Production Planning & Control,
Vol. 15, No. 4, June 2004, 459–471
Mass customization: the key to customer value?
BRIAN SQUIRE, JEFF READMAN, STEVE BROWN and JOHN BESSANT
Keywords Mass customization, value criteria, customer
focus tool
Abstract. The purpose of this paper is to ask the question –
does mass customization really hold the key to customer
value? It is argued that while mass customization can, and
often does, increase the value of an offering, it is not always
the case. In other words, mass customization does not represent
the best strategy for all firms in all cases.
It is critical that manufacturing firms understand whether their
customers (existing and potential) really do value customization. The paper introduces the responsive agility tool that
may provide the basis for an informed decision. The tool differentiates a number of value criteria and a method of selecting
between them. Further, the tool identifies four levels of customization distinguished by secondary value criteria. We provide
a case study demonstrating how the tool may operate in
practice. The case study suggests that the tool may effectively differentiate customer types according to their value
criteria. Finally the paper proposes that a value judgement is
dependent on the negotiated process between a manufacturer
and customer.
1. Introduction
Davis (1987) introduced the notion of mass customization – defined for the purposes of this paper as
‘. . . the ability to quickly design, produce, and deliver
products that meet specific customer needs at close to
mass-production prices’ (Tu et al. 2001).
A number of papers have explored how product strategies (Pine 1993, Eastwood 1996, Duray 2002), process
technology (Hart 1995, Lau 1995, Kotha 1996) and
organizational factors (Hart 1995, Vickery et al. 1999)
can aid the implementation of mass customization.
Despite the valuable contribution of such work, the
magnitude of demand for mass customized products
Authors: Brian Squire, (corresponding author) and Steve Brown, Centre for Technology and
Innovation Management, School of Management, University of Bath, Bath, BA2 7AY, UK.
E-mails: mnpbcs@management.bath.ac.uk and mnsseb@management.bath.ac.uk. Jeff
Readman, Centre for Research in Innovation Management, University of Brighton, Falmer,
Brighton, BN9 1NP, UK. E-mail: J.A.Readman@bton.ac.uk. John Bessant, Cranfield
Management School, Cranfield, MK43 0AL, UK, E-mail: john.bessant@cranfield.ac.uk
BRIAN SQUIRE is a research officer with the Centre for Technology and Innovation Management
(CENTAIM) at the University of Bath. His current research project examines ‘the role, process
and content of manufacturing strategy in pursuing mass customization within firms’. He is also
a part-time doctoral student. His current research interests include mass customization, theories of
the firm and inter-firm collaboration.
JEFF READMAN is working on a mass customization project exploring the strategic and operational
issues companies consider when offering different product varieties and volumes to customers. He
is also working on several value-chain projects, specifically those that reveal the links involving
manufacturers from developing countries and buyers from OECD countries. Other research work
includes agile capabilities and continuous improvement in SMEs. Jeff was also a member of an
EU consortium that investigated services supporting innovation activities. Previous work experience includes four years in East Africa as a business adviser and as a trade officer with the Canadian
government.
Production Planning & Control ISSN 0953–7287 print/ISSN 1366–5871 online # 2004 Taylor & Francis Ltd
http://www.tandf.co.uk/journals
DOI: 10.1080/0953728042000238755
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B. Squire et al.
STEVE BROWN leads the Operations Management Group and is Director of the Centre of
Technology and Innovation Management (CENTAIM) at the University of Bath. He is a
Visiting Professor to Baruch College, City University, New York, and is also Visiting Professor
at NIMBAS in Holland. He is listed in who’s Who in Europe. His management experience was gained
in both public and private sectors including large and SME organizations. He is actively involved
in consulting in a range of organizations in manufacturing and service sectors. He has published
numerous articles and his books include Manufacturing the Future – Strategic Resonance for Enlightened
Manufacturing (2000, Financial Times Books) and Strategic Manufacturing for Competitive Advantage –
Transforming Operations from Shop Floor to Strategy (1996, Prentice Hall).
