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Allbirds Strategic Management Case Study

Introduction

Allbirds has grown up in New Zealand under the leadership of Tim Brown & Joey Zwillinger. The footwear manufacturer has garnered a considerable market share with the offering of unique footwear made out of merino wool. The company has four product variants for men and women. The Report throws light on the product portfolio for allbirds along with the success measures and sources of competitive advantage which are at the company's disposal. The company has managed to carve a niche in the footwear market and the innovation and strategic advantages for allbirds also poses as a challenge too. The suggestions to such challenges are significant too.

Product Portfolio of allbirds

Basis the BCG matrix, Men's wool loungers are represented by stars. Since this segment works at a high growth level with the demand for the loungers in men, it is highly significant (Figure 1).

The company needs to invest its resources in capitalizing the opportunity to get the most from this segment (Allbirds, 2017; Fastcompany, 2016; Mchugh, M., 2016). The loungers in this segment from allbirds have the capability to turn into cash cows. The benefits ascertained from wool loungers is the durability achieved through the USP's such as it being light weight and breathable. Also they offer the flexibility that conforms to movement. The wearers can experience the comfort in the wear and with the sleek line and luxurious comfort offering. The segment can be worn by men as office wear and even with casuals (Jiang, L., Luximon, A., & Younus, A., 2016). The lightweight sole of the wool loungers is a blend of foam along with the rubber which’s makes it the lightest shoe (Mchugh, M., 2016; Allbirds, 2017). The balancing weight and friction control too form the USP of the product and the demand rising thereby worldwide. The men wool runners from allbirds has managed to tap with the desire for luxury within the segment (Mchugh, M., 2016; Allbirds, 2017; Fastcompany, 2016).

The women's wool runners are representative of being question marks in the BCG matrix (Figure 1). The product needs closer consideration. The low market share as that represents the product - women's wool runners is due to the demand not rising as it is not fashionable (Jiang, L., Luximon, A., &Younus, A., 2016; Allbirds, 2017; Mchugh, M., 2016). With the gender more keen to wearing footwear that offers less comfort and more style, the demand for the product has been slow for all runners. Although it has the potential to grow up and become star with the change in the trend and as the gender changes the perception on the shoe (Allbirds, 2017; Idealog, 2017; Lam, Y. N., Yick, K. L., Ng, S. P., Leung, D. M., &Yeung, K. L., 2014). The company would have to shell out greater amount of resources and make greater investments not only on the marketing end but with the addition to the styling to make it turn to the category of stars. The market penetration has to be the focus area for this product of allbirds and considering the lightweight and breathable USP's of the offering, the focus has to turn on to the feather light weight which can be worn seamlessly for hours throughout the day.

The women wool loungers have an interesting story. While the BCG matrix has them represented under the category of cash cows, they are the hot selling product from allbirds (de Villiers, R., Woodside, A. G., & Marshall, R., 2016; Shanbhag, M., Dutt, M. L., &Bagwe, S., 2016). The product should be milked to the limits beyond as it has greater potential in the years to come. The organization should have its resources focus on the product due to the greater demand it carries across the globe. The wool loungers for women have the smart silhouette which does blend with the awesome outfits worn. It is meant for all occasions and can be worn by women wherever they go (Allbirds, 2017; Idealog, 2017; Lam, Y. N., Yick, K. L., Ng, S. P., Leung, D. M., &Yeung, K. L., 2014). The low carbon footing from the brand also poses to be beneficial and can be worn sockless. The trend of wearing sockless shoes has grown over years and the market gearing up for the product from all brands. The knitted wool has formed the focus bearing the unique design as part of offering from the brand (Dua, B., Podhajny, D. A., Shaffer, B. A., Tatler, D. P., &Huffa, B., 2016; Fastcompany, 2016). With the contrast colors and embroidered eyelets, the tubular laces as part of the product are a feather on the crown. The wool texture has fascinated women and the subtle logo tag too complements other add ons.

