Today’s business environment is changing rapidly, with product variety increasing and the customization of products growing. Companies have to react to these developments by adopting strategies which allow a closer reaction to customers’ individual needs as well as an increasing operational efficiency in internal processes. Mass customization is a concept that meets this challenge with offering customized goods at nearly mass production efficiency.
However, recently the phrase of ‘mass customization’ has been the subject of much hype and became a buzzword. In 2005, the management consulting company Bain & Company has investigated that mass customization is already one of the 25 most popular management tools. Thus it seems obvious that within the last years the number of companies introducing own mass customization projects has been significantly increasing.6 Especially in the sport shoes industry the term produces a lively interest and can be seen as a trend: Nike, Adidas and Reebok are running a mass customization initiative today. Also Puma, as the fourth major brand in global sportswear market, recently introduced its ‘Mongolian Shoe BBQ’ called project, enabling customers to design their own shoes in the internet and selected retail stores.
By having a deeper look at all these companies it becomes evident, that mass customization is frequently implemented ineffectual and rarely part of a strategic plan.
Instead, the technique is often only used as a marketing gimmick, “neglecting the needs and possibilities of dealing with single customer orders.”
The fact conversely, that mass customization offers much more potential than its utilization as a marketing instrument, is not only proven by theoretical literature. Also several successful practical examples – sometimes from entirely different industries – demonstrate the wide range of opportunities for pursuing a mass customization strategy.
Table of Contents
1 Introduction
1.1 Relevance and topicality
1.2 Problem statement and research objective
1.3 Outline of this paper
2 Mass customization
2.1 Definition and concept
2.2 Do customers want individual products?
2.3 Economies of mass customization
2.4 Classification of mass customization strategies
3 The case of Puma AG
3.1 Industry development
3.2 Company information
3.3 The ‘Mongolian Shoe BBQ’ project
3.4 State of project
4 Framework for defining mass customization strategies
4.1 Theoretical approach
4.2 Concept of absorptive capacity
4.3 Conceptual development of mass customization strategies
4.3.1 Acquisition
4.3.2 Assimilation
4.3.3 Transformation
4.3.4 Exploitation
4.4 Benefits and potential of this approach
5 Practical Application
5.1 Development phase: Mass customization as a branding tool
5.1.1 Implementation
5.1.2 Potential benefits and challenges
5.2 Research phase: Mass customization as a customer relationship instrument
5.2.1 Implementation
5.2.2 Potential benefits and challenges
5.3 Customer integration phase: Mass customization as an innovation platform
5.3.1 Implementation
5.3.2 Potential benefits and challenges
5.4 Mass customization as a sustainable business model
5.4.1 Implementation
5.4.2 Potential benefits and challenges
6 Conclusion
6.1 Summary and management implication
6.2 Limitations of this paper
Research Objective and Scope
This thesis aims to develop strategic options for Puma AG regarding its mass customization initiative, with the primary objective of evolving the project from a pilot-status marketing tool into a sustainable, strategically integrated component of the company's business model by applying the framework of absorptive capacity.
- Strategic alignment of mass customization within the corporate structure.
- Application of the concept of "absorptive capacity" to leverage customer knowledge.
- Evaluation of mass customization phases (Development, Research, Integration, Sustainable Model).
- Comparative analysis of industry practices to derive actionable management recommendations.
Excerpt from the Book
3.3 The ‘Mongolian Shoe BBQ’ project
Puma’s Mass customization project was initiated in December of 2004 as a marketing initiative to provide selected customers ‘with the art of shoemaking’. Due to its pilot character, it was first only applied as an event in one Puma concept store in Tokyo, Japan (see figure 3-3).
After a successful result, the project was tested under the name ‘Mongolian Shoe Barbeque’ (MBBQ) in international selected Puma retail stores for a limited time during 2005. The designation was chosen according to the environment the project creates for its customers, which follows the idea and the style of a real Mongolian barbeque. Analogue to a restaurant buffet, where meals are custom-made from an assortment of ingredients, the project featured an in-store fixture filled with pre-cut pattern components from a wide selection of colors, textures and materials.
One of Puma’s most popular sneaker models serves as the base for customization (see figure 3-4). Clients could receive a shoe map that details all customizable parts of the shoe and assemble their individual design with 13 different components from corresponding drawers, using the pattern of the left shoe as a guide along with instructions for the creation process.
Summary of Chapters
1 Introduction: Discusses the rapid change in the business environment, the rise of mass customization as a buzzword, and defines the objective to integrate Puma's pilot project into a strategic plan.
2 Mass customization: Provides a theoretical overview of the term, its potential for competitive advantage, and reviews existing classification frameworks in the literature.
3 The case of Puma AG: Analyzes the sportswear industry, profiles Puma's company development, and details the 'Mongolian Shoe BBQ' project, including its current pilot status and SWOT analysis.
4 Framework for defining mass customization strategies: Introduces the concept of 'absorptive capacity' and develops a four-level theoretical model for implementing mass customization strategies.
5 Practical Application: Applies the theoretical framework to Puma, discussing implementation, benefits, and challenges for each of the four strategic stages: Development, Research, Customer Integration, and Sustainable Business Model.
6 Conclusion: Summarizes the key findings, outlines management implications for Puma, and acknowledges the limitations of the research.
Keywords
Mass Customization, Absorptive Capacity, Puma AG, Mongolian Shoe BBQ, Competitive Strategy, Sportlifestyle, Customer Integration, Customer Knowledge, Strategic Management, Product Innovation, Customer Relationship Management, CRM, Business Model, Brand Management, Market Research
Frequently Asked Questions
What is the core focus of this thesis?
The work focuses on how Puma AG can transform its mass customization pilot project, the 'Mongolian Shoe BBQ', from a mere marketing gimmick into a strategically valuable business model.
Which theoretical framework does the author apply?
The author applies the concept of 'absorptive capacity', which categorizes knowledge management into four subprocesses: acquisition, assimilation, transformation, and exploitation.
Why is mass customization often perceived as a "buzzword"?
It is often used as a marketing tool to increase brand visibility rather than being deeply integrated into a firm's core manufacturing or strategic planning processes.
What are the four phases of mass customization defined in the framework?
The framework defines the Development phase, the Research phase, the Customer Integration phase, and the Sustainable Business Model phase.
What role do 'lead customers' play in the model?
Lead customers are identified as key drivers for innovation, helping the firm discover new trends and develop more customer-centric products during the integration phase.
How does Puma's approach differ from competitors like Adidas?
While Adidas focuses on custom fit and performance through 'mi adidas', Puma emphasizes creativity, design individuality, and the 'event character' of the in-store customization process.
What does the SWOT analysis reveal about the current MBBQ project?
The analysis shows that while the program is strong in branding and design variety, it suffers from lack of strategic integration, long delivery times, and low margins.
Why does the author suggest moving beyond the 'Development phase'?
To avoid the fate of projects like 'Levi's Original Spin', which remained mere marketing gimmicks and were eventually closed due to a lack of long-term strategic viability.
- Quote paper
- Simon Straßburger (Author), 2007, Mass customization. Development of competitive strategies by applying the concept of Absorptive Capacity, Munich, GRIN Verlag, https://www.grin.com/document/112973
