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Mass customisation in emerging markets

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http://growthcrossings.economist.com/theme/the-emerging-age-of-customisation/

The opportunities and challenges of product customisation and personalisation in emerging markets.

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Mass customisation in emerging markets

  1. 1. Mass customisation in emerging markets Corporate executive survey highlights
  2. 2. CHINA INDIA GERMANYFRANCE JAPAN NETHERLANDS THAILAND MALAYSIA INDONESIA VIETNAM PHILIPPINES US UK Half of the respondents were from companies that had annual revenues of at least US$500m. Respondents 525 business leaders from companies headquartered in: The march of technology and rising wealth are changing the nature, scope and scale of product mass customisation, especially in the developed world. This survey conducted by the EIU was aimed at exploring the potential for mass customisation and personalisation of goods and services in emerging markets.
  3. 3. BRAZIL CHINA INDIA GERMANYFRANCE JAPAN NETHERLANDS THAILAND MALAYSIA INDONESIA VIETNAM PHILIPPINES US UK Half of the respondents were from companies that had annual revenues of at least US$500m. Respondents 525 business leaders from companies headquartered in:
  4. 4. Respondents 50%of respondents were c-level executives 25%of respondents were manager level 25%of respondents were senior executives
  5. 5. 36%Mass production, the creation of standardised products and/or services. 51%Mass customisation, tailoring products for specific customer groups. 47%Personalisation, tailoring products for individual customers. 24%Co-creation, the direct involvement of customers in the design of new products. 1%None of the above. 0%Do not know. Which of the following form part of your company’s product strategy over the next three years? Select all that apply. Mass customisation and personalisation both figure strongly in the product strategies of companies that were surveyed.
  6. 6. 36%Mass production, the creation of standardised products and/or services. 51%Mass customisation, tailoring products for specific customer groups. 47%Personalisation, tailoring products for individual customers. 24%Co-creation, the direct involvement of customers in the design of new products. 1%None of the above. 0%Do not know. Which of the following form part of your company’s product strategy over the next three years? Select all that apply.
  7. 7. 55% 50% 59% Planning to mass customise over the next three years Planning to personalise over the next three years 54%51% 43% 30% 28% 43% 43% 60% 48% 60% 48%43% 52% 55% 37% 37% Energy Consumer discretionary Consumer staples Information technology Materials Industrials Healthcare Financial Telecommunications Utilities 68% 30 40 50 60 70 Mass customisation is central to the plans of energy, telecoms and financial services firms. Personalisation is significant for healthcare, industrial goods and IT companies.
  8. 8. 55% 50% 59% Planning to mass customise over the next three years Planning to personalise over the next three years 54%51% 43% 30% 28% 43% 43% 60% 48% 60% 48%43% 52% 55% 37% 37% Energy Consumer discretionary Consumer staples Information technology Materials Industrials Healthcare Financial Telecommunications Utilities 68% 30 40 50 60 70
  9. 9. East Asia 30% 33% South-East Asia 18% 22% Western Europe 30% 25% South Asia 22% 20% North America 21% 23% Central & South America 15% 14% Middle East & North Africa 19% 22% Eastern Europe 17% 21% Regions where product demand will be greatest in the next three years: Respondents could pick up to three answers. Mass customised products Personalised products With its diverse and relatively fast growing economies, Asia is expected to lead demand globally for mass customised and personalised products.
  10. 10. East Asia 30% 33% South-East Asia 18% 22% Western Europe 30% 25% South Asia 22% 20% North America 21% 23% Central & South America 15% 14% Middle East & North Africa 19% 22% Eastern Europe 17% 21% Regions where product demand will be greatest in the next three years: Respondents could pick up to three answers. Mass customised products Personalised products
  11. 11. Level of premium that can be added to flagship products in the next three years: 1-10% 11% 10% 11-20% 27% 22% 21-30% 24% 32% 31-40% 16% 15% 41-50% 8% 7% More than 50% 9% 9% No premium can be added 2% 2% Do not know 2% 2% Mass customised products Personalised products For companies with the right resources and capabilities, personalisation appears to be a more lucrative product strategy than mass customisation. Companies expect to attach higher price premiums to personalised products compared with mass customised ones.