Men's wool runners are represented as dogs in the BCG matrix (Palia, A. P., De Ryck, J., &Mak, W. K., 2014). The low market share for the product is due to the less usage with the men not getting accustomed to them for sports (Figure 1). The other competitive brands offering greater flexibility, comfort and style seem to outlay allbirds product - the men's wool runners. The profitability though can be escalated for the product having greater sponsorship being attached to it from various events. The deep analysis with the changes in the manner in which the product is marketed would make a difference (Palia, A. P., De Ryck, J., &Mak, W. K., 2014; Shanbhag, M., Dutt, M. L., &Bagwe, S., 2016).

Relation To Product Life Cycle & Innovation Adoption Curve

As more and more customers have a preference for the woolrunners and loungers, the price of the product is likely to increase. Even though the price is more at the growth stage of product life cycle, the satisfaction to the customers forms to be an essential key. The money income to the company can be increased (Bartlett, D., &Twineham, J., 2013; Brown, T., &Zwillinger, J., 2016).

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The maturity stage of product life cycle being represented by allbirds with the woolrunners staying in stocks with the retailers and distributors and sales having touched to the levels, wherein the expectation cannot grow further can be anticipated only after a decade or two (Stark, J., 2015, Figure 2). With the introduction stage based on PLC of allbirds, the launch of new variants for the woolrunners and loungers, lot of advertisements and banner advertisements is the area that the company would have to lay focus on (Brown, T., &Zwillinger, J., 2016; Allbirds, 2017; Lam, Y. N., Yick, K. L., Ng, S. P., Leung, D. M., &Yeung, K. L., 2014). The innovation adoption curve for allbirds with the evolving marketing strategies and keeping abreast with the trends and style is significant. For allbirds to reach a level wherein it becomes a recognized brand, it is crucial. The innovation of the brand had begun with the prototypes being designed. With the efforts from Tim Brown and designer Jamie McLellan, allbirds can bring the vision of organization to life (Fastcompany, 2016; Bartlett, D., &Twineham, J., 2013;DesignersInstitute, 2017). The innovative technology embedded in the soles of the brand, the sustainability of fashion too continues. The second generation design is already in process with the replacement of synthetics by merino wool for allbirds (DesignersInstitute, 2017; Allbirds, 2017).

Strategic Advice To allbirds

Considering the trends and adoption of greater styling and comfort, The second generation design is already in process with the replacement of synthetics by merino wool for allbirds. The company has retained greater strength and competence in the market with the brand based on wool. Now with the replacement coming into picture, the designers would need to focus on the concept which has been the key area for sales of products by the brand (Gmelin, H., &Seuring, S., 2014; Bartlett, D., &Twineham, J., 2013; Brown, T., &Zwillinger, J., 2016). The new classic and the casual sport wear, the brand is trying to turn into would need the utilization of the resources and capabilities in accordance. The sustainability on the grounds of fashion and innovation brought in with the unique styling has to be the focus too with the USP of the brand kept intact such that it does not lose popularity (de Villiers, R., Woodside, A. G., & Marshall, R., 2016; Zhang, Y., Luo, X., Buis, J. J., & Sutherland, J. W., 2015). Although the focus of allbirds on the material research innovation continues, the other key areas of marketing the brand have to stay strong too. The shoes need to capture the attention and have to be gone off shelves with the least possible time. With the demand having grown to this extent, the company can utilize the margins attained from the business on to areas as worldwide marketing and even the franchising setup can be adopted considering the strategic placement of brand elsewhere too (Allbirds, 2017; de Villiers, R., Woodside, A. G., & Marshall, R., 2016; Zhang, Y., Luo, X., Buis, J. J., & Sutherland, J. W., 2015).

Success Measures for allbirds

The successful strategies adopted by the brand in positioning itself to be a major on the use of merino wool rather than synthetics gives it an edge over the existing brands in footwear for men and women. allbirds cares about its customers and offers great benefits for the use and the comfort linked to the footwear. the segmentation with the classification done for the woolrunners and the wool loungers for men and women is a great strategy that has worked well for the brand (Brexendorf, T. O., Bayus, B., & Keller, K. L., 2015; Brown, T., &Zwillinger, J., 2016; MaaritJalkala, A., &Keränen, J., 2014).

