Department of Marketing
Advertising and
Communications
Management
Ms Marina Psiloutsikou
Mass Customization
Anna Hildebrand
Jonas Lang
Sophia Schütze
Theresa Thum
10.12.2015
Agenda
1
Definition of Mass Customization
2
Success Factors
3
Customization Approaches
4
Development
5
Impact on Competitive Factors
6
Literature Review
7
Application
8
Conclusion
Anna Hildebrand I Jonas Lang I Sophia Schütze I Theresa Thum
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“Give the customer any color
they want, so long as it is
black” (Henry Ford)
Mass Customization (MC) - Definition
Broad
Narrow
 Provision of individualized products
 Wide-ranging system
- Information technology
- Flexible process
- Organizational structures
- Available for every customer
- Process agility, flexibility,
integration
…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).
Anna Hildebrand I Jonas Lang I Sophia Schütze I Theresa Thum
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Success Factors of MC Systems
Market-related Factors
• Must exist
for variety &
customization
Customer
demand
Pine et al. (1993).
Lau (1995).
Kotha (1996).
Feitzinger/Lee (1997).
Organization-based Factors
Market
• Conditions
must be
appropriate
Technology
• Must be
ready
• Must be
available
Value chain
Anna Hildebrand I Jonas Lang I Sophia Schütze I Theresa Thum
Knowledge
• Should be
customizable
• Must be
shared
Product
5
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).
Anna Hildebrand I Jonas Lang I Sophia Schütze I Theresa Thum
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Mass Customization - Development
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
Ahlstrom (1999).
Kotler (1989).
Anna Hildebrand I Jonas Lang I Sophia Schütze I Theresa Thum
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Impact of MC on Competitive Factors
Strategic goal: Positive effect on all four competitive factors
Kumar, Gattoufi and Reisman (2007)
Price
Flexibility
Quality
Speed
Anna Hildebrand I Jonas Lang I Sophia Schütze I Theresa Thum
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Mass Customization - Literature Review
Many different research perspectives - at different levels
 Value of MC
Producer side:
Customer side:
 Strong research on:
Piller et al. (2004).
Merle et al. (2008; 2010).
Fogliatto et al. (2012).
Chandra and Kamrani (2004).
Dietrich et al. (2007).
- Premium prices less customization costs
- Better market information
- Customer loyalty
- Extrinsic (utilitarian, individualistic,
self-expression)
- Intrinsic (hedonic, pride)
- Supply chain coordination
- Web-based tools aiding customization process
Anna Hildebrand I Jonas Lang I Sophia Schütze I Theresa Thum
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Mass Customization - Literature Review
Many different research perspectives - at different levels
 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
 Research focus on products – rarely on services
Fogliatto et al. (2012).
Lee et al. (2010).
Drizo and Pegna (2006).
Zhao et al. (2008).
Piller (2004).
Da Silveira (2001).
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Application - BMW
1998: 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
- 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).
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Conclusion
“MC systems reach customers in the mass market economy but treat them
individually, at a cost near that of mass-produced items”
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
Kumar, Gattoufi and Reisman (2007)
Anna Hildebrand I Jonas Lang I Sophia Schütze I Theresa Thum
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References
Ahlstrom, 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 Business
Review 75 (1), 116-121
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References
Fogliatto, 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 Management
Journal 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
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References
Lee, 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.
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References
Pine, 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.
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