Monday, September 29, 2014

Mass Customization - The Future of Retail

In any market, “Customer is the King”. Hence, it becomes imperative to provide outstanding service to customers. Flexible work flows and latest information technology allow companies to customize their products and meet their customers’ unique needs at a low cost. Mass customization is described as "enabling a customer to decide the exact specification of a product or service, and have that product or service supplied to them at a price close to that for an ordinary mass produced alternative". Many companies have explored this option to benefit from customer heterogeneity.

Paris Miki is a big Japanese eyewear retailer and has many global eyewear stores. The company developed Mikissimes Design System which eliminates the need to view random choices when selecting a pair of glasses. The process involves capturing a digital image of the customer’s face, analyzing its attributes, inputting customer preferences, recommending lens shape and size and displaying it on the digital image of the customer. The customer is provided options to select hinges, arms and nose bridges to finalize the design. Once the design is decided, the optician assembles the eyeglasses within an hour.

ChemsStation, a company in Ohio, mass customized industrial soap used for car washes and cleaning factory floors. It analyzes the customer’s needs and formulates the correct proportion of soap and other ingredients. The company analyses the consumer patterns and delivers more soap without the customer placing an order. Hence, the customer does not have to spend time reordering goods.

Hertz, a rental car service, changed the processes governing car reservations, preparations and returns to reduce counter interaction and less time consuming. It started the gold service program, under which it assigned vehicles to customers en route and automatically prepared rental agreements. Hertz found out that the gold service actually cost it less than the standard operating procedure.

Ritz-Carlton uses data mining techniques to learn about individual needs and customize the rooms based on their preferences. It stores information about guest such as their preferences for particular radio stations and tv channels, hypoallergenic pillows and their food preferences. It then uses it to tailor the service for the customer’s next visit. Each visit adds more preferences to the customer database and the hotel is able to customize and create a unique experience for its guests. [1]

Nike, a sportswear company, allows its customers to customize clothing using the NikeID service. The customers are allowed to add personal designs to selected items. NikeId attributes for almost 20% of the company’s revenue. [2]

Wild Things, an outdoor gear retailer, offered customizable jackets by allowing customers to select the linen fabric, color combination and even the zipper. It also allowed the customers to remove the pockets or pick the location of the pocket depending on whether the customer was left or right handed.[3] Nowadays customers have the option to personalize the card background image (Disover Card), design their shoes (Shoes of prey), choose the perfect artwork according to space (at60inches) and also make their own serial (MixMyOwn).

Although mass customization is lucrative, companies run the risk of sliding from phenomenon to fad if they pick an overcrowded category. Companies need to strike a perfect balance between the features it allows its customers to customize and standard features. High rate of customization might increase costs and delivery times. One should consider all these factors before adopting mass customization techniques.

[1] Four faces of Mass Customization, Harvard Business Review

[3] http://www.entrepreneur.com/article/229869

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