Information systems and Adidas team up to understand sporting goods customers
Students and faculty who are members of the Actionable Analytics Lab have partnered with the sportswear giant to help it make better, more informed decisions using data.
Good data leads to good decisions.
In the case of a sporting goods company, data can answer questions such as which customer is more likely to add socks to their cart — the high-performance shoe buyer or the lifestyle shoe buyer?
Or do women buy more complementary products than men?
For which type of sport do athletes tend to buy accessories with their purchase?
The answers can provide valuable insights and lead businesses toward more sophisticated decision-making.
W. P. Carey information systems students and faculty who are members of the Actionable Analytics Lab have partnered with sportswear giant Adidas to help it answer those questions and make better, more informed decisions.
“Adidas is looking to build analytical capabilities that can help them make more informed decisions about promotion strategies and product recommendation systems, as well as use social media analytics to inform product design and more,” says Assistant Professor of Information Systems Victor Benjamin, who is a co-director of the lab. “It’s a very data-driven exercise to help internal decision-makers at Adidas improve various facets of their organization.”
Using big data to understand customers
Faculty, a doctoral student, and graduate students from the Master of Science in Business Analytics program are part of the research team. Adidas is also working with the athletic department and other schools and business units throughout the campus as part of a strategic partnership with ASU.
The team just concluded their first year of the research project, where they jumped into point-of-sale transaction data provided by the company. They focused on customer segmentation and purchasing behavior, as well as brand affinity — an idea that describes consumers who believe a certain brand shares common values with them and their shared values tend to build a relationship and a loyal customer.
The team also worked with a U.S.-based sporting goods retailer analyzing purchasing patterns in the store and examining the affinities between the top brands sold at the store.
PhD student Kumar Sirugudi says the lab built the Product Affinity Analysis tool for Adidas, which allowed them to understand brand affinity patterns along with complements and substitutes and brand-switching patterns. They also analyzed purchasing patterns in different channels within Adidas.
“It’s customer behavior profiling, but it’s all very data-driven. We’re not just creating stories or narratives, it’s actually the data telling us what’s happening,” Benjamin explains.
And that data is powerful.
Data-mining cuts through assumptions and opinions
Leveraging data analytics gives a company a better understanding of who their customers are and how their products are perceived, says Professor of Information Systems Pei-yu Chen, who is co-director of the lab and one of the principal investigators of the research project.
The takeaways from this analytical research have the potential to affect product design and development, marketing, inventory planning, customer service, and many other departments within Adidas, she says.“All these analytics could potentially lead to more satisfied customers, help increase revenue, and cut down costs,” Chen says.
It’s not just “pie-in-the-sky” information either, it’s usable in the real world, Benjamin says.“We’re actually working with the people in the company on the ground level, trying to find real-use cases that analytics can help them solve, and I think it’s been a rewarding experience for both sides,” he says.
Being agile and accurate when making business decisions is invaluable, says Brooks Clemens, manager of marketing, investment, analytics, and applied research projects at Adidas.
Clemens says the first look at the tool the Actionable Analytics Lab created looks promising and is much needed. Getting solid data in the sporting goods industry is tough to come by, he explains. Many decisions are based on gut opinions, Clemens says, and the company has learned — thanks to the data — that they were wrong in some cases.
“It really helps us to be able to cut through a lot of the assumptions and opinions that go into our bigger decisions, because we now have the ability to factualize,” he explains.
Clemens says every major company, including Adidas, uses some sort of social analytics to get qualitative information from their customers. Adidas, he says, isn’t interested in knowing everything about their customer base. They just want to make sure the content they’re putting out is on point and message, which allows their company to become more tailored.
Research sets students up for success
The next year of the project will focus on social media. The lab will study several social media platforms, as well as the company’s e-commerce website to find out what intelligence signals can be extracted to predict product sales and returns, Benjamin says. Adidas also invests in celebrity branding for some of their products. The research team will explore what celebrity branding looks like on social media and whether it’s worth it to invest more marketing dollars into this type of advertising.
“How much predictive power could they glean on product performance and sales and returns by considering multiple platforms?” he asks. “That’s the academic angle.”
Adidas is pleased with the research they’ve seen so far. Not only is the company benefitting from the sophisticated research but the students are gaining priceless experience too, Clemens says.
“Students get the advantage of working on real-world data sets from a real company,” he says. “It’s a win-win.” Chen agreed that the benefit is shared on both sides. There’s real value for the students, getting to put their heads together with faculty and move beyond the controlled classroom examples and work with a real company’s data.
“On one hand, it helps industry partners leverage state-of-the-art knowledge and rigorous methods and tools from academia for their business problems. On the other hand, it helps researchers develop practical tools and methods that could address business needs, and it gives students a chance to work on real data and problems,” she says.
Sirugudi will use his work and experience on the team in his doctoral program. He says the Adidas partnership has allowed him to learn advanced analytics skills and has provided a solid foundation for his research endeavors.
“It was a challenging project, but patience and perseverance yielded success,” he says.
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