Page 322 - (DK) The Business Book

320 QUALITY SELLS

here is an adage that is that it is usually expensive. In
IN CONTEXT quality sells, and many the UK, for example, in 2013 a
T companies believe that the 30-second television commercial
FOCUS
best way to attract buyers is to cost up to $80,000 (£50,000).
Defining quality
produce a superior product. Offering a quality product is
KEY DATES Businesses that put quality first an alternative to these low-cost
1924 German pen maker believe that the other factors or high-volume approaches. This
Montblanc launches its luxury affecting demand, such as strategy can achieve the same
Meisterstück (“masterpiece”) promotion, distribution, and the goal of boosting a company’s
fountain pen, which is still an price, are much less important than revenues, improving customer
icon of superior quality today. the product itself. retention by offering clients a
At first this approach may seem product of a high standard that
1970 The Hamilton Watch irrational. In some markets, after they will want to keep or to buy
Company develops the first all, low prices are critical. For again and again.
digital watch. It succeeds example, Ryanair’s competitive
despite its $2,100 price tag. advantage over its rivals is based What is quality?
on its low-cost business model, To appreciate the role played by
1985 Management guru Peter
which enables the airline to charge quality, it is first necessary to
Drucker publishes Innovation
lower fares than its rivals. Yet some understand what is meant by this
and Entrepreneurship, which
low-cost goods or services can term. In a manufacturing context,
states that quality is the most
represent a false economy for quality is achieved when a
important factor to affect
customers, especially if the goods company is able to supply reliable,
sales. Drucker says that the
are of poor quality, necessitating durable goods that meet or surpass
consumer is the ultimate
extra costs for the customer to consumer expectations and are
arbiter of a product’s quality. repair or replace them. free of defects.
2005 Entrepreneur Richard Another possible way to boost High-quality products inspire
Branson announces that he revenue is to increase the volume trust. Take, for example, high-
plans to offer the first trips into of goods sold. Some companies quality car tires. They often have
space. The price of $120,000 attempt to achieve this goal by deeper treads than poor-quality
using advertising campaigns to tires, making cars that have them
fails to deter rich and famous
steal market share from their rivals. less likely to skid in emergencies or
potential customers.
However, the problem with trying bad conditions. In this case the
to grow revenue through promotion quality of a car tire could be the

High-quality ...plus added value ...results in a
components and that the customer was product or service
design... not expecting... that will sell itself.