MASS CUSTOMIZATION AS A METHOD OF PROVIDING CLIENT'S PERSONALIZED SERVICE (A CASE STUDY OF NICON LUXURY HOTEL)

CHAPTER ONE

INTRODUCTION

1.1Background of the study

The adage of Henry Ford does no longer apply anymore. Remember his famous statement: “you can have any color car you want as long as it’s black” which is related to the start of the industrialization era in the twentieth century when Henry Ford and others transformed the system of craftsmanship into the system of mass production by a new way of producing goods. It was characterized by the smooth-running flow and operational efficiency of the assembly line, specialized machinery and worker tasks, which creates great economies of scale through standardized cars (B. J. Pine, 1993). Today however, this is no longer applicable to the automobile industry. Pine (1993, p. 7) introduces us to a “new frontier in business competition. In this frontier, a wealth of variety and customization is available to consumers and businesses through the flexibility and responsiveness of companies practicing this new system of management.” This new frontier is mass customization. “Within the manufacturing world, mass customization is about producing highly configured products with the efficiency of a mass produced product” (Gardner, 2009, p. 3). Mass customization creates opportunities for organizations when they are able to produce affordable and reliable output (supply) which corresponds to the increasing demand for customized products of consumers that exactly fits to their specific needs (Papathanassiou, 2004).

That tendency to increased individualization of demand results in a growing number of product variations, supported by flexible and agile production systems according to Piller and Kumar (2006a). Hence, mass customization creates both benefits for customers and organizations. The possibility of creating modular components results in flexibility and variety for customers. Mass customization therefore can be characterized as a production system with a high degree of customer interaction. The need for this is summarized by McCarthy (2004) who gives five competitive factors that determines why a mass customization strategy should be adopted by an organization:

1. Customers and their expectations have shifted from a broad base of uniformity and sameness to a network of niche and heterogeneous market requirements;

2. Fashions and customer preferences shift literally overnight, and product life cycles have become significantly shorter;

3. Assemble to order and the construction of product families are strategies that offer options and differentiation, whilst maintaining performance in terms of cost, quality and delivery;

4. Understanding and satisfying specific customer expectations enables a company to achieve a better strategic fit with customers’ long-term needs;

5. The ability to forecast and understand market opportunities is increased from the improved and frequent communication with customers.

1.2 Problem statement

Mass customization is often presented as a production method that is cost minimizing in combination with a high grade of customization for individual customers. According to Pine (1993) the best way of creating a wide range in product or service variances is producing modular components. Customization and modularization therefore seem to be closely related to each other. In this research we used the framework developed by Bask et al., (2011) which relates modularity and customization and shows the different stages of both variables. This research explores their framework, and fulfills the need of an empirical-based framework that measures both modularity and customization for the service industry. The framework is useful for service organizations and individual services considering that it is a critical measurement tool for the level of efficiently meeting the diversity of customer requests. Salvador, de Holan and Piller (2009) confirm this usefulness by emphasizing that an organization should not only adopt mass customization as a strategy for the efficient utilization of its operations, but rather the synchronization of all its organizational aspects along its customers’ needs.

1.3 Purpose of the study

The purpose of this study is to examine the impact of mass customization as a method of providing client's personalized service using Nicon Luxury Hotel as case study. Specifically the study objectives are:

1. To assess the relevance of mass customization in Nicon Luxury Hotel

2. To examine the level of awareness of mass customization in Nicon Luxury Hotel

3. To determine the impact of mass customization in providing client's personalized service at Nicon Luxury Hotel.

1. 1. Significance of the study

Because customers demand services that meet their increasingly diverse needs mass customization has been proposed as a solution to this challenge. This research concludes on the successful implementation of mass customization at service organizations by presenting an evaluation framework that guides these organizations in the right direction, whether their service offering matches customer needs (being heterogeneous) with modular, customized service offerings at mass production efficiency. Next to this purpose, the developed framework can be used for future research on the relatively unexplored field of service mass customization, as indicated by Piller and Tseng (2010).

1. 1. Study hypothesis

The study hypothesis is:

HO: Mass customization is not relevant in Nicon Luxury Hotel

HO2: The level of awareness of mass customization in Nicon Luxury Hotel is not significant

HO3: there is no significant impact of mass customization in providing client's personalized service at Nicon Luxury Hotel

1. 1. Scope and Limitations of the Study

The study scope is limited to investigating the impact of mass customization in providing client's personalized service at Nicon Luxury Hotel in Abuja . Limitation faced by the research was limited time and financial constraint

1. 1. Definition of Basic terminologies

Mass customization: Mass customization is a marketing and manufacturing technique which combines the flexibility and personalization of custom-made products with the low unit costs associated with mass production.

Service management: this study describes service management by presenting the service paradigm, being “an interest in the customer and the customer’s interaction with the provider’s personnel in delivering the service and creating value

1. 1. Organisation of study

The study is grouped into five chapters. This chapter being the first gives an introduction to the study. Chapter two gives a review of the related literature. Chapter three presents the research methodology; chapter four presents the data analysis as well as interpretation and discussion of the results. Chapter five gives a summary of findings and recommendations.