Marketing Aspect of

Quality

Bijay Lal Pradhan, Ph.D.

Quality starts with ‘Marketing’

• Marketing is responsible for determining the key characteristics that

determine the suitability of the product or service in the eyes of the

customer.

• Excellent communication between customers and suppliers is the key

to total quality.

• Requirements must be communicated properly throughout the

organization in the form of specifications which can be used as the

basis for the design .

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Quality starts with ‘Marketing’

• Marketing must also establish systems for feedback of customer

information and reaction, and these systems should be designed on a

continuous monitoring.

• Study of market readiness of new product or service.

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User purchase perceptions

Marketing should know the characteristics of product

Performance

Features

Service

Warranty

Price

Reputation

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Customer satisfaction/dissatisfaction feedback

• Customer feedback has to be continuously sought and monitored - not one-time only!( Pro-active! Complaints are a reactive method of finding out there is a problem)

• Customer feedback can be relayed to Mfgr.

• Performance comparison with competitors can be known

• Customers needs can be identified

• Areas for improvement can be noted.

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Customer Feedback Methods

• Comment cards enclosed with warranty card when product is purchased.

• Customer survey and questionnaire

• Customer visits

• Customer focus groups

• Quarterly reports

• Toll-free phones

• e-mail, Internet news groups, discussion forums

• Employee feedback

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Customers- Handle with care!

Customers are those who pays the wages! to employee.

So take good care of customers.

Customer-care centers not just profit-centers!

The entire organization must in effect revolve around the customer –

whether the customer is being well served and if he is really pleased,

contented and satisfied with the service offered.

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Quality in all functions

• For an organization to be truly effective, each part of it must work

properly together.

• Errors have a way of multiplying.

• Business employs so many different specialist skills that everyone has

to rely on the activities of others in doing their jobs.

• The commitment of all members of an organization is a requirement

of ‘company-wide quality improvement’.

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Effects of poor Quality

1. Low customer satisfaction

2. Low productivity, sales & profit

3. Low morale of workforce

4. More re-work, material & labor costs

5. High inspection costs

6. Delay in shipping

7. High repair costs

8. Higher inventory costs

9. Greater waste of material

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Benefits of Quality

1. Higher customer satisfaction

2. Reliable products/services

3. Better efficiency of operations

4. More productivity & profit

5. Better morale of work force

6. Less wastage costs

7. Less Inspection costs

8. Improved process

9. More market share

10. Spread of happiness & prosperity

11. Better quality of life for all.

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Total Quality in Service

For different individuals, certain dimensions are more important than others.

More difficult to define than to define product quality

• Intangibility: cannot generally be seen tested felt of smell

• Inseparability (perishability): produced and consume at same time.

Cannot be store for later sale or use.

• Variability: Quality of the same service vary depending on who

provides it as well as when and how it is produced.

Service Quality dimensions

Important Aspects for service quality

• Communication

• Smooth Connectivity between process

• Principles of 5S consist of SEIRI (Sort), SEITON (Orderliness), SEISO (Cleanliness), SETKETSU (Standardize), SHITSUKE (Self-discipline)

• Benchmarking

• Elimination of unwanted Operations

• Training Motivation, Rewards and Recognition

• Six Sigma Standard

Total Quality in Business

• Quality in General Management

• Quality in Account and Finance

• Quality in Human Resource Management

• Quality Assurance System

• Quality Marketing and sales

• Quality procurement

THE TOTAL QUALITY APPROACH

• STRATEGICALLY BASED

• CUSTOMER FOCUS (INTERNAL AND EXTERNAL)

• PASSION WITH QUALITY

• SCIENTIFIC APPROACH TO DECISION MAKING AND PROBLEM SOLVING

• LONG-TERM COMMITMENT

THE TOTAL QUALITY APPROACH

• TEAMWORK

• CONTINUAL PROCESS IMPROVEMENT

• EDUCATION AND TRAINING

• FREEDOM THROUGH CONTROL

• UNITY OF PURPOSE

• EMPLOYEE INVOLVEMENT AND EMPOWERMENT

Total Quality in Safety

• Safety is the state in which the risk of harm to persons or property

damage is reduced to, and maintained at or below, an acceptable level

through a continuing process of hazard identification and risk

management.

