The Cultural Influence on Mass Customization [1st ed.] 9783658310141, 9783658310158

Table of contents :
Front Matter ....Pages I-XVII
Introduction to the cultural influence on mass customization (Carolin Wabia)....Pages 1-10
Theoretical background on mass customization research (Carolin Wabia)....Pages 11-42
Fundamentals of culture research (Carolin Wabia)....Pages 43-57
Cultural influence on consumer behavior under mass customization (Carolin Wabia)....Pages 59-72
Cultural-bound interest in mass customization – survey (Carolin Wabia)....Pages 73-106
Cultural-bound actions in mass customization – experiment (Carolin Wabia)....Pages 107-157
Conclusion (Carolin Wabia)....Pages 159-163
Back Matter ....Pages 165-218

Citation preview

Carolin Wabia

The Cultural Influence on Mass Customization

The Cultural Influence on Mass Customization

Carolin Wabia

The Cultural Influence on Mass Customization

Carolin Wabia Goslar, Germany Dissertation Clausthal University of Technology, Germany, 2019, D 104

ISBN 978-3-658-31014-1 ISBN 978-3-658-31015-8  (eBook) https://doi.org/10.1007/978-3-658-31015-8 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Responsible Editor: Carina Reibold This Springer Gabler imprint is published by the registered company Springer Fachmedien Wiesbaden GmbH part of Springer Nature. The registered company address is: Abraham-Lincoln-Str. 46, 65189 Wiesbaden, Germany

Acknowledgements After a long journey, consisting of academic education in Europe and Asia and intensive years of research on this dissertation, I would like to thank everybody who supported me on my way. Specifically, I thank Prof. Dr. Wolfgang Pfau for his supervision and support and Prof. Dr. Heike Schenk-Mathes for her feedback and review of this thesis. Furthermore, I thank Prof. Dr. Mathias Erlei (†) for his continuous constructive feedback on this research. For intense scientific discussions, I thank the professors and my colleagues from the Institute of Management and Economics at Clausthal University of Technology, especially the Clausthaler Ökonomisches Oberseminar and Oberseminar Unternehmensführung. For their moral support, I thank my friends and family. Especially, I would like to thank my mother Petra and my husband Michael for their encouragement and always being there for me.

Table of contents Acknowledgements ...................................................................................................... V Table of contents ....................................................................................................... VII List of abbreviations ................................................................................................... XI List of figures ............................................................................................................ XIII List of tables................................................................................................................XV Abstract ................................................................................................................... XVII 1

Introduction to the cultural influence on mass customization ........................... 1 1.1 Relevance of the cultural influence on mass customization............................ 1 1.2 Structure of the dissertation ............................................................................. 9

2

Theoretical background on mass customization research ............................... 11 2.1 Definition of mass customization .................................................................. 11 2.2 The development of mass customization ...................................................... 13 2.2.1 Mass customization enabler................................................................ 13 2.2.2 Mass customization capabilities ......................................................... 15 2.3 Mass customization efficacy and classifications ........................................... 16 2.3.1 Mass customization efficacy .............................................................. 16 2.3.2 General classifications of mass customization ................................... 18 2.3.3 Mass customization stages.................................................................. 24 2.4 Mass customization advantages and disadvantages ...................................... 26 2.4.1 Benefits and drawbacks for consumers .............................................. 26 2.4.2 Opportunities and challenges for companies ...................................... 35

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Fundamentals of culture research ...................................................................... 43 3.1 Definition of culture ...................................................................................... 43 3.2 Hofstede’s 6D model for the measurement of culture .................................. 46 3.2.1 Cultural dimensions ............................................................................ 47 3.2.2 Critical reflection ................................................................................ 52 3.3 Hofstede’s model in comparison to other approaches................................... 54

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Cultural influence on consumer behavior under mass customization ............ 59 4.1 Research gaps ................................................................................................ 60 4.2 General research approach............................................................................. 64 4.2.1 Strategies of inquiry............................................................................ 65

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4.2.2 Distinctiveness of cross-cultural research .......................................... 67 4.2.3 Willingness-to-pay measurements ...................................................... 69 5

Cultural-bound interest in mass customization – survey ................................. 73 5.1 Research goals and investigative questions ................................................... 73 5.2 Methodology and data collection approach ................................................... 74 5.2.1 Design ................................................................................................. 74 5.2.2 Procedure ............................................................................................ 75 5.2.3 Operationalization of variables ........................................................... 77 5.2.4 Participants ......................................................................................... 79 5.3 Data analysis and results................................................................................ 80 5.3.1 Mass customization consideration ...................................................... 80 5.3.2 Mass customization stage consideration............................................. 86 5.3.3 Mass customization stage per product category ................................. 88 5.3.4 Willingness-to-pay for different mass customization stages .............. 96 5.4 Discussion of survey findings ..................................................................... 103 5.4.1 Meaning of results ............................................................................ 103 5.4.2 Limitations ........................................................................................ 103 5.4.3 Directions for further research .......................................................... 105

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Cultural-bound actions in mass customization – experiment ........................ 107 6.1 Research goals and investigative questions ................................................. 107 6.2 Hypothesis development.............................................................................. 108 6.2.1 Willingness-to-pay............................................................................ 108 6.2.2 Product evaluations........................................................................... 109 6.2.3 Product evaluations and willingness-to-pay ..................................... 110 6.2.4 Culture .............................................................................................. 111 6.3 Methodology and data collection ................................................................ 115 6.3.1 Experimental design ......................................................................... 115 6.3.2 Procedure .......................................................................................... 125 6.3.3 Participants ....................................................................................... 127 6.4 Data analysis and results.............................................................................. 128 6.4.1 Willingness-to-pay............................................................................ 129 6.4.2 Product evaluations........................................................................... 136 6.4.3 Culture .............................................................................................. 139 6.5 Discussion of experimental findings ........................................................... 152

Table of contents

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6.5.1 Meaning of results ............................................................................ 152 6.5.2 Limitations ........................................................................................ 153 6.5.3 Directions for further research .......................................................... 155 7

Conclusion ........................................................................................................... 159 7.1 Summary of findings and contribution ........................................................ 159 7.2 Managerial implications .............................................................................. 161

References .................................................................................................................. 165 Appendix .................................................................................................................... 183 Appendix 1: Comparison of research approaches ................................................ 183 Appendix 2: Survey - English version ................................................................. 183 Appendix 3: Survey- Further results .................................................................... 196 Appendix 4: Chocolate configurator analysis ...................................................... 200 Appendix 5: Experimental instructions – German version .................................. 201 Appendix 6: Experiment – German version ......................................................... 203 Appendix 7: Usage of parametric vs. non-parametric data analysis .................... 206 Appendix 8: Experiment- Further statistical evaluation- Mediation analysis...... 206 Appendix 9: Experiment- Further statistical evaluation- Influence of personality traits on WTP........................................................................................................ 208 Appendix 10: Experiment- Further statistical evaluation- Regression Analysis – Further results ....................................................................................................... 209 Appendix 11: Experiment- Further statistical evaluation- Regression Analysis – Standardized Regression Coefficients .................................................................. 210 Appendix 12: Experiment- Further statistical evaluation- Principal Component Analysis ................................................................................................................ 213 Appendix 13: Experiment- Further statistical evaluation- Regression analysis with adapted culture scale ............................................................................................ 215

List of abbreviations ACW B Beta BDM CI df DV Hx IV n M MC MED Md OPS p r/R2 SD U vs. VSM 94 WTP α χ2 Ø

Additional Custom Work Unstandardized regression coefficient Standardized regression coefficient Becker-de Groot-Marschak method (WTP measurement) Confidence interval Degrees of freedom Dependent variable Hypothesis X Independent variable Sample size Mean Mass customization Mediating variable Median Optimal pricing solution (van Westendorp price sensitivity) P-value effect size Standard deviation Mann-Whitney-U coefficient Versus values survey module (Hofstede’s national cultural dimensions) Willingness-to-pay Cronbach’s alpha Chi-Square Average

List of figures Figure 1 Dissertation structure ........................................................................................ 9 Figure 2 Mass customization stages ............................................................................. 25 Figure 3 Benefits and drawbacks of mass customization for consumers ..................... 26 Figure 4 Opportunities and challenges of mass customization for companies............. 35 Figure 5 The „onion“ model of cultural levels ............................................................. 44 Figure 6 Definition of cultural dimensions ................................................................... 47 Figure 7 Experimental WTP measurement with the BDM mechanism ....................... 72 Figure 8 Survey screen 4: consideration of mass customization (image section) ........ 75 Figure 9 Survey screen 5: explanation of mass customization stages .......................... 76 Figure 10 Survey respondents according to nationality and gender ............................. 79 Figure 11 Mass customization consideration by product category .............................. 81 Figure 12 Mass customization stage consideration ...................................................... 86 Figure 13 Mass customization stage preference by product category (Germany) ....... 89 Figure 14 Mass customization stage preference by product category (China)............. 90 Figure 15 WTP differences for standard chocolate ...................................................... 96 Figure 16 WTP differences for chocolate (Cosmetic Packaging & ACW) .................. 97 Figure 17 WTP differences for chocolate (Assembly) ................................................. 98 Figure 18 WTP differences for chocolate (Fabrication) ............................................... 99 Figure 19 WTP differences for chocolate (Creation) ................................................. 100 Figure 20 Differences in OPS among MC stage by nationality ................................. 102 Figure 21 Example of experimental treatment B (Assembly) – image section .......... 117 Figure 22 Example of experimental treatment C (Fabrication) – image section........ 118 Figure 23 Complete counterbalancing in the experimental design ............................ 120 Figure 24 Experimental procedure ............................................................................. 125 Figure 25 Experimental screen 15: WTP for chocolate (Fabrication) ........................ 126 Figure 26 Division of experimental participants by nationality and gender .............. 128 Figure 27 Experimental WTP differences among nationalities .................................. 129 Figure 28 Experimental product evaluation differences among nationalities ............ 136 Figure 29 Individual cultural orientation differences among nationalities................. 139 Figure 30 Qualitative, quantitative and mixed-methods research approaches ........... 183 Figure 31 General experience with MC by nationality............................................... 196 Figure 32 Previously customized products by product category (Germany, n=121) . 197

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List of figures

Figure 33 Previously customized products by product category (China, n=48) ........ 198 Figure 34 Product evaluation measurement (Control)................................................ 204 Figure 35 Statistical data analysis approach ............................................................... 206 Figure 36 Individual cultural orientation differences among nationalities (corrected culture scale) ..................................................................................... 215

List of tables Table 1 Comparison of mass customization measurements ......................................... 23 Table 2 Hofstede’s cultural framework in comparison to Kluckhohn/Strodtbeck and Trompenaars ....................................................................................... 56 Table 3 Assignment of research questions to investigative questions.......................... 66 Table 4 Distinctiveness of cross-cultural research ....................................................... 68 Table 5 Stated vs. revealed preference measurement for WTP .................................... 69 Table 6 Real WTP measurement in experimental MC research................................... 71 Table 7 Assignment of investigative questions to survey screens ................................ 77 Table 8 Example of customizable products per product category ................................ 77 Table 9 Mass customization stage explanation for WTP - survey ............................... 78 Table 10 MC consideration differences among German females and males- MannWhitney U ........................................................................................... 82 Table 11 MC consideration differences among Chinese females and males – MannWhitney U ........................................................................................... 82 Table 12 MC consideration differences among Germans and Chinese – Mann-Whitney U ......................................................................................................... 83 Table 13 MC stage consideration differences among Germans and Chinese - MannWhitney U ........................................................................................... 86 Table 14 MC stage preference by product category between German males and females – Chi-Square.......................................................................... 91 Table 15 MC stage per product category differences among Germans and Chinese Chi-Square .......................................................................................... 92 Table 16 WTP differences for standard chocolate - Mann-Whitney U ........................ 96 Table 17 WTP differences for chocolate (Cosmetic Packaging & ACW) - MannWhitney U ........................................................................................... 97 Table 18 WTP differences for chocolate (Assembly) - Mann-Whitney U................... 98 Table 19 WTP differences for chocolate (Fabrication) - Mann-Whitney U ................ 99 Table 20 WTP differences for chocolate (Creation) - Mann-Whitney U ................... 101 Table 21 Hofstede’s national cultural dimension scores for Germany and China ..... 111 Table 22 Reliability of the product evaluations scale - Cronbach’s alpha ................. 121 Table 23 Reliability of the CVSCALE - Cronbach’s alpha ....................................... 123 Table 24 Assignment of investigative questions to hypothesis and operationalization in the experiment .................................................................................. 127 Table 25 WTP differences among nationalities – Mann-Whitney U ......................... 129

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List of tables

Table 26 WTP differences among MC stages – Friedman ......................................... 131 Table 27 WTP differences among MC stages – Wilcoxon signed rank ..................... 131 Table 28 Product evaluation differences among nationalities- Mann-Whitney U ..... 136 Table 29 Product evaluation differences among MC stages – Friedman ................... 137 Table 30 Product evaluation differences among MC stages- Wilcoxon signed rank . 137 Table 31 Individual cultural orientation differences among nationalities – MannWhitney U ......................................................................................... 140 Table 32 Multiple linear regression for WTP (Control) ............................................. 142 Table 33 Multiple linear regression for WTP (Assembly) ......................................... 143 Table 34 Multiple linear regression for WTP (Fabrication) ....................................... 144 Table 35 Multiple linear regression for WTP ............................................................. 145 Table 36 General interest in product category by nationality..................................... 199 Table 37 Mediation analysis for Product Evaluation Control on Nationality and WTP (Control) ........................................................................................... 207 Table 38 Mediation analysis for Product Evaluation Assembly on Nationality and WTP (Assembly) .............................................................................. 207 Table 39 Mediation analysis for Product Evaluation Fabrication on Nationality and WTP (Fabrication) ............................................................................ 208 Table 40 Regression of personality traits on WTP ..................................................... 208 Table 41 Multiple linear regression for WTP in the forward method by nationality . 209 Table 42 Multiple linear regression for WTP (Control) ............................................. 210 Table 43 Multiple linear regression for WTP for (Assembly) ................................... 211 Table 44 Multiple linear regression for WTP (Fabrication) ....................................... 212 Table 45 Principal component analysis culture scale ................................................. 213 Table 46 Factor loadings- principal component extraction culture scale ................... 214 Table 47 Reliability of CVSCALE comparison of original scale and scale after PCA................................................................................................... 214 Table 48 Individual cultural orientation differences among nationalities (corrected culture scale) – Mann-Whitney U .................................................... 215 Table 49 Multiple linear regression for WTP (Control) - corrected culture scale ..... 216 Table 50 Multiple linear regression for WTP (Assembly) - corrected culture scale .. 217 Table 51 Multiple linear regression for WTP (Fabrication) - corrected culture scale 218

Abstract Mass customization describes the personalization of mass products towards individual consumer tastes. This is mostly executed in online company-customer interaction systems, such as product configurators, which enable consumers to adapt products on varying mass customization stages. From customization of the Cosmetic Packaging and Additional Custom Work over Assembly and Fabrication to Creation, this concept allows the satisfaction of heterogeneous consumer demands while keeping a large-scale production. Mass customization has received much attention in science and management in recent years, but although culture influences every aspect of life, little is known about how consumers’ cultural backgrounds affect mass customization. This thesis empirically investigates, utilizing quantitative research methods in the form of a survey and an experiment among German and Chinese participants, to what extent mass customization preferences vary among people in diverse nationalities and which cultural dimensions cause this effect. In the survey, respondents are questioned about their interest in mass customization. Findings indicate that preferences for different stages of mass customization and different product categories vary based on respondents’ nationality. Additionally, German and Chinese respondents show distinctive willingness-to-pay (WTP) levels for personalized chocolate. These findings were further examined in a laboratory experiment where participants customized chocolate on various mass customization stages utilizing different product configurators. Chinese participants report a significantly higher WTP for personalized chocolate in comparison to the standard chocolate. In addition, their WTP for customized chocolate is significantly higher than the WTP stated by German participants. Furthermore, findings indicate that WTP for mass-customized chocolate is significantly influenced by the cultural dimensions uncertainty avoidance, individualism, and power distance. In conclusion, the main contribution of this thesis is the proof of a cultural influence on mass customization, caused by the above-named cultural dimensions and the evidence of WTP differences for varying mass customization stages. These results yield various directions for further research and managerial implications.

1 Introduction to the cultural influence on mass customization 1.1 Relevance of the cultural influence on mass customization For many centuries, specialists like tailors or carpenters handcrafted products directly towards consumer needs.1 Production was artisanship that manufactured unique pieces.2 The high amount of manual labor and complete customization to customer preferences often led to high prices, being too expensive for most people.3 Due to the invention of the moving assembly line, a massive change of the economy towards production line manufactured items occurred. Workers were now responsible for mounting only one specific product part or workflow in the complete production line.4 Consequently, products became more available and affordable due to economies of scale.5 In mass production, customers accepted less customization for lower prices. 6 Half of the cars in the USA were Ford’s Model T; produced according to Henry Ford’s credo “any customer can have a car painted any color that he wants so long as it is black.” 7 Levitt proposed that globalization lead to a worldwide homogenization of consumer tastes, creating one world market with identical consumer preferences, independently of a person’s cultural heritage or location.8 As a result, multinationals could sell standardized products with identical strategies9 all over the world.10 Lampel and Mintzberg even go so far as to conclude for standardization being “ultimately rooted in the wish to simplify the world and make our frameworks as general as possible.”11 International product standardization is expected to increase foreign product profit12 under the conditions of high cross-national homogeneity of demand, great possibility for economies of scale, high efforts of product modification, high price elasticity of demand, a small error of managers, and high quality of strategy implementation.13 This strategy

1

Kaplan and Haenlein (2006, p. 168). Hessmann (2014, p. 14). 3 Kaplan and Haenlein (2006, p. 168). 4 Kaplan and Haenlein (2006, p. 168). 5 Hessmann (2014, p. 14). 6 Addis and Holbrook (2001, pp. 51–52). 7 Bellis et al. (2016, p. 162). 8 Levitt (1983). 9 Homogeneity of consumer preferences implies that no differences affect product choices, thus companies do not need to adapt products or strategies to local markets. 10 Jain (1989, p. 70). 11 Lampel and Mintzberg (1996, p. 29). 12 Jain (1989, p. 70). 13 Schmid and Kotulla (2011, p. 491). 2

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 C. Wabia, The Cultural Influence on Mass Customization, https://doi.org/10.1007/978-3-658-31015-8_1

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Introduction to the cultural influence on mass customization

will eventually result in time advantages and a positive company image due to a consistent appearance towards the customer.14 As homogenization of consumer tastes is presumed, the concept of standardization ignores the existence of differences in consumer tastes. Levitt’s idea of homogenization of consumer tastes is based on the assumption of rational consumer behavior.15 Nevertheless, there are many consumption differences across nations, and consumers are often not rational decision-makers.16 According to Liang and He, cultural differences influence consumer preferences.17 As argued by Mooij and Hofstede, converging technology and vanishing income differences across countries will not lead to a homogenization of consumer behavior, but rather to more heterogeneity across the world due to cultural differences that will manifest through income convergence.18 The counterpart of standardization is differentiation19, which permits an adjustment of products towards local consumer tastes and country-specific market segments.20 Differentiation grants simple conformity to local regulations and reactions to economic differences21, causing an increased appeal to local demand and increased product acceptance in the market.22 Companies reacted to those heterogeneous consumer demands with differentiation in the form of segmentation23, where consumers were divided into groups sharing the same preferences.24 Since the 1970s, manufacturers increased their variety and brands to satisfy customer demands better.25 Product proliferation took place; for example, the available TV screen sizes in the USA increased from five sizes in the 1970s to 15 sizes in the 1990s.26 The standardization versus differentiation debate yielded different outcomes, as scholars could not decide which strategy is dominant.27 Apetrei et al. show that the choice be-

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Kutschker and Schmid (2008, p. 1008). Preference for low priced, high quality standard product compared to more customized, more expensive product (de Mooij and Hofstede, 2002, p. 61). 16 Mooij and Hofstede (2002, p. 61). 17 Liang and He (2012, p. 352). 18 Mooij and Hofstede (2002, p. 61). 19 Sometimes also referred to as adaptation. 20 Kutschker and Schmid (2008, p. 1009). 21 Kutschker and Schmid (2008, p. 1009). 22 Kutschker and Schmid (2008, p. 1009). 23 Kaplan and Haenlein (2006, p. 168). 24 Lampel and Mintzberg (1996, p. 22). 25 Broekhuizen and Alsem (2002, p. 309). 26 Bardakci and Whitelock (2003, p. 464). 27 Schmid and Kotulla (2011, p. 497). 15

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tween standardization and differentiation is influenced by business activity, international experience, and personal values.28 The strategic decision of whether to standardize or differentiate is the core of every company marketing mix.29 Traditional mass manufacturing disclosed a significant weakness: the inability to react to other competitive criteria in the market.30 With traditional approaches to manufacturing, some customers were dissatisfied with standard offerings31, and those with unique needs32 even remained unserved.33 Since the start of the 2000s, the attention shifted towards customization research.34 Due to technological advancement35, such as the development of communication technology and new mass-customizing production methods, mass customization, the individual customization of a mass-manufactured product36, was enabled.37 Pine et al. explain that customers do not want more variety, they “want exactly what they want -when, where, and how they want it - and technology now makes it possible for companies to give it to them.”38 Thus, the idea of customizing is not new, however, the ability to offer it to a mass-market is new.39 In many industries, the traditional “mass production” ideal is dared by the evolving paradigm “mass customization”.40 The main idea of mass customization is to offer web-based toolkits41 letting each user configure personalized products according to individual needs, which is thereafter solely manufactured for the client.42 Thus, consumers take an active role in the value creation

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Apetrei et al. (2015, p. 1519). Schmid and Kotulla (2011, p. 492). 30 McIntosh et al. (2010, p. 1557). 31 Franke and Piller (2004, p. 403); Piller (2004a, p. 319). 32 Needs, also referred to as sources of motivations are split into intrinsic and extrinsic and consistent can be subdivided into physical, mental or spiritual. See Coletti and Aichner (2011, p. 1). 33 Schreier (2006, p. 317). 34 Franke et al. (2009, p. 103). 35 Hessmann (2014, p. 15). 36 Silveira et al. (2001, p. 11). 37 Schreier (2006, p. 318). 38 Pine, II et al. (1995, p. 103). 39 Goldsmith and Freiden (2004, p. 228); Duray et al. (2000, p. 606). 40 Kotha (1995, p. 21). 41 An example for mass customizable products in a web-based product configurator are shoes by Nike (Nike by you, https://www.nike.com/nike-by-you, retrieved: 25.06.2019) or watches by Swatch (swatch X you, https://shop.swatch.com/en_us/watches/originals/gent/swatchxyou-sxy-2017-g.html, retrieved: 25.06.2019) which allow an individual compilation, further products can be found on the Configurator database: https://www.configurator-database.com/ . 42 Franke and Schreier (2008, p. 93). 29

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of the respective product.43 The integration into the value creation can be done by “defining, configuring, matching, or modifying an individual solution.” 44 As a result, users need to transfer their wishes and needs into a product specification via a company-customer-interaction.45 This approach implies that companies no longer try to understand consumer needs but equip them with tools to “transferring need- related aspects of product and service development”.46 Mass customization delivers superior customer value47 as it provides exactly what customers want at reasonable prices.48 Mass customization improves the fulfillment of customer needs49 through a high level of individualization and tailoring that was not possible before.50 When observing customers’ mass-customized products, those are indeed entirely individualized with heterogeneous designs.51 There should thus be no more “one size fit all” approach, as customer needs are growing more diverse.52 As a consequence, an amplification of demand for customized products 53 due to increased heterogeneity of customer demands54 is expected. Piller stated that even if customization is not deemed to become the dominating strategy, it surely is no longer a niche market, but a promising market segment. 55 In previous research, he observed that ten to twenty percent of consumers, accounting for twenty to thirty percent of the market volume, are interested in mass-customized fashion products.56 Mass customization became increasingly popular in various businesses57 and for products, which were usually seen as “undifferentiated commodities58”.59 At the beginning of the 2000s, large-scale mass customization was only practiced by a few firms.60 A

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Liechty et al. (2001, p. 183). Piller (2004a, p. 315). 45 Piller (2004a, p. 315). 46 Hippel and Katz (2002, p. 821). 47 Schreier (2006, p. 317). 48 Broekhuizen and Alsem (2002, p. 310). 49 Alford et al. (2000, p. 99). 50 Addis and Holbrook (2001, p. 51). 51 Franke and Piller (2004, p. 412). 52 Gilmore and Pine, II (1997, p. 91). 53 Franke et al. (2009, p. 103). 54 Gilmore and Pine, II (1997, p. 91). 55 Piller (2004a, p. 320). 56 Piller (2004a, p. 320). 57 Moon et al. (2008, p. 31). 58 Such as lighting controls or midrange computers. 59 Addis and Holbrook (2001, p. 52). 60 Piller (2004a, p. 313). 44

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decade later, the market has grown to an industrial scale.61 Franke and Hader constitute that in 2014, the market shares of customized consumer goods were still petite in comparison to traditional standardized products.62 But continuously increasing global narcissism rates are likely to increase the demand for personalized and unique products.63 Mass customization has since become a “dominant form of production in business-tobusiness and business-to-consumer, high-end and major consumer markets.”64 To illustrate, large established companies such as Nike or Adidas offer mass customization toolkits in the form of configurators65 for the individualization of sneakers. In addition, also start-up companies like Zazzle or Cafepress are very successful with their mass customization platforms.66 Moreover, mass customization is popular for branded and unbranded products.67 By August 2019, the configurator database report, a report listing all available product configurators on the market, showed 125268 configurators presenting 373 products from 17 industries.69 Academically, the number of research publications searched on google scholar under the term „mass customization” revealed more than 204,000 hits.70 Mass customization is a strategy affecting the vast majority of companies in the market.71 While customization has been glorified in the business environment, it is not always a free strategic decision, but a company’s reaction to substantial “economic and technological forces.”72 As markets of today are characterized by an increasing variety, steady shortening of product life cycles, decreasing customer loyalty, and fierce price competition, companies consider mass customization73 to stay competitive.74 Mass customization opens business opportunities in seemingly mature markets.75 Franke et al. predict a future increase in importance of individual marketing in comparison to more

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Hessmann (2014, p. 16). Franke and Hader (2014, p. 1215). 63 Bellis et al. (2016, p. 170). 64 Fogliatto et al. (2012, p. 22). 65 Franke and Schreier (2010, p. 1020). 66 Eliason (2012). 67 Miceli et al. (2013, p. 210). 68 In comparison to 900 configurators in 2013 (https://www.configurator-database.com/report-books., retrieved: 01.08.2019. Cyledge: Configurator Database ). 69 https://www.configurator-database.com/, retrieved: 01.08.2019. Cyledge: Configurator Database . 70 https://scholar.google.de/, search: mass customization, retrieved: 01.08.2019. 71 Tien (2011, p. 129). 72 Lampel and Mintzberg (1996, p. 21). 73 Franke and Piller (2003, p. 595). 74 Alford et al. (2000, p. 109). 75 Franke and Piller (2004, p. 412). 62

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traditional approaches like segmentation or mass marketing.76 Mass customization is “a response to today’s opportunities of heterogeneous demands and the need for companies to become truly customer-centric.”77 Personalization combines the advantages of standardization and adaptation strategies as it supplies individually tailored products at almost mass production costs.78 A never known variety through flexibility and quick responsiveness is available to companies today.79 Researchers have realized the importance of culture research, as cultural differences are deemed to affect perceptions, characters, and behavior80 and shape people’s motivations, lifestyles, and product choices.81 According to Craig and Douglas, culture influences all aspects of human behavior.82 In addition, the importance of international trade, and with it the research, has grown in the last years83 and is expected to increase in the coming years.84 Thus understanding how culture affects businesses and consumers is of great significance. To Frank, Abulaiti, Torrico and Enkawa a better knowledge of cross-cultural differences improves companies marketing strategies.85 De Mooij and Hofstede summarize from a paper by Claire Murphy86 that mainly American and British merchants ignore cultural differences when expanding their operations abroad.87 However, the authors argue in favor of divergence of consumer behavior across the world, as they claim that “convergence [of consumer tastes; note of the author] is merely a persistent myth of international marketing.”88 Liang and He constitute that behavior of “Westerners” is mainly based on their thoughts, feelings and attributes, and thus aim at being independent and distinctive.89 In Western culture, products are used to define one’s self and the own uniqueness.90 In comparison, East Asians behavior is more based on thoughts, feelings, and actions of others, where social norms are followed to be positively evaluated by 76

Franke et al. (2009, p. 116). Piller and Blazek (2014, p. 117). 78 Moon et al. (2008, p. 32). 79 Pine, II (1993a, p. 47). 80 Yeniyurt and Townsend (2003, p. 378). 81 Tse et al. (1989, p. 459). 82 Craig and Douglas (2006, p. 322). 83 Schmid and Kotulla (2011, p. 491). 84 World Trade Organization (2019). 85 Frank et al. (2013, p. 2397). 86 Primary paper: Claire Murphy (1999): Tesco braves the degrees of taking brands abroad in Marketing: Journal of Sales Management 12 (April 22), 19, not available. 87 Mooij and Hofstede (2002, p. 62). 88 Mooij and Hofstede (2002, p. 62). 89 Liang and He (2012, pp. 352–353). 90 Snyder (1992, p. 9); Liang and He (2012, p. 352). 77

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others.91 Briley et al. found that compromising in consumer decisions is more salient in East Asian than in North American cultures.92 Hofstede proved that cultural orientations of people in Western and Eastern cultures are vastly heterogeneous as they are diverse between countries of the same regions.93 Previous research did not investigate differences in the formation of customer satisfaction and preference structures in Asian countries.94 With regard to cultural influences on consumer behavior in Eastern and Western countries, research has been criticized for focussing on the comparison95 of “Western (American, Canadian, Western European) with East Asian (Chinese, Japanese, Korean) populations”.96 Findings by Hagenmeier concerning consumer choice preferences imply “differences exist even between relatively similar Western cultures, which highlight the need for further research”.97 When looking at the cultural influence on mass customization, companies using mass customization strategies worldwide have to be studied. Not all mass customization approaches are successful98, Moon et al. name Dell, a large computer manufacturer, as an example of a company performing poorly in Korea and China, and concludes that the personal approach might not be trendy in these countries.99 De Bellis et al. informs about the success of mass customization in some East Asian markets but a failure in others.100 He puts stress on cultural differences in mass customization, as the request for customized products is a new customer trend in East Asia.101 Mass customization has been adopted by companies worldwide.102 On one side, an increasing number of consumers want customized products with customization having gotten the norm.103 On the other side, the universal appeal of mass customization is questioned. Researchers claim mass customization only appealing to specific consumers.104 Whereas other scholars advocate that mass customization is only interesting for

91

Liang and He (2012, pp. 352–353). Briley et al. (2000). 93 Hofstede et al. (2017). 94 Frank et al. (2013, p. 2403). 95 Bellis et al. (2015, p. 318). 96 Henrich et al. (2010, p. 71). 97 Hagenmaier (2015, p. 178). 98 Franke and Piller (2004, p. 402). 99 Moon et al. (2008, p. 31). 100 Bellis et al. (2015, p. 309). 101 Bellis et al. (2015, p. 309). 102 Gilmore and Pine, II (1997, p. 91). 103 Schreier (2006, p. 318). 104 Bharadwaj et al. (2009, p. 216). 92

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Introduction to the cultural influence on mass customization

certain products.105 For instance, consumers purchasing oil, gas, or wheat106 may not want nor need customization. Moreover, some academics argue that unique specifications might not be universally crucial for product choice.107 Some researchers declare a limited demand increase for customization.108 Additionally, not all customers favor the additional responsibility of designing a customized good.109 Bharadwaj et al. challenge the universal appeal of mass customization as they claim that customized products are not for everybody and only make sense if customers have a perfect preference insight.110 As uniqueness111 of the personalized product is an important benefit, it can be speculated if mass customization only holds value for individualistic cultures. Although culture generalizes a group of people based on their values and beliefs, one cannot conclude that those cultural orientations apply to all members of a respective culture in the same way. Knowing about the existence of “subcultures” with divergent values from the national culture is crucial for managers.112 Franke et al. speculate about a variation of mass customization effects between different societies.113 Kramer, Spolter-Weisfeld and Thakkar found a cultural influence on a person’s responses to personalization.114 Moon et al. observed different consumer reactions to customized products based on consumers’ national cultural background.115Liang and He stated that the effect of culture on consumer choices has been barely researched.116 Furthermore, the research of cultural influences on mass customization has been rare.117 Individual differences (such as need for uniqueness) influence the perceived value of mass customization, and that those perceptions are inter alia due to the perceived risk associated with the customized good.118 In summary, research proved that cultural differences shape consumer behavior, but little is known about their influence on mass customization, a process that requires consumers to become part of the value creation process and engage by utilizing own ideas

105

Zipkin (2001, pp. 84–85). Pine, II. et al. (1993c, p. 111). 107 Kramer et al. (2007, p. 246). 108 Zipkin (2001, p. 82). 109 Hunt et al. (2013, p. 328). 110 Bharadwaj et al. (2009, p. 216). 111 Merle et al. (2010, p. 506). 112 Huo and Randall (1991, p. 168). 113 Franke et al. (2010, p. 139). 114 Kramer et al. (2007, p. 255). 115 Moon et al. (2008, p. 33). 116 Liang and He (2012, p. 352). 117 Hagenmaier (2015, p. 178). 118 Hunt et al. (2013, p. 333). 106

Structure of the dissertation

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and needs. Mass customization can take different forms (or stages), from a lot of customization where the consumer needs to specify every aspect of the product to very little customization, where the user only needs to decide on a customized packaging of a standardized product. It is not known how consumers across the globe value different stages of customizations and which cultural dimensions have an influence. This thesis aims to compare consumers from the cultural different nations Germany and China to investigate how culture influences mass customization interests and actions. Therefore, the main research question is defined as: To what extent do mass customization preferences differ among nationalities and which dimensions of culture cause this effect?