JOHN BESSANT is Professor of Innovation Management at the School of Management, Cranfield
University. He also holds a Fellowship of the Advanced Institute for Management Research, which
he was awarded in 2003. He graduated from Aston University with a degree in Chemical
Engineering in 1975 and later obtained a PhD for work on innovation within the chemical industry. After a spell in industry he took up full-time research and consultancy in the field of technology
and innovation management, working at Aston’s Technology Policy Unit, the Science Policy
Research Unit at Sussex University and at Brighton University where he has held the Chair in
Technology Management since 1987. Prior to joining the faculty at CranfieId, John was Director
of Brighton University’s Centre for Research in Innovation Management which he set up in 1987.
He oversaw its development into a research institute with a staff of 30 people working on around 50
projects for public and private sponsors in the field of effective innovation management. He is an
Honorary Professor at SPRU, Sussex University, and a Visiting Fellow at several UK and international universities. In 2003 he was elected a Fellow of the British Academy of Management. His
areas of research interest include the management of discontinuous innovation, strategies for developing high involvement innovation and enabling effective interfirm collaboration and learning in
product and process innovation. He is the author of 20 books and many articles on the topic and
has lectured and consulted widely around the world. He has acted as adviser to various national
governments and to international bodies including the United Nations, the World Bank and the
OECD.
remains elusive. Firms are still mass-producing standardized and high variety goods in many industries and
customers are still buying these goods. Indeed, a focus
group conducted on buyers in the auto sector found
that ‘there appeared [to be] no real drive to have a
‘‘different car’’ to others by adding features, and most
of those interviewed were happy with a standard specification’ (Waller 2000: 33).
Authors have argued that mass customization offers
superior consumer value compared to other strategies
(Gilmore and Pine 2000, Tu et al. 2001). This paper
asks whether mass customization really does hold the
key to customer value – is mass customization the only
way to create superior customer value? It is argued
that while mass customization can, and often does,
increase the value of an offering, it is not always the
case (Zipkin 2001). In other words, mass customization
does not represent the best strategy for all firms in all
cases. Customers must value customization before manufacturers should allocate resources to a mass customization manufacturing strategy.
Anecdotal evidence aside, mass customization remains
an important and powerful strategic option for many
firms. The strategic imperatives for managers are, first,
to ascertain if customers value direct input into the design
or configuration of a product before purchase and, where
they do, identify the appropriate level of customer involvement. This paper explores how companies can answer
these two questions regarding value and the level of
involvement.
The paper begins by defining what we mean by customer value – on what basis do customers select products?
The paper then presents the responsive agility tool.
The tool enables managers to make an informed decision
about their customers’ immediate and foreseeable needs.
It is developed further in the next section identifying the
different types of customization available to customers.
The final section of the paper suggests that customers
cannot recognize the tradeoffs required in an informed
value-judgement until manufacturers configure their
internal resources. The key to providing customer value
is a negotiated process even when companies pursue a
customer-focus manufacturing strategy.
2. Value criteria
The nature of customer demand is partly based on
a set of prioritized criteria. A customer value criterion
has been defined as,
an attribute (or characteristic) of a product or
service considered by a purchaser to be a primary
reason for selecting a specific product (or service)
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Mass customization: the key to customer value?
Value Criteria
Price
Quality
Delivery Technical Product
attributes variety
New
products
Flexible
volume
Design
Brand
name
Services
Customization
Figure 1. Expanding value criteria.
because it enhances the value of the purchaser’s
output (business to business customer sales) or
improves their lifestyle (business to consumer sales).
(Walters and Lancaster 1999: 697)
Whereas, in the past, customer value criteria could be
easily defined, the fragmentation of markets means the
concept of value has expanded to include several further
factors.
Markets are fragmenting, individual needs and wants
are increasingly prone to shifts and changes (Hart 1995),
or, as Kotler (1989) succinctly puts it, ‘the mass market is
dead’. Marketers are reaching similar conclusions – the
dream of a ‘global village’ where products and marketing
strategies can be standardized enabling economies of
scale, is proving unrealistic (Mueller-Heumann 1992).
