The value increment of mass‐customized products: an empirical assessment

Abstract

The primary argument in favour of mass customization is the delivery of superior customer value. Using willingness‐to‐pay (WTP) measurements, Franke and Piller (2004), Journal of Product Innovation Management, 21, 401–415 have recently shown that customers designing their own watches with design toolkits are willing to pay premiums of more than 100% (ΔWTP). In the course of three studies, we found that this type of value increment is not a singular occurrence but might rather be a general phenomenon, as we again found average ΔWTPs of more than 100% among customers designing their own cell phone covers, T‐shirts and scarves. Building on this, we discuss the sources of benefits that are likely to explain this tremendous value increment. We argue that compared to conventional standard products, a mass‐customized product might render the following utilitarian and hedonic benefits: (1) First, the output might be beneficial as self‐designed products offer a much closer fit between individual needs and product characteristics. In addition to this mere functional benefit, extra value might also stem from (2) the perceived uniqueness of the self‐designed product. As the customer takes on the role of an active co‐designer, there may also be two general ‘do‐it‐yourself effects’: (3) First, the process of designing per se is likely to allow the customer to meet hedonic or experiential needs (process benefit). (4) Customers may also be likely to value the output of self‐design more highly if they take pride in having created something on their own (instead of traditionally buying something created by somebody else). This is referred to as the ‘pride of authorship’ effect. Copyright © 2006 John Wiley & Sons, Ltd.