1.2 Structure of the dissertation

Figure 1 Dissertation structure

This dissertation consists of seven main chapters. Chapter 2 handles the theoretical background of mass customization research. First, a definition and an explanation on the development of the concept are given, then, the efficacy and different classifications of mass customization levels are explained. Afterwards, an elaboration of the measurement

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Introduction to the cultural influence on mass customization

used in this thesis is given: the mass customization stages. The second chapter closes by describing the advantages and disadvantages of mass customization for consumers and companies. Chapter 3 explains the fundamentals of culture research, by first giving a general definition of culture before critically elaborating Geert Hofstede’s model of national cultural dimensions. The third chapter closes by contrasting Hofstede’s work with major culture measurement approaches. Chapter 4 builds on previous chapters by summarizing the cultural influence on consumer behavior under mass customization and illustrates the research gaps of this thesis, namely the preferences for mass-customized product categories, mass customization stages, willingness-to-pay and evaluation differences on varying mass customization stages and the cultural impact on valuation differences. The research questions and the general research approach will be discussed in further parts of chapter 4. Chapters 5 and 6 are the main components of this dissertation. In chapter 5, a survey about general and product-specific interest in mass customization is administered among German and Chinese participants. Additionally, hypothetical willingness-to-pay is measured for chocolate on different mass customization stages. After presenting research goals and investigative questions, the method, data analysis and results, chapter five closes with a discussion of survey findings, limitations, and implications for further research. Chapter 6 observes the actions of German and Chinese participants in a mass customization experiment. Participants were asked to customize chocolate on different mass customization stages and reveal their real willingness-to-pay, product evaluations, and individual cultural orientations. After presenting the research goals and investigative questions, hypothesis are presented about cultural influences on the WTP for mass customization. Thereafter, the method and data analysis and results are revealed before results are discussed by presenting the findings, limitations, and directions for further research. The last chapter summarizes the previous chapters, and provides an overall summary of the findings, main contributions, and managerial implications.

2 Theoretical background on mass customization research Mass customization is a relatively new concept that raised through technological advancement, thus there are still many unknown factors and influences in this construct. This chapter starts by giving a definition of mass customization before elaborating the development of mass customization with enablers from a market perspective and capabilities from the company perspective. Thereafter, mass customization efficacy and classifications are presented by explaining different functionalities of mass customization and which general stages or levels of mass customization can be differentiated. Thereafter, the mass customization stages used in this thesis are deducted. In the last subchapter, mass customization advantages and disadvantages are discussed from a company as well as from a customer perspective. 2.1 Definition of mass customization In 1987, Davis was the first author to use the term mass customization.119 Pine, as the first author to define the concept, describes mass customization as “developing, producing, marketing, and delivering affordable goods and services with enough variety and customization that nearly everyone finds exactly what they want.”120 To Hart, mass customization is not a simple strategy to undertake, and “it is not even a simple concept to comprehend”121, he gives a visionary definition of mass customization as “the ability to provide your customers with anything they want profitably, any time they want it, anywhere they want it, any way they want it”.122 In their analysis of mass customization definitions, Kaplan and Haenlein conclude a visionary definition characterizing mass customization (MC) as “a strategy that creates value by some form of company–customer interaction at the design stage of the operations level to create customized products, following a hybrid strategy combining cost leadership and differentiation”.123 Also to Piller, mass customization is a vision, he elaborates it as to “perform a company’s processes in a truly customer-centric manner, resulting in products or services that are corresponding to the needs and desires of each individual customer, and doing this without the surpluses traditionally connected with customization.”124 Some authors have a more narrow definition of the mass customization concept as they see mass customization only if all individual customer constraints are met.125

119

Franke and Piller (2003, p. 579); Davis (1987). Pine, II (1993a, p. 47). 121 Hart (1995, p. 36). 122 Hart (1995, p. 36). 123 Kaplan and Haenlein (2006, pp. 176–177). 124 Piller (2004a, p. 329). 125 Silveira et al. (2001, p. 2). 120

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 C. Wabia, The Cultural Influence on Mass Customization, https://doi.org/10.1007/978-3-658-31015-8_2

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Theoretical background on mass customization research

Broekhuizen and Alsem also view the enabling side of the concept as to them, mass customization “entails the ability to provide customized products and services to individual customers using technology (information) at optimal production efficiency and cost levels.”126 Authors like Pine and Gilmore also place a focus on the costs when they define mass customization as “offering products tailored to customers' needs but at costs that are almost the same as that of standardized production and Mass Marketing.”127 Mass customization does not imply delivering as many product variants as possible.128 Instead, it lets customers create their own product configuration based on individual liking at an affordable price129. Mass customization should give customers efficiently what they desire at a reasonable price130, by combining unique product craft manufacturing with costefficient mass production methods.131 Other researchers put a stress on the value chain and process side of mass customization: Silveira et al. resolve in their meta-study that mass customization “relates to the ability to provide individually designed products and services to every customer through high process flexibility and integration.”132 Mass customization involves all characteristics of a product: from development over production to sale and delivery.133 Fogliatto et al. conclude mass customization working through integration between supply chain members, flexible processes, and a modularized product or service design.134 Customers need to interact with the manufacturer and configure a product towards individual preferences.135 Consumers can choose between levels of various product attributes to create their customized products.136 To conclude, there is a wide range of different definitions available for mass customization today. Some authors focus on the vision of mass customization, others point on the enablers or the value creation whereas another stream integrates the costs of mass customization into their definitions. To Piller, the vast amount of definitions poses a problem, as mass customization has been vastly used as a buzzword137, and the lack of

126

Broekhuizen and Alsem (2002, p. 309). Moon et al. (2008, p. 32). 128 Broekhuizen and Alsem (2002, p. 310). 129 Alford et al. (2000, p. 99). 130 Piller and Blazek (2014, p. 107). 131 Duray et al. (2000, p. 605). 132 Silveira et al. (2001, p. 1). 133 Silveira et al. (2001, p. 2). 134 Fogliatto et al. (2012, p. 15). 135 Broekhuizen and Alsem (2002, p. 310). 136 Moon et al. (2008, p. 32). 137 Piller (2004a, p. 314). 127

The development of mass customization

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a clear definition and common understanding of this construct ultimately prevents the implementation of the concept.138 The understanding of mass customization applied in this thesis is “mass customization is a mass-scale company-customer interaction, that enables consumers to personalize products to their individual tastes and needs on varying stages of customization.”

2.2 The development of mass customization The development of mass customization can be divided into mass customization enablers and mass customization capabilities. Mass customization enablers examine the external market view, which can be divided into technological advancement, in the form of production and communication technology as well as customer demand. Mass customization capabilities define the internal view of a company’s competencies and requirements for mass customization. 2.2.1 Mass customization enabler For Silveira et al., the main enablers of mass customization are flexible manufacturing and information (by some also referred to as communication) technologies139 and an increased demand for variety and a decrease in product life cycle durations.140 Authors like Wind and Rangaswamy name customer data, information technology, and operational capabilities as drivers of mass customization.141 In literature, two primary enablers, production technology and communication technology, are discussed. They are elaborated as follows: Production technology Due to technological change, new production technologies are now available for mass production. A steady growth in the supply of technology enables customization.142 New technologies include nanotechnology143, smart sensing,144 145 and flexible manufacturing with means of three-dimensional prototyping.146 Although 3D printing is still emerging, 138

Piller (2004a, p. 315). Silveira et al. (2001, p. 2). 140 Silveira et al. (2001, p. 2). 141 Wind and Rangaswamy (2001, p. 18). 142 Franke et al. (2009, p. 103). 143 “Nanotechnology is about manipulating matter on an atomic or molecular scale”, see Tien (2011), p. 149. 144 “Smart sensing is due mostly to micro-electromechanical systems (MEMS) technology, which integrates mechanical elements, sensor material and electronics on a common silicon chip through micro-fabrication techniques.” see Tien (2011), p. 149. 145 Tien (2011, p. 129). 146 Tien (2011, p. 148); Hessmann (2014, p. 15). 139

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Theoretical background on mass customization research

it has the potential to enable customization.147 For instance, computer simulation and rapid prototyping make product development faster and less expensive.148 Those advanced manufacturing technologies give manufacturers an increased manufacturing flexibility.149 The development of production methods lowered the minimum efficient scale of operations.150 This leads to a minimization of costs and a maximization of individual customization for a variety of products in mass customization.151 Technological advancement has reduced the costs of mass customization152 and personalized manufacturing strategies are brought to a vast new scale.153 Communication technology Although technological advancement in the form of flexible manufacturing is regarded as the leading enabler of mass customization, information technologies are of equal importance.154 Mass customization depends on an exchange of information between the customer and the manufacturer. Many mass customizers use web-based systems155, for example, in the form of web-based product configurators. Thus, the elaboration of the internet made it possible for companies to create relationships with consumers156 at reduced communication costs.157 Additionally, the internet enabled electronic commerce – the selling via electronic channels158, and allowed companies to learn about their customers159 via online information exchange. The growth of internet shopping steered a growth in interest for tools that help consumers in their decision-making.160

147

Eliason (2012). Thomke and Hippel (2002, p. 5). 149 Dewan et al. (2003, p. 1055). 150 Bardakci and Whitelock (2003, p. 468). 151 Pine, II (1993b, p. 12). 152 Franke and Piller (2004, p. 403). 153 Hessmann (2014, p. 14). 154 Piller et al. (2004b, p. 435). 155 Fogliatto et al. (2012, p. 17). 156 Ansari and Mela (2003, p. 143). 157 Broekhuizen and Alsem (2002, pp. 322–323). 158 Broekhuizen and Alsem (2002, pp. 322–323). 159 Dewan et al. (2003, p. 1055). 160 Aggarwal and Vaidyanathan (2003, p. 157). 148

The development of mass customization

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2.2.2 Mass customization capabilities Product life cycles have shortened and measuring up to technological change has become increasingly difficult for companies and consumers.161 The successful implementation of mass customization as a business strategy demands unique operational capabilities and several elements to function well together.162 Salvador, Holan and Piller163 describe three core capabilities: solution space development, robust process design, and choice navigation. Comparably, Zipkin points out three main elements of mass customization in the form of three key capabilities: elicitation, process flexibility, and logistics.164 Solution space development, according to Salvador et al., reveals a company’s ability to detect the product attributes on which customer needs differentiate the most.165 Afterwards, companies can clearly state their “solution space”: the products it will offer.166 Companies need to offer design tools like innovation toolkits, which allow consumers to transfer their preferences into specifications.167 After the data collection, the company needs to transfer this information into product concepts168 and use virtual concept testing to allow consumers to review their customized products. Companies need to evaluate consumer data by purchasers and non-purchasers, to improve the solution space.169 This is comparable to Zipkin’s Elicitation, which describes the mechanism of company-customer interaction allowing information obtainment about specific consumer wants and needs.170 Robust process design is vital, as the increased variability through mass customization should not damage the company’s operations.171 Consequently, a company needs to reuse or recombine the existing organizational and value-chain resources to manufacture products close to mass production reliability and efficiency.172 This can be carried out through flexible automation, process modularity, and adaptive human capital.173 This

161

Hart (1995, p. 38). Zipkin (2001, p. 81). 163 Salvador et al. (2009). 164 Zipkin (2001, p. 82). 165 Salvador et al. (2009, p. 72). 166 Salvador et al. (2009, p. 72). 167 Salvador et al. (2009, p. 73). 168 Salvador et al. (2009, p. 73). 169 Salvador et al. (2009, p. 73). 170 Zipkin (2001, p. 82). 171 Salvador et al. (2009, p. 74). 172 Salvador et al. (2009, p. 74). 173 Salvador et al. (2009, p. 73). 162

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capability is comparable to Zipkin’s Process flexibility, which explains the available production technology fabricating products according to the consumer specifications.174 Choice navigation explains the company’s support in customer identification of their solutions while minimizing complexity and the burden of choice to avoid “paradox of choice”. 175 For instance, companies can help users in terms of assortment matching, fast-cycle, trial, and error learning, and embedded configuration.176 Comparable to the definition of Logistics by Zipkin, which describes the value chain enabling the production and delivery of the right product to the right customer.177 In conclusion, Harzer observed the strategic capabilities of Salvador et al. and found that those capabilities do not singularly improve company performance; however, competitive advantage arises through successful integration of those capabilities into the company.178

2.3 Mass customization efficacy and classifications 2.3.1 Mass customization efficacy The basic concept of mass customization implies an integration of consumers into value creation.179 This integration can take place at different steps of the value chain, namely during the configuration, product specification, or design of the product.180 McIntosh et al.181 identify two essential tools and techniques of mass customization: modularity and delayed differentiation. Modularity is the “division of products into sub-assemblies and components and this facilitates the increase of components thus more variety of products can be offered.”182 In other words, it allows a unique combination of ingredients. Delayed differentiation denotes a company’s ability to delay individualization to a late point in the manufacturing process.183 Modules are handled similarly as long as possible

174

Zipkin (2001, p. 82). Salvador et al. (2009, p. 74). 176 Salvador et al. (2009, p. 73). 177 Zipkin (2001, p. 82). 178 Harzer (2013, p. 3). 179 Piller et al. (2004b, p. 435). 180 Piller et al. (2004b, p. 437). 181 McIntosh et al. (2010). 182 McIntosh et al. (2010, pp. 1561–1562). 183 McIntosh et al. (2010, pp. 1561–1562). 175

Mass customization efficacy and classifications

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with mass production and customized according to consumer needs after order.184 McIntosch et al.185 explain three generic types of postponement as defined by Bowersox and Closs: (1) form postponement, describing the delay of some activities of the manufacturing process until the customer places the order, this could be the labeling, the packaging, the assembly or the manufacturing. (2) Time postponement, deferring the movement of products until the order is obtained and (3) place postponement, a combination of the first two approaches, a relocation of inventories upstream in centralized manufacturing or distribution operations and a delay of the downstream movement.186 Piller and Blazek187 distinguish three options for customization via design from the product development perspective: fit and comfort, functionality, and form. Fit and comfort describe the traditional starting point in consumer markets where customization of products is carried out according to consumer measurements such as body measurements or physical objects. This dimension is on the one side the major argument for mass customization and on the other side the most challenging dimension to accomplish, as it requires sophisticated manufacturing and customer interaction systems.188 Functionality is the traditional customization in industrial markets where “speed selection, precision, power, cushioning, output devices, interfaces, connectivity, upgradeability, and similar technical attributes of an offering according to the requirements of the client.” The functionality dimension, in many cases unnoticed, although the same effort required for the information as in the fit dimension is required, can be easier implemented into manufacturing in some cases.189 Form denotes the style or aesthetic design where sensual or visual components of a product are modified in particular styles, applications, cuts, flavors, or colors.190 The majority of consumer goods only focus on offering mass customization in terms of style (or aesthetic design)191, however this does not create enough additional value in comparison to standard products, and therefore this mass customization option might be the least attractive for customers.192

184

Partanen and Haapasalo (2004, p. 213). McIntosh et al. (2010, pp. 1561–1562). 186 McIntosh et al. (2010, pp. 1561–1562). 187 Piller and Blazek (2014, pp. 109–110). 188 Piller (2004a, p. 321). 189 Piller (2004a, p. 321). 190 Piller and Blazek (2014, p. 110) give an example of their typology based on shoe manufacturing, where fit means the shoe last, style describes the color or design of the shoe whereas functionality describes the cushioning and heel form. 191 Piller (2004a, p. 321). 192 Piller (2004a, p. 322). 185

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Although the majority of mass customizers focus on one of the above options, Piller proposed that products combining all three options will be most successful.193 In many cases, companies facilitate their customers with mass customization toolkits in the form of web-based product configurators. Franke and Hader name the Dell computer configurator as the prototypical example of a toolkit as it provides customers with various attributes within several product dimensions (for example screen size or processor) but hardly gives feedback about the combination choices.194 Mass customization toolkits are built based on three main components: a core configuration software, a feedback tool and analyzing tools. The core configuration software presents possible product variants and directs the consumer through the configuration process by showing options or asking questions. The feedback tool shows the configuration and gives feedback in the form of price information or a functionality test, whereas analyzing tools convert the consumer specifications into ingredient orders, construction plans, and manufacturing schedules.195 To Hippel and Katz, the idea of toolkits is not new, however, integrated toolkits that enable users to create and test customized products that can be directly manufactured by companies is new.196 Valenzuela et al. show that different self-customization procedures have the power to influence the favored product configuration, decision difficulty, consumer satisfaction, and the willingness to purchase.197 In summary, the way a company chooses to construct the consumer-customer interactions in a toolkit and which dimensions are available for customization can have a massive impact on the way mass customization is perceived and valued by the consumer. 2.3.2 General classifications of mass customization Many authors constructed approaches to classify different levels of mass customization. They aimed to identify the necessary effort and design freedom of consumers and manufacturers in the product configuration process. The most popular and quoted approaches for the measurement of mass customization are the MC approaches by Gilmore and Pine198 MC strategies by Lampel and Mintzberg199

193

Piller (2004a, p. 322). Franke and Hader (2014, p. 1216). 195 Franke and Piller (2003, pp. 581–582). 196 Hippel and Katz (2002, p. 825). 197 Valenzuela et al. (2009, p. 754). 198 Gilmore and Pine, II (1997). 199 Lampel and Mintzberg (1996). 194

Mass customization efficacy and classifications

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stages of MC by Pine200 MC generic levels by Da Silveira, Borenstein and Fogliatto201. Further authors who researched mass customization classifications are (1) Spira202, (2) Ross203, (3) Piller, Moeslein and Stotko204, (4) Tien205, (5) Squire, Readman, Brown and Bessant206 and (6) Duray, Ward, Milligan and Berry207. Those approaches were left out due to overlaps with approaches that are presented in this subchapter. Gilmore and Pine Gilmore and Pine identify four approaches of customization based on empirical observation.208 The authors name their “faces” of customization adaptive, cosmetic, transparent, and collaborative.209 Adaptive customizers210 offer one standard product, which is customizable by the user. The product is designed and constructed in a way the consumer can alter the product him- or herself.211 Cosmetic customizers212 submit a standard product to different customers with means of customized packaging.213 Transparent customizers present individualized products to their customers without an explicit communication or a direct

200

Pine, II (1993b). Silveira et al. (2001). 202 Spira (1993). The typology by Spira was left out as it overlaps with work by Gilmore and Pine (1997), Pine (1993) and Lampel and Mintzberg (1996), see Silveira et al. (2001), p. 3. 203 Ross (1996). The typology by Ross was left out as it overlaps with work by Lampel and Mintzberg (1996), see Alford et al. (2000), p. 102. 204 Piller et al. (2004b). 205 Tien (2006). The typology by Tien was left out as it builds on work by Lampel and Mintzberg (1996) and Gilmore and Pine (1997), however adds the extra dimension “Real-time mass customization” on the supplier side, see Tien (2006), p. 691. 206 Squire et al. (2004). The typology by Squire was left out as it builds on work by Lampel and Mintzberg (1996), see Squire (2004), p. 463. 207 Duray et al. (2000). 208 Silveira et al. (2001, pp. 2–3). 209 Gilmore and Pine, II (1997, p. 92). 210 For example a lighting system which allows an adjustment of colors. 211 Gilmore and Pine, II (1997, p. 93). 212 For example a standard chocolate in a customized packaging. 213 Gilmore and Pine, II (1997, p. 93). 201

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information flow from the customer to the manufacturer. The manufacturer bases the customized offerings on the observation of the consumer behavior.214 The collaborative customizers215 go into a direct exchange with customers to help them state individual needs. This helps identifying and matching the precise offering to the consumer’s needs.216 Thus serving the consumer with an individually customized product.217 Lampel and Mintzberg Lampel and Mintzberg distinguish five different mass customization strategies: pure standardization, segmented standardization, customized standardization, tailored customization, and pure customization. Pure Standardization218 is defined by an utterly standardized design targeted at the broadest possible group of buyers, produced with maximum economies of scale and standardized distribution. There is no influence of the buyer on product features.219 Segmented Standardization220 implies standardized products within a limited range of characteristics, but not based on the individual consumer demands. This strategy indicates companies’ responses to the demand of different consumer clusters, where each cluster remains aggregated.221 The strategy Customized Standardization222, sometimes referred to as modularization, stands for a product assembled based on consumer preferences from a choice of standardized components. Customers receive their own configuration although the basic design of a product is not customized and sometimes constructed on the base of a standardized core.223 Tailored Customization224 infers that the customer is presented with a product prototype which is then adapted to individual needs and ideas. The adaptation takes place at the fabrication stage; however, the customer does not influence the design.225 In Pure Customization,226 the customer has a significant influence

214

Gilmore and Pine, II (1997, p. 94). For example self-designed jewelry or glasses. 216 Gilmore and Pine, II (1997, p. 92). 217 Gilmore and Pine, II (1997, p. 92). 218 For example Ford’s model T. 219 Lampel and Mintzberg (1996, p. 25). 220 For example cereal brands that offer a wide range of products. 221 Lampel and Mintzberg (1996, p. 25). 222 For example a hamburger serves as a core and the toppings can be customized. 223 Lampel and Mintzberg (1996, pp. 25–26). 224 For example a tailor works with this concept as a product prototype is fitted to the measures of the client. 225 Lampel and Mintzberg (1996, p. 26). 226 For example a jeweler who designs according to consumer requirements. 215

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on the design of the product, and it is entirely made to order. All stages of a product, the design, fabrication, assembly, and distribution are customized.227 Pine Pine has identified five methods for mass customization: embed customizability, provide quick response, and customize services, point of delivery customization and modularization. According to Pine, these strategies are not mutually exclusive but often overlap in practice.228 Embed customizability implies that a product or service is constructed in a manner that a consumer can quickly adapt the product to their own needs.229 Customization is “selfservice”.230 For Provide quick response, a company can directly react to customer desires in an instant and start a path to mass customize.231 This increases the variety and allows companies to satisfy fast-changing customer requirements closely.232 For Customize services, a company tailors a service around a standardized product. This can alter the standard product by adding elements or combining it with other products.233 Point of delivery customization requires moving the final production stage to the point of delivery (to the customer). The customer has to voice the required specifications, which are immediately transferred into the product.234 Modularize stands for modularized components are assembled into a customized final product by the manufacturer based on custom configurations.235 Da Silveira, Borenstein and Fogliatto In their meta-analysis, the authors combine different frameworks of mass customization measurement (Gilmore and Pine, Lampel and Mintzberg, Pine, and Spira)236 to their approach of eight generic MC levels ranging from pure customization to pure standardization. Level 1 (Standardization) displays standardization in its traditional sense, where no product adaptations to individual customers are made. With level 2 (Usage), consumers can customize a product after delivery and give the product different functions. Level 3

227

Lampel and Mintzberg (1996, p. 26). Pine, II (1993b, p. 7). 229 Pine, II (1993b, p. 10). 230 Pine, II (1993b, p. 10). 231 Pine, II (1993b, p. 12). 232 Pine, II (1993b, p. 12). 233 Pine, II (1993b, p. 8). 234 Pine, II (1993b, p. 10). 235 Pine, II (1993b, p. 12). 236 Silveira et al. (2001, p. 3). 228

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(Package and distribution) means an adaptation of the products packaging or distribution according to market segments. On level 4 (Additional services),237 customers receive additional services or level 5 (Additional custom work) extra customized work at the point of delivery. On level 6 (Assembly), modular components are assembled into a custom product according to customer orders. For level 7 (Fabrication), a predefined design is tailored according to consumer orders and then manufactured. For level 8 (Design), a unique product originates from a collaboration between consumer and manufacturer is designed and manufactured according to consumer wishes.238 Comparison Alford and Sackett239 and Silveira, Borenstein and Fogliatto 240 contrasted different MC measurement approaches. The four main approaches can be compared.241 The lowest level of mass customization described by da Silveira et al. as 1. Standardization is comparable to pure standardization by Lampel and Mintzberg. The level 2. Usage by da Silveira et al. overlaps with embedded customizability by Pine and the MC approach adaptive by Gilmore and Pine. Furthermore, the generic level 3. Package and distribution overlaps with segmented standardization by Lampel and Mintzberg and cosmetic by Gilmore and Pine. Whereas the generic level 4. Additional services overlaps with Pines customize services and provide quick response. The generic level 5. Additional custom work overlaps with point of delivery customization by Pine. The generic level 6. Assembly is the same as Pine’s modularize and Lampel and Mintzberg customized standardization. Generic level 7. Fabrication can be found in Lampel and Mintzberg tailored customization mass customization strategy. The highest level of mass customization, described by Silveira et al. as 8. Design can illustrates as pure customization by Lampel and Mintzberg and the MC approaches collaborative and transparent by Gilmore and Pine.242

237

Like adding a custom ingredient to a hamburger at the point of delivery. Silveira et al. (2001, pp. 3–4). 239 Alford et al. (2000, p. 102). 240 Silveira et al. (2001, p. 3). 241 For a graphic comparison, see table 1 Comparison of mass customization measurements. 242 Silveira et al. (2001, p. 3). 238

5. Additional custom work 4. Additional services

Point of delivery customization Customize services, provide quick response

Adaptive Pure standardization

244

Gilmore and Pine, II (1997). Lampel and Mintzberg (1996). 245 Pine, II (1993b). 246 Silveira et al. (2001). 247 Adapted from Silveira et al. (2001, p. 3) with kind permission of © Elsevier 2001. All Rights Reserved.

243

Embed customizability

1. Standardization

2. Usage

3. Package and distribution

6. Assembly

Modularize

Customized standardization

Segmented standardization

7. Fabrication

Tailored customization

Cosmetic

8. Design

Pure customization

Collaborative, transparent

Stages of MC

MC strategies

Da Silveira, Borenstein and Fogliatto (2001)246 MC generic levels

MC approaches

Table 1 Comparison of mass customization measurements247

Degree of customization

Pine (1993)245

Lampel and Mintzberg (1996)244

Gilmore and Pine (1997)243

Mass customization efficacy and classifications 23

24

Theoretical background on mass customization research

However, research did not conclude on how to determine the appropriate level of customization for a specific product or service.248 Although a high-level of customization leads to high operational costs, it also gives companies to gain significant competitive benefits.249 However, shopper data from some products indicate that only a small part of consumers exhaust the full individualization potential, which mass customization offers them.250 2.3.3 Mass customization stages The mass customization stages used in this dissertation are based on work by Lampel and Mintzberg251 and Silveira, Borenstein and Fogliatto252 and are graphically presented in figure 2. The stage Standardization indicates a traditional off-the-shelf product, where no consumer adjustment of the product is possible, such as a standard chocolate, which can be found in every supermarket. The stage Cosmetic Packaging and Additional Custom Work describes a standardized core product that allows customization of the products’ cosmetic packaging and add-ons of the core product. In particular, a standard chocolate where the wrapping can be designed or a fondant message can be added to the chocolate. A product on the stage Assembly is composed of a standardized set of components. The assembly is customized, as the composition of the product is varied consistently with the customer’s individual preferences. The approach allows an individual configuration, constrained by the range of available components. To illustrate, a customer can choose pralines from a standard choice set of pralines. Those are thus uniquely assembled from a standard range of options. On the stage Fabrication, a manufacturer offers a product prototype that the consumer can tailor to individual preferences. Customization works backward to the fabrication stage, as the customer individually modifies a standard design, which is then tailormade. For instance, the configuration of custom chocolate in a product configurator, which is then manufactured based on the customer specifications with the selected ingredients and toppings. The stage Creation expresses the highest possible stage of individualization. The customer self-designs the product without specifications from the manufacturer. The good

248

Silveira et al. (2001, p. 8). Silveira et al. (2001, p. 8). 250 Bellis et al. (2016, p. 162). 251 Lampel and Mintzberg (1996). 252 Silveira et al. (2001). 249

Mass customization efficacy and classifications

25

can be designed from scratch with the manufacturer’s help. There are no limiting specifications, as long as the product is in the manufacturer’s scope of possibilities. Such as a complete created chocolate - maybe even with extraordinary fillings - by the customer and then made by the manufacturer. Degree of customization Description Standardization

Chocolate example

 Complete product standardization

Mass produced chocolate

Cosmetic Packaging & Additional Custom Work  Standardized core product  Adaptation of packaging  Add-ons to standardized core product

Standard chocolate with an adapted packaging and/ or an added message on the chocolate

Assembly  Standardized components  Individual assembly  Allows each customer’s own configuration

Assembly of standard chocolate according to taste

Fabrication  Product prototype that is tailored to customer needs  Fabrication is individualized as standard design is modified

Design of own chocolate in a configurator

Creation  Product is made to order  No specifications from manufacturer (product has to be in the scope of possibilities)

Complete design without the help of a configurator

Figure 2 Mass customization stages253

253

Own illustration. Mass customization stages based on Lampel and Mintzberg (1996) and Silveira, Borenstein and Fogliatto (2001).

