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A new marketing approach to mass

customisationFRANK T. PILLER and MELANIE MULLER

Abstract. Companies today have to adopt strategies thatembrace both a closer reaction to the customers needs andefficiency. Mass customisation meets this challenge by offeringindividually customised goods and services with mass produc-tion efficiency. According to a number of recent surveys, thereis evidence for the increasing importance of this strategy in

various industries. But what do the customers think? Thispaper addresses mass customisation from the customerperspective. If the market demand for customisation is not

large enough, then all investments in a mass customisationsystem would likely be senseless. We will use the example of thefootwear industry to provide insight into the consumersdemand for customisation in regard to fit, style and function-ality. Also, we will comment on the willingness to pay (WTP) forcustomised goods. The analysis is based on data from theEUROShoE market study and a meta-analysis of otherempirical studies in the field. Our analysis shows that betterfit is regarded as the most important benefit by consumers ofcustomisation, followed, by far, by style and functionality.

1. Introduction: benefits and drawbacks of masscustomisation

It is the customer who determines what a business is.

In the very sense of Druckers (1954: 7) analysis, theindividual customer has come more deeply into thefirms focus than ever. Firms are faced by an unin-terrupted trend towards individualization in all areas oflife. Explanations may be found in the growing numberof single households, an orientation towards designand, most importantly, a new awareness of quality andfunctionality which demands durable and reliableproducts corresponding exactly to the specific needs

of the purchaser (Zuboff and Maxmin 2003, Prahaladand Ramaswamy 2004). In particular, consumers with

great purchasing power are increasingly attempting toexpress their personality by means of an individualproduct choice. Thus, manufacturers are forced tocreate product programmes with an increasing wealthof variants, right down to the production of units of one(Cox and Alm 1999). As a final consequence, manycompanies have to process their customers individually.

Precisely this is the objective of mass customisation. Inthe mass customisation concept, goods and services areproduced to meet individual customers needs withnear mass production efficiency (Tseng and Jiao 2001;see also Pine 1993, Durayet al. 2000, Duray 2002, Piller2003, Rangaswamy and Pal 2003, Reichwald et al. 2003,Tseng and Piller 2003). Mass customisation means theproduction of goods and services for a (relatively) largemarket, which meet exactly the needs of each individualcustomer with regard to certain product characteristics(differentiation option), at costs roughly correspondingto those of standard mass-produced goods (costoption). The information collected during the process

of individualization serves to build up a lastingindividual relationship with each customer (relation-ship option).

The differentiation option refers to a competitiveadvantage by offering customisation. In economictheory, the intent of offering customised goods andservices is to attain increased revenue by the ability tocharge premium prices derived from the added value ofa solution meeting the specific needs of a customer(Chamberlin 1962). However, the present competitivesituation in many industries prevents companies fromachieving additional profits from customisation. The

costbenefit relation alters because buyers demandrelatively high standards of quality, service, variety orfunctionality even when the sales price is favourable or,vice versa, suppliers have to meet additional require-ments in pricing when a product is highly differentiated(Piller 2003).

Thus, the cost option of mass customisation de-scribes principles to counterbalance the additional costs

Authors:Frank T. Piller and Melanie Muller, TUM Business School, Research

Group Customer Driven Value Creation, Technische Universitat Munchen

(TUM), Leopoldstrae 139, 80804 Munich, Germany.

E-mail: piller/[email protected].

INT. J. COMPUTER INTEGRATED MANUFACTURING, OCTOBER NOVEMBER2004, VOL. 17, NO. 7, 583593

International Journal of Computer Integrated ManufacturingISSN 0951-192X print/ISSN 1362-3052 online # 2004 Taylor & Francis Ltd

http://www.tandf.co.uk/journalsDOI: 10.1080/0951192042000273140

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that are traditionally connected with high variety ofcustomised production, like set-up costs, costs of higherqualified labour and specialized equipment, as well ascomplexity costs on all levels of planning and execution.These principles are rooted in three areas: (1) processand product design for mass customisation follow

special design rules in relation to communality andmodularity (Jiao and Tseng 1996, Du et al. 2003). Theidea is to produce customised (flexible) products withinstable processes and structures. Mass customisation isdefined by a fixed solution space. (2) Modern informa-tion and manufacturing technologies, such as productconfigurators or dedicated planning systems, enablefirms to cope with information and planning complex-ity, set-up and switching costs and transaction costsrelated to mass customisation. In this regard, masscustomisation can be seen as an application of computerintegrated manufacturing (Karlsson 2002, Anderson

