Firms Can Measure the Success of a New Product by All of the Following Factors Except
Corporate executives and consumers have in recent years adopted divergent views of production quality. Several contempo surveys indicate how wide the quality perception gap is:
- Iii out of 5 chief executives of the country'due south largest 1,300 companies said in a 1981 survey that quality is improving; only thirteen% said it is declining.1 Even so 49% of seven,000 consumers surveyed in a carve up 1981 study said that the quality of U.Due south. products had declined in the by 5 years. In addition, 59% expected quality to stay down or refuse farther in the upcoming 5 years.2
- Half the executives of major American appliance manufacturers said in a 1981 survey that the reliability of their products had improved in recent years. Simply 21% of U.Southward. consumers expressed that belief.3
- Executives of U.South. auto manufacturers cite internal records that show quality to be improving each twelvemonth. "Ford quality improved by 27% in our 1981 models over 1980 models," said a Ford executive.4 But surveys show that consumers perceive the quality of U.Due south. cars to exist declining in comparing with imported cars, especially those from Japan.
Mindful of this gap, many U.S. companies have turned to promotional tactics to improve their quality image. Such efforts are axiomatic in two trends. The first is the greater accent advertisements place on the give-and-take quality and on such themes every bit reliability, durability, and workmanship. Ford, for instance, advertises that "quality is job one," and Levi Strauss proffers the notion that "quality never goes out of style." And many ads now claim that products are "the best" or "meliorate than" competitors'.
The second trend is the move to quality assurance and extended service programs. Chrysler offers a five-year, 50,000 mile warranty; Whirlpool Corporation promises that parts for all models volition be bachelor for 15 years; Hewlett-Packard gives customers a 99% uptime service guarantee on its computers; and Mercedes-Benz makes technicians available for roadside aid after normal dealer service hours.
While these attempts to change customer perceptions are a step in the right management, a company's or a product'south quality image obviously cannot be improved overnight. It takes time to cultivate client confidence, and promotional tactics alone volition not do the job. In fact, they tin can backlash if the claims and promises do not hold up and customers perceive them equally gimmicks.
To ensure commitment of advert claims, companies must build quality into their products or services. From a production perspective, this means a companywide delivery to eliminate errors at every stage of the product evolution procedure—product design, process design, and manufacturing. It also means working closely with suppliers to eliminate defects from all incoming parts.
Equally important yet often disregarded are the marketing aspects of quality-comeback programs. Companies must be sure they are offering the benefits customers seek. Quality should be primarily client-driven, not technology-driven, production-driven, or competitor-driven.
In developing product quality programs, companies often fail to accept into account two basic sets of questions. Commencement, how do customers ascertain quality, and why are they suddenly enervating higher quality than in the by? 2d, how of import is loftier quality in client service, and how tin can it be ensured subsequently the auction?
Equally mundane as these questions may sound, the answers provide essential information on how to build an effective customer-driven quality program. Nosotros should non forget that customers, after all, serve as the ultimate guess of quality in the marketplace.
The Production-Service Connection
Product operation and customer service are closely linked in any quality plan; the greater the attention to product quality in production, the fewer the demands on the customer service functioning to correct subsequent bug. Role equipment manufacturers, for example, are designing products to have fewer manual and more than automated controls. Non only are the products easier to operate and less susceptible to misuse but they also crave little maintenance and have internal troubleshooting systems to aid in problem identification. The upwards-front end investment in quality minimizes the need for client service.
Besides its usual functions, client service can act every bit an early on warning system to notice product quality problems. Client surveys measuring product operation can as well assistance spot quality control or design difficulties. And of course detecting defects early spares afterwards embarrassment and headaches.
Quality-comeback successes
Information technology is relevant at this bespeak to consider two companies that take developed successful customer-driven quality programs: L.50. Bean, Inc. and Caterpillar Tractor Visitor. Although these ii companies are in different businesses—L.L. Bean sells outdoor apparel and equipment primarily through mail service-order while Caterpillar manufactures earth-moving equipment, diesel engines, and materials-handling devices, which it sells through dealers—both enjoy an enviable reputation for high quality.
