Customizing complex products

When should the vendor take control?

Mrinal G Ghosh, Shantanu Dutta, Stefan Stremersch

Research output: Contribution to journalArticle

51 Citations (Scopus)

Abstract

Casual observation suggests that firms use contrasting practices and procedures when offering customized products to individual customers. Some firms take a "hands-off" approach and let customers self-select their desired product. In contrast, other firms are proactively involved in designing customized solutions to individual customer needs. The authors call the former "low vendor customization control" and the latter "high vendor customization control." Despite the strategic importance of customization, no research has shed light on the rationale for using these contrasting approaches to customization and their normative consequences. The authors develop a conceptual model that contends that the appropriate level of vendor control over the customization decision is a function of technology and knowledge considerations. They use data on 304 procurement arrangements for customized products to test their hypotheses and to explore the normative ramifications for three key measures of performance: closeness of the delivered product to customer needs, delivery performance, and the vendor's operating profits. The results show that contracting parties choose the level of vendor control over customization in a strategic and discriminating way to enhance the benefits from customization for both parties. The authors discuss implications for both theory and practice.

Original languageEnglish (US)
Pages (from-to)664-679
Number of pages16
JournalJournal of Marketing Research
Volume43
Issue number4
DOIs
StatePublished - Nov 2006
Externally publishedYes

Fingerprint

Complex product
Vendors
Customization
Customer needs
Hypothesis test
Profit
Rationale
Contracting
Delivery performance
Closeness
Conceptual model
Procurement

ASJC Scopus subject areas

  • Business and International Management
  • Economics and Econometrics
  • Marketing

Cite this

Customizing complex products : When should the vendor take control? / Ghosh, Mrinal G; Dutta, Shantanu; Stremersch, Stefan.

In: Journal of Marketing Research, Vol. 43, No. 4, 11.2006, p. 664-679.

Research output: Contribution to journalArticle

Ghosh, Mrinal G ; Dutta, Shantanu ; Stremersch, Stefan. / Customizing complex products : When should the vendor take control?. In: Journal of Marketing Research. 2006 ; Vol. 43, No. 4. pp. 664-679.
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