Mass customization is the sweet spot between mass production and customized goods and services. Here’s how the competitive advantages outweigh the costs.
Many companies produce large quantities of their standardized core product. And while they might recognize the market appeal of offering tailored varieties, many believe that’s too expensive to tackle.
Mass customization is the sweet spot between customized goods and services and mass production. It’s the business strategy idea that the product a consumer receives may not be one of a kind, but it will have some unique features. Nike By You is one of the pioneers of mass customization. Its customization process gives loyal customers a way to choose the color of their canvas, laces, and logo.
The benefits to individual customers are apparent. They receive a customized product that better meets their preferences. However, many companies wonder how mass customization will benefit their bottom line.
Types of mass customization
Determining the approach for your product and organization is pivotal in ensuring your company employs mass customization successfully. Here are 4 main types of mass customization, along with some real-world examples.
- Collaborative customization: In this process, a custom offering is created through a direct interaction between the business and customer. Software as a service (SaaS) platforms by which software creators provide customized features are prime examples.
- Adaptive customization: This option provides various preset customization options. Different customers can choose which ones they want. Creating the perfect dessert at a sundae bar is a sweet analogy for adaptive customization.
- Cosmetic customization: This is a high-level form of customization that changes the face of the product to offer more solutions. Selling soda in various predetermined sizes of cans and bottles is an accurate representation of cosmetic customization. These types of customized products allow consumers to choose the best fit for them.
- Transparent customization: This form of customization uses consumer data to create personalized options. Product suggestions based on your online shopping cart, body measurements, color preferences, and style choices represent transparent customization.
Organizations may choose any combination of these strategies to create their mass customized approach. The result? Offering better, more desirable products and reaping the rewards of a competitive advantage.
5 organizational benefits of mass customization
Delivering individual customer preferences and personalization within the context of mass manufacturing may sound like a stretch. But it’s actually not uncommon, nor is it counterproductive. In fact, when mass customization is approached with a nod to both marketing and manufacturing technique, the benefits abound.
Mass customization allows companies to charge more than they could for standardized products. On the front end, the costs of incorporating customized elements into a product will be slightly higher. However, these can be covered by a nominal increase within a savvy pricing strategy. That’s when mass customization becomes the perfect upsell.
In light of the profit potential, adding customized elements to mass produced products can be a relatively low cost endeavor. It also doesn’t have to disrupt production lines. Apple found the perfect mass customization option with iPods and iPhones by offering after-market product engraving for personalization. The product was already completely assembled and ready to be shipped or engraved, depending on the customer’s preference. And this mass customization process doesn’t even necessarily require an investment in special manufacturing equipment. Small producers can offer the same type of mass customization with a service like Ponoko.
Being able to customize products also helps move customers through the sales funnel. Those who were debating purchasing your product may be convinced to buy when they see this benefit.
Improved customer satisfaction
Customization options can help raise a customer’s satisfaction when they purchase a product or interact with a company. Studies show that personalization leading to a positive customer experience improves customer satisfaction by up to 20%. This improvement correlates with a 10-15% boost in conversion rates.
Customers who feel like they’ve received something more valuable or individualized for their money are likely to build a better relationship with your business. The higher the satisfaction, the more likely they are to engage in word-of-mouth marketing or user-generated content. Increased brand loyalty and customer rave from something as easy as mass personalization is an incredibly valuable return on the investment.
Reduced customer churn
Another advantage of better meeting customer needs is reduced customer churn. Your company will maximize the chances of retaining more customers due to the perceived value of mass customization.
And as an individual customer enjoys the experience of customizing items to their preference, purchasing similar standardized products becomes ho-hum. This will keep many of them returning to you for custom-made products rather than seeking your competition for generic versions.
One of the primary concerns for companies looking to incorporate mass customization is the impact on the production line. While production will be affected, the changes typically are not as disruptive as people assume they’ll be. The production process is often unaffected until near completion or the customized components are created and ready for assembly. This aspect represents how mass customization and pure customization vary the most.
Still, mass customization processes do impact production times and supply chain management. Businesses looking ahead must take a strategic approach to minimize disruptions and ensure consistent streamlined production. Don’t hesitate to consult an expert in this area when exploring this opportunity.
Improved inventory management
One of the biggest impacts on the bottom line will be decreased inventory management costs. These savings tend to dramatically outpace any increased production costs with mass customization. Using a just-in-time fulfillment strategy, your business can minimize overhead costs by reducing inventory storage and management.
Again, this becomes an issue of change management, as it will alter the supply chain. Working with a specialist to reorganize manufacturing technique and execute the change can help ensure mass production efficiency and a smooth transition to mass customization.
Weighing the advantages of mass customization
In short, mass customization is an approach worth consideration for its unique benefits to companies of all sizes. It’s designed to avoid the unnecessary complexity of full-on customization while helping companies meet customer preferences and maintain a competitive edge for relatively low costs. The majority of companies produce standardized products, and that’s fine. But what could mass customization of your mass produced products do for you, your customers, and your long-term business goals?
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