Testing the Value of Customization: When Do Customers Really Prefer Products Tailored to Their Preferences?

Abstract

Recently, researchers have paid increasing attention to the marketing strategy of customization. A key assumption is that customized products create higher benefits for customers than standard products because they deliver a closer preference fit. The prerequisite for this effect is the ability to obtain precise information on what customers actually want. But are customers able to specify their preferences that precisely? Several theoretical arguments raise doubts about this, implicitly challenging the value of customization. The authors conduct two studies in which they find that products customized on the basis of expressed preferences bring about significantly higher benefits for customers in terms of willingness to pay, purchase intention, and attitude toward the product than standard products. The benefit gain is higher if customers have (1) better insight into their own preferences, (2) a better ability to express their preferences, and (3) greater product involvement. This suggests that customization has the potential to be a powerful marketing strategy if these conditions are met. In the opposite case, firms willing to serve heterogeneous customer preferences need to adapt their customization systems in such a way that they explicitly address the customers' inability to provide valid preference information.

A review and a conceptual framework of the key value drivers of mass customisation

“…For example, the degree of preference insight might moderate the benefits customers derive from MC due to the fact that customers with a low degree of preference insight might not be able to evaluate whether a product fits their preferences or not. Franke et al (2009) found that the effects of preference insight, the ability to express preferences, and product involvement on the benefit customers derive from customised products are moderated by the product category. The dissimilarity in the WTP for personalised scarves, T-shirts, or cell-phone covers, as mentioned above, illustrates that customers evaluate MC approaches differently.…”

“…Researchers have identified a number of product characteristics and, more recently, the MC process itself as an important value driving activity, which satisfies customers' hedonic needs. Various independent studies have found an increase in customers' WTP for mass customised products (e.g., Franke et al, 2009;Piller, 2004). However, the increase in the amount customers are willing to pay has been reported to be rather diverse.…”

“…1 an increase in preference fit (Franke et al, 2009) 2 a product's uniqueness (Fiore et al, 2004;Lee and Chang, 2011) 3 the enjoyment perceived when customising a product (Fiore et al, 2004; 4 the perception of pride to be the author of a product 5 the feeling of psychological ownership .…”

“…The degree of preference insight refers to customers' intimacy with a certain product category and its variations. Customers with a high degree of preference insight are likely to derive greater benefits from MC due to their knowledge about advantages and disadvantages of certain features (Franke et al, 2009).…”

“…Generally, it is argued that mass customised products provide additional value to customers and that the value increment stems from an increase in the so-called 'preference fit', a better fit between customers' preferences and products' attributes, as well as from products' uniqueness, which customers attribute to self-designed objects Ulrich et al, 2003). However, recent research has shown that besides the increase in preference fit and products' uniqueness other factors affect customers' willingness to use MC as well (Franke et al, 2009;Kaplan et al, 2007).…”