Database Reference
In-Depth Information
customer order. By engineering the flexibility of the processing units and coordinating the flow of
resources (materials or services) between these units, the mass customizer can produce an almost
infinite variety of base products or service, at a cost that is competitive when compared even with
a mass producer. Whereas labor in the mass production design is organized to perform repetitive
tasks according to a singular command-and-control system, the mass customizer organizes labor to
routinely respond to an ever-changing set of rules and commands. The mass customizer organizes
labor to work effectively in a dynamic network of relationships and to respond to work require-
ments defined by the dynamically changing customer needs. Although there is apparently a great
degree of centralization in both of these models, there is a fundamental difference in the nature of
centralization: in case of mass production, all decision making is centralized, whereas in the case of
mass customizer, it is only the coordination and control that is centralized. The mass customizing
organizations centralizes
the allocation of work
to different processing units to produce the custom-
er's product or service order (see Sections 1.3.8 “Agile Enterprise” and 1.2.2.2.2 “Business Webs”).
1.2.1 Customer Centricity
CRM is a different approach to business that involves relationship marketing, customer retention,
and cross selling leading to customer extension (see Section 1.2.7 “Customer Life Cycle (CLC)”).
CRM represents a culmination of a long-evolutionary shift in the traditional thinking of business.
Until the last few decades, the business of the global economy was, essentially, manufacturing. The
focus on goods rather than services led to a product-focused, mass-market marketing strategy result-
ing in a high cost of acquiring new customers and a low cost for customers switching to other brands.
LOGICS OF BUSINESS
The fundamental logics of business that have been identified are as follows:
1.
Product-centric business
: These types of business believe that customers primarily
choose products with the best quality, performance, design, or features. These are
characteristically highly innovative and entrepreneurial firms usually driven by the
founders' vision but with marked descent on market research or hearing the
voice of
the customer
. Their managements usually make assumptions regarding what the cus-
tomers want, resulting in over specified or over engineered products that are normally
costly for the majority of the customers. They actually target a relatively small segment
of price-insensitive customers called innovators.
2.
Production-centric business
: These types of business believe that customers primarily
choose low-price products. Consequently, they strive to keep operating costs low.
3.
Sales-centric business
: These types of business believe that if they invest enough in
advertising, selling, public relations (PR), and sales promotion, customers will be per-
suaded to buy their products or services.
4.
Customer-centric business
: These types of business believe in the primacy of the cus-
tomers and their specific wants at a particular moment. Based on customer and com-
petitive information, they develop better value propositions that are attractive for the
customers. Customer-centric businesses are learning organizations that constantly
adapt to customer requirements and competitive conditions.
