Attaining quality is all areas of business is difficult task. To make things even more difficult, consumers change their perceptions of quality. For instance, changes in consumer life-styles and in economic conditions have drastically altered customer perceptions of automobile quality. When the oil crisis hit in the mid 1970s, consumer preferences shifted from power and styling to fuel economy.
To the 1980s preferences for quality of design and performance has been added a demand for greater safety in the 1990s. By failing to identify these trends and respond to them quickly in the 1970s and 1990s, US automakers lost opportunities to maintain or increase their market shares relative to foreign competition. Today US automakers are staging a comeback by being more aware that the customer has a choice and by anticipating customer preferences.
In general, a business’s success depends on the accuracy of its perceptions of customer expectations and its ability to bridge the gap between consumer expectation adn operating capabilities. Consumers are much more quality-minded now than in the past and in many cases prefer to spend more for a product that lasts longer or a service that is delivered promptly and thoroughly. A survey of 2000 business unit. Several studies have concluded that a high-quality product has a better chance of gaining market share than does a low-quality product. Moreover, perception plays as important role as performance: A product or service that is perceived by customers to be of higher quality stands as much better chance of gaining market share than does one perceived to be of low quality, even if the actual level of quality are the same.
Good quality can also pay off in higher profits. High-quality products and services can be priced higher than comparable lower quality ones and yield a greater return for the same sales dollar. Poor quality erodes the firm’s ability to compete in marketplace and increases the costs of producing its product or service. For example, by improving conformance to specifications, a firm can increase its market share and reduce the cost of its products or services, which in turn increases profits. Management is more able to compete on prices as well as on quality.
Source: Operations Management: Strategy and Analysis by Krajewski/Ritzman