Some 96.7% of 3,000 customers 50.L. Bean recently surveyed said that quality is the attribute they like well-nigh well-nigh the company. Bean executes a client-driven quality program by:
Conducting regular customer satisfaction surveys and sample grouping interviews to runway client and noncustomer perceptions of the quality of its own and its competitors' products and services.
Tracking on its computer all customer inquiries and complaints and updating the file daily.
Guaranteeing all its products to be 100% satisfactory and providing a full cash refund, if requested, on whatsoever returns.
Request customers to fill out a short, coded questionnaire and explain their reasons for returning the merchandise.
Performing extensive field tests on any new outdoor equipment before listing it in the company'south catalogs.
Fifty-fifty stocking extra buttons for nigh of the apparel items carried years ago, but in example a customer needs 1.
Despite recent financial setbacks, Caterpillar continues to exist fully committed to sticking with its quality programme, which includes:
Conducting two customer satisfaction surveys following each purchase, i later 300 hours of product use and the second afterward 500 hours of use.
Maintaining a centrally managed list of product problems equally identified by customers from effectually the globe.
Analyzing warranty and service reports submitted by dealers, equally office of a product improvement program.
Asking dealers to deport a quality audit every bit shortly every bit the products are received and to attribute defects to either associates errors or shipping damages.
Guaranteeing 48—hour delivery of whatever office to any client in the earth.
Encouraging dealers to establish side businesses in rebuilding parts to reduce costs and increase the speed of repairs.
How Practice Customers Ascertain Quality?
To empathize how customers perceive quality, both L.L. Bean and Caterpillar collect much data directly from them. Even with such information, though, pinpointing what consumers actually want is no unproblematic task. For 1 matter, consumers cannot always articulate their quality requirements. They often speak in generalities, complaining, for instance, that they bought "a lemon" or that manufacturers "don't brand 'em like they used to."
Consumers' priorities and perceptions likewise change over time. Taking automobiles as an example, marketplace data compiled by SRI International propose that consumer priorities shifted from styling in 1970 to fuel economic system in 1975 and then to quality of blueprint and performance in 1980.5 (See Exhibit I.)
Changes in the importance to customers of U.S. automobile characteristics
In addition, consumers perceive a product's quality relative to competing products. As John F. Welch, chairman and primary executive of Full general Electric Company, observed, "The customer…rates u.s.a. better or worse than somebody else. It'south not very scientific, but it'southward disastrous if you score low."6
Ane of the major problems facing U.S. automobile manufacturers is the public perception that imported cars, peculiarly those from Nippon, are of higher quality. When a 1981 New York Times-CBS News poll asked consumers if they thought that Japanese-made cars are usually better quality than those made here, about the aforementioned, or not as good, 34% answered better, thirty% said the aforementioned, 22% said non every bit adept, and xiv% did not know. When the Roper Organization asked the same question in 1977, only 18% said better, 30% said the same, 32% said not as adept, and twenty% did not know.vii
Further, consumers are demanding high quality at low prices. When a national panel of shoppers was asked where it would similar to see food manufacturers invest more, the highest-rated response was "better quality for the aforementioned toll."eight In search of such value, some consumers are even chartering buses to Cohoes Manufacturing Company, an apparel specialty shop located in Cohoes, New York that has a reputation for offering high-quality, designer-label merchandise at disbelieve prices.
Consumers' perceptions of product quality are influenced by various factors at each stage of the buying procedure. Some of the major influences are listed in Exhibit II.
Exhibit Ii Factors influencing consumer perception of quality* *Not necessarily in guild of importance.
Watching for key trends
What should companies practise to improve their understanding of customers' perspectives on quality? We know of no other manner than to collect and clarify internal data and to monitor publicly bachelor information.
