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2020 | OriginalPaper | Chapter

7. On-Demand Customization and Channel Strategies

Authors : Li Chen, Yao Cui, Hau L. Lee

Published in: Channel Strategies and Marketing Mix in a Connected World

Publisher: Springer International Publishing

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Abstract

In this chapter, we study the impact of two major technological advances in demand fulfillment—the emergence of dual channels in retail (i.e., online and in-store) and the adoption of on-demand customization technology (such as additive manufacturing or 3D printing). Our analysis shows that such technology adoption can have differential impacts to the two channels. The technology leads to increased product variety offered online, as well as allows the firm to charge a price premium for online customers. Yet it also induces the firm to offer a smaller product variety and a reduced price in-store. Moreover, the online demand increases (decreases) if the customer online wait cost is low (high). The firm’s profitability with the new technology is driven by the production setup cost of the traditional production technology it replaces and also by how much customers care about the product’s custom fit.

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previous chapter New Models of Strategic Customers in the Age of Omnichannel Retailing

next chapter Price-Matching Strategy: Implications of Consumer Behavior and Channel Structure

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Title: On-Demand Customization and Channel Strategies
Authors: Li Chen
Yao Cui
Hau L. Lee
Publisher: Springer International Publishing
Book: Channel Strategies and Marketing Mix in a Connected World
Print ISBN: 978-3-030-31732-4

Electronic ISBN: 978-3-030-31733-1

Copyright Year: 2020
DOI: https://doi.org/10.1007/978-3-030-31733-1_7