Personalized Products Please But Can They Create Profit?

Customization Efforts Have Growth Potential, But Don't Work for Every Brand

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In June 2005, Procter & Gamble announced that it was pulling the plug on Reflect, a highly touted venture overseen by then-Chairman A.G. Lafley that promised the mass customization of beauty products, including 10,000 shades of lip gloss, sold online and in stores. Despite some momentum -- at one point the Reflect site had 1 million unique visitors -- P&G said that it would instead focus on its big brands.

The failure of the experiment was heard as a "tap-tap-tap" across the marketing industry: the nail in the coffin of mass customization. But seven years later, the strategy appears to be rising from the dead.

NikeID, the sneaker-design service, has been a boon for the company since it revamped its website.
Thanks to more-affordable digital tools and customer-facing technology that help make the tailoring process easier, there are fresh possibilities. One boost comes from social media, which lets customers show off their looks. Marketers love the enhanced profile that type of pass-around can bring.

A Forrester report last year, "Mass Customization Is (Finally) the Future of Products," said that while initial movers such as Dell and Levi's failed because their setups were expensive or lacked key considerations (Levi's, for example, offering consumers the choice of fit, but not color), major brands including Ford, Kraft and Wrigley are now experimenting with sophisticated build-to-order products.

That's good, because there's certainly demand. Forrester's study found that more than 35% of U.S. online consumers are interested in customizing product features or in purchasing build-to-order products that use their specifications.

Consumers' desire to have a hand in the products they buy has been a boon for Nike . Though its NikeID languished for years, interest in the custom-designed sneaker service jumped after it revamped its website. And in 2009, it released a free iPhone app that let users search products from the NikeID community, find locations of physical NikeID studios and purchase items from the online store.

Six months ago, British luxury brand Burberry began a service allowing fashionistas to select the fabric and color of their trench coats and add accents such as a shearling collar or hot-pink-plaid lining. Customizing comes at a price, though: It starts at $1,795.

Apparel was the original target for mass-customization efforts, but it's moving into more categories. Niche perfume line Le Labo, for example, lets you concoct a bespoke scent, while at Pottery Barn Kids you can personalize a children's book for between $30 and $50.

Food is an established area that has growth potential in customizing, according to experts. M&M's has been a major player, printing specialized messages on its candies; and Wawa convenience stores have long offered a build-a-sandwich ordering program that lets customers input a choice for, say, Swiss cheese or extra bacon.

With cereal a more recent entrant, lovers of the breakfast favorite can mix their own blend at MyMuesli.com.

"It starts with understanding your consumer," said Andy Reichgut, senior VP-marketing for the Duncan Hines division of Pinnacle. The biggest push right now is Frosting Creations, which it calls a "proprietary frosting system." Available in most grocery stores and at Walmart, the kit contains a base icing flavor to which as many as a dozen variations can be added.

"For bakers, it's a real passion," said Mr. Reichgut. "It's not something they do because they need to do. They do it because they love it. It's an opportunity for them to be creative and express their desire for personalization and customization."

The response has been "incredibly positive," he said, adding that he's seen pictures of Frosting Creations experiments shared widely over Facebook.

A lot of innovation is coming not from established global marketers but from startups, which are also changing how customization works.

As co-founder of Birchbox, a monthly delivery service for personal grooming and lifestyle products, Katia Beauchamp sees things differently. Birchbox encourages all customers to complete a skin-and-hair profile that lets the company choose the products they are most likely to enjoy and benefit from.

Birchbox's view is that customization isn't only about allowing consumers to design a product but can also be a way to filter options (hundreds of them, in this case) down to a handful with a better chance of being enjoyed -- and purchased again. 

"It means we're more likely to get the right products in your hands," said Ms. Beauchamp. And the brand gets the huge advantage of getting it right the first time.

"You're definitely more likely to be seen in a more favorable light," she added.

Though positive brand sentiment is one benefit, increased revenue is the ultimate goal of co-creation.

NikeID reached that point a couple of years ago, when the custom-design app surpassed $100 million in sales. But not many major marketers have had such success.

"Very few large, established consumer-goods companies have managed the challenge of turning their mass-customization pilots into really profitable business units," Frank Piller, co-director of the Smart Customization Group at the Massachusetts Institute of Technology, told Ad Age .

The reason for the failure is not "technology or wrong marketing campaigns, but strong internal inertia to change," Mr. Piller said. "It is a very different value chain and interaction with your consumers when you mass customize compared to a forecast-driven model via traditional big-box retail," he said, adding that at many companies it was "especially the sales team that "hated' the mass-customization idea, as it was contrary to their established sales model."

Digitally based businesses are fertile customization ground. There have been some custom-designed, life-inspired video games, and many utilitarian apps. Smart Gardener is a free web app that lets users drag and drop to lay out their green space, find appropriate plants and ping them when its time to prune or water.

In essence, Facebook's Timeline is about customization, letting users tell the story of their life.

Erasing your drunk photos is one thing, but here's where mass customization has gotten most idealistic: U.K. newspaper The Guardian recently had some fun with the launch of a build-your-own London Mayor. Based on a range of policy pledges from Conservative, Labor, Liberal Democrat and Green candidates, you could assemble your own politician.

If only.

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