2003, Bullinger et al. 2003, MacCarthy et al. 2003). (3)Mass customisation opens the way to new cost savingpotentials, called economies of mass customisation (seePiller et al. 2004, for a detailed discussion). Theseeconomies are the result of the integration of customerinformation into value creation, and the on-demandmanufacturing approach of mass customisation. Whilemost high variety strategies in consumer markets assumethat goods are produced in advance for defined marketniches and placed in inventory for some anonymouscustomers, a mass customised product is manufacturedon demand for an identified customer after the orderhas been received (Lee 1998). Thus, the company can

reduce its distribution inventories and fashion risk, gainflexibility, or get access to sticky information, enablingbetter planning and forecasting.

The relationship option of mass customisationdescribes the possibilities to increase customer loyalty.Once the customer has successfully purchased anindividual item, the knowledge acquired by the supplierduring the product configuration represents a con-siderable barrier against switching the supplier (Pep-pers and Rogers 1997). Even if a competitor possessesthe same mass customisation skills and even if he offersa lower price, a switching customer would have to go

again through the procedure of supplying informationfor product customisation. Also, he is once again facedwith uncertainties in regard to the quality of theproduct and the producers behaviour. Thus, masscustomisation may increase the stickiness of a consumerto a supplier.

Motivated by these promising potentials to achiev-ing competitive advantage, numerous companies havestarted mass customisation within the last decade. Manywell-known mass producers like adidas, Lego, KraftFoods, Nike or Procter&Gamble have introduced mass

customisation offerings. A recent survey by Fedex Corp.in the apparel industry among representatives from across-section of the industry found that more than 90per cent of the respondents agree that mass customisa-tion will play a more important role in the next fiveyears. But at the same time, reports on failures and

drawbacks of mass customisation come up. In October2003, mass customisation pioneer Levi Strauss wasforced to close its Original Spin mass customisationprogramme (Piller 2004). There is a growing debate onthe drawbacks and limits of mass customisation, andanalyses continue on the possible reasons behind thesefailures (Huffman and Kahn 1998, Agrawal et al. 2001,Zipkin 2001, Piller and Ihl 2002, Piller et al. 2004).Problems previously addressed include: investmentcosts, production planning and control, productarchitectures or the qualification of workers.

This paper addresses the challenges of mass

customisation from yet another perspective: the viewof the market and that of the customer. This has simplyone reason: if the market demand for customisation isnot large enough, and if consumers are not willing topay for the extra benefits of customisation by meetingtheir individual desires and wishes, then all investmentsin research and implementation of mass customisationwill be sunk costs. In this regard, three researchquestions seem of particular importance:

. Do consumers want customised products andservices anyway?

. What dimension and what extent of customisation

do consumers want in which market segments?. Are consumers willing to pay a premium for

customisation?

The objective of this paper is to provide insights intothese questions; tackling the basic assumption thatinvesting into customised manufacturing is beneficial,per se, from a market point of view. After presentingthe empirical background of our research, we will try toanswer these questions. Our paper ends with adiscussion of the limitations of consumer research inthis field. In regard to the focus of this special issue of

the International Journal of Computer Integrated Manufac-turing, our main field of argumentation will be thefootwear sector. However, we think that many of ourfindings can be transferred to other consumer goodproducts as well.

2. Empirical background

The following argumentation builds on three mainsources: two of own surveys on consumer demand for

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mass customisation, and a meta-research of previousstudies in the field.

First, we will use primary data gathered within theEuroShoE project (www.euro-shoe.net). EuroShoE isfunded by the European Commission to introduce masscustomisation in the European footwear industry by

building an extended enterprise of footwear manufac-turers, suppliers and retailers (Boer and Dulio 2003).Within this project, an exploratory market study shouldestimate the market potential for mass customisedfootwear in different European markets. Footwear isrelated to everyday or formal (business) shoes (butno sports, special purpose or children shoes). Based onexpert interviews and focus group discussions, aconsumer questionnaire among 420 customers wasrun in 2001 in four European target countries(Germany and the UK representing Northern Europe;Spain and Italy representing Southern Europe). Given

this small sample size (due to funding constraints), theresults from this study are not representative but ratherexploratory. However, the tendencies of the resultswere confirmed by various expert interviews and theresults of other studies in the field. It is important tonote that the respondents were not drawn from the

general public, i.e. representing the full population ofone country, but that the samples were based on a pre-selection of target groups that seem to be most likely torespond to the idea of customisation of footwear. Thesetarget groups were defined on the basis of nationalconsumer typographies of the four target countries (see

EuroShoE Consortium (2002) for a detailed descriptionof this methodology and its limitations).

