Mass Customization: What, Why, How, and Examples
Mass customization is an important business concept, which numerous brands are adopting these days. Moreover, the concept is also utilized in the development of marketing strategies for product and service lines and during the process of recognizing the target audience of a brand or business.
In this article we start discussing 1) what is mass customization; going then to describe 2) approaches to mass customization; 3) how it is helpful for entrepreneurs?; 4) insights into modern concepts related to mass customization; and 5) challenges in mass customization.
WHAT IS MASS CUSTOMIZATION?
It deals with making changes to a product or service to satisfy a given consumer group. The changes could be as small as a variety of different flavors or colors or as complex as developing a completely new product for a particular client-base.
Mass customization combines the personalization and flexibility of custom-made business manufacturing and takes it to another level of mass production, which offers a lower unit cost. Therefore, different mass consumer groups are targeted in mass customization rather than targeting a single client. This concept is utilized in numerous business types for instance in software that allow users to change or add certain functionalities according to their requirement. Similarly, Macbooks are available in different RAM sizes, hard disk capacities and the outer finish to provide users exactly what they are looking for. Mass customization is also known as “build to order” or “made to order”.
APPROACHES TO MASS CUSTOMIZATION
There are four basic approaches to mass customization, depending on customization of the product itself or its representation.
1. Collaborative Customization
Collaborative customizers talk to the clients to help them recognize what they need, to recognize factors that will fulfill those needs and to create customized products following those guidelines.
This approach falls under mass customization and is primarily meant for businesses with highly-customization-centric clientele. Moreover, this approach seeks to help clients who struggle to spot exactly what they want and find themselves confused between a huge variety of options. Through decreasing options for an individual client, a collaborative customizer helps to understand the needs of the customers and strives to make it clear to them.
2. Adaptive Customization
Businesses that follow the approach of adaptive customization offer one standard product to the customers along with a few customization options. This approach makes sure that the product is designed in a manner that it can be customized by the end client with absolute ease.
This approach is ideal for a client-base that has different expectations from the product in different situations and occasions. With the availability of technology, clients can easily customize the products on their own.
Pennsylvania’s Lutron Electronics Company forms the best example of this approach. Its clients can make use of its lighting systems to develop the required mood at home or to maximize productivity during the work hours through a wide range of available switches. The design of this lighting system enables clients to create different moods for reading, romantic moments or lively parties. It does so by connecting different lights together and enabling the clients to select the effects.
3. Cosmetic Customization
Cosmetic customizers advertize a standard product differently to different groups of clients. This approach works well when clients use the same product but want them to be presented differently. Such products are not customized but instead they are packaged differently to suit different kinds of customers.
For instance, the benefits and attributes of a product are advertized in a different manner, it is displayed in a different way, promotional programs are communicated and designed differently, and the product mostly carries the client’s name. Although this type of customization is, as its name suggests; cosmetic, it offers great value to a lot of clients. Each year, clients spend billions of dollars on products such as named sweatshirts and T-shirts.
The Planters Company (Nabisco) made use of cosmetic customization to fulfill dissimilar merchandising requirements of its retail clients. As compared to Dominick, Jewel demanded diverse promotional packages while Wal-Mart demanded more mixed nuts and peanuts as compared to 7-Eleven and Safeway. The standard packages of Planters only included small, medium, and large sized cans in the past. However, now the company can easily switch between diverse shipping containers, labels, and sizes to satisfy the demands of its customers.
4. Transparent Customization
Transparent Customization deals with providing customized products to individual clients without telling them that the products are exclusively produced for them.
This approach work in cases where the customer does not want to repeat what she/he needs incessantly or when client needs are predictable or obvious.
Businesses that deal in a transparent customization examine client’s behavior without direct communication with them and then discreetly customize their products for them.
Ohio’s ChemStation has successfully recognized the needs of its customers and has presented them with amazing, standard products. Its industrial soap that can be used for commercial uses like a factory floor cleaning and car washing was whole-heartedly accepted by the market when it launched. ChemStation also analyzes the washing requirements of each customer and produces suitable detergents for them. The company maintains a record of the client’s usage pattern through continuous monitoring and delivers soap to their houses when it is about to fall short without needing the customers to call up and place the order.
