What Is Customization in Marketing? (4 Types and Benefits)

Updated July 21, 2022

Mass customization in marketing refers to the action of altering a product or service to create custom experiences for customers. Many industries use this technique, from retail companies to software designers or financial businesses to modular home construction.

In this article, we define mass customization and explore the four primary types, explain its benefits and how it differs from personalization in marketing.

What is mass customization?

Mass customization is the art of manufacturing goods or services to best meet an individual customer's needs through packaging, marketing, cosmetics or by creating a product that naturally adapts to its environment. Mass customization makes a product feel more personal to buyers and gives a company the benefit of flexibility and integration to develop custom-made products with lower costs on a mass production scale.

Sometimes referred to as made-to-order or built-to-order, innovative production techniques and technology developed to let industries make interchangeable parts that customers can choose from. For example, a furniture manufacturer might feature a sectional couch or sofa that offers multiple layout arrangements and choice of legs, fabrics and colors so a customer can customize it to their living space.

Mass customization applies to many industries, including:

Computer software: Software creators use mass customization to include product configurations and add-ons that customers choose to change specific functions of a core product.
Financial: Independent advisory firms use mass customization to let you diversify your holdings, choose products that match your investment risk tolerance, investment style, time outlook and future goals.
Retail: You can customize a car with its features and options or design a modular home through base packages or upgrades. A suit store offers you choices of colors and material and then customizes it for you through tailoring or button and stitching selections. Even a flower shop can customize an arrangement or bouquet with favorite flowers.

Mass customization encourages high product sales and high customer satisfaction ratings while maintaining the benefit of lower costs through mass production.

How mass customization works in marketing

Companies use mass customization in marketing strategies to have a competitive advantage against rival companies or ones who offer only generic products. The key is letting customers know they can design certain elements of a product, in a made-to-order or mix-and-match offering. This often creates a deeper feeling of ownership for a customer and can lead to brand loyalty.

By advertising the ability to customize a product at a reasonable price without compromising quality, companies can:

Increase sales
Keep costs at mass production rates
Generate more profit
Be perceived as flexible
Engage customers
Build brand loyalty
Gain competitive advantage

Mass customization also works as a marketing tool, where companies can apply a user's tastes, choices and behavior to view or see advertising messages directed specifically to them as a certain market demographic or with messages you know they prefer.

Four types of mass customization

The four primary types of mass customization are:

Collaborative: Companies work in partnership with clients to offer products or services specifically suited to them, like a pizza shop offering a variety of pizza toppings, for example.
Adaptive: Companies produce standardized products which the end-user may customize, like selling an all-in-one pocket knife the customer can use in whatever manner they chose.
Cosmetic: Companies produce standardized products but market them in different ways to various customers, like a supermarket brand ice cream made and marketed by the premium brand manufacture, for example.
Transparent: Companies provide unique products to individual clients without clearly saying the product is customized, like having a product recommendation tool on online websites or within company sales emails directed to a customer, for example.

Benefits of mass customization

There are several benefits for using mass customization in manufacturing, marketing and sales, including:

Production efficiency: Mass customization lets manufacturers keep producing large quantities, often with only the last stage having product differentiation to keep costs down and still offer customization.
Sale influence: Mass customization lets customers pick elements of their purchase, which can influence their decision to buy from one company versus another.
Higher revenue: Mass customization allows the seller, manufacturer or company to command a higher price successfully and generate more sales revenue.
Cost savings: Mass customization reduces expenses by balancing mass production materials and time versus costly individually made items, plus helps control extended inventory costs of storing individualized items.

What is the difference between customization and personalization?

Customization and personalization both aim to give customers a feeling of individual choice and valued opinion. Each also allows personal expression of tastes, requirements and experiences and offers a connection to a brand or company.

The primary difference between the two is that while the company offers customization, a customer chooses personalization. Take a watch manufacturing company, for example:

Customization: You can customize your purchase of the watch through the company's various selections of watch face sizes and shapes, wristband colors and wristband materials, like leather, metal, cloth or silicone.
Personalization: You can personalize the watch by engraving a special sentiment of your choosing on the back, like a name, date, phrase or symbol for yourself or to give as a gift.

Customization and personalization are also different in marketing, digital advertising and social media. Here are some examples:

Customization

A customer can select their preferences when signing up for a service, like outlining how often they want to receive emails, for example. Take a streaming video service platform—you can select genres or types of shows and movies you enjoy and then receive suggested titles to watch the next time you login. Or think of advertisements on social media where you can hide ads not relevant to you or approve ones you want to see more of.

Customization helps marketers highlight campaigns directly to those who are more likely to purchase an item, and a customer who tailored their own user experience is more likely to respond positively because they controlled what they see.

Personalization

You can personalize your shopping experience with certain brands, stores and online retailers through their data collection and get marketing campaigns uniquely made for you, based on your past purchases or browsed items. Also, knowing whether you clicked on a marketing email for a one-day sale or prefer new product release presale events helps personalize your needs and wants and turn them into a perfectly matched message you find relevant to encourage future sales.