The Value of Mass Customization to Consumer and Product Strategies

Mass customization — where customers can tailor a product’s appearance, features or content to their own specifications -– has been the “next big thing” for for a long time. As far back as 1970, the futurist Alvin Toffler predicted its emergence. Customization expert Joseph Pine published his seminal book in 1992, and the 2000 book Markets of One suggested that customization would change the fundamental structure of the American economy.

Yet for years, mass customization largely failed to take off. Worse yet, big brands have tried and failed with customized offerings. Levi Strauss offered customized jeans from 1993 to 2003 but failed to offer the kinds of choices to consumers -– like color -– that would have made the offering successful. Dell, once the most prominent practitioner of mass customization, flamed out spectacularly, saying that the model had become too complex and costly to continue.

But today, mass customization is enjoying a renaissance among big brands such as Kraft, Hallmark, M&Ms, Wrigley and the longest-running success, Nike. And a number of pure-play international startups selling products such as chocolate, jeans, mosaic tile, jewelry and cereal, are showing the value of mass customization to consumers and product strategists alike.

We’re entering a new era in which mass customization will lead a number of consumer product categories, creating value for buyers and sellers alike. Here’s why.

Digital Technologies Will Turbo-Charge Mass Customization

Consumers’ expectations are being shaped by their lives online. Customization plays a large and growing role in digital experiences, from Facebook to Pandora Internet radio to mobile applications like location-aware Google Maps. These rising expectations are being met by three trends that will promote mass customized product offerings:

• Today’s supply chain technologies enable more efficient production. Supply chain software promotes an efficient flow between customers’ co-design efforts and fulfillment on the production side, as Archetype Solutions demonstrates.
• Today’s customer-facing technologies are cheaper and easier to deploy than ever. The price (and time requirement) for developing customer-facing configurators has dropped significantly in the past few years. It’s a fraction of the cost even compared to a few years ago (think $50,000, down from $1 million). And new uses –- like embedding configurators within Facebook — make configurators more accessible (and more social).
• Tomorrow’s customer-facing technologies will be revolutionary. Technologies allowing customers to design their own products will become richer and more plentiful. For example, Microsoft’s Xbox Kinect shows the pathway toward the ultra-configurator: A device that will measure the contours of your body (or home) and allow gestural configuration. A tug on your augmented reality sleeve will lengthen it; pulling on a lapel will widen it. This super-configurator will be used for immersive design experiences across a wide variety of products.

Mass Customization Fits This Age Of Customers

Although mass customized products aren’t yet widespread –- aside from in long-standing categories like eyeglasses — interest in customizable products is mounting. More than 35% of U.S. online consumers are already interested in customizing product features or in purchasing build-to-order products that use their specifications, according to a recent study conducted by my company. The opportunities are much greater than this initial data suggests. Psychologists have determined that an “I Designed It Myself Effect” exists in mass customization, where buyers feel a sense of accomplishment from their co-design efforts. Buyers gain additional value from the certainty that features will be exactly what they want. And they can express themselves with public goods (such as clothing, cars, jewelry, or even PCs) that reflect their unique design. Ultimately, these psychological benefits translate into a higher willingness to pay into loyal, repeat-purchasing customers.

Me-Commerce Anticipates Customers’ Needs

Customer loyalty can only be achieved through unprecedented levels of prediction. Practitioners of mass customization must learn who their buyers are as individuals, forecast the feature combinations that will resonate with them and — eventually — predict what new features these customers will want.

Pandora has shown the way by leveraging direct customer input (ongoing thumbs-up, thumbs-down ratings), sophisticated predictive statistical models (what do other customers like who also like this song?), and product analysis (the famed Music Genome, which analyzes songs) to offer an ever-improving experience to customers. Makers of physical goods will embrace similar methods to sell mass customization products.

Manufacturing Will Return To The U.S. and European Union

Beyond changing the way customers interact with brands and products, mass customization will have an impact on local economies by offering an alternative to the mass-produced, price-is-everything Asian factory model. Mass customized product strategies require local production to reach customers quickly and require highly skilled labor and significant investments in both customer-facing and back-end IT systems. Consequently, these businesses tend to produce locally. Pure-play mass customized companies generally produce their goods in the U.S. (or Germany, a leader in mass customization).

While the U.S. and EU won’t regain their lead in overall manufacturing, mass customization will lead to a small but important reindustrialization for build-to-order production.

Source: Mashable

What do you think? Has the time finally come for mass customization to take over? Let us know in the comments below.