Product Customization Via Starting Solutions

Product customization, whereby consumers self-design their products using a seller’s mass customization (MC) interface, has the potential to provide consumers with offers that closely match their idiosyncratic preferences and, hence, to increase their product satisfaction, loyalty, and willingness-to-pay (Ansari & Mela 2003; Franke et al. 2010). Recent research suggests that each of the two most common formats of product customization – (1) the “by alternative” format of having consumers choose from a pre-specified set of alternatives and (2) the “by attribute” format of asking consumers to customize every attribute and attribute level of the product – has distinct limitations from the consumer’s perspective (Huffman & Kahn 1998; Valenzuela et al. 2009), such as increased complexity due to tradeoffs among attributes (Valenzuela et al. 2009; Dhar 1997) and the need to process a large number of attribute information in parallel (Dellaert & Stremersch 2005; Huffman & Kahn 1998). Inspired by prior research on multi-stage decision processes suggesting that consumers typically first narrow down the set of considered alternatives, and subsequently examine the remaining alternatives in greater depth (Beach 1993; Ge, Häubl, & Elrod 2012; Häubl & Trifts 2000, Bettman & Park 1980), we propose a novel procedure that partitions the product customization process into two stages, whereby consumers first select one of a few pre-specified products as a starting solution, and then create their final customized product by further refining this starting solution. Our key hypotheses were that, compared to standard attribute-by-attribute MC systems, the proposed two-stage approach would reduce the cognitive effort associated with product customization, promote mental simulation of product use, motivate the purchase of more feature-rich – and thus higher-priced – products, and lead to greater satisfaction with self-designed products.