How Under Armour builds social currency to compete against Nike, Adidas: report
Under Armour?s differentiated positioning, cutting-edge brand building, relentless production innovation and commitment to business transformation contribute to a social currency score commensurate with heavyweight competitors Nike and Adidas, according to a new report from CMB and Vivaldi.
Brands must fit themselves into how consumers manage their social lives rather than aim for simple message amplification to build social currency. Under Armour sits among the top 10 brands in terms of social currency scores alongside Nike, Subway, Olive Garden, Southwest Airlines, Honda, Levi?s, Wendy's, Chili?s and Toyota.
The report, Business Transformation Through Greater Customer Centricity: The Power of Social Currency, is based on an online survey of 18,000 U.S. consumers as a joint effort between CMB and Vivaldi, with assistance from Lucid Research.
?We uncovered a significant lesson in terms of what matters to consumers and had to update the definition of Social Currency to mirror the evolution of consumer behavior in the last five years,? said Agathe Blanchon-Ehrsam, chief marketing officer at Vivaldi.
?Whereas the earlier definition of Social Currency measured the degree to which consumers share a brand or information about a brand with others, we were able to see quantitatively that 2016's consumers build their own world and engage with and talk about brands only in so far as it helps them establish themselves and their personal and social identities,? she said.
Competing with the heavyweights
Under Armour, whose annual revenue is $4 billion, has a social currency score of 112 compared to 120 for Nike and 102 for Adidas, whose annual revenues top $31 billion and $16 billion, respectively. Several factors contribute to the brand?s success.
Under Armour?s brand positioning is highly democratizing, empowering and inclusive, helping it drive conversation and expression, tapping into personal and social identities.
The brand?s $750-million investment in mobile technology is an important point of differentiation, with the UA Record platform creating utility and affiliation.
Under Armour also frequently innovates products, creating conversation and keeping it in the news.
The brand?s business model is focused on speed, scale and scope with broader product offerings, new consumer segments, new categories, new markets and additional distribution supporting growth and momentum.
?Today's technology transformations have radically modified how consumers behave, upending the traditional valuation of brands,? Ms. Blanchon-Ehrsam said. ?The winning brands will be those who are able to harness these new behaviors, building their equity through their ability to fit into people's lives.?
Digital transformation and customer centricity should be about consumers, not the brand, according to the report.
Savvy marketers? perception of social media is evolving from believing that its strength is in creating brand ambassadors to recognizing that consumers only proactively talk about brands when it helps them establish themselves, according to the report.
Back in 2010, marketers believed social media would be used by consumers to amplify messages, influence others, become brand ambassadors and create earned today media.
In 2016, marketers increasingly recognize that consumer do not serve brands ? they serve themselves, using social media to create their reality. This includes managing their lives and searching for products or services.
Social currency is important because it higher scores correlate to a likelihood to choose a brand at the time of purchase. Higher social currency scores also correspond to a greater willingness to pay a price premium.
For brands, their success at fitting into how consumers manage their social lives ? or their social currency, per the report ? is dependent on seven factors. These are how a consumer?s relationship to a brand plays into his or her self-image; how much a consumer feels a sense of kinship with others who use the brand; how much the brand facilitates communicating who the person is; how much content shared by a brand engages the consumer; how much the brand help the consumer forge new social connections; how much other people help the consumer engage with the brand, and how much engagement with the brand enhances the value the consumer gets from the brand.
?Brands used to be a beacon that marketers could control, then we moved to an era where we said that the consumer was king, that she was in charge of the brand and that marketers had to let go and engage and empower consumers to build brands for them; and companies looked to nurture brand advocates, used influencer marketing tactics and hoped for earned media,? Ms. Blanchon-Ehrsam said. ?Today, consumers are in the business of defining themselves and brands need to figure out how to help them do just that, otherwise they risk becoming irrelevant.?