HOW IT IS HELPFUL FOR ENTREPRENEURS?
It is true that mass customization caters to the masses, but that does not mean that it is only meant for big corporations and brands. In fact, it provides a lot of assistance, food-for-thought and motivation to entrepreneurs as well. First and foremost, as you apply the concept of mass customization to the designing process, as an entrepreneur you will have a remarkable amount of creativity to deal with. It refines the design phase and modifies it to satisfy the customers in the best way possible.
This concept mainly deals with the consumer and helps entrepreneurs in identifying who their customers are and what are their likes. Since all customers like to be treated in a special manner, mass customization can bring great business benefits to entrepreneurs if they deal with it in the right manner.
There are different approaches and types of mass customization, and hence entrepreneurs can use this production method in the way that suits them the best. Adaptive customization is probably the most utilized type of mass customization among entrepreneurs, as in this production technique standard products are created which can be customized by the users according to their requirements. Since the customized production only begins when the order is placed, there is a lesser chance of a loss.
Therefore, in the current scenario where businesses are all ears to the expectations and needs of the clients and customers are willing to pay extra to ‘feel good’, mass customization leads entrepreneurs to the right way with the right kind of products and customization options.
INSIGHTS INTO MODERN CONCEPTS RELATED TO MASS CUSTOMIZATION
How mass customization has evolved?
The global production industry began with mass production, which focused on producing standardized products for the masses. However, the focus began shifting to the consumers in the 20th Century where all commercial sectors such as retail, service, technology, and manufacturing started taking the likes and dislikes of the consumers very seriously. This is because the customers were evolving, and the demands began to vary from customer to customer.
Currently, the concept of mass customization is being used in businesses like high-end boutiques where exclusive outfits are created for women according to their taste. However, different sectors are also benefiting from it through the usage of technology that is making it easier to create customized products for masses. Majority of the marketing and production experts think that the concept is here to stay.
If mass customization is conducted on products that are exchanged from one business to another, it is referred to as a continuation of total quality management; whereas when it is conducted for the end customer, it is called ‘egonomics’. It does not matter which industry it operates in, latest information technology allows companies to track consumer preferences, and user-friendly manufacturing machinery allows end-products to satisfy those preferences.
An effective distribution and sales system is required to enable customization, as it needs a system through which the product could be channeled to the end customer. In fact, some companies use the distribution method as the mass customization process whereas other companies alter and make modifications to their delivery systems to ensure customization.
Companies such as Levi Strauss, The Custom Foot, and Ascot Chang make use of retail models that require them to employ trained and professional sales staff to take custom measurements in the factory outlet of the brand. After manufacturing, these brands directly ship the customized product to the client.
Mass customization requires trained sales representatives at outlets so that the concept can be implemented. On the other hand, there are numerous manufacturers who have adapted mass customization in alternative distribution and sales channels. For instance, after 10 years of using middlemen retail shops such as Lord & Taylor, Bloomingdale’s and Neiman Marcus, Brenda French took her clothing brand to a next level through selling all of the items via in-house trunk shows. After years of manufacturing clothing for women, she realized that every woman wanted something different for herself and hence she began customizing for her clients and sending the orders directly to their house.
According to Brenda French, a company needs to have a factory or a production unit in order to mass-customize. Outsourcing the customization process to another company or individual cannot make this process work, according to French.
The delivery systems in mass customization for business-to-business products are different. For instance, Ohio based detergent manufacturer, ChemStation, uses an inventive distribution system, which makes use of 41 digitally connected production units all across the country to combine its custom cleaning products. The company began offering customized detergents to clients according to the kind of stains they were battling against.
Current Trends and Technology
Automated-manufacturing-machinery incorporated with an order-taking structure is important for mass-customized production lines. Numerous mass producing companies combine the order-taking structures with an internet-based client interface.
