Department of Marketing Advertising and Communications Management Ms Marina Psiloutsikou Anna...

Department of MarketingAdvertising and Communications ManagementMs Marina Psiloutsikou

Anna HildebrandJonas LangSophia SchützeTheresa Thum

10.12.2015Mass Customization

Anna Hildebrand I Jonas Lang I Sophia Schütze I Theresa Thum 2

AgendaDefinition of Mass Customization

Success Factors

Customization Approaches

Impact on Competitive Factors

Literature Review

1

Application

2

3

5

6

7

Development 4

Conclusion8

“Give the customer any color they want, so long as it is

black” (Henry Ford)

Mass Customization (MC) - Definition

Broad Provision of individualized products

- Available for every customer- Process agility, flexibility, integration

4Anna Hildebrand I Jonas Lang I Sophia Schütze I Theresa Thum

Narrow Wide-ranging system

- Information technology - Flexible process - Organizational structures

…reaches customers as in the mass market economy but treat them individually as in the pre-industrial economies.

Gilmore/Pine (1997).Davis (1989).Hart (1995).Vinodh (2010).


Success Factors of MC Systems

• Must exist for variety & customiza-tion

Customer demand

• Conditions must be appropriate

Market• Must be

ready

Value chain

• Must be available

Technology• Should be

customiza-ble

Product

• Must be shared

Knowledge

Market-related Factors Organization-based Factors

Pine et al. (1993).Lau (1995).Kotha (1996).Feitzinger/Lee (1997).


Customization Approaches

Collaborative• Designers' dialogue with customers

Adaptive• Standard products can be altered by customers during use

Cosmetic• Standard products are packaged specially for each customer

Transparent • Provide individual customers with unique goods or services without letting them

know

Gilmore/Pine (1997).


Mass Customization - Development

Ahlstrom (1999).Kotler (1989).

New technologies to deliver higher variety at lower cost

Increasing demand for product variety and customization

Shorter product life cycles need for production strategies focused on individual customers


Impact of MC on Competitive Factors

Price Flexibility

Quality Speed

Strategic goal: Positive effect on all four competitive factors

Kumar, Gattoufi and Reisman (2007)


Mass Customization - Literature Review

Value of MCProducer side: - Premium prices less customization costs

- Better market information - Customer loyalty

Customer side: - Extrinsic (utilitarian, individualistic, self-expression)

- Intrinsic (hedonic, pride)

Piller et al. (2004).Merle et al. (2008; 2010).Fogliatto et al. (2012).Chandra and Kamrani (2004).Dietrich et al. (2007).

Strong research on: - Supply chain coordination - Web-based tools aiding customization process

Many different research perspectives - at different levels


Mass Customization - Literature Review

Further Research needed on:

- Cost of MC product development- MC value: ethical and environmental- Quality control: hard because of customized products - Warranty: currently the same as for mass products- Empirical perspective: currently mainly theoretical research - Practical implemention

Many different research perspectives - at different levels

Fogliatto et al. (2012).Lee et al. (2010).Drizo and Pegna (2006).Zhao et al. (2008).Piller (2004).Da Silveira (2001).

Research focus on products – rarely on services

11

Application - BMW1998: launching the Customer Oriented Sales and Production

interactive online ordering system to produce the car according to the customers’ needs

E-Brochure:- Customer could mix and match millions of options and finally choose the one that meets their specific requirements

Dealers: - Provide suggestions for various options- Develop and maintain long term relation with the customers

Anna Hildebrand I Jonas Lang I Sophia Schütze I Theresa Thum

- Higher economies of scale (12,000 to 50,000 units per year)- Competitive advantage through differentiation- Huge brand recognition

Regani/Shirisha (2005).Paunu et al. (2014).


Conclusion

Individualized products at a low cost

Increased customer loyalty by MC

MC can be applied to almost all products

Expected trend to more individually designed products, decrease of mainstream mass products

“MC systems reach customers in the mass market economy but treat them individually, at a cost near that of mass-produced items”

Kumar, Gattoufi and Reisman (2007)


ReferencesAhlstrom, P. and Westbrook, R. (1999): Implications of mass customization for operations management. An exploratory survey, in: International Journal of Operations and Production Management 19 (3), p. 262-274.

Build your own BMW, in: BMW North America, URL: http://www.bmwusa.com/standard/content/byo/default.aspx [online], Accessed: 06.12.2015

Chandra, C. and Kamrani, A. (2004): Mass customization: a supply chain approach. Kluwer Academic Press, NewYork.

