The value increment of mass‐customized products: an empirical assessment

Abstract

The primary argument in favour of mass customization is the delivery of superior customer value. Using willingness‐to‐pay (WTP) measurements, Franke and Piller (2004), Journal of Product Innovation Management, 21, 401–415 have recently shown that customers designing their own watches with design toolkits are willing to pay premiums of more than 100% (ΔWTP). In the course of three studies, we found that this type of value increment is not a singular occurrence but might rather be a general phenomenon, as we again found average ΔWTPs of more than 100% among customers designing their own cell phone covers, T‐shirts and scarves. Building on this, we discuss the sources of benefits that are likely to explain this tremendous value increment. We argue that compared to conventional standard products, a mass‐customized product might render the following utilitarian and hedonic benefits: (1) First, the output might be beneficial as self‐designed products offer a much closer fit between individual needs and product characteristics. In addition to this mere functional benefit, extra value might also stem from (2) the perceived uniqueness of the self‐designed product. As the customer takes on the role of an active co‐designer, there may also be two general ‘do‐it‐yourself effects’: (3) First, the process of designing per se is likely to allow the customer to meet hedonic or experiential needs (process benefit). (4) Customers may also be likely to value the output of self‐design more highly if they take pride in having created something on their own (instead of traditionally buying something created by somebody else). This is referred to as the ‘pride of authorship’ effect. Copyright © 2006 John Wiley & Sons, Ltd.

Customers’ online shopping preferences in mass customization

“…Despite the willingness of customers to pay significantly more for selfdesigned versus off-the-shelf-products, 31,34,35 various studies determine implicitly the fundamental goal of achieving mass customization products at the same price or a marginal higher price as mass-produced products, 36,9 as well as this study does.…”

Examining the Impact of Add-on Product Features as an Inferential Cue

“…The results suggest that offering a range of discretionary add-ons may be a useful strategy for weaker competitors, but is of limited benefit for stronger (i.e. superior quality) players [25,26].…”

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

“…For example, Schreier (2006) stated that customers' WTP increased by 207% for a self-designed cell phone cover, 113% for a self-designed T-shirt, and 106% for a self-designed scarf. Merle et al (2008) found an average price premium of 28% for a pair of mass customised shoes, whereas Ives and Piccoli (2003, p.4) cited a study from 1997 in which it was " […] found that 36% of consumers were willing to pay 12 to 15% more for custom apparel and footwear".…”

“…This means that different product features will positively affect customers' perception of the preference fit only if they coincide with particular customer preferences. In the literature, preference fit is seen as the main value driver for customers engaging in MC Schreier, 2006) and the general view is that self-designing a product usually results in a higher preference fit, in terms of aesthetic and functional preferences. Assuming that customers' needs are heterogeneous, this provides superior value to customers.…”