Rather, marketers are talking of ‘market fragmentation’
(Shani and Chalasani 1992), ‘customized mass marketing’ (Mueller-Heumann, 1992), ‘micro marketing’ (Kara
and Kaynak 1997), and ‘markets of one’ (Pine et al. 1995,
Andel 1998). This fragmentation may be associated with
the advent of post-modernistic culture (Firat and Schultz
1997). The dawn of post-modernity calls into question
concepts of ‘mass’ and results in ‘bricolage markets’
(Firat and Schultz 1997: 191); that is, consumers cannot
be easily categorized and are prone to shifting tastes.
While modernity created mass markets of identifiable
market segments, post-modern customer value criteria
have exploded.
Market fragmentation has salient ramifications for
manufacturing strategy. Porter (1980) argued that strategy could be defined on two dimensions: cost leadership or differentiation. Hill (1983) maintained the cost
dimension (price) but considered differentiation in
terms of quality and delivery. Market fragmentation
does not make such classification obsolete, but further
refines the dimensions to target specific niche markets.
We suggest that, besides price, quality and delivery,
value criteria are now defined in terms of variety
(MacDuffie et al. 1996, Da Silveira 1998, Kahn 1998),
flexibility (Hill and Chambers 1991, Gerwin 1993),
customization (Pine 1993, Gilmore and Pine 2000), and
variations on themes related to location (Levitt 1980),
seasonality (Radas and Shugan 1998) and marketing
(Keller 1993, Michell et al. 2001). Figure 1 illustrates
a possible, but not exhaustive, list of customer value
criteria.
The fragmentation of markets may present an interesting extension to the debate surrounding tradeoffs and
cumulative capabilities. The notion of tradeoffs can be
traced back to the seminal work of Wickham Skinner.
Skinner (1974) argues that manufacturing cannot simultaneously pursue all performance objectives, variables
such as cost, time, quality and customer satisfaction are
at odds with each other. In other words, superior performance in one of these variables meant lowering, or trading off, performance in another variable.
Since Skinner’s article a number of authors have found
support for the notion of tradeoffs (Hayes and
Wheelwright 1984, Fine and Hax 1985) and have refined
the performance criteria to include quality, delivery
(speed and reliability), cost, flexibility and innovation
(Leong et al. 1990, Mapes et al. 1997). That is not to
say that the idea of tradeoffs is universally accepted.
Schonberger (1986) argues that world-class manufacturers have eschewed tradeoffs with the introduction of
new, innovative practices, such as JIT, total quality control, and employee involvement. The sand cone model
(Ferdows and De Meyer 1990) contends that competences are cumulative and that performance criteria
can be concurrently improved through a logical sequence
starting with quality, advancing to reliability, flexibility
and finishing with cost. The empirical research suggests
that although tradeoffs do exist, they are dynamic in
nature and that, in the long term, levels of compatibility
do exist between performance criteria (Filippini et al.
1998, Da Silveira and Slack 2001).
The fragmentation of markets may mean that manufacturing has to cope with an increasing number of performance criteria, such as customization and service
variables. It is beyond the scope of this paper to explore
this concept, but represents an important avenue of
future research.
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B. Squire et al.
2.1. Perceived customer value
Manufacturers not only have to meet the value criteria
of customers but they should also be aware that customers are evaluating the benefits and sacrifices entailed
with any buying decision. Perceived customer value is
a tradeoff of benefits and sacrifices. Zeithaml (1988: 14),
for example, states, ‘perceived value is the consumer’s
overall assessment of the utility1 of a product based on
perceptions of what is received and what is given’.
Several authors emphasize that this benefit–sacrifice
tradeoff includes non-monetary considerations (Monroe
1990, Mazumdar 1993, Patterson and Spreng 1997,
Woodruff 1997). For other writers, value is relevant
only in terms of monetary costs and benefits (Walters
and Lancaster 1999, Anderson et al. 2000).
Customers do not make this assessment of utility in
isolation; rather, products are assessed relative to a reference product (Mazumdar 1993). Where no comparable
product exists, there are still competitive alternatives
(Anderson and Narus 1998). Customers may seek alternative means of needs fulfilment by choosing different
configurations, systems or even to undertake the manufacturing process themselves.