Internet has created a lot of opportunities for mass customization and has made companies responsible to maintain a continuous interaction with the clients in real-time. This has renewed the delivery systems with customers always staying on top of the updates through various mobile apps, emails, regular updates from the company or the online progress tracking system (if the company has any).
Numerous companies such as Individual.com, News page and Yahoo are utilizing the Internet to create customized news items for the visitors whereas a rising number of businesses are using the ease of the online platform to enable the clients to design their products. Music based companies such as Volatile Media and Musicmaker have become successful in this arena through delivering customized CDs.
The Future of Mass Customization
According to some business theorists, mass customization is most likely to replace mass production. This is true for numerous operational businesses as mass customization reduces production overruns and wasteful expenditures. However, for majority of the businesses, mass customization is the best available option only if the option of mass production is not available. Currently, all companies that are custom-producing their product lines are charging a premium price as compared to companies that are mass-producing.
The responsive market of today seems to like the idea of being the center of attention and is willing to pay a higher price for it. For instance, in Levi Strauss, 80% of the custom ordered jeans fall under the categories of the available sizes – the clients still choose to custom order through the ‘Personal Pair’ method of the company to feel satisfied and have a feeling of control. The Custom Foot’s Keegan confirms the same client behavior.
We no longer have consumers that are dumb and have big corporations dictating to them what they want. In fact, with the alert public of today, the power structure has been altered forever because businesses have to focus on customers if they wish to stay in the competition and this shows that mass customization will keep moving forward.
MASS CUSTOMIZATION CHALLENGES
Challenges with higher costs: Probably the biggest challenge of mass customization is the fact that it is not an appropriate option for all markets, clients and products. Most customers are not interested in having a customized light bulb or washing detergent. Moreover, customized products cost more and clients have to wait in order to get them. For instance, regular Chinos by Land cost around $35 whereas a custom pair costs around $54.
Successful for luxury and not successful for basic products: If we take into consideration the prospect of making profits and doing good business, then for most business types the profits earned by the customization does not outweigh the complexity and cost of producing customized products. The Yankee Group’s Lisa Melsted believes that mass customization is not an economically feasible option for most businesses and primarily depends on the product type. This concept works better for high-end, luxury items such as designer wear and cars.
Challenges with return of customized product: Mass customization also creates a lot of problems for the manufacturers when the products get returned. Mainly, this does not happen as the product is created according to the likes of the customer but some returns will take place. In such cases, businesses that do not have mechanisms to reverse the customization tend to face many issues. Moreover, the chances of another client wanting the same product as someone else are too narrow, which can put the business in a tricky situation. Therefore, majority of such companies do not have any return policies or simply bear the loss of return in case it allows it.
Challenges with supply chains: The biggest obstacle to mass customization is the fact that most businesses’ supply chains cannot efficiently handle it. The systems of suppliers are mostly optimized and designed for producing prearranged amount of products rather than catering to any unforeseen demand. Many do not even integrate latest supply-chain management applications like just-in-time inventory and automated planning, which results in lesser flexibility, specificity, and visibility with mass customization.
- Supply chains in the current business world are based on the push model whereas the ones associated with mass customization are based on the pull model, which is unimaginably difficult to manage.
- Such supply-chain problems can only be solved if businesses compromise between mass customization and mass production to create standard products and configure them in a manner that they can be customizable in the future. For majority of the businesses, it is not economically feasible to start the customization process in the start of the supply chain.
This means that most businesses will only be able to implement mass customization in a partial manner. However, even this partiality can offer advantages to manufacturers. As the concept increases the scope of a product, it helps manufactures to cater to different types of consumer markets. It also introduces manufacturers to new target markets and allows them to explore the possibility of manufacturing products for them.
Mass customization is going to take a few years before it becomes a household name. Even then, it will more likely be a rough adaptation of conventional mass production, according to some theorists. On the contrary, products that cannot exist without customization will be customized no matter what happens to this concept.
Data is a powerful tool for companies, as it provides information for businesses to work with. …