The Impact of Quality Standards on Firm Attractiveness

1. The Impact of Quality Standards on Firm Attractiveness Author: Ekant Veer Lecturer in Marketing School of Management University of Bath

2. Overview • What constitutes assured quality and reliability? • How can quality be communicated effectively? • What role do brands play in consumer perceptions and behaviour? • Can Quality Standards represent a high quality ‘brand’ for a firm?

3. Quality and Reliability Assurance • A number of different authors have examined the question of what constitutes ‘good quality’. • Before a firm can leverage its high quality procedures or products one must have an understanding of the antecedents of high quality.

4. Quality and Reliability Assurance • From the literature 15 different factors were identified as being antecedents of quality assurance • These factors include: • the use of benchmarking • supplier quality management • top management leadership • the role of the quality department • team work structures • These 15 factors were then synergised into 5 Critical Success Factors (CSFs), or those factors that are essential to developing a high quality organisation.

5. Critical Success Factors • Senior Management Commitment • Internal and External Customer Relationship Management • Process Design • Process Management • Process Measurement

6. Senior Management Commitment • This CSF relates to the way that senior management view quality and reliability assurance. • The literature shows that it is essential for a top down approach to quality within an organisation. • A culture of quality should be disseminated through all levels and all departments of an organisation, starting with the senior managers.

7. Internal and External Customer Relationship Management • Long-term relationships and communicating expectations with both internal and external customers was seen as another CSF from the literature. • Both communication and delivery of processes is crucial for quality to be assured. • Gaining increased involvement from stakeholders in a quality regime helps improve relationships and communication regarding quality.

8. Process Design • Much of the literature is devoted to the importance of good process design. • Focusing on how to minimise double handling in a process, unnecessary paperwork or establishing minimum training requirements are some common examples. • With a well designed process there is less need for costly reworking and redevelopment as problems arise.

9. Process Management • This CSF relates to how a process is maintained and managed using a systemised approach. • Documentation oriented quality systems play a key role in aiding process management. • Removal of unnecessary bureaucracy and levels or management are common tactics in improving process management.

10. Process Measurement • This CSF acts as a key feedback mechanism to aid in the management and development of the quality systems and processes. • It is often seen as an underused element of quality assurance. • Focus is on continual measurement of quality and reliability with an aim to aid continuous improvement of the process.

11. How the CSFs Interact

12. Task • Take the conceptual diagram and apply it to your organisation. Remember, a process does not need to be restricted to a production line or manufacturing firm, but can incorporate services and other less tangible roles.

13. Communicating Quality • If it was felt that quality assurance was key to building external partnerships then each of the CSFs would need to be communicated. • The cost and complexity of this form of communication can be beyond most organisations. • However, the importance associated with quality in some industries, such as pharmaceutical manufacturing, necessitates some means of reducing perceived risk in the eyes of potential partners.

14. Branding of Quality • Branding offers a solution to these communication problems. • A brand is a “name, term, sign, symbol or design, or combination of them which is intended to identify the goods or services of one seller…and to differentiate them from those of competitors” (Kotler, 1991). • Brand equity is “the differential effect of consumer response of brand knowledge on consumer response to the marketing of the brand” (Keller, 1993).

15. Branding of Quality • Therefore, an organization could associate themselves with a brand that symbolises high quality and, so long as this brand was strong enough, be able to change the perceptions and behaviour of potential customers. • For example, a YSL business shirt may be preferred over an unbranded shirt from the same retailer. • Similarly, a firm with ISO accreditation may be preferred over a firm without ISO accreditation when high quality is a key factor in one’s decision making .

16. ISO as a Brand • ISO has shown mixed results in actually improving the quality of a firms processes and products. • However, ISO does offer an internationally recognised brand that helps alleviate risks associated with poor quality.

17. ISO as a Brand • When the risks of partnerships with poor quality stakeholders is high the importance of reputable Standards, such as ISO, increases significantly. • As such, the demands of attaining accreditation are often offset over time. • However, the tangible benefits may be hard to quantify, e.g. how much does one attribute to keeping a long-term partner or one’s reputation improving in the eyes of a new partner.

18. Task • Recall a business dealing or occasion where a customer may have been swayed due to a perception of either poor or excellent quality levels in your or another firm. • Have you ever used your ISO accreditation to convince a potential partner to do business with you? • Has the lack of a Standard ever explicitly led to a lost deal? • Do you feel that Standards are appropriate for your industry? • Do you think Standards are seen as more important to some countries compared with others?

19. Conclusion • Quality is a multi-faceted concept and as such requires a significant communications contribution to effectively show that one’s firm is able to assure levels of high quality. • Firms utilising quality Standards, such as ISO, are able to leverage associated meanings of the brand and communicate a sense of high quality more effectively and efficiently. • The implementation costs of ISO are often offset by the improvements to brand image and brand equity if communicated to prospective stakeholders effectively and the industry demands high quality.