Perceived quality is consument’s subjective and intangible feeling of the brand that depends on personal judgments and based on basic dimensions. It is different to satisfaction or attitude and is defined in relation to the assumed purpose and alternative choices. It is distinguished by the fact that it can be assessed depending on various criteria (D.A. Aaker 1991, p. 80-81). Perceived quality is one of the eight dimensions of quality, that were developed by David Garvin - the deserved professor of Harvard Business School. These eight dimensions can form the basis for strategic quality analysis and therefore proper quality management. David Garvin stated that one of the foundations of perceived quality is the content of marketing information. In his opinion, the customer evaluates the product mainly through the prism of brand names and advertising, not by its objective features (D.A. Garvin 1987r.) Literature pays more attention to quality uncertainty than perceived quality because of information asymmetry. Perceived quality has gained favor in marketing science (L. Wankhade, B. Dabade 2010, p. 27).
Factors affecting the perception of quality
The following factors have an impact on the perception of quality (L. Wankhade, B. Dabade 2010, p.28):
More cues that are considered as quality symbols can be seen in two dimensions: predicted value and confidence value. However, price is a measureable entity that has a high confidence value so people perceive it as quality indicator with low risk. Quality and price may have a positive or negative connection. It depends on whether management uses the price to differentiate the company's products (D.A. Garwin 1988, p. 71). The brand's reputation is also crucial in perceiving its quality. This is due to the analogy regarding the similarity of the company's new products to its existing products. The quality perceived also depends on the country of origin of the product. Management can then work in two ways - intensify sales by emphasizing the country of origin or suppressing the link between the product and its country of origin (L. Wankhade, B. Dabade 2010, p. 28).
The value is provided by perceived quality in several aspects (D.A. Aaker 1991, p. 82-83):
- Reason-to-Buy – perceived quality is key reason for people to buy. It has an impact on the perception of the brand as valuable,
- Differentiate/Position – perceived quality is mainly responsible for placing the product in a specific segment (premium or economy). it reflects the brand's competitiveness,
- A Price Premium – high quality product allows company to charge premium price,
- Channel Member Interest – perceived quality is meaningful for distribution channel members. Image of all channel members depends on products located on the whole line,
- Brand Extensions – strong brand that is respected by customers is able to create new products categories succesfully.
Perceived quality and profitability
Perceived quality creates profitability in following areas (Aaker D.A. 1991, p. 83 ):
- Higher quality products are better perceived and have a larger market share. It emphasizes that perceived quality mostly affects market share,
- By maintaining high quality of products, companies are able to charge higher price. It helps them to improve competitive barriers. Higher price also intensify perceived quality as a result of perceiving it as an indicator of quality,
- Profitability largely depends on the perceived quality, neglecting its impact on the price and market share. Perceived quality will escalate profitability relatively firmly without affecting the price and market share. It shows direct association between ROI and quality,
- Perceived quality does not affect costs in a negative way. In fact, there is no clear sign reflected in the data that enhancing quality will increase costs. Contrary, by improving quality, companies will reduce defects and make manufacturing costs lower.
Perceived quality and willingness to buy
Quality perception process is under big influence of variable price. Monroe and Krischnan created a model that represents the impact of perceived price on willingness to buy. Perceived value occurs in this model as a compromise between sacrifice and perceived quality. The price has a double nature – if it is higher, the customer has the impression about greater perceived quality. This will lead him to purchase decision. Simultaneously, customer identifies higher price with something that must be sacrificed by purchasing certain goods. It reduces his willingness to buy it. This model illustrates that willingness to buy is strongly correlated with perceived value (William B. Dodds, Kent Monroe, Dhruv Grewal 1991, s. 308).
- Aaker D.A. (1991), Managing Brand Equity. Capitalizing on the Value of a Brand Name, The Free Press, New York, p. 81-83
- Aaker D.A., (2010), Buildings Strong Brands, The Free Press, New York, p. 39-44
- Aaker D.A., McLoughlin D. (2009), Strategic Market Management: Global Perspectives, Wiley, New Jersey, p. 163-167
- Dodds W.B., Monroe K., Grewal D. (1991), Effects of Price, Brand and Store Information on Buyer’s Product Evaluations. Journal of Marketing Research, 28(3), p. 307-319
- Garvin D.A. (1988), Managing Quality: The Strategic and Competitive Edge, Managing Quality: The Strategic and Competitive Edge. The Free Press, New York, p. 71.
- Garvin D.A. (1987), Competing on the eight dimensions of quality, Harvard Business Review, November 1987r (2018). Competing on the eight dimensions of quality, Harvard Business Review, 65(6), Boston, p. 101-109
- Walter van Laack A. (2014) Measurement of Sensory and Cultural Influences on Haptic Quality Perception of Vehicle Interiors. Van Laack GmbH, Monchengladbach, p. 11-14, 151-159
- Wankhade L., Dabade B. M. (2010), Quality Uncertainty and Perception. Information Asymmetry and Management of Quality Uncertainty and Quality Perception, Physica-Verlag, Heidelberg, p. 28
Author: Sonia Natkaniec