Perceived quality

From CEOpedia | Management online

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):

  • Price,
  • Market share,
  • Word-of-mouth,
  • Brand name,
  • Reputation,
  • Financial information,
  • Advertising.

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).

Providing value

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 successfully.

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, p. 308).

Examples of Perceived quality

  • Design: The design of a product is a key factor in the perceived quality of a product. Customers will often associate a well-designed product with a higher level of quality and will be willing to pay more for it. For example, Apple has become known for its sleek and modern designs, and people often associate their products with a higher level of quality than other brands.
  • Brand Name: The brand name of a product can also have a major impact on its perceived quality. Customers often associate well-known brands with higher quality products and are willing to pay more for them. For example, people often associate the brand name Rolex with a higher level of quality than other watch brands.
  • Price: The price of a product can also have an effect on its perceived quality. Customers often associate higher priced products with higher levels of quality, regardless of actual performance. For example, a customer may perceive a product with a higher price tag to be of higher quality than a lower priced product, even if the performance is the same.

Advantages of Perceived quality

One of the main advantages of perceived quality is that it allows customers to make judgments about products and services on the basis of their own preferences and values. This provides them with a more personal and tailored experience that can lead to increased satisfaction and loyalty. The following are some of the other advantages of perceived quality:

  • It allows customers to form an opinion of the product before actually using it, based on marketing information, brand names and other factors. This can help drive sales as customers may be more likely to purchase a product that they perceive as being of high quality.
  • It can also be used by companies to differentiate their products and services from those of their competitors. As customers will be more likely to purchase a product or service that they perceive as superior in quality, companies can use perceived quality to create a competitive advantage.
  • It can also help companies to identify areas of improvement and focus their efforts on developing products and services that meet customer expectations. Companies can use customer feedback and surveys to gain insights into how customers perceive the quality of their products and services, and use this information to make improvements.

Limitations of Perceived quality

  • One of the most significant limitations of perceived quality is that it is subjective and highly personal. It is based on individual judgments and opinions which can be influenced by various factors such as culture, personal experiences, and even mood. As such, it is difficult to measure and quantify the perceived quality of a product or service, as it is highly dependent on the individual's perception.
  • Another limitation of perceived quality is that it is affected by the context in which the product or service is evaluated. This means that the same product or service may be perceived differently when evaluated in different contexts. For example, the same product may be perceived differently when it is evaluated in a store versus when it is evaluated online.
  • One of the most significant limitations of perceived quality is that it is influenced by the marketing information provided by the company. Customers may form an opinion of a product or service based on the marketing information provided, which may not be accurate or reflective of the actual quality of the product or service.
  • Finally, perceived quality is highly dependent on the comparison with other similar products or services. For instance, customers may perceive the quality of a product to be higher or lower depending on how it compares to other similar products or services. This means that perceived quality is relative and can change depending on the competition.

Other approaches related to Perceived quality

  • In addition to the eight-dimensional model of quality developed by David Garvin, there are other approaches related to the concept of perceived quality. These include:
  • The concept of total quality management (TQM), which emphasizes the importance of continuously improving product quality and customer service. It stresses the need for organizations to develop a culture of quality, where every individual is committed to providing the highest quality products and services.
  • The concept of service quality, which focuses on the quality of the service provided by an organization. This includes both tangible aspects, such as the physical environment, and intangible aspects, such as the attitude of staff.
  • The concept of customer-perceived value, which emphasizes the importance of providing customers with a product or service that offers them a unique combination of features and benefits at a price they can afford.
  • The concept of customer satisfaction, which measures how satisfied customers are with the products and services they receive.

In summary, there are several other approaches related to perceived quality, such as total quality management, service quality, customer-perceived value, and customer satisfaction. Each of these concepts emphasizes the importance of providing customers with a high-quality product or service, and of measuring how satisfied customers are with their purchase.


Perceived quality — recommended articles
Brand equity measure — Perceived value — Types of market segmentation — Client satisfaction — Customer loyalty — Image of the company — Brand value chain — Kano model — Customer perception

References

Author: Sonia Natkaniec

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