On Tuesday, Adidas sued the Baltimore-based sports apparel maker Under Armour over its recently-acquired MapMyFitness technology, saying it infringed on patents Adidas obtained in the mid-2000s for its own workout tracking features. It's the kind of move you don't necessarily take unless you really feel a competitor breathing down your neck, and Under Armour has been doing that: Its sales have steadily increased, totaling $2.33 billion last year; Adidas' full year results aren't in yet, but the trend line isn't good.
The story behind all this: The $244 billion sportswear industry is unusually brand-obsessed, and Under Armour has come from nowhere to establish itself as an household name alongside industry titans like Nike and Reebok (which Adidas owns). So, how do you do that? Here are the most important things Under Armour did to break into the top ranks.
1. Focus on the athletics part of athletic wear.
Sports apparel isn't just for sports anymore: For a while now, it's also qualified as high fashion, with even the Paris couturier Dior starting to make sneakers. Nike's womens section is as much fashion as it is activewear, and Air Jordans are a cultural icon.
Under Armour isn't chasing that market. Instead, they've built their messaging around innovation and performance -- most recently through a high-tech Olympic speed-skating suit developed with Lockheed Martin.
"This isn't about putting a product on a speedskater and sales go through the roof," Under Armour chief financial officer Brad Dickerson told the Baltimore Sun. "It's more about the long-term perception of the brand being innovative."
Considering the experience of formerly-hot labels like Abercrombie and Aeropostale, that's probably a more sustainable approach.
"They shouldn't market to become fashion, because that's probably fleeting," says Sam Poser, an analyst with Sterne Agee. "Eventually, it will probably find them, but we don't really have to worry about that right now."
2. Go after the kids.
Children don't have the same solidified brand perceptions as adults, and they're seeking to distinguish themselves, anyway. That's why Under Armour has a full suite of kids' offerings, and does a lot of sponsorships of youth training camps and the Junior PGA Tour -- it'll pay off with local adult customers.
"I think they're capturing the imagination of young kids, where they can really have their own thing," Poser says. "When I was growing up, I wanted a pair of Adidas shell toe shoes. If you go to a t-ball game, these kids are head-to-toe Under Armour."
3. Fix mistakes fast.
Under Armour hasn't been without its missteps. It started out its women's line, for example, with a "shrink and pink it" strategy: Make a few sports bras and compression shorts in feminine colors and hope the ladies like them. That flopped back in the early 2000s, so the company relaunched a campaign with stylish pieces aimed at young women, bringing on athletes like skiier Lindsey Vonn and -- more recently -- the brawny ballerina Misty Copeland. Women now account for nearly a third of Under Armour's sales, which is pretty good for a company that started out marketing to musclebound dudes.
Originally, the underdog Under Armour eschewed expensive marketing campaigns and high-dollar sponsorships. But you can't become a major sports brand without getting your name on a few major college teams, and Under Armour has started playing the game: Most recently, it snatched Notre Dame away from Adidas, which had underwritten the franchise for 17 years. And then, there are the big-name individual sponsorships, like Patriots quarterback Tom Brady and Olympic swimmer Michael Phelps.
Still, Under Armour has also picked up some more offbeat and up-and-coming names, like the Canadian Olympic Snowboarding team and the U.S. Olympic bobsledding team -- not to mention a Chilean soccer club -- that could bolster its popularity in more niche sporting communities, as well as outside the United States. Ultimately, though, going head to head with Nike abroad could get expensive.
Speaking of which!
5. Grow overseas -- slowly and carefully.
Right now Under Armour gets only about 7 percent of its revenues from outside the United States-- negligible, compared with Nike's 59 percent. That's a huge growth opportunity, and the temptation would be to open stores all over the place, which can be disastrous (see: Crocs). Instead, CEO Kevin Plank has proceeded slowly and carefully, with a handful of stores in China -- including a Shanghai outlet that puts shoppers through a video before they enter -- and a focus on Brazil in advance of the 2016 World Cup. He also stole an executive who'd worked in Adidas' international operations for 22 years to head up overseas growth -- just another reason for the second-place retailer to look out behind.