21 is another
established brand
that focuses on
making athletic gear
at a low consumer
cost. The only issue
being that the brand
is still young and has
yet to amass a larger
product list.
3
By breaking these companies into these three segments we see that the low cost leader is H&M
Sport, the premiere high quality brand is Nike, and the company succeeding the most in niche
markets is Abercrombie & Fitch.
If I use the model established by Michael Porter, I can ascertain the appeal of the athletic
apparel market. The first of Porter’s five forces is: the threat of new entrants into the market.
Due to the almost monopolistic nature of this industry it is very difficult to thrive as a newcomer -
- essentially lowering this threat level to minuscule proportions. The second force is: the threat
of established rivals. This is the most prevalent threat within the athletic apparel industry. With
huge names such as Nike and Adidas it is very rare to combat these forces. The third of Porter’s
forces is: the bargaining power of suppliers. This is an almost non-existent threat as the large
conglomerates within the industry are willing to part ways with a supplier over the smallest of

4. details; leaving suppliers with little job security as well as little bargaining power. Porter’s fourth
force is: the bargaining power of consumers. Much like the third force, this threat is almost non-
existent. Consumers are willing to pay most any price when it comes to the large brands present
within this market. The consumers of these brands are left with little leeway and little bargaining
power, if any. The fifth and final of the forces is the threat of substitute products. This is another
prevalent threat within this market. The athletic apparel market is especially based on brand
recognition more than many other factors. Most sales are made in this industry when
professional athletes are seen supporting a specific brand, not in the store isle. Based on that
analysis I would conclude that the athletic apparel industry is a 1-3 star industry due to the high
levels of competition between already established brands.
Due to the volatile conditions within the industry it is amazing that companies are still able
to establish a competitive advantage. Using the examples of Nike and Under Armour we can
asses if both companies have viable competitive advantages as well as substantial enough
economic moats. Nike is at the forefront of the athletic apparel world, recording over 30 billion
dollars in revenue during the 2015 fiscal year. Their competitive advantage is their extensive
reach throughout a multitude of markets as well as the brand loyalty that they have massed for
their athletic footwear. Under Armour is an up and coming player in the athletic apparel industry,
earning just over three billion dollars in 2015. Their competitive advantage is the brand loyalty
among their apparel as well as the investment ps they have made into athletic technology. Both
companies reside within a high risk-zone when it comes to stability within the market. Nike is in
the better position due to their huge leg up on their competitors. It is unlikely that Nike’s supply
chain will deteriorate; however, the marketing strategy that many companies within this industry
employ requires constant upkeep with consumers. Nike must continue to sign the hottest
athletes in professional sports in order to maintain their brand’s popularity. Under Armour, on
the other hand, has does not have the same brand popularity that Nike enjoys. Under Armour’s
brand loyalty among their apparel chains is constantly vulnerable to substitution; due to the
large supply of competition with similar product lines within the market. The only competitive
advantage that Under Armour has presently, not subject to complication is: their intellectual
property. These properties include Endomondo as well as MyFitnessPal. Based on a platform of
digital exercise equipment Under Armour hopes to continue their upward trend and cultivate the
brand loyalty that they have enjoyed within their apparel product line. Based on each company’s
competitive advantages I would conclude that Nike’s economic moat is expansive and
formidable; whereas, Under Armour’s economic moat is still being shaped in order to prepare
for the future.
The athletic apparel industry is one that seems to be locked in constant competition. There
are larger conglomerates that make market penetration seemingly impossible (Nike and
Adidas), with only a small number of companies succeeding in doing just that (Under Armour,
H&M Sport, Joe Fresh). If one examines the market, you are able to determine the strategies
utilized by each company and how they might better their market blueprint analysis. Using
Porter’s Five Forces I am able to examine the athletic apparel market and apply a grade to the
attractiveness of the field. Looking at the examples of Nike and Under Armour we can conclude
that the competitive advantages of Nike are sound, for now, and the Under Armour’s

5. competitive advantages are focused on future growth. These companies and their competition
are all, presently, stable and will most likely continue to do so for many years to come; all until
the new company in town saunters into the market, makes a killing, and is later analyzed by
college students and professionals alike using the very same techniques.