Mass Customization

The use of standardization and scale economies to deliver wide-market goods and services tailored to suit specific customer’s requirements

Over 1.8 million professionals use CFI to learn accounting, financial analysis, modeling and more. Start with a free account to explore 20+ always-free courses and hundreds of finance templates and cheat sheets. Start Free

What is Mass Customization?

Mass customization refers to a business process of providing customized goods and services that best meet individual customer’s needs. It reaps the benefits of flexibility, integration, and personalization to produce custom-made products with low unit costs at near mass production efficiency.

Mass Customization

Mass customization is a business strategy that focuses on customers and recognizes the need to provide outstanding products while using new programs and procedures. The strategy makes it possible to design a product that reflects the actual choice of an individual customer through a flexible process. The components of a product are modular in some situations.


  • Mass customization is the use of standardization and scale economies to deliver wide-market goods and services tailored to suit specific customer’s requirements in high volumes and at a reasonable low cost. 
  • Mass customization takes independent and capable modules and customizes them into different functionalities that suit the user’s preference.
  • The four main phases of mass customization include collaborative, adaptive, cosmetic, and transparent customizations.

Understanding Mass Customization

The flexibility of mass customization enables the customer or retailer to mix and match the modules into different configurations and eventually realize a final custom-made product. Mass customization is more common in the retail industry but may also apply to other fields. For example, software creators can design products to allow remote services to increase functionality.

Another sector that embraces mass customization is the financial industry, which is characterized by the growth of independent and free-only companies. Mass customization attempts to give companies a competitive edge by providing unique value to their customers at lower costs associated with mass production.

Manufacturing firms make use of readily available information and efficient processes to facilitate the customization process. However, managers have discovered that mass customization, similar to mass production, is tied with unnecessary complexity and cost. Such disruptive risks are linked to a lack of due diligence before adopting such a business strategy. The managers believe that they need to use various methods to provide customer value.

Mass Customization Processes

The process of mass customization entails an interlinked set of activities to capture individual requirements and translate them into a physical product to be produced and delivered to the client. Companies provide their customers with a toolkit for product innovation during the process.

Mass customization attains its goals if the product is developed and tailored to the user requirements at a reduced cost. The development of sub-processes helps transform the various customer requirements into generic product architecture from which several customized products can be derived.

Modularity facilitates the creation of customized-product variety. Other than minimizing the development lead times considerably, modularity enables companies to realize economies of scope, economies of substitution, and economies of scale.

Companies use additional concepts to increase the re-usability of customized products, such as platform and commonality approaches. Under the commonality approach, end users can use multiple comments on a product for various purposes.

Similarly, a product platform strategy can help companies customize products into several end variants of the product family. The originator of the innovation gives customers the ability to develop new product concepts on their own.

Types of Mass Customization

Below are the four main types of mass customization, each with different characteristics and are applied under different conditions:

Mass Customization

1. Collaborative Customization

Companies work in collaboration with customers who cannot articulate what they want and are not in a position to specify their preferred options. Under collaborative customization, customers are offered a range of product options from where to choose, while the product features are reviewed and adjusted.

2. Adaptive Customization

Under the adaptive approach, manufacturing firms provide customized products that can perform different functions. The available technologies make it easy to create the product’s architectural aspects rather than repeatedly adjust its components. Customers can then alter the standard products during use.

3. Cosmetic Customization

The cosmetic customization approach is used when end-users prefer similar features and differ in how they want it packaged. In such a case, companies produce standardized products and present them in different ways that suit customers. For example, the products’ attributes are advertised or displayed differently.

4. Transparent Customization

The transparent customization approach is mostly used when companies can predict their customers’ specific needs, especially when customers do not prefer to state their preferences repeatedly. Companies need not overstate that the products are customized when providing them; rather, they customize products within a standard package based on customers’ behavior and no direct interaction.

Mass Customization of Software Products

Mass customization is also applicable to intangible products, such as software. Companies use prototype implementation with industrial partners as a tool to enable the automatic derivation of software artifacts required to meet customer-specified features.

A product model is then used to deduce information about the different software components and the existing issues. Quite often, product families are presented using a product model with multiple abstractions. The technique helps in the identification and definition of software features. However, meeting personal customer’s needs requires optimal balancing between operation reality and customer needs.

Real-World Examples

Free-only financial planners allow their principal clients to customize their managed accounts to align with market conditions. The customer may decide to purchase products that are in line with their time horizon, future goals, or risk tolerance.

Another example of mass customization is in the clothing industry, where apparel firms use computer-controlled machines to cut fabrics that match individual body measurements.

More Resources

Thank you for reading CFI’s guide to Mass Customization. To keep learning and advancing your career, the following resources will be helpful:

0 search results for ‘