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IMPORTANCE OF BRAND QUALITY IN ORGANIZATIONS

Growth of Modern Quality Management

Key Idea
As consumer expectations have risen, a focus on quality has permeated other key sectors of the
economy, most notably health care, education, not-for-profits, and government.
Systems
 A system is a set of functions or activities within an organization that work together for
the aim of the organization.
 Subsystems of an organization are linked together as internal customers and suppliers.
 A systems perspective acknowledges the importance of the interactions of subsystems,
not the actions of them individually.
Key Idea

Successful management relies on a systems perspective, one of the most important elements of
total quality.
Manufacturing Systems (1 of 2)
 Marketing and sales
 Product design and engineering
 Purchasing and receiving
 Production planning and scheduling
 Manufacturing and assembly
 Tool engineering
 Industrial engineering and process design
 Finished goods inspection and test
 Packaging, shipping, and warehousing
 Installation and service

Key Idea
Traditional quality assurance systems in manufacturing focus primarily on technical issues such
as equipment reliability, inspection, defect measurement, and process control.

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Relationships in a Typical Manufacturing System (Fig.2.1)

Quality in Marketing
Marketing and sales personnel are responsible for determining the needs and expectations of
consumers.

Quality in Product Design

Product design and engineering functions develop technical specifications for products and
production processes to meet the requirements determined by the marketing function.

Quality in Purchasing
A purchasing agent should not simply be responsible for low-cost procurement, but should
maintain a clear focus on the quality of purchased goods and materials.

Quality in Production Planning & Scheduling

Poor quality often results from time pressures caused by insufficient planning and scheduling.

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Quality in Manufacturing and Assembly

Both technology and people are essential to high-quality manufacturing.

Quality in Production Planning & Scheduling

Poor quality often results from time pressures caused by insufficient planning and scheduling.

Quality in Process Design

Manufacturing processes must be capable of producing output that meets specifications
consistently.
Quality in Finished Goods Inspection and Testing
The purposes of final product inspection are to judge the quality of manufacturing, to discover
and help to resolve production problems that may arise, and to ensure that no defective items
reach the customer.
Quality in Installation and Service
Service after the sale is one of the most important factors in establishing customer perception of
quality and customer loyalty.
Quality in Business Support Functions for Manufacturing
 Finance and accounting
 Quality assurance
 Legal services

Key Idea
Every manager is responsible for studying and improving the quality of the process for which he
or she is responsible; thus, every manager is a quality manager.
Quality in Services
 Service is defined as “any primary or complementary activity that does not directly
produce a physical product – that is, the non-goods part of the transaction between buyer
(customer) and seller (provider).”

Key Idea
The American Management Association estimates that the average company loses as many as 35
percent of its customers each year, and that about two-thirds of these are lost because of poor
customer service.

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Critical Differences Between Service and Manufacturing (1 of 2)

 Customer needs and performance standards are more difficult to identify and measure
 Services requires a higher degree of customization
 Output is intangible
 Services are produced and consumed simultaneously
 Customers are often involved in actual process
 Services are more labor-intensive than manufacturing
 Services handle large numbers of transactions

Key Idea
These differences make it difficult for many service organizations to apply total quality principles,
and foster misguided perceptions that quality management cannot be effectively accomplished
in services.

Components of Service System Quality

 Employees
 Information technology
Key Idea
Researchers have repeatedly demonstrated that when service employee job satisfaction is high,
customer satisfaction is high, and that when job satisfaction is low, customer satisfaction is low.

Key Idea
Information technology is essential for quality in modern service organizations because of the
high volumes of information they must process and because customers demand service at ever-
increasing speeds.

Quality Issues in Health Care

 Avoidable errors
 Underutilization of services
 Overuse of services
 Variation in services
Key Idea
Although the national health care system as a whole may need a sweeping overhaul, many
individual providers have turned toward quality as a means of achieving better performance and
customer satisfaction.

