What is Mass Customization?

Mass customization is the process of delivering wide-market goods and services which are modified to satisfy a specific customer's need. Mass customization is a marketing and manufacturing technique which combines the flexibility and personalization of custom-made products with the low unit costs associated with mass production. Other names for mass customization include made-to-order or built-to-order.

Mass customization allows a customer to design certain features of a product while still keeping costs closer to that of mass-produced products. In some cases, the components of the product are modular. This flexibility allows the client to mix-and-match options to create a semi-custom final product.

Mass customization may apply to many fields, but many connect it to the retail industry. Software creators may use this method to include software-based product configurations which enable end users to add or change specific functions of a core product. Even the financial services industry embraces mass customization through the growth of independent, fee-only advisory firms.

Mass Customization: The New Frontier in Business Competition

B. Joseph Pine II looked at the growth of the American economy due to mass production. In his book, Mass Customization: The New Frontier in Business Competition (Harvard Business Review Press,1992), he describes four primary types of mass customization which took the concept of mass production to a new level.

• Collaborative customization - companies work in partnership with clients to offer products or services uniquely suited to each client

• Adaptive customization - companies produce standardized products which the end user may customize

• Transparent customization - companies provide unique products to individual clients without overtly stating the products are customized

• Cosmetic customization - companies produce standardized products but market them in different ways to various customers

Pine focused on the concept of creating a small number of interchangeable pieces. The individual parts may be combined in a variety of ways producing a cost-efficient production model and still allow consumers to choose how the pieces went together.

Real World Example

Fee-only, independent financial advisors allow their clients to customize their portfolio holdings to match their unique situations. The consumer may choose products which match their investment risk tolerance, time horizon, investment style, and future goals.

Certain furniture companies offer mass customization by providing multiple options for various components or features. This flexibility may include different fabrics, furniture legs or pieces which combine in numerous configurations. Also, modular home builders use mass-customization models by allowing customers to make changes to the base home package.