26

Theoretical background on mass customization research

2.4 Mass customization advantages and disadvantages Designing a product toward individual consumer specifications opens new possibilities that have advantages and disadvantages for consumers and companies. 2.4.1 Benefits and drawbacks for consumers

+

_

opportunity / challenge

elaboration

preference fit

better customer satisfaction due increased preference fit

perceived uniqueness

perception as unique product

signaling effect

communication of consumers distinct identity

I-designed-it-myself effect

pride and achievement of having “created” an own product, enjoyment of the customization process

unawareness of preferences

customers do not have a perfect preference insight

uncertainty

mass customization process includes uncertainty due to lack of haptic feedback

time-effort

mass customization has a longer duration in comparison to off-the-shelf-products

privacy

online decisions can be traced back to customers

mass confusion

consumers face a choice overload

monetary costs

Mass-customized products are mostly costlier than their standardized counterparts

Figure 3 Benefits and drawbacks of mass customization for consumers254

2.4.1.1 Mass customization benefits for consumers Preference fit Mass customization provides customers with products that are precisely what they want255, which leads to an increased preference fit.256 Self-designed products yield functional benefits, as the consumer perceives those products as better matching individual

254

Own illustration based on literature review. Broekhuizen and Alsem (2002, p. 310). 256 Franke et al. (2009, p. 111). 255

Mass customization advantages and disadvantages

27

needs in comparison to standard products.257 This enhances the identification with the product.258 Mittal explains that when consumers select a product, they choose a brand that appears to best fit the respective consumers’ own self-concept.259 Self-designed products have a higher fit to user preferences260 and therefore increase consumer satisfaction.261 This leads to a higher product utility262 in comparison to standard or differentiated products.263 The utilitarian value was defined by Merle et al. as “value acquired from the closeness of fit between product characteristics and individual preferences.”264 The increased preference fit holds for various product categories, hedonic and utilitarian, and products that are seldom versus frequently purchased.265 Consequently, mass customization creates value for consumers in general.266 Particular attention should be paid where customer needs are very heterogeneous267, for instance, where consumers have diverging expectations for a product. A higher preference fit of the customized product leads to a higher perceived economic value increment, which increases the willingness-to-pay.268 Perceived uniqueness The second leading driver of utility and main advantage of mass customization is perceived uniqueness.269 Mass customization gives consumers more product options than off-the-shelf products, and are hence seen as unique.270 Merle et al. define the uniqueness value as “value acquired from the opportunity to assert personal uniqueness using the customized product”.271 Value arises through the creation of differentiated, unique

257

Schreier (2006, p. 323). Franke and Schreier (2008, p. 102). 259 Mittal (2006, p. 556). 260 Randall et al. (2007, p. 278); Hippel (2001, p. 254); Simonson (2005, p. 37); Franke and Schreier (2008, p. 102); Schreier (2006, p. 317). 261 Franke and Piller (2004, p. 403); Wind and Rangaswamy (2001, p. 18); Schreier (2006, p. 323). 262 Dellaert and Stremersch (2005, p. 226). 263 Schreier (2006, p. 323). 264 Merle et al. (2010, p. 506). 265 Franke et al. (2009, p. 116). 266 Schreier (2006, p. 325). 267 Franke and Piller (2004, p. 412). 268 Franke and Schreier (2010, p. 1027). 269 Franke and Schreier (2008, p. 93); Schreier (2006, p. 317). 270 Schreier (2006, p. 323). 271 Merle et al. (2010, p. 506). 258

28

Theoretical background on mass customization research

products made according to customized specifications.272 The products serve as an expression of consumer uniqueness273 and thus distinct him/herself from others.274 Some scholars go so far as to state that consumers can use products as means to signal superiority.275 According to counter-conformity theory, consumers have an intrinsic need to differentiate themselves from others via consumer goods as a visual display.276 According to Fiore et al., creating a unique product is more important for consumers in mass customization than the exciting experience of creating a product by yourself is.277 However, being “too unique” can also be seen as negative, but Ruvio found the expression of uniqueness with consumption behavior “a safe way to achieve a different sense of being without damaging an individual’s sense of social assimilation.”278 Signaling effect The next product related benefit going hand-in-hand with perceived uniqueness is the signaling effect, also referred to as self-expressiveness value. Merle et al. define this benefit as “value derives from the opportunity to possess a product that is a reflection of personality”.279 The need to distinguish oneself from others and be “unique” is a metapreference for many people.280 Consumers identify themselves better with self-designed products; eventually consumers can distinguish themselves from others with the help of mass-customized products.281 “I-designed-it-myself”- effect The I-designed-it-myself effect282 also referred to as the IKEA effect283 is a form of process enjoyment. Since the consumer actively engages in the product composition, “do-it-yourself” effects in mass customization arise.284 The effect can be split into: (1) pride of authorship and (2) process enjoyment.285

272

Fiore et al. (2004, p. 845). Franke and Schreier (2008, p. 102). 274 Franke and Schreier (2008, p. 102). 275 Bellis et al. (2016, p. 169). 276 Tian et al. (2001, p. 52). 277 Fiore et al. (2004, p. 845). 278 Ruvio (2008, p. 444). 279 Merle et al. (2010, p. 506). 280 Simonson and Nowlis (2000, p. 65). 281 Franke and Schreier (2008, p. 102). 282 Franke et al. (2010, p. 126). 283 Norton et al. (2012, p. 453). 284 Schreier (2006, p. 323). 285 Schreier (2006, p. 317). 273

Mass customization advantages and disadvantages

29

(1) Pride of authorship describes the consumers’ feelings of pride towards the created product.286 Consumers value the self-designed product higher than off-the-shelf products as they actively engaged in the creation process.287 However, Norton et al. argue that labor only leads to love when the labor ends in successful completion of the task.288 Merle et al. name this effect in their research creative achievement and define it as “value acquired from the feeling of accomplishment related to the creative task of codesigning.”289 This benefit does not fall under the product related benefits of mass customization, but under value creation as is attributed to the process of mass customizing itself. 290

(2) Process enjoyment elaborates user’s enjoyment of the active engagement in the process of self-designing and creating individual products.291 Merle et al. call this a hedonic value and define it as “value acquired from the experience’s capacity to meet needs related to enjoyment, fun, or pleasure.”292 Broekhuizen and Alsem describe this effect as a “more enjoyable shopping process”.293 Fiore et al. show that consumers who are experimenting with appearance are motivated to use mass customization, as it is a new experience to create the product next to the motivation to make a unique appearance.294 Franke and Schreier conclude from their research that the experience of mass customization entices the consumer and creates value for them.295 Schreier explains process benefit as an advantage of mass customization for the customer as the process of designing itself is likely to permit the consumer to “meet hedonic or experiential needs.”296 The enjoyment of the product design process also has a tremendous positive influence on the willingness-to-pay for the customized product.297 Piller and Blazek explain that next to the enjoyment of the mass customization process, it is considered a highly creative problem-solving process, which might act as a motivator to purchase the mass-customized product.298 However, Piller warns that process satisfaction and the co-design

286

Schreier (2006, p. 317). Norton et al. (2012, p. 453); Schreier (2006, p. 317). 288 Norton et al. (2012, p. 453). 289 Merle et al. (2010, p. 506). 290 Merle et al. (2010, p. 506). 291 Schreier (2006, p. 323). 292 Merle et al. (2010, p. 506). 293 Broekhuizen and Alsem (2002, p. 316). 294 Fiore et al. (2004, p. 843). 295 Schreier (2006, p. 323); Fiore et al. (2004, p. 845). 296 Schreier (2006, p. 317). 297 Franke and Schreier (2010, p. 1027). 298 Piller and Blazek (2014, p. 115). 287

30

Theoretical background on mass customization research

process are significant aspects for mass customization, but “they should not become the center of the value proposition of a mass customizer.”299 2.4.1.2 Mass customization drawbacks for consumers Unawareness of preferences Researchers question the universal appeal of mass customization as they suggest that customized products are not for everybody.300 Due to a lack of product knowledge, consumers might be unable to meaningfully use configuration toolkits, which lead to an inability to specify product requirements.301 Franke et al. discovered an influence of consumer preference insight and their ability to express them on the benefits of mass customization.302 Many customers cannot express their needs precisely, and are thus not able to transfer their wishes into a product specification.303 The more insight customers have into their own preferences, the better they are at expressing those, the more benefits a consumer gets from mass customization.304 Even if customers have a good insight into their preferences, they are more likely to accept a customized offer if they trust the customization process.305 When a product is obtained infrequently, the manufacturer cannot rely on the revealed preferences of a customer.306 If consumers do not have a good preference insight and are unable to specify requirements, this might lead to regret.307 Not because the custom product is different from the given specifications, but because the customer ultimately dislikes the own design.308 Franke et al. show potential consumer problems with mass customization, as real preferences may differ from the expressed preferences based on which the product was personalized.309 Thomke and von Hippel conclude that consumers do not completely understand their own needs until they try out prototypes, which enables a “learning by doing” for the customer.310 Franke and Hader suggest a use of product configurators as

299

Piller (2004a, p. 323). Bharadwaj et al. (2009, p. 216). 301 Franke and Hader (2014, p. 1214). 302 Franke et al. (2009, p. 111). 303 Piller et al. (2004b, p. 440). 304 Franke et al. (2009, p. 104). 305 Simonson (2005, p. 40). 306 Simonson (2005, p. 40). 307 Syam et al. (2008, p. 379). 308 Syam et al. (2008, p. 379). 309 Franke et al. (2009, p. 104). 310 Thomke and Hippel (2002, p. 6). 300

Mass customization advantages and disadvantages

31

learning instruments to help customers explore their preferences.311 Mass customization creates not only value for consumers who have a clear insight into their preferenceswhich is the minority, but also for people who are unaware of their preferences.312 Mass customization can help them discover their preferences and improve their preference insight.313 Kramer found that the trust on personal preferences is dependent on the level of consumer expertise.314 Simonson concludes that consumer preferences are often unstable and vulnerable to influence, as consumers often have insufficient insight into their own preferences, and therefore the benefit of customization will be limited.315 Those customers are less willing to make a purchase, as the perceived costs are higher than the perceived benefits of customization.316 Ghosh finds when dealing with inexperienced customers in unpredictable technological environments, the manufacturer should aim for higher customization control to offer solutions which had better meet customer needs.317 Zipkin even states the process of design being “an artful means of leading customers through the process of identifying exactly what they want.”318 Then, customized products based on consumer preferences can generate higher benefits in the areas of Willingness-to-pay (WTP), purchase intention and attitude towards the product.319 Thus leading to an increase if the customer has a better preference insight and better ability to express them, and greater product involvement.320 Uncertainty Mass customization involves a high degree of uncertainty compared to off-the-shelf products.321 Consumers face uncertainty during the configuration process.322 It involves social risk, as the choice of a customized product is not supported by a large number of other consumers.323 Many people do not make use of the complete customization range, in particular Lampel and Mintzberg show customers not wanting to choose between eighty-seven different options of a steering wheel.324 De Bellis et al state that many

311

Franke and Hader (2014, p. 1229). Franke and Hader (2014, p. 1230). 313 Franke and Hader (2014, p. 1230). 314 Kramer et al. (2007, p. 255). 315 Simonson (2005, p. 43). 316 Simonson (2005, p. 40). 317 Ghosh et al. (2006, p. 675). 318 Zipkin (2001, p. 82). 319 Franke et al. (2009, p. 104). 320 Franke et al. (2009, p. 103). 321 Broekhuizen and Alsem (2002, p. 316). 322 Bellis et al. (2015, p. 311). 323 Bellis et al. (2016, p. 164). 324 Lampel and Mintzberg (1996, p. 24). 312

32

Theoretical background on mass customization research

consumers rely on the things they are already accustomed to and only a small part of consumers utilized the full range of individualization when it comes to car customization.325 For example, regarding car colors, 78 percent of car buyers worldwide chose black, grey, silver, or white in 2018.326 Therefore it could be questioned if consumers would make use of the complete range of options that mass customization has to offer in all product categories. Time-effort Although mass customization increases the utility of a product, it also increases consumer costs in terms of time327 and effort.328 Effort and speed of delivery represent a trade-off in mass customization.329 Time for preference specification needs to be invested before the product can be manufactured.330 This leads to a delay in the availability of the customized product in comparison to its standardized off-the-shelf counterparts.331 Beatty and Smith investigated external search effort for consumer electronics and revealed a positive relationship for purchase involvement, attitudes toward shopping, and time availability, and a negative relationship for product class knowledge.332 Valenzuela observes that the subjective feeling of difficulty in the customization process might affect product choice and outcomes.333 In addition, Franke and Schreier report additional effort not leading to a decrease in product evaluations of self-designed scarves.334 However, the additional process effort of customization does not decrease a customer’s preferences.335 Privacy Some consumers using online mass customization might have privacy concerns.336 The communication stream between consumers and manufacturers might be vulnerable to data phishing or monitoring, as online activity is never completely private.

325

Bellis et al. (2016, p. 162). https://corporate.ppg.com/Color/Color-Trends/Automotive-Color-Trends.aspx, retrieved: 08.05.2019. PPG Industries, 2018 . 327 Squire et al. (2004, p. 462). 328 Broekhuizen and Alsem (2002, pp. 313–316). 329 Squire et al. (2004, p. 470). 330 Bardakci and Whitelock (2003, p. 463). 331 Bardakci and Whitelock (2003, p. 463). 332 Beatty and Smith (1987, p. 83). 333 Valenzuela et al. (2009, p. 755). 334 Franke and Schreier (2010, p. 1027). 335 Coletti and Aichner (2011, p. 27). 336 Broekhuizen and Alsem (2002, p. 319). 326

Mass customization advantages and disadvantages

33

Mass confusion Mass confusion arises when consumers are overwhelmed by the endless amount of customization options. Consumers could have trouble deciding what is wanted, as they are unsure337 about the various options. Customers are easily confused and even overwhelmed by the vast amount of available selection options.338 Mitchell revealed three types of consumer confusion, namely (1) similarity confusion339, (2) overload confusion340, and (3) ambiguity confusion341.342 Matzler et al. investigated these three sources of confusion in a mass customization context and found that the product-specific knowledge and the toolkit-usability strongly influence the perception of confusion.343 Furthermore, the authors proof consumer confusion leading to a decrease in consumer satisfaction, fun, and trust in the supplier.344 On the one side, confusion might lead customers to deter from the customization process altogether.345 On the other side, customers might be dissatisfied with the resulting product346 or become frustrated during the process.347 One reason might be that many consumers do not possess the required technical knowledge to configure a customized good.348 Thus, some authors argue that the need for an individualized product has to be high enough to offset the costs of using a product configurator.349 Therefore, toolkits should only be offered to a subset of customers who have a need for it.350 Adverse effects of complexity in mass customization are lower for the experienced customer, which makes them attractive customers for mass customization.351

337

Zipkin (2001, p. 82). Zipkin (2001, p. 82); Wind and Rangaswamy (2001, p. 29); Huffman and Kahn (1998, p. 492). 339 “a lack of understanding and potential alteration of a consumer’s choice or an incorrect brand evaluation caused by the perceived physical similarity of products or services” Mitchell et al. (2005, p. 143). 340 “a lack of understanding caused by the consumer being confronted with an overly information-rich environment that cannot be processed in the time available to fully understand, and be confident in the purchase environment“ Mitchell et al. (2005, p. 143). 341 “a lack of understanding during which consumers are forced to re-evaluate and revise current beliefs or assumptions about products or the purchasing environment“ Mitchell et al. (2005, p. 143). 342 Mitchell et al. (2005, p. 146). 343 Matzler et al. (2011, p. 243). 344 Matzler et al. (2011, p. 243). 345 Franke and Piller (2004, p. 404). 346 Randall et al. (2007, p. 278). 347 Huffman and Kahn (1998, p. 506). 348 Randall et al. (2005, p. 71). 349 Hippel (2001, p. 255). 350 Hippel (2001, p. 255). 351 Dellaert and Stremersch (2005, p. 226). 338

34

Theoretical background on mass customization research

Monetary costs Mass-customized products often cost more than their standardized counterparts do.352 The higher price is justified by added value, as customized products meet the exact wishes of a consumer.353 This leads to an increased satisfaction with the customized product.354 Franke and Piller state if the expected returns exceed the predicted costs (in terms of price premium in comparison to standard product and the drawbacks in the customization process) the willingness to use mass customization will increase.355 Products that require a match of “physical dimensions” often allow a higher price premium than products customized just on “design patterns”.356

352

Bardakci and Whitelock (2003, p. 463). Piller et al. (2004b, p. 438). 354 Franke and Piller (2004, p. 403). 355 Franke and Piller (2003, p. 594). 356 Berger and Piller (2003, p. 45).; Piller et al. (2004, p. 438). 353

Mass customization advantages and disadvantages

35

2.4.2 Opportunities and challenges for companies opportunity / challenge

elaboration

competitive advantage

Better satisfaction of consumer needs through better info on market demand

customer loyalty

+

-

product lifecycle management

Higher retention rate as consumers are brand advocates and in a loyalty loop Direct implementation of consumer preferences into the development and market management of products

large consumer base

Mass customization is adapted and required by customers

Willingness-to-pay premium price

Consumers are willing to pay a premium price, MC products have higher gross margins in comparison to standard products

complication of value chain

Product customization imposes challenges and a need for variation on the value chain

complaint mechanism

Customers might not like the self-designed product and competence in complaint management is required

management change

MC poses challenges on companies and requires different management skills than mass production

Figure 4 Opportunities and challenges of mass customization for companies357

Mass customization may not be the best strategy for all companies in all situations358, as it can be more difficult to implement than expected, and several companies averted their approach to become mass customizers.359 Some high profile flops, such as Levi Strauss & Co.’s approach to custom jeans, were observed on the market.360 Not every product will perform better with more product personalization.361 Therefore companies

357

Own illustration based on literature review. Squire et al. (2004, p. 459). 359 Salvador et al. (2009, p. 71). 360 Salvador et al. (2009, p. 71). 361 Zipkin (2001, p. 86). 358

36

Theoretical background on mass customization research

should be aware of the opportunities as well as the challenges that mass customization poses on them. 2.4.2.1 Mass customization opportunities for companies Competitive advantage Competitive advantage implies a company gaining a lead over other companies in the market. Mass customization fulfills customer needs better362 and has been identified as a source of competitive advantage by a growing number of firms.363 Some industries in which mass customization could serve as a competitive advantage are automobile, clothing, and computer manufacturing.364 Nishikawa et al. compared the market performance of user-generated365 with designer-generated366 products.367 They found user-generated products to show increasing sales volumes, sales revenue, and gross margins in comparison to designer-generated products; stable over time as it occurred in each of the three years of their observation.368 Furthermore, firms operating in highly competitive and segmented markets can choose mass customization as an alternative strategy369, as mass customization with configurators enables companies to gain first-mover advantages due to better consumer preference insights.370 In conclusion, companies have better market research information, which allows a more precise planning regarding consumer needs.371 Customer loyalty The process of mass customizing builds a relationship between the consumer and the company, for example through the exchange of information in a product configurator. This relationship leads to higher customer satisfaction and loyalty.372 People who purchased a customized system from a retailer are more willing to return to the same retailer for subsequent purchases373, they are in a “loyalty loop” and more likely to be brand advocates.374 Brand advocates are enthusiastic about the product and thus spread the

362

Wind and Rangaswamy (2001, p. 19). Silveira et al. (2001, p. 1). 364 Fogliatto et al. (2012, p. 15). 365 Mass customized products/ products based on consumer configuration. 366 Products based on regular R&D. 367 Nishikawa et al. (2013, p. 163). 368 Nishikawa et al. (2013, p. 163). 369 Silveira et al. (2001, p. 1). 370 Hippel (2001, p. 255). 371 Piller (2004a, p. 327). 372 Wind and Rangaswamy (2001, p. 19). 373 Bharadwaj et al. (2009, p. 221). 374 Eliason (2012). 363

Mass customization advantages and disadvantages

37

excitement among peers. This gives mass customizers the opportunity of offering better value-added services.375 Product lifecycle management Product lifecycle management can be separated into the development cycle, the market cycle, and the aftercare376 cycle.377 Mass customization can have a great potential in the product lifecycle management, as it can influence the (1) development and the (2) market cycle of a product through information-based and time-based advantages. The need to focus on individual customers has increased not only due to a stagnation of traditional mass production industries but also due to shortening of product life cycles and expanding competition.378 In contrast, consumers self-designing unique products can enhance product diffusion and boost profit margins.379 (1) Development cycle With regard to information-based advantages, traditional product development used to be difficult in terms of consumer intel as it consisted of asymmetrical information: only the customers knew what they really demanded and the supplythat hopefully met the demand- was created by the manufacturer.380 Franke and Piller explained that although market research expenditure was huge381, the failure rates of new products were still very high.382 As conventional market research techniques only touched the surface of consumer information383, they did not completely understand complex user needs. Product design via mass customization toolkits has major advantages over traditional product development, as consumers have a better knowledge about their own needs than the manufacturers.384 Mass customization gives companies the chance to develop completely new products based on their increased consumer knowledge and preferences. Additionally, mass customization allows faster product development as the design and the build of prototypes are shifted from manufacturer to

375

Wind and Rangaswamy (2001, p. 19). The aftercare cycle describes the point when the product is already taken off the market. 377 Pfau (2001, p. 93). 378 Silveira et al. (2001, p. 2). 379 Bellis et al. (2016, p. 169). 380 Thomke and Hippel (2002, p. 6). 381 Franke and Piller (2004, p. 403). 382 Crawford (1977, p. 51). 383 Hippel and Katz (2002, p. 821). 384 Thomke and Hippel (2002, p. 8). 376

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Theoretical background on mass customization research

customer.385 As a result, financial and time responsibilities decreased for manufacturers.386 Even though many companies are reconsidering their product development process387, they did not consider user involvement for new product development until recently.388 Wind and Ramgaswamy explain a stimulation of continuous innovation through mass customization389 and von Hippel390 introduced the concept of “user toolkits for innovation”. This concept turns consumers into the actual product developers by letting them design their own goods. This concept is claimed to be more useful than traditional manufacturer-based methods.391 Since extensive market research efforts by experts are obsolete, the online configuration process gives an opportunity for faster feedback loops.392 Hippel advocates for transferring only need-related design tasks to users, which are made as easy as possible393.394 (2) Market cycle With regard to information about consumer behavior, companies in mass customization no longer seek to understand their customer’s wants but give them a chance to configure their own products395. This leads to cost savings and gives companies access to sticky information.396 Instead of costly market research, which might lead to inaccurate information,397 the information is directly acquisitioned from the customer.398 As a result, enabling companies to access completely new distribution channels.399 With regard to timing, mass customization offers potential benefits for products that are already introduced to the market. Allowing customer configuration of product features400 enables companies to quickly respond to changing market preferences.401 To illustrate, a food manufacturer could add a trendy ingredient option like Chia to an existing cereal configurator.

385

Thomke and von Hippel (2002, p. 6). Thomke and von Hippel (2002, p. 6). 387 Nishikawa et al. (2013, p. 161). 388 Nishikawa et al. (2013, p. 160). 389 Wind and Rangaswamy (2001, p. 19). 390 Hippel (2001). 391 Hippel (2001, p. 247). 392 Thomke and Hippel (2002, p. 7). 393 Hippel (2001, p. 250). 394 It is debatable if consumers are the better innovators due the in chapter 2.4.2 presented disadvantages of mass customization for consumers such as “mass confusion” and “unawareness of preferences”. 395 Thomke and Hippel (2002, p. 5). 396 Piller et al. (2004b, p. 440). 397 Thomke and Hippel (2002, p. 5). 398 Wind and Rangaswamy (2001, p. 19). 399 Bellis et al. (2016, p. 162). 400 Alford et al. (2000, p. 100). 401 Hippel (2001, p. 247). 386

Mass customization advantages and disadvantages

39

The approach of integrating the customer into the design of a product is interesting for all companies where the customer demand is heterogeneous402, meaning where consumers have different requests on a product. In conclusion, mass customization with toolkits allows an adjustment to quick changing customer preferences, as the process of delivering preference information from customer to manufacturer is made easier.403 Large consumer base Mass customization appeals to a mass market as it creates value for a large consumer segment: to consumers who have a complete preference insight but also to those who use product configurators as a learning instrument.404 Many companies already identified the enormous potential of mass customization and launched “product configurators” that allow customers to customize a version of a standard product.405 When observing empirical mass customization research, more than 50 percent of consumers say that they are “ready” for customized products.406 Thus would make use of mass customization. Willingness-to-pay premium price Consumer integration into the value-creation process does not increase costs for companies, but instead offers potential to reduce costs through postponement of activities until the consumers order placement, and more exact information on market demands.407 Although products can be produced at costs nearly to those of mass manufacturers, consumers see mass customization as beneficial due to an increase product utility and are thus are willing to pay a premium price.408 Even when the technical quality of the customized product and the standardized product are equal, Franke and Piller reported value increments of 100% for self-designed watches.409 Schreier confirms the value increment of mass customization as a general phenomenon as he found price premiums for customized products (for cell phone covers, T-shirts and scarves) of more than 100% in comparison to standardized items.410 Empirical research has found that more than 50% of the value increment of mass-customized products can be attributed to the increased product value but also the value of the mass customization experience itself.411

402

Hippel (2001, p. 254). Franke and Piller (2004, p. 403). 404 Franke and Hader (2014, p. 1230). 405 Thomke and Hippel (2002, p. 10). 406 Bardakci and Whitelock (2004, p. 1405). 407 Piller et al. (2004b, p. 439). 408 Wind and Rangaswamy (2001, p. 19); Franke et al. (2009, p. 103); Dewan et al. (2003, p. 1055). 409 Franke and Piller (2004, p. 401). 410 Schreier (2006, p. 317). 411 Merle et al. (2008, p. 40). 403

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2.4.2.2 Mass customization drawbacks for companies According to Piller, the costs of mass customization from a company perspective can be summarized under the costs of high flexibility manufacturing and the costs of eliciting consumer preferences.412 Complication of the value chain The transfer process from being a mass producer to becoming a mass customizer poses challenges to the reconfiguration of the value chain.413 In particular, manufacturers might need a new base of suppliers and corporate purchasing policy, arising external structural constraints among distribution and supply channels.414 Mass customization requires manufacturers to overthink traditional ways of value chain configuration which used to be standardized sourcing over standardized manufacturing to a standardized delivery. Depending on the degree of customers “design freedom”415, companies need to construct the value chain.416 Thus, manufacturers need to consider value chain construction that on one side supports customization and on the other side, averts an explosion of cost and complexity in production.417 In theory, mass customization helps companies redesigning their operations and logistics, leading to better, cheaper, and faster processes.418 Furthermore, mass customization leads to inventory reduction.419 This gives companies manufacturing flexibility resulting in cost-efficient customized products.420 A decoupling of the value chain into an order-specific and a customer neutral part and postponing activities until an order is placed is suggested.421 Some authors also stress the time concern of mass customization as lead-time is essential, and companies need to focus on utilizing standardized methods and modularized product structures to deliver products to the customer fast.422

412

Piller (2004a, p. 317). Salvador et al. (2009, pp. 76–77). 414 Salvador et al. (2009, pp. 76–77). 415 An example for relatively low design freedom is offering standardized products with customized packaging, moderate design freedom could be portrayed as individually assembled product from standardized modules whereas complete design freedom lets consumers drafting completely individualized products. 416 Alford et al. (2000, p. 100). 417 Alford et al. (2000, p. 99). 418 Wind and Rangaswamy (2001, p. 19). 419 Wind and Rangaswamy (2001, p. 19). 420 Dewan et al. (2003, p. 1055). 421 Piller et al. (2004b, pp. 439–440). 422 Partanen and Haapasalo (2004, p. 213). 413

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Complaint mechanism Closely connected to the large consumer base of experienced and non-experienced consumers is the challenge of the complaint mechanism. Especially inexperienced users with an insufficient preference insight could increase the return rates of customized products in comparison to standardized products. Consumers could experience regret, as their stated preferences are different from their real preferences.423 One proposed outcome is that if people are not pleased with the customized product, this requires an in depth complaint management. One further idea is that companies need to implement learning mechanisms that enable them to deal with possible consumer dissatisfaction. Management change Companies following a traditional strategy like standardization or differentiation, used to look for similarities among customer groups to serve them with commonality products.424 Mass customization on the other hand, stresses the differences and uniqueness of each customer, which leads to the requirement of a completely different approach and knowledge, which traditional mass marketers often lack.425 Mass customization is a very unfamiliar strategy that requires different organizational structures, management roles, systems, and ways to connect to customers.426 For example in the area of accounting, mass customization requires an exact calculation to allocate the precise costs of each part and the production step to a mass-customized product. This might lead to a miscalculation or trouble in determining the financial consequences of customization and hence cost can quickly spiral out of control.427 This was not necessary with mass production, as there was simply no variety that needed to be accounted for.428 Some authors argue that when competing firms customize, the optimal strategy should limit the customizable offer to only a few product varieties.429 Failure in mass customization can be attributed to an unsuccessful change management.430 Larger corporation require a more complex change management process, which might explain their low adaptation rate.431 Concluding, pros and cons of mass customization for consumers and companies were presented and it is interesting to see which consumers mass customizing companies

423

Syam et al. (2008, p. 379). Salvador et al. (2009, pp. 76–77). 425 Salvador et al. (2009, pp. 76–77). 426 Pine, II. et al. (1993c, p. 109). 427 Salvador et al. (2009, pp. 76–77). 428 Salvador et al. (2009, pp. 76–77). 429 Cavusoglu et al. (2007, p. 12). 430 Piller (2004a, p. 325). 431 Piller (2004a, p. 326). 424

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should aim at and if it is really an approach for everybody. Furthermore, due to the presented company challenges, companies need to carefully reflect if mass customization is an interesting approach for their industry and if customers are interested in customizing their products. Although manufacturers offer great mass customization products that are liked by the market, they still failed.432 Although mass customization leads to higher consumer satisfaction and greater profits, companies do not fully utilize the full potential of the strategy.433 Only a few companies use the complete array of possibilities, overlooking the potential for innovation management and strategic planning.434

432

Piller (2004a, p. 325). Randall et al. (2005, p. 84). 434 Piller (2004a, p. 328). 433

3 Fundamentals of culture research Every human is a carrier of culture, and as such, culture influences all aspects of people’s lives. Culture reveals in two layers, the concepta, and the percepta.435 The concepta is invisible and describes the deeper layers of culture though basic assumptions, values, and norms. The percepta is how the concepta expresses and is thus empirically observable, for example, in behaviors. Therefore, culture is implicit as well as explicit.436 Franke et al. speculate about a variation of mass customization effects between different societies.437 Cultural differences are deemed to affect perceptions, characters, and behavior438 and shape people’s motivations, lifestyles, and product choices.439 Therefore, it can be suggested that people from culturally different backgrounds behave differently in terms of mass customization as they have different preferences with different motivations. As the aim of this dissertation is to investigate cultural influences on mass customization, identify, measure, and statistically compare two culturally distinct nations, the cultural dimensions by Hofstede are applied. As the Hofstede metric succeeded to identify “fundamental differences in the way people in various countries perceive and interpret their worlds”440 and allows an empirical comparison of cultural dimensions. This third chapter elaborates the theoretical foundations of culture research. This chapter begins by defining culture and constitutes how culture manifests in societies. Subsequently, a detailed explanation of Hofstede’s cultural dimensions is given, followed by a critical review. Afterwards, Hofstede’s approach will be compared to other major cultural concepts.

3.1 Definition of culture One of the first widely agreed definition of culture is given by Kluckhohn441 “culture consists in patterned ways of thinking, feeling and reacting, acquired and transmitted mainly by symbols, constituting the distinctive achievements of human groups, including their embodiments in artifacts, the essential core of culture consists of traditional (i.e.

435

Kutschker and Schmid (2008, pp. 672–673). Kutschker and Schmid (2008, pp. 672–673). 437 Franke et al. (2010, p. 139). 438 Yeniyurt and Townsend (2003, p. 378). 439 Tse et al. (1989, p. 459). 440 Huo and Randall (1991, p. 159). 441 Hofstede (2001, p. 9). 436

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 C. Wabia, The Cultural Influence on Mass Customization, https://doi.org/10.1007/978-3-658-31015-8_3

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historically derived and selected) ideas and especially their attached values.”442 Hofstede builds on the approach by Kluckhohn and shortens the definition to “the collective programming of the mind that distinguishes the members of one group or category of people from another”.443 The “mind” implies a person’s thinking, feeling, and acting, which influences their beliefs, attitudes, and skills and therefore includes values.444 Those patterns are carried intrinsically by every person and learned throughout the lifetime, but mostly acquired during early childhood.445 Culture reveals and manifests in several ways: symbols, heroes, rituals, and values. From the outside to the inside, the onion model portrays visible manifestations of culture, with symbols indicating the outward manifestation, and values are the most inner and profound manifestation.446

Symbols Heroes Rituals

Values

Figure 5 The „onion“ model of cultural levels447

The most superficial layer of cultural manifestations are symbols which are pictures, gestures, words, or objects that transmit a specific meaning. Those are only recognized by people sharing the same culture, for instance, hairstyles, flags, and status symbols.448 Heroes are people, dead or alive, real or imaginary and hold characteristics serving as

442

Kluckhohn (1951, p. 86). Hofstede (2001, p. 9). 444 Hofstede (2001, p. 10). 445 Hofstede et al. (2010, p. 4). 446 Hofstede et al. (2010, p. 7). 447 Adapted from Hofstede et al. (2010, p. 8) with kind permission of © McGraw Hill LLC 2010. All Rights Reserved. 448 Hofstede et al. (2010, p. 8). 443

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role models for behavior as they carry characteristics that are highly admired by members of a culture, for example, Barbie in the USA or Asterix in France.449 Rituals describe collective activities that are socially essential, for example ways of greeting or social ceremonies.450 Rituals, heroes, and symbols can be summarized under practices. Thus, they are externally observable, but insiders can only understand their cultural meaning.451 Practices are mostly learned at school or work.452 The core of culture are values, those are learned during early childhood.453 Values are general tendencies to favor or disfavor certain circumstances. 454 They are in the stricter sense feelings with an orientation towards a plus and a minus side, for instance paring evil versus good, dangerous versus safe or moral versus immoral.455 Values are unconscious, and often, described as “what the heart or conscience” tells you.456 Therefore, values cannot be directly examined extrinsically.457 Values can only be understood by the way people act under certain circumstances.458 According to Hofstede, Hofstede and Minkov “there is no evidence that the values of present-day generations from different countries are converging.”459 Consequently, the change of values is slow, and values themselves are stable over time.460 Culture on the outer layers of the onion model changes faster and can change throughout a person’s lifetime, as people can, for instance, adapt to new technologies.461 Culture in itself has the greatest influence on many dimensions of human behavior.462

449

Hofstede et al. (2010, p. 8). Hofstede et al. (2010, p. 9). 451 Hofstede et al. (2017, p. 8). 452 Hofstede et al. (2010, p. 10). 453 Hofstede et al. (2010, pp. 9–10). 454 Hofstede et al. (2010, p. 9). 455 Hofstede et al. (2010, p. 9). 456 Hofstede et al. (2010, p. 11). 457 Hofstede et al. (2010, p. 11). 458 Hofstede et al. (2010, p. 11). 459 Hofstede et al. (2010, p. 19). 460 Hofstede et al. (2010, p. 19). 461 Hofstede et al. (2010, pp. 19–20). 462 Soares et al. (2007, p. 277). 450

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3.2 Hofstede’s 6D model for the measurement of culture While working as the first personnel researcher for the European head office at IBM463, Hofstede more or less unintentionally464 had the chance to study survey data from people working at IBM subsidiaries around the world.465 He observed differences in people’s behavior. For all country comparisons, respondents came from a mix of occupations 466 thus Hofstede identified matched samples, which were similar in all aspects except their nationality.467 From the original IBM data set, which consisted of 116,000 questionnaires468 in about 50 IBM country subsidiaries469, four cultural dimensions were identified470 based on statistical correlations, grouping several phenomena that are found to occur in combination.471 The original four culture dimensions are power distance (from small to large), collectivism versus individualism, femininity versus masculinity and uncertainty avoidance (from weak to strong).472 The fifth dimension, long-term vs. short-term orientation, was first discovered in a survey devolved by Chinese scholars among students from 23 countries (Chinese Culture Connection, 1987).473 The study’s first author, Michael Harris Bond named the dimension Confucian Work Dynamism.474 As none of the existing four dimensions related to long-term orientation, this dimension was added to the framework.475 The latest addition to the Hofstede framework focused on another aspect that was not covered in the other dimensions476 is the dimension indulgence versus restraint. This dimension was extracted from the world values survey data477 based on work of Michael Minkov.478

463

Hofstede (2001, p. 43). Hofstede (2011, p. 8). 465 Mooij and Hofstede (2002, pp. 63–64). 466 Hofstede et al. (2010, p. 64). 467 Hofstede (2011, p. 6). 468 Mooij and Hofstede (2002, pp. 63–64). 469 Hofstede et al. (2010, p. 30). 470 Hofstede et al. (2010, pp. 31–33). 471 Hofstede et al. (2010, pp. 31–33). 472 Hofstede et al. (2010, p. 31). 473 Hofstede (2011, p. 13). 474 Hofstede (2011, pp. 7–8). 475 Hofstede (2011, p. 13). 476 Hofstede (2011, p. 15). 477 Inglehart et al. (2018). http://www.worldvaluessurvey.org/WVSContents.jsp is a global network of social scientists that measure and study changing values and their impact since 1981. 478 Hofstede (2011, p. 14). 464

Hofstede’s 6D model for the measurement of culture

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Hofstede measured culture on a comparative scale between countries479 where each dimension is an aspect of culture measured relative to other cultures.480 The six cultural dimensions are “statistically distinct”; they can be observed in all combinations, although Hofstede observed that some combinations occur more often than others.481 Each dimension is measured on a scale from 0 to 100, although some countries might have scores of more than 100, those were measured after the original development of the scale and added later.482 3.2.1 Cultural dimensions Culture Dimension

Elaboration

Power Distance

… related to the different solutions to the basic problem of human inequality

Individualism vs. Collectivism

… related to the integration of individuals into primary groups

Masculinity vs. Femininity

…related to the division of emotional roles between women and men

Uncertainty Avoidance

…related to the level of stress in a society in the face of an unknown future

Long-term vs. Short-term Orientation

…related to the choice of focus for people’s efforts: the future or the present and past

Indulgence vs. Restraint

…related to the gratification versus control of basic human desires related to enjoying life.

