PRODUCT CUSTOMISATION - Current advanced practices future fundamentals?
It's funny how American potato chips command a higher price compared to our local chips made from bananas or tapioca.
Processes are most likely the same, yet they differ in perception or "status" as the preferred snack between meals.
The basic principle behind the success of a product is value, with production cost often irrelevent to the purchasing decision of the consumer. Simply put, we will part with our hard earned money when the perceived value of a product or service is equal or exceeds its price.
Perceived value is not just derived from quality and pricing alone. It is also a function of the consumer psychography - the experience, stature, financial flexibility and also the customers' level of need.
It is not surprising why most economocally-developed nations not only possess strong foundations in the optimisation of their manufacturing or service operations, but also have developed an understanding in the psychometry of their customers by tailoring their products to the behaviours and purchasing decisions of different market segments within their ecosystem.
The free market and liberal economic world view, prevalent in the latter half of the 20th century, was perhaps a product of this understanding of consumer behaviour. Naturally, businesses with access to larger markets attained a wider reach for their tailored products and services, and faired better within the globalised economy. With diminishing economic borders in the 21st century, this equalled the playing field between nations with different population size.
As we progress, one key disruption to conventional economic theory was the advent of e-commerce. Connected globalisation had somewhat equalled the playing field between big businesses and small players.
Key examples include Lazada and Facebook, Internet companies that grew in the shadow of much larger competitors to emerge champions of their targeted markets. Interestingly, these companies grew in size with one specialisation - they owned customers without having their own products. They partner other companies, each with their own specialisation, and the interdependence of these large network of businesses contribute to the success of each, perceived as a single brand or entity.
The world speaks of the global value chain concept. As products and services grow in complexity due to technological advancement, it becomes impossible for an entity to invest in all specialisations to bring forth a particular product to the world.
With specialisation being the key word, here, it doesn't matter if you are a car manufacturer, a textile trader or a tapioca chip procuder - your specialisation needs to be matched to the appropriate global value chain for any chance of global success.
Failure to customise products in a world that is growing ever much closer to mass customisation - honing down to specific consumer analytics - may diminish the perceived value of products that are our comparative advantage.
I believe that a shift in focus is required, here, in which funding and government policies must evolve not just in line with changing trends, but rapidly changing economic norms. While fundamentals of marketing and business will remain, business models must keep up with changes in the "rules" of the game.
The best player may no longer score points when the rules of the games change.