Faculty Publication: Dr. Yazdani

April 2021

My most recent publication is about competition between companies with “mass customization” capabilities. Mass customization refers to the collection of flexible and integrated processes and technologies enabling a company to efficiently tailor its products to a wide range of customer preferences. Consider, for example, Nike’s “By You” or Oakley’s custom sunglasses production lines. The research question we investigate in our paper is how such companies should adjust the scope of their product lines and prices when facing competitors (e.g., Adidas or Ray-Ban) adopting a similar mass customization practice.

A few decades ago, mass customization was hailed as a competitive weapon many companies sought to gain advantage in the market. As the mass customization technology has become more accessible, many businesses have adopted the practice to some degrees. While one might expect that companies can enjoy higher profits if they manage to improve the fit between their offerings and the diverse tastes of their customers (through mass customization), the failure stories outnumber the thriving cases. Nevertheless, there are few formal studies addressing mass customization in competition. Our paper is an effort to fill that gap.

One of the most important business insights from our paper is that managers should take the benefits of mass customization with a grain of salt. Through a mathematical (game-theoretical) analysis, we show that competing companies’ profits can decrease with the availability of the mass customization technology—depending on customers’ sensitivity to product fit. This adverse profit effect could coincide with customers receiving lower net values from the product (on average) when taking into account the premium price of customized products. So it could be the case that mass customization benefits neither the company adopting it nor its customers.