importance of product quality essay

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What Does “Product Quality” Really Mean?

In this article, the author reviews and synthesizes the varying definitions of product quality arising from philosophy, economics, marketing, and operations management. He then goes on to build an eight­-dimensional framework to elaborate on these definitions. Using this framework, he addresses the empirical relationships between quality and variables such as price, advertising, market share, cost, and profitability.

• Quality & Service

Product quality is rapidly becoming an important competitive issue. The superior reliability of many Japanese products has sparked considerable soul-searching among American managers. 1 In addition, several surveys have voiced consumers’ dissatisfaction with the existing levels of quality and service of the products they buy. 2 In a recent study of the business units of major North American companies, managers ranked “producing to high quality standards” as their chief current concern. 3

Despite the interest of managers, the academic literature on quality has not been reviewed extensively. The problem is one of coverage: scholars in four disciplines — philosophy, economics, marketing, and operations management — have considered the subject, but each group has viewed it from a different vantage point. Philosophy has focused on definitional issues; economics, on profit maximization and market equilibrium; marketing , on the determinants of buying behavior and customer satisfaction; and operations management , on engineering practices and manufacturing control. The result has been a host of competing perspectives, each based on a different analytical framework and each employing its own terminology.

At the same time, a number of common themes are apparent. All of them have important management implications. On the conceptual front, each discipline has wrestled with the following questions: Is quality objective or subjective? Is it timeless or socially determined? Empirically, interest has focused on the correlates of quality. What, for example, is the connection between quality and price? Between quality and advertising? Between quality and cost? Between quality and market share? More generally, do quality improvements lead to higher or lower profits?

Five Approaches to Defining Quality

Five major approaches to the definition of quality can be identified: (1) the transcendent approach of philosophy; (2) the product-based approach of economics; (3) the user-based approach of economics, marketing, and operations management; and (4) the manufacturing-based and (5) value-based approaches of operations management. Table 1 presents representative examples of each approach.

The Transcendent Approach

According to the transcendent view, quality is synonymous with “innate excellence.” 4 It is both absolute and universally recognizable, a mark of uncompromising standards and high achievement. Nevertheless, proponents of this view claim that quality cannot be defined precisely; rather, it is a simple, unanalyzable property that we learn to recognize only through experience. This definition borrows heavily from Plato’s discussion of beauty. 5 In the Symposium, he argues that beauty is one of the “platonic forms,” and, therefore, a term that cannot be defined. Like other such terms that philosophers consider to be “logically primitive,” beauty (and perhaps quality as well) can be understood only after one is exposed to a succession of objects that display its characteristics.

The Product-based Approach

Product-based definitions are quite different; they view quality as a precise and measurable variable. According to this view, differences in quality reflect differences in the quantity of some ingredient or attribute possessed by a product. 6 For example, high-quality ice cream has a high butterfat content, just as fine rugs have a large number of knots per square inch. This approach lends a vertical or hierarchical dimension to quality, for goods can be ranked according to the amount of the desired attribute that they possess. However, an unambiguous ranking is possible only if the attributes in question are considered preferable by virtually’ all buyers. 7

Product-based definitions of quality first appeared in the economics literature, where they where quickly incorporated into theoretical models. In fact, the early economic research on quality focused almost exclusively on durability, simply because it was so easily translated into the above framework. 8 Since durable goods provide a stream of services over time, increased durability implies a longer stream of services — in effect, more of the good. Quality differences could, therefore, be treated as differences in quantity, considerably simplifying the mathematics.

There are two obvious corollaries to this approach. First, higher quality can only be obtained at higher cost. Because quality reflects the quantity of attributes that a product contains, and because attributes are considered to be costly to produce, higher-quality goods will be more expensive. Second, quality is viewed as an inherent characteristic of goods, rather than as something ascribed to them. Because quality reflects the presence or absence of measurable product attributes, it can be assessed objectively, and is based on more than preferences alone.

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The User-based Approach

User-based definitions start from the opposite premise that quality “lies in the eyes of the beholder.” Individual consumers are assumed to have different wants or needs, and those goods that best satisfy their preferences are those that they regard as having the highest quality. 9 This is an idiosyncratic and personal view of quality, and one that is highly subjective. In the marketing literature, it has led to the notion of “ideal points”: precise combinations of product attributes that provide the greatest satisfaction to a specified consumer; 10 in the economics literature, to the view that quality differences are captured by shifts in a product’s demand curve; 11 and in the operations management literature, to the concept of “fitness for use.” 12 Each of these concepts, however, faces two problems. The first is practical — how to aggregate widely varying individual preferences so that they lead to meaningful definitions of quality at the market level. The second is more fundamental — how to distinguish those product attributes that connote quality from those that simply maximize consumer satisfaction.

The aggregation problem is usually resolved by assuming that high-quality products are those that best meet the needs of a majority of consumers. A consensus of views is implied, with virtually all users agreeing on the desirability of certain product attributes. Unfortunately, this approach ignores the different weights that individuals normally attach to quality characteristics, and the difficulty of devising an unbiased statistical procedure for aggregating such widely varying preferences. 13 For the most part, these problems have been ignored by theorists. Economists, for example, have typically specified models in which the market demand curve responds to quality changes without explaining how that curve, which represents the summation of individual preferences, was derived in the first place. 14

A more basic problem with the user-based approach is its equation of quality with maximum satisfaction. While the two are related, they are by no means identical. A product that maximizes satisfaction is certainly preferable to one that meets fewer needs, but is it necessarily better as well? The implied equivalence often breaks down in practice. A consumer may enjoy a particular brand because of its unusual taste or features, yet may still regard some other brand as being of higher quality. In the latter assessment, the product’s objective characteristics are also being considered.

Even perfectly objective characteristics, however, are open to varying interpretations. Today, durability is regarded as an important element of quality. Long-lived products are generally preferred to those that wear out more quickly. This was not always true: until the late nineteenth century, durable goods were primarily possessions of the poor, for only wealthy individuals could afford delicate products that required frequent replacement or repair. 15 The result was a long-standing association between durability and inferior quality, a view that changed only with the mass production of luxury items made possible by the Industrial Revolution.

The Manufacturing-based Approach

User-based definitions of quality incorporate subjective elements, for they are rooted in consumer preferences — the determinants of demand. In contrast, manufacturing-based definitions focus on the supply side of the equation, and are primarily concerned with engineering and manufacturing practice. Virtually all manufacturing-based definitions identify quality as “conformance to requirements.” 16 Once a design or a specification has been established, any deviation implies a reduction in quality. Excellence is equated with meeting specifications, and with “making it right the first time.” In these terms, a well-made Mercedes is a high-quality automobile, as is a well-made Chevette.

While this approach recognizes the consumer’s interest in quality — a product that deviates from specifications is likely to be poorly made and unreliable, providing less satisfaction than one that is properly constructed — its primary focus is internal. Quality is defined in a manner that simplifies engineering and production control. On the design side, this has led to an emphasis on reliability engineering; 17 and on the manufacturing side, to an emphasis on statistical quality control. 18 Both techniques are designed to weed out deviations early: the former, by analyzing a product’s basic components, identifying possible failure modes, and then proposing alternative designs to enhance reliability; the latter, by employing statistical techniques to discover when a production process is performing outside acceptable limits.

Each of these techniques is focused on the same end: cost reduction. According to the manufacturing-based approach, improvements in quality (which are equivalent to reductions in the number of deviations) lead to lower costs, for preventing defects is viewed as less expensive than repairing or reworking them. 19 Firms are, therefore, assumed to be performing suboptimally: were they only to increase their expenditures on prevention and inspection — testing prototypes more carefully or weeding out a larger number of defective components before they become part of fully assembled units — they would find their rework, scrap, and warranty expenses falling by an even greater amount. 20

The Value-based Approach

Value-based definitions take this idea one step further. They actually define quality in terms of costs and prices. According to this view, a quality product is one that provides performance at an acceptable price or conformance at an acceptable cost. 21 Under this approach, a $500 running shoe, no matter how well constructed, could not be a quality product, for it would find few buyers.

A recent survey of consumer perceptions of quality in twenty-eight product categories suggests that the value-based view is becoming more prevalent. 22 While ingredients and materials were seen as the key quality indicators in such categories as food, clothing, personal care, and beauty products — reflecting a product-based approach to the subject — the study’s overall conclusion was that “quality is increasingly apt to be discussed and perceived in relationship to price.”

The difficulty in employing this approach lies in its blending of two related but distinct concepts. Quality, which is a measure of excellence, is being equated with value, which is a measure of worth. The result is a hybrid — “affordable excellence” — that lacks well-defined limits and is difficult to apply in practice.

The Implications of Multiple Definitions

Most existing definitions of quality fall into one of the categories listed above. The coexistence of these differing approaches has several important implications. First, it helps to explain the often competing views of quality held by members of the marketing and manufacturing departments. Marketing people typically take a user-based or product-based approach to the subject; for them, higher quality means better performance, enhanced features, and other improvements that increase cost. Because they see the customer as the arbiter of quality, they view what happens in the factory as much less important than what happens in the field.

Manufacturing people normally take a different approach. For them, quality means conformance to specifications and an emphasis on “doing it right the first time.” Because they associate poor quality with high levels of rework and scrap, manufacturing people usually expect quality improvements to result in cost reductions.

The Potential for Conflict.

These two views are obviously in conflict, and can cause serious breakdowns in communications. Remedial efforts may become paralyzed if the coexistence of these competing perspectives is not openly acknowledged. For example, a large division of a major consumer goods company recently reviewed its quality management practices. The firm was especially interested in assessing its new-product introduction process, for new products were regarded as the key to competitive success. Two divergent views emerged. One group felt that the process had been quite successful: new products appeared regularly, customer complaints were few, and defective items had not been shipped to the trade in any large number. Another group felt that the process had to be revamped because quality was so poor: new product releases were frequently delayed while designs were reconfigured to adapt to manufacturing requirements, and material and labor variances of several hundred thousand dollars had been incurred because of unanticipated expenditures on rework and scrap. Because of these disagreements, the project quickly stalled. Further progress requires the recognition that one group is employing a user-based definition of quality while the other is employing a manufacturing-based approach. Only then are the two groups likely to agree on the nature of the problems they face.

The Need for Different Definitions.