The price of the footwear offered by allbirds is low as compared to the alternatives available in the market for synthetic shoes. The advantage of branding for it also offering greater scope in the manner of cost savings one with the use of merino wool deployed for the manufacturing is a greater offering (Brexendorf, T. O., Bayus, B., & Keller, K. L., 2015; Brown, T., &Zwillinger, J., 2016; MaaritJalkala, A., &Keränen, J., 2014). The innovation of the brand with the uniqueness offered in insole technology. The New Zealand’s superfino merino wool is a natural material available in abundance for the company as a resource of the mainland.

Sources Of Competitive Advantages

The sources of competitive advantage for the organization stand to be the simplicity in the operation mechanics. The footwear brand has put in greater efforts on the designing front with the key designers being part of their team. The sole is vegetable based and not the wool that was earlier in practice (Hsu, D. H., &Ziedonis, R. H., 2013; Riasi, A., 2015; Palia, A. P., De Ryck, J., &Mak, W. K., 2014). Merino wool is being replaced by synthetics for the shoe. The competitive edge for allbirds is set to a greater extent with the low carbon footprint and the wear ability option for the shoe with them being worn sockless. The lightweight USP stands to be apart and provisioning additional breathability adds to the comfort for the wearers. The soft comfort provisioned by the brand gives it the major economy of scale (Saeidi, S. P., Sofian, S., Saeidi, P., Saeidi, S. P., &Saaeidi, S. A., 2015; de Villiers, R., Woodside, A. G., & Marshall, R., 2016). The competitors for the brand do not exist in greater number for the usage of merino wool. The sustainable sneaker has grown and spread to the worldwide market with the comfort and style attributed with the products offered. they are tagged as the "world's most comfortable shoe" and the low cost offering by the brand gives it an edge over the competition whatsoever in the synthetic shoe market. The sneaker is being crafted in the land of wool, New Zealand and the company has the benefit - locational too and the wool runners taking the flagship based on the brand (Zhang, Y., Luo, X., Buis, J. J., & Sutherland, J. W., 2015; AllBirds, 2017; Daigneault, A., Greenhalgh, S., &Samarasinghe, O., 2016). The fabric which is being utilized as part of the shoes aids in regulation of temperature and the excess moisture retained. The adaptability of the brand to being tossed and washed in the washing machine too gives it’s an edge over others (Findling, D., 2017).

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Organization Structure of allbirds

Tim Brown being the co-founder of the brand with the CEO Joey Zwillingerhas made allbirds reach at an astonishing level. The Analysts on Strategy and Operations along with other designers directly report into the founder and Co-founder at allbirds (Designersinstitute, 2017; Bartlett, D., &Twineham, J., 2013; Lam, Y. N., Yick, K. L., Ng, S. P., Leung, D. M., &Yeung, K. L., 2014). Comparing this structure to an organization like Apple, which has a spoke and wheel hierarchy representing the collaboration of the teams associated with hardware and software. The VP of the organization has greater autonomy. The same was not the case while Apple was under the leadership of Steve Jobs. The organization structure on the other hand for allbirds is less stiff with greater flexibility being operated at various levels and the minimized stakeholders representing part of the group. The top leaders at allbirds key stake and the autonomy flows from them to the other departments (Designersinstitute, 2017; Bartlett, D., &Twineham, J., 2013; Lam, Y. N., Yick, K. L., Ng, S. P., Leung, D. M., &Yeung, K. L., 2014).

