Mass Customization in AdidasPresented by: Akash Choudhary Paritosh Sharma

Yousra Emara

Contents

• Adidas Journey.• Adidas v/s Nike• Mass Customization – Customer Centric Enterprise • Modes of customer participation• Stages of MC in Adidas• Paradox of tie Strength in customer relationship.• Mass customization capabilities• Future Development in MC• Conclusion

Adidas Currently

• The biggest sportswear company in Europe and the second Worldwide.

• Adidas sales revenue is €14.49 Billion (in 2013).

• Total number of employees 50,728 (in 2013).

• It produced 257 million pair of shoes worldwide and 341 units of sports apparel (in 2013).

1924ADIDAS founded by

Adolf Dassler 1947Split between

brothers.Rudolph Dassler founded Puma

1963-1967Introduction of soccer balls and

apparels1979Emergence of new

competitors like NIKE and REEBOK

1999Started mass customization

2006Acquisition of

Reebok

Adidas History

Revenue : 14.49 Billion EurosNo of Employees : 50,728

Revenue : 25.3 Billion EurosNo of Employees : 48,000

Started in 1920 and implemented mass customization in 1999-2000.

Started in 1976 and implemented mass customization in early 1999.

Main focus European Market. Manufacturing units in East but designing in Germany.

Main focus American market. All manufacturing outsourced. Design and marketing in USA.

Only sports brand to offer 3 options in mass customization.

Mass Customization focuses on design.

Performance based. Design based.

Soccer, Tennis, Athletics Basketball, Cross-training, Running, Women and Children’s shoesAggressively entering Soccer.

Need for Mass Customization

• Between 1980-2000 variety of shoes increased by 3000 percent.

• Creating individuality became the necessity. • But the cost and risk involved in showcasing

new variety was huge.• In late 1990s Adidas decided to “go back to the

roots”.• Customization demanded immense customer

relation.

Modes of Customer ParticipationMode 3 – “Design BY customers”

•Customers as active co creators•Customer participation in innovation•For e.g., Include toolkits for user innovation, idea competitions, user workshops etc.

Mode 2 – “Design WITH customers”

•Quasi interaction•Company listens to customers but does not engage in a dialogue•E.g. Customer surveys, Different solutions to customers for concept testing

Mode 1 – “Design FOR customers”

•Communication is one way•Firms use customer information from diverse input channels•For e.g. feedback from sales, internet forums, online community etc.

Adidas Mass Customization Offerings

• miAdidas: Program focused on performance shoes and combines fit (measurements), function (climate control, insole), and form (color combination)

• miTeam: Targeted sports teams, where a coach, for example, can customize sportswear for all team members

• miOriginals: Allowed consumers to create their own style

• miCoach: Personalized online training program

miAdidas Fulfillment Process

Stages of MC in Adidas

• Piloting• First Rollout Growth and Expansion (3rd and 4th Phase)• Sustainable Business Model (5th Phase)

Stages of MC in Adidas

Piloting (Launched in 2000)

• Evaluated the feasibility of the offering during a two-month trial period.

• Offered one model of custom (football) trainers at six different events around Europe.

• The pilot helped evaluate the possible degree of available variety.• Knowledge gained in this stage was used to reengineer the sales,

product models and backup processes.

Customer Feedback: POSITIVE

Stages of MC in Adidas

First Rollout (Launched in 2001)

• Two further models were offered (for running and tennis)

• Retailers were asked to participate by testing the product offering

• Out of 1000 retailers, 100 were ultimately selected

Evaluation: POSITIVE

Stages of MC in Adidas

Growth and Expansion (Launched in 2003-2005)

• The line of products was enlarged o its current scope of four kinds of sports (football, running, tennis, and indoor)

• More retail outlets were added (fourth phase, 2005). • More attention to the commercial side of miAdidas

Evaluation: POSITIVE

Stages of MC in Adidas

Sustainable business model

• Support the brand image and enhance the other (inline) products

• Position itself as an innovative player on the market

• Improve relationships with its users

Evaluation: POSITIVE

Paradox of tie strength customer relationship

• MC Literature says : Strong ties constraints innovation and radical change in an organization.

• Solution : 1. Ignore customer preference – eg: design and

entertainment forms2. Sustain ties with majority and generate revenue from

them while create innovation from the ones with weaker ties.

Mass Customization Capabilities

• Defining Solution Space

• Robust Supply Chain Process Design

• Choice Navigation

Defining Solution Space for miAdidasStep 1

Offered customization on existing inline shoes, mostly of premium products of each category.

Step 2

miAdidas engaged in conventional research techniques. But wasn’t effective enough.

Step 3

But very soon engaged in pilot prototyping with potential customers from sporting events.

Defining Solution Space for miAdidas – First Customer Feedback

• 73 % felt good and willing to pay upto 30% more.

• 80 % understood delivery will take >21 Days.• Based on criteria :– Fit was mentioned most often– Followed by Function/ Performance– Then Design

Defining Solution Space for miAdidas – Result

• Decided to position miAdidas as a performance product with 3 dimensions:– miFit (Measurement)– miPerformance (Functionality and components)– miDesign (Color and graphics)

In recent years design has also been very important:– In order to go online– To target young creative customers

Robust Process Design for miAdidas

• Customers served within predefined components, company’s solution space– Library of predefined casts is used, larger than

standard size assortment.– Different show sizes for both feet.

• Same supplier used for custom shoes for corresponding inline products.

• Flawless Order management system.

Robust Process Design for miAdidas

• Distribution :– Manufactured in different country and delivered

with 21 days.– Express courier used.– Orders can be tracked.

Choice Navigation for miAdidas

• Also known as co-design tool.• 3 possible place for customer to place order:– Flagship Retail stores– Events– Online

• Customer data saved and reused.

SWOT Analysis of miAdidas Strength

• Less fashion risks, discounts, and inventory costs.

• Adequate financial resources for financing future growth

• Close customer contact at the miAdidas shop unit.

Weakness• High logistic costs due to manufacturing in

Asia.• No configuration system available for online

sales.• Dependence on external partners in

manufacturing and logistics.

Opportunities• Possibility to build strong customer

relationships • Access to aggregated market information

can continuously improve inline assortment.• miAdidas is the only full customization

business in the athletic shoe industry. (three customization options: fit, performance, and aesthetic design)

Threats• Rather long delivery times may hinder

growth when new customer segments are targeted.

• Unknown market potential for custom footwear.

• Potentially limited willingness-to-pay for custom shoes.

Future Development in Mass Customization• Adidas should improve their supply chain in order to decrease their fright cost and time.

• However, the company must continue to examine and redesign current processes in order to create the best possible fit between its mass customization business and the mass production.

• Adidas should integrate various functions along the entire value chain, enormous efficiency potential could be leveraged.

• More incremental innovative ideas could be generated in the future through having strong customer relations and to expand upon its customer interaction processes.

.

miAdidas Conclusion• The development of miAdidas reveals a long learning path and trial and error ‐ ‐

process for implementing and scaling up a mass customization offering.‐

• Mass customization for Adidas contributed to brand building and positioning the company uniquely on the market as a performance centric product.

• No other competitor offers a product with such a high degree of customization.

• They have changed the way world see MC by going against the paradox.