Despite the potential for conflict, companies need to cultivate such differing perspectives, for they are essential to the successful introduction of high-quality products. Reliance on a single definition of quality is a frequent source of problems. For example, a Japanese paper manufacturer recently discovered that its newsprint rolls failed to satisfy customers even though they met the Japanese Industrial Standard. Conformance was excellent, reflecting a manufacturing-based approach to quality, but acceptance was poor. Other rolls of newsprint, however, generated no customer complaints even though they failed to meet the standard. 23 A leading U.S. manufacturer of room air conditioners faced the opposite problem. Its products were well received by customers and highly rated by Consumer Reports . Reject, scrap, and warranty costs were so high, however, that large losses were incurred. While the product’s design matched customers’ needs, the failure to follow through with tight conformance in manufacturing cost the company dearly.

These examples suggest the need to actively shift one’s approach to quality as products move from design to market. The characteristics that connote quality must first be identified through market research (a user-based approach to quality); these characteristics must then be translated into identifiable product attributes (a product-based approach to quality); and the manufacturing process must then be organized to ensure that products are made precisely to these specifications (a manufacturing-based approach to quality). A process that ignores anyone of these steps will not result in a quality product. All three views are necessary and must be consciously cultivated.

Nevertheless, each of the major approaches to quality shares a common problem. Each is vague and imprecise when it comes to describing the basic elements of product quality. Relatively few analysts, with the exceptions of Juran 24 and Maynes, 25 have shown an interest in these details. That oversight is unfortunate, for much can be learned by treating quality in a less homogeneous fashion.

Eight Dimensions of Quality

Eight dimensions can be identified as a framework for thinking about the basic elements of product quality:

• Performance,
• Reliability,
• Conformance,
• Durability,
• Serviceability,
• Aesthetics,
• Perceived Quality.

Each is self-contained and distinct, for a product can be ranked high on one dimension while being low on another.

Performance

First on the list is performance, which refers to the primary operating characteristics of a product. For an automobile, these would be traits like acceleration, handling, cruising speed, and comfort; for a television set, they would include sound and picture clarity, color, and ability to receive distant stations.

This dimension of quality combines elements of both the product and user-based approaches. Measurable product attributes are involved, and brands can usually be ranked objectively on at least one dimension of performance. The connection between performance and quality, however, is more ambiguous. Whether performance differences are perceived as quality differences normally depends on individual preferences. Users typically have a wide range of interests and needs; each is likely to equate quality with high performance in his or her area of immediate interest. The connection between performance and quality is also affected by semantics. Among the words that describe product performance are terms that are frequently associated with quality as well as terms that fail to carry the association. For example, a 100-watt light bulb provides greater candlepower (performance) than a 50-watt bulb, yet few consumers would regard this difference as a measure of quality. The products simply belong to different performance classes. The smoothness and quietness of an automobile’s ride, however, is typically viewed as a direct reflection of its quality. Quietness is therefore a performance dimension that readily translates into quality, while candlepower is not. These differences appear to reflect the conventions of the English language as much as they do personal preferences.

There is a clear analogy here to Lancaster’s theory of consumer demand. 26 The theory is based on two propositions: 27

All goods possess objective characteristics relevant to the choices which people make among different collections of goods. The relationship between … a good … and the characteristics which it possesses is essentially a technical relationship, depending on the objective characteristics of the good…. Individuals differ in their reaction to different characteristics, rather than in their assessments of the characteristics…. It is these characteristics in which consumers are interested . . . the various characteristics can be viewed . . . as each helping to satisfy some kind of “want.”

In these terms, the performance of a product would correspond to its objective characteristics, while the relationship between performance and quality would reflect individual reactions.

The same approach can be applied to product features, a second dimension of quality. Features are the “bells and whistles” of products, those secondary characteristics that supplement the product’s basic functioning. Examples include free drinks on a plane flight, permanent press as well as cotton cycles on a washing machine, and automatic tuners on a color television set. In many cases, the line separating primary product characteristics (performance) from secondary characteristics (features) is difficult to draw. Features, like product performance, involve objective and measurable attributes; their translation into quality differences is equally affected by individual preferences. The distinction between the two is primarily one of centrality or degree of importance to the user.

Reliability

Reliability is a third dimension of quality. It reflects the probability of a product’s failing within a specified period of time. Among the most common measures of reliability are the mean time to first failure (MTFF), the mean time between failures (MTBF), and the failure rate per unit time. 28 Because these measures require a product to be in use for some period, they are more relevant to durable goods than they are to products and services that are consumed instantly. Japanese manufacturers typically pay great attention to this dimension of quality, and have used it to gain a competitive edge in the automotive, consumer electronics, semiconductor, and copying machine industries.

Conformance

A related dimension of quality is conformance, or the degree to which a product’s design and operating characteristics match preestablished standards. Both internal and external elements are involved. Within the factory, conformance is commonly measured by the incidence of defects: the proportion of all units that fail to meet specifications, and so require rework or repair. In the field, data on conformance are often difficult to obtain, and proxies are frequently used. Two common measures are the incidence of service calls for a product and the frequency of repairs under warranty. These measures, while suggestive, neglect other deviations from standard, such as misspelled labels or shoddy construction, that do not lead to service or repair. More comprehensive measures of conformance are required if these items are to be counted.

Both reliability and conformance are closely tied to the manufacturing-based approach to quality. Improvements in both measures are normally viewed as translating directly into quality gains because defects and field failures are regarded as undesirable by virtually all consumers. They are, therefore, relatively objective measures of quality, and are less likely to reflect individual preferences than are rankings based on performance or features.

Durability, a measure of product life, has both economic and technical dimensions. Technically, durability can be defined as the amount of use one gets from a product before it physically deteriorates. A light bulb provides the perfect example: after so many hours of use, the filament burns up and the bulb must be replaced. Repair is impossible. Economists call such products “one-hoss shays,” and have used them extensively in modeling the production and consumption of capital goods. 29

Durability becomes more difficult to interpret when repair is possible. Then the concept takes on an added dimension, for product life will vary with changing economic conditions. Durability becomes the amount of use one gets from a product before it breaks down and replacement is regarded as preferable to continued repair. Consumers are faced with a series of choices: each time a product fails, they must weigh the expected cost, in both dollars and personal inconvenience, of future repairs against the investment and operating expenses of a newer, more reliable model. In these circumstances, a product’s life is determined by repair costs, personal valuations of time and inconvenience, losses due to downtime, relative prices, and other economic variables, as much as it is by the quality of components or materials.

This approach to durability has two important implications. First, it suggests that durability and reliability are closely linked. A product that fails frequently is likely to be scrapped earlier than one that is more reliable; repair costs will be correspondingly higher, and the purchase of a new model will look that much more desirable. Second, this approach suggests that durability figures should be interpreted with care. An increase in product life may not be due to technical improvements or to the use of longer-lived materials; the underlying economic environment may simply have changed. For example, the expected life of an automobile has risen steadily over the last decade, and now averages fourteen years. 30 Older automobiles are held for longer periods and have become a greater percentage of all cars in use. 31 Among the factors thought to be responsible for these changes are rising gasoline prices and a weak economy, which have reduced the average number of miles driven per year, and federal regulations governing gas mileage, which have resulted in a reduction in the size of new models and an increase in the attractiveness to many consumers of retaining older cars. In this case, environmental changes have been responsible for much of the reported increase in durability.

Serviceability

A sixth dimension of quality is serviceability, or the speed, courtesy, and competence of repair. Consumers are concerned not only about a product breaking down, but also about the elapsed time before service is restored, the timeliness with which service appointments are kept, the nature of their dealings with service personnel, and the frequency with which service calls or repairs fail to resolve outstanding problems. Some of these variables can be measured quite objectively; others reflect differing personal standards of what constitutes acceptable service. For example, a recent study of consumer satisfaction with professional services found the major complaints to be that “the service was provided in a careless, unprofessional manner” and that “I feel I was treated as an object rather than as an individual.” 32 These comments clearly reflect subjective views of what constitutes acceptable professional behavior. Other aspects of service can be assessed more objectively. Responsiveness is typically measured by the mean time to repair (MTTR), while technical competence is reflected in the incidence of multiple service calls required to correct a single problem. Because most consumers equate more rapid repair and reduced downtime with higher quality, these elements of serviceability are less subject to personal interpretation than are those involving evaluations of courtesy or standards of professional behavior. A number of companies have begun emphasizing this dimension of quality. Caterpillar Tractor’s promise that it will deliver repair parts anywhere in the world within forty-eight hours and Mercedes’ guarantee of twenty-four-hour (overnight) service in California and Arizona show that even top-of-the-line producers believe that this approach has value.

The final two dimensions of quality are the most subjective. Both aesthetics and perceived quality are closely related to the user-based approach. Aesthetics — how a product looks, feels, sounds, tastes, or smells — is clearly matters of personal judgment, and reflections of individual preferences. In fact, the marketing concept of “ideal points” — those combinations of product attributes that best match the preferences of a specified consumer — was originally developed to capture just this dimension of quality. 33

Perceived Quality

Perceptions of quality can be as subjective as assessments of aesthetics. Because consumers do not always possess complete information about a product’s attributes, they must frequently rely on indirect measures when comparing brands. 34 In these circumstances, products will be evaluated less on their objective characteristics than on their images, advertising, or brand names. These forces even affect scholarly judgments. When professors around the country were asked to rank the departments in their fields by quality, their rankings were only partially explained by such objective measures as the number of articles published in leading journals by members of the department. Both reputation — the historical strength of the department — and affiliation — the quality of the university to which a department was attached — were equally important in explaining the rankings. 35

Together, the eight major dimensions of quality cover a broad range of concepts. Several of the dimensions involve measurable product attributes; others reflect individual preferences. Some are objective and timeless, while others shift with changing fashions. Some are inherent characteristics of goods, while others are ascribed characteristics.

The diversity of these concepts helps to explain the differences among the five traditional approaches to quality. Each of the approaches focuses implicitly on a different dimension of quality: the product-based approach focuses on performance, features, and durability; the user-based approach focuses on aesthetics and perceived quality; and the manufacturing-based approach focuses on conformance and reliability. Conflicts among the five approaches are inevitable because each defines quality from a different point of view. Once the concept is unbundled, however, and each dimension is considered separately, the sources of disagreement become clear.

The Strategic Importance of Quality Dimensions

A recognition of these eight dimensions is also important for strategic purposes. A firm that chooses to compete on the basis of quality can do so in several ways; it need not pursue all eight dimensions at once. Instead, a segmentation strategy can be followed, with a few dimensions singled out for special attention. For example, Japanese manufacturers have traditionally entered U.S. markets by emphasizing the reliability and conformance of their products while down-playing the other dimensions of quality. The superior “fits and finishes” and low repair rates of Japanese automobiles are well known; what are less frequently recognized are their poor safety records (performance) and low corrosion resistance (durability). Despite these drawbacks, Japanese automobiles have come to symbolize the very best in quality for many American consumers.

