by James D. Roumeliotis and Violetta Ihalainen
A study of 33 publicly traded firms over a 4-year period, as measured by the EquiTrend method, illustrated that perceived quality had an impact on stock yields ─ a key business performance measure.
The study looked at American Express, AT&T, Avon, Citicorp, Coke, Kodak, Ford, Goodyear, IBM, Kellogg’s, and 23 other firms for which the corporate brand drove a substantial amount of sales and profits. Not surprisingly, the influence of perceived quality was nearly as great as that of Return On Investment (ROI).
“Perceived Quality” is considered the customer’s perception of the overall quality or superiority of a product or service with respect to its intended purpose and compared to its alternatives/competition.
“Quality” Is Subjective
According to academics Scott Maynes and Valarie Zeithaml, as there is no general agreement on standards for the skewed term “quality”, a consumer’s judgment about a product’s excellence and superiority is an intangible aspect of a brand. As a result, objective quality is moot, and all quality evaluations are considered to be subjective.
This argument supports the premise that quality is determined by customers’ perceptions, based on individual values. Consequently, perceived quality is defined as a measure of belief.
Branding Activities Impact Consumer Perceptions
Branding activities are all a brand does that impacts consumer perceptions of the brand including product improvements, customer service, user manuals/quick-start guides, and discounts amongst others.
A notable example is with the branding activities Hyundai performed in the automobile industry that raised the product quality perception with both its dealers and consumers. The South Korean automobile manufacturer offered an extended warranty on all its vehicle models to encourage confidence. It worked superbly as demonstrated by their sales which peaked over the last few years.
Great advertising, great packaging and price are also key components. With consumer electronics and software, usability is the main component.
What Influences Perceived Quality in a Product and a Service Provider?
According to David Aaker, a brand strategist and author on the subject matter, perceived quality generates value. As for measurements in the product context, he identifies the following elements:
1. Performance: How well does a washing machine clean clothes?
2. Features: Does toothpaste have a convenient dispenser?
3. Conformance with specifications: What is the incidence of defects?
4. Reliability: Will the lawn mower work properly each time it is used?
5. Durability: How long will the lawn mower last?
6. Serviceability: Is the service system efficient, competent, and convenient?
7. Fit and finish: Does the product look and feel like a quality product?
Within the service context, he considers:
Do the physical facilities, equipment, and appearance of personnel imply quality?
Will the accounting work be performed dependably and accurately?
Does the repair shop staff have the knowledge and skill to get the job done right? Do they convey trust and confidence?
4. Responsiveness: Is the sales staff willing to help customers and provide prompt service?
5. Empathy: Does the bank provide caring, individualized attention to its customers?
Perceived Quality in the Luxury Domain
Although there are no extensive studies on perceived quality in the luxury market, marketing and branding experts, with emphasis in the luxury domain, contend that in the business of luxury, customers perceive quality in a product when they experience high-quality materials and service, when a product performs its function, as well as when it has desirable features, reliability, durability and design.
Luxury consumers also perceive quality based on service received prior to purchase, at the point of purchase and following their purchase. Superior service during the purchasing experience positively affects attitudes and future behavior towards the brand. Customers with little experience of luxury products are especially influenced by service factors.
A shopping atmosphere which exploits the five senses with the presence of sophisticated music, luxurious fixtures and exceptional service creates a mystique that is key to the luxury experience. Such an atmosphere can help persuade shoppers to make purchases that do not necessarily seem sensible in economic terms.
Similarly, exquisite packaging, such as perfume in a beautiful bottle, helps satisfy the ‘need for beauty’ and creates a link between the consumer and the aesthetic values of a luxury brand.
The same experts above, argue that premium prices are associated with prestige ─ the major indication of superior quality.
Making Perceived Quality Equate Actual Quality
Marketing and brand managers shouldn’t overlook the perceived quality concept. They must make consumer perceptions of quality match actual quality by following three recommendations along these lines:
1) Communicate the information about product quality to their customers continuously by utilizing integrated marketing communications tools such as public relations, advertising, sales promotion, personal selling etc.
2) Avoid boasting about product/service quality excessively despite the presence of high-level quality, otherwise, it can make customers feel as if the products and/or services can’t satisfy them as they greatly anticipated previously.
3) Pay attention to the factors affecting the quality of products/services such as pricing, advertising, warranty issues, and brand image etc. These can influence perceived quality directly. For example, using a low pricing strategy excessively can make the perceived product quality decrease because most consumers often equate cheap products with a low-end consumer sector. Consequently, brand image will lose its luster.
Financial performance is deemed to be linked to a brand’s perceived quality – a distinct relationship between them.
Perceived quality is an intangible and overall feeling about a brand and can’t essentially be objectively determined, partly because it is a perception and also because judgments about what is important to customers differ sharply in their personalities, needs, and preferences. However, perceived quality is based on essential factors which include characteristics of the products to which the brand is attached to such as performance and reliability.
In the luxury sector, customers expect luxury brands to be expensive; to satisfy them, luxury products should be in a higher price range. The scarcity of a product also affects the perception of quality during the purchasing experience.
Chevalier and Mazzalovo (2008)
Dubois and Laurent (1999)
Take a Different Path to Learn and Achieve – online – on the above subject matter. Self Study or Scheduled (via webinars). REGISTER FOR THE FREE eCOURSE.