Customization Essay ⋆ Business Essay Examples ⋆ EssayEmpire

Customization refers to the efforts of companies to offer goods and services specifically designed or customized according to the needs of a particular customer, a group of customers, or an entire market (country). The core of customization or customization strategy is the focus on specific customer needs. The opposite of customization is standardization, which refers to the efforts of companies to offer a common product or common marketing programs throughout a particular market, region, or the whole world. Therefore, with respect to global business, companies pursuing the customization strategy or view treat each country as having unique features and customize their offerings accordingly instead of offering standardized products. That means that companies will modify their offerings according to differences in market characteristics, culture, industry conditions, legal environment, and marketing infrastructure (distribution channels, advertising agencies, and media) to better serve foreign consumers. Some terms used in the same or similar meaning with customization are adaptation, personalization, personalized marketing, and one-to-one marketing.

There are two broad strategies regarding international operations of companies: the global and the multidomestic strategy. In companies implementing the global strategy, products are the same across all countries in which the company operates and there is a centralized decision-making and control system. This strategy is appropriate when there are small differences across foreign markets with respect to the product the company offers; this strategy provides cost advantage and flexibility. However, companies pursuing the multidomestic strategy customize their offerings for each market and give these markets autonomy in decision making. This strategy is appropriate when there are significant differences across foreign markets and companies may better serve local customers if local needs and preferences affect buying behavior. Compared to the global strategy, the multidomestic strategy is harder to design and implement due to the existence of different factors to be considered in each foreign market.

From the marketing point of view, companies are expected to serve consumers better through customization than standardization since the ideal market segment size is one for which 100 percent customer satisfaction is needed. Therefore, customization at the individual level is the highest level of customization and assumes that each individual is different from others and thus has unique needs. Therefore, companies need to know the specific needs of each customer to be able to individually customize their offerings. For example, many computer producers now do not offer computers with only standardized configurations; instead, they give consumers the opportunity to configure computers according to their needs. Similarly, companies in many industries such as automobile, clothing, real estate, and tourism offer customization opportunities to best meet the needs of their customers.

However, it may not be possible for some companies to customize products at the individual level since such a high level of customization increases costs and requires additional resources. As a result, some companies implement customization at the consumer group or segment level as well. For example, the needs of children, teenagers, and adults may be different, and thus companies customize their offerings according to the group’s needs; in addition to age, customers can also be segmented in many other ways, for example, climate, language group, media habits, education, and income.

In addition to customization at the individual and group level, customization can be done at the country level as well; laws and regulations, traditions, and religion may necessitate such a country level customization. For example, cars with the steering wheel on the right in the United Kingdom and meatless hamburgers in India are examples of customization of products at the country level, resulting from differences in law, regulations, and religion across markets.

Customization is sometimes referred to as mass customization, which means production and marketing of good and services according to customers’ needs at normal or low prices that are close to prices of products produced in large quantities, which is called mass-production. When companies engage in mass-production, they are able to decrease their unit cost, capitalizing on the scale economies; however, with respect to customized production, this is not always the case since companies need to have additional resources to produce customized or somewhat different products. So, how are products not so high priced in mass-customized production? In the past, companies could offer low-priced but similar products through mass-production (having taken advantage of low unit cost), but they used to offer customized or differentiated products at generally higher prices. However, technological developments nowadays have allowed companies to interact with customers easily and effectively and also enabled quick and flexible production that together allow decreases in costs of customized products as well. Therefore, mass-customized products are not priced as high as they once were.

Types

There are four types of customization: collaborative, adaptive, transparent, and cosmetic. In collaborative customization, companies listen to their customers and find out their exact needs. According to this information, companies then produce the product. Customized computers, clothes, and cars are all this type of customization. In adaptive customization, companies produce a standard product but the consumer or the end user can change the product according to his/ her needs. For example, think of two chairs. One is not adjustable, whereas the other is adjustable. The latter gives opportunity to the end user to adjust the chair and is an example of a product for adaptive customization. In transparent customization, companies offer individual customers unique products without telling them directly. This kind of customization occurs when companies can foresee customers’ specific needs. Companies implementing transparent customization observe consumers without interaction and based on this observation and further analyses, companies forecast the needs of customers and produce accordingly. In cosmetic customization, consumers use a product in a similar way, but they do change the way the product is marketed. For example, through different packaging, advertisement, marketing materials, promotion, placement, terms and conditions, and brand names, a particular product is highly customized psychologically or emotionally but not functionally.

There are several patterns and various degrees of customization that firms can adopt to do business in international markets. The most common of these are obligatory and discretionary product customization. An obligatory or minimal product customization indicates that a company is urged to introduce minor changes or modifications in the product design for either of two reasons. First, customization may be obligatory to enter and operate in a particular foreign market. Second, customization may be forced by external environmental factors, including the special needs of the foreign market. In brief, obligatory customization is related to safety regulations, trademark registration, quality, and media standards. An obligatory customization requires mostly physical changes in a product. Discretionary, or voluntary, product customization reflects a sort of self-imposed discipline and a deliberate move on the part of an international company to build stable foreign markets through a better alignment of product with market needs and/or cultural preferences.

Many factors necessitate customization, and customization may require significant changes in the design, manufacturing system, distribution, and marketing of the product in foreign markets. These changes will no doubt bring additional costs, and if the company has operations in many foreign markets, then the costs will further increase due to the increased number of adaptations. Therefore, if possible, companies usually prefer standardization because it is easier and less costly than adaptation. Others implement customization to meet local customer needs and mandated regulations. In most cases, companies implement standardization and customization simultaneously at varying degrees since it is rarely feasible or practical to follow a one offering–one world strategy across all different markets. Convergence of regional preferences, regional economic integration, harmonization of product standards, and growth of regional media and distribution channels all make regional customization more feasible than pursuing global standardization.

In conclusion, customization offers opportunities to companies to better serve their customers since companies can create greater variety in their products to be sold at competitive prices because products are produced according to customers’ specific needs. When companies are able to find opportunities for mass-customization by identifying unique needs of consumer groups, they can gain benefits from offering both unique and relatively low-priced products. Companies may also have to customize their offerings for a foreign country since laws, traditions, life styles, and religion necessitate customization.

Bibliography:

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Thorsten Blecker, Innovative Processes and Products for Mass Customization (Gito, 2007);
T. Cavusgil, G. Knight, and J. R. Riesenberger, International Business, Strategy, Management, and the New Realities (Prentice Hall, 2008);
M. Hayes, P. V. Jenster, and N. E. Aaby, Business Marketing: A Global Perspective (Irwin, 1996);
Lars Hvam, Niels Henrik Mortensen, and Jesper Riis, Product Customization (Springer, 2008);
C. Jain, Marketing Planning & Strategy (Thomson, 1997);
Levitt, “The Globalization of Markets,” Harvard Business Review (May–June, 1983);
Haim Mendelson and Ali K. Parlakturk, “Competitive Customization,” Manufacturing & Service Operations Management (v.10/3, 2008);
J. Pine II and J. H. Gilmore, “The Four Faces of Mass Customization,” Harvard Business Review (v.75/1, 1997);
J. Pine II and S. Davis, Customization: The New Frontier in Business Competition (Harvard Business School, 1999);
M. Tseng and J. Jiao, “Mass Customization,” in Handbook of Industrial Engineering, Technology and Operation Management, Gavriel Salvendy, ed. (Wiley, 2001).

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