Companys shifting from mass production to mass customization
Examples of Mass Customization in Hotels
Connie Mok, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston, USA
Alan T. Stutts, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston, USA
Lillian Wong, Department of Hotel, Catering, and Tourism Management, Hong Kong Vocational Training Council, Hong Kong
|Fourth International Conference
in Southeast Asia & Indo-China: Development, Marketing and Sustainability"
June 24-26, 2000
|Mass production as a paradigm of management has dominated the world
industrial production since World War II. With shifting demographics and
changing consumer tastes and preferences, mass production far homogeneous
markets is not enough to keep businesses going. This paper discusses the
paradigm shift from mass production to mass customization, its conceptualization
and applications in the hospitality industry.
Mass production as a paradigm of management has dominated the world
industrial production since World War II, and it has fettered the tremendous
growth in American economy in the twentieth century. With shifting demographics
and changing consumer tastes and preferences, mass production for homogeneous
markets is not enough to keep businesses going. In the present business
world, organizations are facing tremendous forces to change to stay ahead
of competitors. The companies that responded properly and quickly to changes
are now beginning to master a new frontier in business competition. These
companies found that not only can higher quality yield lower costs, but
so can greater variety. In 1993, Pine stated that:
Mass customization is arising in direct response to the turbulence that has splintered the mass market. One sharp-eyed observer who spotted the coming of mass customization long ago is perhaps United States' best known futurist, Alvin Toffler (INC. 1998). As far back as 1970, Toffler wrote in Future Shock about "destandarized" goods and services that he forecast the United States would produce in "great variety." Speaking recently to INC by telephone, Toffler said that mass customization will proceed with a kind of gravitational force because, as American become more affluent, they have wanted greater individuality. People now can afford it partly because technology makes it cheaper. Michael Cox, chief economist at the Federal Reserve Bank of Dallas, in concurrence with Toffler lamented that "If you don't customize, you're going to lose business in today's marketplace." (Wall Street Journal, April 29, 1999, pp. A1)
Nowadays, virtually all companies recognize the need to be customer driven by providing superior service to satisfy customers' needs. But as customers and their needs grow increasing diverse, unnecessary cost and complexity are inevitably added to operations. Companies around the world have embraced mass customization in an attempt to avoid those pitfalls of trying to meet every customer's need (Gilmore and Pine, 1997; Martin, 1997; Schonfeld, 1998; Knowles, 1997). Readily available information technology and flexible processes permit them to customize goods or services for individual customers in high volumes and at a relatively low cost (Gilmore and Pine, 1997).
Little has been published in the hospitality and tourism literature about this important production concept. Therefore, the purpose of this article is to discuss the conceptual underpinnings of mass customization based on literature review and to examine the applications of mass customization in the hospitality industry so as to stimulate future discussions and research.
CONCEPTS OF MASS CUSTOMIZATION
Mass customization is neither a simple strategy to undertake organizationally and operationally, nor is it a simple concept to comprehend. Hart (1995) defined mass customization by using two distinct definitions:
In essence, mass customization is a hybrid technique by which a company churns out products in typical assembly-line fashion yet can add unique features to individual orders (Martin, 1997; Falkenberg, 1998). This requires a flexible manufacturing system that anticipates a wide range of options. However, due to the vast differences in customer preferences, mass customization, too, can produce unnecessary cost and complexity. Therefore, it is crucial that managers must examine thoroughly what kind of customization their customers would value before they adopt this new strategy.
DECISION FACTORS - AN ANALYTICAL FRAMEWORK
Should companies pursue a mass customization strategy? Hart (1995) further
identified four key decision factors:
FOUR APPROACHES TO MASS CUSTOMIZATION
In 1997, Gilmore and Pine identified four distinct approaches
to customization, which are collaborative, adaptive,
cosmetic, and transparent. They advocated that when designing or redesigning
a product, process, or business unit, managers should choose an approach
or a mix of some or all of the four approaches to serve their own particular
set of customers.
To sum up, collaborative customizers change the product itself in addition to changing some aspect of the presentation while a cosmetic customizer changes only the presentation of the product. A transparent customizer uses a standard representation to mask the customization of the product and finally adaptive customizers change neither the product nor the representation of the product but they provide the customer with the ability to change both the product's function and/or its presentation to meet their needs.
PIONEERS OF MASS CUSTOMIZATION
For the purpose of this article, it is important to look beyond the hospitality industry for ways to mass customize products and services in order to learn from other industries. Based on literature review, the following section discusses how some companies in the hospitality industry, as well as other industries mass customized their products and services. First, let's examine a few specific companies and see how they shifted from mass production to mass customization. They are summarized in Table I.
