German machine tool manufacturers are increasingly confronted with difficulties in gaining competitive advantages by offering highly customized products. But necessary cost reductions can be obtained by employing a modularization strategy that explicitly considers customers' requirements already in the module design stage. Nils Tönshoff presents a new framework of the machine tool building and selling process that accounts for optimized cross-functional decision making in module design, machine tool manufacturing and product marketing. The tradeoff between customization and standardization is balanced by a bundle pricing strategy based on a modular product structure. The analytic tool developed by the author has been validated by a major German machine tool manufacturer.
