Current affairs

Pablo Contreras

Wednesday, 22 de November, 2017

The customer has become the key axis defining how the market functions. All companies and brands want to get to know their users in order to give them want they want. In a new session of the Focused Programs, the lecturer on the Master in Marketing and Commercial Management at EAE Business School, Pablo Contreras,  gave students an overview of the current paradigm in relation to customized production.

Mass customization: The end of segmentation?” was the title of the new session, held online on 20th November for the School’s students. In the session, the lecturer started by explaining the concept of “Fordism”, taken to mean the start of the production line model of manufacturing. “They could have whatever colour car they want as long as it was black” said Henry Ford, which perfectly sums up the situation consumers faced at the time.

Nowadays, marketing as become an indispensable tool when trying to reach a greater number of consumers. Using marketing techniques, “companies offer different products or services to their customers”. As such, the key to achieving differentiation¸ as Contreras explained, is “knowing your market’s needs and how to fulfil them in a completely different way to your competition”.

The market is made up of an endless list of products and services and people interested in acquiring them. Brands have to clearly identify what customer profile they are interested in capturing. He went in to define market segmentation as “a group of consumers who share a similar set of needs and desires”. Effective segmentation is crucial because, as the lecturer emphasized, “one of a company’s critical success factors is its capacity to segment its market properly”.

Moreover, the customer profile has changed and is no longer characterized by a passive attitude. The customer is at the centre of everybody’s sights and they know it. Some of the features that best define them is their impatience, the search for comfort and a desire for the company to do everything possible to interact with them, as well as ensuring that their needs are understood and fulfilled by brands.

In the 20th Century, the production line model did indeed revolutionize markets. However, the trend is now shifting towards customized production. To analyse this aspect, Pablo Contreras mentioned the book ‘Future Shock’ by Alvin Toffler, using a quote by the author as a clear example. “Thanks to information technology, manufacturing in the future will be able to offer products that are customized to a high degree at a low or no additional cost”.

Narcissism is one of the characteristics that best describes modern customers, who want to acquire exclusive products, as well as being involved in the shopping process by designing or personalizing the products themselves. “When brands convert the customer into a designer, the consumers assign greater value to products that they themselves have helped to create or manufacture”, explained Pablo Contreras.

With respect to this new trend, the EAE lecturer emphasized that “modern emerging technologies are increasing the possibilities of mass customization, generated significant changes in product strategies, which have to embrace mass customization, including the concept of built-to-order products in their portfolios. This new priority adapted by many companies has led to an increase in the complexity and cost involved in satisfying extremely diversified demand”.

To conclude, Professor Contreras gave students an insight into the concept of mass customization, as well as analysis the benefits and disadvantages of this new business model. “Providing a wide variety of products and services designed to fulfil the specific needs of individual customers at a cost similar to mass-produced goods requires a combination of mass production efficiency and the maximum adaptation to individual needs and preferences”.

The key benefits include customer satisfaction and loyalty to a certain brand due to the attractive products that it offers. However, it is important not to overlook the disadvantages involved in this system. “A substantial investment in information technology is required to create close integration between all the links of the company’s value chain, the external suppliers and intermediaries”, concluded the lecturer.

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