Dear Mr. Ford, let me paint my car!
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Created 232 days ago, Updated 74 days ago
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Henry Ford is believed to have said, “You can paint it any color, so long as it’s black.” That is a wonderful manifesto of the victory of mass production. If you were to benefit from the economy of large-scale production, you should minimize the variety of products you offer. And doing so was good for the people. Mass production led to lower costs and lower prices, allowing more people to afford to buy a car. It was not very important to have a red colored car. They were happy to have any color, which happened to be black.
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But people increasingly wanted different products that fit their individual needs and tastes better, and the large companies had to modify the mass production system. They needed more than one product to keep growing, and they learned to do market segmentation, product manager organization, product life cycle management, and other management tools.
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Yet, the big companies still have been supplying relatively limited variety in a category. When you buy a car, you don’t have thousands of colors. You probably have tens. However, as Chris Anderson elaborated in The Long Tail, people will increasingly look for niche products, which means more diversity is needed. How can the companies keep up? Or how can the market as a whole?
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Business strategists found the concept of mass customization. In a true mass customization model, a company with highly computerized production system would make a product per individual customer order. They thought that they could achieve scale economy of mass production while increasing their product variety infinitely to serve unique needs of individual customers. Although it seems that this dream of being “a small tailor-make shop as well as a big company” has never been truly realized, attempts to provide diverse products resulted in most of the large companies having much more product variety.
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There is another way of supplying variety to a market. I call it ‘Mass Niche’. If mass customization is ‘one company times many different products,’ mass niche is ‘many companies times one unique product.’ It means that you have many different small companies that individually sell one or a few products only. Individually, they don’t provide variety. They offer uniqueness and differentiation with one to a few products with the same style. Collectively, however, they provide a great variety in the market. The mass niche is variety realized by the Long Tail of players.
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As a summary, here are the equations:
- Mass production = one (or a few) company (x) one (or a few) product
- Mass customization = one (or a few) company (x) many different products
- Mass niche = many companies (x) one (or a few) unique product
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Of these three, mass niche is the most exciting and newest model, and our focus here. We all know what mass production is. Mass customization is an interesting topic. We see big companies applying it, and in some categories they seem succeeding in providing quite a variety. However, it is a continuation of mass production model. Big companies figure out final consumers’ tastes and produce in big volume. Everyone else works for the big companies, either as an employee or a contractor or a component supplier. The mass niche model, if it becomes a large phenomenon, will change this relationship upside down. Small companies and individuals will deal with the final consumers, hiring big companies.
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Is this really coming? Yes, I believe firmly. A lot of examples in Chris Anderson’s book could be categorized mass niche, though there were some more like mass customization. And we did research for Korean case studies, solely to look for mass niche.
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One reason why I got interested in the mass niche was that Korean economy was still pretty much dominated by the large corporations. When we divided revenues of the 10 largest companies of a country by its GDP, we got 47% for Korea, which was much higher than the US, Japan, China or Germany.
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The largest companies are the ultimate hits of our economy. We love and admire their brands. They provide the most essential products and services that we cannot live without. We hope that these big companies keep getting better at what they do, but at the same time we humans like to see variety and occasional surprises. A world where everyone uses the same products made by these giants may be efficient but can also be monotonous. They are by and large, the successors of mass production system invented in the early 20th century by Mr. Henry Ford. Over time, big companies increased product lines. However, even now these largest companies prosper by producing a relatively small number of product lines to sell to many people. They need hit products, to make economy of mass production work for them.
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Another reason why we got interested in the existence of mass niche is, from a business strategy perspective, the kind of strategy one should take may vary depending on whether the shift toward Long Tail is led by increasing participation of small and niche players or by market segmentation capability of large companies. I hope for the large companies to further prosper. Nonetheless, wouldn’t the economy lively and colorful if it evolves into a market in which small businesses and consumers with diversified interests show off their creativity?
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So we had a few questions to answer.
- Is mass niche happening? Where is it?
- If it is, what is driving this change?
- What can we do about it?
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