The Machine Age of Customer Insightdemonstrates the impact of machine learning and data analytics, combining an academic state-of-the-art overview of machine learning with cases from well-known ...companies. These cases show the opportunities and challenges of the transformation process for business and for customer insights more specifically.
•This work introduces one-of-a-kindness as strict form of uniqueness.•Products designed with mass customization systems are often one of a kind.•Automated feedback on mass-customized products being ...one-of-a-kind increases value.•This effect is enhanced when one-of-a-kindness is ensured for the future.•The effect reverses for products that are matters of quality (vs. taste).
This research examines product uniqueness in its most pure form—products that are literally one of a kind. It does so in mass customization (MC) settings where consumers configure their own products. Due to extremely large solution spaces that are typically available in MC, a specific product configured by a consumer is often one of a kind in that it has never been produced before. How might firms leverage such strict product uniqueness to enhance consumer value? A natural way of doing so is to simply inform consumers that the product they have configured is one of a kind—through a feedback message that is either present-oriented (e.g., “this specific product has never been produced before”) or future-oriented (e.g., “this product will remain one of a kind in perpetuity”). Evidence from five experiments, including a large-scale field experiment, shows that one-of-a-kind feedback can cause a substantial increase in consumers’ product valuation. This value-enhancing effect of one-of-a-kind feedback specifically occurs in product domains that are primarily matters of subjective taste. By contrast, such feedback tends to reduce consumers’ product valuation in domains that are primarily matters of objective quality. These findings advance our understanding of the concept of product uniqueness, and of how firms can harness the one-of-a-kindness of mass-customized products to unlock consumer value.
In recent years, many companies have started integrating the consumer into the new product development process by establishing mass customization (MC) systems (Kaiser, Schreier, and Janiszewski ...2017). These systems enable consumers to create their own product design (Dellaert and Stremersch 2005). A considerable amount of research has been devoted to the factors that determine the resulting value for the consumer (Moreau 2011). An important source of the value that consumers obtain from designing or configuring their own products via MC systems is the perceived uniqueness of these products (Michel et al. 2009). One way for providers of MC systems to enhance the value of a customized product might be to provide the consumer who designed it with feedback about its uniqueness. This research examines the effects of two types of such feedback on a consumer's valuation of a customized product-that the particular design or configuration (1) is currently unique in that it has never been created before by another consumer and (2) will remain unique in that it will be unavailable to future consumers by blocking the configuration. Taken together, feedback on current uniqueness ("Your configuration has never been created before") and future uniqueness ("Your configuration will be blocked for future consumers") should enhance the value-generating mechanism of perceived uniqueness. Hypothesis 1: Feedback on (a) current product uniqueness increases consumers' subjective valuation to their customized products, (b) which should be further increased by feedback on future product uniqueness. So why should current and future uniqueness feedback generate value for consumers? We argue that perceived exclusivity plays a key role in this value-generating effect. Exclusivity has been referred to as one specific dimension of uniqueness (Barone and Roy 2010a). Consumers with a high need for uniqueness are likely to value uniqueness in products and therefore also have a preference for exclusive products (Barone and Roy 2010b). By giving consumers feedback that their product has never been configured before we not only notify them that their configuration is currently unique but also that it is currently exclusive. At the same time, by giving consumers feedback that their product will be blocked for future consumers we not only notify them that their configuration will remain unique in the future but also that it will remain exclusive. Thus, feedback on the current and future uniqueness of a configured product should trigger feelings of exclusivity, which in turn should create value for consumers. Hypothesis 2 The value-generating effect of current and future uniqueness feedback is caused by perceived exclusivity. Objectively, many customized products are actually unique given the vast number of attributes and options that consumers can choose from in typical MC systems. For this reason, the content of these feedback messages should not necessarily create value for consumers. Drawing on research on probability neglect (Sunstein 2002) and numeracy (Peters et al. 2006) we show that people tend to neglect differences in probabilities and often lack the ability to comprehend and transform numerical information. We theorize that, in such a mass customization setting, consumers tend to neglect the fact that the product they have configured is actually very likely to be unique, and to underestimate the probability of it being unique. Therefore, providing consumers with detailed information about the number of possible attribute combinations in MC systems should reduce the beneficial effects of uniqueness feedback by highlighting the fact that many product configurations are unique anyway. Thus, we hypothesize that revealing the size of the actual solution space to consumers attenuates the positive effect of uniqueness feedback on their subjective valuation of the customized product. Hypothesis 3 The value-generating effects of current and future uniqueness are attenuated when the size of the solution space is made transparent to consumers. Four experiments reveal that current and future uniqueness feedback create value for consumers, that the effect is mediated by perceived exclusivity and moderated by making the solution space transparent. The first study tests the real-life impact of current uniqueness feedback. Specifically, it examines whether such feedback has a positive effect on the subjective value that consumers attribute to the product (operationalized as conversion rate). We conducted a field experiment in collaboration with the provider of an MC system in the domain of customized cereals (mymuesli.com). Our results show that the difference in the conversion rates between the current uniqueness and no feedback condition is significant, supporting hypothesis 1a. In our second study we tested whether both forms of uniqueness feedback-current and future-can drive the subjective value consumers attribute to their customized products (measured as actual willingness to pay (WTP)). We conducted a lab experiment using an MC system to customize sneakers. Our findings reveal that both current and future uniqueness feedback significantly increase actual WTP compared to when they are given no feedback (see figure 1). This provides evidence for hypothesis 1b. The third study tests whether the additional value consumers attribute to their configured product (measured in WTP) is caused by perceived exclusivity. We conducted an online experiment using an MC system to customize sunglasses. A mediation analysis shows that the effect of uniqueness feedback on WTP is mediated by perceived exclusivity. Beyond the successful test of hypothesis 2 this study provides renewed support for hypothesis 1. In our fourth study we aimed at testing whether making the solution space transparent to participants attenuates the effect of current and future uniqueness feedback on perceived exclusivity. We conducted an experiment with an online panel using an MC system to customize sneakers. Our findings reveal that making the solution space transparent to participants moderates the effect between uniqueness feedback and perceived exclusivity. Beyond the successful test of hypothesis 3 this study provides renewed support for hypothesis 1. With this research we contribute to the literature on the interaction of consumers with MC systems by showing how the functionality of these systems can be considerably enhanced by an automated feedback function. We also contribute to the uniqueness literature by demonstrating that two types of product uniqueness feedback (current and future) create value for consumers in an MC context.
