What Is Mass Customization?
Mass customization is a business concept referring to the ability of a business to produce and market customized products and services per the requirements of individual customers. The cost of a custom-made unit remains low or equal to the mass production price.
This business strategy utilizes a flexible manufacturing process. It also integrates information technology for developing items with personalized features compared to generic ones. It gives businesses a competitive advantage and increases their economic value. Industries like retail, financial services, software and technology, home construction and interiors, etc., use this built-to-order approach to satisfy consumer needs.
Table of contents
- What Is Mass Customization?
- How Does Mass Customization Work?
- Types Of Mass Customization
- Real-World Mass Customization Examples
- Advantages & Disadvantages
- Mass Customization vs. Mass Production
- Frequently Asked Questions (FAQs)
- Recommended Articles
- Mass customization definition refers to a business concept of offering customized products and services to meet the individual customer’s requirements. It gives businesses a competitive advantage and boosts their economic value.
- The mass customization strategy combines low-cost and high-volume manufacturing. It utilizes a flexible manufacturing process, computer-aided information, and individual customization to customize products.
- It serves consumer needs in manufacturing and services industries like retail, financial services, software and technology, home construction and interiors, etc.
- Depending on desired features, the price of customized products may be higher than the base price, yet still lower than or equal to the mass production price.
How Does Mass Customization Work?
Mass customization or made-to-order allows customers to receive personalized products and services at a relatively low cost. Using this business strategy, a company delivers unique value to its consumers based on specific requirements. The flexible manufacturing process involves using computer-aided information and individual customization to design and develop a custom-made product. Stan Davis, a business thinker, first introduced the concept in his book “Future Perfect.“
The mass customization strategy combines low-cost and high-volume manufacturing. Customers get a list of predefined features to personalize according to their choice. The price of the final customized product can increase or decrease from its base price depending upon the desired configurations. Besides manufacturing, this customization approach is highly successful in service industries.
Nike By You or NikeiD from apparel manufacturer Nike is a perfect example of mass customization in marketing and manufacturing. It allows customers to personalize their own Nike products, including clothing and footwear, from colors and materials to style.
Research by Dassault Systèmes and CITE Research revealed that consumers worldwide want to personalize items they prefer to buy. It surveyed consumers from the U.S., France, and China in healthcare, home improvement, mobility, and retail sectors. Therefore, businesses must consider consumer expectations when manufacturing and marketing their products and services.
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- Businesses must determine various aspects of products that customers prefer to customize.
- The process of reusing or restructuring manufactured goods to make them suitable for customization.
- The customization options should be a unique solution to suit individual customer’s requirements.
Types Of Mass Customization
#1 – Transparent Customization
It is the process of businesses providing unique products and services within a standard package to specific customers without informing them that they are customized. Companies accomplish this by observing consumer behaviors over time and predicting their preferences without interacting with them directly.
The digital media streaming service Netflix, for example, recommends a list of shows and movies for its viewers based on their viewing history. Another example is hotels, which provide various ancillary services to consumers based on their behavior.
#2 – Collaborative Customization
Unlike transparent customization, this approach requires businesses to interact with individual customers to offer customized products or services. Such customized products guide consumers who are unsure of what they should choose or cannot specify what they prefer from the available options. It monitors and considers consumer needs while manufacturing specific products with unique features and functions.
For example, while purchasing spectacles, consumers can choose from various frames along with prescribed lenses. Another example includes customizable shoes with different patterns and heel sizes.
#3 – Adaptive Customization
It serves different purposes under different situations. Here, companies do not need to interact with customers to know their requirements. In this customization technique, customers get a standard product or service with the option to personalize, modify, or reconfigure it per their preferences.
It is suitable for online businesses. For example, the e-commerce company Etsy provides personalized leather wallets with customer names and custom sign makers with neon lights for parties. Another example is the variety of adjustable mattresses.
#4 – Cosmetic Customization
It involves the marketing of standardized products and services in unique formats or packages, depending on the needs of different customer groups. In other words, customers get the choice of customizing the form, quantity, price, and packaging of products that best reflect their personality and style.
For example, Planters Nut & Chocolate Co. markets its products (mix of nuts) in customized shipping containers, labels, and sizes to fit customer preferences. Another example is certain drug brands that come in the form of individualized capsules or pills.
Real-World Mass Customization Examples
Mass customization examples are common in the manufacturing and services industries.