  12. 12. Level of premium that can be added to flagship products in the next three years: 1-10% 11% 10% 11-20% 27% 22% 21-30% 24% 32% 31-40% 16% 15% 41-50% 8% 7% More than 50% 9% 9% No premium can be added 2% 2% Do not know 2% 2% Mass customised products Personalised products
  13. 13. Lack of quality transport infrastructure Lack of reliable distribution options Inadequate Internet access/communications networks Shortage of local marketing skills Inadequate payment systems Lack of working capital Lack of insights about customer demand Shortage of local production skills Inadequate or insufficient financing options 353025201510 16% 32% 33% 21% 23% 11% 17% 23% 33% The main external obstacles to overcome to pursue a strategy of mass customisation and/or product personalisation in emerging markets? Respondents chose up to three answers. Corporate executives face considerable challenges to executing their mass customisation and personalisation strategies in emerging markets. Chief among them: lack of insights about customer demand, insufficient working capital and a shortage of reliable distribution options.
  14. 14. Lack of quality transport infrastructure Lack of reliable distribution options Inadequate Internet access/communications networks Shortage of local marketing skills Inadequate payment systems Lack of working capital Lack of insights about customer demand Shortage of local production skills Inadequate or insufficient financing options 353025201510 16% 32% 33% 21% 23% 11% 17% 23% 33% The main external obstacles to overcome to pursue a strategy of mass customisation and/or product personalisation in emerging markets? Respondents chose up to three answers.
  15. 15. 16%78% 7% 24%69% 8% Demand for product personalisation will soon be greater in emerging markets than it is in developed markets. 27%63% 11% Emerging-market companies are better positioned than developed-market companies to meet demand for personalisation in their markets. In three years, no producer will be able to compete without the build-to-order abilities. Agree Neither agree nor disagree Disagree Values may not add up to 100% due to rounding There were few doubts that demand for personalised products will be greater in emerging markets than in developed markets.
  16. 16. 16%78% 7% 24%69% 8% Demand for product personalisation will soon be greater in emerging markets than it is in developed markets. 27%63% 11% Emerging-market companies are better positioned than developed-market companies to meet demand for personalisation in their markets. In three years, no producer will be able to compete without the build-to-order abilities. Agree Neither agree nor disagree Disagree Values may not add up to 100% due to rounding
  17. 17. 24%Neither agree nor disagree 69%Agree 7% Disagree Mass customisation and personalisation require new approaches to financing supply-chain operations. However, the speed and agility required are expected to strain supply-chain financing options. New thinking will be required.
  18. 18. 24%Neither agree nor disagree 69%Agree 7% Disagree Mass customisation and personalisation require new approaches to financing supply-chain operations.
  19. 19. Expectations about how mass customisation and personalisation will affect financing needs over the next three years: Respondents chose all answers that applied. Increase the need for real-time payments to suppliers 33% 33% 30% 3% 3% 28% Require more long-term capital investments Require higher borrowings for working capital Lead to increased frequency of payments to suppliers Lead to longer payment terms to suppliers Require more flexible financing options None of the above 32%29% 41%37% 24% 26% 28% 31% 45403530252015105 Mass customised products Personalised products The biggest impact of customisation and personalisation on supply-chain financing will be the need for more long-term capital investment to build capabilities, particularly in Asia’s emerging markets, where demand is expected to be greatest.
  20. 20. Expectations about how mass customisation and personalisation will affect financing needs over the next three years: Respondents chose all answers that applied. Increase the need for real-time payments to suppliers 33% 33% 30% 3% 3% 28% Require more long-term capital investments Require higher borrowings for working capital Lead to increased frequency of payments to suppliers Lead to longer payment terms to suppliers Require more flexible financing options None of the above 32%29% 41%37% 24% 26% 28% 31% 45403530252015105 Mass customised products Personalised products
  21. 21. To uncover more insights about mass customisation in emerging markets, go to http://growthcrossings.economist.com/ report/made-to-order/

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