Under Armour’s Silver Lining

Under Armour’s Silver Lining
by Julia Feldmeier
For all the fracas surrounding the disappointments of the US Speed Skating team’s performance at the Sochi Olympics, as the Games wrapped up last week, one player may be poised to emerge a winner— Under Armour.

Men's Pursuit Speed skating

Yes, Under Armour may actually benefit from the blitz of negative publicity surrounding its much-hyped (and now much-maligned) Mach 39 speed skating suit.

To say that “even bad press is good press” is cliché, but consider Under Armour’s context. At the moment, the Baltimore-based sports apparel company is one-sixth the size of Nike— an $11 billion dollar business to Nike’s $67 billion. Whereas Nike’s largesse comes from global distribution, 95 percent of Under Armour’s sales are in North America. In the scheme of things, Under Armour’s flap over the Mach 39 isn’t a problem for the brand. What is a problem is awareness— or lack thereof— for the brand around the globe.

In our Brand Asset Valuator database, a tool through which we measure consumer perceptions and attitudes toward more than 50,000 brands across the globe, awareness and understanding of the Under Armour brand is strikingly low in overseas markets. In data collected prior to the Olympics, we see that among Chinese consumers, Under Armour is in the bottom three percent of brands when it comes to knowledge of the brand; in Germany and France, it’s in the bottom one percent. By contrast, Nike ranks in the top five percent. Even in the US, Under Armour’s knowledge is only at 56 percent, versus Nike’s 96 percent.

Of course, this was before the Games, before the finger-pointing, before the Under Armour name got dragged across the ice and through the media. The story has been covered relentlessly in the U.S., and, thanks to its accusatory sensationalism, has picked up mention overseas, too. Certainly this was not part of Under Armour’s strategic planning, but all the buzz does beg the question: Does Under Armour have more to gain from negative attention than if, say, the U.S. skating team had brought home a bucket of medals? Research suggests that, in fact, this so-called calamity might actually be a golden opportunity.

A 2010 study led by Jonah Berger, a marketing professor at the Wharton School, examined whether negative publicity could have a positive effect. The study found that brand familiarity was a crucial factor in the equation— while negative press and reviews seemed to hurt sales of well-known brands, relatively unknown brands saw a spike in sales. (For example, when they cross-matched book sales against book critics’ appraisals, they found that negative reviews hurt book sales for established authors, whereas unknown authors saw their sales increase 45 percent over their expected sales.)

Berger’s research is consistent with patterns we routinely see in our Brand Asset Valuator data. When established brands with high knowledge take a negative publicity hit, it can severely damage their esteem and brand momentum, causing what we call negative knowledge— a situation where a brand is more well-known than it is liked. The climb back from negative knowledge is a slippery one (imagine, say, walking up a luge track in socks). But for brands like Under Armour who don’t yet have strong consumer awareness and understanding, there’s little to lose. Awareness has to grow in order for the brand to eventually become differentiated and esteemed.

Under Armour’s crisis management team still has its work cut out to smooth over any remaining ruffles from the Games, but its marketing team should be alert and ready to turn a drag into a door opened.


All Content © 2017 BrandAsset Consulting

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