Online Mass Customization and the Customer Experience Arnold Kamis, Bentley College Marios Koufaris, Baruch College Tziporah Stern, Baruch College NJIT - November 22, 2004

Mass Customization The ability to manufacture individually customized products and services on a mass production scale without a significant cost increase. Online examples: NikeID Reflect.com Dell

Online interfaces Alternative based: Select from all possible customized product options Attribute based: Select from all customizable product attributes to customize product Question based: Answer relevant questions and have product customized for you

Research questions What is the best interface? Simple vs. Powerful How much variety to offer? Is more choice always good? Who are the customers/users? Are all users having the same experience?

Theoretical background Behavioral decision-making: Discovered Preferences (Payne et al. 1988; Coupey 1994; Fennema et al. 1995)  Rational model – Optimal choice exists  Less realistic in customer decision-making Constructed Preferences (Payne et al. 1992; Rosenshein 2000)  No objective optimal choice  Preferences dynamically constructed  What is best decision support tool for self-customization?

Theoretical background Task-technology fit model (Goodhue, 1995): Appropriate technology for specific user tasks increases performance and satisfaction Also important are user characteristics What is appropriate technology (interface) for online mass customization task?

Study variables Measure success of system through customer experience: Perceived ease of use Perceived usefulness Perceived control Enjoyment Effect of the interface: alternative vs. attribute Effect of variety: Number of possible product versions User characteristics: Computer anxiety and computer playfulness

The Interface Alternative-based: Customers must deconstruct product into attributes and values May inflate perceived variety (3 attributes x 5 values = 125 alternatives) Not very interactive, just pick one from the list Attribute-based: Product already deconstructed Actual variety obvious (3 attributes x 5 values = 15 choices) Interactive, experimental, game-like Hypothesis: Overall, online customers will experience higher (perceived control, perceived usefulness, enjoyment) with an attribute-based MC interface than with an alternative-based one

Variety: Is more choice always better? Hypothesis: Overall, enjoyment of online MC customers will follow an inverted U-shaped curve as variety increases. Source: Desmeules, 2002

Variety and Interface Attribute-based interface reduces task complexity and cognitive effort Hypotheses: Enjoyment will start decreasing at a higher variety for users who use the attribute-based MC interface than for those who use the alternative-based one. (Perceived ease of use, perceived control) will decrease in the alternative-based interface but will remain constant in the attribute-based interface as variety increases.

The User Computer anxiety and computer playfulness will moderate the effect of interface on customer experience Hypotheses: Overall, the difference in (perceived control, perceived usefulness, perceived ease of use, enjoyment) between using the attribute-based and using the alternative-based interfaces will be larger for users with low computer anxiety than for those with high computer anxiety. Overall, the difference in (perceived control, perceived usefulness, perceived ease of use, enjoyment) between using the attribute-based and using the alternative-based interfaces will be larger for users with high computer playfulness than for those with low computer playfulness.

Methodology 2x2x3 factorial design Interface: Alternative – Attribute Product: Watch – Backpack Variety: 8 – 54 – 150 possible product versions Web pages created by researchers from NikeID.com and Factory121.com with no brand identifiers

Methodology Baseline experience: Subjects used all three interfaces (including a question-based one) at 54-scale to customize a candle Then randomly assigned to one of 12 conditions Told that they may win customized watch or backpack (incentive) At the end, filled out survey on their experience and themselves

Data Analysis 329 subjects recruited online through Zoomerang’s MarketTools Nationally representative sample Ran CFA with AMOS 4.0 to test validity and reliability of survey instrument Ran ANCOVAs to test hypotheses Covariates: Product Involvement and Web Skills

Results Mean differences are significant at p<0.001 Hypotheses supported: Overall, attribute-based interface provides a better customer experience than alternative-based interface.

Results Main effect of variety significant at p<0.01 Hypothesis supported: Enjoyment follows inverted U-shaped curve as variety increases Interaction effect of interface and variety not significant

Results Interaction effect of interface and variety significant at p<0.01 Hypothesis supported: Perceived control decreases as variety increases in alternative-based interface but remains constant in attribute-based interface

Results Interaction effect of interface and variety significant at p<0.05 Hypothesis supported: Perceived ease of use decreases as variety increases in alternative-based interface but remains constant in attribute-based interface

Results Categorized computer anxiety into low-medium-high and excluded medium Interaction effect of interface and computer anxiety significant at at least p<0.05 Hypotheses partially supported: Computer anxiety moderates effect of interface on (a) enjoyment and (b) perceived usefulness (but not perceived control or perceived ease of use)

Results Categorized computer playfulness into low-medium-high and excluded medium Interaction effect of interface and computer playfulness significant at p<0.05 for p. control and significant only at variety=150 for p. ease of use Hypotheses partially supported: Computer playfulness moderates effect of interface on (a) perceived control and (b) perceived ease of use at high variety levels (but not perceived usefulness or enjoyment)

Contributions Theory/Research: Attribute-based decision-making tool best for constructed preferences Appropriateness of attribute-based tool increases with task complexity Verified core ideas of TTF in context of online mass customization, including often ignored user characteristics Reduction in cognitive effort in online user tasks may outweigh reduction in physical effort Computer anxiety affects perceptions on outcome while computer playfulness affects perceptions on process

Contributions Practice/Industry: Increase in variety of products without appropriate tools to make decisions can have negative effect Not all customers are the same – More powerful interface is often also more complex, overwhelming some customers Since computer anxiety affects perceptions regarding outcome, always provide ways to backtrack or undo actions

Future work Part of a larger study Look at question-based interface Impact on behavioral intention Other user characteristics: personal innovativeness in IT Suggestions for further research Study other products, especially experiential ones with non-visual attributes Examine variety at a more detailed level

Questions? Comments? Marios Koufaris Department of Statistics and Computer Information Systems Zicklin School of Business Baruch College, CUNY