Figure 6 Definition of cultural dimensions483

3.2.1.1 Power Distance The dimension power distance484 describes “the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally.”485

479

Hofstede (2011, p. 8). Hofstede (2011, p. 7). 481 Hofstede (2011, p. 8). 482 Mooij and Hofstede (2002, pp. 63–64). 483 Own illustration based on Hofstede (2011, p. 8). 484 From 0 = small to 100= large 485 Hofstede et al. (2010, p. 61). 480

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It studies the power distance from below, from a perspective of the less powerful members of a society, which is rather untypical as most interest is usually admitted to leaders.486 Hofstede describes that power and inequality are very fundamental facts for any culture and all societies are unequal, however, some societies are “more unequal than others.”487 Hofstede found that if a country as a whole scored high in power distance, this applied to all members of society: those in high-status as well as in low-status occupations.488 If a country ranked low, this applied mostly to the higher and middlestatus employees and the scores of lower-status employees in a low power distance are as high as the ones of their counterparts in high power distant societies.489 A culture with small power distance can be observed by less hierarchy, as hierarchy means inequality of roles and use of power that should be legitimated. In societies with a large power distance, hierarchy means “existential inequality” and power is a basic fact of society and legitimacy is not relevant.490 In societies with a prevailing large power distance, status is important to show power, whereas powerful people in countries with small power distance try to appear less powerful.491 Power distance tends to be higher in Eastern Europe, Asia, and Africa and lower in Western Germanic and English-speaking societies.492 3.2.1.2 Individualism versus Collectivism The cultural dimension individualism493 is defined as “societies in which the ties between individuals are loose: everyone is expected to look after him- or herself and his or her immediate family.”494 Whereas collectivism describes “societies in which people from birth onward are integrated into strong, cohesive in-groups, which throughout people’s lifetime continue to protect them in exchange for unquestioning loyalty.”495 A culture with individualism can be defined by an I-consciousness where everyone is expected to take care of him- or herself and the closest relatives. Societies value a right to privacy.496 Collectivist cultures are outlined by a We-consciousness, where in-groups

486

Hofstede et al. (2010, p. 61). Hofstede (2011, p. 9). 488 Hofstede et al. (2010, p. 66). 489 Hofstede et al. (2010, p. 66). 490 Hofstede (2011, p. 9). 491 Mooij and Hofstede (2002, pp. 63–64). 492 Hofstede (2011, p. 10); Hofstede et al. (2010, pp. 57–59). 493 From 0 = collectivistic to 100= individualistic. 494 Hofstede et al. (2010, p. 92). 495 Hofstede et al. (2010, p. 92). 496 Hofstede (2011, p. 11). 487

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predetermine opinions and votes.497 People are more explicit and communicate more verbally in highly individualistic cultures, whereas implicit communication prevails in collectivist countries.498 The USA is leading as the most individualistic country in the world; other Western countries like European and Anglo-American countries tend to be individualist while eastern countries like Russia, China, and Latin-America tend to be collectivistic in nature.499 But significant differences in individualism scores can be observed between regions within China, due to heterogeneity in the local history.500 According to Hofstede, the majority of people around the globe live in societies where the group overcomes the individual interests.501 3.2.1.3 Masculinity versus Femininity A culture is defined as masculine502, when “emotional gender roles are clearly distinct: men are supposed to be assertive, though, and focused on material success, whereas women are supposed to be more modest, tender, and concerned with the quality of life.”503 On other side, a society is feminine when “gender roles overlap: both men and women are supposed to be modest, tender, and concerned with the quality of life.”504 In a feminine society, there is only a minimal social role differentiation between genders505, a balance between family and work, and both genders deal with facts and feelings in the education of their children.506 Whereas in masculine societies, there is a maximal role differentiation between genders where work predominates over family and fathers deal with facts, whereas mothers deal with feelings.507 Masculinity is high in German-speaking countries and some Latin countries, moderately in English, Western countries, low in Nordic countries, and the Netherlands.508

497

Hofstede (2011, p. 11). Mooij and Hofstede (2002, pp. 63–64). 499 Hofstede (2011, p. 12); Hofstede et al. (2010, pp. 95–97). 500 Huo and Randall (1991, p. 160). 501 Hofstede et al. (2010, p. 90). 502 From 0 = feminine to 100= masculine. 503 Hofstede et al. (2010, p. 140). 504 Hofstede et al. (2010, p. 140). 505 de Mooij and Hofstede (2002, pp. 63–64). 506 Hofstede (2011, p. 12). 507 Hofstede (2011, p. 12). 508 Hofstede (2011, p. 13); Hofstede et al. (2010, pp. 141–143). 498

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3.2.1.4 Uncertainty Avoidance Hofstede defined uncertainty avoidance509 as “the extent to which the members of a culture feel threatened by ambiguous or unknown situations.”510 Hofstede explains that this expresses through the way people deal with stress and their need for predictability and rules.511 This dimension portrays a culture’s tolerance for ambiguity and the unknown.512 It expresses how people deal with uncertainty and to what extent they feel comfortable in unstructured situations.513 Hofstede defines unstructured situations as “novel, unknown, surprising, and different from usual.”514 People in highly uncertainty avoiding societies seek to minimize the possibility of unstructured situations by very strict behavioral codes, the belief in one absolute truth, laws, and regulations and disapproval of divergent views.515 But uncertainty avoidance is not the same as risk avoidance, because risk can be attributed to a direct situation, uncertainty defines the fear of the “unknown”.516 Countries with a strong uncertainty avoidance tend to be more stressed, anxious, and neuroticistic as well as in need for clarity and structure as uncertainty in life poses a threat that must be reduced.517 People in weak uncertainty avoiding nations as comfortable with ambiguity and as more easygoing and self-controlled as well as are more accepting of uncertainty and tackled the situation as it occurs.518 In countries with a low uncertainty avoidance score, people are more innovative and entrepreneurial.519 Countries scoring higher on uncertainty avoidance are in eastern and central Europe and Latin and Germanic-speaking countries, whereas lower in English speaking and Nordic countries as well as in Chinese culture countries.520 3.2.1.5 Long-term versus Short-term Orientation Geert Hofstede defines the fifth dimension long-term orientation521 as “the fostering of virtues oriented toward future rewards – in particular, perseverance and thrift”, the

509

from 0= weak to 100= strong. Hofstede et al. (2010, p. 191). 511 Hofstede et al. (2010, p. 191). 512 Hofstede (2011, p. 10). 513 Hofstede (2011, p. 10). 514 Hofstede (2011, p. 10). 515 Hofstede (2011, p. 10). 516 Hofstede (2001, p. 148). 517 Hofstede (2011, p. 10). 518 Hofstede (2011, p. 10). 519 de Mooij and Hofstede (2002, pp. 63–64). 520 Hofstede (2011, p. 11); Hofstede et al. (2010, pp. 192–194). 521 From 0= short-term oriented to 100 = long-term oriented. 510

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opposite dimension short-term orientation is labelled as “the fostering of virtues related to the past and present- in particular, respect for tradition, preservation of “face”, and fulfilling social obligations”.522 For societies with a short-term orientation, the most important life events occurred in the past or take place now, personal steadiness and stability are essential, and a person is always the same and there are social spending and consumption.523 Whereas for longterm oriented societies, the most important life events occur in the future, it is crucial that a good person adapts to the conditions and the saving quota is large.524 The values of perseverance, thrift, and pursuit of peace of mind are essential to people.525 The most long-term oriented countries are in East Asia, followed by Eastern and Central European countries. Medium scores are North and South Europe and South Asia, whereas the Middle East and Africa, Anglo-countries and Latin American countries are short-term oriented.526 3.2.1.6 Indulgence versus Restraint Hofstede and Minkov define the dimension indulgence527 as “tendency to allow relatively free gratification of basic and natural human desires related to enjoying life and having fun”, whereas restraint describes “conviction that such gratification needs to be curbed and regulated by strict social norms.”528 In a culture seen as indulging, a higher percentage of people are declaring themselves as very happy, higher importance is put on leisure, and freedom of speech is essential.529 Whereas in a restraint society, fewer people see themselves as happy and lower importance is put on leisure and freedom of speech is not a main concern.530 Countries scoring high on indulgence are those in the Americas and Western Europe and Southern Africa, restraint, however, dominates countries in Eastern Europe, Asia, and Muslim countries531. 532

522

Hofstede et al. (2010, p. 239). Hofstede (2011, p. 15). 524 Hofstede (2011, p. 15). 525 Mooij and Hofstede (2002, pp. 63–64). 526 Hofstede (2011, p. 15); Hofstede et al. (2010, pp. 255–258). 527 From 0= restraint to 100= indulging. 528 Hofstede et al. (2010, p. 281). 529 Hofstede (2011, p. 16). 530 Hofstede (2011, p. 16). 531 Hofstede (2011, p. 16). 532 For a detailed elaboration on the influence of each cultural dimension on mass customization, see chapter 6.2. Hypothesis development. 523

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3.2.2 Critical reflection Hofstede’s six dimensions for the measurement of culture have been highly praised and largely criticized in the scientific community.533 The first major point of criticism is that the data for the development of the first four cultural dimensions were collected between 1967 and 1973534, making the data very old and even outdated.535 It might be pointed out that national culture is changeable over time.536 Fernandez et al.537 argue based on evidence in their replication study that significant value classifications shifts in some countries took place since Hofstede’s original study as they found changes in country rankings. However, researchers like Lu et al.538, Hoppe539, Merritt540, de Mooij541, Lowe542, and Søndergaard543 used Hofstede’s Value Survey Module (VSM) questionnaire and successfully extended and replicated his findings. Sivakumar and Nakata advocate that culture transforms slowly.544 In addition, Hofstede argues that culture, in its core based on cultural values, are stable over time.545 One further argument is that Hofstede makes continuous improvements to his framework and extends it with collaborations with other authors.546 Secondly, the original four cultural dimensions were empirically developed based on an evaluation of 116,000 questionnaires547, whereas other cultural constructs are theoretical

533

Soares et al. (2007, p. 281); Sivakumar and Nakata (2001, p. 557); Kirkman et al. (2006, p. 286). Mooij and Hofstede (2002, pp. 63–64). 535 Soares et al. (2007, p. 281). 536 Sivakumar and Nakata (2001, p. 557). 537 Fernandez et al. (1997, p. 52) Country comparison: USA, Germany, Japan, Yugoslavia, China, Russia, Venezuela, Mexico and Chile. 538 Lu et al. (1999, p. 102) Validation and extension of Hofstede findings in country comparison USA and Taiwan. 539 Hoppe (1990); Hofstede et al. (2017, p. 44). Hoppe investigated elites from 18 countries and confirmed the dimensions power distance, individualism, masculinity and uncertainty avoidance. 540 Merritt (2000, p. 295); Hofstede et al. (2017, p. 44). Merritt investigated pilots from 19 countries and confirmed power distance, individualism, masculinity and uncertainty avoidance. 541 Hofstede (2001, 187,262,336); Hofstede et al. (2017, p. 44) De Mooij investigated consumers from 15 European countries and confirmed individualism, masculinity and uncertainty avoidance. 542 Lowe (1996, p. 117). Lowe investigated consumers in the UK and Hong Kong and confirmed the dimensions power distance, individualism and masculinity, but not uncertainty avoidance. 543 Søndergaard (1994, p. 451); Hofstede et al. (2017, pp. 43–44) Søndergaard summarizes that all 4 cultural dimensions can be confirmed based on results of 19 reviewed replication studies. 544 Sivakumar and Nakata (2001, p. 559). 545 Hofstede et al. (2010, p. 19). 546 Hofstede (2011, p. 13). 547 Mooij and Hofstede (2002, pp. 63–64). 534

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on the conceptualization stage.548 The applicability of the VSM to all cultures is questioned549 and the very complex construct of culture cannot be measured with “just” four variables.550 Nevertheless, Hofstede’s cultural dimensions significantly correlate with more than 400 other dimensions of other cultural measurement constructs.551 Therefore, Hofstede’s approach might be the most comprehensive for the measurement of culture. Thirdly, researchers criticized that the Hofstede’s data for the first four cultural dimensions were collected at only one large multinational corporation (IBM).552 As a result, the country scores might not represent the total population of a country and not be transferrable to consumer behavior.553 However, it has to be noted that the Hofstede study was repeated with subjects from other occupations and in other countries and thus been validated by other researchers.554 Fourthly, authors like Yeniyurt and Townsend fear confounding effects, as Hofstede’s dimensions represent national cultural traits, but some nations have multiple sub-cultures and social groups.555 Hofstede is aware and agrees that he is being criticized for using nations as the unit of analysis for culture, but argues that those are usually the only types of data available for comparison.556 Lastly, the Hofstede metric does not hold on the individual level557 as it “lacks sufficient construct validity when applied to the individual level of analysis”.558 In contrast, Hofstede identifies significant correlations between the country cultural dimensions and the personality inventory dimensions (BIG 5: Neuroticism, Extraversion, Openness, Agreeableness, and Conscientiousness). For example, 55 percent of country differences on Neuroticism can be elaborated by Uncertainty Avoidance and Masculinity.559 Yet, Hofstede concludes that this link is purely statistical and that there are varieties of individual personalities within each national culture.560 Finally, Hofstede’s warns that national culture scores should not be used for the stereotyping of individuals.561

548

Yoo et al. (2011, p. 194). Soares et al. (2007, p. 281). 550 Sivakumar and Nakata (2001, p. 557). 551 Hofstede (2001, pp. 503–522). 552 Yeniyurt and Townsend (2003, p. 392); Sivakumar and Nakata (2001, p. 557). 553 Steenkamp et al. (1999, p. 66); Sivakumar and Nakata (2001, p. 557). 554 Hofstede et al. (2017, p. 44). 555 Yeniyurt and Townsend (2003, p. 392). 556 Hofstede (2001, p. 73). 557 Yoo et al. (2011, p. 195). 558 Blodgett et al. (2008, p. 343). 559 Hofstede (2011, p. 8). 560 Hofstede (2011, p. 8). 561 Hofstede (2011, p. 8). 549

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Despite criticism and limitations of the Hofstede model, it remains a simple, practical, and usable way to integrate culture into research studies562 and an increasing number of scholars are using this model to incorporate culture into their research563.564

3.3 Hofstede’s model in comparison to other approaches This sub-chapter contrasts Hofstede’s work with three main cultural studies, which use different theoretical foundations. Hofstede’s work is based on values. Kluckhohn and Strodtbeck base their dimensions on basic assumptions565, whereas Trompenaars measures culture based on values and basic assumptions. Hall concentrates on communication aspects, which closes the gap between basic assumptions and behavior.566 Kluckhohn / Strodtbeck Kluckhohn and Strodtbeck studied five basic value orientations: human nature, mannature, time, activity, and relational orientations.567 Human nature describes whether humans are static, meaning good or bad; or dynamic, to which degree a human can change in the course of life568 Man-nature implies if a human subjugates, masters, or harmonizes with nature.569 Time differentiates the focus on past, present, or future.570 Activity investigates the focus that humans put a focus on being, doing, or being-inbecoming.571 Relational orientations differentiate cultures in their relation to other men as lineal, collateral, or individualistic.572 Trompenaars Trompenaars distinguishes between seven cultural dimensions: universalism vs. particularism, individualism vs. communitarism, neutral vs. emotional, specific vs. diffuse, achievement vs. ascription, attitudes to time, and attitudes to environment. Universalism

562

Soares et al. (2007, p. 283). Sivakumar and Nakata (2001, p. 557); Kirkman et al. (2006, p. 286). 564 For a detailed elaboration on how culture in applied in this thesis, see chapter 4.2.2. Distinctiveness of cross-cultural research, for the general approach; chapter 5.1. Research goals for the survey and chapter 6.3.1. Experimental design for the experiment. 565 Basic assumptions are general orientations, how a human views the world, other humans, and the society. They are invisible, subconscious, and self-evident. Kutschker and Schmid (2008, p. 686). 566 Kutschker and Schmid (2008, p. 700). 567 Kluckhohn and Strodtbeck (1961). 568 Kluckhohn and Strodtbeck (1961, pp. 11–12). 569 Kluckhohn and Strodtbeck (1961, p. 13). 570 Kluckhohn and Strodtbeck (1961, p. 13). 571 Kluckhohn and Strodtbeck (1961, p. 15). 572 Kluckhohn and Strodtbeck (1961, p. 17). 563

Hofstede’s model in comparison to other approaches

55

versus particularism explains to what extent a human puts importance on the compliance to rules.573 Individualism versus communitarism explains how people view their relations to others.574 Neural versus emotional explains how people deal with emotions and feeling and how far they are suppressed.575 Specific versus diffuse describes in how far humans are affected by certain situations, if living and working environment submerge.576 Achievement versus ascription indicates if a person’s status is achieved or ascripted.577 The dimensions attitudes to time and attitudes to environment are based on the corresponding dimensions of Kluckhohn and Strodtbeck.578 Hall Hall compares cultures based on four criteria in communication: context orientation, space, time, and information flow. Context orientation indicates how much information flow is required from sender to receiver of a message to understand it. This dimension differentiates between high-context and low-context.579 Space describes the physical boundaries of humans meaning how people deal with territory and personal space.580 Time indicates monochrome or polychrome understanding of time for instance if things should be done at the same time or after another.581 Information flow, high versus low, indicates the speed at which messages in communication are coded and decoded.582

573

Kutschker and Schmid (2008, p. 736). Kutschker and Schmid (2008, p. 737). 575 Kutschker and Schmid (2008, p. 737). 576 Kutschker and Schmid (2008, p. 737). 577 Kutschker and Schmid (2008, p. 737). 578 Kutschker and Schmid (2008, p. 736). 579 Hall and Hall (1990, pp. 6–7). 580 Hall and Hall (1990, pp. 10–11). 581 Hall and Hall (1990, p. 13). 582 Hall and Hall (1990, pp. 22–24). 574

Neutral/ emotional

Universalism / particularism, Individualism / communitarism

Uncertainty Avoidance

Attitudes to time

time584

Long-term Orientation

Indulgence / Restraint

Specific/diffuse, achievement/ascription, Attitudes to environment

man-nature, activity

Additions

584

Classification in context for human nature and relational orientations based on Clark (1990, p. 73). Trompenaars dimensions attitudes to time and attitudes to environment are based on the corresponding dimensions by Kluckhohn/Strodtbeck see Kutschker and Schmid (2008, p. 736). 585 Classification in context based on Soares et al. (2007, p. 280).

583

Table 2 Hofstede’s cultural framework in comparison to Kluckhohn/Strodtbeck and Trompenaars

Trompenaars (1997)585

Human nature

Human nature

Relational orientations

Kluckhohn/ Strodtbeck (1961)583

Masculinity / Femininity

Individualism / Collectivism

Power Distance

Hofstede, Hofstede & Minkov (2010)

56 Fundamentals of culture research

Hofstede’s model in comparison to other approaches

57

Comparison The approaches by Kluckhohn and Strodtbeck as well as the approach by Trompenaars can be directly compared to Hofstede’s dimensions. The approach of Hall is left out of the comparison as it classifies cultures among only one dimension: the way messages are communicated.586 Kluckhohn and Strodtbeck dimension relational orientations can be found in Hofstede’s power distance. 587 Whereas Kluckhohn and Strodtbeck dimension human nature is comparable to Hofstede’s individualism vs. collectivism and masculinity vs. femininity.588 The dimension time by Kluckhohn and Strodtbeck can be found in Hofstede’s long-term vs. short-term orientation.589 Trompenaars dimensions universalism/ particularism and individualism/ communitarism overlap with Hofstede’s individualism vs. collectivism dimensions.590 Trompenaars neutral/emotional dimensions are comparable to Hofstede’s masculinity vs. femininity.591 Whereas Trompenaars attitudes to time can be interpreted as Hofstede’s long-term vs. short-term orientation.592 His work has been criticized, inter alia by Geert Hofstede, who claims that Trompenaars could have used fewer dimensions as he only measures individualism and power distance.593 As shown, the Hofstede cultural dimensions overlap with other prominent culture measurement approaches. Another point worth noticing is that these overlaps are not limited to the here presented approaches, further correlations with further approaches can be found in the appendix of Culture’s Consequences.594 The critical reflection on Hofstede’s cultural dimensions and the above short comparison to other approaches might underline other researcher’s opinions on why it is a popular and influential metric for culture measurement today.595

586

Soares et al. (2007, p. 278). Clark (1990, p. 73). 588 Clark (1990, p. 73). 589 Trompenaars dimensions attitudes to time and attitudes to environment are based on the corresponding dimensions by Kluckhohn/Strodtbeck see Kutschker and Schmid (2008, p. 736). 590 Soares et al. (2007, p. 280). 591 Soares et al. (2007, p. 280). 592 Soares et al. (2007, p. 280). 593 Hofstede (1996, p. 195). 594 Hofstede (2001, pp. 503–520). 595 Yoo et al. (2011, p. 193); Huo and Randall (1991, p. 159); Soares et al. (2007, p. 279); Kirkman et al. (2006, p. 285); Singh et al. (2005, p. 132). 587

4 Cultural influence on consumer behavior under mass customization Before own empirical research in the form of a survey and an experiment about the cultural influence on mass customization are presented, the theoretical background discussed in the previous chapters will be used to formulate research gaps. After deducting research questions from the research gaps, the general research approaches of this thesis will be presented. This includes survey and experimental strategies of inquiry, an elaboration on the distinctiveness of cross-cultural research and its application in this thesis as well as an explanation of real and hypothetical willingness-to-pay measurements that were used to measure value in mass customization. It can be concluded that although researchers have realized the importance of culture research, as cultural differences are deemed to affect perceptions, characters, and behavior596, and shape people’s motivations, lifestyles, and product choices597, the effect of culture on consumer choice has been barely researched.598 Kramer et al. indicate a control of cultural orientation over the way people respond to personalization because of the importance a person puts on the preferences of his or her peers.599 Moon et al. observe different consumer reactions to customized products based on their cultural background.600 Consumer needs are heterogeneous601 and therefore might vary according to cultural background and product categories on offer. Hunt et al. suggest that consumer value for mass-customized products differ due to individual differences in need for uniqueness, need for optimization, centrality of visual product aesthetics, product category involvement, and perceived risk.602 For instance, uniqueness can be attributed and measured in a cultural context when observing individualism or power distance. Hofstede proved that cultural orientations of people in Western and Eastern cultures are vastly heterogeneous as they are diverse between countries of the regions.603 Germany for instance has higher masculinity, higher uncertainty avoidance, higher long-term orientation and lower indulgence scores than its Dutch neighbors.604 China in particular 596

Yeniyurt and Townsend (2003, p. 378); Liang and He (2012, p. 352). Tse et al. (1989, p. 459). 598 Liang and He (2012, p. 352). 599 Kramer et al. (2007, p. 255). 600 Moon et al. (2008, p. 33). 601 Franke and Piller (2004, p. 401). 602 Hunt et al. (2013, p. 327). 603 Hofstede et al. (2017). 604 https://www.hofstede-insights.com/country-comparison/germany,the-netherlands/, retrieved 01.07.2019. Hofstede (2001); Hofstede Insights (2019). 597

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 C. Wabia, The Cultural Influence on Mass Customization, https://doi.org/10.1007/978-3-658-31015-8_4

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Cultural influence on consumer behavior under mass customization

shows higher power distance, lower individualism, lower masculinity, lower uncertainty avoidance, and lower indulgence scores than Japanese.605 To conclude, the extent of differences in mass customization preferences based on cultural orientation and their impact is not known.

4.1 Research gaps After presenting the derivation of the main research question in chapter 1, To what extent do mass customization preferences differ among nationalities and which dimensions of culture cause this effect?, the research questions to answer the main problem statement are derived from further research gaps. Most companies are becoming mass customizers in a progress based on their origin as mass producers.606 This can be a key challenge for many industries.607 Companies shifting towards customer-designed products have to reconfigure their business models to meet this new challenge.608 The requirement of business model change, next to the conviction that their customers have homogenous needs and/ or do not want personalization, is a primary reason for the low adaption rate of mass customization.609 Authors even argue that mass customization is important for all companies that place a focus on delivering customer value.610 The key to survive in today’s business environment is to recognize the “power of mass customization” as it allows companies to “shorten their cycle times, lower their costs, enhance their flexibility and responsiveness, and increase their variety and customization”.611 The application of different product customization approaches by companies has largely grown in the past years.612 Mass customization is a controversial strategy for some researches and might be not the best way to deliver product variety.613 Therefore, it is of practical relevance to question if mass customization is generally preferable over standardization by customers.

605

https://www.hofstede-insights.com/country-comparison/china,japan/, retrieved 10.07.2019. Hofstede Insights (2019). 606 Comstock et al. (2004, p. 362). 607 Martellini (2016, p. 10). 608 Thomke and Hippel (2002, p. 5). 609 Broekhuizen and Alsem (2002, p. 310). 610 Broekhuizen and Alsem (2002, p. 326). 611 Addis and Holbrook (2001, p. 52). 612 Miceli et al. (2013, p. 210). 613 Zipkin (2001, p. 81).

Research gaps

61

In their meta-investigation on mass customization, Fogliatto et al. call for research on the question: “How much variety is really required by customers?”614 Variety in mass customization expresses through different stages of customization that allow different degrees of design freedom. Thus, different personalization approaches, namely mass customization stages should be investigated. The first sub-research question is: 1. To what extent do preferences for mass customization stages differ among nationalities? The perceived value of mass customization might be limited to specific industries, as findings by Hagenmeier show that consumers’ general interest in customization varied across different product categories.615 Moon et al. revealed that the consumption of personalized products varied according to the product type.616 Research by Bharadwaj et al. testifies that mass customization does not have universal appeal.617 For example, consumers with less product category expertise are less drawn to customization in that specific product category.618 People consume products for hedonic or utilitarian reasons.619 Hedonic products are consumed for fun and enjoyment620 as they are evaluated mainly based on aesthetics, taste, and sensory experience.621 Utilitarian products have a rational appeal, and are less arousing and have cognitively oriented benefits.622 Lim and Ang found that consumers in Shanghai preferred advertisements promoted as utilitarian rather than hedonic, they evaluated utilitarian brands as more competent and sincere in comparison to hedonic products. Singaporean consumers on the other hand showed a preference for hedonic over utilitarian products.623 Tse et al. state that with economic growth and progress, the consumption changes from utilitarian to hedonic.624 Contradictory observations were made whether user- or manufacturer- generated625 products should be preferred, as mass customization might only create value for specific

614

Fogliatto et al. (2012, p. 21). Hagenmaier (2015, p. 177). 616 Moon et al. (2008, p. 37). 617 Bharadwaj et al. (2009, p. 225). 618 Bharadwaj et al. (2009, p. 216). 619 Hirschman (1986); Batra and Ahtola (1990, p. 161). 620 Holbrook and Hirschman (1982, p. 132). 621 Holbrook and Moore (1981, p. 103). 622 Lim and Ang (2008, p. 226); Hirschman (1986). 623 Lim and Ang (2008, p. 225). 624 Tse et al. (1989, 463-469). 625 Manufacturer-generated product: designed by marketers, designers and engineers; user-generated product: involvement of the consumer see Nishikawa et al. (2013, p. 160). 615

62

Cultural influence on consumer behavior under mass customization

goods from certain industries.626 Mass customization might not appeal to all customers in all markets at all times.627 Zipkin suggests that a small range of products from only a few product categories have the potential for mass customization.628 Silveira et al. call for studies „in the form of a methodology for determining the appropriate level of MC for a product or service”.629 Research is needed to examine which stages of mass customization are required for different product categories and if people from different cultures differ in their preferences. The second sub-research question is: 2. Does the preference for mass customization stages differ for different products among nationalities? The idea of mass customization implies that personalized products are manufactured at a cost close to standardized goods and therefore, could be sold at prices similar to standard products on the market.630 Various researchers examined the willingness-to-pay of a premium price for mass-customized products in comparison to standard products.631 Mass customization generates superior consumer value632 from an increased consumer satisfaction.633. In previous experiments, researchers only measured outcomes between standardized and mass-customized products but did not consider mass customization differences in the form of mass customization stages. In their meta-analysis on mass customization, Silveira et al. call for research on customization level assessment.634 They give one research direction as “measuring the value customers provide to a level of customization”.635 Franke and Piller state that research is needed to answer (amongst others) the question: “How highly do actual and potential customers value individualization?”636 After extensive literature research and thus to the best of the author’s knowledge, there are no studies regarding this. Value can be measured in “monetary

626

Hagenmaier (2015, p. 177). Squire et al. (2004, p. 469). 628 Zipkin (2001, p. 86). Such as apparel, home and office, media, personal care, services and other (vehicles, gifts, food, pet items, boats). 629 Silveira et al. (2001, p. 8). 630 Moon et al. (2008, p. 31). 631 Wind and Rangaswamy (2001, p. 19); Franke et al. (2009, p. 103); Dewan et al. (2003, p. 1055); Franke and Piller (2004, p. 412); Schreier (2006, p. 317); Franke and Schreier (2010); Franke et al. (2010); Franke and Hader (2014). 632 Broekhuizen and Alsem (2002, p. 326). 633 Schreier (2006, p. 319). 634 In this dissertation defined as „stages“, Silveira et al. name levels: for example customized design, fabrication, or assembly. 635 Silveira et al. (2001, p. 8). 636 Franke and Piller (2003, p. 595). 627

Research gaps

63

value” that a consumer attributes to different stages of customization. The third subresearch question is: 3. To what extent does Willingness-to-pay vary for different stages of mass customization among nationalities? The main benefit of mass customization for consumers is the higher preference fit637, which is achieved through self-designing. This yields a higher level of satisfaction with the customized product.638 Although researchers have compared the appraisals of customized versus non-customized systems639, after extensive literature research and thus to the best of the author’s knowledge, there are no studies comparing the evaluations of customized products on different mass customization stages versus standard products. Zhang et al. summarize that consumers from different cultures evaluate and perceive service quality differently.640 Moon et al. posit in their study about purchase intention to personalized products that consumers respond differently to customized products across different cultures.641 It can be expected that consumers vary on their evaluation of masscustomized products on different stages. The fourth sub-research question is: 4. To what extent do product evaluations of mass-customized products diverge among nationalities? Differences in culture shape consumer behavior642 through consumer motivations and product choices.643 Kaplan and Haenlein state a need for mass customization research, which focusses on the measurement and operationalization.644 Although culture is an intrinsic construct, researchers like Moon, Chandee and Tikoo used Hofstede’s cultural dimensions of individualism, uncertainty avoidance, power distance and masculinity to explain cross-cultural differences in consumer acceptance of personalized products.645 Therefore, it can be suggested that the Hofstede framework can be used to investigate a cultural influence on consumer behavior under mass customization.646 People in China

637

Franke et al. (2009, p. 103). Franke and Piller (2004, p. 403). 639 Bharadwaj et al. (2009, p. 217). 640 Zhang et al. (2008, p. 218). 641 Moon et al. (2008, p. 33). 642 Yeniyurt and Townsend (2003, p. 377). 643 Tse et al. (1989, p. 459). 644 Kaplan and Haenlein (2006, p. 179). 645 Moon et al. (2008, p. 31). 646 For a detailed elaboration on the influence of each cultural dimension on mass customization, see chapter 6.2. Hypothesis development. 638

64

Cultural influence on consumer behavior under mass customization

have a different way to deal with uncertainty, individualism, power distance, and indulgence in comparison to Germans.647 Liang and He conclude that Westerners tend to have a higher need for uniqueness, whereas East Asians have a higher need for conformity.648 Next to utility, uniqueness and self-expressiveness649 are the main advantages of the mass customization concept and thus it can be speculated that people from different cultural backgrounds differ in their needs for utility, uniqueness, and self-expressiveness due to differences in mental programming among nations. Thus, the fifth sub-research question is: 5. Which dimensions of culture have an influence on mass customization? 4.2 General research approach Mass customization has received much attention in the scientific community, as research papers in this domain vastly increased in recent years.650 Since the start of the 2000’s, various scholars have put a focus to studies on customization.651 According to Fogliatto et al., the research on mass customization enablers has even shown the “largest quantitative increment in the past decade”.652 Early research on mass customization mainly focused on the technical aspects of the concept and not on the customer interface or toolkit itself.653 Mass customization research is dominated by case studies and petite samples, and broad approaches investigating flexible manufacturing systems.654 Schmid and Kotulla demand more studies that “concentrate on a small number of industry segments and countries in order to control for industry-segment- and country-specific differences in the product-profit enhancing effects of the respective situation-strategy fits, while also considering potential supranational strategy effects”.655 There is a need for empirical research on mass customization as, although a huge amount of papers on the topic exists, the minority of these papers is built on empirical research.656 Empirical research on the topic mass customization can be divided into first, studies approaching company-customer interactions mostly from a company perspective 647

https://www.hofstede-insights.com/product/compare-countries/, retrieved: 26.06.2019. Hofstede Insights (2019). 648 Liang and He (2012, p. 352). 649 Merle et al. (2010, p. 509). 650 Fogliatto et al. (2012, p. 15). 651 Franke and Schreier (2008, p. 93); Franke et al. (2009, p. 103); Dellaert and Stremersch (2005); Gilmore and Pine, II (1997); Syam et al. (2005); Fogliatto et al. (2012); Silveira et al. (2001). 652 Fogliatto et al. (2012, p. 15). 653 Franke and Piller (2004, p. 404). 654 Piller et al. (2004b, p. 443). 655 Schmid and Kotulla (2011, p. 504). 656 Franke and Piller (2003, p. 582); Fogliatto et al. (2012, p. 22); Kaplan and Haenlein (2006, p. 179).