Use Of Innovation To Develop Strategic Advantage For allbirds

The focus of allbirds on the innovation associated with the materials research done for the product is a technique which has worked really well for the brand. the new wave that is associated with the digitally native brands existing in the market have been altered with a better approach and innovative thinking (Damanpour, F., Walker, R. M., Chen, J., &Aravind, D., 2014; Brown, T., &Zwillinger, J., 2016). The company has retained greater strength and competence in the market with the brand based on wool. Now with the replacement coming into picture, the designers would need to focus on the concept which has been the key area for sales of products by the brand. The industrial designers deployed on the job of designing work as a team and the research and development initiatives adopted by allbirds has aided in taking it to heights (Brown, T., &Zwillinger, J., 2016; Daigneault, A., Greenhalgh, S., &Samarasinghe, O., 2016; Idealog, 2017). The pure merino wool of New Zealand has been put to use for the creation of super comfort footwear that leads to the employment of greater natural resource available to the company. The design is developed keeping the innovativeness in pace and yet offering a cost effective option for the wearers. The innovation of keeping a tiny tag on the brand is yet another strategy deployed to keep pace with the competition and keeping the customers liking and interest in mind. The company allbirds has the wicks moisture technology as part of innovation which is put to use in a great manner (Brown, T., &Zwillinger, J., 2016; Daigneault, A., Greenhalgh, S., &Samarasinghe, O., 2016; Idealog, 2017). The Superfine merino wool travels to the Italian mill which is being knitted into a textile that is being utilized with the use of fibers which are 20% of the diameter, that of a human hair. The USP of breathability with the offering of such a fabric for the shoe retains moisture and gives an anti-itch experience while the footwear is being even worn for longer hours. The R&D division of allbirds utilizes the resources and has brought in the proprietary dual faced textile that s soft enough and dirt resistant. The technology to cut into a single sock like shape is unique too (Lam, Y. N., Yick, K. L., Ng, S. P., Leung, D. M., &Yeung, K. L., 2014; AllBirds, 2017).

Significant Challenges Faced Byallbirds

The challenges that are faced by allbirds are the challenge on the design. With the shoe that is cut into sock shape and the unique design cannot have many variants (AllBirds, 2017; Volberda, H. W., Van Den Bosch, F. A., &Heij, C. V., 2013). The offering of allbirds with four products for men and women is a great challenge it possesses than the variants available in competition with the synthetic materials deployed by companies. The expansion into the markets globally would also need the customers to adapt to the unique design. With the markets too much attached to the sports footwear being of synthetic nature, analyzing and changing the perception for the customers is also a challenge to the shoemaker. With the limited range and the venturing into slippers lately, the brand has to strive a lot in order to meet the demand for the alternatives (NYTimes, 2017). With the allbirds footwear being tagged as a classic category of the shoe, the comfortable and light weight may not be a real demand in catching up with the sportsmen. It is not a hardcore running shoe (Plimmer, S., 2017).

Suggestion To Challenges

With the challenges faced by allbirds, it is evident that the shoemaker needs to be versatile and greater styling and design needs to be incorporated. Moreover with the current offering of just four products in its kitty, the New Zealand Merino wool footwear major has to penetrate more into offering greater variants. The venture into slippers is an initiative which was taken up recently by the brand. Apart from slippers, the brand needs to focus on sandals, more styled variants. The company has also not yet expanded to the children segment. The segment itself holds greater signification considering the worldwide demand. The offering by the company needs to cater to this segment too. Also the marketing for the shoe has to be focused more basis the analysis derived from the growing demand segment. It is quite likely that outside New Zealand, the company would need to deploy more resources in selling and marketing the footwear and the USP's of it with the changing behavior and consumer preference.

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REFERENCES

Bartlett, D., &Twineham, J. (2013).Product Life Cycle.In Encyclopedia of Corporate Social Responsibility (pp. 1914-1920).Springer Berlin Heidelberg.

Brexendorf, T. O., Bayus, B., & Keller, K. L. (2015).Understanding the interplay between brand and innovation management: findings and future research directions. Journal of the Academy of Marketing Science, 43(5), 548-557.

Brown, T., &Zwillinger, J. (2016).Doing things differently. Engineering Insight, 17(6), 32.

Daigneault, A., Greenhalgh, S., &Samarasinghe, O. (2016). Economic impacts of multiple agro-environmental policies on New Zealand land use. Environmental and Resource Economics, 1-23.

Damanpour, F., Walker, R. M., Chen, J., &Aravind, D. (2014, January).A Quantitative Review of Research on Performance Effects of Management Innovation.In Academy of Management Proceedings (Vol. 2014, No. 1, p. 11670).Academy of Management.

Dua, B., Podhajny, D. A., Shaffer, B. A., Tatler, D. P., &Huffa, B. (2016). U.S. Patent No. 9,445,640. Washington, DC: U.S. Patent and Trademark Office.

Gmelin, H., &Seuring, S. (2014). Achieving sustainable new product development by integrating product life-cycle management capabilities. International Journal of Production Economics, 154, 166-177.

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