Are innovative consumers who modify existing products according to their own ideas to suit their specific needs?

What Is Mass Customization?

Mass customization is the process of delivering market goods and services that are modified to satisfy a specific customer's needs. Mass customization is a marketing and manufacturing technique that combines the flexibility and personalization of custom-made products with the low unit costs associated with mass production. Other names for mass customization include made-to-order or built-to-order.

Key Takeaways

• Mass customization is a process that allows a customer to personalize certain features of a product while still keeping costs at or near mass production prices.
• Innovative manufacturing techniques help companies produce interchangeable parts that can be combined in a variety of ways to build a cost-effective product that satisfies a specific customer's needs.
• The four primary types of mass customization are collaborative customization, adaptive customization, transparent customization, and cosmetic customization.
• Various companies employ mass customization techniques, including retail companies, software creators, financial services companies, and modular home builders.
• Companies that offer mass customization can give themselves a competitive advantage over other companies that only offer generic products.

Understanding Mass Customization

Mass customization allows a customer to design certain made-to-order features of a product while still keeping costs closer to that of mass-produced products. In some cases, the components of the product are modular. This flexibility allows the client to mix-and-match options to create a semi-custom final product.

Mass customization may apply to many fields, but many connect it to the retail industry. Software creators may use this method to include software-based product configurations that enable end-users to add or change specific functions of a core product. Even the financial services industry embraces mass customization through the growth of independent, fee-only advisory firms.

The Growth of Mass Customization

B. Joseph Pine II looked at the growth of the American economy due to mass production. In his book, Mass Customization: The New Frontier in Business Competition (Harvard Business Review Press, 1992), he describes four primary types of mass customization which took the concept of mass production to a new level:

• Collaborative customization: companies work in partnership with clients to offer products or services uniquely suited to each client
• Adaptive customization: companies produce standardized products which the end-user may customize
• Transparent customization: companies provide unique products to individual clients without overtly stating the products are customized
• Cosmetic customization: companies produce standardized products but market them in different ways to various customers

Pine focused on the concept of creating a small number of interchangeable pieces. The individual parts may be combined in a variety of ways producing a cost-efficient production model and still allows consumers to choose how the pieces go together.

Examples of Mass Customization

Fee-only, independent financial advisors allow their clients to customize their portfolio holdings to match their unique situations. The consumer may choose products that match their investment risk tolerance, time horizon, investment style, and future goals.

Certain furniture companies offer mass customization by providing multiple options for various components or features. This flexibility may include different fabrics, furniture legs, or pieces that combine in numerous configurations. Also, modular home builders use mass-customization models by allowing customers to make changes to the base home package.

Benefits of Mass Customization

Mass customization enables manufacturers to delay the step of product differentiation until the final phase of manufacturing. Rather than the manufacturer deciding on the features that make the product unique, mass customization allows the consumer to make these decisions. For some consumers, the ability to customize a product is enough to sway their buying decision in favor of one company over another.

Mass customization can then become part of a lucrative marketing strategy for a company. Companies that offer customization can give themselves a competitive advantage over their rivals. They can tout their ability to produce a semi-custom product at a reasonable price to consumers who are looking for an upgrade over a generic product. As long as the company is able to deliver a product that does not compromise on quality, they have an opportunity to increase sales, profits, and brand loyalty for their one-of-a-kind products.

Mass customization can also help a company with the costs associated with excess inventory. Implementing a just-in-time (JIT) approach to manufacturing can assist companies in minimizing inventory and increasing efficiency. Companies that take a JIT approach to mass customization will need reliable suppliers and an inventory replenishment system that notifies them exactly when new materials need to be ordered.

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