• Safety management reduced the rate of accidents

• Continuous safety management is required for further improvement

Management Commitment and Responsibility

• Develop the safety policy, signed by the accountable executive, in

accordance to national and international standards and

organizational priorities.

• Communicate, with visible endorsement, the safety policy to all

staff.

• Provide necessary human and financial resources.

• People should make knowledgeable about the human, technical,

organizational and environmental factors that determine the safety

of the system as a whole.

Economies of scale

Unit cost reductions associated with a large scale of output

• Ability to spread fixed costs over a large production volume

• Ability of companies producing in large volumes to achieve a greater division of labor and specialization

• Specialization has favorable impact on productivity by enabling employees to become very skilled at performing a particular task

Economies of Scale

Units of output

per period

Cost per

unit of

output

Sources of scale economies:

- technical improvement in production system

- specialization of work

Economies of Scale and TQ

• When a company’s sales gradually increases, company can manufacture more units for selling more products. When large number of units can be produced in a large scale with less input costs then economies of scale can be obtained. It may also mean that if the company grows with the large number of production units, the costs can be decreased in the substantial manner..

• Economies of scale can be obtained with the cost advantage that arises with the increased number of output. The economies of scale can occur due to the inversely proportion between the number of products produced and the fixed costs. The variable cost per unit can also be reduced in this case as the operational efficiency increases.

Effect of Total Quality in Economies of Scale

CUSTOMER SATISFACTION MARKET SHARE

AND LOYALTY

Competing with the value

High relative price is possible

PRICE

QUALITY EXTERNAL

Zero defect products

and services, Exiting INTERNAL

products and services COST

PRODUCTIVITY PROFIT

Mass Marketing

It's vital to modern mass production, mass marketing and quality management.

It lowers cost of production and sets a medium by which products may be

assessed and tested.

Mass marketing is the advertising or promotion of a product, good or service

to a wide variety of audiences with the expectation of appealing to as many

people as possible.

By producing goods that are needed by a large market and offering them at

competitive prices, a mass marketing strategy increases the potential for high

volume sales while reducing the costs of manufacturing through mass

production and quality enhancement.

Understanding and building the quality chains

• “A Customer’s impression of quality begins with the initial contact with the

company and continues through the life of the product.”

• Customers look to the total package - sales, service during the sale, packaging,

deliver, and service after the sale.

• Quality extends to how the receptionist answers the phone, how managers treat

subordinates, how courteous sales and repair people are, and how the product is

serviced after the sale.

• “All departments of the company must strive to improve the quality of their

operations.”24

Customer satisfaction

A customer is one who purchases a product or service from the organization. It is obvious that business cannot survive without satisfying customers.

Satisfaction is “ a person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance in relation to his or her expectation.

• Customer is the Boss or ’King’

• Customer dictates the market trends and direction

• Customer not only has needs to be supplied( basic performance functions)

• Also he ‘wants what he wants!’( additional features satisfy him and influence his purchase decision)

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What is customer satisfaction?

Satisfied customers often make repeat purchases as well as refer

business to other people they know.

• Is it due to Product quality?

• Is it due to pricing?

• Is it due to good customer service ?

• Is it due to company reputation?

• Is it something more?

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Integrated Quality

Quality

CustomerRequirements

ProcessCapability

Cost

Selling Price

Production Cost

Delivery

Customer Schedule

Process Speed

Supplier

Customer

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Customer Satisfaction Process

• Step 1 – Understanding Customer Expectations

• Step 2 – Promises to Customers

• Step 3 – Execution

• Step 4 – Ongoing Dialog with a Customer

• Step 5 – Customer Satisfaction Surveys

To Satisfy customer org has to ..

• Identifies customer needs.

• Designs the production and service systems to meet these needs

• Measures the results as the basis for improvement

• Integrates customers into the strategic planning activities of all

managers.

Customer Retention

Customer retention is more powerful and effective

than customer satisfaction. Customer retention

represents the activities that produce the necessary

customer satisfaction that creates customer loyalty,

which actually improves the bottom line. Customer

satisfaction surveys, focus groups, interviews and

observations can help determine what customers think

of a service or a product.

Customer Retention

Customer retention moves customer satisfaction to the

next level by determining what is truly important to

the customers and making sure that the customer

satisfaction system focuses valuable resources on

things that really matter to the customer. Customer

retention is the nexus between customer satisfaction

and the bottom line. High employee retention has a

significant impact on high retention.