General research approach

65

and secondly, the smaller group of studies focusing on customers657 and their choices and experience in MC.658 Fogliatto et al. demand validation experiments addressing the topics stated in, amongst others, Franke and Piller’s 2003 paper on key research issues in mass customization.659 Where Franke and Piller ask researchers to address the questions, “How highly do actual and potential customers value individualisation? Which factors have an impact on this valuation? Which options of customisation (fit, functionality, design) are valued most and in which context?”660 In conclusion, this thesis focuses on quantitative research approaches661 in the form of survey and experimental strategies of inquiry to answer the research questions statistically. 4.2.1 Strategies of inquiry Survey research Per definition, a survey “provides a quantitative or numeric description of trends, attitudes, or opinions of a population by studying a sample of that population.”662 Surveys are designed for conduction by respondents without interaction with the researcher.663 They easily gather answers from many people664, making them very economical due to small expenses and a fast turnaround.665 The purpose of surveys can be profiling and descriptive research666, predictive and analytical research667, and developing and testing measurement scales.668 Experimental research Experimental research aims to investigate the “impact of a treatment (or an intervention) on an outcome, controlling for all other factors that might influence that outcome.”669 In experimental research, scholars randomly assign people to groups. The groups are then exposed to treatments, thus allowing the researcher to examine the effect

657

Hunt et al. (2013, p. 327). Kaplan and Haenlein (2006, p. 179). 659 Fogliatto et al. (2012, p. 22). 660 Franke and Piller (2003, p. 595). 661 For a comparison of qualitative, quantitative and mixed methods research approaches see appendix. 662 Creswell (2009, p. 145). 663 Rowley (2014, p. 308). 664 Rowley (2014, p. 310). 665 Creswell (2009, p. 146). 666 Deviating a profile of characteristics of a sample, Rowley (2014, p. 311). 667 Understanding relationships between variables, Rowley (2014, p. 311). 668 Testing combinations of questions to generate a measurement scale, Rowley (2014, p. 311). 669 Creswell (2009, pp. 145–146). 658

66

Cultural influence on consumer behavior under mass customization

of the treatment on the measured outcome.670 Due to this practice, experiments allow an establishment of cause and effect relationships.671 The purpose of experiments is to test model predictions, establish behavioral models, refine existing theories, develop new theories, and act as measurement tools.672 Experiments can be divided into betweengroup and within-group designs. In a between-groups design, also referred to as independent measures, participants receive only one treatment, whereas participants in the within-group design also referred to as repeated measures, receive all experimental treatments.673 Strategies of inquiry in the dissertation In this dissertation, the main research question is answered with sub research questions, which are operationalized as investigative questions in a survey, and an experiment. Table 3 provides an overview of the research question assignment to investigative questions and their respective strategy of inquiry. Research Question

Inquiry

1. To what extent do preferences for mass customization stages differ among nationalities?

Survey

2. Does the preference for mass customization stages differ for different products among nationalities?

Survey

3. To what extent does Willingness-to-pay vary for different stages of mass customization among nationalities? 4. To what extent do product evaluations of mass-customized products diverge among nationalities? 5. Which dimensions of culture have an influence on mass customization?

Survey & Experiment

Experiment Experiment

Investigative question IS. For which product categories would German/ Chinese participants use mass customization? IIS. Which mass customization stage is generally preferred among German/ Chinese participants? IIIS. Which mass customization stage is specifically preferred per product category among German / Chinese participants? IVS. How much money would German / Chinese participants spend on the different mass customization stages in comparison to a standard product? IE. To what extent does willingness-to-pay for masscustomized products (standard products) differ between German and Chinese participants? IIE. To what extent do product evaluations of masscustomized products (standard products) differ between German and Chinese participants? IIIE. Which dimensions of culture influence willingness-to-pay for mass-customized products?

S= survey investigative question, E = experimental investigative question.

Table 3 Assignment of research questions to investigative questions

670

Creswell (2009, p. 146). Field and Hole (2013, p. 64). 672 Croson and Gächter (2010, p. 125). 673 Field and Hole (2013, p. 70). 671

General research approach

67

4.2.2 Distinctiveness of cross-cultural research Empirical cross-cultural research poses many challenges on researchers today, which might lead to pitfalls such as definition errors, measurement errors or explanation errors.674 To avoid those potential pitfalls, the process model for cross-cultural research by Cavusgil and Das675 was used in this dissertation. Table 4 includes the seven steps by Cavusgil and Das and their application in this research. Culture as main independent variable will be observed in the survey and in the experiment. Steenkamp suggests “when cultural factors are part of the theoretical framework, and (one of) the goal(s) of the study is to test the effects of culture, it is important that the countries sampled differ sufficiently on the focal dimension(s).”676 Additionally, Sivakumar and Nakata propose for a sample design in cross-cultural studies for a researcher to “needing to assemble a multi- country sample to determine the impact of culture on business phenomena, all other things being equal.”677 Therefore, the cultural impact will be compared between two contrary countries that are differing in their cultural dimension scores, namely Germany and China.678 As the first step in this research is to explore the proposed existence of differences in mass customization interest based on culture, nationality serves as a proxy of culture679 in the survey. The second step of research is the experiment, where cause-and-effect relationships between the cultural orientation and the willingness-to-pay for different mass customization stages of a product are investigated. Consequently, due to the limitation of construct validity of the original national cultural dimensions scale (VSM 94) on the individual level680, the individual cultural dimensions by Yoo, Donthu and Lenartowicz681 which is based on Hofstede’s VSM 94 are utilized for the measurement of culture.

674

Cavusgil and Das (1997, pp. 74-87). Cavusgil and Das (1997). 676 Steenkamp (2001, p. 41). 677 Sivakumar and Nakata (2001, p. 560). 678 Hofstede cultural dimensions: Power distance (China: 80, Germany: 35), Individualism (China: 20, Germany: 67), Masculinity (China: 66, Germany: 66), Uncertainty avoidance (China: 30, Germany: 65), Long Term orientation (China: 87, Germany: 83), Indulgence (China: 24, Germany: 40) see https://www.hofstede-insights.com/country-comparison/china,germany/, retrieved: 01.08.2019. Hofstede Insights (2019). 679 Steenkamp (2001, p. 37). 680 Blodgett et al. (2008, p. 343). 681 Yoo et al. (2011). 675

683

682

Cavusgil and Das (1997, pp.73, 89-92). Cavusgil and Das (1997, pp. 89-92).

Table 4 Distinctiveness of cross-cultural research

7. Interpretation

6. Data analysis

5. Data collection

4. Instrumentation

3. Construction of sampling design

2. Conceptual and functional equivalence

Specification of theoretical domains of the research construct, measurement of dependent variable on the organizational levels whereas independent variable on the socio-cultural level Researcher should have a good knowledge of the studied cultures and conduct an in-depth literature review about culture beforehand Sample size and cost factors with a culture and country variety should be ensured, starting with two cultures and randomization

1. Theory and construct definition

Application in the dissertation

Measurement of variables on the individual level, nationality as proxy for culture in the survey whereas Hofstede’s cultural dimensions on the individual level in the experiment Knowledge of China due to personal experience, in-depth literature review, presentation of the research approach to culture insiders Populations are comparable, German and Chinese students from TU Clausthal, cultures are largely distinct on cultural dimensions, instrumentations randomized (where appropriate) Employment of validated research scale, scale reliability assess- Usage of validated scales and reliability analysis, parallel and back translation of survey and experiment by Chinese native ment, assurance of language equivalency with back/parallel and Chinese professional speakers, timing, setting (online and translation of instrumentation, equivalence of timing, settings, laboratory) kept constant, incentives (Amazon vouchers in and incentives survey and payout in experiment) were the same Timing and literacy rate adherence, concealing of true research Populations (students) are comparable, true research objecorigin/purpose (if ethically permissible), and avoidance of extive is disguised in survey and experiment, experimenter is perimenter effects kept constant for all treatments in the experiment Usage of higher order scales and multivariate data-analysis Higher order scales and multivariate data-analysis applied methods (where appropriate) Comparison of results within the culture and between cultures, Data interpretation first within nationalities, then between naawareness of external validity issues due to existence of sub-cul- tionalities, careful interpretation of results tures, cautious interpretation of results

Theoretical elaboration683

Step682

68 Cultural influence on consumer behavior under mass customization

General research approach

69

4.2.3 Willingness-to-pay measurements The willingness-to-pay (WTP) or reservation price describes the maximum monetary quantity that a consumer is willing to spend on a “specific amount” of a product.684 The WTP is observed in the survey and in the experiment, thus different measurements (theoretical and real) are available. Real WTP implies that consumers face real economic consequences in the form of real purchases.685 In contrast, surveys are theoretical and can only measure stated preferences686, thus respondents do not have to face monetary consequences when indicating their willingness-to-pay. Research stated that people not facing economic consequences tend to overvalue their willingness-to-pay687, thus giving inaccurate estimations of their true preferences. Stated preferences Theoretical Absence of monetary consequences for respondents Consequence Higher likelihood of price overvaluation Major strategy of Surveys inquiry Form Incentives

Revealed preferences Real Presence of monetary consequences for respondents Reveal of true preferences Experiments

Table 5 Stated vs. revealed preference measurement for WTP688

4.2.3.1 Stated preferences Two major approaches for theoretical measurement of WTP through direct surveys689 exist: expert judgement and customer surveys.690 Expert Judgements Experts in a field (mostly marketing managers), who are aware of competitive structures in the market, are interviewed regarding their judgments on the consumers’ willingnessto-pay.691 However, expert judgements are “best applicable in a market environment

684

Kalish and Nelson (1991, p. 328); Voelckner (2006, p. 137). Voelckner (2006, p. 138). 686 Breidert et al. (2006, p. 9). 687 Breidert et al. (2006, p. 14). 688 Own illustration based on literature review. 689 Indirect surveys include methods like the conjoint analysis where product attributes have to be known to decide regarding the trade-off. 690 Breidert et al. (2006, pp. 13–14). 691 Breidert et al. (2006, pp. 13–14). 685

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Cultural influence on consumer behavior under mass customization

with only small numbers of customers.“692 This approach is not suitable for WTP measurement in a mass customization context, as MC serves a mass market693 and answers heterogeneous consumer needs.694 Customer Surveys The evident approach to estimate consumer prices is to question the consumers about their willingness-to-pay for a specific product. Stoetzel695 first developed the idea to directly ask consumers about their minimum and maximum price estimation for a respective product.696 An extension to this approach is the van Westendorp method. van Westendorp price sensitivity The price sensitivity was proposed by economist Peter van Westendorp.697 His approach is based on the assumption that “reasonable prices exist for consumers in every category and for each perceived level of quality within a category”.698 Hence, an upper and a lower bound of a price exist that a consumer will pay for a product (or service).699 The main idea behind this approach is to question customers directly about their price perceptions. They are asked what is “cheap” and “expensive”, and when they perceive the product as “too cheap” and “too expensive”.700 To evaluate the willingness-to-pay data, van Westendorp suggested plotting curves of the results to the four questions.701 The optimal pricing (OPS) of a product is calculated at the intersection point of the curves “too cheap reversed” and “too expensive”. As the survey aims at investigating general differences in WTP between nationalities and mass customization stages, the optimal pricing (OPS) is of main interest and used for WTP investigation in the survey. 4.2.3.2 Revealed preferences Experimental auctions are useful in research as they are incentive compatible.702In past mass customization research, two methods for real WTP measurement were used by other researchers: Vickrey auctions and the Becker-de Groot-Marschak (BDM) method.

692

Breidert et al. (2006, p. 13). Fogliatto et al. (2012, p. 22). 694 Gilmore and Pine, II (1997, p. 91). 695 Original source Stoetzel J. Le Prix Comme Limite , P.L. Reynaud (Ed.), La Psychologie Economique, Paris: P.L. Reynaud, 1954. – pp. 183-188. Not available. 696 Breidert et al. (2006, p. 13). 697 Lipovetsky (2006, p. 1). 698 Lipovetsky (2006, p. 2). 699 Lipovetsky (2006, p. 2). 700 Lipovetsky (2006, pp. 2–3). 701 Lipovetsky (2006, p. 3). 702 Hoffman et al. (1993, p. 320). 693

General research approach

Method Vickrey auction703

Becker-de Groot-Marschak (BDM) method707

71

Product - Scarves704 - Phone covers705 - Watches706 - Skis & T-Shirts708 - Watches709

Table 6 Real WTP measurement in experimental MC research

Vickrey auction In Vickrey auctions, all subjects are asked to hand in sealed bids for a certain product.710 The auction is won by the highest bidder, but the price is determined by the second highest bid.711 In order to avoid “losing” the chance of winning the desired product, the bidder would bid “to the highest amount he could afford to pay without incurring a net loss or to that price at which he would be on the margin of indifference as to whether he obtains the article or not”.712 Thus, one huge limitation of this method is the competitive setting, as people would not compete for limited supply in a real environment.713 In conclusion, WTP measurement in Vickrey auctions does not only include the true valuation but also the fear of losing the respective product.714 The tendency to overstate the price is positively correlated with the number of bidders715 thus “Vickrey auctions might [.] be incentive-compatible only in theory”.716 Therefore, this method is not applied for WTP investigation. Becker-de Groot-Marschak mechanism With the BDM method, each participant states a maximum price for which he or she is willing to purchase the product (X). Afterwards, the purchase price (Y) is randomly

703

Vickrey (1961). Franke and Schreier (2010). 705 Schreier (2006). 706 Franke and Piller (2004). 707 Becker et al. (1964). 708 Franke et al. (2010). 709 Franke and Hader (2014). 710 Voelckner (2006, p. 138). 711 Vickrey (1961, p. 8). 712 Vickrey (1961, p. 20). 713 Wertenbroch and Skiera (2002, p. 229). 714 Wertenbroch and Skiera (2002, p. 229). 715 Voelckner (2006, p. 143). 716 Voelckner (2006, p. 143). 704

72

Cultural influence on consumer behavior under mass customization

determined (for example by drawing a card from an urn or by a random number generator). If the randomly determined price is higher or equal to the participant’s price, the purchase will be made at the determined price (Y). In case the random price is higher than the participants bid, the product will not be purchased.717

Figure 7 Experimental WTP measurement with the BDM mechanism

When using BDM, it is expected to find overall lower WTP in comparison to hypothetical WTP because of incentive constraints.718 Wertenbroch and Skiera showed that the BDM method has a high face validity, a high internal validity and criterion validity due to its incentive-compatible nature, where they find no evidence of overbidding.719 Also Breidert et al. observed no overbidding bias in BDM auctions.720 All points considered, revealed preference WTP measurement BDM mechanism is applied in the experiment.

717

Voelckner (2006, p. 138). Wertenbroch and Skiera (2002, p. 229). 719 Wertenbroch and Skiera (2002, p. 237). 720 Breidert et al. (2006, p. 12). 718

5 Cultural-bound interest in mass customization – survey This survey aims to explore the cultural-bound interest in mass customization by examining proposed differences between German and Chinese respondents regarding their mass customization preferences. Therefore, respondents were surveyed on their favored products for mass customization and their general as well as their product-specific preferences for mass customization stages. Additionally, respondents were questioned how much money they were willing-to-pay for different mass customization stages. This chapter begins with an explanation of the goals of this survey. Then, investigative questions are shown. Afterward, the methodology and data collection approach are elaborated by explaining the survey design, procedure, operationalization of variables, and an explanation of the participants. After that, the data analysis and the results are presented and discussed before findings, limitations, and directions for further research are explored.

5.1 Research goals and investigative questions First, due to a suggested cultural influence on mass customization, preferences for mass customization might vary between nations. The two culturally distant countries Germany and China were chosen for comparison. In the survey, respondents are grouped according to their nationalities721, due to the aim to explore if respondents from diverging cultures vary at all in their mass customization interest. Second, most studies involving mass customization toolkits had a utilitarian character722 where consumers’ preference insights were high and unchangeable due to user-toolkit interaction.723 Researchers suggested that mass customization might only be attractive where product preferences are heterogeneous and differ sharply.724 Zipkin illustrates specific industries where preferences are heterogeneous such as apparel, sports equipment, and accessories725, thus, product-specific differences in mass customization interest are examined.

721

The experiment in chapter 6 investigates which exact cultural dimensions have an influence on WTP for mass customization stages. 722 Such as allowing configuration of laptops, sofas, or home theater systems. 723 Franke and Hader (2014, p. 1216). 724 Zipkin (2001, p. 82). 725 Zipkin (2001, p. 82).

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 C. Wabia, The Cultural Influence on Mass Customization, https://doi.org/10.1007/978-3-658-31015-8_5

74

Cultural-bound interest in mass customization – survey

Thirdly, previous research testified willingness-to-pay price premiums for customized products726, but not for different customization stages. Thus, the willingness-to-pay per mass customization stage of chocolate is measured with the van Westendorp method. Chocolate in the form of a praline box was chosen as a means for investigation as it is relatively inexpensive and customizable on all MC stages. One more point is that a certain consumer preference insight regarding chocolate can be expected due to large sales volumes in the respective markets. In 2019, the German chocolate market had a volume of 6.6 billion euros in comparison to 3 billion euros in China.727 Four investigative questions for this survey are defined: I. II. III. IV.

For which product categories would German/ Chinese participants use mass customization? Which mass customization stage is generally preferred among German/ Chinese participants? Which mass customization stage is specifically preferred per product category among German / Chinese participants? How much money would German / Chinese participants spend on the different mass customization stages in comparison to a standard product?

5.2 Methodology and data collection approach 5.2.1 Design To investigate cultural-bound interest in mass customization, a cross-sectional survey728, collected at one point in time via self-administered questionnaires in the program Questback729 was administered. Participants had the choice to answer the questionnaire in English, German, or Chinese. The base survey was formulated in English and then translated into German and Chinese before being checked by native German and native Chinese speakers to rule out translation biases. Further potential sources of error like anchoring or social preferential answering were ruled out with a pre-test with ten respondents and disguising the survey topic as "mass customization & values". The duration was between 20 and 25 minutes. All respondents were asked to follow the 726

Wind and Rangaswamy (2001, p. 19); Franke et al. (2009, p. 103); Dewan et al. (2003, p. 1055); Franke and Piller (2004, p. 412); Schreier (2006, p. 317); Franke and Schreier (2010); Franke et al. (2010); Franke and Hader (2014). 727 https://de.statista.com/outlook/40100100/117/schokolade/china#market-pricePerUnit, retrieved 27.06.2019. Statista . 728 The original survey can be found in the appendix. 729 https://www.questback.com/de/, Questback is an online survey tool that allows the presentation of questionnaires in different variations.

Methodology and data collection approach

75

instructions, to choose one answer per line, and to fill out the questionnaire completely. They were informed about the data processing and anonymous analysis. To incentivize participation, five Amazon vouchers with a value of 20 euros were raffled among all respondents. 5.2.2 Procedure The survey consisted of 17 screens:730 (1) (2) (3) (4)

response language welcome screen compact introduction to mass customization consideration of mass customization per 16 product categories731

Figure 8 Survey screen 4: consideration of mass customization (image section)

730

Number in brackets displays the page in the online survey, see appendix for survey. If respondents were not interested in mass customization, they could indicate this as well, thus not forcing choices.

731

76

Cultural-bound interest in mass customization – survey

(5)

compact explanation of mass customization stages732

Figure 9 Survey screen 5: explanation of mass customization stages

(6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17)

preference for general mass customization stage mass customization stage preference per 16 product categories733 anchoring for WTP measurement: box of chocolate pralines WTP per mass customization stage of pralines – randomized individual cultural values (CVSCALE)734 - randomized general experience with mass customization- randomized previous mass customization per 16 product categories general interest per 16 product categories big-5-personality traits scale735 demographics demographics e-mail addresses for incentives736

The following table gives an overview of the survey screens and the investigative questions:

732

See chapter 2.3.3 Mass customization stages. If participants answered in screen 4 that they were not interested in customizing that respective product category (value of equal or below 3), that category was left out in this question. 734 The CVSCALE (Yoo et al., 2011) is a 26-item scale measuring Hofstede’s cultural orientations on the individual level. This variable was used as an independent variable in the experiment (Chapter 6) and pretested in the survey. 735 The BIG-Five-Inventory-10 (BFI-10) by Rammstedt and John (2007) is a 10-item scale measuring personality traits on a short scale. The personality dimensions were used as a control variable in the experiment (Chapter 6) and pretested in the survey. 736 Due to changes in the EU data protection law, screen 17 provided a link to lime survey for entering e-mail data to guarantee anonymity. 733

Methodology and data collection approach

Investigative question I. For which product categories would German/ Chinese participants use mass customization? II. Which mass customization stage is generally preferred among German/ Chinese participants? III. Which mass customization stage is specifically preferred per product cate-gory among German / Chinese participants? IV. How much money would German / Chinese participants spend on the different mass customization stages in comparison to a standard product?

77

Screen 3, 4 5, 6 5, 7 8, 9

Table 7 Assignment of investigative questions to survey screens

5.2.3 Operationalization of variables Mass customization The mass customization stages Cosmetic Packaging and Additional Custom Work (ACW), Assembly, Fabrication and Creation were elaborated (screen 5) as presented in detail in chapter 2.3.3. Product categories product category accessories apparel beauty & health electronics food & packaging footwear games & music house & garden industrial goods kids & babies motor vehicles office & merchandise paper & books pet supplies printing platforms sportswear & equipment

example products jewelry, bags T-shirts, pants, underwear shampoo, make-Up, perfume computer, USB-sticks cereal, sweets, chocolate, wine sneakers, flip-flops games, puzzles, guitars kitchen, shelf medicine bottles, blankets automobiles, boats, motorcycles pens, cards books, calendar aquariums, animal food photography, mugs, engraving skateboards, snowboards, bike

Table 8 Example of customizable products per product category

78

Cultural-bound interest in mass customization – survey

The product categories for mass customization were based on customizable products that are already on the market. The 16 product categories737 and example products738 used in this survey were identified as shown in table 8. Willingness-to-pay Survey respondents were instructed to think of a box of chocolate pralines (screen 8). This box was said to contain nine pieces and could be purchased in an online store or an upper-class supermarket or delicacy store. The stages of mass customization were explained as follows: Stage Explanation Standardization (Control Condi- The box contains a standard assortment of pralines that has been tion) selected by the manufacturer. You cannot make any adaptations to the product. Cosmetic Packaging and Addi- You cannot choose the pralines in the box, however the packagtional Custom Work ing of the box will be adapted to your taste. You can for example let pictures be printed on the box and add personal message. Assembly You can compile your own assortment of pralines out of a standardized range of praline sorts. Fabrication You are presented with a set of standardized ingredients (for example different chocolate types, toppings etc.) out of which you compile your own "praline-configuration". Creation You can think of any combination of ingredients and tastes you like, there are no specifications that you need to follow. Table 9 Mass customization stage explanation for WTP - survey

For every stage, the respondents had to answer four questions following the van Westendorp method739, at what price the pralines were too expensive, too cheap, start getting expensive and when they were a bargain740. To avoid anchoring effects, no price span was given to the respondents and the sequence of the mass customization stages was randomized.

737

Blazek et al. (2014, p. 9). Examples based on products and product categories listed as “industries” in the configurator database: https://www.configurator-database.com/configurators#/, retrieved 08.05.2019. Cyledge: Configurator Database . Mass customization is already possible for products in these 16 industries. 739 Lipovetsky (2006). 740 Price points of this research „start getting expensive“ equals „expensive“ in the van Westendorp model, price points of this research „bargain“ equals „cheap“ in the van Westendorp model. 738

Methodology and data collection approach

79

5.2.4 Participants Students from Clausthal University of Technology were invited to the online questionnaire via Stud.IP741 and e-mail. The online survey was accessible for two months742 gathering 167743 completed responses. As only 23 Chinese students participated, additional data collection in paper form was conducted744 yielding additional 26 valid responses resulting in a total of 176 valid responses. 140

number of participants

120 100

47

80 60 40

80

24

20

25

0 German

Chinese

Nationality male

female

Figure 10 Survey respondents according to nationality and gender

The 49745 Chinese respondents split in 24 female and 25 male participants with a mean age of 25 years (SD=3.10) at a minimum of 20 and a maximum of 33 years. Whereas the 127 German participants are between 19 and 37 years old (M=26, SD=3.96) and present with 47 female and 80 male subjects.

741

Learning management system of TU Clausthal. 16.04.2018 to 15.06.2018. 743 17 outlier were removed from the data set: 1 was removed because of age, 1 was removed as this participant only clicked through the questionnaire and answered one-sided and 1 participant was removed, as the price of the product was completely overvalued. 14 participants took part in the questionnaire were not from Germany or China and therefore not in the focus of this investigation. They were from Cameroon (n=3), Egypt (n=1), Nepal (n=1), Iran (n=1), India (n=1), Turkey (n=1), Greece (n=1), Russia (n=1), Senegal (n=1) or other (n=3). 744 18.10.2018 to 02.11.2018 and during the Chinese culture week at Clausthal University of Technology. 745 The number of observations of the Chinese population differs, as some of the 49 Chinese participants did not answer all questions in the survey. 742

80

Cultural-bound interest in mass customization – survey

The dataset consists of people who are “born digital”746 with an increased likelihood of having experienced a product configurator at least once. As a result, the data set is biased towards young and educated individuals. This does not pose a problem, as “the college student may be a prime target customer for mass customization”.747 The preliminary investigation of mass customization expertise748 asserts that German respondents are on average more experienced with mass customization than Chinese respondents, although both samples show very experienced as well as very inexperienced individuals. 5.3 Data analysis and results The data analysis749 is based on the investigative questions. First, the data for the German and Chinese respondents are analyzed separately before both nationalities are contrasted and the results are discussed. 5.3.1 Mass customization consideration Figure 11 displays the different results concerning consideration for mass customization per product category among German and Chinese respondents.750 German respondents German respondents show the highest consideration for mass customization for motor vehicles (M=7.27, SD=2.78, Md=8.00), house and garden (M=6.94, SD=2.71, Md=8.00) and printing platforms (M=6.33, SD=3.15, Md=7.00) followed by electronics (M=6.28, SD=2.91, Md=7.00) and apparel (M=6.24, SD=2.73, Md=7.00). The lowest consideration is for pet supplies (M=3.14, SD=2.675, Md=2.00), beauty and health (M=3.76, SD=2.965, Md=2.00) and products for kids and babies (M=3.88, SD=2.698, Md=3.00).

746

People already grew up with the respective technology. Fiore et al. (2004, p. 841). 748 See appendix 3: Survey - Further results. 749 With software: IBM SPSS Statistics 25. 750 For which product categories would you consider customizing products to your needs? The 10-item scale (1= very unlikely to 10=very likely) was recoded into low (1,2), medium-low(3,4), medium (5,6), medium-high (7,8), and high (9,10) consideration for figure 11. 747

number of responses

33

21

11

2

14

Accessories

13

25

19

43

8

5

18

Apparel

64

18

16

27

4

7

Beauty& Health

16

22

22

34

13

4

15

Electronics

38

29

17

27

18

8

9

6

Food & Packaging

25

19

30

30

11

6

8

12

low

Footwear

medium-low

Games & Music

16

6

9

8

41

26

26

22

Figure 11 Mass customization consideration by product category

0%

10%

20%

30%

40%

17

China

50%

Germany

10

China

60%

Germany

7

Germany

39

China

70%

Germany

7

China

80%

Germany

15

China

12

China

33

Germany

7

China

Germany

12

13

13

19

43

39

15

6

12

10

50

27

18

12

28

9

7

medium

51

25

29

14

23

7

9

7

3

12

9

17

41

48

16

6

7

10

10

44

21

26

22

14

13

11

11

7

7

38

29

28

16

16

12

6

12

9

10

Motor Vehicles Office&Merchandise Paper& Books

high

Kids & Babies

medium-high

product categories

House& Garden Industrial Goods

Germany

10

China

11

Germany

27

China

8

Germany

3

China

1

China

20

Germany

6

China

12

Germany

23

Germany

8

China

16

74

19

17

7

10

20

5

11

8

5

Pet Supplies

Germany

9

China

4

23

17

15

32

40

6

9

9

7

18

20

23

30

29

25

12

6

16

5

10

Printing Platforms Sportswear & Equipment

Germany

14

China

17

China

90%

Germany

100%

Data analysis and results 81

82

Cultural-bound interest in mass customization – survey

German males (n=80) MC consideration in product category accessories beauty & health electronics food & packaging footwear motor vehicles paper & books

M

SD

Md

German females (n=47) M SD Md

Mann-Whitney U test

4.64 2.94 7.07 4.18

3.10 2.66 2.69 2.74

4.00 2.00 8.00 4.00

6.19 5.15 4.94 5.55

2.81 2.95 2.80 3.27

7.00 5.00 5.00 5.00

1352 1041 1096 1424

-2.66 -4.28 -3.94 -2.29

.008 .000 .000 .022

5.10 7.79 3.96

5.65 2.58 2.43

5.00 8.00 3.00

6.53 6.38 5.43

2.88 2.90 3.28

7.00 7.00 6.00

1313 1299.5 1417.5

-2.84 -2.95 -2.33

.004 .003 .020

U

z

p

Table 10 MC consideration differences among German females and males- Mann-Whitney U

Independent samples Mann-Whitney U tests751 compare the mass customization consideration per product category for German males and females. Significant differences in scores are found for seven product categories. German women consider accessories, beauty and health, food and packaging, footwear and paper and books significantly more likely for mass customization. Contrary, German men indicate electronics, and motor vehicles significantly more often for mass customization. Chinese respondents The preferred categories for customization among Chinese respondents are printing platforms (M= 6.45, SD=3.06, Md=7.00), apparel (M=5.86, SD=2.83, Md=6.00) and accessories (M=5.84, SD=3.14, Md=6.00), followed by footwear (M=5.78, SD=3.09, Md=6.00) and paper and books (M=5.35, SD=3.12, Md=5.00). The lowest consideration is observed for industrial goods (M=2.90, SD=2.520, Md=2.00), beauty and health products (M=3.49, SD=2.959, Md=2.00) and products for kids and babies (M=3.57, SD=2.865, Md=3.00). Chinese males (n=25) MC consideration in product category accessories beauty & health

M

SD

Md

Chinese females (n=24) M SD Md

4.72 2.08

3.34 1.68

5.00 1.00

7.00 4.96

2.48 3.30

7.00 5.00

Mann-Whitney U test U

z

p

182.5 155.5

-2.37 -3.02

.018 .003

Table 11 MC consideration differences among Chinese females and males – Mann-Whitney U

751

The Mann-Whitney-U test is the non-parametric alternative to the independent samples t-test. It tests for differences between two independent groups on one continuous variable. Whereas the t-test compares the mean values, the Mann-Whitney-U test compares the medians by transforming the values on the continuous variable into ranks. The Mann-Whitney-U tests for significant differences in the ranks of the two groups. See Pallant (2016, p. 230).