Second, we will present data from another study inthe footwear Industry. Subjects of research werecustomers of selve AG, a Munich, Germany, basedmanufacturer and retailer of customised ladies shoes(www.selve.net). We conducted two surveys, one withpotential buyers exploring the offerings at the point ofsale (n= 213), and a second on existing customers ofthe company (n= 155). Data for the first survey wascollected in interviews in summer 2003, for the secondsurvey with a mail questionnaire in autumn 2003

(EwoMacs 2003).Third, we analysed a number of earlier studies ondemand and willingness-to-pay (WTP) of consumers forcustomised goods. Table 1 provides a summary of thesesources. Studies were identified by literature andinternet research (see also Franke and Piller 2003,

Table 1. Empirical research on customer demand for mass customization

Author (Research) question Research design, subjects of research

Dellaert andStremersch (2003)

What influences consumers choice whether or notto participate in different mass customisation

processes?

Survey and experiments (online consumer panel ofn= 431).

EuroShoEConsortium (2002)

What is the market for customisable shoes inEurope (considering four target countries inEurope: Germany, UK, Spain and Italy)?

Survey among consumers (n= 420) in Italy,Germany, Spain and the UK expert interviews(n= 40), focus groups with consumers (n= 16

with about ten participants per group).EwoMacs (2003) What are the demands on a mass customisation

offering from a consumers point of view?Survey among female mass customisation

customers (n= 155) and female consumerswithout mass customisation experience (n= 213).

Franke andPiller (2004)

How differs willingness to pay (WTP) between user-designed products and standard products? Doesmass confusion affect WTP?

Survey and experiments among customers (n=165,n=155,n= 220).

Franke andvon Hippel (2003)

What affects the satisfaction experience of userswho modify their own product?

Survey among users of a software application(n= 138).

Kamali andLoker (2002)

What influences satisfaction and WTP of consumersusing online mass customization toolkits?

Survey and experiments among consumers (n=72).

Kieserling (1999) What is the market for customisable women shoesin Germany?

Survey among consumers (n= 800).

Huffman andKahn (1998)

Does complexity inherent with a wide number ofoptions lead to customers dissatisfaction (massconfusion)?

Survey and experiments among consumers (n= 79andn=65).

Outsize (1998) What needs do customers have when buying clothesand shoes?

Survey among customers (n=80).

Piller, Honigschmidand Muller (2002)

What is the WTP for customised products (clothes,shoes, wristwatches, cell-phone covers, jewellery)?

Online survey among consumers (n= 2400, subsample withn= 600 younger participants between20 and 29).

Zitex (1999) What is the demand for and WTP for customisableclothes for men and women in Germany?

Survey among consumers (n= 1173).

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Piller et al. 2004). Compared to other over researchedareas of marketing, it was astonishing that there is only asmall number of empirical studies on the demand forcustomised products and services. Here, further re-search is needed.

3. Do consumers want customised products andservices anyway?

It is a commonplace to state that customer prefer-ences in many markets are heterogeneous and changequickly (see for example Cox and Alm 1999, Prahaladand Ramaswamy 2004, Zuboff and Maxmin 2004). todate, there are only few studies that quantify hetero-geneity of user preferences. In an empirical study ofsoftware, Franke and von Hippel (2003) show that usersin fact have very unique needs, leaving many displeased

with standard goods. Users claimed that they werewilling to pay a considerable premium for improvementswhich satisfy their individual needs. In a meta-analysis ofpublished cluster analyses, Franke and Reisinger (2003)found evidence that this dissatisfaction is not anexception. Current practice in market segmentationgenerally leads to high levels of total variance, left over asin-segment variation (over 50 per cent on average). Thereason for this dissatisfaction can be seen in the missingcapability of mass or variant manufacturing to respondto individual needs regarding the desired ideal productof individual customers. Standardized products are

produced on-stock, meeting only the mean preferencesof an average customer in a market segment. Thisimplies that a major group of customers stays somewhatdissatisfied with standard offerings, even when it comesto what seem to be mature markets.

