Itinerary to Mass Customisation

By Alan Cooper

Mass Customisation, the production of unique products at a mass produced cost, sounds like a contradiction, but by using the new interactive mediums it's now possible to meet the individual needs of customers in a mass market and make superior profits. Many though are still sceptical. They continue with the familiar mass production model of few product choices, long production runs, uniform distribution, and apparent low cost.

It is much better to see Mass Customisation as a possible end point with a number of stages in the journey, and like all itineraries, it should be possible to join the journey from where ever you happen to be to-day. This incremental, low risk approach allows a company to sense, lead and retain their existing customer base. At the same time, they can also acquire more advance customers and gain valuable knowledge and ideas from their needs.

Mythical Cups

Rather that discuss the abstract let's use examples based around the marketing and selling of the humble cup (or mug). Each of the following descriptions represents a different mythical cup manufacturer or retailer, each of whom is at a different stage of interactive marketing. The companies stereotype the four levels in the Customer Relationship cycle from Mass Information through to Mass Customisation but of course companies can be positioned anywhere within and between these discrete stages.

Using these examples, first position your own company whether it is trading on or off the net. Then decide the best positioning for your interactive marketing - mostly likely at the same or next step - taking into account the non technology issues. These include current brand image, distribution strategy, organisational culture and management style, supply chain integration, technology infrastructure and delivery capability (and more!).

Step 1 Mass Information

Your Choice Cups plc is a well established and traditional company making volume cups for the mass market. You can immediately see that from its web page, it just oozes formality. Your Choice Cups wasn't the first cup supplier to be on the internet. A late comer, it only jumped when the chairman Mr. Smith (yes, that's him there on the home page), was playing his weekly game of golf and his partner mentioned Cups Direct. On return to his desk, Mr. Smith picked the junk mail from his waste bin and telephone the Acme Advertising. They told him they could have a site up and running within a week and the deal was made there and then. Taking their brief, and often explicit instructions from Mr. Smith, Acme Advertising took pains not to upset the status quo.

Your Choice Cups has a well-established distribution chain, selling through the large departmental stores, High Street chains and specialist china shops according to the type of cup. Mark ups and final prices vary accordingly and this precludes Your Choice Cups giving any pricing information. It has a reputation for quality and dependability and their web site aims to put this message across. The promise of dependability is easy to achieve due to its substantial stock levels and own delivery fleet but these of course eat into margins that are already wafer thin.

Its web site is a basic mass information site, providing illustrations and facts about its wide range of cups. Some consumers do visit the site with many finding the store locator useful, although for simplicity and to keep all retailers happy, no attempt is made to select a particular store. Consumers could therefore risk a wasted journey because the required item was not in stock. The smaller retailers who have infrequent visits from the sales reps especially find the web site of value. Wishing to place an order they follow the existing order process of posting or telephoning the sales department. Unbeknown to Your Choice Cups this looses many sales due to the poor call response.

Web site maintenance is low for Your Choice Cups as product lines and distributors are slow to change. Despite this, the site is often out-of-date. There are no internal processes to trigger these changes and no one person or department responsible for the site. Built very much on the spur of the moment it's a case of been there, done that.

Step 2 Mass Presentation

Cups Direct is a brash new kid "on the block". Aggressive, with bright people, and up-to-date ideas about exploiting the new delivery channels, they have used E-purchase, one of the new E-commerce packages. It was quickly put together with the help of some creative flair from Inspire, a new multi-media agency. The design is bold, colourful and functional - just like its cups.

The products are very standard, with up to 4 designs and 10 colours or patterns at any one time. In fact, Cups Direct doesn't manufacture but is regularly changing its source of supply as the current fashion changes. This was the biggest challenge. To avoid holding unwanted stock when tastes change, Cups Direct uses just-in-time delivery based on anticipating trends using a sophisticated order analysis system. Suppliers are often small companies so EDI was out of the question. Instead Cups Direct use the internet to send orders using XML e-mails. Suppliers found it easy to write small routines to identify these messages and pass them to their order system, or if they weren't so sophisticated, simply to read the e-mails.

Cups Direct's selling point is low cost and fast delivery. E-purchase can handle credit cards and it has a link to a 3rd party merchant who verifies the card on-line and handles the interface to the card company. Orders are e-mailed to UK Express who collect at frequent intervals. Then using an internet link to the company, customers can track their orders.

Finally, Cups Direct has a clear process in place for implementing changes such as new designs, prices and suppliers. The E-purchase package handles these in a straight forward way, allowing Cups Direct to concentrate on the organisational aspects. As a fast moving company in a fast moving E-world it's important to avoid gaps leading to disappointed customers who are unlikely to return again.

Step 3 Mass Personalisation

Cups Unlimited are an established medium sized player seeking to develop a niche. Positioning themselves away from the cut throat mass market dominated by Your Choice Cups Plc whilst providing something extra to the no frills offering from Cups Direct. Gifts for special occasions such as birthdays, promotions, holidays and anniversaries are their market. Of course, by being on-line, Cups Unlimited offers all the speed, convenience and value for money of Cups Direct but in addition they allow their customers to personalise the cups.