Data analysis and results

83

Independent samples Mann-Whitney-U tests compare the mass customization consideration per product category for Chinese males and females. Significant differences in scores are found for accessories, and beauty and health, where Chinese women have a significantly higher score than Chinese men. Comparison of German and Chinese respondents MC consideration in product category house & garden industrial goods

Germans (n=127) M SD Md

Chinese (n=49) M SD Md

Mann-Whitney U test U z p

6.94 4.30

2.71 3.19

8.00 3.00

4.84 2.90

2.89 2.52

5.00 2.00

1872.5 2281

-4.12 -2.62

.000 .009

7.27 3.14

2.78 2.67

8.00 2.00

5.18 4.22

3.27 3.05

5.00 4.00

1982 2503

-3.78 -2.07

.000 .038

752

motor vehicles pet supplies

Table 12 MC consideration differences among Germans and Chinese – Mann-Whitney U

When testing for differences between German and Chinese respondents, Mann-Whitney U Tests reveal significant differences in consideration for mass customization for house and garden, industrial goods, motor vehicles and pet supplies. No significant differences between German and Chinese respondents are found for other product categories.753 Discussion, meaning of results and contribution This study finds that German and Chinese respondents have a need for mass customization as they consider mass customizing various products. People in both nationalities show preferences for hedonic products (such as accessories, apparel and footwear) and in utilitarian products (such as office and merchandize, food and packaging) for mass customization, therefore findings by Lim and Ang, who prove that consumers in Shanghai had a preference for utilitarian brands754, cannot be supported in this research. Furthermore, the results suggest that people differ in their consideration for mass customization for products, not only because of their nationality but also because of their gender. On the first inspection, differences based on gender occur for “typical” female or male products. When looking further, findings by Kaplan et al.755 regarding customization testified that the more frequently a person consumes a product of the base category (the standardized product), the higher the intention to adopt a mass-customized 752

Chinese n=48. An independent samples Kruskal-Wallis test in combination with a Mann-Whitney U test revealed a gender effect for mass customization consideration of motor vehicles. German males differ significantly from Chinese males (p=.001), Chinese females (p=.001) and German females (p=.003). 754 Lim and Ang (2008, p. 225). 755 Kaplan et al. investigated printed newspapers. 753

84

Cultural-bound interest in mass customization – survey

product in this respective base category.756 Thus, the survey results of this first investigative question are compared with the consumers expressed general interest in the product category (screen 13757) and e-commerce market data of standardized products in the respective product category. German women show a significantly higher consideration for customizing accessories than men. This also holds when observing general interest in this product category where Mann-Whitney U tests state a significantly higher interest in this product category for females (MdmalesG=2.00, MdfemalesG=6.00).When exploring e-commerce market data of bags and accessories, users split in 72.5 percent women and 27.5 percent males in 2017.758 For beauty and health, German women present a higher consideration of using mass customization than men. Females demonstrate a higher general affection for this product category (MdmalesG=2.50, MdfemalesG=7.00) which is further supported when investigating e-commerce market data on drugs and health products, splitting total users into 33.3 percent males and 66.7 percent females.759 German males have a significantly higher consideration for using mass customization than females for electronics. They also display a significantly higher general interest in the product category electronics (MdmalesG=8.00, MdfemalesG=6.00). And when inspecting consumer electronics e-commerce data, total German users split into 62.3 percent male and 37.7 percent female in 2017.760 For food and packaging, German females disclose a higher consideration for mass customization, this holds when observing the general interest in the product category (MdmalesG=6.00, MdfemalesG=7.00). When comparing the findings this to e-commerce of food and drinks, real customers segment into 52 percent male and 48 percent female.761 However, the standardized product category on e-commerce market data also includes drinks, which was not the case for the product category in the survey. With regard to mass customization for footwear, where women exhibit a significantly higher consideration for mass customization, this also holds for general interest in the product category footwear (MdmalesG=5.50, MdfemalesG=7.00) and real e-commerce market data reveal users splitting into 43.8 percent male consumers and 56.2 percent female consumers.762

756

Kaplan et al. (2007, p. 110). For further information, see appendix 3: Survey - Further results. 758 https://de.statista.com/outlook/358/137/taschen-accessoires/deutschland, retrieved: 07.08.2019 Statista . 759 https://de.statista.com/outlook/254/137/drogerie-gesundheit/deutschland, retrieved: 07.08.2019 Statista . 760 https://de.statista.com/outlook/251/137/consumer-electronics/deutschland, retrieved: 07.08.2019 Statista . 761 https://de.statista.com/outlook/253/137/lebensmittel-getraenke/deutschland, retrieved 07.08.2019 Statista . 762 https://de.statista.com/outlook/250/137/schuhe/deutschland, retrieved 07.08.2019 Statista . 757

Data analysis and results

85

German males specify a significantly higher consideration for using mass customization for motor vehicles in comparison to females, this also holds when observing the general interest in the product (MdmalesG=7.50, MdfemalesG=5.00). Observing German women’s higher consideration of using mass customization for paper and books, females denote a significantly higher interest in the product category (MdmalesG=4.00, MdfemalesG=6.00) and real market e-commerce data for books, movies, music and games of standardized products reveal that users divide into 46.7 percent male and 53.3 percent female.763 Among the Chinese respondents, women demonstrate a higher consideration for using mass customization for accessories, this also holds in the general interest in the product category (MdmalesC=5.00, MdfemalesC=8.00).When looking at e-commerce for bags and accessories, Chinese consumers split into 35.6 percent male and 64.4 percent female in 2017.764 For products in beauty and health, Chinese women have a higher interest in product customization than men did, this also applies for the general interest in the beauty and health products (MdmalesC=1.50, MdfemalesC=7.00). Market data underlines this, as Chinese users of e-commerce for drug and health split into 32.1 percent male and 67.9 percent female.765 Thus, this survey underlines findings by Gilmore and Pine, who state that consumer needs are diverse766, and by Salvador, who says that mass customization is especially beneficial where consumer needs are heterogeneous.767 Furthermore, this survey extends research by showing which product categories have diverging preferences regarding mass customization and where gender effects exist.

763

https://de.statista.com/outlook/252/137/buecher-filme-musik-games/deutschland, retrieved 07.08.2019 Statista . 764 https://de.statista.com/outlook/358/117/taschen-accessoires/china, retrieved 07.08.2019 Statista . 765 https://de.statista.com/outlook/254/117/drogerie-gesundheit/china, retrieved: 07.08.2019 Statista . 766 Gilmore and Pine, II (1997, p. 91). 767 Salvador et al. (2009, p. 73).

86

Cultural-bound interest in mass customization – survey

5.3.2 Mass customization stage consideration Respondents could indicate which stage they would generally use when customizing a product to their needs.768 100% 8

90%

12

37 80%

number of responses

9

24

29

46 22

6

10

70%

17 39

60%

15

31

17 15

50% 40%

41

25 41

10

30% 20%

9

17

21

7

10 17

21

3

5 4

39 10%

11

8

21

8

19

8

0% Germany

China

6

4

Germany

Cosmetic Packaging & ACW

8

China

Germany

Assembly

China

Germany

Fabrication

China

Creation

consideration of customization stage low

medium‐low

medium

medium‐high

high

Figure 12 Mass customization stage consideration

MC stage consideration Cosmetic Packaging & ACW Assembly Fabrication Creation

Germans (n=127) M SD Md

Chinese (n=48) M SD Md

Mann-Whitney U test U z p

6.26

2.95

7.00

6.44

2.96

7.5

2935

-.381

.703

7.18 6.43 5.03

2.42 2.23 3.25

8.00 6.00 4.00

5.67 5.27 7.10

2.75 2.74 3.09

6.00 5.00 8.00

2045.5 2263.5 1975

-3.38 -2.65 -3.61

.001 .008 .000

Table 13 MC stage consideration differences among Germans and Chinese - Mann-Whitney U

German respondents The most considered general stage for product customization among German participants is Assembly (M=7.18, SD=2.42, Md=8.00), where 87 (68.5%) people report a

768

After reading about the different stages of mass customization, which stage would you use when adapting a product to your needs? The 10-item scale (1= very unlikely to 10=very likely) was recoded into low (1,2), medium-low(3,4), medium (5,6), medium-high (7,8), and high (9,10) consideration for figure 12.

Data analysis and results

87

high or medium-high consideration. Second is Cosmetic Packaging and Additional Custom Work, with 68 (53.5%) participants closely followed by Fabrication where 63 (49.6%) people report a high or medium-high consideration for this stage, followed by the stage Creation with 46 (36.2%) people.769 Chinese respondents When evaluating the data from the Chinese participants, the highest general stage is Creation (M=7.10, SD=3.09, Md=8.00) where 31 (64.5%) people indicate a high or medium-high interest. Followed by Cosmetic Packaging and ACW indicated by 27 (56.2%) people and Assembly indicated by 18 (37.5%) persons. Lastly, Fabrication named by 15 (31.2%) people.770 Comparison of German and Chinese respondents In order to compare the mass customization stage consideration between German and Chinese respondents Mann-Whitney U tests are run to compare the stages. For Cosmetic Packaging and ACW, no significant differences in consideration between German and Chinese respondents are found. For Assembly and Fabrication, German respondents present significantly higher consideration than Chinese respondents do. For the stage Creation, Chinese respondents present a significantly higher consideration than German respondents do. Discussion, meaning of results and contribution The general mass customization stage preference expressed by German and Chinese respondents differs significantly. Results imply a preference for assembled products among German respondents, which allows a matching of product components to achieve an individualized configuration. Chinese respondents indicate Creation as their favorite mass customization stage, which allows a complete design freedom of the product. Authors suggested that mass customization is valuable for consumers due to a better preference fit and perceived uniqueness.771 Research by Zaggl et al. showed that consumers seek conformity and uniqueness in customization.772 The mass customization stage Creation gives the consumer the highest level of uniqueness and creative design freedom; therefore, it can be proposed that Chinese consumers might seek more uniqueness than German consumers in mass customization. However, respondents from both nationalities also consider other customization stages, which again underlines heterogeneous

769

Independent samples Mann-Whitney U tests showed no significant differences in stage consideration between German male and female respondents. 770 Independent samples Mann-Whitney U tests showed no significant differences in stage consideration of Chinese male and female respondents. 771 Merle et al. (2010, p. 509). 772 Zaggl et al. (2019, p. 209).

88

Cultural-bound interest in mass customization – survey

consumer needs in mass customization.773 Concluding, when answering the call for research by Fogliatto, “How much variety is really required by customers?”774, results of this survey propose that variety in mass customization is dependent on the consumers nationality. 5.3.3 Mass customization stage per product category Mass customization stage preference per product category among German and Chinese participants is investigated.775 Figure 13 and 14 display the distribution of mass customization stage per product category for the German and Chinese respondents. German respondents As displayed in figure 13, the most popular overall category among German respondents are motor vehicles (n =104, 81.8%776)777, followed by house & garden (n=101, 79.5%)778 and electronics (n=93, 73.2%)779. The most popular product categories for the mass customization stage Cosmetic Packaging and ACW are office and merchandise (30 votes), apparel (30 votes) and printing platforms (29 votes). The most popular product category for the stage Assembly is observed for electronics (49 votes), followed by motor vehicles (45 votes) and sportswear and equipment (39 votes). For Fabrication, the most popular product categories are examined as motor vehicles (39 votes), house and garden (35 votes) and apparel (28 votes). The stage Creation show peak scores for the categories house and garden (27 votes), printing platforms (27 votes), and apparel (15 votes). .

773

Franke and Piller (2004, p. 412). Fogliatto et al. (2012, p. 21). 775 If you would customize a product in the following categories, on which stage would you adapt that product? The presentation of this question is dependent on the answers to a previous question (which product categories were generally considered for mass customization). If respondents indicated a very low general interest in mass customization for the respective product category (score lower or equal to 3 /10), the product category was removed in this question. 776 Number of answers divided by sample size. 777 Responses: Cosmetic Packaging & ACW = 8, Assembly= 45, Fabrication= 39, Creation =12. 778 Responses: Cosmetic Packaging & ACW =7, Assembly=32, Fabrication=35, Creation=27. 779 Responses: Cosmetic Packaging & ACW = 12, Assembly= 49, Fabrication= 23, Creation= 9. 774

0

9

8

7

6

12

16

14

16

10

8

20

6

10

32

14

15

8

25

3

45

30

21

10

14

6

9

9

21

49

12

10

14

39

Cosmetic Packaging & ACW

30

30

29

26

24

23

10

20

17

40

20

10 6

12

4

50

Assembly

14

9

12

11

20

60

18

28

14

17

20

9

70

23

14

39

27

Creation

number of responses

19

35

10

14

Fabrication

11

23

20

7

Figure 13 Mass customization stage preference by product category (Germany)

Accessories

Apparel

Beauty & Health

Electronics

Food & Packaging

Footwear

Games & Music

House & Garden

Industrial Goods

Kids & Babies

Motor Vehicles

Office & Merchandise

Paper & Books

Pet Supplies

Printing Platforms

Sportwear & Equipment

80

15

13

9

27

90

10

12

5

4

100

12

No interest in customization

5

7

10

4

110

120

130

Data analysis and results 89

0

1

2

3

4

Kids & Babies

4

Apparel

5

6

6

7

7

4

7

2

3

3

3

5

9

4

3

4

10

10

5

9

3

5

6

8

14

13

12

4

3

7

14

7

Cosmetic Packaging & ACW

12

4

1

6

Assembly

8

9

20

10

12

10

23

10

17

13

26

18

4

28

Creation

number of responses

2

11

10

Fabrication

14

Figure 14 Mass customization stage preference by product category (China)

Accessories

4

Beauty & Health

Electronics

Food & Packaging

Footwear

Games & Music

House & Garden

Industrial Goods

4

Motor Vehicles

Office & Merchandise

Paper & Books

4

4

Printing Platforms

Pet Supplies

4

Sportwear & Equipment

16

15

19

4

8

9

8

10

9

6

10

9

No interest in customization

30

7

5

5

6

40

5

7

50

90 Cultural-bound interest in mass customization – survey

Data analysis and results

91

With chi-square tests780, significant gender specific differences in mass customization stage preference for product categories among the German respondents are found for four product categories

Electronics Footwear Industrial products Motor vehicles

Packaging & ACW Male Female 5 7 13 7 2 7

Assembly

Fabrication

Creation

Male

Male

Male

3

5

41 14 4

Female 8 7 4

37

8

14 15 11

Female 9 8 3

21

18

6 3 10

Female 3 11 2

No interest in MC. Male Female 2 2 9 4 12 8

10

2

0

4

Table 14 MC stage preference by product category between German males and females – ChiSquare

For electronics, Fisher’s exact test781 (n= 97) = 10.98, p=.018, Cramer’s V= .332, am medium effect size is observed as German men have a preference for Assembly and German females have comparable scores for Cosmetic packaging and ACW, Assembly and Fabrication. For footwear, χ2 (4, n = 91) = 9.93, p=.042, Cramer’s V=.330, a medium effect is reported as men have a tendency for lower customization stages whereas German females prefer the stage Creation. For industrial goods, Fisher’s exact test (n=63) = 10.03, p=.035, Cramer’s V=.408, a medium effect size is found as German males prefer higher customization stage and women tend for cosmetic packaging and ACW or no customization. In comparison, motor vehicles, Fisher’s exact test (n=108) = 19.15, p= .000, Cramer’s V=.431, a medium effect size can be certified as German men opt for Assembly in comparison to German females who mainly chose Fabrication. Chinese respondents As displayed in figure 14, the most popular overall category among Chinese respondents is printing platforms (n = 41, 83.6%)782, followed by accessories (n=40, 81.6%)783. The

780

Chi-Square test for independence explores the relationships between two categorical variables (here Gender and Mass customization stage per product category) where each variable can have two or more categories. This test compares the observed frequencies and proportions of cases that occur in each category and produces cross tabulations. As the output is larger than 2x2, the effect size is reported with Cramer’s V. See Pallant (2016, pp. 218–221). 781 Fisher’s exact test was used as a correction method as the data set violates the assumption of cell frequencies of 5 or more. See Pallant (2016, p. 220). 782 Responses: Cosmetic Packaging & ACW = 4, Assembly = 4, Fabrication = 5, Creation = 28. 783 Responses: Cosmetic Packaging & ACW = 5, Assembly = 3, Fabrication = 6, Creation = 26.

92

Cultural-bound interest in mass customization – survey

third most popular overall categories are apparel (n=36, 73.4%)784, footwear (n=36, 73.4%)785 and motor vehicles (n=36, 73.4%)786. The most popular product categories for the mass customization stage cosmetic packaging & ACW are food and packaging (12 votes), paper and books (7 votes) and games and music (7 votes). For the stage Assembly, the most popular product categories are motor vehicles (14 votes), electronics (13 votes), and sportswear and equipment (10 votes). For Fabrication, those are beauty and health (14 votes), apparel (12 votes) and sportswear and equipment (12 votes). With regard to the preference for the stage Creation, most responses fall on printing platforms (28 votes), accessories (26 votes), and footwear (23 votes). Among the Chinese respondents, Chi-square tests reveal gender specific differences in mass customization stage preference for accessories, Fisher’s exact test (n= 45) = 8.92, p=.045, Cramer’s V= .451, with a medium effect size Chinese women show a tendency to Creation and Chinese men to Creation, Cosmetic Packaging and ACW, and no customization. Comparison of German and Chinese respondents Chi-square tests for independence compare the respective mass customization stage preference for the product categories among German and Chinese participants. MC consideration in product category accessories apparel beauty & health electronics food & packaging footwear games & music house & garden industrial goods kids & babies motor vehicles office & merchandise paper & books pet supplies printing platforms sportswear & equipment

χ2

df

n

p

35.745 21.528 10.428 6.860 11.887 26.348 9.793 6.184 7.814 17.495 8.612 15.353 5.166 9.497 16.775 8.392

4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

125 139 88 136 110 132 105 150 96 100 150 112 108 83 143 137

.000 .000 .034 .143 .018 .000 .044 .186 .099 .002 .072 .004 .271 .050 .002 .078

Cramer’s V .535 .394 .344 .225 .329 .447 .305 .203 .285 .418 .240 .370 .219 .338 .342 .247

Table 15 MC stage per product category differences among Germans and Chinese - Chi-Square

784

Responses: Cosmetic Packaging & ACW = 4, Assembly = 2, Fabrication = 12, Creation = 18. Responses: Cosmetic Packaging & ACW = 1, Assembly = 7, Fabrication = 5, Creation = 23. 786 Responses: Cosmetic Packaging & ACW = 4, Assembly = 14, Fabrication = 10, Creation = 8. 785

Data analysis and results

93

Significant differences (p < .05) are found between German and Chinese participants regarding the mass customization stage consideration per product category. Interpretation of Cramer’s V scores testify a large effect787 for accessories, whereas a medium effect size can be reported for differences in the product categories apparel, beauty and health, food and packaging, footwear, games and music, kids and babies, office and merchandise, pet supplies and printing platforms. Discussion, meaning of results and contribution Results of the German respondents with regard to their mass customization stage per product category are in line with findings regarding the general interest in MC stages (question 2), as most entries to this research question fall on the stage Assembly (333 votes), followed by Fabrication (291 votes) and Cosmetic Packaging and ACW (287 votes) and Creation (181). At most, 92% of respondents were interested in one of the mass customization stages for motor vehicles. The least interesting categories for mass customization among this sample were pet supplies with 22% and beauty and health with 30% of responses. The most chosen product category among German respondents was motor vehicles, with the primary customization stage Assembly, but the stage Fabrication also received many votes. This implies that many consumers considered a higher level of design freedom for instance in the form of individualized paint or uniquely fabricated seats for cars. Findings validate that German respondents are interested in different mass customization stages across various product categories. Furthermore, results suggest that German respondents might use mass customization due to an increased preference fit and process enjoyment but not so much due to the signaling effect (chapter 2.4.1) , as no predominant interest for products which have a signaling effect (such as accessories, apparel, footwear) can be found. As utilitarian characterized products like electronics, office and merchandise, and sportswear and equipment are considered on various stages as well. Results of the Chinese respondents are not in line with results from investigative question 2, although in both cases Chinese respondents indicated their preferred stage as Creation, this does not hold for Cosmetic Packaging and ACW, which scored second in the general interest (question 2) and presents in this question only on the last place with 77 votes. At most, 83% of respondents were interested in one of the mass customization stages for printing platforms. The least interesting categories for mass customization among this sample were industrial goods with 32%, pet supplies with 42% and kids and babies with 42% of responses. The most chosen product categories printing platforms and accessories were most preferred on the stage Creation. This implies Chinese consumers wish to completely design a product like pictures or jewelry themselves and then made by the manufacturer. For products with a signaling effect, such as accessories,

787

Pallant (2016, p. 222).

94

Cultural-bound interest in mass customization – survey

apparel and footwear, the dominant preference was for the mass customization stage Creation which gives the consumer complete design freedom, however, other stages were considered here as well. On average and across all product categories, the interest in mass customizing a product on one of the stages is 53% for German respondents and 61% for Chinese respondents. This is in line with findings by Coletti and Aichner who stated a high demand for customization amongst their respondents.788 Zaggl et al. show that consumer choice in mass customization is driven by conformity in utilitarian789 product attributes and uniqueness in hedonic790 product attributes (such as shoe design).791 Results of this investigative question imply that all product categories are interesting for mass customization, although some product categories and mass customization stages are more popular for mass customization than others. Franke and Piller found in their research that consumers presented with heterogeneous designs in mass customization.792 This is underlined in this survey as no predominant preference could be concluded. Research by Squire suggested that mass customization might not appeal to all consumers in all markets at all times793, and Zipkin concludes a potential for mass customization for a small range of products from only a few product categories.794 However, results of this survey suggest otherwise. Consumers are interested in various product categories for mass customization but vary in their interest in mass customization stages. Fogliatto et al. demanded research on “How much variety is really required by customers?”795 This variety could be conveyed through different mass customization stages that allow consumers different degrees of design freedom. Findings from this survey yield no simple answer. Consumers request customization for various products from different industries and on different stages of customization. Silveira et al. call for studies „in the form of a methodology for determining the appropriate level of MC for a product or service”.796 This question cannot be clearly answered, variety of different stages of product

788

Coletti and Aichner (2011, p. 27). Utilitarian product attributes are those associated with product functions. In car customization, utilitarian attributes are for example the engine or the service package. Zaggl et al. (2019, p. 214). 790 Hedonic product attributes are those associated with sensory experiences and feelings. In car customization, hedonic product attributes are for instance exterior color or seat design. Zaggl et al. (2019, p. 214). 791 Zaggl et al. (2019, p. 211). 792 Franke and Piller (2004, p. 412). 793 Squire et al. (2004, p. 469). 794 Zipkin (2001, p. 86). Such as apparel, home and office, media, personal care, services and other (vehicles, gifts, food, pet items, boats). 795 Fogliatto et al. (2012, p. 21). 796 Silveira et al. (2001, p. 8). 789

Data analysis and results

95

categories. Although for Chinese consumers for example the products footwear and accessories, the predominant stage seems to be Creation. However, for other product categories like sportswear and equipment, Chinese respondents gave no predominant answer and requested various mass customization stages. This survey thus supports findings by Moon et al. that the consumption of personalized products varied according to the product type.797

797

Moon et al. (2008, p. 37).

96

Cultural-bound interest in mass customization – survey

5.3.4 Willingness-to-pay for different mass customization stages Standard chocolate

Figure 15 WTP differences for standard chocolate

Standard WTP too expensive too cheap start (getting) expensive bargain798

Germans (n=127) M SD Md 9.71 6.69 9.00 2.21 1.83 1.99 6.89 4.55 5.00

Chinese (n=42) M SD 19.09 14.31 2.49 2.25 13.22 10.36

Md 15.00 2.00 9.50

Mann-Whitney U U Z p 1345 -4.82 .000 2478 -.693 .488 1496 -4.26 .000

5.15

7.76

6.00

1988

3.53

4.00

6.32

-2.85

.004

Table 16 WTP differences for standard chocolate - Mann-Whitney U

The standard chocolate served as the control condition where no customization is possible. German respondents indicate the chocolate as too expensive at on average 9.71 euros (SD = 6.69), too cheap at Ø 2.21 euros (SD = 1.83), start expensive at Ø 6.89 euros (SD = 4.55) and a bargain at Ø 5.15 euros (SD = 3.53). The optimal pricing solution (OPS) reveals a price of 3.67 euros.799 Chinese respondents see the chocolate as being too expensive at on average 19.09 euros (SD = 14.31), too cheap at Ø 2.49 euros (SD = 2.25), staring to be expensive at Ø 13.22 euros (SD = 10.36), and being a bargain at Ø 7.76 euros (SD = 6.32). The OPS for standard chocolate for Chinese participants is

798

Chinese respondents for this question n=44. Mann-Whitney U tests for gender-effects revealed no significant differences between German males and females in their WTP for this customization stage.

799

Data analysis and results

97

5.00 euros800. The comparisons of price sensitivity for standard chocolate with MannWhitney U tests among Germans and Chinese show significant differences for the prices too expensive, starting to get expensive, and bargain. Cosmetic Packaging and Additional Custom Work

Figure 16 WTP differences for chocolate (Cosmetic Packaging & ACW)

Cosmetic & ACW WTP too expensive too cheap start (getting) expensive bargain801

Germans (n=127)

Chinese (n=39)

Mann-Whitney U

M 12.09 3.16 8.91

SD 8.49 2.29 5.96

Md 10.00 2.90 7.99

M 25.84 3.57 17.06

SD 24.17 2.96 13.89

Md 20.00 3.00 15.00

U 1269 2294 1413.5

z -4.61 -.701 -4.05

p .000 .484 .000

6.85

4.85

5.99

10.30

8.70

7.99

1961.5

-2.37

.018

Table 17 WTP differences for chocolate (Cosmetic Packaging & ACW) - Mann-Whitney U

For Cosmetic Packaging & ACW, German respondents have an OPS of 5.00 euros in comparison 6.00 euros in the Chinese sample. German respondents see the chocolate as too expensive at an average price of 12.09 euros (SD = 8.49), too cheap at Ø 3.16 euros (SD = 2.29), start to get expensive at Ø 8.91 euros (SD = 5.96), and a bargain at Ø 6.85

800

Mann-Whitney U tests for gender-effects revealed no significant differences between Chinese males and females in their WTP for this customization stage. 801 Chinese respondents for this question n=41.

98

Cultural-bound interest in mass customization – survey

euros (SD = 4.85)802. Chinese respondents assess the chocolate as too expensive at on average 25.84 euros (SD = 24.17), too cheap at Ø 3.57 euros (SD = 2.96), staring to be expensive at Ø 17.06 euros (SD = 13.89) and a bargain at Ø 10.30 euros (SD = 8.70)803. The comparison of price sensitivity for chocolate on this MC stage among German and Chinese respondents shows significant differences for too expensive, starting to get expensive and bargain. Assembly

Figure 17 WTP differences for chocolate (Assembly)

Assembly WTP too expensive too cheap start (getting) expensive bargain804

Germans (n=127) M SD Md 12.00 8.01 10.00 2.82 2.03 2.50 8.44 5.42 7.00

Chinese (n=39) M SD 27.60 23.72 3.59 2.41 19.77 17.17

Md 20.00 3.00 15.00

Mann-Whitney U U z p 1117.5 -5.19 .000 1973 -1.93 .054 1105 -5.23 .000

6.54

12.22

9.99

1373

4.48

5.99

9.57

-4.38

.000

Table 18 WTP differences for chocolate (Assembly) - Mann-Whitney U

Chocolate on the mass customization stage Assembly is rated by German respondents as too expensive at mean 12.00 euros (SD=8.01), too cheap at Ø 2.82 euros (SD=2.03),

802

Mann-Whitney U tests for gender-effects revealed no significant differences between German males and females in their WTP for this customization stage. 803 Mann-Whitney U tests for gender-effects revealed no significant differences between Chinese males and females in their WTP for this customization stage. 804 Chinese respondents for this question n=40.

Data analysis and results

99

starting to be expensive at Ø 8.44 euros (SD=5.42) and being a bargain at Ø 6.54 euros (SD=4.48). The OPS for German participants is 4.97 euros.805 On the other hand, Chinese participants rate the assembled chocolate as too expensive at on average 27.60 euros (SD=23.72), too cheap at Ø 3.59 euros (SD=2.41), start expensive at Ø 19.77 euros (SD=17.17) and a bargain at Ø 12.22 euros (SD=9.57).The optimal pricing solution for Chinese respondents for assembled chocolate is 7.62 euros.806 The comparison of price sensitivity for a product on the stage Assembly among German and Chinese respondents points to significant differences for the points of too expensive, starting to get expensive and bargain. Fabrication

Figure 18 WTP differences for chocolate (Fabrication)

Fabrication WTP too expensive too cheap start (getting) expensive bargain807

Germans (n=127) M SD Md 14.48 9.98 12.00 3.65 2.60 3.00 10.33 6.62 9.00

Chinese (n=39) M SD 32.15 27.97 5.38 4.30 22.34 17.56

Md 25.00 5.00 20.00

Mann-Whitney U U Z p 1143.5 -5.09 .000 1730.5 -2.86 .004 1093 -5.27 .000

8.08

14.09

10.49

1426

5.42

6.00

9.96

-4.18

.000

Table 19 WTP differences for chocolate (Fabrication) - Mann-Whitney U

805

Mann-Whitney U tests for gender-effects revealed no significant differences between German males and females in their WTP for this customization stage. 806 Mann-Whitney U tests for gender-effects revealed no significant differences between Chinese males and females in their WTP for this customization stage. 807 Chinese respondents for this question n=40.

100

Cultural-bound interest in mass customization – survey

Chocolate on the mass customization stage Fabrication, is rated by 127 German respondents as too expensive at on average 14.48 euros (SD=9.98), too cheap at Ø 3.65 euros (SD=2.60), start getting expensive at Ø 10.33 euros (SD=6.62) and a bargain at Ø 8.08 euros (SD=5.42). The optimal pricing is 5.00 euros.808 For Chinese respondents, the OPS is Ø 9.34 euros, thus almost double the amount indicated by the German respondents. Chinese respondents reveal that the product was too expensive at Ø 32.15 euros (SD=27.97), too cheap at Ø 5.38 euros (SD=4.30), starting expensive at Ø 22.34 euros (SD=17.56) and being a bargain at Ø 14.09 euros (SD=9.96).809 The comparison of price sensitivity among German and Chinese respondents shows significant differences for all questions. Creation

Figure 19 WTP differences for chocolate (Creation)

808

Mann-Whitney U tests for gender-effects revealed a significant difference between German males and females for the “too expensive” measurement. German males considered the pralines as too expensive at 10 Euros, whereas German females regarded it as too expensive at median 15 Euros. 809 Mann-Whitney U tests for gender-effects revealed no significant differences between Chinese males and females in their WTP for this customization stage.

Data analysis and results

101

Creation WTP too expensive too cheap start (getting) expensive

Germans (n=127) M SD Md 16.43 11.28 15.00 4.21 3.37 3.99 12.04 7.83 10.00

Chinese (n=38) M SD 37.60 30.24 5.85 4.91 26.09 21.74

Md 30.00 5.00 20.99

Mann-Whitney U U z p 1109.5 -5.06 .000 1730 -2.66 .008 1210 -4.66 .000

bargain810

9.46

17.01

15.00

1431.5

6.47

8.00

13.29

-3.98

.000

Table 20 WTP differences for chocolate (Creation) - Mann-Whitney U

On the stage Creation, German participants rate the chocolate as too at expensive at on average 16.43 euros (SD=11.28), too cheap at Ø 4.21 euros (SD=3.37), starting to get expensive Ø 12.04 euros (SD=7.83), and a bargain at Ø 9.46 Euros (SD=6.47).811 The optimal pricing solution for German respondents is at 6.33 euros in comparison to 9.80 euros for Chinese respondents. Chinese respondents indicate created chocolate as too expensive at on average 37.60 euros (SD=30.24), too cheap at Ø 5.85 euros (SD= 4.91), start being expensive at Ø 26.09 euros (SD=21.74) and being a bargain at Ø 17.01 euros (SD=13.29).812 The comparison of price sensitivity for a product on the stage Creation among German and Chinese respondents advocates significant differences for all questions. Discussion, meaning of results and contribution Several authors found that mass customization yields higher WTP in comparison to a comparable standard product.813 Results of this survey underline these observations as both samples, German and Chinese respondents; present increasing optimal pricing solutions for mass-customized chocolate.

810

Chinese respondents for this question n=39. Mann-Whitney U tests for gender-effects revealed no significant differences between German males and females in their WTP for this customization stage. 812 Mann-Whitney U tests for gender-effects revealed no significant differences between Chinese males and females in their WTP for this customization stage. 813 Wind and Rangaswamy (2001, p. 19); Franke et al. (2009, p. 103); Dewan et al. (2003, p. 1055); Franke and Piller (2004, p. 412); Schreier (2006, p. 317); Franke and Schreier (2010); Franke et al. (2010); Franke and Hader (2014). 811

102

Cultural-bound interest in mass customization – survey

10 €

9,80 € 9,34 €

€

8€

7,62 €

6€ 5,00 € 4€

6,33 €

6,00 € 4,97 €

5,00 €

5,00 €

3,67 €

2€ Standard product

Cosmetic Packaging & ACW

Assembly

Germany

Fabrication

Creation

China

Figure 20 Differences in OPS among MC stage by nationality

The optimal pricing solution (OPS) for the German respondents asserts a value increase of approximately 36 percent from the standard product with OPS 3.67 euros to 5.00 euros on the stage Cosmetic Packaging and ACW, 4.97 euros on Assembly and 5.00 euros on Fabrication. In comparison to the standard product, the value increment for the stage Creation (OPS of 6.33 euros) is 72 percent. The Chinese respondents reveal a value increment of 96 percent from the standard chocolate OPS of 5.00 euros to 9.80 euros for the stage Creation. The Chinese respondents have a steady increase in willingness-to-pay over the stages on mass customization. They display a value increment of 20 percent for chocolate on the stage Cosmetic Packaging and Additional Custom Work (OPS at 6.00 euros), 52 percent (OPS of 7.62 euros) on the stage Assembly and 86 percent (OPS of 9.34 euros) on the stage Fabrication in comparison to the standard product. When comparing these findings with previous research that used theoretical measurements for willingness-to-pay, the observed value increments in this survey lay in the boundaries of previous reported results (from increments of 24 percent to approximately 225 percent). Franke, Schreier and Kaiser used open ended contingent valuation and reported value increases for customized products of 36 percent for newspapers, 40 percent for fountain pens, 37 percent for kitchens, 24 percent for skis, 50 percent for cereal.814 Franke and Piller observed an increment of about 225 percent for self-design watches with the open contingent valuation method.815

814 815

Franke et al. (2009, p. 115). Franke and Piller (2004, p. 401).

Discussion of survey findings

103

Looking especially at the value increment of 50 percent for cereal816, a product also in the category food and packaging and thus comparable to chocolate pralines, it is suggested that mass customization for food and packaging increases the WTP depending on the mass customization stage and thus yields the potential for further value increments in the food industry. In conclusion, results of the willingness-to-pay observations not only support existing research about a value increment of mass customization, but also extend this branch as significant differences between German and Chinese respondents in terms of their WTP for mass-customized chocolate are testified. Furthermore, this research stream was extended as results show that mass customization stages yield a different value increment for the mass-customized products.

