1. Introduction
In general terms, ’feature’ is defined as a characteristic of a product that supplements its function and enriches the basic application [
1]. Following the technological revolution resulting from the diffusion of digital technologies, firms continuously enhance innovation efforts as often as they can in order to design and produce feature-rich products to satisfy consumers’ new and sophisticated needs. For instance, the major handset makers, Samsung and Apple, try their best to embed sophisticated features in flagship smartphones, which allow consumers to take photos, check emails, track appointments, and perform hundreds of other functions [
2]. Appliance manufacturers, such as Media, Haier, and Samsung, also equip their refrigerators with large touchscreens, which are used to manage the family calendar, set up photos, monitor refrigerator contents, listen to music and the radio, watch TV, manage a to-do list, and so on [
3]. The complex design of refrigerators is moving far away from simply keeping food fresh. Although feature-rich products often seem very appealing and attractive during the purchasing phase, quite a few consumers reflect that sophisticated features might render the product difficult to use during consumption, and even generate frustration and regret for them [
3].
The phenomenon that additional features decrease the usability of products is often referred to as feature creep, which has become much more widespread in many industries [
4]. In 2021, Auto Pacific conducted a survey about the most practical features in autos, and nearly 90,000 car buyers were involved in this inquiry. The results showed that among 100 alternative features, only ten of them have more than 50 percent support. Specifically, the BMW745’s dashboard has more than 700 features, but it has been shown that no more than five of them are generally used. Similarly, the feature creep issue also occurs in office software. Microsoft Office has hundreds of features, and the number of features keeps on increasing with new versions. Along with the upgrades of version, manuals and instructions that are hundreds of pages in length are offered, which results in difficulty of use and leads to lower satisfaction for some consumers. In addition to results in dissatisfaction for consumers, feature creep also implies higher innovation cost and production cost for firms. Accordingly, researchers suggest that firms should attach great significance to the overloading of product features [
5]. Furthermore, several studies even warn against the tendency for firms to design and produce feature-rich products [
4,
5,
6].
Although feature creep may hurt their profits, manufacturers still tend to embed more features in products. That is because offering feature-rich products makes the firm more competitive in market demand. Additionally, there is a large fraction of consumers that pursue feature-rich items, whom we refer to, in this paper, as high-end segment consumers. On the contrary, there are also some consumers who only need the basic functions, whom we refer to as low-end segment consumers. Among the low-end segment consumers, typical examples are elderly consumers. For them, if more additional features are embedded in products, such as smartphones and smart appliances, it will result in significant difficulty to use. In order to meet the various preferences of heterogeneous consumers, firms have adopted customization production strategy and produce customized products. Particularly, in addition to offering standard feature-rich products for high-end consumers, firms also design and produce items that exactly meet the low-end segment consumers’ needs, which we refer to as feature-fit products in this paper. For example, Samsung has created groups of handsets for older users, Jitterbugs, which have big buttons and necessary functions. Furthermore, some home appliance enterprises in China also tend to attach great significance to elderly users’ needs. By reducing the remote control with dozens of keys to only several keys, Xiaomi simplifies the operation of intelligent home appliances and makes it easier for elderly consumers to use. Since feature-fit products are endowed with fewer features than feature-rich items, the production cost of a customized product is usually lower than that of a feature-rich one. Therefore, it seems always profitable for manufacturers to take customization production strategy rather than standardization production strategy. In view of this, one purpose of our research is to explore the impact of customization production on the manufacturer’s profit. The same issue has been widely studied by scholars [
7,
8,
9], and most of them have demonstrated that adopting customization production strategy can benefit firms in certain conditions.
In line with the reality that firms offer simpler products for consumers, we regard customization production as a measure to alleviate the negative effect of feature creep. More specifically, the manufacturer can produce feature-fit products for low-end consumers, and feature-rich products for high-end consumers. Owing to staying away from markets, manufacturers usually cannot precisely perceive the amount of low-end consumers and know only the proportion’s prior distribution and expectations. That means it is difficult for firms to offer correct amounts of customized products that exactly meet low-end consumers’ need. Thus, if manufacturers produce customized products according to their prior expectations, there may exist a potential risk that is the oversupply of customized products. This potential risk might cause negative effects on firms’ returns, because only low-end consumers prefer customized products, but high-end consumers will never purchase them, so the oversupplied items will not generate any payoffs for manufacturers. That is to say, though they can save production costs, taking customization strategy does not always generate higher profits for manufacturers. Taking into consideration the oversupply of customized products, we formulate a supply chain consisting of a manufacturer and a retail platform to certify the conditions wherein customization strategy can benefit the manufacturer. Such consideration is quite different from what has been studied in the previous research about customization.