Furthermore, perceived value is highly individualized:
‘what constitutes value – even in a single product category – appears to be highly personal and idiosyncratic’
(Zeithaml 1988: 13). Perceptions of value may vary from
customer to customer: however, even at this level perceptions are not static. The utility of a product is situationspecific (Ravald and Grönroos 1996). A product which
is considered to be over-priced and of low quality in
one context, may represent good value in a different
situation.
2.2. Value in customizing
A strategy of mass customization may create value
for a consumer by closely matching a product to his
or her needs at prices reflecting the efficiencies of a
mass-produced item. Because value originates in a person’s needs system (Connor and Davidson 1985), a product closely matching those needs may be perceived to
be of higher value. Firms have known this for centuries,
offering bespoke solutions to consumer needs.
1
However, as we noted above, value is not just made up
of benefits, but a tradeoff between benefits and sacrifices
(Zeithaml 1988, Mazumdar 1993, Patterson and Spreng
1997). Customization may increase the perceived benefits of a product, but in turn may raise the sacrifices, in
terms of time and price for example. Before a significant
number of customers recognize positive utility in any
customization venture, manufacturers must configure
their resources sufficiently to reduce these customer
sacrifices.
Mass customization, in theory, aims to reduce these
sacrifices (Pine 1993). Advances in process technology
(Piller and Moeslein 2002), product architecture
(Duray 2002) and organizational practices (Vickery
et al. 1999) mean that price and time sacrifices, while
often marginally higher than standardized, volume production, have been minimized. From the point of view of
the customer, mass customization combines the benefits
of direct customer input with the negligible sacrifices
found in the manufacturers’ ability to produce a low
priced, high quality product (Fralix 2001). As such, the
overall value or total utility of a product is augmented.
Perceptions of value are subjective, albeit at times
highly informed. Customers may be indifferent to
customization; their value criteria lie elsewhere (for
example, delivery or brand name). It is critical that
firms understand whether their customers (existing and
potential) really do value customization (Pine et al. 1993,
Zipkin 2001). Once the customers’ interest is revealed,
companies can direct attention to a manufacturing strategy. The next section outlines a tool that may provide the
basis for an informed decision.
3. Revealing customer value criteria
The starting point to understanding customer value
is to have customers prioritize their value criteria.
Customers are asked to rank the value criteria discussed
in figure 1, which includes price, quality, delivery, technical attributes (features), variety, new products, flexible
volume, design, customization, services and brand name.
As noted earlier, this list is not exhaustive but it does
cover many of the issues customers often consider.
Value criteria are not static and what customers
demand today may be different tomorrow.
Manufacturers should ask their customers to consider
not only their current value criteria but also what they
Neoclassical economists tend to examine the concept of value in terms of utility. Utility is a measure of satisfaction a consumer receives from
consumption of goods or services. Utility theory states that consumers spend their income to maximize their satisfaction or utility (Bowman and
Ambrosini 2000). In this light, the concept of value delves deeper into the reasons behind consumer choice; in other words, how do consumers decide
which offering will bestow maximum utility? For example, Zeithaml incorporates the notion of utility in her definition but goes further to encompass the
basis on which utility is assessed, i.e. through what is given and what is received.
Mass customization: the key to customer value?
may want in the future. In turbulent markets such as in
the multi-media games industry where product life cycles
are short, value criteria can change monthly, while in
mature markets such as the industrial pump industry,
value criteria may evolve more slowly. In other words,
industry clockspeed (Fine 1996) plays a key role in the
speed with which value criteria change.
The ‘responsive agility tool’ is a company–customer
insight communication technique. This tool is structured
so that product attributes desired by customers are translated into a manufacturing strategy. Each product and
market segment that the manufacturer currently produces for, or is contemplating producing for, requires a
different application of the tool. A representative sample
of the customer base should be surveyed. The tool is
segmented into two sections, each section consisting of
three steps. We now discuss each of these in turn.
