Due to the shift from seller to buyer markets in recent times, where instead of productivity and cost efficiency now other goals like quality, time and flexibility become more important, firms have to react. Furthermore, availability of modern information and communication technologies, notably the internet and the resulting market transparency enhances the bargaining power of customers. Along with globalization, shorter product life cycles, a wide variety of variants and increasing market saturation firms are confronted with highly competitive global markets. Therefore, it is all the more crucial that companies distinguish themselves in the market to succeed. An extremely important point in this context is the ability of firms to innovate. Only with innovative and marketable products a company can survive in a market in the long-term. To ensure innovativeness that is strongly linked with competitive advantage, sustainability and long term profitability firms are increasingly in search of new sources.
Customer co-creation, customer integration, user innovation, open innovation and mass customization are just some terms behind which a new paradigm in technology and innovation management is hidden. The accurate umbrella-term for all these concepts is “interactive value creation”. Firms, most notably in the last four decades , recognized that external actors, especially customers and users, are a crucial source for innovative knowledge. Accordingly interactive value creation means the active integration of customers and users in the value creation process within a firm, so far mainly performed internally. In this regard, interactive value creation is primarily divided in two basic types: open innovation and mass customization (product individualization). Whereas, put simply, open innovation targets the innovation of new products by opening the innovation process to external actors, mass customization implies the development of individualized products. Within this thesis the focus lies particularly on mass customization.
Table of Contents
1. Introduction
2. Paper review: Franke et al. (2009)
2.1. Aim, motivation and positioning
2.2. Interactive Value Creation – Open Innovation and Mass Customization
2.3. Experimental model
2.3.1. Hypotheses
2.3.2. Procedure and sample
2.3.3. Findings
2.3.4. Evaluation of the methodology
3. Comparison
4. Conclusion and outlook
Objectives & Research Topics
The primary objective of this assignment is to conduct a systematic review of the research paper "Testing the Value of Customization: When Do Customers Really Prefer Products Tailored to Their Preferences?" by Franke et al. (2009). The work aims to position the study within the broader academic discourse on interactive value creation, specifically focusing on the efficacy of mass customization compared to alternative market strategies such as segmentation and mass marketing, while evaluating the methodology and findings of the authors.
- Interactive value creation (Open Innovation and Mass Customization)
- The impact of "sticky information" on product development
- Empirical assessment of customization benefit (Willingness to Pay)
- Moderating factors: Preference insight, express ability, and product involvement
- Methodological rigor in consumer research and experimental design
Excerpt from the Book
2.1. Aim, motivation and positioning
While in the past, research has predominantly shown that strategy of customization and so individualized products offer new opportunities and great merits for companies, some recent failures left room for objections. In addition, although some empirical studies emphasize the benefit increase of customized products, there are also some investigations, which strengthen the opposite. However, the latter findings may not appear self-evident at first sight. Why should not products tailored to individual needs and preferences of customers allow to draw much more benefits out of that product?
One possible strong argument, as known in appropriate literature by the term “sticky information”, indicates one of the reasons for the complex handling of customization strategy, which is, certainly in combination with some other factors, responsible for known recent failures in industry. The term of sticky information, originated by von Hippel (1994), relates to the problem-solving process of an innovation, where both need information, located at customers, and solution information, to be found at manufacturers, are required. The former includes among others information about wishes, preferences and buying motives, whereas the latter relates to technological problem-solving capabilities. According to von Hippel information is sticky, if it is “costly to acquire, transfer and use.” There are some reasons for this. First, information can be tacit, this means, hard to put into words. Then, the organization that needs information can lack the ability and the skills to get it or else the customer lacks the ability to express his/her information (e.g. preferences) correctly. As a result, the individual product based on the expressed preferences does not match to the real preferences of the customer and includes an error term. The last mentioned point also delivers an explanation that in some cases products adapted to average preferences may provide a higher benefit than customized products.
Summary of Chapters
1. Introduction: Discusses the shift toward buyer-centric markets and the necessity for companies to adopt interactive value creation strategies to remain competitive.
2. Paper review: Franke et al. (2009): Analyzes the core motivations, conceptual framework, and the empirical results of the reviewed study regarding customized product benefits.
3. Comparison: Introduces complementary literature on mass customization to place the reviewed findings in a comparative academic context.
4. Conclusion and outlook: Synthesizes the main findings and provides a reflection on the limitations and future research potential regarding service integration in mass customization.
Keywords
Mass Customization, Open Innovation, Interactive Value Creation, Sticky Information, Willingness to Pay, Preference Insight, Product Involvement, Consumer Preferences, Market Segmentation, Product Development, User Innovation, Experimental Design, Customer Integration, Individualized Products, Innovation Management.
Frequently Asked Questions
What is the core focus of this assignment?
This work critically reviews the research paper by Franke et al. (2009) to understand the conditions under which mass customization provides tangible benefits to consumers compared to mass marketing.
What are the central themes discussed?
The assignment covers the transition to customer-centric business models, the challenges of "sticky information," and the empirical impact of customization on consumer willingness to pay.
What is the primary research question?
The work aims to systematically investigate whether customized products genuinely offer an increased benefit to customers and which variables moderate this benefit gain.
Which methodology is employed in the original study?
The authors utilized two independent empirical studies, incorporating various product categories and both between-group and within-group experimental designs to ensure robustness.
What does the main body address?
It provides an in-depth review of Franke et al.'s hypotheses, evaluates their methodology, and compares their findings with other significant literature in the field.
Which keywords best describe the work?
Key terms include Mass Customization, Open Innovation, Sticky Information, and Consumer Preference.
Why is "sticky information" relevant to customization?
Sticky information represents the challenge of transferring tacit customer needs to manufacturers; if this transfer is imperfect, the resulting customized product may fail to meet true preferences.
Does the author agree with the paper's findings?
The author considers the paper to be theoretically and empirically well-founded, though points out limitations regarding how "ability to express preferences" was measured and the unrealistic nature of the simulated newspaper experiment.
- Arbeit zitieren
- B.Sc. Yasemin Sari (Autor:in), 2011, Interactive Value Creation - Mass Customization, München, GRIN Verlag, https://www.hausarbeiten.de/document/170870