This general finding is confirmed by the Outsize

(1998) study, analysing consumer needs when buyingclothes and shoes. The studys objective was to learnmore about the difficulties that customers experiencewhen buying outsize apparel. According to this study, fitis the most important issue, followed by quality anddesign. Deficits in matching fit and style (aestheticdesign) were identified especially in the up-marketsmart segment. The study concludes that the variety ofclothes and shoes provided today is not sufficient tofulfil the heterogeneous needs of customers.

The Zitex (1999) study asked German customersexplicitly for their desire for customisation of apparel.

The study showed that todays customers are unsatisfiedwith the availability of sizes and the fit of standardclothes. More than 70 per cent of formal wear boughtfrom the rack is altered after the purchase at thecustomers expense! 65 per cent of the interviewees 65per cent expressed a strong need for customisation inregard to custom fit (measurements) for suits andformal dresses.

The EUROShoE data confirm that a considerablenumber of consumers are interested in the idea ofcustomising shoes. Figure 1 shows the aggregated resultsacross all countries in the survey (Germany, the UK,

Figure 1. Consumer interest in customised footwear on a scale from 1 ( = very interested) to 7 ( = not interested), aggregatedresults of the four target countries (Germany, theUK, Italy and Spain).


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Spain and Italy). According to the data gathered, 41 percent of women and 31 per cent of men are very muchinterested in customised footwear, whereas 33 per centof the female and 28 per cent of the male respondentscompletely reject the concept. This data indicates astrong trend: consumers either like customisation, or

they do not like the idea. Compared to other studiesusing seven-point likert scales, we have very little answersin the middle, but either a very strong acceptance orstrong rejection of the idea of customisation.

However, there seem to be large differences inconsumers attitudes depending on gender and thecountry of origin. Concerning the country of origin, ourdata shows a significantly higher interest in customisedfootwear in the northern than in the southern Europeancountries. Figures 2 and 3 show the differences

concerning the interest in customised footwear in largerdetail. In Northern Europe (represented by Germanyand the UK), the interest in customisation of shoes iscomparatively high (figure 2), whereas in Southern

Figure 2. German and UK consumer interest in customized footwear on a scale from 1 (= very interested) to 7 ( = not interested).

Figure 3. Spanish and Italian consumer interest in customized footwear on a scale from1 ( = very interested) to 7 ( = not interested).


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Europe (represented by Italy and Spain) customisationseems to be of less importance (figure 3). According toour expert interviews, the selection (variety) of footwearoffered in Italy is much wider, and with higher fashioncontent than in other European countries. Therefore,the need to alter given models, or even design shoes on

their own, do not seem to be an issue for theseconsumers. Also, data from our focus group interviewsshow a much higher fashion and trend consciousness ofItalian and Spanish consumers, leading to the rejectionof customised shoes which were, per definition, notregarded as following the fashion standard of theseason. This implies that footwear manufactures aimingat differentiation by customisation should try to makethe act of customisation as a fashion item (Piller and Ihl2002) meaning that big fashion brands will have anadvantage in introducing customisation as a point ofdifferentiation in fashion.

In all four countries, women seem to generally bemore interested in the customisation of footwear thanmen. Men are less interested in customisation thanwomen in all target countries except Spain. This findingis of particular importance as according to our knowl-edge today most efforts of footwear manufacturersregarding customised footwear focus the men marketonly. One explanation for the larger interest of womenthat was mentioned frequently in our expert interviewscould be that men are likely to buy shoes only whenthey actually need them, and in a time efficient way.Thus, they object the necessity to wait for thecustomised shoe being produced. Moreover, men seem

to be more satisfied with the standard offerings inEuropean shops in regard to style and design. On thecontrary, for women shoes are a major fashionaccessory that has to go with their latest clothing. Thus,the fashion content is much more important resultingin a stronger interest in style customisation (see nextsection). Additionally, women encounter comparativelymore difficulties in regard to fit and comfort due to thedesign of womens shoes (e.g. high heels, pointed toe),dictated by fashion trends rather than by biomechanicalsuggestions (Luximon et al. 2003).

