Market customization

Market Customization

“Customize”– to modify (something) according to a customer’s individual requirements. [Collins English Dictionary, 8th Ed 2006. Harper Collins Publishers.]

Micro Marketing include, segment, niche, local and custom.

Future of mass production

Mass production no longer seems suitable for today’s market and is being replaced by mass customization. New technologies have made it possible to prepare individual designs, products and communications on a mass basis. One of the advantages of the internet is the ability to personalise content. A website can now tailor information or products to the customer. In the past years, more and more possibilities have become available for consumers. This trend has provided companies with new possibilities for creating loyalty bonds. According to Michael Solomon, [Solomon, M & Others, Consumer Behaviour- A European Perspective, 3rd Ed., 2006] customization is one of the six basic factors that increase or decrease attention from the consumer.

Tailored to the customer

Some companies may be more familiar with customer relationship management which concentrates on the methods and technologies companies use to manage their relationships with clients. Market customization goes one step further. It tailors products to a specific market or user group enabling the company to present a product that appears to be designed for a specific market and to increase the experience and satisfaction for the customer. In order to achieve this, the company needs to understand the consumers that it is targeting by collecting information about preferences, passions and interests.

Research has shown that 75% of American adults would like to have more customised products and 70% of them are willing to pay more for it. The demand for customized products is even higher by people in the age group of 18-24-years old. 85% of them search for customized products with special interests in the domains such as clothing, shoes, electronics and travel services. [Gardyn, R, ‘Swap meet’, American Demographics, July 2001]

Rewards for the company

Besides adapting to the current customer, there are also rewards for the company. Microsoft acknowledges [www.microsoft.com/globaldev/getwr/DesignWRProg/CustFeat.mspx, 12-10-2006] four advantages. They include satisfying the customer requirements by using the existing framework and infrastructure, using different pricing models in different markets, creating loyal customers and changing the perception of the company’s public image to that of a more local one.

According to David Anderson [Anderson, D. M., Build-to-Order & Mass Customization, 2004] , there are three ways to customize products: - Modular Customization: tailoring a product by assembling a range of combinations of modules. A clear example of modular customization is assembling many components in a vehicle. - Adjustable customization: these are mechanical or electrical adjustments which are reversible. An example of this is the possibility of customizing software by user-defined settings or by table driven programming. - Dimensional customization: this is the permanent customization which can be infinite or have a selection of discrete choices. The tailoring of clothing falls within this definition.

Example

A well-known illustration of market customization is Paris Miki, a Tokyo eyeglass store. The store’s Custom Designed Eyewear System allows the technicians to tailor the lenses and frames using a scanned image of the customer’s face.

As well as product customization, micromarketing can be used for market customization. In the extreme, micromarketing develops into individual/customised marketing. In individual marketing, all products and programmes are tailored to the needs of individual customers. [Kotler, P, & Others, Principles of Marketing: European Edition, 4th Edition, Pearson Prentice Hall, 2005. p395] For example, De Beers’ website allows customers to design their own diamond rings. Mass customization allows the company to switch from mass marketing to customized marketing.

The Internet allows many companies around the world to extend customization to everyday products. In the U.S., Zazzle helps customers create their own custom-designed products and ships them out in 24 hours. In India, DilSeBol lets you create your own T-shirts and mugs to suit your individual taste.

Pros and Cons

Customization will always be bound to financial limits as well as technological development. Mass customization, however, can be interpreted as a threat to tailor-made customization. General customization now can be achieved at a lower cost. The extent of this menace for tailors depends on the product and social class of the customer. Products in the higher-price range, as opposed to lower-price products or commodities, are more likely to be customised as consumers are more concerned with quality. Customization offers them the opportunity to have more input and flexibility. Dell computers have found much success in customising computers against main players such as IBM. Although mass customization is likely to find new ways in the market, it is unlikely that the mass market will be “tailor-made”. Nevertheless, just with all technological developments, the established companies have to compete with each other to maintain their market share.

References