Do We Perceive the Quality the Same Way (1of2)

published in: Educational articles

01 Mar
2010

Every manager comes to the big question about the quality of goods and services he sells on the markets. Quality is essential to company prosperity.

The researches of the consulting firm "McKinsey" and the SPI in Cambridge (USA) of more than 2000 companies shows that improving quality is a major factor for increasing corporations’ market share. Companies providing higher quality products and services have greater profits and stable pace of development. For many industries the traditional notion that higher quality leads to higher costs is incorrect. Quite on the contrary, the additional income prevails over the higher quality costs in all cases. Higher quality leads to cost savings in wastage, waste control, complaints, etc. In addition, the company has an additional instrument to enhance its competitiveness by combining high quality with low price. As confirmation, Japanese manufacturers of consumer electronics sell in Europe at a lower price, but at the same time at a higher profit margin.
 
The researchers have no doubt that there are only two ways to recover lost market share: lower prices or higher quality. The first option is risky, since any market decline will increase indirect costs relative share. The low-prices-policy forces the company to reduce its long-term investments and undermines its future potential. The second option - higher quality - is more reliable. The higher quality provides the possibility of maintaining or increasing the price.
 
The overall study conclusion is that the best indication of future financial success of a company is represented by higher quality products perception. In other words if the customers believe that company A products are of greater quality than company B products then company A is more likely to have brighter future.
 
But what is quality? Many companies restrict the meaning of the quality to the technical parameters of the qualityproduct. While customers include packaging, reliability, on-time delivery, speed of service, and level of after-sales service.
 
Another research, from Sweden, did show that only 17% of consumers are worried about whether the product or service fulfills the manufacturer promises. Most consumers pay greater attention to “little” things that are not related in any way with the functional characteristics of the goods, such as packaging, design, color, odor, etc... The results of the previous study are confirmed by "Procter & Gamble” telephone line for complaints and recommendations. 80% of the cases relate to the handle shape, box design, packaging material and other side issues.
 
In summary - the clients’ quality is much broader concept than manufacturer’s quality.

The studies reveal the need for managers to determine, from customers’ point of view, what the comparative elements of each of their product or service are and how they can be modified for gaining advantages over competitors.
 

                                                   Advance to part 2...
 

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