Based on the data presented above, a roughestimation of the potential market volume for custo-mised footwear in the four target countries can be given(table 2). Note that this estimation is by definition veryexploratory in its result and does not representempirically valid the actual size of the market for

customised shoes. Using various sources of informationon consumer typographies, market segmentations andmarket volumes in the footwear industry (see EuroShoEConsortium [2002] for more information), the numberof consumers interested in customised footwear,according to our study, was transferred into a quanti-tative market volume (pairs of shoes). The data showthat there is an enormous market potential forcustomisation that is not covered by existing offersyet. In our opinion, even one tenth of these volumeswould justify major investments in an otherwise verymature and price competitive market with very little

real innovation.

4. What extent of customisation do consumers want?

The previous studies have shown that there mightbe a promising market for customised offerings.However, customisation has to be customised, too.Mass customisation is characterized by a fixed solutionspace, meaning that the customisation options arerestricted and not unlimited as in the case of traditionalcraft customisation (Pine 1993, Lampel and Mintzberg1996, Robertson and Ulrich 1998, Tseng and Jiao 2001,

Piller 2003). Thus, setting the right extent of a masscustomisation offering is of paramount importance.Generally speaking, customisation can be carried outon three levels:

. Style (aesthetic design): modifications aiming atsensual or optical senses, i.e. selecting colours,styles, applications, cuts or flavours. Often, indivi-duality is seen only in this dimension (Tepper etal. 2001). Examples in footwear include the IDprogram of Nike where customers can select

Table 2. Market potential for customised shoes in the four target countries (everyday and business shoes, but no sports, specialpurpose, or children shoes); general market data taken from SATRA.

Market volume for mass customized shoes (million pairs p.a.)

Male Female Total Pairs of shoes sold p.a. in the country

Germany 12.3 32.8 45.1 326.3UK 11.2 29.2 40.4 315Italy 2.2 10.2 12.4 216.5Spain 2.2 4.8 7.0 133.8


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misation as a means to make the fashionable shoemore comfortable and to improve the pricequalityratio of customisation. They are more or less satisfiedwith the footwear designs offered today, but no longerwant to compromise when it comes to style and fit(confirmed by the focus group discussions). This

conclusion is confirmed by other studies on consumersdemands for individualization of apparel and footwear(Kieserling 1999, Zitex 1999, EwoMacs 2003). Thesestudies conclude that the most important benefit ofcustomisation for these goods is to minimize todayscompromise between fit or comfort and design.

In the following, we will stress this finding with someresults from the market research we conducted with thepotential and present customers of selve, a Munich basedcompany offering customised ladies shoes. In contrast tothe EUROShoE study, only subjects that had alreadysome real life experiences with customised shoes were

questioned. Thus, we expect that these results have ahigher validity than the EUROShoE study. From theparticipants of the first survey (n= 213), women asked inthe shop after they have explored the system (customisa-tion options, style options, measurement procedure) butleaving without purchase, 82 per cent state that they canimagine much or very likely to purchase a pair ofcustomised shoes. Only 18 per cent claimed to have nointerest at all. These acceptance figures are much higherthan the EuroShoE results, stressing the importance ofconsumer education and educational advertising ex-plaining the possibilities and process of customisationfrom the consumers perspective (Wind and Rangaswa-

my 2001, Piller 2003). In a second survey, we askedexisting customers of selve about their feedback onbuying a pair of customised shoes (n= 155). The subjectsstated that design (style, colour and heel) and thecustom fit were equally important for their decision topurchase a customised pair of shoes. Many customersindicated explicitly the possibility to combine customdesign with fit as the most important purchase factor.Thus, customisation should not be restricted to thefitting aspect, as it is common today for many up-marketcraft customiser (traditional shoemaker) of footwear.

In conclusion, a set of customisation options for

footwear should start with an inline (standard) shoemodel that can be ordered in individual measurements.From an analysis of the order data of selve we know thatmany orders (4 40 per cent) are placed with differentsizes for the right and left shoe (the same wasconfirmed by adidas within their mi adidas system).This is an option that no standard shoe can offer today.In addition, the customers should become enabled toalter also a limited number of options within the mostimportant design and style parameters (i.e. colour,material, heel, foot bed and sole).