Now, let's look more closely into how the hospitality industry mass
customized products and services. Much has been
said about the standardizing forces of McDonaldization in the
wider society (Love, 1986; Royle, 1995; Taylor and Lyon, 1995; Ritzer,
1993; Lyon, Taylor & Smith, 1994). Fast-food restaurants and other
McDonaldized systems are mass production systems, which were built upon
the belief that in the world of mass production, consumers
accept homogeneous products. Their acceptance facilitates market
growth and the reduction of prices through economies of scale, which in
turn leads to a greater price gap between mass-produced goods and
that of customized goods. As with other mass producers, the fast-food
industry has reached the limited of the old paradigm. In 1995, Taylor and
Lyon reported mass customization as an alternative
to McDonaldization. They recognized that fast-food companies, including
McDonald's, have experienced the same sources of discontinuity as other
mass producers, creating extreme pressure for change. Burger King was the
first one to embrace the principles of mass customization - "Have it your
way!" and "Sometimes you've gotta break the rules!" The focus then was
on burgers and fries but later shifts testified that this was only the
start. Using McDonald's as an example, it can be seen that standardization
is still a characteristic of its operations. However, its menu has been
It was pointed out that the hospitality industry has generally preferred
to keep wages low, thus avoiding the need for technological innovation,
particularly in the actual delivery of its services (McIntosh and
Goeltiner, 1995). Although technology has been used extensively
in a supporting role to enhance performance and effectiveness, (e.g., computer
reservation system, air control technology, accounting system) there has
been a great reluctance to replace human service providers with technologically
driven alternatives (Mcintosh and Goeldher, 1995). However, in recent years,
some "tinkering" of mass customization has occurred in selected areas in
the lodging industry. Some examples are summarized in Table
2. As seen from these examples, mass customization is made possible
by technological applications.
Could you ever imagine selling guest rooms that customers could personally customize, down to their favorite wall art, prior to check-in? The hotel guest room of the future project, sponsored by Conrad N. Hilton College at the University of Houston, is developing ideas to assist hoteliers' globally to mass customize the hotel product to better meet individual customer's need by mastering technological change. The premise of this project is that a hotel guest room should be divided into zones that include work, entertainment and relaxation/rest; technology can then be introduced into each zone that enhances the guest's satisfaction. The project believes that technologies must be considered which impact upon: ergonomics, temperature, light, sound, exercise and diet; and variation of such technology that are responsive to the guest's principle purpose for using the room, work or leisure or a combination of both; and also consider the physiological, psychological and sociological needs of the guests.
There have been ample discussions about the aging global population and its implications for future marketing strategies and service provisions. This new demographic trend suggests new features in the hotel room that caters specifically to the needs and preferences of the senior travelers. These new features, made possible by technology include:
With all that is said about high-tech, the bottom line is that guests want a room that is comfortable and adaptable to their particular needs. Many guests' expectations are not particularly high-tech. All guests want a good night's sleep which may mean paying attention to the soundness of the mattress being provided: what type of mattress does you guest prefer? According to the Westin sleep study conducted for the chain by a New York-based research firm, the main criticism by 27% of respondents was that hotel mattresses are too soft. For another 21 percent, the number one complaint was that mattresses are too hard. There are two concepts - one utilizing springs and the other air -are being studied that will allow guests to adjust the firmness of each side of a bed. Other than the mattresses, guest of the future hotel room will be provided an assortment of pillows ranging from soft to firm and some or all hypoallergenic.
Industries, which are less dependent on the human interactions have adopted laborsaving technology (Pine, 1993). As a result, these industries have been able to improve wage levels and enhance career opportunities for employees while keeping costs under control. For example, banks replace human tellers with automatic teller machines, which not only save labor costs but also offer 24-hour service year round. This kind of convenience provided to their customers can be considered a great customization (i.e., anytime they want it).
History has shown that the business world is in a continuous state of improvement as it strives to become more effective and competitive. The mass production system has dominated the industrial world for many years and it is now moving on to mass customization in recent years of increasing market fragmentation and customer demand. Should the hospitality industry adopt more customization? If the answer is yes, then how does it go about achieving it? By asking these questions, the authors wish to stimulate thoughts and discussions among CEOs and senior executives in the hospitality industry on the direction of the future development of the industry. A full discussion of why and how to mass-customize the hospitality industry is beyond the scope of this article. Besides, it is impossible to provide a standard formula for mass customization for the whole industry. As pointed out above, effective mass customization is organization specific. The understanding of the concept of mass customization itself is a prerequisite for mass customization. A successful mass customization strategy of one company, most probably, will not work for another company. Mass customization must be customized to a particular organization's customers, production capabilities, competitive situation, and the new technology available to them. The authors believe that organizations, which are well prepared for customization, will be rewarded in customer loyalty, market leadership, productivity, and profitability.
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Professor Kaye Chon
Chair Professor & Head
Dept of Hotel and Tourism Management
The Hong Kong Polytechnic University
Hung Hom, Kowloon, Hong Kong