5.4 Discussion of survey findings 5.4.1 Meaning of results In accordance to findings by Fogliatto et al.817 and Franke and Hader818, findings of this survey suggest that mass customization is indeed not a niche phenomenon anymore. As a great part of respondents, both from Germany and China, indicate that they are interested in using mass customization and have used it for product adaptation before. Moon posits that consumers react differently to customized products based on their cultural background.819 Franke et al. speculate that the effects of mass customization might vary between different societies.820 Results of this survey state that respondents from different nationalities vary regarding their preferences for using mass customization in general. Additionally, they diverged in their general and product-specific preference for mass customization stages. Lastly, German and Chinese respondents reveal significant differences in their willingness-to-pay for diverging levels of mass-customized chocolate. 5.4.2 Limitations The first limitation is that the survey only consisted of students from Clausthal University of Technology. Using students as subjects seems to be legitimate as Höst et al. could

816

Franke et al. (2009, p. 115). Fogliatto et al. (2012, p. 22). 818 Franke and Hader (2014, p. 1230). 819 Moon et al. (2008, p. 33). 820 Franke et al. (2010, p. 139). 817

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only find minor differences between professionals and students when executing small tasks of judgment.821 The second limitation is that the Chinese respondents in this survey were Chinese students that lived in Germany. Therefore, the answers of the Chinese population might be different to Chinese respondents in China. One approach to solve this is to classify immigrants as nationals of a country after five years of residence in the respective country.822 However, this approach was not used as Chinese respondents were seen as truly Chinese despite living in Germany. In accordance with Hofstede, the main part of culture, the values, are acquired during childhood and opted to change only very slowly over time.823 The third limitation is the predicted existence of cultural based response styles, where people from diverging nations use different styles when expressing the same opinion.824 Baumgartner and Steenkamp propose investigating response styles acquiescence (agreeing regardless of content), disacquiescence (disagreeing regardless of content), net acquiescence (acquiescence minus disacquiescence), extreme responses, and response range.825 They demand a checking and application of correction methods to adjust to response style differences.826 However, no correction methods for the data were used in this survey, as the author believes that correcting for these differences implies an alteration of results. The fourth limitation is the limited time-frame of this questionnaire. A survey must aim to on one side guarantee unbiased responses827 but also consider participants’ discontinuation rate. Single-item measures instead of multi-item measures were used due to the extent of this survey, as respondents’ attitude towards customization for multiple mass customization stages and many product categories was tested. This approach is based on findings by Bergquist and Rossier who stated that single-item measures have an equal predictive validity in comparison to multi-item measures for attitudes.828

821

Höst et al. (2000, p. 212). Moon et al. (2008, p. 35). 823 Hofstede et al. (2010, p. 19). 824 Frank et al. (2013, p. 2400). 825 Baumgartner and Steenkamp (2001, p. 153). 826 Baumgartner and Steenkamp (2001, p. 155); Frank et al. (2013, p. 2401). 827 Frank et al. (2013, p. 2400). 828 Bergkvist and Rossiter (2007, p. 182). 822

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One further limitation is a general problem with research on consumer preferences. Preferences are known to be labile and can be changed due to various factors, such as response mode and product category familiarity.829 Thus, results of this survey should be interpreted cautiously. Lastly, previous research found considerably higher hypothetical WTP in comparison to real WTP.830 Willingness-to-pay is an unobservable construct, where “each method for measuring WTP only represents the attempt to come as close as possible to the truth”.831 Directly surveying consumers regarding their WTP has several problems such as an unnatural focus on price, no incentive for consumers to reveal their true WTP, no transfer into a purchase and unstable valuations.832 Additionally, some respondents stated to be inexperienced with mass customization. Research observed that the direct inquiry of WTP for unfamiliar and complex products is cognitively challenging for respondents.833 Therefore, the validity of the willingness-to-pay results might be limited. 5.4.3 Directions for further research The first direction for further research is to extend and replicate the results of this survey. The sample size of this survey was limited to German and Chinese respondent, thus further research could expand to a larger sample size with strategic sampling in other nationalities. The second direction is to investigate the relationship between product liking and mass customization stage for that respective product. Some researchers indicated that mass customization is most beneficial when consumers have a good insight into their preferences.834 The trust on personal preferences is dependent on the level of consumer expertise.835 Therefore, one further direction is to investigate if a high preference and familiarity with a product category leads to an increase of mass customization consideration and consideration for a higher mass customization stage. The next direction for further research follows from the limitation of willingness-to-pay overstatement due to stated preferences836; thus, revealed preferences WTP for instance

829

Coupey et al. (1998, p. 459). Wertenbroch and Skiera (2002, p. 238); Voelckner (2006, p. 147). 831 Voelckner (2006, p. 137). 832 Breidert et al. (2006, p. 14). 833 Breidert et al. (2006, p. 14); Brown et al. (1996, p. 162). 834 Piller et al. (2004b, p. 440); Simonson (2005, p. 40); Syam et al. (2008, p. 379); Franke et al. (2009, p. 104). 835 Kramer et al. (2007, p. 255). 836 Breidert et al. (2006, p. 14). 830

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with means of an experiment should be measured to check if the discovered WTP differences between German and Chinese respondents and MC stages also hold in a real context. An additional direction for further research is to investigate the drivers of the observed mass customization differences, as gender and cultural backgrounds could be identified as potential factors of difference. Thus, future qualitative research could focus on the motivations behind consumer preferences in mass customization. The last direction for further research is the investigation of cultural influences on mass customization. As this survey proofs differences in preferences for mass customization, further research should investigate which dimensions of culture drive this effect. Statistical data analysis should test the relationship between measurable cultural dimensions and consumer behavior.

6 Cultural-bound actions in mass customization – experiment This experiment explores the cultural-bound actions in mass customization by examining German and Chinese participants regarding their mass customization decisions. Participants were invited to an experiment where they customized chocolate on different mass customization stages. They had to evaluate and determine their willingness-to-pay for each chocolate with the BDM method. This chapter begins with an explanation of the research goals before investigative questions and hypotheses are presented. The sub-chapter about the methodology and the data collection approach includes the experimental design, the procedure, apparatus, and operationalization of variables and participants. The following sub-chapter presents the data analysis and results by examining the data according to the investigative questions. The chapter ends with a short discussion, limitations, and directions for further research. 6.1 Research goals and investigative questions After validating an existence of cultural differences in terms of mass customization interests in the survey, the next step is to determine which dimensions of culture influence actions in mass customization. First, previous research by other authors testified willingness-to-pay price premiums for customized products837, but not for different customization stages. Results in the survey found different value increments per mass customization stages and differences between nationalities using the theoretical WTP measurement of the van Westendorp price sensitivity. Consequently, this experiment will build on these findings by measuring the real willingness-to-pay with the BDM method at a real purchase setting as participants are exposed to real product configurators. The product category under investigation in this experiment stays constant with the survey and thus remains chocolate. Second, research revealed customization leading to higher levels of customer satisfaction.838 Studies showed that consumers from varying cultures respond differently, such as, they evaluate service quality differently839 or show differences in purchase intentions to customized goods.840 There are no studies comparing the evaluations of customized products on different mass customization stages versus standard products, therefore this experiment aims to close this research gap.

837

Franke et al. (2009, p. 115); Franke and Piller (2004, p. 401); Franke and Schreier (2010, p. 1026); Schreier (2006, p. 322); Franke and Schreier (2008, p. 99); Franke and Hader (2014, p. 1214); Franke et al. (2010, p. 133). 838 Chang and Chen (2009, p. 11); Franke and Piller (2004, p. 403). 839 Zhang et al. (2008, p. 218). 840 Moon et al. (2008, p. 33).

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2020 C. Wabia, The Cultural Influence on Mass Customization, https://doi.org/10.1007/978-3-658-31015-8_6

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Lastly, differences in culture shape consumer behavior.841 People in China show differences in their uncertainty avoidance, individualism, power distance, and indulgence in comparison to Germans.842 Westerners tend to have a higher need for uniqueness, whereas East Asians have a higher need for conformity.843 Uniqueness is next to utility and self-expressiveness844 the main advantage of mass customization. Therefore, the influence of each cultural dimension on the willingness-to-pay for mass-customized products is studied. Three investigative questions for this experiment are defined: I. II. III.

To what extent does willingness-to-pay for mass-customized products (standard products) differ between German and Chinese participants? To what extent do product evaluations of mass-customized products (standard products) differ between German and Chinese participants? Which dimensions of culture influence willingness-to-pay for mass-customized products?

6.2 Hypothesis development 6.2.1 Willingness-to-pay Previous research showed mass customization increases the willingness-to-pay for a product in comparison to its standardized equivalent.845 The value increment can stem from various sources. First, an increased preference fit 846 as a higher fit leads to consumers being more satisfied with the mass-customized product, which in turn increases the willingness-to-pay.847 The mass-customized product holds higher utility through the increased preference fit.848 Second, people attribute higher value to unique products in

841

Yeniyurt and Townsend (2003, p. 377). https://www.hofstede-insights.com/product/compare-countries/, retrieved: 26.06.2019. Hofstede Insights (2019). 843 Liang and He (2012, p. 352). 844 Merle et al. (2010, p. 509). 845 Franke et al. (2009, p. 115); Franke and Piller (2004, p. 401); Franke and Schreier (2010, p. 1026); Schreier (2006, p. 322); Franke and Schreier (2008, p. 99); Franke and Hader (2014, p. 1214); Franke et al. (2010, p. 133). 846 Randall et al. (2007, p. 278); Hippel (2001, p. 254); Simonson (2005, p. 37); Franke and Schreier (2008, p. 102); Schreier (2006, p. 317); Franke et al. (2009, p. 111). 847 Franke and Piller (2004, p. 403). 848 Dellaert and Stremersch (2005, p. 226). 842

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comparison to standard products caused by perceived uniqueness.849 Third, do-it-yourself effects increase consumers’ willingness-to-pay because of an active engagement in the product customization process.850 Lastly, consumers attribute a higher value for the mass-customized products due to process enjoyment.851 It is hypothesized: H1: Mass customization increases the willingness-to-pay for a product. The survey results imply Chinese participants having a higher willingness-to-pay for mass-customized chocolate as higher optimal pricing solutions on all mass customization stages were found in comparison to the German participants. It is hypothesized: H2: There is a significant difference between the WTP for mass-customized products for Chinese and German participants. 6.2.2 Product evaluations Norton et al. reveal the IKEA-effect, the increase of valuation of self-made products, which holds for utilitarian and hedonic products.852 Chang and Chen observe that customization can lead to a higher level of customer satisfaction.853 According to Kaylyanaraman and Sudar, mass-customized content of web portals leads to positive evaluations of the portal, that provided the content.854 Merle et al. explain that the personal co-design experience directly influences how people perceive and evaluate a product.855 Providing novel attributes is likely to improve product evaluations as attributes are seen as additional benefits.856 However, this is only the case for low complexity products, but not for high complexity products where the consumer has negative learning costs because of the complexity.857 In total, it can be suggested that through a higher preference fit of the customized product, the product utility increases which would in turn lead to higher product evaluations for adapted products in comparison to standard products. Thus, it is hypothesized: H3: Mass customization increases the evaluations of a product.

849

Original source Brock (1968) not available in Franke and Piller (2004, p. 413). Norton et al. (2012, p. 453); Franke et al. (2010, p. 130). 851 Franke and Schreier (2010, p. 1024). 852 Norton et al. (2012, p. 458). 853 Chang and Chen (2009, p. 11). 854 Kalyanaraman and Sundar (2006, p. 126). 855 Merle et al. (2008, p. 42). 856 Mukherjee and Hoyer (2001, p. 462). 857 Mukherjee and Hoyer (2001, p. 462). 850

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Zhang et al summarize consumers in different cultures evaluating and perceiving service quality differently possibly caused by their expectations.858 Frank et al. observe influences on customer satisfaction through perceived quality, perceived value, quality expectations, and public brand image.859 In addition, they observed a difference in the magnitude between Japan and China.860 Furthermore, they found a stronger influence of quality expectations on customer satisfaction in China than in Japan861 and hypothesized that this might be due to individualism, which may weaken the influence of quality expectations on customer satisfaction.862As differences between China and Japan, two countries located in the same region, were found, differences between Germany and China can be expected as well. Thus it is hypothesized: H4: There is a significant difference between the product evaluations of mass-customized products for Chinese and German participants.

6.2.3 Product evaluations and willingness-to-pay When investigating the Ikea-effect, Norton et al. reveal that people who build a product themselves have higher WTP than non-builders.863 Products closely corresponding to consumer needs may be perceived as of higher value.864 The mass-customized product has a close fit to user preferences and the product should yield a higher satisfaction and thus increase the WTP.865 Thus, it is hypothesized: H5: Product evaluations have a positive influence on Willingness-to-pay.

858

Zhang et al. (2008, p. 218). Frank et al. (2013, p. 2403). 860 Frank et al. (2013, p. 2403). 861 Frank et al. (2013, p. 2401). 862 Frank et al. (2013, p. 2399). 863 Norton et al. (2012, p. 455). 864 Squire et al. (2004, p. 462). 865 Franke and Piller (2004, p. 403). 859

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6.2.4 Culture Based on Hofstede’s national cultural dimensions, hypothesis regarding each cultural dimensions influence on mass customization are derived.

National Culutral Dimension

100 90

87

83

80

80 67

70

66

66

65

60 50 40

35

30

30

20

20 10 0 Germany

China

Nationality Power Distance

Individualism

Masculinity

Uncertainty Avoidance

Long-term Orientation

Table 21 Hofstede’s national cultural dimension scores for Germany and China866

Power Distance reveals how a society deals with human inequalities867. In a society with high power distance, people think that inequalities are acceptable. 868 People are influenced by formal authority, thus believe to have no ambitions beyond their rank.869 The coefficient of innovation is high in countries scoring low on power distance.870 As such, societies are less open to new ideas and products871 in high power distant societies. The cultural dimension power distance has a negative influence on the acceptance of new products in a country.872 Furthermore, a high power distance has a negative influence on adoption rates of innovations in a country.873 This would imply for mass customization, a process requiring customers to show new ideas and thinking out of the box of traditional products, that a high score on power distance has a negative effect on mass

866

Adapted from https://www.hofstede-insights.com/country-comparison/china,germany/, retrieved: 17.07.2019. Hofstede Insights (2019). Scale: 0 = low, 100 = high. 867 Hofstede (2011, p. 8). 868 https://www.hofstede-insights.com/country-comparison/china,germany/, retrieved: 17.07.2019. Hofstede Insights (2019). 869 https://www.hofstede-insights.com/country-comparison/china,germany/, retrieved: 17.07.2019. Hofstede Insights (2019). 870 Yaveroglu and Donthu (2002, p. 49). 871 Yeniyurt and Townsend (2003, p. 380). 872 Yeniyurt and Townsend (2003, p. 377). 873 Everdingen and Waarts (2003, p. 230).

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customization. China (80) shows a relatively high score in national power distance in comparison to Germany (35).874 Thus, it is hypnotized: H6: Power distance has a negative influence on WTP for mass-customized products. Individualism versus Collectivism describes how individuals are integrated into primary groups.875 In individualist societies, the self-image is defined as “I” whereas in collectivist cultures, the focus is on the “We”.876 Collectivist societies act in the interest of the group, which might not necessarily match their individual interests.877 Research showed individualism positively influencing consumers’ purchase intentions of personalized sunglasses and computer desks.878 Furthermore, people in more individualistic countries tend to be more innovative.879 In addition, individualism has a positive effect on the acceptance of new products.880 Hofstede advocated that a high individualism increases the market potential for certain innovative products. 881 Frank et al. show distinctiveness being an important driver in product repurchase intent for individualists.882 People in individualist cultures show higher preference for uniqueness and differentiation, while attitudes towards building relationships are more favorable for people in collectivistic societies.883 Mass-customized products allow consumers to express their unique personality through an individual customization towards their preferences.884 Fiore et al. validate that the resulting unique product next to the exciting experience are important drivers for willingness to co-design a mass-customized product.885 Therefore, people in individualistic societies can be expected to underline their unique personality more strongly than people in collectivist societies. China (20) displays as a collectivist society, whereas Germany (67) is considered an individualistic society.886 Thus: H7: Individualism has a positive influence on WTP for mass-customized products.

874

Hofstede et al. (2017, pp. 69–72). Hofstede (2011, p. 8). 876 https://www.hofstede-insights.com/country-comparison/china,germany/, retrieved 17.07.2019. Hofstede Insights (2019). 877 https://www.hofstede-insights.com/country-comparison/china,germany/, retrieved 17.07.2019 Hofstede Insights (2019). 878 Moon et al. (2008, p. 37). 879 Steenkamp et al. (1999, p. 65); Yaveroglu and Donthu (2002, p. 60). 880 Yeniyurt and Townsend (2003, p. 377). 881 Hofstede (2001, p. 449). 882 Frank et al. (2015, p. 272). 883 Aaker and Maheswaran (1997, p. 315). 884 Franke and Schreier (2008, p. 101). 885 Fiore et al. (2004, p. 842). 886 Hofstede et al. (2017, pp. 113–117). 875

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Masculinity versus Femininity displays the division of emotional roles between women and men.887 A low score presents a feminine society preferring cooperation, modesty, and quality of life888 whereas a high score shows a masculine society being driven by competition, success, and achievement.889 Achievement can be demonstrated by having the latest and novelist possessions.890 The purchase of new items is one way to show (off) success and wealth.891 Furthermore, consumers in more masculine societies tended to be more innovative892, although Yeniyurt and Townsend found no significant effect of masculinity on the acceptance of new products893 and Everdingen and Waarts found high masculinity having a negative influence on adoption rates of innovations.894 Mass customization could help people to underline achievement with a signaling-effect of a personalized product.895 Thus mass customization could have high potential in a masculine society. China (66) and Germany (66) are both masculine societies.896 Thus, it is hypothesized: H8: Masculinity has a positive influence on WTP for mass-customized products. Uncertainty Avoidance pictures the level of stress in a society when the future is unknown897 and how members of a society deal with ambiguous or unknown situations.898 Previous research examined uncertainty avoidance having a negative influence on innovativeness899, the adoption rates of innovations900, and the acceptance of new products

887

Hofstede (2011, p. 8)., own illustration. https://www.hofstede-insights.com/models/national-culture/, retrieved: 17.07.2019. Hofstede Insights (2019). 889 https://www.hofstede-insights.com/country-comparison/china,germany/, retrieved: 17.07.2019. Hofstede Insights (2019). 890 Yeniyurt and Townsend (2003, p. 381). 891 Steenkamp et al. (1999, p. 60). 892 Steenkamp et al. (1999, p. 65). 893 Yeniyurt and Townsend (2003, p. 377). 894 Everdingen and Waarts (2003, p. 230). 895 Moon et al. (2008, p. 33). 896 Hofstede et al. (2017, p. 161). 897 Hofstede (2011, p. 8). 898 https://www.hofstede-insights.com/country-comparison/china,germany/, retrieved: 17.07.2019. Hofstede Insights (2019). 899 Yeniyurt and Townsend (2003, p. 380); Yaveroglu and Donthu (2002, p. 58); Steenkamp et al. (1999, p. 65). 900 Everdingen and Waarts (2003, p. 230). 888

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in a country901. Hofstede claims low uncertainty avoidance increasing the market potential for particular innovative products.902 Mass customization exposes customers to more uncertainty than choosing a standard product.903 Mass customization involves social risk, as the product choice of a personalized product is not supported by a large group of other customers.904 Thus, consumers may face uncertainty during the customization process.905 Uncertainty can stem from the large amount of product features, various combination possibilities, and functionalities, which leads to choice906 and task complexity907 and preference uncertainty908. 909 De Bellis et al. discovered that the product personalization process is more cumbersome for consumers in high uncertainty avoiding societies, which ultimately leads to poorer conversion rates for those products.910 It can be expected that people in high uncertainty avoiding societies have a lower preference for mass-customized products. China (30) has a low score on uncertainty avoidance, and Germany (65) ranks high on uncertainty avoidance.911 Thus, it is hypothesized: H9: Uncertainty avoidance has a negative influence on WTP for mass-customized products. Long-term versus Short-term Orientation displays how people focus their attempts, on the future or the present and past.912 In long-term oriented societies, people emphasize future events.913 Perseverance and thrift are important for people in LTO societies.914 High long-term orientation has a positive influence on adoption rates of innovations.915 Mass-customized products emphasize on added utility by cause of an increased preference fit, which will in turn, increase the consumers’ satisfaction and could be of more prolonged use than a standard product.916 Research proved a greater

901

Yeniyurt and Townsend (2003, p. 377). Hofstede (2001, p. 449). 903 Bellis et al. (2015, p. 311). 904 Bellis et al. (2016, p. 164). 905 Franke and Piller (2003, p. 581). 906 Hildebrand et al. (2014, p. 707). 907 Dellaert and Stremersch (2005, p. 226). 908 Broniarczyk and Griffin (2014, p. 608). 909 Bellis et al. (2015, p. 311). 910 Bellis et al. (2015, p. 318). 911 Hofstede et al. (2017, pp. 211–215). 912 Hofstede (2011, p. 8). 913 Hofstede (2011, p. 15). 914 Mooij and Hofstede (2002, pp. 63–64). 915 Everdingen and Waarts (2003, p. 230). 916 Dellaert and Stremersch (2005, p. 226); Franke and Piller (2004, p. 403). 902

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willingness-to-pay for durable products that are believed to be used frequently.917 Therefore, it can be speculated for people in long-term oriented societies having a higher preference for mass-customized products than people in short-term oriented societies. China (87) and Germany (83) are both long-term oriented countries.918 Thus, it is hypothesized: H10: Long-term orientation has a positive influence on WTP for mass-customized products.

6.3 Methodology and data collection The task of this experiment was to select or design chocolate919 for three different stages of mass customization by using mass customization configurators. Each stage was a treatment in this experiment. 6.3.1 Experimental design The experiment used a 2 x 3 factorial-mixed design: with the independent variables nationality (German or Chinese) and mass customization stage (Standard product (control treatment), Assembly, or Fabrication). Nationality was a between-subjects variable as it is an “individual difference”-variable which cannot be manipulated, but only measured.920 Mass customization stage was a within-subjects variable and manipulated in three treatments with “type of variable”.921 Participants received different “amounts” of customization with different mass customization stages. The dependent variable in this experiment is willingness-to-pay. Furthermore, the variable product evaluation was included in this experiment. Confounding variables were experience with mass customization, general interest in the product category and personality traits. In summary, a controlled experiment with actual products and real consequences was used to “overcome the limitations of abstract stimuli”922 as demanded by Franke et al.

917

Hamilton et al. (2011, p. 1079); Tanner and Carlson (2009, p. 816). Hofstede et al. (2017, p. 273). 919 Chocolate is relatively inexpensive and customizable on all MC stages. Additionally, a certain consumer preference insight regarding chocolate can be expected due to large sales volumes in the respective markets. In 2019, the German chocolate market had a volume of 6.6 billion euros in comparison to 3 billion euros in China (Statista, last access: 27.06.2019). 920 Briers (2013). 921 Briers (2013). 922 Franke et al. (2009, p. 104). 918

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6.3.1.1 Apparatus A lab experiment, computerized and realized with the online-tool “Questback”923, was conducted with six sessions at the Clausthal University of Technology EXeCuTe research laboratory between October and November 2018. Each session lasted 60 minutes and students received a compensation of 10 euros for their participation. Bolle validates that participants do not act differently based on compensation schemes, as results of experiments utilizing a random reward system924 versus the deterministic reward system925 did not differ significantly.926 6.3.1.2 Mass customization stage - product configurator per treatment The treatments used in this experiment were the mass customization stages. They were manipulated by using different configurators927 per mass customization stage in the treatments (Control, Assembly, and Fabrication). In general, configurators should allow consumers to actively contribute to the development of the product928 and lead the user through the “preference elicitation process” with means of a software tool.929 However, the degree to which customers could contribute to the development has to be varied in the width930 and the depth931 of the decisions. Mass customization configuration systems should be easy to understand and use.932 The configurators in this experiment were constructed based on the four major requirements for consumer toolkits as suggested by Thomke and van Hippel. First, toolkits need to be easy to use, though learning by doing. Thus, the buildup of each stage in this experiment should be simple. Second, the toolkit should be user friendly and “not require customers to learn an entirely new design language” 933 and thirdly “contain libraries of useful components and modules that have been pretested and debugged” 934, thus the structure of the configurator should be simple with images and written elaboration texts. Lastly,

923

Questback is in cooperation with Unipark and provides students and professionals with an online survey platform allowing a wide configuration of questionnaires and even experiments. 924 Only one randomly selected participant receives the complete payout. Bolle (1990, p. 157). 925 All subjects receive a payout. Bolle (1990, p. 157). 926 Bolle (1990, p. 157). 927 Configurators for the experiment are based on real market configurators. See appendix for chocolate configurator analysis of 25 available configurators on the market, Chocolate configurators were found on the configurator database (https://www.configurator-database.com/). 928 Franke and Piller (2004, p. 402). 929 Piller and Blazek (2014, p. 107). 930 Amount of decisions a customers has to make. 931 Amount of options a customer can choose from. 932 Piller and Blazek (2014, p. 117). 933 Thomke and Hippel (2002, p. 7). 934 Thomke and Hippel (2002, p. 7).

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toolkits should contain information about the limitations935 of the production process to ensure the produce ability of the consumers design.936 Through a simple configurator structure on the stages “Assembly” and “Fabrication”, and a relatively simple product type, the error rate of the configurators should be low. The task of each product configurator was to let participants choose or design their own chocolate with a weight of 100 grams. Control – treatment A Following Schreier’s proposition in mass customization research for a “valid reference point to measure the value increment” 937, ten standard products were available for choice in the control condition of this experiment. Those ten available standard chocolates were the bestsellers on a famous chocolate configuration website. Furthermore, the chocolate assortment was versatile, which ensured a comparable preference fit for all participants. For this treatment, participants had to make one decision: choose one standard chocolate. Assembly – treatment B

Figure 21 Example of experimental treatment B (Assembly) – image section

935

The only limitation in this experiment was that milk chocolate and dark chocolate could not be mixed, therefore this option was not selectable for students during the experiment. 936 Thomke and Hippel (2002, p. 7). 937 Schreier (2006, p. 320).

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For the configurator on the stage Assembly, participants had to make four decisions938, they should choose four small chocolates (each 25 grams) from a range of 20 different chocolate options. Those options were equally distributed: white, milk, and dark chocolate with versatile toppings. Fabrication – treatment C

Figure 22 Example of experimental treatment C (Fabrication) – image section

938

For a regular market configurator on the stage “Assembly”, customers have to make on average 4.66 decisions (minimum 2, maximum 8 decisions). See appendix 4: Chocolate configurator analysis.

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In the experimental configurator on the stage “Fabrication”, the participants had to make seven decisions939. One decision on the chocolate base (choose from milk chocolate, white chocolate, or dark chocolate) and one decision on the chocolate mix (with which chocolate the base chocolate should be mixed; four options: milk chocolate, white chocolate, dark chocolate, no mix chocolate, however dark and milk chocolate could not be mixed). Furthermore, the participants could choose up to five different chocolate toppings from 71 available options, ranging from regular fruits and nuts to extravagant ingredients like Fleur de Sel or gold powder. The presented treatments are the within-subjects variables. Within-subjects designs persuade through their high internal validity that does not depend on random assignment, high statistical power and is appropriate for detecting price changes940, as respondents in a within-design have a reference point when answering the second question regardless of the first question.941 In addition, the researcher gets the double amount of data in comparison to between-designs.942 When utilizing mixed or hybrid designs, threats to validity are maturation effects943, testing effects944, and the carryover effects945. The adequate control technique for those potential errors is complete counterbalancing946, which is a randomization and order change in the treatments. For this study, the random treatment orders per participants were:

939

In a real market configurator on the stage “Fabrication”, a consumer has to make on average 7 (range: 5-11) decisions during the chocolate customization process. Those decisions include base chocolate options and chocolate inlays (minimum 3, maximum 23 options), chocolate forms (minimum 3, maximum 20 options), ingredients for toppings (minimum 18, maximum 148 options). Additionally, customers can choose between different packaging and a personalized message on the packaging. See appendix 4: Chocolate configurator analysis. 940 Charness et al. (2012, p. 2). 941 Charness et al. (2012, p. 3). 942 Charness et al. (2012, p. 3). 943 Participants get tired or bored during the experiment (Field and Hole, 2013, p. 75). 944 Participants are sensitized during the experiment (Field and Hole, 2013, p. 75). 945 The first manipulation is still present at the time when the second manipulation is measured (Field and Hole, 2013, pp. 80-82). 946 Field and Hole (2013, p. 81).

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Figure 23 Complete counterbalancing in the experimental design947

6.3.1.3 Dependent variable: Willingness-to-pay In this experiment, the BDM method was used in all three treatments (see chapter 4.2.3). Participants had to purchase the chocolate if they won the auction. If they won more than one treatment, a raffle randomly determined which chocolate would be purchased. The price distributions in the random number generator of each treatment were plus/ minus 1.00 euro of the real purchase price of the chocolate and the spans were in steps of 0.25 euros. The participants were not aware of the price range, only that it would be in a realistic money span and that in case they were successful in the BDM, they had to purchase the respective chocolate. This was in line with findings by Wertenbroch and Skiera, who propose not to name the span to avoid anchoring948 however giving the participants the insurance to partake in a fair transaction949. With this experimental design and real consequences, it was ensured that the chocolates corresponded to real preferences, which ensured external validity.950 Additionally, willingness-to-pay was measured at a real purchase setting after product configuration. The BDM method allows measuring individual WTP at the respective relevant purchase setting.951 This is very important, as Thaler found willingness-to-pay

947

Own illustration based on Field and Hole (2013, p. 85). Wertenbroch and Skiera (2002, p. 231). 949 Wertenbroch and Skiera (2002, p. 231). 950 Franke and Hader (2014, p. 1220). 951 Wertenbroch and Skiera (2002, p. 230); Voelckner (2006, p. 148). 948

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to be context specific as he observed different levels of WTP for the same product (cold beer) for different points of purchase (grocery store versus Hotel).952 After a “winning” the chocolate, the price according to the BDM was subtracted from the students’ show-up fee of ten euros. The payout of the sessions took place two weeks after the experiment considering the delivery times of the chocolate. All students- including participants who received the show-up fee and no chocolate- received their payout at the same time to avoid time-effects. 6.3.1.4 Product evaluation The measurement of product evaluations in this study was a challenge, as the chocolate had to be evaluated previous of consumption and without tacit feedback. In a 1996 paper, Perrachio and Tybout propose a scale were they measure cake evaluations before consumption.953 However, their proposed scale also included purchase intention and recommendations to friends. As this was not part of the experimental scope, the application of the Perrachio and Tybout scale in the paper by Mukherjee and Hoyer was used.954 In this experiment, product evaluations were measured with a six-item, seven-point scale anchored at: bad/ good, bad looking / good looking, designed that I would not like to eat it / designed that I would like to eat it, not desirable / desirable, low quality / high quality, negative / positive. Product evaluation per MC stage – Germans955 scale reliability Control .897 Assembly .844 Fabrication .850

Chinese .941 .877 .890

Table 22 Reliability of the product evaluations scale - Cronbach’s alpha

Table 22 shows the results of the scale reliability analysis956 for product evaluation with the Cronbach’s alpha coefficient. As the all Cronbach’s alpha coefficient present with a score of above 0.7, the scale is reliable.

952

Thaler (1985, p. 206). Peracchio and Tybout (1996, p. 183). 954 Mukherjee and Hoyer (2001, p. 466). 955 Germany: n=57, China: n=37. For information on the sample see 6.3.3 Participants. 956 Cronbach’s alpha measures if the scale is internally consistent and thus measures the same construct. See Pallant (2016, p. 101). 953

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6.3.1.5 Independent variable: Culture Culture can be measured on different levels: national, group, or individual level.957 Measuring culture is only possible by means of questionnaires, as in comparison to other constructs like beliefs, opinions and values, culture is an intrinsic variable. The accepted and most widely used typology to measure cultural orientations in research is Hofstede’s Value Survey Module (VSM) and the updated version, the VSM 94.958 Hofstede’s original work compares cultural scores on the national level.959 In various research streams, the country level measurements have been used to explain individual-level behavioral phenomena; this has been discussed in research960 and the suitability of this approach is debated.961 In past research, when using country level scores, a practice was to assign all members of a nations culture scores according to the overall nation’s cultural score.962 Yoo et al. conclude that this can be done, when “the unit of analysis is a country (or culture is used as a contextual variable)”. 963 However, this is not suitable when investigating the “effect of an individual's cultural orientation”.964 Yoo et al. summarize utilizing country-level culture scores to draw conclusions about the individual member of a society becoming less important.965 After analyzing several authors approaches to measure Hofstede’s metric on the individual level, Yoo et al. resolve “Hofstede's metric did not hold at the individual level”966 Blodgett et al state “Hofstede’s cultural instrument lacks sufficient construct validity when applied at an individual level of analysis”967 and is thus not necessarily usable at the consumer level.968 Furthermore, Soares et al. stated that, with certain exceptions, individual values are more appropriate to forecast individual behavior.969 As this experiment uses culture as an independent variable to explain changes in willingness-to-pay for mass-customized products, cultural scores need to be measured on the individual level.

