nderstanding Mass Customization
The term “mass customization” was first popularizedby Joseph Pine, who defined it as “developing,producing, marketing and delivering affordablegoods and services with enough variety and customizationthat nearly everyone finds exactly whatthey want.”2 In other words, the goal is to providecustomers what they want when they want it. Considerthe following examples.Pandora.com relieves people of having to channelsurfthrough radio stations to find the music theylike. Customers submit an initial set of their preferredsongs, and from that information thecompany identifies a broader set of music that fitstheir preference profile and then broadcasts thosesongs as a custom radio channel. As of December2008, Pandora.com had more than 21 million listenerswho had created 361 million custom radiostations that play 61 million songs from 60,000 artistsevery day.
Customers of Bayerische Motoren Werke AGcan use an online tool kit to design the roof of aMini Cooper with their very own graphics or picture,which is then reproduced with an advanceddigital printing system on a special foil. The tool kithas enabled BMW to tap into the custom after-salesmarket, which was previously owned by niche companies.
In addition, Mini Cooper customers canalso choose from among hundreds of options formany of the car’s components, as BMW is able tomanufacture all cars on demand according to eachbuyer’s individual order.
My Virtual Model Inc., based in Montreal, ischanging the very nature of the buying experience.
The software enables consumers to build virtualmodels, or “avatars,” of themselves that allow themto evaluate (by virtually trying on or using) productsfrom retailers like adidas, Best Buy, Levi’s and Sears.More than 10 million users have already signed upfor the service, and the early results are impressive:Land’s End Inc. reports an increase in average ordervalue of 15% and a jump in conversion rate of 45%.
What do these examples have in common? Regardlessof product category or industry, they haveopportunity to create value, rather than a problemto be minimized, challenging the “one-size-fits-all”assumption of traditional mass production. To reapthe benefits of mass customization, though, managersneed to think of it not as a stand-alone business
strategy for replacing production and distributionprocesses but as a set of organizational capabilitiesthat can help a company better align itself with itscustomers’ needs.
Three Capabilities RequiredOf course, any approach to mass customization musttake into account various factors that are either industryor product specific. But through our research
we have identified three common capabilities thatwill determine the fundamental ability of a companyto mass-customize its offerings. (See “Three FundamentalCapabilities.”)3
1. Solution Space Development A mass customizermust first identify the idiosyncratic needs of itscustomers, specifically, the product attributes alongwhich customer needs diverge the most. (This is instark contrast to a mass producer, which must focuson serving universal needs that are ideally shared byall target customers.) Once that information isknown and understood, a business can define its “solutionspace,” clearly delineating what it will offer —and what it will not. Obviously, correlatingheterogeneous customer needs with differentiated
product attributes, validating product concepts and
collecting customer feedback can be costly and com
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