Jason and his family visited a self-serve frozen yogurt outlet of Yogurtland, a chain of yogurt restaurants. The outlet houses eight yogurt machines. It delights customers with a yogurt buffet of fresh frozen yogurt with 16 different flavors, including more than 30 toppings available any time. Initially, Jason and his kids picked up their cups, an oversized one to make large portions, and later on, they identified their favorite choice and moved towards them.
Next to the yogurt machines, Jason’s kids found the extensive toppings bar with varieties of flavors ranging from fresh fruits to gummy bears, dry fruits, cookies, candies, and sprinkles, to serve themselves. They enjoyed the yummy customized scoops, which were weighed and priced accordingly. These personalized scoops can also fulfill the nutritional needs of some customers. Hence, Yogurtland implements made-to-order for varied customers innovatively.
The computer technology company Dell maintains a close relationship with its customers and suppliers. It collects personalization information from customers via the Internet and allows them to select their preferred configurations online. It also customizes and assembles parts promptly. Because of its modularity and web-based features for order processing, Dell successfully executes made-to-order.
Advantages & Disadvantages
The advantages of the mass customization strategy are,
- Allows customers to choose from a range of customizable design specifications, colors, structures, patterns, etc
- Attracts customers and improves the brand image
- Contributes to customer’s satisfaction and delightfulness
- Decreases the unit costUnit CostUnit cost is the total cost (fixed and variable) incurred to produce, store and sell one unit of a product or service. It is calculated by adding fixed and variable expense and dividing it by the total number of units produced. of products as the scale of production increases
- Ensures timely delivery using existing equipment and technologies and new programs and procedures
- It gives brands and companies a competitive advantageCompetitive AdvantageCompetitive advantage refers to an advantage availed by a company that has remained successful in outdoing its competitors belonging to the same industry by designing and implementing effective strategies that allow the same in offering quality goods or services, quoting reasonable prices to its customers, maximizing the wealth of its stakeholders and so on and as a result of which the company can make more profits, build a positive brand reputation, make more sales, maximize return on assets, etc..
- It helps businesses maintain long-term customer relationships and retain potential consumers.
The disadvantages are,
- Requires companies to spend on building and maintaining the manufacturing equipment and creating online platforms for customization
- Extends production time for custom-made products compared to mass-produced products
- It affects the flow of supply chains in periods of demand variations due to vendors and third-party business partners.
- Puts burden of cost on manufacturers to maintain excess inventory levels because of variable demand
- Increases customer expectations, including speedy delivery, affordable price, quality, flexible return policies, etc
- It makes it challenging for businesses to manage increased customer expectations.
Mass Customization vs. Mass Production
- Built-to-order is the cost-effective and large-scale production of custom-made products. Mass productionMass ProductionMass production is defined as the manufacturing of goods on a large scale without compromising on the quality. is the production of standardized products on a large scale.
- In made-to-order, a wide range of varieties with high-production volume is available. Bulk production manufactures large volumes of standard products with lesser variations.
- In built-to-order, demand is of fragmented type. In mass production, consumption is stable.
- Customers’ needs are identical in bulk production, but they are distinct in made-to-order.
- In built-to-order, operating economies of scaleEconomies Of ScaleEconomies of scale are the cost advantage a business achieves due to large-scale production and higher efficiency. are not possible. But the same is possible in mass production.
- Small manufacturers do not prefer made-to-order, as they cannot invest in expensive technologies for customization. Businesses of various sizes adopt mass production.
- In bulk production, the value chain involvement of customers is passive. Built-to-order observes active and integrated customer involvement of the value chainValue ChainValue chain (VC) refers to the sequence of activities and processes a business undertakes to add value to its product or service at every stage from its inception to delivery..
- Made-to-order requires process-oriented factories, skilled operators, and proficient supervisors. Mass production requires specific machines for production and uses unskilled operators.
Frequently Asked Questions (FAQs)
Mass customization refers to a business strategy to manufacture, market, and deliver products and services customized per the needs of individual customers. These custom-made products exhibit unique features and functions compared to generic ones. Its purpose is to help businesses gain a competitive advantage by offering personalized goods at a low cost.
– Custom-made jeans from Levi Strauss & Co.
– Customized light control products and systems from Lutron
– Personalized cleaning solutions from ChemStation
– Personalized hospitality services from Ritz-Carlton
– Custom LEGO minifigures
– Personalized outfits from Tommy Hilfiger B.V.
Customization is the process of modifying standard products to match the needs of specific customers on a small scale. Mass customization refers to producing standardized products per the requirements of individual customers on a large scale.
This has been a guide to What is Mass Customization and its Definition. Here we discuss types of mass customization, factors, and how it works, along with examples, advantages, and disadvantages. You may also have a look at the following articles to learn more –