Choice menus for mass customization: An experimental approach for analyzing customer demand with an application to a Web-based information service

Customers are now active collaborators in creating value. Companies are inc reasingly engaging in mass customization and offering consumers a "choicebo ard" (or a menu of choices) of various features and options for configuring their own products and services. The authors discuss the use of experiment al choice menus for assessing customers' preferences and price sensitivitie s for the variety of features and options that might be offered by a firm i n its choiceboard. The proposed approach directly analyzes customers' portf olio of choices from each of several experimental menus by estimating the u tility for each menu item as a function of its characteristics, its price, and other specific attributes such as multifeature discounts. The authors a ccommodate customer heterogeneity in the utilities, allow for correlation o f the utilities across items, and incorporate constraints in menu choices. Various technical issues and methodological contributions are discussed. Th e authors illustrate the approach in a commercial application of a customiz ed Web-based information service, which is typical of offerings in the info rmation economy. To assess predictive performance, the authors compare the proposed approach with alternative traditional approaches. The authors conc lude with a discussion of the types of insights that can be obtained from t his approach to menu choices and the managerial implications of these findi ngs.