Competitive Effects of Mass Customization

Q4 Business, Management and Accounting

Review of Marketing Science Pub Date : 2012-09-24 DOI:10.1515/1546-5616.1139

O. Loginova

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引用次数: 5

Abstract

Abstract The existing theoretical literature on mass customization maintains that customization reduces product differentiation and intensifies price competition. In contrast, operations management studies argue that customization serves primarily to differentiate a company from its competitors. Interactive involvement of the customer in product design creates an affective relationship with the firm, relaxing price competition. This paper provides a model that incorporates consumer involvement to explain the phenomena described in the operations management literature.Two firms on the Hotelling line compete for a continuum of consumers with heterogeneous brand preferences. An exogenously given fraction of consumers is potentially interested in customization. Consumer benefits from customization are the rewards from a special shopping experience and the value of product customization (a better fitting product); these benefits are higher for consumers located closer to the customizing brand. When a consumer purchases a customized product, he/she incurs waiting costs. Each firm simultaneously decides whether to offer standard products, customized products, or both, and then engage in price competition. I show that customization increases product differentiation, leading to less intense price competition. Depending on the parameter values, in equilibrium either both firms offer customized products, one firm offers customized products and the other standard and customized products, or one firm offers customized products and the other standard products. I perform comparative statics analysis with respect to the fraction of consumers interested in customization, the waiting costs, and the fixed cost of customization.

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大规模定制的竞争效应

现有的大规模定制理论文献认为，定制化降低了产品差异化，加剧了价格竞争。相比之下，运营管理研究认为，定制的主要作用是将公司与其竞争对手区分开来。顾客在产品设计中的互动参与创造了一种与公司的情感关系，缓解了价格竞争。本文提供了一个包含消费者参与的模型来解释在运营管理文献中描述的现象。Hotelling线上的两家公司争夺具有不同品牌偏好的连续消费者。外生给定的一部分消费者可能对定制感兴趣。消费者从定制中获得的利益是特殊购物体验的奖励和产品定制的价值(更合身的产品);对于离定制品牌更近的消费者来说，这些好处更高。当消费者购买定制产品时，他/她会产生等待成本。每家公司同时决定是提供标准产品，定制产品，还是两者兼而有之，然后进行价格竞争。我表明，定制增加了产品差异化，导致价格竞争不那么激烈。根据参数值的不同，在均衡状态下，要么两个企业都提供定制产品，要么一个企业提供定制产品，另一个企业提供标准产品和定制产品，要么一个企业提供定制产品和另一个标准产品。我对对定制感兴趣的消费者比例、等待成本和定制的固定成本进行了比较静态分析。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Review of Marketing Science Business, Management and Accounting-Marketing

CiteScore

1.10

自引率

0.00%

发文量

期刊介绍： The Review of Marketing Science (ROMS) is a peer-reviewed electronic-only journal whose mission is twofold: wide and rapid dissemination of the latest research in marketing, and one-stop review of important marketing research across the field, past and present. Unlike most marketing journals, ROMS is able to publish peer-reviewed articles immediately thanks to its electronic format. Electronic publication is designed to ensure speedy publication. It works in a very novel and simple way. An issue of ROMS opens and then closes after a year. All papers accepted during the year are part of the issue, and appear as soon as they are accepted. Combined with the rapid peer review process, this makes for quick dissemination.