The first section examines value criteria at a macro
level. The first step of this section asks, customers to
rank the importance of each value criterion using a
Likert scale (with 1 representing not important, 3 somewhat not important, 5 important and 7 representing
crucial). The value criteria are expressed in terms of
generalized leading questions. Companies may tailor
(customize) the questions to fit their situation. The tool
is designed to discover the value customers place on each
different criterion for a particular product.2 The value
criteria we use in our example were drawn from, first,
the literature and, second, modified by our collaborating
firms.3
The second step asks customers to rank their satisfaction level on each of the identified criteria (if appropriate), again using a Likert scale method (with 1
representing not satisfied, 3 somewhat not satisfied, 5
satisfied and 7 representing very satisfied). Figures 2(a)
and 2(b) illustrate an example of the value criteria ranking scheme.
The third step in the first part of the tool is to identify
possible customer opportunities using an algorithm introduced by Ulwick (2002). Unlike traditional marketing
satisfaction measures, the opportunity score places more
weight on the customer importance score than on the
customer satisfaction score4.
The value criterion yielding the highest score from the
opportunity algorithm becomes the customer’s ‘primary
2
463
value criteria’. Other value criteria may have also registered a significant score – this is often a judgement call
between the customer and the producer – and these criteria become the customer’s ‘secondary value criteria’.
Companies should now collect more detailed information
about the primary and secondary value criteria before
committing resources to their manufacturing strategy.
The second section of the tool explores in greater detail
issues pertaining to the primary criteria and directs attention to different possible sub-types or value deliverables.
We now turn our attention to the example of customization to illustrate this part of the tool.
4. Primary value criteria: the example
of customization
We have shown that mass customization is not the only
way to provide customer value. Firms may use the
responsive agility tool to ascertain whether mass customization is appropriate for their customers (existing and
potential). For customers who identify customization as
a primary value criterion we may further distinguish the
type of customization that offers the greatest perceived
value.
Customization is the inclusion of customer input before
the product is purchased and may be differentiated
according to the stage in the value chain at which that
input occurs (Lampel and Mintzberg 1996). Some
authors (Gilmore and Pine 1997, Alford et al. 2000,
Duray et al. 2000, Da Silveira et al. 2001) have constructed typologies for mass customization; however,
the majority use the ‘point of customer involvement’ for
at least one their variables. The paper draws upon the
Lampel and Mintzberg (1996) framework and associates
the different forms of customization with four manufacturing functions:
(1) Distribution customization: customers may customize product packaging, delivery schedule and
delivery location. The actual product is standardized.
(2) Assembly customization: customers are offered a
number of pre-defined options. Products are
made to order using standardized components.
In the first iteration of the tool, the authors used the framework developed by Terry Hill 1983, Hill 2000). Each customer was given 100 points to
allocate among the different value criteria. Although a useful device, the tool proved inconclusive because the scoring system proved to be ambiguous.
Customers were uncertain about the weight they should give to the importance and satisfaction of each criterion. For instance, despite asking customers
to only consider the criteria in terms of importance, many customers were influenced by pressing (i.e. real) satisfaction issues relating to recent
performances. Our test firms expressed an interest to separate satisfaction and importance measures.
3
We draw upon the value strategies identified in section 2 which have been deemed successful as the starting point for our value criteria categories.
4
The opportunity algorithm is defined as: O ¼ I þ (IS), where I equals the importance score of each criterion and S equals the satisfaction score of each
criterion. The amount in parenthesis can never be less than zero to ensure integrity of the formula.
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B. Squire et al.
Importance
1
Price
2
Quality
3
Delivery
VALUE-ADDING CRITERIA
We value low price
We value high quality
3a
We value on-time delivery
3b
We value fast delivery
3c
We value flexible delivery times
3d
Other time criteria?
4
Technical
attributes
4a
We value optional extras
4b
We value durable/reliable products
4c
Other technical criteria?
5
5a
Product variety
We value an extensive product range
5b
6
Other variety criteria?
New products
6a
We value new products
6b
Other new product criteria?
7
7a
Flexible volume
We value the ability to order any quantity of a
product
7b
8
Other volume criteria?
Design
8a
We value a low-cost designed product
8b
We value fast designs
8c
We value an innovative design
8d
Other design criteria?
