Integrated Product and Channel Decision in Mass Customization

Abstract

This paper explores the effectiveness of mass customization strategies in a manufacturing firm. The manufacturing firm produces standard products in a flexible factory where mass customization is technologically feasible. We integrate product strategy and channel design to explore whether the firm should adopt mass customization and how the distribution channel should be configured for custom products. We find that the mixed mass customization strategy dominates the pure standard product strategy in the centralized system. For the decentralized system, we identify the parameters that would impact superiority of each product strategy. We further discuss two channel structures for mass customization: single-channel strategy and dual-channel strategy, and find that the dual-channel strategy is always superior to the single-channel strategy when mixed mass customization is adopted.

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