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. In this industry, U. Some of these variables can be measured quite objectively; others reflect differing personal standards of what constitutes acceptable service.
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. 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: 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. 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. 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. 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. 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: 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.
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. 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.
If they do not, they will rely on other cues when making that assessment, including comparative 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 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. 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.
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. The theoretical argument for a positive association between quality and advertising was initially developed by Phillip Nelson.
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. 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. 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: But no broad generalizations can be made.
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: 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. 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. 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? 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 s 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. 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.
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. In practice, less inclusive measures are usually employed. Total quality costs typically include expenditures in the following four categories: A number of analysts have extended this argument, claiming that improved conformance should eventually lead to a reduction in long-term manufacturing costs.
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. 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.
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. Several surveys have collected more comprehensive data on the costs of quality; these provide additional support for the above relationships.
A 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.
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.
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. 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. 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. Figure 1 shows two ways in which improved quality might lead to higher profitability. The first route is through the market: If the cost of achieving these gains is outweighed by the increases in contribution received by the firm, higher profits will result. 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. 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. 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.
Similar research is necessary to understand the precise connection between consumer satisfaction and the various dimensions of quality discussed in this article. 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.
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. 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: 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: 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. Kantrow, Industrial Renaissance New York: Basic Books, ; D. Massachusetts Institute of Technology, , pp. Miller, The Manufacturing Futures Project: School of Management, Boston University, , p.
Bantam Books, ; B. The Viking Press, ; G. An Introduction New York: The Bobbs-Merrill Company, Inc. Abbott, Quality and Competition New York: Columbia University Press, ; Z. Harvard University Press, ; K. A New Approach New York: Columbia University Press, , p.
Abbott , p. Kuehn and Day November—December ; R. Kotler, Marketing Decision Making: Holt, Rinehart and Winston, , pp. McGraw-Hill, , p. Edwards October , pp. Theil, Principles of Econometrics New York: Rodale Press, , pp. McGraw-Hill, ; Gilmore June McGraw-Hill, , ch. Feigenbaum , chs. See The Consumer Network, Inc. The Consumer Network, Inc. National Bureau of Economic Research, , pp. North-Holland, , ch. American Marketing Association, Are Heavily Advertised Products Better?
Schoeffler, Buzzell, and Heany March—April , p. Marcel Dekker, , ch. I would like to thank Ken Goodpaster, Ted Levitt, John Quelch, members of the Production and Operations Management area at the Harvard Business School, and an anonymous referee for their helpful comments on an earlier draft of this paper.
I would also like to thank the Division of Research at the Harvard Business School for its financial support. Dileep Dandge February 19, Although so much has been studied, researched, and reported on Quality over the past 30 years, Mr. This is surely a fine piece of work and quite relevant in respect of understanding the quality concept in spite of being published many years ago.
Having worked as a quality engineer in China for more than 10 years, I have experienced all 8 dimensions of quality, but until now, never properly appreciated how important it was that the strategy that reflects its most important quality targets, as catagorised in your article. I will ask my customers, what is important to them, and act accordingly. You must sign in to post a comment.
Another thing that can be done is responding to complaints or compliments online. Marketing studies have proved again and again that high-quality brands will obtain more repeat purchases.
Spending more time and money upfront perfecting a product before it hits the market will minimize customer complaints and returns. It's About The People: Testing products on potential customers or a market research group can help produce a great product.
Most people in these groups will give brutally honest opinions, and these are something a company can use to boost the quality of their product. Coming out with the best product possible without consulting people from outside the company can be a disaster for regular user experience as an untrained eye sometimes can give great feedback. One dimension of quality is how a product looks, feels, sounds, tastes or smells.
For example, MrTakeOutBags pays close attention to aesthetics, and it shows in their bakery cupcake boxes. Customers notice this kind of details, and they can make or break a sale. There are so many similar product options out there these days that unique attributes and designs have a big impact on purchasing decisions. Offering a wide variety of colors can be the difference between a great fiscal year and an average one.
Many people care more about the look of a product so giving them the most customizable options can outweigh the actual quality of the product. Having customizable features will also allow a company to tack on a few extra dollars to the price. 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. 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. Improvements in performance, features, or other dimensions of quality lead to increased sales and larger market shares MIT Sloan Management Review.
If a company has produced a quality product and has marketed it effectively, then comes the time to see if there is anywhere the cost of making a product can decrease.
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