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Quality in Higher Education

Business plays an important role in fostering quality improvement efforts in higher education by
transferring knowledge and expertise on quality processes and implementation practices.

Academic Quality Improvement Project (AQIP)

AQIP criteria focuses on institutional practices for helping students learn, accomplishing other
distinct objectives, understanding student and stakeholder needs, valuing people, leading and
communicating, supporting institutional operations, measuring effectiveness, planning
continuous improvement, and building collaborative relationships—all of which are key elements
of TQ.

Quality in Small Business and Not-for-Profits

 Slow to adopt quality approaches
– General lack of understanding and knowledge about quality
– Focus on sales and market growth, cash flow, and routine fire fighting
– Lack of resources for formal quality systems
Key Idea
Perhaps the most important factor in successful quality initiatives in small businesses is the
recognition by the CEO or president that a quality focus can be beneficial and lead to achieving
organizational goals.

Key Idea
Quality concepts and principles are universal and can be applied in all types of organizations. The
difficulty, of course, is developing an infrastructure to make it happen and the discipline to
sustain efforts over time.

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FOCUSING ON CUSTOMERS

Key Idea
To create satisfied customers, the organization needs to identify customers’ needs, design the
production and service systems to meet those needs, and measure the results as the basis for
improvement.

Importance of Customer Satisfaction and Loyalty

 “Satisfaction is an attitude; loyalty is a behavior”
 Loyal customers spend more, are willing to pay higher prices, refer new clients, and are
less costly to do business with.
 It costs five times more to find a new customer than to keep an existing one happy.
 A firm cannot create loyal customers without first creating satisfied
customers.

Key Idea
Customer wants and needs drive competitive advantage, and statistics show that growth in
market share is strongly correlated with customer satisfaction.

Key Idea

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The econometric model used to produce ACSI links customer satisfaction to its determinants:
customer expectations, perceived quality, and perceived value. Customer satisfaction, in turn, is
linked to customer loyalty, which has an impact on profitability.

Key Idea
Many organizations still focus more on processes and products from an internal perspective,
rather than taking the perspective of the external customer.

Leading Practices (1 of 2)
 Define and segment key customer groups and markets
 Understand the voice of the customer (VOC)
 Understand linkages between VOC and design, production, and delivery
 Build relationships through commitments, provide accessibility to people and
information, set service standards, and follow-up on transactions
 Develop effective complaint management processes
 Measure customer satisfaction for improvement

Key Customer Groups

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 Organization level
 consumers
 external customers
 employees
 society
 Process level
 internal customer units or groups
 Performer level
 individual internal customers

Identifying Internal Customers

 What products or services are produced?
 Who uses these products and services?
 Who do employees call, write to, or answer questions for?
 Who supplies inputs to the process?

Key Idea
The natural customer-supplier linkages among individuals, departments, and functions build up
the “chain of customers” throughout an organization that connect every individual and function
to the external customers and consumers, thus characterizing the organization’s value chain.

Customer Segmentation
 Demographics

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 Geography
 Volumes
 Profit potential

Key Idea
Segmentation allows a company to prioritize customer groups, for instance by
considering for each group the benefits of satisfying their requirements and the
consequences of failing to satisfy their requirements.
Key Dimensions of Manufacturing Quality
 Performance – primary operating characteristics
 Features – “bells and whistles”
 Reliability – probability of operating for specific time and conditions of use
 Conformance – degree to which characteristics match standards
 Durability - amount of use before deterioration or replacement
 Serviceability – speed, courtesy, and competence of repair
 Aesthetics – look, feel, sound, taste, smell

Key Dimensions of Service Quality

 Reliability – ability to provide what was promised
 Assurance – knowledge and courtesy of employees and ability to convey trust
 Tangibles – physical facilities and appearance of personnel
 Empathy – degree of caring and individual attention
 Responsiveness – willingness to help customers and provide prompt service

