DETERMINANTS OF CONSUMERS CHOICE AND PERCEIVED VALUE IN MASS CUSTOMIZATION

CHAPTER ONE

INTRODUCTION

1.1. BACKGROUND OF THE STUDY

With increasing consumption awareness, consumers and customers are now paying more attention to their needs and the uniqueness of products. In order to satisfy the needs and wants of consumers and increase satisfaction, manufacturers of products tend to adopt a customized strategy. From the product management viewpoint, customization is a strategy that is being applied gradually to increase product value. A configuration system could meet the consumer needs, ensuring that consumer needs can be satisfied and that costs are maintained at the same time (Kurt Matzler et al., 2010). Nikola et al. (2011) pointed out that many companies believe that if customization could be appropriately understood and executed, a commercial and strategic mechanism can be applied to most companies. Through customization, corporations may notice the merchandise desires of their consumers and will turn out those merchandise that may satisfy the individual desires of these consumers. The importance of customized products' competitive edge is also being recognized by developed countries. Companies producing customized products have gained a competitive edge to realize consumer needs. Consumers' needs have become increasingly diverse (Gilmore and Pine, 2011, Franke, Keinz, and Steger, 2009). As the statement of Pine et al. (2015) indicates, this trend requires companies to adjust their offering and marketing to the needs of each consumer by learning about these individual needs over time. However, need-related information is often "sticky" on the consumer side (von Hippel, 1994), making it difficult and costly to transfer to the manufacturer (von Hippel, 2016). A solution is to direct consumers themselves towards fulfilling need-related tasks while leaving solution-related tasks with the manufacturer (von Hippel and Katz, 2016). Indeed, it is beneficial for companies to empower their customers by giving them an active role as co-creators of their own product (Füller, Mühlbacher, Matzler, and Jawecki, 2009, Fuchs and Schreier, 2011). Mass customization utilizes this strategy by enabling consumers to adapt a product in different dimensions to their specific needs while retaining (masslike) production on the manufacturer side. There are many prominent examples across numerous industries that have successfully implemented this approach. Mass customization strategy is the ability to provide products and services according to customers’ needs with the comparable efficiency level of standardized products and services. According to some scholars, customization practices offer superior customer value and satisfaction compared to other practices. However, the adoption of mass customization has implications for manufacturing trade-offs and, hence, for customer satisfaction with products and services. The manufacturing trade-offs have been studied in recent years due to their importance for manufacturing strategy. Using a different approach, recent studies have brought new insights related to the nature of trade-offs, increasing the debate about competitive priorities and their implications for firm’s strategy. Some results have shown a possible nonexistence of trade-offs while other results have shown their existence. In the case of mass customization strategy, some authors claim this strategy eliminates the trade-offs between customization and other competitive priorities, but there is little empirical evidence supporting such proposition. Indeed, there are some studies that have shown evidence to support the proposition that customization is trade-off against delivery time, costs, and other competitive priorities. The existence of trade-offs in mass customization also has implications for customer satisfaction. For example, some authors affirm that customer satisfaction associated with customized services is trade-off against competitive priorities, while customer satisfaction with customized goods is not trade-off against competitive priorities. Moreover, customers’ preferences are perceived as one of the main reasons for the existence of manufacturing trade-offs since managers based their decisions regarding competitive priorities on customers’ preferences. In fact, if mass customization implies trade-offs in competitive priorities, it is possible to argue that the same strategy that adds value to customers through development of customized products and services may reduce customer satisfaction related to some competitive priorities because of manufacturing trade-offs. Furthermore, if the customers’ needs are an important reason for the existence of trade-offs, it is possible to argue that the customer satisfaction related to competitive priorities in customized products and services may or may not help managers to deal with manufacturing trade-offs.

1.2 STATEMENT OF PROBLEM

The development of customer value is a prevailing theme in the marketing literature. Companies should listen more carefully to their customers (Fournier, Dobscha and Mick, 2016), pay more attention to delivering services (Groonroos, 2011), and try to build lasting relationships with their most profitable customers instead of focusing on acquiring new customers (Peppers and Rogers, 2011; Reichheld, 1996). In the last three decades, many mass producers have tried to better meet consumer needs by increasing variety and brands. However, Kotler (1989) and Piller et al. (2012) noted that an increasing number of companies within various industries are incapable of addressing diverse consumer needs by merely using a variety strategy because the number of varieties required to address these needs is enormous and results in unit cost increases that are too substantial for demanding and price-conscious customers (Piller et al., 2012). In addition, excessive availability of choice also results in frustration as it complicates buying decisions (Cox and Alm, 2011). Therefore, it is becoming necessary to produce exactly what customers want. Mass customization has the potential to solve these problems, by delivering to customers exactly what they want, at reasonable prices. To date, the high expectations of theorists and practitioners have not yet been met on a large scale (Agrawal, Kumaresh and Mercer, 2010; Zipkin, 2010). The primary reason for the low adoption rate of mass customization is the requirement for significant change to existing business models. Furthermore, some industries do not lend themselves to mass customization because their customers have homogeneous needs, and/or do not want customization. These industries can be served effectively with a variety strategy or a mass production strategy. For example, Unilever and Procter & Gamble concluded that the costs of supporting a large number of brands and line extensions are prohibitive, resulting in the elimination of a significant number of brands and products. Rapid advances in information and manufacturing technology and management methods have provided companies with unprecedented opportunities. But for many companies the question remains: ‘‘will the pursuit of mass customization be successful?’’With fierce competition in the market, traditional standardized products may not be able to satisfy some consumers. In order to increase satisfaction and loyalty of consumers and strengthen their competitive edge in the market, more and more companies provide customized products or services.