5. Are consumers willing to pay a premium forcustomisation?

One of the most challenging questions of masscustomisation is if, and to what extent, consumers arewilling to pay a premium for customisation. For

customers, the decision to buy customised products isbasically the result of a simple economic equation(Franke and Piller 2003): if the (expected) returnsexceed the (expected) costs, the likelihood thatcustomers employ mass customisation will increase.Returns are twofold: first, possible rewards from aspecial shopping experience such as flow experience orsatisfaction with the fulfilment of a co-design task(Dellaert and Stremersch 2003; Franke and Piller2003), and, second, the value of product customisation(i.e. the increment of utility a customer gains from aproduct that fits better to his needs than the best

standard product attainable). The data presented in theprevious sections has shown that a large number ofconsumers expect returns in this respect. Costs of masscustomisation for consumers are: (1) the premium acustomer has to pay for the individualized productcompared to a standard offering; and (2) the drawbacksof the customers active participation at (integrationinto) value creation during the configuration process(increase in mass confusion, i.e. purchasing complex-ity, uncertainty, co-design risk, etc.; see Huffman andKahn 1998, Kamali and Loker 2002, Dellaert andStremersch 2003, Piller et al. 2004). In the following,we will focus on the first cost aspect the premium a

customer has to pay for the customised productcompared to a standard offering.

In the EUROShoE study, we asked people for theirWTP for customised footwear. The majority of male (46per cent) and female (42 per cent) respondentsanswered that they would accept a premium of 10 to30 per cent on top of the average price of a formal shoe(figure 4). Approximately 40 per cent of the men and35 per cent of the women accept a maximum premiumof 10 per cent only (including subjects who are notwilling to pay any premium or even want to pay less tocounterbalance waiting time). However, about 12 per

cent of the men and 18 per cent of the women arewilling to pay a premium of 30 per cent or more.In all target countries, we found that the majority of

customers reported to accept a premium of between 10and 30 per cent (except for women in Spain and menin the UK where the peak is in the 510 per centrange). Spain was the country with the lowest WTP forcustomised shoes (47 per cent of the female and morethan 62 per cent of the male interviewees would notaccept a premium of more than 10 per cent). In Italy,the average WTP was higher than in the other


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countries. More than 36 per cent of the women, andmore than 26 per cent of the men would accept apremium higher than 30 per cent, and a premiumniche of about 13 per cent women would even accept apremium of more than 50 per cent! The correspondingvalues in the other countries are significantly lower.These findings also match the average price levels ofstandard footwear in the target countries (SATRAdata): if the average price level in all four countries isset to an index value of 100, Italy has the highestaverage price level with an index value of 108.5, the UKthe lowest with 93.4, Germany 93.5, and Spain 99.3.

Results of an online survey among 600 youngconsumers (Piller et al. 2002) show a much higherWTP for customised footwear (this study used a refinedmethodology, price sensitivity measurement, to mea-sure WTP). Both women and men reported a con-siderably higher WTP for the possibility to get anindividual fit (measurements). As far as style customisa-tion for footwear is concerned, the results were some-what different. While the optimal price for stylecustomisation for women is clearly above the averageprice for a standard pair of shoes, mens WTP for stylecustomisation is lower than that for standard shoes. On

the other hand, to women the idea of a customiseddesign seems to be rather appealing (Piller et al. 2002,for exact data).

In an exploratory study in the watch market (Swatchalike fashion watches), Franke and Piller (2004)performed a set of four experiments with a total of717 participants, in which users created their owncustomised watches. The self-designed watches arehighly heterogeneous and diverse in style, confirmingthe trend reported in the literature, that todays usershave very distinct preferences. From an economic point

of view, the most important finding of this study is thatconsumers are also willing to pay a considerablepremium: the WTP for a self-designed watch exceedsthe WTP for standard watches by far, even for the best-selling standards (Swatch models) of the same technicalquality. On an average, this study reports a 100 per cent

value increment for watches designed by users com-pared to standard watches from the same segment.

However, measuring WTP by means of question-naires is rather difficult and often leads to unrealisticresults (Franke and Piller 2004). Consider the case ofadidas and selve who are already offering customisedshoes. Both companies target average upmarket (butno luxury) market segments. In the sports shoemarket, adidas can charge premiums of up to 50 percent (on the suggested retail price, even more on thestreet price) for its customised shoes. The reason canbe seen in the whole set of customisation options:

adidas allows customers not only to choose betweenvarious colours and to put a name on the shoe, butalso to customise the shoes with regard to comfort, fitand functionality. Its competitor Nike, offering juststyle customisation with its ID programme, can askonly premiums of 10 per cent. The average sellingprice for ladies shoes at selve is above e180 this is amore than 100 per cent premium to the averageselling price of a pair of shoes in the local upmarketmarket segment.

