Explain why mass customisation might be used by businesses.
CAMBRIDGE
A level and AS level
Year Examined
February/March 2018
Topic
Operations Management
👑Complete Model Essay
Mass Customisation
Mass customisation is a company’s ability to efficiently mass produce products that meet individual consumer wants and needs. This essay will explain why businesses might use this approach.
Customer Satisfaction and Reputation
Firstly, mass customisation can lead to high customer satisfaction. Customers are more likely to be satisfied if they are getting exactly what they want, from the functional features to the aesthetic design. For example, companies like Nike and Adidas allow customers to customise their trainers by choosing the colour, style, and even adding their own initials. This level of personalisation creates a unique product that meets the customer's specific needs and preferences. Consequently, this leads to improved company reputation and positive word-of-mouth marketing, which can attract new customers.
Reduced Costs and Increased Profits
Secondly, mass customisation can reduce costs associated with inventories of unsold goods and raw materials. Businesses can produce products based on actual customer orders rather than relying on forecasts and speculation. This just-in-time approach minimises waste and storage costs. Furthermore, as customer demand and satisfaction are likely to be high, higher profits can be expected. Customised products often come with a premium price tag as customers are willing to pay more for a product that is tailored to their exact requirements. For example, a personally designed piece of jewellery will fetch a higher price than a mass-produced one.
Added Value and Premium Pricing
This leads us to the point of added value. Mass customisation allows businesses to offer a high level of added value, differentiating themselves from competitors who offer standardised products. This perceived value justifies premium pricing. Consider a company like Moonpig, which allows customers to create personalised greeting cards. The ability to add personal photos and messages makes the card more meaningful and therefore worth a higher price compared to a generic card from a supermarket.
Customer Involvement and Brand Loyalty
Another reason why businesses might use mass customisation is the high level of involvement it offers to the consumer in the design and production process. This collaborative approach fosters a sense of ownership and connection with the brand. This is particularly appealing to the modern consumer who values individuality and uniqueness. For example, companies like Function of Beauty allow customers to create their own personalised shampoo and conditioner by completing a survey about their hair type and desired results.
This high level of involvement can lead to strong relationships with customers and increased brand loyalty. Customers who feel valued and heard are more likely to become repeat customers. This loyalty translates into repeat business and can significantly impact a company’s bottom line.
Employee Motivation and Fulfillment
Finally, mass customisation can have positive implications for employee motivation and fulfillment. In a traditional manufacturing setting, employees may perform repetitive tasks on a single production line. Mass customisation, however, often involves employees in a variety of tasks, requiring a broader skillset and offering greater variety in their daily work. This can lead to increased job satisfaction and a more engaged workforce.
Conclusion
In conclusion, mass customisation offers numerous benefits for businesses, including increased customer satisfaction, reduced costs, higher profits, enhanced brand loyalty, and a more motivated workforce. By leveraging technology and innovative production processes, businesses can cater to the growing consumer demand for personalised products and services, leading to a significant competitive advantage. The examples of companies like Nike, Adidas, Moonpig, and Function of Beauty demonstrate the successful implementation of mass customisation across different industries, highlighting its potential for businesses of all sizes.
Explain why mass customisation might be used by businesses.
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A-Level Business Studies Essay Guide: Mass Customisation
This guide will help you write a compelling essay exploring the reasons why businesses might choose to implement mass customisation. Remember to use relevant examples and structure your essay logically to impress your examiner.
What is Mass Customisation?
Start by defining mass customisation. This is a key concept that needs to be clearly understood by your reader.
Mass customisation is a production strategy where companies efficiently produce goods that meet individual consumer wants and needs. It combines elements of mass production with individualisation, allowing businesses to cater to a wider range of customer preferences while maintaining competitive costs.
Why Businesses Use Mass Customisation
Now, dive into the reasons why businesses adopt this strategy. Structure your essay by exploring each reason in detail, providing clear explanations and supporting examples.
1. Enhanced Customer Satisfaction and Reputation
Mass customisation empowers businesses to deliver products that exactly meet customer expectations. This leads to:
- High customer satisfaction: Customers are more likely to be happy with a product that meets their individual needs and preferences.