This example suggests that firms can successfully pursue a relatively narrow quality niche. In fact, they may have no other choice if competitors have already established broad reputations for excellence. In these circumstances, new entrants may only be able to secure a defensible position if they focus on an as yet untapped dimension of quality.

This pattern clearly fits the piano industry. For many years, Steinway & Sons has been the quality leader; its instruments are known for their even voicing (the evenness of character and timbre of each of the eighty-eight notes on the keyboard), the sweetness of their registers (the roundness and softness of tone throughout the piano’s entire range), the duration of their tone, their long lives, and their finely polished woodwork. 36 Each piano is handcrafted, and each is unique in sound and style. Despite these advantages, Steinway has recently been challenged by Yamaha, a Japanese manufacturer that has developed a strong reputation for quality in a relatively short time. Yamaha has done so by emphasizing reliability and conformance, two dimensions of quality that are low on Steinway’s list, rather than artistry and uniqueness. In fact, one of Yamaha’s major selling points is that all of its pianos sound exactly the same. Both companies enjoy high profits, despite their widely varying approaches to quality.

This example suggests the importance of carefully targeting one’s quality niche. The selection of a defensible niche, however, is only a first step. Operational requirements must also be met, for each dimension of quality imposes its own demands on the firm. High performance requires careful attention to design and a strong design staff; superior durability requires the use of long-lived or “derated” components and close cooperation between the engineering and purchasing departments; superior conformance requires attention to written specifications and precision in assembly; and exceptional serviceability requires a strong customer service department and active field representatives. In each case, a different function enjoys the lead role, and different tasks are required for success. The managerial implications of this analysis should be obvious: after selecting the dimensions of quality on which it hopes to compete, a firm must tailor its organization and operations to meet these specific needs. Otherwise, the wrong departments may be elevated in status, or the wrong tasks pursued. Disaggregating the concept of quality allows companies to pinpoint these operating requirements as carefully as they target untapped markets.

Correlates of Quality

Managers are interested in quality primarily because of its marketing and financial implications. Many believe that a product’s price, advertising, market share, costs, and profitability are connected in some way to product quality. The following section of the article explores the theory and evidence in each of these areas.

Quality and Price

The theoretical argument about the relationship between quality and price runs in both directions. On the one hand, quality and price are assumed to be positively correlated. If higher quality can only be produced at higher cost, and if costs and prices are, as economic theory suggests, positively related, then quality and price will move together. 37 This assumes, however, that consumers possess sufficient information to evaluate product quality. If they do not, they will rely on other cues when making that assessment, including comparative prices. 38 As Riesz points out, once managers observe this behavior, they may then respond by readjusting prices:

If managers believe that perceptions and perhaps consumer purchase decisions are positively correlated with price, they may set higher prices in order to imply higher product quality. Price, therefore, may become a means of differentiating a product …. Such pricing strategies … would likely result in a deterioration of the price-quality relationship within a product category. 39

The theory, then, is equivocal. Quality and price mayor may not be positively correlated, depending on the amount of information available to consumers. The empirical results are equally mixed. A number of studies have found a positive correlation between the two variables. 40 These studies, however, were based primarily on experimental evidence rather than on market data. When market data were used, the results differed by product category. Nondurables generally displayed a weak or negative correlation between price and quality (with quality measured by Consumer Report rankings, which typically focus on product performance), while durables showed a significant positive correlation. 41 The findings for durables are broadly consistent with research on the purchase decision for major home appliances. Westbrook et al. found that 86 percent of recent purchasers and 75 percent of prospective buyers felt that they had no difficulty judging the quality or reliability of competing brands. 42 A similar study, “The Buying Consumer: Room Air Conditioners,” found that 85 percent of all buyers rated the product information available to them as adequate or more than adequate. 43 Where information of this kind is available, a positive correlation between price and quality is to be expected.

This relationship breaks down, however, in the more sophisticated experimental studies. Where multiple cues are present for inferring quality — brand name, store image, product features, or country of manufacture, in addition to price — the strong price-quality association of the earlier bivariate research weakens or disappears. 44 In these circumstances, quality assessment is guided less by price than by the other variables present.

Quality and Advertising

The theoretical argument for a positive association between quality and advertising was initially developed by Phillip Nelson. 45 A more formal modeling was later pursued by Richard Schmalensee. 46 Nelson first introduced the distinction between “search” and “experience” goods. The attributes of the former can be determined prior to purchase, while those of the latter can only be learned after the product has been purchased and used. The cut and fit of an article of clothing are examples of product characteristics that can be learned through search; the reliability and durability of a major home appliance are examples of traits that can be learned only through experience. Nelson then argued that for experience goods, higher levels of advertising would be associated with higher quality products. Schmalensee has summarized this argument succinctly:

High-quality brands will obtain more repeat purchases, ceteris paribus, than low-quality brands. Thus, … sellers of high-quality brands will spend more to persuade consumers to try their wares, since ceteris paribus again, the present value of a trial purchase is larger. Nelson contends that this force causes better brands to advertise more in equilibrium as long as consumers respond to advertising at all; the level of advertising for experience goods is thus positively correlated with quality, regardless of what individual ads actually claim. Quality information is provided by the level of advertising, not the claims it makes. 47

The evidence on this point is inconclusive. Analysts using both American and British data have found some evidence of a positive relationship between advertising and product quality (with quality again measured by Consumer Reports or Consumers’ Bulletin rankings), but these results have been undercut by other studies. Rotfeld and Rozell, after reviewing the research on this topic, concluded that: “Advertised products are apparently of better quality than nonadvertised goods for some products, when rated by certain criteria, in some years …. But no broad generalizations can be made.” 48

Gilligan and Holmes, who expanded on the earlier studies by using a variety of different measures of both advertising expenditures and brand quality, reached a similar conclusion: “A heavily advertised product is just as likely to be poor quality as any other.” 49 While these studies have involved both search and experience goods, the same conclusions apply if the analysis is limited to goods in the latter category. Nelson’s claim that heavy advertising implies superior quality is, therefore, not supported by the available evidence. In fact, in a recent survey of consumer attitudes the majority of respondents felt that advertised products were no more likely to be dependable than were products without advertising. 50

Quality and Market Share

The relationship between quality and market share is likely to depend on how quality is defined. If a high-quality product is one with superior performance or a large number of features, it will generally be more expensive, and will sell in smaller volumes. But if quality is defined as fitness for use, superior aesthetics, or improved conformance, high quality need not be accompanied by premium prices. In that case, quality and market share are likely to be positively correlated.

Virtually all empirical work on this topic has employed the Profit Impact of Marketing Strategies (PIMS) data base. 51 All studies have, therefore, used the same, highly aggregated measure of quality. Each company in the PIMS survey was first asked the following questions: What was the percentage of sales of products or services from each business in each year which were superior to those of competitors? What was the percentage of equivalent products? What was the percentage of inferior products? Quality indexes were then compiled for each firm by subtracting its percentage “inferior” from its percentage “superior.”

Using these indexes, analysts have found a strong positive association between quality and market share. Those businesses in the PIMS study that improved in quality during the 1970s increased their market share five or six times faster than those that declined in quality, and three times as rapidly as those whose relative quality remained un-changed. 52 Cross-sectional studies using both bivariate 53 and multivariate methods 54 have confirmed the positive association between quality and market share.

Quality and Cost

Theoretical discussions of the relationship between quality and cost fall into three distinct categories. One group, following the product-based approach, argues that quality and direct cost are positively related. The implicit assumption here is that quality differences reflect variations in performance, features, durability, or other product attributes that require more expensive components or materials, additional labor hours in construction, or other commitments of tangible resources. This view dominates much American thinking on the subject. A second view, which draws on the operations management literature, sees quality and cost as inversely related because the costs of improving quality are thought to be less than the resulting savings in rework, scrap, and warranty expenses. According to this view, which is widely held among Japanese manufacturers and explains much of their dedication to the goal of “continuous improvement,” quality is synonymous with the absence of defects, and the costs in question are quality costs. 55

Quality costs are defined as any expenditure on manufacturing or service in excess of that which would have been incurred if the product had been built exactly right the first time. 56 In their most comprehensive form, these costs would include such hidden elements as the expense of carrying excess raw materials and work-in-process inventory to insure that defective items do not shut down the production process, as well as the cost of owning and operating excess capacity in order to compensate for machine clogging and downtime. In practice, less inclusive measures are usually employed. Total quality costs typically include expenditures in the following four categories: 57 prevention (e.g., quality planning, worker training, and supplier education); appraisal (e.g., product inspection and testing); internal failures (e.g., rework and scrap); and external failures (e.g., warranty and product liability).

A number of analysts have extended this argument, claiming that improved conformance should eventually lead to a reduction in long-term manufacturing costs. 58 One justification for this claim has been the expected link between quality improvement and productivity gains. For example, simplified and easy-to-assemble designs should require fewer workers at the same time that they reduce defects. Investments in machinery and equipment should result in more consistent production as well as improvements in worker productivity. Quality improvements are also expected to lead to further savings, in the form of experience-based scale economies, through their impact on market share and (cumulative) production levels. 59

While the evidence is limited, most empirical work suggests that superior conformance and total quality costs are inversely related. Garvin, for example, in a study of the room air conditioning industry, found that Japanese manufacturers, with defect and field failure rates between fifteen and seventy times lower than U.S. competitors, averaged total costs of quality that were 1.3 percent of sales. 60 The best American companies averaged rework, scrap, and warranty costs that alone were 2.8 percent of sales. At the U.S. firms with the poorest quality, these costs exceeded 5.8 percent of sales. Garvin also found that quality and productivity were positively related, even though firms employed similar technologies and showed few differences in capital intensity. In this industry, U.S. companies with the highest quality were five times as productive, when measured by units produced per man-hour of assembly-line direct labor, as companies with the poorest quality.

Several surveys have collected more comprehensive data on the costs of quality; these provide additional support for the above relationships. A 1977 survey, for example, found that companies with formal systems for assessing quality costs — which most analysts associate with superior quality management and low failure rates 61 — had lower total costs of quality than companies without such systems. Companies in the former group averaged quality costs that were 5.8 percent of sales; those in the latter, rework, scrap, and warranty costs that alone were 7.8 percent of sales. 62

Moreover, the amount that companies are spending to prevent quality problems — and, therefore, to insure lower failure rates — may very well be suboptimal. Gilmore found that at least one-quarter of the companies he surveyed were spending less than 5 percent of their quality costs on prevention; approximately one-half were spending less than 10 percent. 63 His conclusion was that greater expenditures on prevention would result in improved conformance and fewer defects; these, in turn, were likely to produce an overall reduction in the total costs of quality because of significant savings in rework, scrap, and warranty.