Da Silveira,G.,Borenstein,D. and Fogliatto,F.S. (2001): Mass customization: literature review and research directions. International Journal of Production Economics 72 (1),1–13.

Davis, S. M. (1989): From future perfect. Mass customizing, in: Planning Review 17 (2), p.16-21.Eastwood, M. (1996): Implementing mass customization, in: Computers in Industry 30 (3), p.171-174.

Dietrich, A.J., Kirn, S. and Sugumaran, V. (2007): A service-oriented architecture for mass customization: a shoe industry case study. IEEE Transactions on Engineering Management54(1),190–204.

Drizo, A. and Pegna,J. (2006): Environmental impacts of rapid prototyping: an overview of research to date. Rapid Prototyping Journal 12(2), 64–71.

Feitzinger E. and Lee H. (1997): Mass customization at Hewlett-Packard: The power of postponement, Harvard BusinessReview 75 (1), 116-121


ReferencesFogliatto, F. S., da Silveira, G. J. C. and Borenstein, D. (2012): The mass customization decade: An updated review of the literature. International Journal of Production Economics, 138(1), 14–25.

Gilmore, J. H. and Pine, J. (1997): The four faces of mass customization, in: Harvard Business Review, URL: https://hbr.org/1997/01/the-four-faces-of-mass-customization , Accessed: 29.11.2015.

Hart, C. (1995): Mass customization: Conceptual underpinnings, opportunities and limits, in: International Journal of Service Industry Management 6 (2), p.36-45.

Kotha, S. (1996): From mass production to mass customization:The case of the National Industry Bicycle Company of Japan, European Management Journal 14 (5), 442-450

Kotha, S. (1995): Mass customization: Implementing the emerging paradigm for competitive advantage, Strategic ManagementJournal 16, 21-42

Kotler, P. (1989): From mass marketing to mass customization, in: Planning Review 17 (5), p. 10-13.

Kumar, A., Gattoufi, S. and Reisman, A. (2007): Mass customization research: trends, directions, diffusion intensity, and taxonomic frameworks. International Journal of Flexible Manufacturing Systems 19 (4), p. 637-665

Lau, R. (1995): Mass customization: The next industrial revolution, Industrial Management 37 (5), 18-19


ReferencesLee, M., Pant, A. and Ali, A. (2010): Does the individualist consume more? The interplay of ethics and beliefs that govern sconsumerism across cultures. Journal of Business Ethics 93 (4), 567–581.

Merle, A., Chandon, J.-L. and Roux, E., (2008): Understanding the perceived value of mass customization: the distinction between product value and experiential value of co-design. Recherche et Applications en Marketing (English Edition) 23 (3), 27–50.

Merle, A., Chandon, J.-L., Roux, E. and Alizon, F. (2010) Perceived value of the mass- customized product and mass customization experience for individual consumers. Production and Operations Management 19 (5), 503–514.

Pauno, Pasi and Marko Mäkipää (2014): Design Configurator Requirements for IS Integration. In: Brunoe, Thomas D., Kjeld Nielsen, Kaj A. Joergensen and Stig B. Tups (Publ.), Proceedings of the 7th World Conference on Mass Customization, Personalization and Co-Creation (MCPC 2014) Aalborg, Denmark, February, 4th-7th, 2014 Twenty Years of Mass Customization – Towards New Frontiers. Springer: Cham et al., 301-310

Piller, F.T. (2004): Mass customization: reflections on the state of the concept. International Journal of Flexible Manufacturing Systems 16 (4), 313–334.

Piller, F.T., Moeslein, K. and Stotko, C.M. (2004): Does mass customization pay? An economic approach to evaluate customer integration. Production Planning and Control 15(4), 435–444.


ReferencesPine, J. (1993): Mass customizing products and services, Planning Review 21 (4), 6-13

Regani and Shirisha (2005): Mass Customization as Differentiation Strategy at BMW. in: icmrindia.org. IBS Center for Management Research

Vinodh, S. , Sundararai, G., Devadasan, S. R. , Kuttalingam, D. and Rajanavagam, D. (2010): Amalgamation of mass customisation and agile manufacturing concepts. The theory and implementation study in an electronics switches manufacturing company, in: International Journal of Production Research 48 (7), p. 2141–2164.

Zhao, F., He, Z. and Wu, D. (2008): Quality assurance of mass customization: a state-of-the-art review. In: Proceedings of IEEE Symposiumon Advanced Management of Information for Globalized Enterprises. September, Tianjin, China.

Department of Marketing Advertising and Communications Management Ms Marina Psiloutsikou Anna...

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