They provide a comprehensive picture library and range of fonts. Customers can search using keywords, a hierarchical subject index, an index by special occasion or by entering free format text such as "suggest a design for a teenager who loves riding". Using Ex-Text, an expert system, it analyses the request and asking further questions in plain English. Alternatively customers can upload their own image.

Many of the pictures are humorous and they are looking to expand into complementary products such as personalised greeting cards. A recent innovation is a partnership with a company installing information kiosks in holiday resorts and popular venues. Visitors can select an image from a series of local views or indeed plug in their digital camera and provide one of their own shots. Gifts for friends are delivered immediately together with a personal message typed into the kiosk.

Whilst the cups are a fairly basic product, Cups Unlimited have acquired the latest German machinery to add the personalised design. Computer controlled, it has an electronic link from the Internet server providing speed of order execution together with total accuracy. SI-Aries, a well-known large systems integrator, undertook the implementation.

To encourage repeat orders, customers can set up a reminder facility so they don't forget important birthdays and other occasions. Cups Unlimited selling point is the personal touch for every occasion.

Step 4 Mass Customisation

MyCup.com is aiming to capture a number of niche markets. These include the gift market, the market for individualists, the special needs market, such as disabled people or those who have large hands, those who simply want to ring the changes and have say a different cup for each day, and those that just want to be wacky! They know these people will pay a premium for something that is unique. They also hope to attract the creative types who will enjoy the experience of designing and using their own creation. Again, MyCup.com offers all the convenience of the other players.

MyCup.com has purchased separate CAD/CAM systems from the US. It then commissioned Silicon-Components, a US entrepreneurial Object Oriented software company, to build the middleware linking the two systems, as well as building an easy to use Internet front end. By designing the system in California and developing it in India, using e-mail, data and video links to keep all parties in daily contact, developing the system was very fast. As the interface was a key component, they included a UK focus group recruited via a discussion group. They too were linked into the video links using a video card given as a thank you gift for participating.

Customers can define over 6 million combinations with the standard options - but unlimited by designing or providing their own patterns, colours, pictures, fonts, etc..

All MyCup.com customers' can store their designs, annotating them with notes such as who the cup was for and what the occasion was. Using a business intelligence system, MyCup.com is able to analyse these past orders and offer suitable help and suggestions to other customers who run out of ideas or are in a hurry. In fact it also surreptitiously adjusts the menus and options to reflect the individual tastes of its customers, for example, the colour palette and the options desired by power users. However, it deliberately aims not to be too perfect and will for example introduce random and unusual colours so as to spark new ideas.

If customers wish, they can enter their cup into the monthly competition and put their design into an ideas library along with a personal profile of their likes and dislikes. Using data mining, the system automatically creates unique new designs for customers with similar tastes, sending these suggestions by e-mail. MyCup.com's branding emphasises the uniqueness of each of their customers.

By making all the cups to order, there are no stocks or warehouses, just simply the basic raw materials that are delivered on a just-in-time basis. This does wonders for cash flow and helps to pay back the expensive up-front capital investment.

Having established themselves, MyCup.com is now addressing other markets. Using the designs from its mass customised customers, who have given their permission, they will offer unusual cups for those that have limited desire or time to design their own. The customer who originated the design will then get commission. This service will be under a different brand and at a separate web site.

Onward to Experiences

Your Choice Cups, with its established suppliers and distributors, together with its traditional approach is the most vulnerable to the new direct companies but will they see the writing on the wall? Cups Direct is making strong headway but with the new E-commerce packages on the market it is so open to imitations. It needs a large advertising spend with the major portals if it is to retain its lead.

Cups Unlimited realises the competitive nature of the internet and is seeking to use its technology and expertise in other channels, like the kiosk venture. Finally, MyCup.com's offering gains competitive advantage in its unique and customisable delivery system. Like Cups Unlimited it too realises it must look to spin off complementary business operations. Beyond Mass Customisation comes Experiences.

MyCup.com is teaming up with organisations offering unusual and unique experiences capturing them on camera and then recording them for posterity on a range of cups. One example is participants in white water rafting in the Rockies. They can take home a souvenir gold rimmed china cup with their own picture on it, taken as they ride the rapids. By giving participants a personal web URL they can view photographs and order further cups or re-prints for themselves, friends or relatives, or download the images for at-home printing. But this new venture is another story.

Footnotes: the products and companies mentioned are imaginary and any resemblance to actual products and companies is a co-incidence and unintentional.

Managing Change's Strategic Interactive Marketing (SIM) Framework describes each of the stages with examples of real life companies. See: www.managingchange.com/simfw/overview.htm

Pool, Spring 2000

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© Alan Cooper / Through the Loop Consulting Ltd 1998-2000