The PIMS data base has generally been used to examine the relationship between quality and direct cost. The results have varied considerably by industry. In one study, quality and direct cost were positively related for differentiated-product businesses but negatively related for homogeneous products. 64 In another study, the two were positively related in capital goods businesses but negatively related in components and supplies businesses. 65 However, the experience curve effect, with high quality leading to high market share, increases in cumulative production, and eventually, experience-based reductions in costs, were found in all types of businesses. 66

The varying results of these studies may reflect differences in the definitions of quality used by firms in different industries. The PIMS quality index is highly aggregated; no distinction is made among performance, features, reliability, or the other dimensions of quality discussed earlier. As a result, different industries could be employing different definitions when assessing the quality of their products. This, in turn, would determine whether the relationship between quality and direct cost was positive or negative. For example, among homogeneous product businesses (e.g., chemicals), quality is often defined as “meeting specifications.” 67 Such a conformance-based view of quality is likely to result in an inverse relationship between quality and direct cost. Among differentiated and capital goods businesses, however, quality is likely to be equated with performance or features, suggesting a positive association between quality and direct cost. While these inferences are consistent with the PIMS findings, they require further research in order to be verified.

Quality and Profitability

Figure 1 shows two ways in which improved quality might lead to higher profitability. The first route is through the market: improvements in performance, features, or other dimensions of quality lead to increased sales and larger market shares, or alternatively, to less elastic demand and higher prices. If the cost of achieving these gains is outweighed by the increases in contribution received by the firm, higher profits will result. 68

Quality improvements may also affect profitability through the cost side. Fewer defects or field failures result in lower manufacturing and service costs; as long as these gains exceed any increase in expenditures by the firm on defect prevention, profitability will improve.

Empirical studies using the PIMS data base confirm the strong positive association between quality and profitability. 69 High quality produces a higher return on investment (ROI) for any given market share: among businesses with less than 12 percent of the market, for example, those with inferior product quality averaged an ROI of 4.5 percent, those with average product quality an ROI of 10.4 percent, and those with superior product quality an ROI of 17.4 percent. 70 Quality improvements, by increasing share, also lead to experience-based cost savings and further gains in profitability. 71 The market-based link between quality and profitability is, therefore, well supported by the evidence. The second linkage described in Figure 1 is less firmly established. As an earlier discussion has shown, the relationship between quality and cost depends on how the terms are defined. Those studies that have equated quality with conformance, and cost with total quality cost, have found an inverse relationship between the two. They have not, however, carried the analysis a step further to find if profitability was similarly affected. Nor have the studies focusing on the connection between quality and direct cost taken into account differences in investment levels or capital costs, which would clearly affect the relationship between quality and ROI.

The empirical research on quality, then, has produced mixed results, with few clear directions for managers. The relationship between quality and such variables as price, advertising, and direct cost is both complex and difficult to predict. Few unambiguous results are found in the literature. Even where the expected relationships have emerged, further work is required because of the highly aggregated nature of the quality measures that have been employed. This is especially true of the studies relating quality to market share and profitability, for they have all employed the PIMS data base. These findings suggest a number of directions for future research.

Directions for Future Research

There is a clear need for more precise measures of product quality. Few studies have recognized the multiple dimensions of quality, and still fewer, the possibility that quality may have different meanings in different industries. Much of the empirical research on the correlates of quality needs to be replicated with these distinctions in mind. Similarly, analysts need to determine if the various dimensions of quality move together or separately, for otherwise, managers will be unable to position their companies to exploit particular quality niches.

These questions suggest two possible avenues of research. The first would focus on the determinants of consumer satisfaction, consumer perceptions of quality, and the relative importance of the various dimensions of quality in shaping buyer behavior. Andreasen, for example, has found that indexes of consumer satisfaction based on voiced complaints, objective measures of product nonperformance, satisfaction immediately after purchase, and satisfaction after initial problems have been resolved are not well correlated. 72 Each apparently measures a slightly different aspect of consumer satisfaction. Similar research is necessary to understand the precise connection between consumer satisfaction and the various dimensions of quality discussed in this article. As Takeuchi and Quelch point out, for many consumers “quality is more than [simply] making a good product.” 73

A second possible line of research would focus on manufacturing tradeoffs. Traditionally, analysts have argued that manufacturing operations could only be effective if they pursued a limited set of objectives. 74 Low cost, high quality, rapid delivery, flexibility to volume changes, and flexibility to new product introductions were thought to be mutually incompatible. Tradeoffs were unavoidable, and anyone goal could only be achieved at the expense of others.

Japanese manufacturers, however, have succeeded in producing products that meet the twin objectives of high quality (conformance and reliability) and low cost. Their ability to do so has forced analysts to reconsider the concept of manufacturing tradeoffs, for many traditional assumptions no longer apply. 75 This area clearly warrants further research. Tradeoffs among the various dimensions of quality and between these dimensions and the objectives of cost, flexibility, and delivery must be better understood. Do the different dimensions of quality require different forms of expertise, or are firms likely to succeed on several dimensions at once? Durability, for example, often requires the use of sturdy and oversized components; does it also guarantee superior reliability, or is that more a reflection of how the assembly process is managed? More generally, which of the dimensions of quality are primarily a reflection of manufacturing skills, and which reflect design and engineering expertise? These questions must be answered if companies are to devise and execute effective strategies for competing on the basis of product or service quality.

Quality is a complex and multifaceted concept. It is also the source of great confusion: managers — particularly those in different functions — frequently fail to communicate precisely what they mean by the term. The result is often endless debate, and an inability to show real progress on the quality front.

This article has identified several different perspectives on quality, and has emphasized a number of critical dimensions. These distinctions are more than just theoretical niceties: they are the key to using quality as a competitive weapon. Managers must learn to think carefully about how their approach to quality changes as a product moves from design to market, and must devise ways to cultivate these multiple perspectives. Attention must be focused on the separate dimensions of quality; markets must be closely examined for any untapped quality niches, and the organization must be tailored to support the desired focus. Once these approaches have been adopted, cost savings, market share gains, and profitability improvements can hardly be far behind.

About the Author

David A. Garvin is Associate Professor of Business Administration at the Graduate School of Business Administration, Harvard University. Dr. Garvin holds the A.B. degree from Harvard University and the Ph.D. degree from M.I.T. His primary research interests are in the areas of production and operations management, industrial economics, and discussion teaching. Dr. Garvin has had consulting and executive education experience with major U.S. corporations, nonprofit organizations, and public agencies. He is the author of The Economics of University Behavior and coauthor of Cases in Operations Management . His many articles have appeared in such journals as Columbia Journal of World Business, Business Horizons, Harvard Business Review, and California Management Review.

1. See: W. J. Abernathy, K. B. Clark, and A. M. Kantrow, Industrial Renaissance (New York: Basic Books, 1983); D. A. Garvin, “Quality on the Line,” Harvard Business Review, September–October 1983, pp. 64–75; D. A. Garvin, “Japanese Quality Management,” Columbia Journal of World Business , in press. J. M. Juran, “Japanese and Western Quality: A Contrast,” Quality Progress, December 1978, pp. 10–18; A. L. Robinson, “Perilous Times for U.S. Microcircuit Makers,” Science , 9 May 1980, pp. 582–586.

2. See: Barksdale et al., “A Cross-National Survey of Consumer Attitudes Towards Marketing Practices, Consumerism, and Government Relations,” Columbia Journal of World Business , Summer 1982, pp. 71–86; Center for Policy Alternatives, Consumer Durables: Warranties, Service Contracts, and Alternatives (Cambridge, MA: Massachusetts Institute of Technology, 1978), pp. 3-127–3-146; “Rising Concern on Consumer Issues Is Found in Harris Poll,” New York Times , 17 February 1983.

3. See J. G. Miller, The 1983 Manufacturing Futures Project: Summary of North American Survey Responses & Preliminary Report (Boston, MA: School of Management, Boston University, 1983), p. 14.

4. See: R. M. Pirsig, Zen and the Art of Motorcycle Maintenance (New York: Bantam Books, 1974); B. W. Tuchman, “The Decline of Quality,” New York Times Magazine , 2 November 1980.

5. See: S. Buchanen, ed., The Portable Plato (New York: The Viking Press, 1948); G. Dickie, Aesthetics: An Introduction (New York: The Bobbs-Merrill Company, Inc., 1971), p. 5.

6. See: L. Abbott, Quality and Competition (New York: Columbia University Press, 1955); Z. Griliches, ed., Price Indexes and Quality Change (Cambridge, MA: Harvard University Press, 1971); K. Lancaster, Consumer Demand: A New Approach (New York: Columbia University Press, 1971), p. 122; K. B. Leffler, “Ambiguous Changes in Product Quality,” American Economic Review (December 1982): 956–967.

7. See: Abbott (1955), p. 129; K. Lancaster, Variety, Equity, and Efficiency (New York: Columbia University Press, 1979), p. 28.

8. See: D. Levhari and T. N. Srinivasan, “Durability of Consumption Goods: Competition versus Monopoly,” American Economic Review (March 1969): 102–107; R. L. Schmalensee, “Regulation and the Durability of Goods,” Bell Journal of Economics and Management Science (Spring 1970): 54–64; P. L. Swan, “Durability of Consumption Goods,” American Economic Review (December 1970): 884–894; P. L. Swan, “The Durability of Goods and the Regulation of Monopoly,” Bell Journal of Economics and Management Science (Autumn 1971): 347–357; T. R. Saving, “Market Organization and Product Quality,” Southern Economic Journal (April 1982): 856.

9. See: C. D. Edwards, “The Meaning of Quality,” Quality Progress , October 1968, pp. 36–39; A. A. Kuehn and R. L. Day, “Strategy of Product Quality,” Harvard Business Review, November–December 1962, pp. 100–110.

10. See: Kuehn and Day (November–December 1962); R. M. Johnson, “Market Segmentation: A Strategic Management Tool,” Journal of Marketing Research , February 1971, pp. 13–18; P. Kotler, Marketing Decision Making: A Model Building Approach (New York: Holt, Rinehart and Winston, 1971), pp. 491–497; B. T. Ratchford, “The New Economic Theory of Consumer Behavior: An Interpretive Essay,” Journal of Consumer Research , September 1975, pp. 65–75.

