Mass customization: luxury in lower price?


Recently I bumped onto a very interesting article relative to the mass customization, seen from the perspective of housing. More specifically Noguchi & Hernandes-Velasco (2005) referring to the housing needs in Mexico, they distinguish three categories of homebuilders in Mexico: production, semi-custom and custom homebuilders.

The production homebuilders are organized for high volume production and they produce the ready built homes. They provide a number of standard designs/models and the customers can compare the attributes of each model in order to choose. In this case the high volume work results in low price.

The semi-custom builders combine characteristics of ready built and custom built homes, working, as the previous, on predesigned plans. In this case there is the option based on the pre-existing model to extend it in order to cover the needs of the prospect buyer. But, due to this fact, the high volume work is lost, and as a result the price is higher.

The custom builders are the ones that create unique houses. Starting from a tabula rasa, they create a one-of-a-kind house, totally customized on the needs of the buyer. This process though, demands the contribution of a number of professionals (i.e. architects, civil engineers etc), which result in high prices.

The two authors though, propose a fourth category of homebuilders which lies on the “mass custom design” approach. Combining the mass production with the customization they refer to the mass custom home. The “mass custom design” of homes results from the three basic design elements of housing: the volume, the exterior and the interior.  In this case, although the components of the house are mass-produced, the home its self is customized according to the user’s needs and preferences. How it works? The volume of the house, the main design, is fixed, pre-existing, like in the first case I mentioned above. The difference though lays on the fact that the two other elements the interior and exterior are totally customized. By seeing the subcategories of the interior and exterior design we have the roof, the walls, the balconies, the main entrance etc in the exterior, while kitchen, bathrooms, toilets, bedrooms etc in the interior.  Adding the variety of sizes, colors and textures available for each component, we see that one can succeed many variations based on the same predesigned structure. By customizing all the elements of the interior and exterior, the mass custom home builders without producing a number of model homes, they can meet the expectations of the buyers by providing them numerous variations of houses, customized on their own needs and preferences. The great variety of the mass-produced elements leaves space for creativity and uniqueness. Furthermore, the two authors stress out that the “mass custom design” approach meets the low cost through the mass production of the housing elements, achieving economies of scope, while the same time it holds the advantage of the customized offer.

Noguchi & Hernandes-Velasco (2005)

Mass custom homebuilders exist, and I would propose to you to check the website bellow from a zero-energy house manufacturer in Japan, Misawa Homes Co., which follows this paradigm and has as a motto: “lifelong commitment to customers through housing.”

http://www.misawa.co.jp/en/info/

Reference:

Noguchi, M. and Hernandez-Velasco, C.R. (2005) A ‘mass custom design’ approach to upgrading conventional housing development in Mexico, Habitat International, 29: 325-336.

Regards,

Christos Makris

2 thoughts on “Mass customization: luxury in lower price?”

  1. Nice article Christos! I think it is in line with the article “Customizing Customization” of Joseph Lampel and Henry Mintzberg. The different view from standardization to customization actually is a continuation of the standardization mentality that has long pervaded: we replace one extreme with another. The article shows that these two extremes led management think to ignore strategies that combine these logics, while in fact the most striking trend has been not toward pure cusomization, but toward some middle ground that is called customized standardization: like in the example of the fourth category of homebuilders in Mexico. With using a standard basic design (volume) you still benefit from low cost, but you still let customers choose their interior and exterior design so you also benefit from a customized offer.

  2. Thank you Christos for this very interesting example.

    It is very important to see the customization process from a perspective of benefits versus costs. I think it is highly linked to the supply chain theories we will discuss tomorrow. As Larissa mentions, it is very closely related to Lampel & Mintzberg paper. As in every strategy in marketing, i think there is no black and white approach, but it is rather related to the beauty of gray!! And giving the choice of the level of customization to the customers…well, makes the approach even more customized!!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s