957

Soares et al. (2007, p. 278); Yoo et al. (2011). Steenkamp et al. (1999, p. 59). 959 Yeniyurt and Townsend (2003, p. 392). 960 Bearden et al. (2006, p. 195). 961 Bearden et al. (2006, p. 196). 962 Yoo et al. (2011, p. 195). 963 Yoo et al. (2011, p. 195). 964 Yoo et al. (2011, p. 195). 965 Yoo et al. (2011, p. 195). 966 Yoo et al. (2011, p. 195). 967 Blodgett et al. (2008, p. 343). 968 Blodgett et al. (2008, p. 343). 969 Soares et al. (2007, p. 282). 958

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As mentioned before, Hofstede’s metric is the most widely adapted theory and builds the widest base in illustrating different cultural dimensions across all other cultural concepts.970 Therefore, it seems right to use an operationalization building on Hofstede’s cultural dimensions on the individual level. This scale, named CVSCALE971, was developed by Yoo, Donthu and Lenartowicz and consists of 26-items972 on five-dimensions. The scale was validated across different nationalities and across different sample types (for example students, professionals, employees).973 Power Distance Uncertainty Avoidance Long-term Orientation Masculinity Individualism975

items 5 5 6 4 6

Germans974 .473 .624 .387 .404 .811

Chinese .750 .803 .558 .739 .883

Table 23 Reliability of the CVSCALE - Cronbach’s alpha

For the experiment, the question order was randomized as well as the item sequence. As the Cronbach’s alpha values of the German participants do not satisfy the reliability requirements of above .7, however, it is known from research that scales consisting of 10 items or less might have problems with their reliability coefficients.976 However, the scale has been validated by Schumacher et al. for a measurement in Germany977, thus the original scale was used for data analysis978. 6.3.1.6 Further variables - control for confounds To control for disturbances, next to the regular control variables such as gender, age, nationality, and education level, further control variables were recorded: Personality traits Personality traits describe the personality inventory of an individual, measured on the five dimensions extraversion, openness to experience, conscientiousness, agreeableness,

970

Soares et al. (2007, p. 280). For the 26 respective questions, see appendix. 972 1 (strongly disagree) to 5 (strongly agree). 973 Yoo et al. (2011, p. 204). 974 Germany: n=57, China: n=37. For information on the sample see 6.3.3 Participants. 975 The original CVSCALE measures collectivism, therefore this dimension was recoded. 976 Pallant (2016, p. 101). 977 Yoo et al. (2011, p. 206); Schumann et al. (2010, p. 75). 978 Statistical analysis with the corrected culture scale based on factor analysis can be found in the appendix. 971

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and neuroticism.979 Findings by Hagenmeier, indicate consumers' interest in mass customization depending on two of the Big Five personality traits: openness to experience and extraversion.980 According to Hofstede and McCrae, there are correlations between extraversion and the cultural dimensions individualism and power distance, whereas openness to experience correlates with masculinity and power distance.981 Therefore, this needs to be controlled. An easy scale to measure personality traits is the Big Five personality inventory. Rammstedt and John982 developed a short 10-item scale to measure all five dimensions of personality in only 10 questions. As the big five-personality inventory is only a control variable, the length of the scale is deemed appropriate. Experience with mass customization Research showed that when dealing with inexperienced customers in unpredictable environments, the manufacturer should take more control to offer goods to please the consumer.983 Adverse effects of complexity in mass customization are lower for experienced customers.984 Thus, mass customization might deliver more utility for the experienced customer, and utility is one of the drivers of success in this concept. Mass customization leads to an increase in WTP if the customer has a better preference insight and better ability to express them and greater product involvement.985 Thus, the previous experience with mass customization needs to be measured. For this, the experience with mass customization as used by Hagenmeier986 was employed for this thesis. A scale consisting of three items measured with five points was employed. General interest in the product category General interest in the product category might have an influence on the willingness-topay for mass-customized chocolate. This variable is introduced to this experiment based on the discussion of survey investigative question one where a theoretical link between mass customization interest and general product category interest was discussed. Furthermore owing to research evidence by Kaplan et al.987 argue that the more frequently a person consumes a product in a base category (the standardized product), the higher the intention to adopt a mass-customized product in this respective base category.988

979

Costa and McCrae (1992). Hagenmaier (2015, p. 37). 981 Hofstede and McCrae (2004, p. 69). 982 Rammstedt and John (2007). 983 Ghosh et al. (2006, p. 675). 984 Dellaert and Stremersch (2005, p. 226). 985 Franke et al. (2009, p. 103). 986 Hagenmaier (2015, p. 186). 987 Kaplan et al. investigated printed newspapers. 988 Kaplan et al. (2007, p. 110). 980

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6.3.2 Procedure Before the start of each experiment, students were greeted and upon entering the laboratory, drew a random number indicating their seat. Seats in the laboratory were separated by wooden blinds for anonymity. As pictured in figure 24, the experimental procedure started with instructions. Students received paperbound experimental instructions in German and Chinese and could decide in which language they would participate.989 Participants had seven minutes to read the instructions before they were allowed to start the computer-based experiment. The experimental task was to adapt chocolate (100 gram each) to individual preferences. Exemplary, the procedure is described in complete counterbalancing order 1:

Figure 24 Experimental procedure

The experiment consisted of 30 screens990: (1) response language (2) participant number (3) info screen: start of the product configuration rounds (4) info screen: Round A (treatment) (5) product choice (standard chocolate) 989

To avoid language bias, the instructions as well as the experimental set-up were translated into German and Chinese and re-checked by native speakers. 990 Number in brackets displays the page in the experiment, see appendix for experiment and experimental instructions.

126

(6) (7) (8) (9) (10) (11) (12) (13) (14) (15)

Cultural-bound actions in mass customization – experiment

product evaluation (control) WTP (control) info screen: Round B (treatment) product configurator (Assembly) product evaluation (Assembly) WTP (Assembly) info screen: Round C (treatment) product configurator (Fabrication) product evaluation (Fabrication) WTP (Fabrication)

Figure 25 Experimental screen 15: WTP for chocolate (Fabrication)

(16) (17) (18-21) (22) (23) (24) (25) (26-29) (30)

info screen: Questionnaire experience with mass customization individual cultural orientation (CVSCALE) – randomized personality traits (Big 5) general interest in product categories demographics info screen: chocolate price according to random price generator price treatment A, B, C info screen: end of experiment and instruction to collect receipt

The following table gives an overview of the experimental screens and the investigative questions and hypothesis:

Methodology and data collection

Investigative question I. To what extent does willingness-to-pay for masscustomized products (standard products) differ between German and Chinese participants? II. To what extent do product evaluations of mass-customized products (standard products) differ between German and Chinese participants? III. Which dimensions of culture influence willingness-to-pay for mass-customized products?

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Nr.

Hypothesis

Screen

H1:

Mass customization increases the willingness-topay for a product. There is a significant difference between the WTP for mass-customized products for Chinese and German participants.

5 & 7, 9 & 11, 13 & 15, 26 - 29

H2

H3 H4

H5 H6 H7 H8 H9 H10

Mass customization increases the evaluations of a 5 - 15 product. There is a significant difference between the product evaluations of mass-customized products for Chinese and German participants. Product evaluations have a positive influence on 5 - 15, willingness-to-pay. 18 - 21 Power distance has a negative influence on WTP for mass-customized products. Individualism has a positive influence on WTP for mass-customized products. Masculinity has a positive influence on WTP for mass-customized products. Uncertainty avoidance has a negative influence on WTP for mass-customized products. Long-term orientation has a positive influence on WTP for mass-customized products.

Table 24 Assignment of investigative questions to hypothesis and operationalization in the experiment

6.3.3 Participants Participants were randomly recruited from the total student population991 of TU Clausthal via learning management system Stud.IP, E-Mail and promotion during lectures. Therefore, the dataset was biased towards young and educated individuals who are familiar with technology, according to Franke and Piller; this is the major target group in B2C toolkit user.992 A bias towards these participants does not pose a problem, as according to Fiore “the college student may be a prime target customer for mass customization”.993 To take part in the experiment, students needed to have the German or Chinese citizenship and like chocolate, they received a show-up fee of ten euros. In

991

To ensure a smooth and error free experiment, the complete set-up was pre-tested with 15 participants from the author’s research group at Clausthal University of Technology in July 2018. 992 Franke and Piller (2004, p. 406). 993 Fiore et al. (2004, p. 841).

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number of participants

total, 94 students participated. From the total dataset, 57994 students were German and 37 students held the Chinese nationality. Four sessions of the experiment were held on the 29th and 30th October 2018, were 66 valid responses from German and Chinese participants were gathered and two further sessions were conducted on the 26th of November 2018, were 28 responses from Chinese students were collected. 60 50

22

40 30 20

15 35 22

10 0 German

Chinese

Nationality male

female

Figure 26 Division of experimental participants by nationality and gender

From the 57 German participants, 22 were female and 35 were male with an average age of 25 years (SD=5.23 years) and a range from 18 to 54 years. The 37 Chinese participants divided into 15 females and 22 males. They were on average 24 years (SD=2.85) old and their age ranged from 20 to 33 years. 58 participants conduced the experiment in German language whereas 36 people answered in Chinese.

6.4 Data analysis and results The data analysis995 is based on the investigative questions in the experiment. First, the data are analyzed for the between-subjects effect before investigating the with-in-subjects effect and discussing the results and their interpretation.

994

Originally, 58 participants were Germans, however, one person participated twice, and thus his second participation was removed from the data set, leaving 57 valid responses. 995 With software: IBM SPSS Statistics 25, Stata version 14.

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129

6.4.1 Willingness-to-pay In order to answer the first investigative question: To what extent does willingness-topay for mass-customized products (standard products) differ between German and Chinese participants, Mann-Whitney U tests, Friedman tests and Wilcoxon signed rank tests with Bonferroni adjustment were used to compare German and Chinese respondents.

Figure 27 Experimental WTP differences among nationalities

6.4.1.1 Between-subjects WTP WTP Control Assembly Fabrication

Germans (n=57) M SD Md 2.14 1.26 1.99 2.15 1.14 1.95 2.11 0.90 2.00

Chinese (n=37) M SD 2.90 1.98 4.00 2.71 4.39 4.19

Md 2.50 3.25 2.99

Mann-Whitney U test U z p 837.5 -1.68 .093 503.5 -4.26 .000 537.5 -4.00 .000

r .17 .47 .41

Table 25 WTP differences among nationalities – Mann-Whitney U

Control When investigating the WTP for a self-selected chocolate, German participants indicate prices between 0.30 and 6.99 euros, on average 2.14 euros (SD=1.26) and a mean of 1.99 euros, no differences between females and males are found. Chinese participants indicate a willingness-to-pay between 0.69 and 8.88 euros, averaged 2.90 euros (SD =1.98) and median 2.50 euros. In this sub-sample, no significant differences are found for gender. When comparing the willingness-to-pay for chocolate in the control condi-

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tion, independent samples Mann-Whitney U test shows no significant differences between German and Chinese participants regarding their willingness-to-pay for standard chocolate. Assembly German participants indicate their willingness-to-pay for chocolate on the stage Assembly between 0.69 and 4.99 euros, with an average of 2.15 euros (SD=1.14) and a median of 1.95 euros. Whereas the Chinese respondents specify their WTP between 0.89 and 12.99 euros, mean 4.00 euros (SD=2.71) and median 3.25 euros. For both subgroups, no differences are found based on gender. An independent samples Mann-Whitney U test reports significant differences with a medium996 effect size997 between German and Chinese participants with regard to willingness-to-pay for chocolate on the stage Assembly. Fabrication For chocolate on the mass customization stage Fabrication, German respondents report a willingness-to-pay range between 0.69 and 3.99 euros, median at 2.00 euros and average at 2.11 euros. In contrast, Chinese respondents indicate prices between 0.89 and 23.99 euros, with averaged WTP of 4.39 euros (SD=4.19) and a median of 2.99 euros. Both subgroups show no differences in WTP based on gender. An independent samples Mann-Whitney U test discloses significant differences with a medium effect size between German and Chinese participants with regard to willingness-to-pay for chocolate on the stage Fabrication. The next point is to analyze is whether the differences of WTP between mass customization stages are statistically significant. 6.4.1.2 Within-subjects WTP The mean WTP among German respondents standard chocolate is 2.14 euros, 2.15 euros for assembled chocolate, and 2.11 euros for fabricated chocolate. Thus, there is no value increment from the most preferred standard chocolate to the assembled chocolate. The value increment for fabricated chocolate is even negative by 2 percent in comparison to the most preferred standard chocolate. In contrast, Chinese respondents indicate an averaged value increment for mass-customized chocolate from 2.90 euros of the standard chocolate to 4.00 euros for Assembly (increment of 38 percent) and 4.29 for Fabrication (increment of 51 percent).

996

According to Cohen the effect size (r) are .1(small effect), .3 (medium effect) and .5 (large effect) Cohen (1988, pp. 79–80).

997

According to Cohen, the effect size describes „it can now readily be made clear that when the null hypothesis is false, it is false to some specific degree, i.e., the effect size (ES) is some specific nonzero value in the population. The larger this value, the greater the degree to which the phenomenon under study is manifested.“ Cohen (1988, p. 10).

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A Friedman test998 with post-hoc Wilcoxon signed rank tests999 with Bonferroni adjustment1000 assesses differences in willingness-to-pay between the mass customization stages. WTP Germans Chinese

n 57 37

Control Md 1.99 2.50

Assembly Md 1.95 3.25

Fabrication Md 2.00 2.99

Friedman Chi-Square 6.764 26.800

df 2 2

p .034 .000

Table 26 WTP differences among MC stages – Friedman

Wilcoxon signed rank test Germans (n=57) Chinese (n=37) p r Z p r

WTP Test statistic

Z

Control - Assembly

-.675

.499

.06

-4.115

.000

Control - Fabrication

-1.941

.052

.18

-4.253

.000

.49

Assembly - Fabrication

-.328

.743

.03

-.617

.537

.07

.47

Table 27 WTP differences among MC stages – Wilcoxon signed rank

For the German participants, the results of the Friedman test indicate a statistically significant difference in WTP across the three treatments (Control, Assembly and Fabrication χ2 (2, n = 57) = 6.76, p = .034). Inspection of the median values showed a slight change from the control condition (Md = 1.99) to Assembly (Md = 1.95) to a small increase in Fabrication (Md = 2.00). Post-hoc tests with the Wilcoxon signed rank test and Bonferroni adjustment imply that there is no significant increase in willingness-topay among German respondents between Control and Assembly, Control and Fabrication and Assembly and Fabrication. For the Chinese sample, the willingness-to-pay differences among treatments tested with the Friedman Test indicate a statistically significant difference (Control, Assembly and Fabrication χ2 (2, n = 37) = 26.80, p < .001). The median values reveal an increase from the Control condition (Md = 2.50) to Assembly (Md = 3.25) and Fabrication (Md = 2.99). Post-hoc tests with the Wilcoxon signed rank test prove a statistical significant willingness-to-pay increase between the stages Control and Assembly and between Control and Fabrication with a medium on the border to large effect size. However, the test

998

The Friedman test is the non-parametric alternative to the one-way repeated measures ANOVA, it tests for differences within the same sample of participants for three or more conditions. See Pallant (2016, p. 240). 999 The Wilcoxon signed rank test is a repeated measures test and the non-parametric alternative to the repeated measures t-test. The test converts scores into ranks and compares them at different points of time or conditions. See Pallant (2016, p. 234). 1000 A Bonferroni adjusted alpha value indicates that the alpha value for the respective test is divided by the total conditions in order to control for Type 1 error. See Pallant (2016, pp. 240–242).

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does not show a significant difference in willingness-to-pay between the stages Assembly and Fabrication. 6.4.1.3 Discussion, meaning of results and contribution Hypothesis 1: is only partially supported as the Chinese sample shows an increase in average willingness-to-pay for mass customization stages in comparison to the standard chocolate whereas the German sample does not. Hypothesis 2: is supported as Chinese respondents show a significantly higher WTP for mass-customized products than German respondents, both subsamples show an identical willingness-to-pay for the standard chocolate. German respondents reveal no value increment from the most preferred standard chocolate to the assembled chocolate and a negative increment to Fabrication. Comparing these results to previous research, Bardakci and Whitelock observe in their study with theoretical measurement of willingness-to-pay premiums, that 41.2 percent of consumers were not willing to pay a premium for customized cars.1001 Merle et al. show in their study about customized shoes that 27 percent of respondents were not willing to pay a price premium in the contingent evaluation method.1002 In his study on mass customization value of cell phone covers, t-shirts and scarves, Schreier reports a certain part of users (12 percent) are not willing to pay a price premium.1003 There might be a number of reasons for an absence of value increments for mass-customized products among German participants. First, the perceived “costs” of the customization might overweight the perceived benefits associated with mass customization.1004 Sources of “costs” for consumers in mass customization are an increased effort, additional time, and uncertainty in comparison to the standard product. With regard to costs stemming from effort, Franke and Schreier validate that a higher process effort in mass customization does not decrease the WTP for customized scarves.1005 However, in case of chocolate, the benefit owning customized chocolate might not outweigh the process of customization. This might be product specific. Furthermore, additional time, consumers today are driven by time and prefer convenience when they shop, thus when low involvement products (such as fast moving consumer goods like chocolate) are purchased, consumers are neither willing to devote their time for configuration nor willing to wait for the final product.1006 This can be

1001

Bardakci and Whitelock (2004, p. 1405). Merle et al. (2008, p. 40). 1003 Schreier (2006, p. 323). 1004 Merle et al. (2008, p. 40). 1005 Franke and Schreier (2010, p. 1027). 1006 Broekhuizen and Alsem (2002, p. 316). 1002

Data analysis and results

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different when customizing mid-range or high involvement products.1007 Thus, the absence of willingness-to-pay price premiums among German respondents might be limited to low involvement products. Lastly, “costs” in terms of increased uncertainty.1008 As discussed in chapter 2.4.1 and chapter 6.2, uncertainty can stem from various sources. Germany in general is a highly uncertainty avoiding culture (with a score of 80 in the Hofstede cultural dimensions). The product type chocolate might have a higher degree of uncertainty than goods like t-shirts or scarves, as the chocolate can only be throughout evaluated by consumers after consumption. Thus, the next step is to check if there are differences in willingness-to-pay based on differences in product evaluations. Second, according to Merle et al., the value of mass customization originates from five sources: utility (close preference fit), uniqueness (prevailing uniqueness), and self-expressiveness (product is reflection of personality), hedonic value (fun and enjoyment of the process), and creative achievement (accomplishment of creative task).1009 For customized chocolate, a product consumed in private and thus “without” a signaling effect, although the preference fit, hedonic value, and creative achievement can be displayed, uniqueness and self-expressiveness might be not as salient in comparison to products with a more self-expressive character such as clothing, shoes, or accessories. Third, research showed consumers with lower product category expertise and less insight into their own preferences being less attracted to customized systems.1010 And consumers then do not appreciate the benefits of customization like consumers with a high preference insight.1011 Thus, one explanation for the constant WTP among the German respondents could be a lower preference insight or product category expertise for chocolate. When comparing the results of the observed average value increment of the Chinese participants with previous research using stated preference willingness-to-pay measurement, the observed value increments lay in the boundaries of previous reported results (from increments of 24 percent to approximately 300 percent). For WTP for mass-customized products measured in Vickrey auctions, Franke and Schreier1012 report a value increase of 91 percent for customized scarves. Whereas Schreier measures value increments of 207 percent for customized cell phones covers, 113 percent for T-shirts, and 106 percent for scarves.1013 Franke and Schreier found value increments of 300 percent

1007

Broekhuizen and Alsem (2002, p. 316). Broekhuizen and Alsem (2002, p. 316). 1009 Merle et al. (2010, p. 509). 1010 Bharadwaj et al. (2009, p. 225). 1011 Bharadwaj et al. (2009, p. 218). 1012 Franke and Schreier (2010, p. 1026). 1013 Schreier (2006, p. 322). 1008

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for self-designed cell phone covers.1014 Franke and Piller1015 indicated an increment of about 200 percent for self-designed watches. Looking at the BDM method, Franke and Hader report a value increase of 66 percent for self-designed watches.1016 Franke, Schreier and Kaiser show a value increase of 62 percent for self-designed skis1017, and of 44 percent for a self-designed T-shirts.1018 However, these studies use products that can be considered hedonic and are used for public display.1019 Norton et al. report a more conservative value increment (measured with BDM) of 62 percent for a utilitarian box when a user builds it themselves.1020 The median value difference between the stages Assembly and Fabrication is not statistically different, which implies that there is no added willingness-to-pay for more customization. Next to the added “costs” of customization which were discussed above, this points to the conclusion that there is an “optimum” mass customization level for chocolate as customizing beyond a certain point is not “worth” the extra effort as chocolate is just a low involvement good. One further point could be the stage Fabrication giving consumers more choices than the stage Assembly, thus the added options might have led to mass confusion and overwhelmed the participants.1021 The next point is to compare experimental findings with results from the questionnaire1022. For German participants, the observed optimal pricing solutions in the questionnaire was 3,67 euros for the standard product, 4,97 euros on the stage Assembly and 5,00 euros on the stage Fabrication. The observed value increment for mass customization in the questionnaire was about 36 per cent for both, Assembly and Fabrication in comparison to the standard product, whereas no value increment could be observed in the experiment. For Chinese participants, the questionnaire showed an optimal pricing solution of 5,00 euros for the standard product, 7,62 euros on the stage Assembly and 9,34 euros on the stage Fabrication. Mass customization therefore yielded a value increment of 52 per cent on the stage Assembly and 86 per cent on the stage Fabrication in comparison to the standard product in the survey. In the experiment, value increments for mass customization could be observed as well, they were 38 per cent for the stage Assembly and 51

1014

Franke and Schreier (2008, p. 99). Franke and Piller (2004, p. 401). 1016 Franke and Hader (2014, p. 1214). 1017 Franke et al. (2010, p. 133). 1018 Franke et al. (2010, p. 132). 1019 Norton et al. (2012, p. 454). 1020 Norton et al. (2012, p. 455). 1021 Zipkin (2001, p. 82); Wind and Rangaswamy (2001, p. 29); Huffman and Kahn (1998, p. 492). 1022 In the questionnaire, participants had to state their Willingness-to-pay for a hypothetical box of chocolate (see chapter 5). 1015

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per cent for the stage Fabrication in comparison to the standard product. However, the value increments between Assembly and Fabrication were not statistically significant. Differences in WTP observations between the experiment and the questionnaire could be due to various reasons. Firstly, the product investigated in the questionnaire was a box of chocolate pralines (with nine chocolates) whereas in the experiment, it was a chocolate bar (with a weight of 100 grams). Although both products are from the same product category, they are hardly directly comparable. Therefore, the trend in the willingness-to-pay seems to be of higher informative value than the real price. Secondly, participants might have different price anchoring points for chocolate bars and pralines, which would explain different standard prices between the questionnaire and the experiment. As the willingness-to-pay for the standard chocolate bar in the experiment did not differ between German and Chinese participants, the anchoring point seems a logical explanation. The value increment due to mass customization for pralines seems to be higher than for a chocolate bar, this again underlines the need to compare the trend in value increments rather than the real numbers. Thirdly, the data collection method for willingness-to-pay differed between survey and experiment.1023 In the survey, participants had to abstractly think about the customization process and then give their price estimates with the van Westendorp method without facing real monetary consequences. In the experiment, the willingness-to-pay data were collected directly after a real customization process, furthermore, the BDM-mechanism ensured incentive compatibility. Thus, an overestimation of the price might have taken place when answering the survey. Additionally, the willingness-to-pay might have been context specific. We know from Thaler1024, that people have differing price perceptions with regard to different situations. The results of this study hence underline previous research in stating WTP premiums for mass customization, but also showing that there are no value increments in some cases. Furthermore, findings advance previous research by stating that there are differences in average value increments between mass customization stages and respondents from different cultural backgrounds. However, the median willingness-to-pay for masscustomized chocolate on the stages Assembly and Fabrication does not differ significantly.

1023 1024

See chapter 4.2.3 Willingness-to-pay for measurements. Thaler (1985, p. 206).

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6.4.2 Product evaluations With regard to the second investigative question, to what extent do product evaluations of mass-customized products (standard products) differ between German and Chinese participants, Mann-Whitney U tests, Friedman test, and Wilcoxon signed rank test with Bonferroni adjustment were used to compare German and Chinese respondents.

Figure 28 Experimental product evaluation differences among nationalities

6.4.2.1 Between-subjects product evaluations Germans (n=57) M SD Md

Chinese (n=37) M SD Md

Mann-Whitney U test U z p

r

34.10

5.64

35.00

34.40

7.47

36.00

927

-.990

.322

.10

Assembly

35.80

4.18

36.00

37.94

3.85

39.00

727.5

-2.54

.011

.26

Fabrication

37.70

4.12

39.00

38.56

3.83

39.00

910

-1.13

.258

.11

Product evaluations Control

Table 28 Product evaluation differences among nationalities- Mann-Whitney U

Control In the control condition, when choosing one standard chocolate, Germans show a product evaluation score between 19 and 42. The median is 35 and the mean 34.10 with a standard deviation of 5.64. When running a Mann-Whitney U test, no significant effects for gender is found. Chinese respondents indicate product evaluation scores between 15 and 42 with an average of 34.40 (SD =7.47) and a median of 36. In addition, no gender

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specific differences are found. When comparing the product evaluations in the control condition, an independent samples Mann-Whitney U test finds no significant differences in product evaluations between German and Chinese participants. Assembly For product evaluations for chocolate on the stage Assembly, German respondents score the chocolate between 26 and 42 points with on average 35.8 (SD=4.18) and a median of 36. No gender specific differences are detected. Chinese respondents present scores between 28 and 42, with average 37.94 (SD=3.85) and median 39. No significant differences in gender are found. An independent samples Mann-Whitney U test shows significant differences with a small effect size in product evaluations between German and Chinese participants, where Chinese participants rated the chocolate higher than Germans. Fabrication Assessment of the scores of product evaluations for fabricated chocolate among Germans shows a range from 26 to 42 with an average of 37.70 (SD=4.12) and a median of 39. For Chinese respondents a range between 25 and 42 and an average of 38.56 (SD=3.83) and median of 39 are examined. For both groups, no significant differences are observed based on gender. An independent samples Mann-Whitney U test finds no significant differences in product evaluations for Fabrication between German and Chinese participants. 6.4.2.2 Within-subjects product evaluation A Friedman test with post-hoc Wilcoxon signed rank tests with Bonferroni adjustment assesses differences in product evaluations between the mass customization stages. Product evaluation Germans Chinese

n

Control Md

Assembly Md

57 35.00 37 36.00

36.00 39.00

Fabrication Md

Friedman ChiSquare 20.010 5.778

39.00 39.00

df

p

2 2

.000 .056

Table 29 Product evaluation differences among MC stages – Friedman

Wilcoxon signed rank test Germans (n=57) Chinese (n=37) p r Z p r

Product evaluation Test statistic

Z

Control - Assembly

-1.804

.071

.17

-2.472

.013

.29

Control - Fabrication

-4.538

.000

.43

-3.193

.001

.37

Assembly - Fabrication

-3.121

.002

.29

-.611

.541

.07

Table 30 Product evaluation differences among MC stages- Wilcoxon signed rank

For the German participants, a Friedman test showed significant differences in product evaluations per mass customization stage. Observations of the median scores indicate a

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slight increase of product evaluation over mass customization stages. Post-hoc tests with the Wilcoxon signed rank test imply that there is no statistically different change in product evaluation scores between standard product in the control condition and the assembled product. However, product evaluations between Control and Fabrication and between Assembly and Fabrication increase significantly with a medium effect size. For the Chinese participants, the Friedman tests show no significant differences between MC stages with regard to product evaluations. When running post-hoc comparisons with the Wilcoxon signed rank test, this does not hold for all stages. No significant differences are found between the stages Assembly and Fabrication, however test results validate significant changes in product evaluations between the stages Control and Assembly (with a medium effect size) as well as between Control and Fabrication (with a medium effect size). 6.4.2.3 Discussion, meaning of results and contribution Hypothesis 3: is only partially supported, as mass-customized products have higher product evaluations than standard products for the Chinese participants. German participants show higher average and median product evaluations for customized products, but no significant differences in evaluation between the stages Assembly and Fabrication. Hypothesis 4: is not supported, as the only difference between German and Chinese participants in product evaluations is found for Assembly. Findings of this thesis support findings by Norton1025, Chang and Chen1026, Kaylyanaraman and Sudar1027, and Goldsmith and Freiden1028 who observed higher valuations of mass-customized products in comparison to its standardized counterparts. This can be reasond by Merle et al.s1029 presentation of benefis in mass customization such as increased preference fit, hedonic value, and creative achievement. Due to the nature of the product, product evaluations for mass-customized chocolate might have only minor influenced by uniqueness and self-expressiveness. Instead, driver of increased product evaluations of this low complexity product might have been the novel attributes1030, such as the option to add gold powder to the chocolate or other extravagant combinations of chocolate.

1025

Norton et al. (2012, p. 458). Chang and Chen (2009, p. 11). 1027 Kalyanaraman and Sundar (2006, p. 126). 1028 Goldsmith and Freiden (2004, p. 236). 1029 Merle et al. (2010, p. 509). 1030 Mukherjee and Hoyer (2001, p. 462). 1026

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As the product evaluations did not significantly differ between both samples, the results suggest contrary to Zhang et al. 1031 and Frank et al.1032, that consumers in different cultures might not have different expectations or satisfaction levels when it comes to mass customizing chocolate. 6.4.3 Culture In order to answer the third investigative question: Which dimensions of culture influence willingness-to-pay for mass-customized products?, Mann-Whitney U tests and Regression analysis were utilized for data analysis. Figure 29 and table 31 display the results of the individual cultural orientation measured on the CVSCALE.

total Long-term Orientation

Figure 29 Individual cultural orientation differences among nationalities

1031 1032

Zhang et al. (2008, p. 218). Frank et al. (2013, p. 2403).

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Cultural-bound actions in mass customization – experiment

Germans (n=57) M SD Md

Chinese (n=37) M SD Md

Mann-Whitney U test U z p

r

9.80

2.55

10.00

8.89

3.41

8.00

855.5

.120

.16

16.84

4.49

17.00

15.45

4.76

16.00

907.5

.254

.12

Masculinity

9.91

2.59

9.00

12.05

3.58

12.00

639.5

.001

.33

Uncertainty Avoidance Long-term Orientation

18.61

2.57

19.00

22.40

2.31

22.00

294

.000

.61

24.49

2.13

24.00

24.67

2.85

25.00

993

.631

.05

Individual cultural orientation Power Distance Individualism

1.553 1.141 3.231 5.926 -.480

Table 31 Individual cultural orientation differences among nationalities – Mann-Whitney U

6.4.3.1 Between-subjects cultural orientation Power Distance German participants reach scores between 5 and 16, with a mean of 9.80 (Md =10.00) for individual power distance, whereas Chinese participants range from 5 and 20, with on average of 8.89 (Md=8.00). A Mann-Whitney U test presents an insignificantly higher score in individual power distance for German participants. In Hofstede’s original study1033 on national cultural dimensions, China reaches a higher score than Germany on this dimension. Individualism German participants indicate scores from 7 to 30 with an average of 6.84 (Md=17.00) whereas Chinese respondents show scores between 6 and 25 and a mean 15.45 (Md=16.00) for individual individualism. Mann-Whitney U tests show that the higher score on individualism among German participants is not significantly higher than the scores of the Chinese participants. In the study on national cultural dimensions, Hofstede states a higher score on individualism for Germans. Masculinity In the individual dimension masculinity, German respondents reveal scores between 5 and 15, mean 9.91 (Md=9.00), whereas Chinese respondents ranged between 4 and 20 and on average 12.05 (Md= 12.00). A Mann-Whitney U test proves a significantly

1033

Hofstede cultural dimensions: Power distance (China: 80, Germany: 35), Individualism (China: 20, Germany: 67), Masculinity (China: 66, Germany: 66), Uncertainty avoidance (China: 30, Germany: 65), Long-term orientation (China: 87, Germany: 83) see https://www.hofstede-insights.com/countrycomparison/china,germany/, retrieved 01.08.2019. For further information, see chapter 3.2.1., and chapter 6.2.4.

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higher score in masculinity for Chinese participants. Concerning national cultural dimensions, Germany and China rank the same. Uncertainty Avoidance German participants indicate scores from 13 to 25, with an average of 18.61 (Md=19.00), whereas answers from the Chinese participants reveal scores between 18 and 25 and on average 22.40 (Md=22.00). Mann-Whitney U tests show that Chinese participants have significantly higher scores in individual uncertainty avoidance than German subjects. In the study of national cultural dimensions, Germans point a higher score in uncertainty avoidance in comparison to Chinese. Long-term Orientation In terms of individual long-term orientation, answers of German participants range from 19 to 29 (M= 24.49, Md= 24.00) whereas scores of Chinese respondents range from 19 to 30 (M= 24.67, Md=25.00). Mann-Whitney U tests indicate no significant differences between both nationalities. This is in line with Hofstede, who showed similar scores in national cultural orientation for both cultures. 6.4.3.2 Regression analysis To investigate the cultural influence on willingness-to-pay for mass-customized products on different stages and to answer hypothesis five to ten, multiple linear regression analysis is run. As presented in chapter 4.2.2., the data will be analyzed individually per nation and in total. The treatments (Control, Assembly, and Fabrication) are first analyzed separately before comparing the complete model. In each treatment, the data is analyzed with the method enter (Model numberE)1034, then forward selection (Model numberF)1035 and backward selection (Model numberB)1036. The forward selection model is more conservative, as it only adds variables with a significance of 0.05 or lower to the model. Only significant results are explained.

1034

The regression in the method “Enter” implies the model as predicted through theory. The cultural dimensions were included as independent variables. As no significant mediation effect was observed for “product evaluations” (see appendix 8) this variable was added as an independent variable to the regression. Mass customization experience was added as an independent variable to the model as well as general interest in the product category of chocolate. Furthermore, personality traits were measured as control variables. However, regression analysis showed no significant simple contribution (R2=.0) of the construct in explaining WTP differences for mass-customized chocolate (see appendix 9), thus these variables were left out. 1035 The regression starts with an „empty“ model and variables are added that make a significant contribution (p