11. See: E. H. Chamberlin, “The Product as an Economic Variable,” Quarterly Journal of Economics , February 1953, pp. 1–29; R. Dorfman and P. O. Steiner, “Optimal Advertising and Optimal Quality,” American Economic Review (December 1954): 822–836; L. J. White, “Quality Variation When Prices Are Regulated,” Bell Journal of Economics and Management Science (Autumn 1972): 425–436.

12. See: J. M. Juran, ed., Quality Control Handbook , 3rd ed. (New York: McGraw-Hill, 1974), p. 2; H. L. Gilmore, “Product Conformance Cost,” Quality Progress , June 1974, pp. 16–19.

13. See: Edwards (October 1968), pp. 36–39; Lancaster (1979), p. 28; H. Theil, Principles of Econometrics (New York: John Wiley & Sons, 1971), pp. 556–573.

14. See: E. Sheshinski, “Price, Quality, and Quantity Regulation in a Monopoly Situation,” Economica , May 1976, pp. 127–137; White (Autumn 1972).

15. See R. B. Yepsen, Jr., ed., The Durability Factor (Emmaus, PA: Rodale Press, 1982), pp. 12–15.

16. See: P. B. Crosby, Quality Is Free (New York: McGraw-Hill, 1979); Gilmore (June 1974).

17. See: G. Boehm, “ 'Reliability' Engineering,” Fortune , April 1963, pp. 124–127, 181–182, 184, 186; A. V. Feigenbaum, Total Quality Control (New York: McGraw-Hill, 1961), ch. 14; Juran (1974), pp. 8-9–8-32.

18. See: Feigenbaum (1961), chs. 10–13; J. M. Juran and F. M. Gryna, Jr., Quality Planning and Analysis (New York: McGraw-Hill, 1980).

19. See: J. Campanella and F. J. Corcoran, “Principles of Quality Costs,” Quality Progress , April 1983, p. 21; Crosby (1979).

20. See: R. A. Broh, Managing Quality for Higher Profits (New York: McGraw-Hill, 1982), ch. 1; Juran (1974), ch. 5.

21. See: Broh (1982); Feigenbaum (1961).

22. See The Consumer Network, Inc., Brand Quality Perceptions (Philadelphia, PA: The Consumer Network, Inc., August 1983).

23. See K. Ishikawa, “Quality and Standardization: Program for Economic Success,” Quality Progress , January 1984, p. 18.

24. See Juran (1974), pp. 2-4–2-9.

25. See E. S. Maynes, “The Concept and Measurement of Product Quality,” in Household Production and Consumption , ed. N. E. Terleckyj (New York: National Bureau of Economic Research, 1976), pp. 550–554.

26. See: K. Lancaster, “A New Approach to Consumer Theory,” Journal of Political Economy , April 1966, pp. 132–157; Lancaster (1971); Lancaster (1979).

27. See Lancaster (1971), p. 7.

28. See Juran (1974), pp. 8–12.

29. See C. J. Bliss, Capital Theory and the Distribution of Income (Amsterdam: North-Holland, 1975), ch. 6.

30. See “Retiring Autos at 14,” New York Times , 3 April 1983, sec. 3, p. 1.

31. See S. W. Burch, “The Aging U.S. Auto Stock: Implications for Demand,” Business Economics , May 1983, pp. 22–26.

32. See J. A. Quelch and S. B. Ash, “Consumer Satisfaction with Professional Services,” in Marketing of Services, ed. J. H. Donnelly and W. R. George (Chicago, IL: American Marketing Association, 1981).

33. See: Kuehn and Day (November–December 1962); Johnson (February 1971).

34. See: D. F. Cox, ed., Risk Taking and Information Handling in Consumer Behavior (Boston, MA: Division of Research, Harvard University, Graduate School of Business Administration, 1967), ch. 11; D. R. Lambert, “Price as a Quality Signal: The Tip of the Iceberg,” Economy Inquiry , January 1980, pp. 144–150.

35. See: W. O. Hagstrom, “inputs, Outputs, and the Prestige of American University Science Departments,” Sociology of Education , Fall 1971, pp. 384–385; D. D. Knudsen and T. R. Vaughan, “Quality in Graduate Education: A Reevaluation of the Rankings of Sociology Departments in the Cartter Report,” American Sociologist, February 1969, p. 18.

36. See Steinway & Sons (Boston, MA: Harvard Business School, HBS Case Services #9-682-625, 1981), p. 5.

37. See P. C. Riesz, “Price-Quality Correlations for Packaged Food Products,” Journal of Consumer Affairs , Winter 1979, p. 234.

38. See Lambert (January 1980).

39. See Riesz (1979), p. 244.

40. See: H. J. Leavitt, “A Note on Some Experimental Findings about the Meanings of Price,” Journal of Business , July 1954, pp. 205–210; A. Gabor and C. W. J. Granger, “Price as an Indicator of Quality: Report on an Enquiry,” Economica , February 1966, pp. 43–70; J. D. McConnell, “An Experimental Examination of the Price-Quality Relationship,” Journal of Business , October 1968, pp. 439–444.

41. See Riesz (1979), p. 236.

42. See R. A. Westbrook, J. W. Newman, and J. R. Taylor, “Satisfaction/Dissatisfaction in the Purchase Decision Process,” Journal of Marketing , October 1978, pp. 54–60.

43. See “The Buying Consumer: Room Air Conditioners,” a report by Appliance Manufacturer (Chicago, IL: Cahners Publishing, 1979).

44. See Lambert (January 1980).

45. See: P. Nelson, “Information and Consumer Behavior,” Journal of Political Economy (March–April 1970): 311–329; P. Nelson, “Advertising as Information,” Journal of Political Economy (July–August 1974): 729–754.

46. See R. L. Schmalensee, “A Model of Advertising and Product Quality,” Journal of Political Economy (June 1978): 485–504.

47. Ibid., pp. 485–486.

48. See H. J. Rotfeld and K. B. Rotzoll, “Advertising and Product Quality: Are Heavily Advertised Products Better?” Journal of Consumer Affairs , September 1976, p. 46.

49. See C. T. Gilligan and D. E. A. Holmes, “Advertising Expenditure and Product Quality,” Management Decision (Vol. 17, No. 5): 392.

50. See Barksdale et al. (Summer 1982), p. 78.

51. See: R. D. Buzzell and F. D. Wiersema, “Modeling Changes in Market Share: A Cross-Sectional Analysis,” Strategic Management Journal, 1981, pp. 27–42; R. D. Buzzell and F. D. Wiersema, “Successful Share-Building Strategies,” Harvard Business Review, January–February 1981, pp. 135–144; C. S. Craig and S. P. Douglas, “Strategic Factors Associated with Market and Financial Performance,” Quarterly Review of Economics and Business , Summer 1982, pp. 101–111; B. T. Gale and B. S. Branch, “Concentration versus Market Share: Which Determines Performance and Why Does It Matter?” The Antitrust Bulletin, Spring 1982, pp. 83–105; L. W. Phillips, D. Chang, and R. D. Buzzell, “Product Quality, Cost Position, and Business Performance: A Test of Some Key Hypotheses,” Journal of Marketing , Spring 1983, pp. 26–43; S. Schoeffler, R. D. Buzzell, and D. F. Heany, “Impact of Strategic Planning on Profit Performance,” Harvard Business Review, March–April 1974, pp. 137–145.

52. See Buzzell and Wiersema (January–February 1981), p. 140.

53. See: Schoeffler, Buzzell, and Heany (March–April 1974), p. 141; Gale and Branch (Spring 1982), pp. 93–95.

54. See: Buzzell and Wiersema (1981); Craig and Douglas (Summer 1982); Phillips, Chang, and Buzzell (Spring 1983).

55. See: R. E. Cole, “Improving Product Quality through Continuous Feedback,” Management Review, October 1983, pp. 8–12; Garvin (in press).

56. See Campanella and Corcoran (April 1983) p. 17.

57. See: Campanella and Corcoran (April 1983); Crosby (1979); Gilmore (June 1974); H. L. Gilmore, “Consumer Product Quality Cost Revisited,” Quality Progress , April 1983, pp. 28–33.

58. See: R. S. Kaplan, “Measuring Manufacturing Performance: A New Challenge for Managerial Accounting Research,” The Accounting Review (October 1983): 686–705; S. C. Wheelwright, “Japan — Where Operations Really Are Strategic,” Harvard Business Review, July–August 1981, pp. 70–71.

59. See Phillips, Chang, and Buzzell (Spring 1983), p. 27.

60. See Garvin (September–October 1983).

61. See Crosby (1979).

62. See “Quality Cost Survey,” Quality, June 1977, pp. 20–22.

63. See: Gilmore (June 1974); Gilmore (April 1983).

64. See Gale and Branch (Spring 1982), pp. 96–97.

65. See Phillips, Chang, and Buzzell (Spring 1983), pp. 38–39.

66. Ibid., p. 37.

67. See M. E. Bader, Practical Quality Management in the Chemical Process Industry (New York: Marcel Dekker, 1983), ch. 1.

68. See: Chamberlin (February 1953); Dorfman and Steiner (December 1954).

69. See: Craig and Douglas (Summer 1982); Phillips, Chang, and Buzzell (Spring 1983); Schoeffler, Buzzell, and Heany (March–April 1974).

70. See Schoeffler, Buzzell, and Heany (March–April 1974), p. 141.

71. See: Buzzell and Wiersema (January–February 1981); Phillips, Chang, and Buzzell (Spring 1983).

72. See A. R. Andreasen, “A Taxonomy of Consumer Satisfaction/Dissatisfaction Measures,” Journal of Consumer Affairs , Winter 1977, pp. 11–24.

73. See H. Takeuchi and J. A. Quelch, “Quality Is More Than Making a Good Product,” Harvard Business Review , July–August 1983, pp. 139–145.

74. See: W. Skinner, “Manufacturing — Missing Link in Corporate Strategy,” Harvard Business Review, May–June 1969, pp. 136–145; W. Skinner, “The Focused Factory,” Harvard Business Review , May–June 1974, pp. 113–121; S. C. Wheelwright, “Reflecting Corporate Strategy in Manufacturing Decisions,” Business Horizons , February 1978, pp. 57–66.

75. See Wheelwright (July–August 1981).

Acknowledgments

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Elevating Expectations: 5 Ways Product Quality Affects Your Brand

Table of Contents

Product quality can make or break your brand’s success and profitability — however, determining what makes a quality product depends on the end user. Each consumer has their own idea of what constitutes a valuable product; for some, a fancy and durable product demonstrates quality, while others may look for something unpretentious and easy to use. 