Internally generated data is obtained principally through client surveys, interviews of potential customers (such every bit focus grouping interviews), reports from salespeople, and field experiments. Recall how L.L. Edible bean and Caterpillar use these approaches to obtain data on how their current and potential customers rate their products' quality versus those of competitors'.
Publicly available information of a more general nature tin can be obtained through pollsters, independent enquiry organizations, regime agencies, and the news media. Such sources are oft helpful in identifying shifts in societal attitudes.
Companies that attempt to define their customers' attitudes on product and service quality often focus too narrowly on the significant of quality for their products and services; an agreement of irresolute attitudes in the broader marketplace can exist equally valuable.
Toward the stop of the terminal decade, too many U.Southward. companies failed to observe that the optimism of the mid-1970s was increasingly giving way to a mood of pessimism and restraint because of deteriorating economic weather condition. Several polls taken during the 1970s indicated the nature and extent of this shift;9 for example, Gallup polls showed that while only 21% of Americans in the early 1970s believed "next year will be worse than this year," 55% held this pessimistic outlook past the end of the 1970s.
Pessimistic about what the future held, consumers began adjusting their life-styles. The unrestrained want during the mid-1970s to buy and own more than gave way to more restrained behavior, such as "integrity" buying, "investment" buying, and "life-cycle" ownership.
Integrity purchases are those made for their perceived importance to society rather than solely for personal condition. Buying a small, energy-efficient automobile, for example, tin be a sign of personal integrity. Investment ownership is geared toward long-lasting products, fifty-fifty if that ways paying a piffling more than. The accent is on such values equally durability, reliability, craftsmanship, and longevity. In the dress business, for example, more manufacturers have begun stressing the investment value of article of clothing. And life-cycle buying entails comparing the cost of buying with the cost of owning. For example, some might see a $10 lite bulb, which uses one-third as much electricity and lasts 4 times every bit long as a $1 conventional light bulb, as the amend deal.
These changes in buying behavior reflect the pessimistic outlook of consumers and their growing emphasis on quality rather than quantity: "If we're going to buy less, permit it be better."
By overlooking this key shift in consumer attitudes, companies missed the opportunity to capitalize on it. If they had monitored the information available, managers could have identified and responded to the trends earlier.
Ensuring Quality Subsequently the Sale
Equally we suggested earlier, the quality of customer service after the sale is often as of import every bit the quality of the product itself. Of form, excellent customer service can rarely compensate for a weak product. Merely poor client service can quickly negate all the advantages associated with delivering a product of superior quality. At companies like L.50. Edible bean and Caterpillar, customer service is not an afterthought but an integral part of the product offering and is subject field to the same quality standards every bit the product process. These companies realize that a tiptop-notch customer service operation tin can be an effective means of accomplishing the following iii objectives:
1. Differentiating a company from competitors. As more customers seek to extend the lives of their durable goods, the perceived quality of customer service becomes an increasingly important factor in the buy decision. Whirlpool Corporation promises to stand by its products rather than hibernate behind its distribution channels; it has parlayed a reputation for constructive customer service into a singled-out competitive reward that reinforces its image of quality.
2. Generating new sales leads and discouraging switches to alternative suppliers. Keeping in regular contact with customers so as to deliver new data to them and gather suggestions for product improvements tin can ensure the continued satisfaction of existing customers and improve the chances of meeting the needs of potential purchasers.
3. Reinforcing dealer loyalty. Companies with potent client service programs can too broaden their distribution channels more easily to include outlets that may not be able to deliver high levels of postpurchase customer service on their ain.
The customer service audit
To be effective, a customer service operation requires a marketing programme. Customer services should be viewed as a product line that must exist packaged, priced, communicated, and delivered to customers. An evaluation of a visitor's current customer service performance—a customer service inspect—is essential to the development of such a plan.
A customer service audit asks managers the following questions:
What are your client service objectives?
