Mass Customization in Adidas Presented by Akash Choudhary

Mass Customization in Adidas Presented 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).

Adidas History 2006 Acquisition of Reebok 1999 Started mass customization 1924 ADIDAS founded by Adolf Dassler 1979 Emergence of new competitors like NIKE and REEBOK 1947 Split between brothers. Rudolph Dassler founded Puma 1963 -1967 Introduction of soccer balls and apparels

Revenue : 14. 49 Billion Euros No of Employees : 50, 728 Revenue : 25. 3 Billion Euros No 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. Main focus American market. All Manufacturing units in East but designing in manufacturing outsourced. Design and Germany. marketing in USA. Only sports brand to offer 3 options in mass Mass Customization focuses on design. customization. Performance based. Design based. Soccer, Tennis, Athletics Basketball, Cross‐training, Running, Women and Children’s shoes Aggressively 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 1990 s Adidas decided to “go back to the roots”. • Customization demanded immense customer relation.

Modes of Customer Participation Mode 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 • Quasi interaction customers” • 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 • mi. Adidas: Program focused on performance shoes and combines fit (measurements), function (climate control, insole), and form (color combination) • mi. Team: Targeted sports teams, where a coach, for example, can customize sportswear for all team members • mi. Originals: Allowed consumers to create their own style • mi. Coach: Personalized online training program

mi. Adidas Fulfillment Process

Stages of MC in Adidas • Piloting • First Rollout Growth and Expansion (3 rd and 4 th Phase) • Sustainable Business Model (5 th 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 mi. Adidas 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 forms 2. 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

mi. Adidas engaged in conventional research techniques. But wasn’t effective enough. Step 3 Offered customization on existing inline shoes, mostly of premium products of each category. Step 2 Step 1 Defining Solution Space for mi. Adidas But very soon engaged in pilot prototyping with potential customers from sporting events.

Defining Solution Space for mi. Adidas – 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 mi. Adidas – Result • Decided to position mi. Adidas as a performance product with 3 dimensions: – mi. Fit (Measurement) – mi. Performance (Functionality and components) – mi. Design (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 mi. Adidas • 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 mi. Adidas • Distribution : – Manufactured in different country and delivered with 21 days. – Express courier used. – Orders can be tracked.

Choice Navigation for mi. Adidas • 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 mi. Adidas • • • Strength Less fashion risks, discounts, and inventory costs. Adequate financial resources for financing future growth Close customer contact at the mi. Adidas shop unit. Opportunities • • • Possibility to build strong customer • relationships Access to aggregated market information can continuously improve inline assortment. • mi. Adidas is the only full customization business in the athletic shoe industry. (three • customization options: fit, performance, and aesthetic design) Weakness High logistic costs due to manufacturing in Asia. No configuration system available for online sales. Dependence on external partners in manufacturing and logistics. 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. .

mi. Adidas Conclusion • The development of mi. Adidas 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.