- Improved company reputation: High satisfaction translates into positive word-of-mouth and a stronger brand image.
- Increased sales: Satisfied customers are more likely to return for more and recommend the company to others.
Example: A clothing company offering custom-made shirts with individualised design elements will likely experience higher customer satisfaction and loyalty compared to one selling only standardised shirts.
2. Reduced Inventories and Costs
Mass customisation can streamline production by:
- Reducing unsold inventory: Businesses produce only what is ordered, minimizing the risk of having unsold goods.
- Lowering raw material costs: Less waste is generated because materials are used only for specific orders.
Example: A car manufacturer offering custom-built vehicles would avoid excess production and associated storage costs.
3. Increased Profitability
By catering to individual needs and reducing waste, mass customisation can lead to:
- Higher profit margins: Customer satisfaction and reduced costs contribute to increased profitability.
Example: A bespoke chocolate company offering personalised gift boxes may charge a premium price for its unique offerings, leading to higher profits.
4. Added Value and Premium Pricing
When companies offer customisation, they create a unique selling proposition that justifies a higher price:
- Enhanced product value: Customized products are perceived as more valuable and desirable due to their unique features.
- Premium pricing: Businesses can command higher prices for products that meet specific customer preferences.
Example: An online retailer offering personalised photo albums can charge a premium for its customisable and sentimental products.
5. Increased Customer Involvement
Mass customisation fosters a sense of ownership and engagement:
- Consumer participation in design: Customers can actively contribute to the design and development of products, leading to greater satisfaction and a sense of personalization.
Example: A shoe company that allows customers to design their own sneakers online provides a unique and engaging experience.
6. Stronger Customer Relationships and Loyalty
Mass customisation can build strong bonds between businesses and their customers:
- Personalized experiences: Creating products tailored to individual tastes fosters a sense of connection and loyalty.
- Repeat business: Satisfied customers are more likely to return for future purchases, increasing customer lifetime value.
Example: A florist offering custom bouquets for special occasions can build long-term relationships with customers who appreciate their personalized touch.
7. Workforce Empowerment and Fulfillment
Mass customisation can empower employees by:
- Varied work: Employees involved in mass customisation often have more diverse roles, promoting greater job satisfaction.
Example: Employees in a furniture company offering bespoke designs may feel more fulfilled by their creative input and contributing to unique projects.
Conclusion
Conclude by summarizing the key benefits of mass customisation for businesses. Emphasize how it can lead to improved customer satisfaction, enhanced profitability, stronger relationships, and increased employee fulfillment. Remember to avoid stating your opinion, as this is an academic essay.
Tips for Writing an Effective Essay
* **Address the question directly:** Make sure your essay clearly answers the question posed in the essay prompt. * **Use clear and concise language:** Avoid jargon and complex sentence structures. * **Provide relevant examples:** Support your arguments with specific and clear examples from real businesses. * **Structure your essay logically:** Use headings and subheadings to organize your ideas and ensure a clear flow. * **Proofread carefully:** Check for grammatical errors and typos before submitting your essay.By following these tips and exploring the benefits of mass customisation in depth, you can write a strong and impactful A-level Business Studies essay.
Extracts from Mark Schemes
Why Mass Customization Might Be Used by Businesses
Mass customization is a company’s ability to efficiently mass produce products that meet individual consumer wants and needs.
Examples may include functional and aesthetic features of computers, cars, clothing, M&Ms, trainers, cards, chocolates, a flower bouquet for a special occasion etc.
Benefits of Mass Customization
- High customer satisfaction as they are getting exactly what they want which leads to improved company reputation and sales.
- Reduced costs of inventories of unsold goods and raw materials.
- Higher profit expected if customer demand and satisfaction is high.
- High level of added value and therefore premium price can be charged.
- High level of involvement of consumer in design / production process.
- Customized products more attractive to consumers than uniform products.
- Companies can develop strong relationships with their customers and this loyalty leads to return business time and again.
- Workforce is more fulfilled as they take part in numerous tasks as opposed to one production line responsibility.