9
Customization
9a
We value input before product purchase
9b
Other customization criteria?
10
Services
10a
We value after-sales technical support
10b
We value product training
10c
Other service criteria?
11
11a
1
Brand name
We value the brand name associated with the
product
Figure 2(a). Importance of customer value criteria.
3
5
7
465
Mass customization: the key to customer value?
Satisfaction
VALUE-ADDING CRITERIA
1
Price
We are satisfied with prices
2
Quality
We are satisfied with quality levels
3
Delivery
3a
We are satisfied with on-time delivery
3b
We are satisfied with the speed of deliveries
3c
We are satisfied with the flexibility of delivery times
3d
Other time criteria?
4
Technical
attributes
4a
We are satisfied with the range of optional extras
4b
We are satisfied with the durability/reliability of
products
4c
Other technical criteria?
5
5a
Product variety
We are satisfied with the variety in the product range
5b
6
Other variety criteria?
New products
6a
We are satisfied with the number of new products
6b
Other new product criteria?
7
7a
Flexible volume
We are satisfied with the ability to order any quantity of
a product
7b
8
Other volume criteria?
Design
8a
We are satisfied with the cost of designed products
8b
We are satisfied with the speed of designs
8c
We are satisfied with the innovation in design
8d
Other design criteria?
9
Customization
9a
We are satisfied with the degree of customer input
9b
Other customization criteria?
10
Services
10a
We are satisfied with after-sales technical support
10b
We are satisfied with product training
10c
Other service criteria?
11
11a
1
Brand name
We are satisfied with the brand name associated with
the product
Figure 2(b). Customer satisfaction with value criteria.
3
5
7
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B. Squire et al.
(3) Fabrication customization: customers are offered
a number of predefined designs. Products are
manufactured to order.
(4) Design customization: customer input stretches
to the start of the production process. Products
do not exist until initiated by a customer order.
the customization specifications and the two ranking
exercises.
Having completed the importance and satisfaction
ranking exercises, companies can complete an opportunity algorithm to ascertain the ‘primary customization
type and specification’. Manufacturers may now consider
how best to configure their resources to meet the demand
for this primary customization type should a customerfocused manufacturing strategy be the goal of the
company.
Each customization type has an associated set of
unique customization specifications such as delivery
demands and technical options. Customers are asked to
rank the importance of each customization specification
using Likert scaling (the scale categories are defined as
1 equal to not important, 3 somewhat not important,
5 important and 7 crucial). Furthermore, customers are
asked to rank their level of satisfaction of each specification using a Likert scale method with 1 representing
not satisfied, 3 somewhat not satisfied, 5 satisfied and 7
representing very satisfied. Figures 3(a) and 3(b) present
1
Type of customization and
specifications
DISTRIBUTION CUSTOMIZATION
1a
Do you value individualized delivery?
1b
Do you value individualized
packaging?
1c
Other?
2
ASSEMBLY CUSTOMIZATION
2a
Do you value a number of customized
optional extras?
2b
Pre-defined size options …
2c
Pre-defined colour options …
2d
Pre-defined technical options …
2e
Other?
3
FABRICATION CUSTOMIZATION
3a
Do you value a product that has a predefined design but can also be tailored
to your needs?
3b
Any size …
3c
Any colour …
3d
Any technical option (that does not
impede the design) …
3e
Other?
4
CUSTOMIZED DESIGN
4a
Do you value a unique product design?
4b
Other?
1
5. Case example
We now turn to demonstrate how this tool works
in practice. One of the companies we collaborated
with for the development of the tool was a UK-based
2
3
4
5
Figure 3(a). Importance of customization types and specifications.
6
7
467
Mass customization: the key to customer value?
1
1a
Type of customization and
specifications
DISTRIBUTION
CUSTOMIZATION
We are satisfied with
individualized delivery
1b
We are satisfied with
individualized packaging
1c
Other?
2
ASSEMBLY
CUSTOMIZATION
We are satisfied with the number
of customized optional extras
2a
2b
Pre-defined size options …
2c
Pre-defined colour options…
2d
Pre-defined technical options …
2e
Other?
