Customer satisfaction and company profitability are linked closely to product and serviee quality. Higher levels of quality result in greater customer satisfaction, while at the same time supporting higher prices and often lower costs. Therefore, quality improvement programmes normally increase profitability. The Profit Impact of Marketing Strategies studies show similarly high correlations between relative product quality and profitability for Europe and the United States (see Figure 11.6).31
The task of improving product and service quality should be a company's top priority. Much of the striking global successes of Japanese companies resulted from their building exceptional quality into their products. Most customers will no longer tolerate poor or average quality. Companies today have no choice but to adopt total quality management if they want to stay in the race, let alone be profitable. According to GE's chairman, John F. Welch, Jr: 'Quality is our best assurance of customer allegiance, our strongest defence against foreign competition and the only path to sustained growth and earnings.21
Quality has been variously defined as 'fitness for use', 'confonnance to requirements' and 'freedom from variation'.2'5 The American Society for Quality Control defines quality as the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. This is clearly a customer-centred definition of quality. It suggests that a company has delivered quality whenever its product and service meets or exceeds customers' needs, requirements and expectations. A company that satisfies most of its customers' needs most of the time is a quality company.
It is important to distinguish between performance quality and eonformance quality. Performance quality refers to the level at which a product performs its functions. Compare two German cars: Volkswagen, Europe's leading volume car maker, and Mercedes, Europe's leading luxury car maker. A Mercedes provides higher performance quality than a VW: it has a smoother ride, handles better and lasts longer. It is more expensive and sells to a market with higher means and requirements. Conformance quality refers to freedom from defects and the qualify
The totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.
total quality management (TQM) Programmes designed to continuously improve the quality of product, service and marketing processes.
Relative qualify boosts rate of return.
consistency with which a product delivers a specified level of performance. Both a Mercedes and a VW could offer equivalent conformance quality to their respective markets, since each consistently delivers what its market expects. A DM50,000 car that meets all of its requirements is a quality car; so is a DM15,000 car that meets all of its requirements. However, if the Mercedes handles badly or if the VW gives poor fuel efficiency, then both cars have failed to deliver quality, and customer satisfaction suffers accordingly.
The European Foundation for Quality Management's excellence model, in Figure 11.5, is used widely across Europe. Marketing shares with other functions the responsibility for striving for the highest quality of a company, product or service. Marketing's commitment to the whole process needs to be particularly strong because of the central role of customer satisfaction to both marketing and total quality management (TQM). Within a quality-centre company, marketing management has two types of responsibility. First, marketing management participates in formulating the strategies and policies that direct resources and strive for quality excellence. Secondly, marketing has to deliver marketing quality alongside product quality. It must perform each marketing activity to consistently high standards: marketing research, sales training, advertising, customer services and others. Much damage can be done to customer satisfaction with an excellent product if it is oversold or is 'supported' by advertising that builds unrealistic expectations.
Within quality programmes, marketing has several distinct roles. Firstly, marketing has responsibility for correctly identifying customers' needs and wants, and for communicating them correctly to aid product design and to schedule production. Second, marketing has to ensure that customers' orders are filled correctly and on time, and must check to see that customers receive proper instruction, training and technical assistance in the use of their product. Thirdly, marketers must stay in touch with customers after the sale, to make sure that they remain satisfied. Finally, marketers must gather and convey customers' ideas for product and service improvement back to the company.
TQM has played an important role in educating businesses that quality is more than products and services being well produced, but is about what marketing has been saying all the time: customer .satis/action. At the same time, TQM extends marketing's view to realize that the acquisition, retention and satisfaction of good employees is central to the acquisition, retention and satisfaction of customers.24
Total quality is the key to creating customer vaiue and satisfaction. Total quality is everyone's job, just as marketing is everyone's job:
Marketers who don't learn the language of quality improvement, manufacturing and operations will become as obsolete as buggy whips. The days of functional marketing are gone. We can no longer afford to think of ourselves as market researchers, advertising people, direct marketers, marketing strategists - we have to think of ourselves as customer satish'ers - customer advocates focused on whole processes .2fr
With TQM's commonality with marketing's aims, it is ironic that one study found that marketing people were responsible for more customer complaints than any other department (35 per cent). Marketing mistakes included eases in which the sales force ordered special product features for customers, but failed to notify manufacturing of the changes; in which incorrect order processing resulted in the wrong product being made and shipped; and in which customer complaints were not properly handled.36
The implication here is that marketers must spend time and effort not only to improve external marketing, but also to improve internal marketing. Marketers must be the customer's watchdog or guardian, complaining loudly for the customer when the product or the service is not right. Marketers must constantly uphold the standard of 'giving the customer the best solution*. Marketing Highlight 11.4 presents some important conclusions about total quality marketing strategy.
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