“Goods can no be produced and sold without considering customer needs and recognizing the heterogeneity of those needs” Wedel and Kamakura, 2001
Economies of scale in manufacturing and distribution brought down the price of mass-produced goods so much that most consumers were often willing to forgot their individuality and settle for standardized goods. However, with the advent of social media services, such as Twitter, Facebook and Pinterest have made it easier for people to have a window to show and share moments of life and to brand themselves. In turn consumers started to consider products as another form of expressing their uniqueness.
To fulfil consumers’ needs, companies throughout the world have embraced mass customization to provide unique value in an efficient way.
How we got to Mass Customization
- The concept of mass customization began coming back into view when companies discovered market segmentation in the 50s and niche marketing in the 80s.
- The rise of mass customization in the 1990s gained space with the notion of segments of one: every consumer is his or her own market segment with specific requirements that must be fulfilled. Consumers got more informed and empowered, and businesses had to meet their demands to stay competitive and relevant. Mass marketing become less effective since customers expected personalized, real-time communications so businesses started to employ individualized marketing efforts to remain connected.
- Mass Customization term has become well-known since Joseph Pine published his book “Market of One- Creating Customer Unique Value through Mass Customization” where he defined Mass Customization as “producing, developing, marketing and delivering affordable low cost and high quality of goods and services that give customer nearly what they want.“
Companies that seize the opportunity of profitable mass customization:
- build loyalty
- increase revenue and gain a competitive advantage and engagement vs. competitors
- use their consumer base as an engine of advocacy to potential buyers
Big data for mass customization
As consumers customize products, they are volunteering extensive data about their preferences that brands can use to inform future product development. Data analytics have the ability to track customer episodes, predict certain customer behaviors and perceptions, and prescribe how a company should engage with those behaviors to deliver more value to customers.
It is the process of getting ideas from a crowd of people, usually online. It has emerged as one popular method for mass customization
PepsiCo: FritoLay “Do Us a Flavor” campaign, has been built around seeking consumer input: consumers suggested new product flavors, and the winning flavors were developed and launched.
– DARWIN (Decision Algorithm Rating What Ingredient’s Next)
Graze is an online healthy snack supplier that relies on an artificial-intelligence algorithm called DARWIN to customize snack boxes based on the preferences subscribers enter on the site. “It’s possible to get 4.9 million different combinations of snacks in a Graze box,” says Jones.
– Smart algorithms for dynamic pricing
Some companies are managing on-demand capacity by using smart algorithms and better data-processing capacity to enable dynamic pricing.
Walmart: dynamic pricing is done by monitoring pricing at your competitors, in real-time and it means dynamically changing prices to optimize revenue. Walmart changes its prices roughly 50,000 times a month.
– Recommendation Engines
Recommendation engines it is what advise product choices based on previous selections and it is now moving into the customization space by helping customers configure products.
Chocri: customizes and ships chocolate bars, helping consumers configure their own bars from four base chocolates and 100 different toppings. Recommendations are based on popular choices users of the site have made and are edited by the company.
Innovation technologies for mass customization
3 D Scanning and Modeling
3D scanners let you gather data from real-world objects that can be analyzed and collected and can be used to construct 3-D digital models. VTT Technical Research Centre of Finland Ltd aims to develop advanced food manufacturing technologies by combining expertise in food, material science and 3D printing technology. Researchers have the long-term vision of developing high-tech vending machines that provide customised purchases.
- Production process organization: it is necessary to avoid early proliferation of consumers orders
- Supply chain structure for mass customization: it is crucial to manage physical and information flows with consumers, customers and suppliers in order to improve not only efficiency but also consumers and customer satisfaction.
Research’s key takeaway
SCM World, in cooperation with the non-profit association MESA international, recently completed a survey of 174 supply chain and operations executives to understand the future of manufacturing . According to the research, manufacturing is now entering a new phase of customization-oriented production that is less concerned with productivity and efficiency and more focused on agility and responsiveness. Fast increasing rates of investment in advanced robotics, additive manufacturing and advanced digital simulation of manufacturing processes all lend themselves to shorter production runs and more unit-level customization.
What is the focus for Brand Development
Mass customization offers the opportunity to perceive and capture latent market niches and subsequently to develop technical capabilities to meet the diverse needs of target customers. For Brand Development it is necessary to:
- Challenge the Mass-Market Mind-Set : in fact for mass producers, the focus of the marketing group is not about spotting differences but it’s about identifying and exploiting needs that are similar.
- Embrace Big Data as a new way of doing business.It is essential to incorporate advanced analytics and insights as key elements of all critical decisions.