Marketing mix customization and customizability. assignment

Companies should be able to adapt their tactics immediately. In the same context, a firm’s communication approach becomes more and more bottom-up. Rather than determining target groups (who? ) and communication aims (what? ) before deciding on the instruments (how? ), specific methods of communicating, such as via the Internet, are leading to the identification of who and what. Moreover, many writers claim that a paradigm shift is occurring from transaction marketing to relationship marketing. Firms are beginning to realize that keeping current customers may be more important than trying to attract new ones. (*)

Especially in business-to-business markets, many firms are starting to involve their customers in the product development process. Along with an increased concern about customers’ real needs, wants, and demands, the information flow between customers and firms becomes more important. The Internet and other new communication media allow companies to interact with customers much more directly. Face-to-face or phone and fax contacts are no longer the only means of doing so. Marketing strategies are also becoming more individually oriented. Businesses have begun to develop databases that allow them to approach customers on an individual basis.

No additional costs result from canceling an order because, again, the same standard modules can be used for different customers. The modules can be shipped from one region to another when a significant imbalance between supply and demand occurs. And the manufacturer may concentrate on production of the modules, which is an interesting option in view of economies of scale. Hewlett-Packard experienced the advantages of customizing its local distribution centers when its total manufacturing, shipping, and inventory costs of the DeskJet printer for European and Asian markets dropped 25 percent.

Taking such savings a step further, developing a flexible and responsive “ customized” production-supply network may reduce not only costs but delivery times as well. In many industries, different product models (with a different look or varied options) are derived from the same core product. Different car models, for instance, are often based on the same chassis. Offering products with different options may allow customers to upgrade or extend their product in a later stage, perhaps because of price considerations.

The Laboratory of Production Technologies of Siemens in Belgium transforms basic technology into integrated solutions that fit perfectly into the production lines of different Siemens divisions. Purchase Price Offering price discounts is one of the most popular ways to customize prices. Criteria for discounting often include a customer’s sales volume, sales history (such as being loyal or not), and time of purchase. High-volume customers may get special discounts, users of old product versions may get discounts on new product versions, and so on.

Another way to customize prices is by customizing the product, with additional product options leading to higher prices. Product bundling allows firms to customize prices as well. A distinction should be made, however, between pure bundling, in which products can only be bought bundled, and mixed bundling, in which they can be bought separately or together. Various price policies can be pursued in the case of mixed bundling. One product might be discounted if another is bought; this is called mixed leader bundling. Or a favorable price might be set for a package of products, which is known as mixed joint bundling.

They can determine where, when, and how they want goods to be delivered; they can even specify the manner in which they want goods to be handled before and after delivery. Gilmore and Pine (1997) refer to this as “ representation” requirements. Especially in industrial markets, where many firms are working in a just-in-time (JIT) environment, suppliers have to become more flexible in terms of distribution and logistics. Volvo Europe Truck (VET) in Belgium has moved to replace its push supply system with a pull system, which means supplies and raw materials are stocked and delivered only after a specific demand from a production division.

Customized distribution and logistics solutions therefore have to be provided by VET’s suppliers. To attain distribution flexibility, companies may use multiple channels. Depending on the customer’s product knowledge, service needs, and price sensitivity, one channel may be more appropriate than another. Customers who are looking for lower prices and are very knowledgeable about product features may prefer to buy from a direct mail catalogue. Less knowledgeable customers with bigger pocketbooks may prefer specialty stores that can provide the necessary information and support.

The choice depends on several considerations. Customizable solutions may be appropriate for customers whose needs and expectations change from time to time. This is most obvious at the product level. A customizable lighting system with user-controlled light effects may be used in different ways, depending on the occasion: a business meeting, a romantic dinner, an hour of reading. Similarly, a customizable communication network such as the Web allows users to select which information they need at a certain time.

People who are primarily looking for user guidelines in the beginning may become interested in new information topics–upgrading, new applications, and so on–as they gain more experience. Companies that develop well-structured Web sites, containing separate information sections for beginners and experienced users, stand to gain. An important moderating factor, then, is the buyer’s knowledge and experience. Customizable solutions are more suitable for savvy or experienced customers than for neophytes. People may lack the experience and skills for dealing with customizable solutions properly.

Figure 1 Marketing Mix Customization and Customizability Options Marketing Customization Mix By Customer Elements By Company (“ Customizability”) Product Offering enhanced and/ Offering final orbundled products (to products with meet individual different options customer needs) Offering a menu of (from which customers can select and design their final product)

Purchase Price Price discounting As a result of product (dependent on sales customizability volume, sales history, time of purchase) As a result of customers’ bargaining As a result of product power customization As a result of customers’ decision timing Communication Using one-to-one Offering a customizable communication tools interactive information (direct mail, sales network (such as the force) internet)

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