This experience is confirmed by other retailers.Cove, for example, offers in the German marketcustomised suits for an advertised price of approx.

e330. However, most customers are upgrading theirproduct during the co-design (configuration) processby choosing better fabrics or additional features. As theresult, the average selling price is above e600 farabove the price conception Coves customers had whenentering the store!

The last aspect relates to the possibilities of pricecustomisation by allowing customers to adjust theirown price by selecting differently priced options for oneproduct feature. Levin et al. (2002) compare the priceeffects of customisation to how price customisation isperformed. They find for various consumer products

that a subtractive option-framing method is superior(i.e. leads to higher average prices) compared to anadditive-framing. Subtractive option-framing meansthat consumers start with a fully loaded product anddelete options, while additive option-framing means tostart with a base model and add options. The data byLevin et al. (2002) show that subtracting leads to ahigher price (WTP). This provides an indication of theadditional value of offering customisation not only onthe product level, but also on the option level, and howto skin this value.

Figure 4. Accepted premium for customized formal shoes;aggregated results of the four target countries; consumers

interested in customization only.


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6. Limitations and conclusion

The mass customisation landscape today reveals asomewhat sobering picture. The opportunities of masscustomisation are acknowledged as fundamentally posi-tive by theory and anecdotal evidence for many years. A

growing number of companies are already successfullyoperating this kind of business model. However, a deficitexists in analysing the consumer perspective on masscustomisation (Kamali and Loker 2002, Dellaert andStremersch 2003, Franke and Piller 2003). Thus, theobjective of this article was to review a number ofempirical insights into the consumer perception of masscustomisation. Focusing on the footwear industry anddata from the EuroShoE study we can conclude thatconsumers are curious about the customisation conceptand do realize the related benefits. They are also willingto pay a premium for these benefits. A first estimation

suggested a market potential of about 40 million pairs ofcustomised shoes both in the UK and in Germany, 17.7million pairs in Italy and 7 million pairs in Spain. Even ifmass customisation is not becoming the dominatingsystem, these are no niche markets, but promisingmarket segments, totally uncovered today. Especiallyfemale consumers seem to be willing to invest incustomisation, so that they do not have to compromisebetween fit and style any longer.

Some challenges have to be taken into account.Empirical research on consumer demands for masscustomisation faces one important limitation, restrict-ing the interpretation of the findings: the majority of

the research subjects had no hand-on experience withcustomisation. Already, surveys concerning consumerpurchasing behaviour of standard goods face numerousbiases due to the survey situation, and these biases areexponentiated in the case of customised goods. Mostconsumers have an imagination about customisation,but no experience with it. They will answer positivelywhen asked if theywould(could image to) purchase agood customised to their individual wishes and desires.But are they also willing to wait for the product until it isproduced? Will they trust the supplier and pay for aproduct in advance that they do cannot see? Only data

gained from observing consumers in real purchasingsituations will provide evidence on the real market formass customisation. Thus, more pilot studies and testmarkets for mass customisation are needed. First stepsare focus group discussions and experiments in marketresearch labs, where the participants can at leastexperience the purchasing and configuration process.

In the end, it is very important to remember thewords of Pine (1998: 14): Customers dont want choice.They want exactly, what they want. Customers are notbuying individuality; they are purchasing a product or

service that fits exactly to their needs and desires. Onlyfew customers honour long configuration processes.Most users want to find their fitting solution as smoothand simple as possible. Mass customisation concepts,based primarily on the promise of customisation, willfail (Piller and Ihl 2002). Successful customisers stress

fit, comfort, higher functionality, lower costs of owner-ship and so on. From a marketing perspective, masscustomisation means to offer its customers not anylonger a product, but the capability to deliver anindividual solution. The customer becomes a co-designer, using the firms capacity to create his ownunique solution. Thus, the experience of the buyingand configuration process gets predominant impor-tance. Here, many companies have still their lessons tolearn, beyond all achievement and research oncomputer integrated manufacturing and flexible man-ufacturing systems enabling mass customisation.

Acknowledgments

This paper builds on research conducted in theEuroShoE project under a grant by the EuropeanCommission and research conducted in course of theEwoMacs project, supported by the German FederalMinistry of Research (BMBF-PFT). We further thankMichael Uhl and Stephan Jager for their support.

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