Many companies have not established objectives for their customer service operations and take no concept of the role customer service should play in their business and marketing strategies. Every visitor should know what percentage of its revenue stream it expects to derive from service sales and whether the goal is to make a profit, interruption even, or—for reasons of competitive reward—sustain a loss.
What services practise you provide?
It is useful to develop a filigree showing which services your company provides or could provide for each of the products in your line. These might include customer educational activity, financing arrangements, social club confirmation and tracing, predelivery grooming, spare-parts inventory, repair service, and claims and complaints handling.
How do you compare with the contest?
A similar filigree can be used to chart the customer services your competitors provide. Through customer surveys, you can identify those areas of customer service in which your company rates higher or lower than the contest. In areas where your company is weak, can you invest to improve your performance? Where you lot are strong, how easy is it for competitors to match or exceed your performance?
What services do your customers want?
There is little value in developing superior operation in areas of client service most customers consider only marginally of import. An essential ingredient of the audit is, therefore, to empathise the relative importance of various customer services to current and potential customers. Singled-out customer segments can frequently be identified according to the priorities they attach to particular services.
What are your customers' service need patterns?
The level and nature of customer service needed ofttimes change over the product's life. Services that are top priority at the fourth dimension of sale may exist less important five years later on. Companies must understand the patterns and timing of demand for customer services on each of their products. These they can graph, every bit Exhibit Three shows.
Exhibit Iii Postpurchase service demands for ii products
Product A in the exhibit is a security control system, an electronics product with few moving parts. A high level of service is needed immediately following installation to railroad train operators and debug the system. Thereafter, the demand for service rapidly drops to just periodic replacement of mechanical parts, such equally often used door switches.
Product B is an automobile. Service requirements are significant during the warranty period because of customer sensitivity to any artful and functional defects and as well because repairs are free (to the customer). After the warranty period, notwithstanding, service requirements beyond basic maintenance will be more all-encompassing for B than for A, since at that place are more mechanical parts to wear out.
What merchandise-offs are your customers prepared to make?
Excellent service can ever be extended—at a toll. You should know the costs to your company of providing contrasted customer services through various delivery systems (an 800 phone number, a client service amanuensis, a salesperson) at dissimilar levels of performance efficiency. At the same time, you should plant what value your customers place on varying levels of customer service, what level of service quality they are prepared to pay for, and whether they adopt to pay for services separately or every bit part of the product purchase price.
Customers are likely to differ widely in price sensitivity. A printing press manufacturer, for case, has plant that daily newspaper publishers, because of the time sensitivity of their product, are willing to pay a high price for immediate repair service, whereas book publishers, beingness less fourth dimension pressured, tin can afford to be more cost conscious.
The Client Service Program
The success of the marketing program will depend as much on constructive implementation every bit on audio analysis and research. After reviewing several customer service operations in a variety of industries, we believe that managers should concentrate on the following vii guidelines for effective program implementation:
one. Educate your customers. Customers must exist taught both how to use and how non to use a production. And through advisable training programs, companies tin can reduce the chances of calls for highly trained service personnel to solve unproblematic problems. General Electrical recently established a network of product education centers that purchasers of GE appliances tin call toll free. Many consumer problems during the warranty catamenia can exist handled at a cost of $five per phone call rather than the $thirty to $l toll for a service technician to visit a consumer's home.
2. Educate your employees. In many organizations, employees view the customer with a trouble as an badgerer rather than as a source of information. A marketing program is oft needed to alter such negative attitudes and to convince employees not simply that customers are the ultimate judge of quality but besides that their criticisms should exist respected and acted on immediately. The internal marketing plan should comprise detailed procedures to guide customer-employee interactions.
3. Be efficient first, overnice second. Given the selection, most customers would rather accept efficient resolution of their problem than a smile face. The two of course are not mutually sectional, but no company should hesitate to centralize its client service performance in the interests of efficiency. Federal Express, for example, recently centralized its client service function to improve quality control of client-employee interactions, to more easily monitor customer service performance, and to enable field personnel to concentrate on operations and selling. The fearfulness that channeling all calls through three national centers would depersonalize service and annoy customers used to dealing with a field function sales representative proved unwarranted.