Although what one person views as luxurious may appear simple to others, what’s important is creating a product of quality that is right for your target market. Here’s how to determine what constitutes quality, why caliber is important and how to improve your products .

What constitutes product quality?

Product quality describes a product’s capability to meet user standards. Here are some questions to consider when evaluating a product’s caliber:

• Does it solve a problem? No product would exist if it weren’t solving or improving something. The extent to which it fixes the intended problem helps to determine its quality.
• Is it easy to use? A high-quality product shouldn’t be complicated to use. Customers shouldn’t have to spend too much time trying to figure out how to assemble or work it.
• Is it polished? Colors, dimensions, fonts (if applicable) and other elements of design should be in alignment. The product shouldn’t appear cheap in any way.
• Is it efficient? The product should not only get the job done, but it should do so efficiently. In other words, it should deliver quickly and require minimal effort from the consumer.
• Is it tailored to your customers? The product should be tailored specifically to users’ needs, showing that you understand your customers and are willing to accept the recommendations they voice.

5 reasons product quality is important

Improving your product quality is paramount to preserving your business’s bottom line. Here are five reasons product quality is important:

1. It builds trust with your customers.

Most businesses won’t succeed if they can’t build customer trust ; potential sales are lost when brands fail to make deeper connections with prospective buyers. In contrast, when you gain the confidence and loyalty of consumers, you have more freedom to make decisions such as raising prices. Ensuring high-quality products and services is one way to help you get consumers to appreciate and believe in what you have to offer.

Humanizing the company also can help customers connect with your brand. One way to do this is to create newsletters or social media posts that show updates and photos of what employees are working on. If customers begin to associate faces with your company, it will help them connect with your organization more than they would with a faceless corporate entity. Another way to build loyalty and appreciation is to establish a rewards program. Understanding the value of customer loyalty is crucial when trying to establish repeat business.

2. It fuels recommendations.

Most people trust recommendations from friends and family above all other forms of advertising when making a purchase decision. This is why nothing beats word of mouth when you’re trying to gain customers.

Word-of-mouth recommendations can be a persuasive factor in both online and offline purchasing decisions. Friends and family want to know if someone similar to them had a good experience with a product. The higher-quality product a company has to offer, the better chance they’ll have at driving positive reviews, recommendations and shares between consumers.

Starting campaigns to get people buzzing about a product is a great way to spread recommendations by word of mouth. You can also respond to complaints or compliments online to show that you provide good customer service , which is another aspect of high product quality.

3. It results in fewer customer complaints and returns.

Marketing studies have proven again and again that companies that produce high-quality products obtain more repeat business. Spend more time and money upfront to perfect a product before it hits the market if you want to minimize customer complaints and returns.

It’s common for sellers of high-quality brands to spend more to persuade consumers to try their goods. The more successful companies are at pleasing customers during their initial experience with a product, the more likely they’ll be to see repeat purchases from those customers. 

Testing products with potential customers or a market research group can help to produce a great product. Most people in these groups will give brutally honest opinions, and companies can use that feedback to make improvements to their products.

4. People care about aesthetics.

One dimension of quality is the aesthetics — or how a product looks, feels, sounds, tastes and smells. For example, MrTakeOutBags pays close attention to these qualities, and it shows in the company’s bakery cupcake boxes. The colors, prints, shapes, textures and features (such as handles) make all the difference, and it’s what sets the brand apart from its competitors. Customers notice these details, and they can make or break a sale.

5. It produces a higher ROI.

Studies show a strong positive association between quality and profitability. In fact, high quality produces a higher return on investment (ROI) for any given market share. According to MIT Sloan Management Review, having fewer defects or field failures results in lower manufacturing and service costs. As long as these gains exceed any increase in expenditures by the firm on defect prevention, profitability will improve. In addition, improvements in performance, features or other dimensions of quality lead to increased sales and larger market shares.

If you have produced a quality product and marketed it effectively, it’s time to see if you can cut costs without sacrificing quality.

How to ensure product quality

Here are five tips to ensure high product quality:

1. Implement a quality management system.

A quality management system is a set of business practices comprising the planning and execution of delivering a product. The system includes principles that help to prepare a product for its launch, such as customer focus, leadership, research and evidence-based decision-making .

2. Build a product strategy.

A product strategy details information about a product and the company’s vision for it. Its key points should include the target customers, market, competitors and business goals. This strategy serves as a roadmap for your product’s journey, from creation to launch.

3. Consider competitors.

Thinking about your competitors is an important part of developing your product. What are they doing that you aren’t (and vice versa)? How are their products performing? What works for them and why? Answering these questions will put you in a better position to compete with similar businesses in the market.

4. Listen to your customers.

Don’t be afraid to ask your customers how you can improve your products. Use any negative customer feedback to learn more about your consumers and help your products better meet their needs.

5. Always test your products.

It’s essential to test every product before launch so you can anticipate how buyers might react and see what changes you might need to make before you release it to the public.

Sean Peek contributed to this article. ​​

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Creating a Culture of Quality

• Ashwin Srinivasan
• Bryan Kurey

Financial incentives don’t reduce errors. Employees must be passionate about eliminating mistakes.

In most industries, quality has never mattered more. New technologies have empowered customers to seek out and compare an endless array of products from around the globe. Shoppers can click to find objective data compiled by experts at organizations such as Consumer Reports and J.D. Power and go online to read user-generated reviews at sites such as Amazon; together, these sources provide an early warning system that alerts the public to quality problems. And when customers are unhappy with a product or service, they can use social media to broadcast their displeasure. In surveys, 26% of consumers say they have used social media to air grievances about a company and its products. And this issue isn’t limited to the consumer space—75% of B2B customers say they rely on word of mouth, including social media, when making purchase decisions.

• AS Ashwin Srinivasan is a managing director, and Bryan Kurey is a senior director, at CEB.
• BK Bryan Kurey is the Senior Vice President of Research at SBI Growth Advisory.

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Product quality: definition, characteristics and importance.

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After reading this article you will learn about:- 1. Definition of Quality 2. Quality Characteristics 3. Costs 4. Impact of Poor Quality 5. Importance 6. Management.

Definition of Quality :

Generally, it can be said that product is of satisfactory quality, if it satisfiers the consumers/user. The consumer will buy a product or service only if it suits his requirements.

Therefore, consumers’ requirements are first assessed by marketing department and then the quality decision is taken on the basis of the information collected. Although we have described the virtues of quality one basic question needs be answered: What is quality and who decided what quality?

According to C.D. Lewis quality is “an asset which may be offered to the potential consumer of a product or service”.

The following are other more explanatory definitions of quality:

(1) Quality is the performance of the product as per the commitment made by the producer to the consumer. Such commitment may be explicit or implicit i.e. in terms of written contract or in terms to the QUALITY MANAGEMENT expectation of the average consumer of the product. The performance of the product is concerned with the ultimate function and service which the product must provide to the final; consumer.

A product is known as a quality product only when it satisfies various criteria for its functioning for the consumer. In addition to the physical criteria, there is also a service and time factor to quality. The same quality of physical performance should be available over a reasonable length of time. Hence time is also unnecessary aspect of quality.

(2) Quality is either a written or non-written promise/commitment to a consumer, known or unknown in the market, because the market is decided by the plant/company, that to which type of consumer/customer to cater to quality is a strategic marketing decision taken by the company itself.

Thus it can be said that the quality decision is based on various marketing considerations production constraints, manpower constraints and equipment or technology constraints. In this way the decision concerning quality are not in the hands of one functional manager, since this involves overall strategic decision for the running business of a corporation.

(3) Once such a strategic policy regarding the quality is followed, it becomes the job of all functional managers such as the Production and Operations.

Manager, to see that such strategic aims/objectives and goals are achieved. In this case all departments such as purchasing, production; warehousing and transport have made contribution so as to achieve the quality of products. So quality implementation is also a ‘total organization effort’.

The essential need of the products/services is that they must fulfil the requirements of those who will actually use them. Now because the use of the product differs from situation to situation, the requirement is viewed in different manners by various users.

Simple definitions evolved for quality are (i) Fitness for use (ii) Consistent, Conformance to consumer’s needs, or poor/inferior quality of raw material entering into the plant/enterprise or improper techniques/ method and processes being followed in the plant.

A more comprehensive definition of quality as adopted by International Standards Organization is “the totality of features and characteristics of product or service that bear on its ability to satisfy stated or implied needs revolving around customer”.

It may be concluded that quality is a key attribute that consumers use to evaluate products or services. Thus it is everything to everyone involved in a business, to satisfy the total needs of every consumer/user whoever that customer may be, and is driven by the market conditions, i.e., by the competition and especially by the consumer.

In the end, quality is the capability of a product or service to satisfy “knowingly” those preconceived composite needs of the consumers/user(s) that are intelligibly related to characteristics of performance, and do not lead to major overt or covert action or reactions by other people.

To manufacturer (in industry), it means ‘best for certain customer conditions’.

The important customer conditions are:

(i) Selling price of the final product, and

(ii) Actual end use of the product.

These may be reflected in the following features of the product:

(i) The dimensional specification and operating characteristics of the product.

(ii) Reliability and life of the product.

(iii) The cost of production of the production.

(iv) The production conditions required for the manufacture of product,

(v) Installation and maintenance objectives and related costs.

Quality Characteristics:

An element which makes a product/item fit for use is the quality characteristics. The quality characteristics also mean a process by which the fitness for use can be translated into the technologists’ language for managing the quality. The quality characteristics are also classified into categories called ‘parameters’ of fitness for use.

Two such major parameters are known as:

(i) Quality of design and

(ii) Quality of conformance.

The quality of design is concerned with consumers’ satisfaction by variation in quality of products popularly called “grades”. In contrast the quality of conformance is the extent to which the products/ items and services conform to the intent of design.

The process capability, inspection and process control is involved in achieving this conformance so that product/goods produced meet the pre-decided specifications. The end of both these parameters is the quality as shown in Fig. 33.10.

(iii) Costs of Failure:

Inspire of prevention and appraisal, there will still be losses by virtue of rejections, rework and spoilage etc. to some extent. These costs as well as the costs of attending to consumer complaints and providing product service are included in the category of costs of failures.

The costs of quality can be analysed in two different ways:

1. Category to Category Comparison:

Comparing the relative costs involved on each of the above mentioned cost categories i.e., how much is spent on planning? How much on appraisal? and How much on failure?

2. Time to time Comparison:

For instance, comparing one quarter’s operation with the previous quarter’s operation.

Impact of Poor Quality :

Poor quality of products results in the extra cost of production. A manufacturer sometimes has to bear losses due to poor product quality.