Practically, with the remarkable development of e-commerce, products produced by manufacturers are often sold to consumers through an e-commerce platform (e.g., Amazon, JD.com, and Suning.com), which also acts as a retailer [
10]. Because of their advanced information technology and data analytics tools, platforms can also accurately and privately perceive information about consumers’ preferences and potential demands. Meanwhile, because manufacturers usually stay far away from the market, accurate information is not available for them. In view of this, we assume that the platform privately owns the information about the real proportion of low-end consumers, whereas the manufacturer knows only the proportion’s prior distribution and expectation. As a matter of fact, the potential risk related to the oversupply of customized products is caused by the asymmetrical information between the manufacturer and the platform. If the platform shares its private information with the manufacturer, the potential risk can be prevented exactly. Thereby, the manufacturer can produce exact amounts of products that exactly meet consumers’ needs. Accordingly, we take into account the platform’s information sharing strategy, and investigate how information sharing affects both parties’ profits.
Additionally, we also pay attention to the impacts of the manufacture’s production process on environmental performance. With increasing awareness of environmental protection and sustainable development, firms tend to attach significant attention to their environmental responsibility and try their best to reduce the environmental impacts of products [
11]. To achieve a high level of eco-efficiency, various actions have been taken by firms not only from the perspective of the production process but also from the perspective of the design process [
12,
13]. Feature-fit products usually consume fewer production resources than feature-rich ones. As a result, along with saving production resources, designing and producing customized products for low-end consumers can be seen as an environmentally friendly action. As mentioned earlier, though feature creep generates frustration for low-end consumers, firms still enhance their innovation efforts to enrich their product’s functions. That results in more production resources being consumed and greater environmental impacts being caused. Therefore, if the production cost saved by producing feature-fit products is transferred into the innovation investment, it may even intensify the negative effects of feature creep. In this context, we take into consideration the environmental impacts of the production process, and then explore the impacts of the manufacture’s customization production on environmental performance. Regarding environmental and sustainable operation management in the supply chain, a large amount of the Literature has focused on the manufacturer’s production process [
14,
15,
16,
17,
18]. Similarly, we also aim at the production process and investigate the impacts of strategic customization production on environmental performance in the presence of feature creep.
In this paper, we formulate a supply chain consisting of a manufacturer and a retail platform to investigate the impacts of customization and information sharing on environmental performance in the presence of feature creep. The following fundamental research questions are addressed:
- (1)
What are the impacts of customization production and information sharing on the manufacturer’s innovation efforts, product’s retail price, and consumers’ demand?
- (2)
Under what conditions can customization benefit the manufacturer, and under what conditions should the platform share the information?
- (3)
How does customization and information sharing affect environmental performance?
- (4)
What is the equilibrium strategy between the manufacturer and the platform?
To answer the above four questions, we formulate three sequential models for the following conditions, respectively: when the manufacturer only produces standard feature-rich products (mode NN), when the manufacturer takes customization production strategy with uninformed information (mode NC), and when the manufacturer takes customization production strategy with information sharing (mode SC). Furthermore, we compare the equilibrium outcomes under these three models and conclude the following main results: first, the manufacturer taking customization strategy always leads to the enhancement of innovation efforts and the rise of wholesale price; secondly, the impacts of customization production and information sharing on the product’s retail price and demand are related to the proportion of low-end consumers; and thirdly, information sharing always generates higher profits for both the manufacturer and the platform. Additionally, the equilibrium strategy between two parties is that the platform shares the real information with the manufacturer, and the latter takes customization strategy and produces feature-fit products according to the real proportion. Finally, customization contributes to the reduction in negative impacts on the environment, and the information sharing can enhance the reduction in certain conditions.
The structures and organizations of this article are designed as follows. After reviewing the related studies in
Section 2, we lay out the assumptions and modeling in
Section 3. In
Section 4, we formulate sequential models and derive solutions. In
Section 5, we compare the results and analyze the impacts of customization and information sharing. In
Section 6, we present the impacts of customization and information sharing on environmental performance. In
Section 7, we demonstrate both parties’ optimal strategy. Finally, we discuss the conclusions and outlook in
Section 8, where
Section 8.1 concludes the conclusions and managerial insights,
Section 8.2 presents the main contributions of our work, and
Section 8.3 gives several directions for future work.