Kano Model of Customer Needs

 Dissatisfiers: expected requirements that cause dissatisfaction if not present
 Satisfiers: expressed requirements
 Exciters/delighters: unexpected features

Key Idea

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As customers become familiar with them, exciters/delighters become satisfiers over time.
Eventually, satisfiers become dissatisfiers.
Customer Listening Posts

 Comment cards and formal surveys

 Focus groups
 Direct customer contact
 Field intelligence
 Complaint analysis
 Internet monitoring
Key Idea
Companies use a variety of methods, or “listening posts,” to collect information about customer
needs and expectations, their importance, and customer satisfaction with the company’s
performance on these measures.
Using Customer Information

 Link customer needs and expectations to design, production, and service delivery
processes
 Empower employees to listen and take appropriate action to meet customer needs

Key Idea
An organization builds customer loyalty by developing trust, communicating with customers, and
effectively managing the interactions and relationships with customers through approaches and
its people. Companies must carefully select customer contact employees, train them well, and
empower them to meet and exceed customer expectations.
Moments of Truth

 Every instance in which a customer comes in contact with an employee of the company.
 Example (airline)
 Making a reservation
 Purchasing tickets
 Checking baggage
 Boarding a flight
 Ordering a beverage
 Requests a magazine
 Deplanes
 Picks up baggage

Customer Relationship Management

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 Accessibility and commitments

 Selecting and developing customer contact employees
 Relevant customer contact requirements
 Effective complaint management
 Strategic partnerships and alliances

Importance of Complaint Management

 The average company never hears from 96 percent of its unhappy customers
 Of the customers who make a complaint, more than half will do future business if the
complaint is resolved
 The average customer who has had a problem will tell 9 or 10 others.
 Dissatisfied customers increasingly post their feelings on the Web

Key Idea
To improve products and processes effectively, companies must do more than simply fix the
immediate problem. They need a systematic process for collecting and analyzing complaint data
and then using that information for improvements.
Measuring Customer Satisfaction

 Discover customer perceptions of business effectiveness

 Compare company’s performance relative to competitors
 Identify areas for improvement
 Track trends to determine if changes result in improvements

Key Idea
An effective customer satisfaction measurement system results in reliable information about
customer ratings of specific product and service features and about the relationship between
these ratings and the customer’s likely future market behavior.
Survey Design
 Identify purpose
 Determine who should conduct the survey
 Select the appropriate survey instrument
 Design questions and response scales

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Key Idea
The types of questions to ask in a survey must be properly worded to achieve actionable results.
By actionable, we mean that responses are tied directly to key business processes, so that what
needs to be improved is clear; and information can be translated into cost/revenue implications
to support the setting of improvement priorities.
Key Idea
Appropriate customer satisfaction measurement identifies processes that have high impact on
satisfaction and distinguishes between low performing processes low performance and those
that are performing well.
Difficulties with Customer Satisfaction Measurement

 Poor measurement schemes

 Failure to identify appropriate quality dimensions
 Failure to weight dimensions appropriately
 Lack of comparison with leading competitors
 Failure to measure potential and former customers
 Confusing loyalty with satisfaction

Customer Perceived Value

 CPV measures how customers assess benefits—such as product performance, ease of
use, or time savings—against costs, such as purchase price,installation cost or time, and
so on,in making purchase decisions.

THE CUSTOMER IS NOT ALWAYS RIGHT BUT...

• the customer is always the customer and this means simply that solving the problem is
often more important than who is right

• If you can solve their problem without blaming yourself or others, you will reduce stress,
everyone will feel better and you will be on your way to CUSTOMER SATISFACTION

TYPES OF DIFFICULT CUSTOMERS?

• ANGRY
• NASTY
• DEMANDING
• CRITICAL
• NON-STOP TALKER

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• ODDBALL
• INDECISIVE

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DR. ERICSON “ST. YURI” MATIAS