My Way

Ever since Henry Ford invented mass production, companies have pursued a strategy of standardisation. Given globalisation, you’d think that standardisation would be intensifying but you’d be wrong. First, consumer markets are fragmenting. In the 1970s, the US population was typically segmented into 40 lifestyle groups. Nowadays, the number has increased to 66. This diversity comes in many forms; lifestyle, beliefs, values, income, ethnicity, family structures and so on, but all of these groups have one thing in common — they dislike homogenisation. A second problem is that standardisation stifles innovation. Making things the same reduces points of difference and leads towards commoditisation. Mass customisation and localisation, on the other hand, encourages experimentation, which drives innovation. Local customisation is also very difficult for competitors to track, let alone copy. As a result, retailers are starting to customise store formats, products and even service offers according to local, even individual, tastes. Equally, manufacturers are formulating specific products for specific regions or groups. For example, Coca-Coca has created four different canned coffee drinks for the Japanese market, each one targeting a particular region, while Wal-Mart varies selections of canned chilli peppers according to store location. Too much localisation or customisation can obviously breed logistical chaos and dilute the brand so changes are usually clustered using local geographic or lifestyle data. So what, apart from customer fragmentation, is driving this trend? The answer is information. Customer data can pinpoint not only who is buying what, but also when and why. For instance, data can identify need-states based on the time of day, so an inner city store can change both the mood of the store (lighting and music for instance) and the products on sale according to specific time segments.This is hardly rocket science, but companies are finding that localising stores or changing what get sold when can result in significant sales increases.

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