Daily thoughts, observations, and speculations
When a company’s strategy is product differentiation, they strive to increase the customer’s perception of their product’s value. This is UA’s main strategy. In fact, it is their only strategy! While some corporation’s strategy is an amalgam of both cost leadership and product differentiation, UA makes no excuses for their approach. They consider their product a premium product and as such charge a considerably more expensive price for their product.
Chapter 5 looked at how a firm’s strengths are really a combination of productive resources. These distinctive competencies are exploited to accomplish the firm’s strategy. The work falls into two broad categories; the first examines how managers are a competency and the second how other organizational attributes combine to accomplish their strategy.
UA operates smartly in both of these categories to lead (i.e. managers) the design of new products (i.e. product design) that attract a wide spectrum of athletes (i.e. marketing) – from the gym sportsperson to the team participant. They have grown their product line from a t-shirt to the likes of shorts, hoodies, underwear, socks, shoes, and hunting apparel. While UA claims they operate in a Niche market (servicing only the performance apparel), their product line extends into the jurisdiction of the other industries (like hunting clothes, warm weather wear, and shoe wear).
To accomplish this differentiation, UA implements a design process much like that described in Chapter 7, wherein they use their organizational structure, management controls, and compensation policies to innovate. Henry Stafford, the SVP of Apparel, Accessories, and Outdoor, explains how he leads a team of more than 150 members and is responsible for Men’s, Women’s, and youth apparel categories from concept to market including design, innovation, and retail execution. He states he “directs and leads a great team whose main goal is to bring innovative product to athletes that help them perform better. (His) responsibilities reach across multiple categories from women’s, to training, to football, youth, and outdoor and (he) strives to empower a great team of fabric, print and pattern specialists, engineers, merchants, designers, and product innovators all with the collective goal of making gear that helps make the next generation of athletes better.”
He also talks about how he balances the tension between creativity on one hand and order on the other, another concept discussed in Chapter 7. “I’m charged with blending the art and science of creating and marketing product and to do that I am constantly meeting with athletes, different teams internally and externally including product engineers, designers, consumers, merchants and the innovation team to make sure we are delivering state-of-the-art performance apparel that not only performs, but looks great, feels great, and meets the needs of our athletes.”
Finally Chapter 7 discusses the process of developing highly differentiated products. The book explains the considerably lock-step process of initiation, development, and implementation/termination stage. This allows for that unique mix of creativity and order to coexist. Mr. Stafford explains their development process as follows, “We accomplish innovation three ways: through our internal teammates, our innovation lab, and through outside partnerships.” Here one sees a similarity to the text book process, yet the own unique spin UA has put on it to coordinate efforts with out-of-house designers.
Again, UA is a company that uses product differentiation as its primary strategy. They use their managerial skills to chorale their resources and create new products for their customers. They balance order with creativity. Even though they are in a business with stiff competition, they continue to operate well on their distinctive competencies and create economic rents on their merchandises.