This can be explained as follows:

(1) Reduction in sales is the result of poor quality of product which leads to lower production volume and hence reduced profitability. Such losses may prove detrimental to the existence of those manufacturing plants.

(2) Poor product quality also affects goodwill of manufacturer in the market. Goodwill is created as a result of good performance over a long period and goodwill once lost is very difficult to re-establish.

(3) A manufacturer or a supplier may be required to replace a product, if it proves to be of inferior quality during the guarantee period and replace the parts/components during warranty period.

(4) A manufacturer is liable to indemnify the customer for any loss sustained by him by virtue of poor product quality.

(5) A manufacturer may be compelled to sell the sub-stand products at reduced price.

(6) Defective products may lead to stoppages in production processes thus leading to higher cost of production.

(7) Sometimes, a manufacturer has to pay for rework on defective items/goods.

(8) Sometimes extra money is to be spent by producer for repair and servicing of defective products.

(9) A rejected/substandard product represents a loss to a manufacturer equivalent to material as well as labour cost plus other overhead costs.

(10) In case the proportion of defectives increases it makes essential for the industrial plant to invest extra amount for vigorous inspection and testing at various stages of production.

(11) The high proportion of production of defective/substandard products affects the morale of the work force badly.

(12) Sometimes it becomes necessary to identify the causes of failures or high rate of defective production. The manufacturer has to waste money on such investigations.

Importance of Quality:

Quality is an important dimension of production and operations management. It is not sufficient to produce products/goods or services in the right quantity and at right time; it is important to ensure that the goods/items and services produced/provided are of the right quality.

The consumer of the final product of company/organization requires a certain quantity of products of requisite quantity as per his requirements. Without quality, the other dimensions of quality and time have little rather no relevance.

Quality management, which includes ensuring proper quality for a organization’s/plant’s output product, is important not only for its survival in the market, but also to expand its market if new product line is to be introduced and various other marketing ventures.

The lives of human beings are effected to a great extent by the quality of products and services. Quality failures may and would result in serious human inconveniences, wastage of money and sometimes loss of life.

In the early twentieth century, consumers/users were expected to pay extra for quality. However in the present day competitive business market quality is no longer an option. In other words, it is a positive need without which the survival of an organization is not possible.

Hence, a organisation/ company which designs, produces and sells its products in today’s market, must take into consideration the following trends related with quality:

(a) Consumers, ‘industrial and defence personnel’ have been increasing their quality requirement very sharply.

(b) The stringent consumers demand on quality compels for the review of in plant practices and techniques.

Taken together these trends to following two quality challenges i.e.:

(i) Considerable improvement in the quality of many products/goods and quality practices

(ii) Substantial minimization in the overall cost of maintaining quality.

In order to fulfil the quality requirements of the consumers, a thorough, understanding is required regarding the interacting role of all major activities of an organization. These activities performed anywhere, put together substitute the “Quality function”. So quality function may be defined as that set of activities, without mattering where performed, through which quality level can be achieved by the company.

Thus it can be concluded that the management of quality function requires the utilization of managerial, technical and analytical inferences, usually based on observations, including statistical concepts, concerning major functions of an organization.

When properly managed with factors/ understanding mentioned above the following benefits can be achieved:

(1) Improved productivity of the system.

(2) Reduced costs of products/services.

(3) Improved image of the organization.

(4) Committed Consumers/Customers.

(5) Dedicated management of the unit/plant.

(6) Increased involvement of employees at various levels.

Quality Manage ment:

Quality management is related with quality assessment. Quality assessment is a probe of the level of quality being achieved. This assessment of quality leads to quality control and it includes action taken to do away with unacceptable quality products.

A typical quality control programme is based upon the periodic inspection at various stages of production, later followed by feedback on results and the adjustments made where found essential. The term quality assurance is quality control but with an emphasis on quality at the design stage of the products, processes and jobs and in the selection of manpower and their training.

Another term Total Quality Control (TQC) refers to a total commitment to quality in all its aspects, to commitment of quality in all functional areas of work and utilizes behavioural techniques such as quality circles (QC,S) and zero defect programmes etc.

The biggest misconception among people regarding TQC is that it is restricted to product quality and it is not about the quality of all business processes. The concept of TQM is that, it takes quality from the shop floor to every conceivable activity in an organisation. Keeping the consumer at the centre of all thoughts, decisions and processes.

To Improve a industry’s/company’s operations effectiveness (TQM) is one of the techniques along with others such as supply chain management, reengineering, cellular manufacturing and bench marking etc.

Thus operational effectiveness techniques and TQM can elevate a company’s operation to such a level which cannot be surpassed unless there is some alternative superior technology. This could be a short term competitive benefit. It is essential to appreciate that rival plants/industries can also adopt the same operational effectiveness techniques.

Quality management is also defined as “the system of establishing defect prevention actions and attitudes with a industrial unit/company or a organization on a permanent basis for the purpose of assuring conforming products or services directed at customer satisfaction.”

The TQM provides a entirely different way of looking at the management style. It develops and provides a participative culture where each employee can directly participate in areas concerning his work as well as decisions relating to his work. So it is an approach to improve the effectiveness and flexibility of the organization as a whole.

The basic aim is to involve every person of every department of the organization to work together so as to eliminate errors and prevent waste. The cross functional goals such as quality cost, manpower development, quality of work life are satisfied by this improved performance. Thus all these activities ultimately provide customer and employee satisfaction.

Related Articles:

• 12 Importance or Benefits of Quality Control | Production Management
• Quality Control (QC): Definition, Importance and Tools of Quality Control

Industry , Industrial Engineering , Product , Quality of a Product

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Nie wieder prokastinieren mit unseren Lernerinnerungen.

- John Ruskin

Low-quality products and services deter customers from making a purchase. As a result, it is essential for all businesses to develop and maintain quality standards and insights. Let's take a look at why quality is so important and how businesses can implement strategies to manage quality.

What is the importance of quality?

Quality is defined as constant conformity to the expectation of the customers in an organisation. Others define quality as excellence, absolute best, value, etc. When quality is defined in accordance with organisations, it is the organisation that has to survey and classify how quality is defined and perceived by their customers so that they can work towards meeting these expectations.

Nearly everyone would agree that the quality of a particular product/service is significant, however, not everyone has a similar impression of what forms high quality.

To certain people, the quality of a product is high if it’s lavish or long-lasting, while for others the ease of use is of more value.

Some of the tangibility measures are as follows:

Appearance : The look of the product is an important measure for fashion apparel.

Reliable : Machines will be of frequent use; therefore, reliability is required.

Durable : This is the long-lasting aspect of the product.

Functions : Smartphones are becoming more appealing with added functions and apps.

Maintenance requirements : A vehicle that needs fewer repairs and servicing can be viewed to be of good quality.

Some of the intangible measures include the following:

Brand image : Customers assess the quality of a product with the brand image of a company. Cadbury is considered a high-quality brand, although it has diversified away from its original products also.

Reputation : A company such as Apple, Inc. has developed a reputation for quality.

Importance of quality for a business

Meeting the expectations of the customers.

Irrespective of the industry, customers will not choose a particular product merely based on the price, nonetheless often on quality. According to some studies, customers are willing to pay a higher price for a product or service if they consider it as a well-made product that surpasses the quality standards.

Gaining competitive advantage

Companies want to attain competitiveness with differentiation. This happens when there are distinctive qualities in a product that can not be imitated by rivals. A distinctive product can be patented in order to avoid other companies from replicating it for almost 20 years. This would mean that a company can sustain its competitive advantage for a long time.

Quality is crucial for the satisfaction of customers

If an organisation fails to meet the expectation of its customers, then it will look for replacements. Quality is essential to satisfy customers in order to retain their loyalty so that they will be willing to buy in the future as well. Quality products make a significant impact on revenues in the long run. Quality is what differentiates a company in a crammed market.

Apple can charge a higher price for its iPhone in comparison to its rivals in the industry. This is because it has developed a long history of delivering high-quality products.

Quality develops reputation

Quality signals on an organisation’s reputation. Nowadays, there is an increasing significance of social media which means that the customers can effortlessly share both positive and negative opinions on the quality of a product/service on different platforms. Therefore, a sound reputation for quality could be an essential factor that can differentiate an organisation in a market that is highly competitive.

Poor quality products/services can lead to negative publicity and can harm the reputation. If the organisation is constantly delivering what it has promised, then the customers will give positive and constructive views on social media. This will not only create awareness for the brand but will also make a wanted effect and they wouldn’t want to be missed out. The user on social networking sites who view an organisation’s strong reputation will desire to be part of the product/service being offered that will in turn increase sales.

Influence on sales volume

If a product matches the requirements of the customers, then the demand for that particular product will increase, hence allowing the company to boost its profit levels. As people become wealthier, their desire for good quality products also increases as they are not constricted by their income.

Quality helps in managing costs effectively

Poor quality products escalate costs. If an organisation does not have an efficient quality control system, they may have to bear costs to assess peculiar products in order to evaluate the main causes. They may have to get rid of faulty products and incur extra production costs for their replacement.

Greater productivity levels

When an organisation understands and follows the significance of quality in every aspect of its operations then there is an increase in the productivity of its employees. As they realize and comprehend that they are working on a product that is exceptional and high on quality.

Boosted brand value

Every brand wants a greater market share and a boosted brand value. It is through following and comprehending the significance of quality that will support an organisation make its brand value rise in comparison to its rivals in the industry

Reduced risk

The other facet that helps an organisation sustain its brand value is to diminish risks. Risks simply befall business operations when an organisation do not follow parameters of quality

Growth in revenues and profits

In current vigorous markets, there is ever-growing competition, it becomes challenging for an organisation to make anticipated revenues to meet their short and long-run goals. An organisation that follows quality management will have a greater level of satisfied customers, higher brand value, and market share.

What are the examples of Quality management?

Coca-Cola guarantees the finest quality product by applying widely approved and authentic manufacturing processes and systems. It measures the quality of its product as well as packaging to make sure that the products meet the requirements of the company and fulfil the consumers' expectations. Reliability and regularity are the two main components of the quality of products. These components are crucial in order to meet the organisation’s standards and regulatory prerequisites globally. The fact that Coca-Cola is a global product necessitates higher standards and processes to guarantee reliable products as well as quality from the initial production to the delivery of the product.

• The finalisation of the manufacturing plant site by Coca-Cola is only after the source water has been tested and verified for the requirement.
• The process of purifying sugar, carbon-dioxide preparation, sterilisation of bottles goes through quality control that ensures that the product meets the global standards and meets customers’ expectations.

