The Era of Personalization, Customization, and Co-Production

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The Era of Personalization, Customization, and Co-Production

There have been three great stages in the Industrial Age. During the mass production stage, manufacturers made a few standardized products to which every customer had to adapt. This was the era of “one product for every customers.” It was exemplified by Henry Ford’s famous saying that customers could have any color Model T they wanted, “as long as it was black.”

Eventually, customers demanded more variety. To satisfy them, producers entered the second stage: product proliferation. Companies fragmented markets by offering the same sweater in different colors, or the same cereal in different boxes, with or without raisins, sugar, or some other ingredient. This was the era of “myriad products to satisfy myriad customer niches.”

But today, even that level of choice is not enough. And companies are not only failing to satisfy many customers, they are incurring enormous costs when they try to anticipate every customer’s needs in advance. Fortunately, the convergence of technology, demography, and attitudes is enabling smart marketers to enter the personalization, customization, and co-production stage.

For the most part, they offer mass-produced products that can be personalized to meet each customer’s individual tastes and needs. As a result, consumers can now exercise their freedom to create their own cereal, their own computer, their own clothes, and even their own candy. This is the bold new era of “a different product for each customer.”

The M&M serves to illustrate each of these three stages. In the 1940s, the Mars company used mass production principles to manufacture identical pieces of brown candy for all of its customers.

Over the next 40 years, Mars used the product proliferation model to create new variations on the core product. That led the company to sell 10 varieties of M&M’s, in scores of packaging alternatives.

Then, in 2005, Mars entered the era of personalization: At, customers can select which colors they want, and then specify a message to be printed on the candy. This has enabled Mars to turn a deeply-discounted grocery store item into a high-margin specialty good.1

However, the new personalized M&Ms is just one simplistic example of a familiar product that has found a way to thrive in the marketplace by providing mass customization.

To appreciate what’s happening here, it’s important to understand that there are actually five different types of personalization and customization that marketers are already using successfully:

The first type is the standard product that is personalized for the customer...

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