3
FABRICATION
CUSTOMIZATION
We are satisfied with products
that can be tailored to our needs
3a
3b
Any size …
3c
Any colour …
3d
Any technical option (that does
not impede the design) …
3e
Other …
4
CUSTOMIZED DESIGN
4a
We are satisfied with unique
product designs
4b
Other?
N/A
1
2
3
4
5
6
7
Figure 3(b). Satisfaction with customization types and specifications.
medium-sized firm with sales of £15 million in 2002. The
firm produces products for an integrated system used in
the retail industry and sells to end-users, OEMs and distributors throughout Europe and Asia. The company
manufactures both standardized and all four types of
customized products: customized designed products,
fabrication customization, assembly customization and
individualized delivery. The company was interested to
discover if it was really necessary to offer all four types of
customization.
The responsive agility tool was first tested with the
collaborative firm’s international marketing and sales
team to ensure the appropriateness and usefulness of
the tool’s questions and the scoring system. The authors
of this paper adjusted the questions and applied the tool
to three key customers (representing the two largest
buyers in the UK and the sole distributor in the
Benelux). As this was a proto-type tool, the authors
undertook this endeavour to gauge customer responsiveness. The benefits of using a third-party facilitator can
also ensure impartiality but the tool is designed for the
company to use without outside assistance (in fact, our
collaborator is preparing to use a variation of the tool
with all international customers in the autumn of 2003).
Here we present the results of the second section only.
The results of the ranking are presented in figure 4.
Taken on their own, each customer ranking illustrates
the importance and satisfaction of each customization
type and specification but companies have to judge
which areas deserve attention, i.e. should a company
focus more on improving areas of high importance or
areas of low satisfaction? Combining the two measures
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B. Squire et al.
Importancea
Type of customization and
specifications
DISTRIBUTION
CUSTOMIZATION
Individualized delivery
a
b
Satisfactionb
Customer A
Customer B
Customer C
Customer A
Customer B
Customer C
5
1
5
3
3
5
Individualized packaging
4
1
3
3
3
5
ASSEMBLY
CUSTOMIZATION (wide array
but limited number of features)
Pre-defined size options
5
2
3
5
5
3
Pre-defined colour options
5
5
3
4
5
5
Pre-defined technical options
5
3
3
5
5
3
FABRICATION
CUSTOMIZATION (pre-defined
design but can also be tailored to
their needs
Any size (pre-design)
4
3
3
3
5
3
Any colour (pre-design)
5
5
1
3
5
3
Any technical option (that does
not impede the design)
CUSTOMIZED DESIGN
5
3
1
3
5
3
Unique product design
4
5
1
4
5
5
Importance scales: 1 represents not important, 3 somewhat not important, 5 important and 7 crucial.
Satisfaction scales: 1 represents not satisfied, 3 somewhat not satisfied, 5 satisfied and 7 very satisfied.
Figure 4. Example of responsive agility tool: customization type and specification, importance and satisfaction rankings.
using the opportunity algorithm provides companies
with a method to prioritize the customization types
with a balanced approach.
The results from the application of the algorithm are
presented in figure 5. The figure illustrates that our collaborator’s customers want different types of customization. The primary customization types and specifications
for Customer A (a system integrator) were individualized
delivery, any colour and any technical option (that did
not impede the design). Customer B (a large distributor)
wanted either a choice of pre-defined colours or to have
the option of picking any colour, while Customer C (a
systems integrator representing an OEM) wanted the
company to meet individualized delivery specifications.
All three customers indicated a set of secondary customization types and specifications that the company may
have to consider as well.
For the managers of our collaborative company, this
tool revealed that customization can present opportunities but also challenges. The three customers – significant buyers in terms of volume and sales – tend to
demand different customization specifications, which
the company is capable of providing through a local
and highly responsive manufacturing operation. But listening to the customer also means that the company
cannot focus on only one or two customization types
and steer resources away from those areas not in demand.
The ability to deliver all the specification types is explicitly required. It appears from this case that customers will
press for the full gambit of customization specification
once they are aware that customization is a possibility.
