the "mi adidas" mass customization initiative case study

mi adidasMass Customization Initiative

mi adidasAkram Anas Mohamed K Mohamed A Karim Youssef Dr. Ingy

Road Map The case synopsis. History of adidas. What is mi adidas? Case problem. Phase 1

Phase 2 (executed). SWOT analysis. Global Footwear market & Competition. Phase 3 Phase 4. The three alternatives. Recommendations. Current situation of mi adidas. References List.


Phase 2 (executed). SWOT analysis. Global Footwear market & Competition. Phase 3 Phase 4. The three alternatives Recommendations. Current situation of mi adidas. References List.

The Case Synopsis This case is about mi adidas. We are talking about an industry in the field of sports

wears and sports equipment. Discussing a product offered by mass customization. mi adidas is in the middle of a plan after executing the first half of it. We are here to help them to make the proper decision based on the study we made.



History of adidas In 1920, it all began when Adolph Dassler adidas and

his brother Rudolph made their first shoes in a small village in south Germany using basic material available after World War I. Their idea was to provide every athlete with the best possible equipment. Jesse Owens was the first agreed to wear their shoes and he won 4 gold medals in Berlin Olympics. In 1948 the two brothers quarreled, Rudolph left to establish Puma and Adolph to register Adidas. 1954 Germany won the world cup wearing new screw studs on adidas soccer shoes.

1920 adidas Shoe

History of adidas (Cont) In 1972 Nike entered the American market targeting

teenagers, Reebok followed in 1979. Adidas struggled through the high pace of competition as the aggressive competition in industry is getting higher. In 1989 the Dassler family withdrew from the company and transformed into a corporation. Through 1989 and 1998 adidas has been acquired and sold 3 times till 2000 when Herbert Hainer took over as a chairman and CEO of adidas and Rolf Reinschmidt as a head of Forever Sport Division.



What is mi adidas? mi adidas store in Chanzelize'

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Case ProblemIn 2001 mi adidas had three alternative routes to choose from : 1. Withdraw : celebrate the success but quietly withdraw from MC in order to focus on adidas core business. 2. Maintain : Maintain the developed capabilities and planned retail tours following top events such as the Soccer World Cup and marathon series i.e. ( maintain the product categories {soccer , running}footwear without any intend to expand in product) 3. Expand : Expand to multiple product categories and new markets



Phase I : The mi adidas Pilot The objectives

Offer a customized product Test consumers demands Fulfill the consumers expectation The mi Adidas Strategy1-Attract new customer by promising superior value ( our experience)

Phase 1 AnalysisMi adidas started the phase 1 project. 1. The project start with small pilot ( 300 pairs ) 2. Product Selection mi adidas select soccer footwear to perform the pilot on. 3. Market Segmentation mi adidas segment the market geographically by select six countries interested in the selected product ( Germany , France , England , Spain , Italy and the Netherland ) 3. Period 100 % event based. Over a two-month period in 2000

Phase II Analysis Phase 2 Mi adidas strategy for growth for the Soccer footwear

for (2001)1. Mi adidas increase the current product mass in the

same market market penetration 2. Mi adidas targeted a new market ( US) by the current product market Development Mi adidas strategy for growth for the running footwear for (2001) 1. Mi adidas provided a new product ( running footwear) in new market (Berlin Marathon) market Diversification



mi adidas SWOT analysis

Strengths- Good brand reputation in the sports goods market. - mi adidas sales of soccer footwear increased by 1600% -

between phase 1 & 2. High level of customization details Able to handle the complexity of the process. Large mass production facilities. Strong Market channels and Distribution Capabilities Better lead time with two weeks. Adidas expanded to compete in the running sports market after phase 1.

Weaknesses- Adidas is in the second place of the world footwear

Market. - Not enough capabilities to deal with issues presented. - Delays due to Workers lack of training and language capability and expertise to handle MC on a larger scale.

Opportunities- World cup competition in Japan 2002 - 7 major marathons (April October 2002) - Acquisition of rebook to compete with Nike. - Slogan of Impossible is nothing - The ability to have the most recent fashion customized. - Athletics foot wear market was characterize by rapid

product turnover. - 100% of the consumers in phase 1 want customization service available in the future.

Threats- Several Competitors offer similar service. - Most of adidas income comes from the selling of its

products to retailers. - Nike has a large global market and a large acceptance of their product all over the globe than adidas. - Adidas has a growing market share, but it remains to be seen whether it will grow at the cost of Nike, or other lesser brands.

Adidas Divisions

Forever Sport (largest division)Were mi adidas is located.

Originals

Equipment

mi adidas in adidass BCG mi adidas considered to be a question mark in adidass

BCG because market growing but sales still low with respect to other products. To pull mi adidas towards a star.