4. Standardize service response systems. A standard response machinery is essential for handling inquiries and complaints. L.L. Bean has a standard form that client service personnel use to cover all telephone inquiries and complaints. As noted earlier, the documented information is immediately fed into a computer and updated daily to expedite follow-through. In addition, most companies should establish a response system to handle customer problems in which technically sophisticated people are called in on problems not solved within specific time periods past lower-level employees.
5. Develop a pricing policy. Quality client service does not necessarily mean complimentary service. Many customers even prefer to pay for service beyond a minimum level. This is why long warranty periods often have limited entreatment; customers recognize that product prices must ascent to comprehend actress warranty costs, which may principally do good those customers who misuse the product.10 More of import to success than costless service is the development of pricing policies and multiple-selection service contracts that customers view equally equitable and like shooting fish in a barrel to understand.
Because a separate market place exists for postsale service in many product categories, running the customer service operation as a profit centre is increasingly common. Simply the philosophy of "selling the product cheap and making money on the service" is likely to be self-defeating over the long term, since it implicitly encourages poor product quality.
6. Involve subcontractors, if necessary. To ensure quality, most companies prefer to accept all client services performed by in-house personnel. When effectiveness is compromised as a result, however, the visitor must consider subcontracting selected service functions to other members of the distribution aqueduct or to other manufacturers. Otherwise the quality of customer service will reject as an backwash of cost-cutting or attempts to artificially stimulate need for customer service to utilize slack capacity. Docutel, the automated teller manufacturer, for example, transferred responsibility for client service operations to Texas Instruments because servicing its small base of equipment dispersed nationwide was unprofitable.
7. Evaluate client service. Whether the customer service operation is treated equally a cost center or a profit center, quantitative performance standards should be set for each element of the service package. Practise an analysis of variances between bodily and standard performances. American Airlines and other companies employ such variances to calculate bonuses to service personnel. In improver, many companies regularly solicit customers' opinions about service operations and personnel.
In conclusion, we must stress that responsibility for quality cannot rest exclusively with the production section. Marketers must as well be active in contributing to perceptions of quality. Marketers accept been too passive in managing quality. Successful businesses of today volition use marketing techniques to plan, pattern, and implement quality strategies that stretch beyond the factory flooring.
References
i. Results of a Wall Street Journal:-Gallup survey conducted in September 1981, published in the Wall Street Journal, Oct 12, 1981.
two. Results of a survey conducted past the American Guild for Quality Command and published in the Boston Globe, Jan 25, 1981.
3. 1981 survey information from Appliance Manufacturer, April 1981.
4. John Holusha, "Detroit'southward New Stress on Quality," New York Times, April xxx, 1981.
5. Norman B. McEachron and Harold S. Javitz, "Managing Quality: A Strategic Perspective," SRI International, Business organisation Intelligence Program Report No. 658 (Stanford, Calif.: 1981).
6. John F. Welch, "Where Is Marketing At present That We Really Need It?" a voice communication presented to the Conference Board's 1981 Marketing Conference, New York City, Oct 28, 1981.
7. John Holusha, Ibid.
8. Bill Abrams, "Enquiry Suggests Consumers Will Increasingly Seek Quality," Wall Street Journal, October xv, 1981.
9. Daniel Yankelovich, New Rules (New York: Random House, 1981), p. 182.
x. For bear witness of this fact, see John R. Kennedy, Michael R. Pearce, and John A. Quelch, Consumer Products Warranties: Perspectives, Problems, and Options, report to the Canadian Ministry building of Consumer and Corporate Affairs, 1979.
A version of this article appeared in the July 1983 issue of Harvard Business Review.
Source: https://hbr.org/1983/07/quality-is-more-than-making-a-good-product
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