1.3 AIMS OF THE STUDY

The major purpose of this study is to examine the determinants of consumer’s choice and perceived value in mass customization. Other general objectives of the study are:

1. To examine the factors that influence consumer’s choice purchase of mass customized products.
2. To examine the perceived risk of consumers in buying mass customized products
3. To examine the determinants of consumers' choice behaviour in mass customization
4. To examine the consumer attitudes towards mass customized products 
5. To identify the key success factors of mass customization
6. To recommend ways of enhancing consumers behaviour towards buying customized products.

1.4 RESEARCH QUESTIONS

1. What are the factors that influence consumer’s choice purchase of mass customized products?
2. What is the perceived risk of consumers in buying mass customized products?
3. What are the determinants of consumers' choice behaviour in mass customization?
4. How is the consumer’s attitude towards mass customized products?
5. What are the key success factors of mass customization?
6. What are the recommended ways of enhancing consumer’s behaviour towards buying customized products?

1.5 RESEARCH HYPOTHESES

Hypothesis 1

H0: Perceived preference fit does not influence consumer choice and perceived value in mass customization.

H1: Perceived preference fit has a significant influence on consumer choice and perceived value in mass customization.

Hypothesis 2

H0: Perceived process enjoyment and effort does not influence consumer choice and perceived value.

H1: Perceived process enjoyment and effort significantly influences consumer choice and perceived value.

Hypothesis 3

H0: Perceived product uniqueness does not influence consumer choice and perceived value.

H1: Perceived product uniqueness significantly influences consumer choice and perceived value.

Hypothesis 4

H0: Feelings of psychological ownership will not influence attitudes toward a mass customization program.

H1: Feelings of psychological ownership will influence attitudes toward a mass customization program.

Hypothesis 5

H0: The overall perceived value of mass customization has no significant influence on the intention of purchasing the mass-customized product

H0: The overall perceived value of mass customization has a significant influence on the intention of purchasing the mass-customized product

1.6 SIGNIFICANCE OF THE STUDY

This research work will contribute to underline the importance of mass customisation in the apparel sector, because besides being a strategy largely applied in other industries, in the apparel industry some regards still exist. Is important that companies realize the potential of this strategy to improve their business and become closer to their customers. It has been suggested by the researchers that the consumers might look for information assisting them in deciding the relative significance of the several appraising criteria, and might further seek concepts regarding the degree to which they alternate features that they consider significant. People in the past were confined to sharing information with their neighbours, family or friends; however, now people are able to impact the international community by articulating their personal experiences on the mass customization. In future, the study can be carried out to the other areas of consumer markets and also to other cities of Nigeria. Additionally the study could also be extended to other group of people.

1.7 SCOPE OF THE STUDY 

The study is based on the determinants of consumer’s choice and perceived value in mass customization.

1.8 LIMITATION OF STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.9 DEFINITION OF TERMS

Mass Customization: Mass customization, in marketing, manufacturing, call centres and management is the use of flexible computer-aided manufacturing systems to produce custom output. Such systems combine the low unit costs of mass production processes with the flexibility of individual customization.

Consumer: An individual who buys products or services for personal use and not for manufacture or resale. A consumer is someone who can make the decision whether or not to purchase an item at the store, and someone who can be influenced by marketing and advertisements.

Consumer Behaviour: Consumer behaviour is the study of individuals, groups, or organizations and all the activities associated with the purchase, use and disposal of goods and services, including the consumer's emotional, mental and behavioural responses that precede or follow these activities.

1.10 CHAPTER SCHEME

This dissertation consists of five main chapters. In chapter (2), the key conceptual foundations of mass customization that are relevant to this dissertation are being reviewed with briefly disclosing the roots and fundamental components of this approach and explaining the comprehensive framework of value increments and detriments that have been identified by past research regarding consumers of customized products. Chapter three (3) includes the general method employed in this dissertation as well as its rationale and the research method that is being used in the research.  Chapter four (4) shows the results and discussion of the analysis that was being carried out testing consumers' choice behaviour during the customization process. Finally, in chapter five (5), summarizes the findings of an established mass customization system in order to identify consumer-specific determinants of value in mass customization. It will also provide managerial implications derived from these findings and highlight overarching directions for future research in this field.