What is the importance of quality control and quality assurance?

Quality control is necessary to develop a flourishing business that offers products that meet or surpass the expectations of customers. It also builds the foundation of an efficient organisation that lowers waste and functions at a higher level of productivity.

Quality assurance is a continuous effort to improve quality practices. It is a process-based practice and quality control on the other hand is a product-based process. Quality assurance is important because it ensures that the production process of a product aligns with the quality requirements and standards. The significance of quality assurance is that it ensures that the finished product fulfils the quality requirements.

What is the importance of quality standards?

Quality standards are developed to make sure that organisations fulfil the minimum requisites to become an essential part of any industry from food, automotive, clothes to healthcare.

In current times, the significance of quality has increased and organisations are trying to cope with it.

It helps to accomplish higher consistency in the offering of products and services

It lowers costly mistakes

It escalates efficiency through better utilization of time and resources

What is the importance of quality culture?

Organisations that promote the development of quality culture generally undergo low employee turnover and employee disappointment, and higher successful regulatory assessments. Working with such organisations encourage employees on the lower level to be more involved in enhancing the processes they work with each day, therefore, increasing interest and enthusiasm, loyalty, and also dedication to quality.

Importance of Quality - Key takeaways

Quality makes sure that a high-class product/service is being produced.

Quality is important for customer satisfaction that ultimately results in customer loyalty.

Quality management assists an organisation to create and developing a product/service which is desired by the customers.

Quality establishes that higher revenues and productivity is achieved for the organisation.

Quality assists an organisation to diminish waste, costs, and risks.

Quality helps to boost reputation , brand value and meet the industry standards.

Quality control is a product-based process and quality assurance is a process-based process.

The importance of quality culture is that it lowers employee turnover and motivates employees at a lower level to improve their daily work.

Quality standards help organisations fulfil the minimum requisites to become a part of any industry.

Frequently Asked Questions about Importance of Quality

--> what is quality in a business.

Quality  in a business is the constant conformity to the expectation of the customers. 

--> Why is quality important for a customer?

Quality is important for a customer because it means the product will meet his/her expectation. 

--> What are the benefits of quality? 

The benefits of quality are: Meeting customers' expectations, gaining a competitive advantage, increased reputation, and increased sales. etc. 

--> How can a business improve quality? 

A business can improve quality through quality control, quality assurance, and total quality management.  

--> What is the importance of quality culture in a business?

The importance of quality culture means: low employee turnover and successful regulatory assessments. 

--> Why is quality management important?

Quality management is important for several reasons:

• it helps to increase customer satisfaction, which can lead to increased loyalty and repeat business
• It can help reduce costs associated with rework, warranty claims, and customer complaints, which can have a significant impact on profitability.
• It provides a framework for continuous improvement
• It can help ensure that products or services meet legal and regulatory

Which key factors customers keep in mind when buying a product based on the following factors:

Price and Quality

Why is quality important for an organization?

Among the many factors, some of them include: to meet customer expectations, boost brand value and reputation, meet industry standards, reduce risk and cost.

How does quality improve the reputation and value of a business?

With the increasing use of social media, customers can share their positive and negative feedback of a product/service. Therefore, a sound reputation for quality could be an essential factor that can differentiate an organization in a market that is highly competitive.

 How does quality increase productivity?

Employees understand the importance of quality and they realize and comprehend that they are working on a product that is exceptional and high on quality.

Are customers willing to pay a higher price for a superior quality product?

Write an example of quality management?

Coca-Cola ensures to implement vigorous globally accepted methods and processes. The quality assurance and control at Coca-Cola starts from the very beginning as the manufacturing plant site is approved and the source water and carbon dioxide are used only when it meets the company’s standards. It makes sure that the bottles are recycled and sterilized before usage.  It tries to make a product that will meet the customer expectations and eventually result in loyal customers leading to increased revenues.

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Various dimensions of product and service quality Essay

Introduction, conceptualizing quality.

Defining quality is one of the most controversial topics in management. The fact is that quality, by any precision, is a difficult concept. Most of the management scholars understand quality products or services as those that can be deemed to be meeting the customer’s expectations (Reeves & Bednar 1994, p.120).

Though, this fundamental definition of quality is still being considered to be inadequate. According to Garvin 1987, this definition only considers one aspect which is user-based. However, there are also other scopes such as transcendent, product based and manufacturing based qualities that must be considered so as to have a complete definition of quality.

Scholars such as Garvin 1987, argue that in order to come up with a complete definition of product or service quality, certain dimensions must be put into consideration. These include performance, features, reliability, durability, serviceability, aesthetics and perception. These eight dimensions of Garvin will constitute what a quality product or service is to the end user.

In most cases, product or service quality will be understood from the customer’s point of view (Reeves & Bednar 1994, p.123). According to Garvin 1987, that would be when the end user is satisfied.

The reason why this definition dominates is that most corporations have understood the fact that providing customer’s value is the only way through which they can remain competitive. In other words, providing quality services or products that satisfies the customer’s needs offers the company an additional competitive advantage (Sachdev & Verma 2004, p.93).

Basically, increased competition, technological changes and the constant modifications in the regulatory environment have led to increased customer sophistication (Chakrapani, 1998). Customers are constantly demanding more in a particular product, emphasizing quality that normally satisfy their broader needs. This makes it intricate for companies to manage their expectations. The customers raised standards, expectations and perceptions of a product or service are constantly evolving (Foster, 2009).

This further complicates the effective management and measurement of the customer needs. In order to manage and measure the customer services effectively, firms have to selectively improve the services and critically pay attention to more customer oriented dimensions (Sachdev & Verma 2004, p.93). It is vital for the companies to acknowledge the product dimensions that their customers emphasize.

Investments that firms make must also provide impetus on those actions geared towards satisfying customer needs. This will increase their efficiency in their service delivery and remain competitive in a highly charged market place (Chakrapani, 1998). Moreover, firms need to prioritize and fully exploit their customer services attributes according to their specific contexts. In other words, each services quality has its own specific dimensions.

For instance, dimensions that are required in the hospitality servives are different from those that are required in the information services or in health. Another important consideration is that all the customer oriented quality dimensions are all equally important hence no proper order could be established in terms of their importance (Sachdev & Verma 2004, p.94).

Products such as mobile phones are very sensitive to the market demand and mobile phone firms take cognizance of the product quality dimensions in their marketing strategy. For instance, compare the newly released Samsung Galaxy S3 Smartphone and much anticipated Galaxy S4.

Samsung Galaxy Android Smartphone S4 is expected to be an improvement of S3 with more features such as 12-megapixel camera capable of taking 1080 videos accompanied with stereo sound. The phone will be based on multi-media together with high resolution display. The high resolution displays is an improvement of galaxy S3Pen Tile display that displeases most of the users.

Also expected in the Galaxy S4 is the longer lasting battery. Even though Galaxy S3 had 2100mAh which was claimed to be lasting longer, most of the customers complained of its quicker drain. Another feature which is also expected to meet the customer expectation in Galaxy S4 is the design.

Most of the S3 users complained of its contemptible plastic feel. S4 is expected to have a more cutting-edge design completed with enhanced material. Galaxy S4 is also expected to have S-Voice system, android beam as well as the Google Chrome default browser. The Smartphone will also be having the latest android operating system 4.1 Jelly Bean, 2GB RAM, the 3D water proofing flexible display. All these features were expected in S3 but somehow they failed to show.

Looking at the Samsung Galaxy Smartphone example it is clear that the company take into consideration various dimensions such as performance, features, reliability, conformance, aesthetic and perception when developing the latest product.

Even though the Galaxy S3 was an improvement of the other Galaxy series, it fell short of the customer expectations. This made the company face stiff competition from other mobile phone companies such as Apple. Apple is also expected to release iPhone 5 which will be a substitute to Samsung Galaxy S4.

The performance dimension is what the product or service is expected to do. In most cases, companies emphasize on the performance because it directly influences profitability and the customer reputation (Foster, 2009). The features dimension defines and specifies the purpose of particular features in the intended product.

In other words, it identifies whether the product or service have all the specified features for its intended purpose (Garvin, 1987). The reliability aspect looks at the way that particular product or service is performing according to stipulated conditions. The reliability dimension contributes hugely to the company brand image. It is one of the fundamental dimensions that the end users normally look into (Foster, 2009).

Conformance dimension looks at whether the product matches the specification or whether the products are performing as specified. Conformance dimension depends on the product development. That is, whether the product is developed on design or performance specifications.

The aesthetic dimension is how the product appears to the customers (Garvin, 1987). Aesthetic dimension of a product or service is where the company derives the brand identity. Defects or faults in the products normally reduce the aesthetic dimension. The perception is how the product is conceived by the end-user.

For instance, Galaxy S3 is still perceived as a high definition Smartphone even though it posses some shortfalls in its features. Other dimensions such as serviceability and durability must also be put into consideration when developing a product (Garvin, 1987).

The service or product quality is defined as those that meet the customer satisfaction. Even though there are other aspects of quality product or service, the end-user definition is essential because it increases the company competitive edge.

Besides, other dimensions performance, features, reliability, durability, serviceability, aesthetics and perception that form part of product quality are also being looked into by the firms. However, quality dimensions are all equally important hence no proper order could be established in terms of their importance.

Chakrapani, C 1998, How to measure service quality and customer satisfaction , American marketing association, Chicago, IL.

Foster, ST 2009, Managing quality: integrating the supply chain , Pearson-Prentice Hall, Upper Saddle River, NJ.

Garvin, DA 1987, “Competing on eight dimensions of quality” Harvard Business Review , Vol. 65, pp. 101-109.

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• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2019, December 15). Various dimensions of product and service quality. https://ivypanda.com/essays/various-dimensions-of-product-and-service-quality-essay/

"Various dimensions of product and service quality." IvyPanda , 15 Dec. 2019, ivypanda.com/essays/various-dimensions-of-product-and-service-quality-essay/.

IvyPanda . (2019) 'Various dimensions of product and service quality'. 15 December.

IvyPanda . 2019. "Various dimensions of product and service quality." December 15, 2019. https://ivypanda.com/essays/various-dimensions-of-product-and-service-quality-essay/.

1. IvyPanda . "Various dimensions of product and service quality." December 15, 2019. https://ivypanda.com/essays/various-dimensions-of-product-and-service-quality-essay/.

Bibliography

IvyPanda . "Various dimensions of product and service quality." December 15, 2019. https://ivypanda.com/essays/various-dimensions-of-product-and-service-quality-essay/.

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