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The Top 5 Reasons Why Your Company Should Focus on Quality

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Katie Dutchak & Jaedyn Matsalla Edwards School of Business. July.4.2017

…And how the German reputation can help your start-up

After spending 10 days in Stuttgart, Germany touring many companies both local and global, two things became glaringly obvious (and it wasn’t the German’s love for beer, although that too was quickly apparent as we were immersed in German culture). First, that German companies rely heavily on data to make decisions as opposed to using a gut instinct. And second, that quality is as much a part of the German culture as a whole as it is a business model decision (maybe this is why the beer is so good!).

While in Stuttgart, we made a few connections back to Canada and specifically, Saskatchewan. One notable connection was that the high-quality product and premium-pricing business model utilized by nearly all the German companies we visited was mirrored in a few local companies, specifically small start-ups.

That being said, an observation was also made. It is much less common to see these up and coming companies using data based decision making (DBDM) in making the majority of business decisions. DBDM is the idea that decisions be made after extensive research is conducted so a misinformed decision is not made. Yet many start-up companies are relying more on gut instinct than on thoroughly researched facts.

But this is not their fault, and here’s why:

Data-based decision making requires resources. It requires a company to pay employees to spend time researching topics needed to make a simple decision. OR, it requires companies to search for the best and most reliable market research available and then purchase said research. The required resources of time, manpower, and mostly money are all things that start-ups are generally short on in the beginning.

So, if you are that start-up company, and you know that you have a high quality product that you want to sell at a premium price but don’t have the data to back up your decision, this information is for you.

Here are 5 Reasons Why Consumers Will Pay for High Quality Products

It’s Your Competitive Advantage
When you want longevity in a market, the only thing that will get you there is your customers’ satisfaction – consistently. And the only thing that creates consistent customer satisfaction? Quality. As discussed about in Relationship Between Quality Management, Innovation, and Competitiveness: Evidence from Greek Companies a customer’s satisfaction can only be your competitive advantage if quality is at the utmost forefront.

This is the Century of Quality
Dr. Joseph Juran explains in the International Journal of Productivity and Performance Management about the transition happening from last century’s focus on control and improvement to this century’s clear emphasis on pure quality of a product.  The time is now! (The Ten Commandments of Quality: A Performance Perspective)

Quality → Customer Advocacy → Customer Loyalty
Jiju Antony of Heriot Watt University, Edinburgh, UK explains that as quality transitions in this new century, having a quality product will lead you to customer advocacy. In a world connected so firmly to social media, a satisfied customer will take to a social platform to express their approval of your product. This research also talks about how that customer’s advocacy will almost always lead to customer loyalty; the golden ticket with customers. Not only will they continue to purchase from you, but they will also recommend you first to those around them. (The Ten Commandments of Quality: A Performance Perspective) Win – Win!

Quality Leads to an Emotional Connection
As hinted above, Harvard Business Review’s article Luxury for The Masses notes that when customers have the choice to buy a product that is “well-designed, well-crafted, (and) well-engineered” they will pay a premium for it. Not only that, but they now have an emotional connection to it, they believe in the product and that belief is a strong emotion. The consumer will pay more because they feel connected to the product and it now has meaning to them.  Sounds a lot like what Antony from Edinburgh was talking about – ‘eh?!

Because the Customers Have Said They Will!
Ipsos OTX, a market research company, polled over 18,000 people in 25 different countries and 45% say they would be likely to pay more for a higher quality product. Geography was not a factor in the differences of agreement and disagreement, however socio-economic factors were. Out of the 23% that did not agree, the factors that played a role was household income, education level, and social media use. (Warc 2013)

The people have spoken, it’s high quality they want and a greater price they’ll pay!

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