Star Cash Cow

Question Mark Dog



Global Footwear MarketTotal Footwear Market in Billion

1.3 2.0 7.9 North America Europe Asia-Pacific Rest of the world

5.2

Total market = 16.4 billion

Global Footwear Market60% of the total footwear market is controlled by

Global Footwear MarketAdidas footwear sales in 2001North america Europe Asia Latin America

1,200 971 818

122

North america

Europe

Asia

Latin America

Global Footwear MarketNike footwear sales in 2001USA 3,209 Europe Asia Latin America

1,423 632 360

USA

Europe

Asia

Latin America



Phase III &Mass Customization Rollout Plan IVPhase 4 2003Permanent MC units in adidas stores and selected specially retailers Precision "VI" 20,000 pairs Retail / Events/Promo and Japan all Year Quick response SMU's 4,000 pairs via specially retailers Premium 100 pairs Direct 8 US College Teams Sept - Oct Permanent MC unit in Tolland Garros

Phase 3 2002

Supernova (RX) 1,400 pairs Retail Partners 7 major Marathons Apr -Oct

Barricade 500 pairs Direct Roland Garros May - Jun

Phase 2 2001

Predator Precision 5,000 pairs Retail/Events/Promo and US Retail (Jun - Aug) Events (all years)

Boston Supernova 200 pairs Retail Partners Berlin Marathon Sept

Phase 1 2000

Predator Precision 300 pairs Direct Trail UK/D/S/F/I/NL Soccer

Running

Basketball

Tennis

Phase III & IV Phase 3 Mi adidas strategy for growth for the Soccer footwear

for (2002)1. Mi adidas increase the current product mass in the same

market market penetration 2. Mi adidas targeted a new market ( japan) by the current product market Development * Japan ( Make full use of the soccer world cup event ) Mi adidas strategy for growth for the running footwear for (2002) 1. Mi adidas targeted a new market (7 major Marathons) market Development

Phase III & IV Phase 3 Mi adidas strategy for growth for the Basketball footwear

for (2002)1. Mi adidas provided a new product (Basketball footwear) 2. I. II.

1.

in a current market (US) product Development mi adidas segment the market geographically by select US By age by select the university students. Mi adidas strategy for growth for the Tennis footwear for (2002) Mi adidas provided a new product ( Tennis footwear) in a current market (Paris) product Development

Phase III & IV Phase 4 Mi adidas strategy for growth for the Soccer footwear

for (2003)Mi adidas maintain the developed market and selected specially retailers Mi adidas strategy for growth for the Basketball footwear for (2003) Mi adidas Expand the developed market in US in order to meet the increasing demand

Mi adidas strategy for growth for the Tennis footwear

for (2003)Mi adidas maintain the developed market in Roland Garros



Question In this case the problem that adidas will be facing is the

extremely high cost of inventory in addition to the high production cost. The question is: Does the added value for the service cover these additional costs? Will the price be ideal for Adidas to keep its good reputation?

Considering the three alternatives, Withdraw, Maintain & ExpandWithdrawThe first option of withdrawing will mean that all the effort was almost for nothing. Competitors can take advantage of a lucrative market devoid of competitors.

Maintain

Customization of products has already become a trend. mi adidas has created a good energy for the business and customization capabilities could be integrated into existing functions. Even though a huge demand of customized products exist in the market, there are limited resources and capabilities to handle large volume of customized goods.

Considering the three alternatives, Withdraw, Maintain & ExpandExpandA demand for customized footwear exists. No big contenders (yet) for this market space. A controlled expansion can reduce risks. This can be attained by limiting the amount of customization. As capabilities and competences improve the level of customization can be increased The problems that mi adidas face right now can only be fixed by allocating more resources to deal with those issues and the resources can be obtained only by expansion.



RecommendationsUsing the existing production facilities or with minimal changes to them. Nike s footwear sales are increasing so Adidas needs to take a step forward and do something different in order to keep the customers interested. Adidas should make plans of entering into other segments of service business like customized sports goods and sports wear Problems with retailers can be avoided by first expanding to

Adidas' own retail stores. After all major issues have been solved, the service can be further expanded to other retailers. As for products, adidas should lead customers taste in a certain level.



mi adidas 2011 mi adidas expanded to cover eight categories for both

men and women (Soccer, Running, Tennis, Basket ball, Golf, Casual, Outdoor & Training) mi adidas allows you to customize your shoe through the web site without any campaigns or face to face contact.Choose your model

Choose your gender

Choose your size

Start customizing

Video Video removed due to large size

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the "mi adidas" mass customization initiative case study

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