The use of tools such as the responsive agile tool should
not replace direct contact with customers. In fact the tool
should be seen as a complementary technique, one that
can provide additional insight into customer–producer
relations. The results generated from the ranking
exercises and from the opportunity algorithm are ordinal
at best and remain highly subjective, but they can be
a focal point for the marketing and manufacturing
departments.
6. Determining perceived customer value?
The identification of the primary value criterion
focuses the company to a particular product attribute
but the customer may also value other criteria, hence
the importance of the secondary value criteria. We suggest that each level of customization may create tradeoffs
with factors such as cost, quality, speed of delivery,
delivery reliability, flexibility and rate of new product
introduction (Yeh and Chu 1991, Mapes et al. 1997).
Schonberger (1986) suggests that such tradeoffs are
‘myths’ and it is possible to achieve success on several
469
Mass customization: the key to customer value?
Individualized delivery
8
Unique product design
6
Individualized packaging
4
2
Any technical option (not
to impede the design)
Pre-defined sizes
0
Any colour
Pre-defined colours
Any size
Customer A
Pre-defined technical options
Customer B
Customer C
NB: The largest number for each series indicates the primary customization type and specification.
Figure 5. Primary customization types and specifications example.
competitive priorities. Although these tradeoffs may be
overcome in the long term, especially by agile manufacturing capabilities (Slack 1991, Bessant et al. 2001), they
still represent real compromises for manufacturing firms
in the present (Da Silveira and Slack 2001).
For example, at the distribution stage, the degree of
customization is minimal, while at the product design
stage the degree of customization is substantial.
Distribution customization may not incur any tradeoffs
with price and delivery factors while prices may be higher
and the delivery time longer for products at the design
customization stage. A customer may have identified customization as a primary value criterion and fast delivery
as a secondary value criterion. This may lead the customer to identify a form of distribution customization as
their primary customization type.
Staying with this example, the customer will not know
the complete composition of this tradeoff until the
manufacturer proposes a price and delivery schedule
for the product. On the other hand, the manufacturer
cannot propose a price or delivery schedule until their
internal manufacturing resources have been configured.
Companies that follow a customer-focus manufacturing
strategy will identify the primary value criterion from
a representative sample of customers. Should customization be the key value criterion then a further step is
required to determine the level of customization. Only at
this point can manufacturers consider reconfiguring their
internal resources (processes, technology, people and
supporting networks) to meet this demand. Customers
cannot determine the real value of the product until
the manufacturer proposes a real value proposition.
7. Conclusion
This paper asked whether mass customization is the
only way to create customer value. Customer-perceived
value consists of benefits and sacrifices (Zeithaml 1988).
Mass customization may raise the benefits by closely
matching a product to a customer’s needs, while simultaneously reducing the sacrifices typically associated with
a customized offering. However, fragmenting markets
suggest customer value criteria are defined on an everincreasing number of dimensions, of which customization
is one. It is argued that mass customization may augment
customer perceived value, but only for certain customers,
in certain markets, at certain times.
It is critical that firms understand whether their customers (existing and potential) really do value customization. The paper presents a tool that may provide the
basis for this decision. With the use of the responsive
agility tool, managers can make use of a proxy customer
value system by measuring criteria in terms of importance and satisfaction. Often, the results of the customer
satisfaction surveys rarely influence the manufacturing
department but we stress that the questions used to reveal
the value criteria should reflect a range of possible manufacturing strategies. Should a company want to follow
a customer-focus strategy, the opportunities revealed by
470
B. Squire et al.
this tool will be a starting point from which all activities,
processes and structures would be aligned.
It is suggested that customization represents a tradeoff
with several factors, such as price, speed of delivery, and
effort. Future research is required to validate such a view
and to uncover the nature of the tradeoff. The tradeoff
requires the input of both the customer and manufacturer. The manufacturer must negotiate the level of
sacrifice the customer is prepared to accept for the benefits customization can bring. Such a negotiated process
may also be an important area of future research.
Acknowledgements
This research was partly funded by a grant from the
Engineering and Physical Sciences Research Council,
no. GR/R26559/01. This manuscript has benefited from
the helpful comments of three anonymous PPC reviewers.
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