{"id":4810,"date":"2019-05-07T05:19:36","date_gmt":"2019-05-07T10:19:36","guid":{"rendered":"http:\/\/flevy.com\/blog\/?p=4810"},"modified":"2020-12-19T20:21:31","modified_gmt":"2020-12-20T01:21:31","slug":"product-strategy-the-advantages-smart-customization-offers","status":"publish","type":"post","link":"https:\/\/flevy.com\/blog\/product-strategy-the-advantages-smart-customization-offers\/","title":{"rendered":"Product Strategy: The Advantages Smart Customization Offers"},"content":{"rendered":"

\"\"The advantages of Smart Customization are more visible in the manufacturing industry\u2014owing to fairly speedy cash recoveries when factory costs are aligned to customer value.\u00a0 It is becoming an integral pillar to Product Strategy<\/a> in many organizations.<\/p>\n

However, services sector can also benefit from smart customization, but this demands relatively closer interactions with customers and more flexible systems for providing offerings. \u00a0Service sector is more complexity ridden, yet offers more opportunities.<\/p>\n

Successful Smart Customization<\/a> necessitates balancing the cost of complexity against the value of variety and comparing the benefits of sales growth against the buildup of overhead and indirect costs.\u00a0 It entails a multi-divisional management system to rationalize a company\u2019s operations by sharing common resources among the organization\u2019s many divisions.\u00a0 Customization involves a comprehensive review of all the business streams\u2014e.g., customer segments, demands, and servicing\u2014evaluating all functions and channels, delivering more to clients who need the highest interaction, but maintaining highest quality for all.<\/p>\n

Smart customization<\/a> helps the organizations thrive in the market. \u00a0To take full advantage of Smart Customization, organizations must focus on 3 sources of improved performance:<\/p>\n

    \n
  1. Understand the sources of value from customization<\/strong><\/li>\n
  2. Focus on the right customization<\/strong><\/li>\n
  3. Tailor business streams to provide value at minimal cost<\/strong><\/li>\n<\/ol>\n

    \"\"<\/a><\/p>\n

    Let’s discuss the 3 sources in detail now.<\/p>\n

    Understand sources of value from customization<\/strong><\/h2>\n

    Competition forces<\/a> the companies to increase customization, differentiation, and segmentation.\u00a0 This is often done without comprehending the sources of value from customization, carefully planning, or contemplating the environmental and external forces in play.<\/p>\n

    In the wake of intense competition, most organizations create additional value through more differentiation and more segmentation\u2014extending their existing offering range further, adding new specifications to products, and creating brand extensions. \u00a0Sooner or later, rivals jump in to capture the lost market share by adding more variety and segmenting the market further.<\/p>\n

    Most firms try to accomplish Smart Customization without essentially transforming their production and delivery systems.\u00a0 This adds to the problem of complexity and there comes a point where further customization efforts begin to raise costs and shrink margins, nullifying the value gained from differentiation.\u00a0 These actions initiate an unnecessary \u201ccustomization competition\u201d between companies, and eventually they fail to keep both growth and costs in check.<\/p>\n

    Focus on right customization <\/strong><\/h2>\n

    Companies often tend to provide similar service and support to transactional customers and for customers with deeper needs\u2014adding to unwarranted costs.<\/p>\n

    A thorough interpretation of the requirements of different customer segments and identification of the unique requirements from the common requirements is essential to generate superior performance and customization revenue. \u00a0But there is a need to differentiate between the \u201cOrder Qualifiers\u201d and \u201cOrder Winners\u201d (the two categories of products and services) first:<\/p>\n