Topics: Quality management, Quality of service, Quality control Pages: 7 (2606 words) Published: September 29, 2013
The introduction of free trade policy and globalisation has forced businesses to review their strategies and focus on achieving customer satisfaction through quality services and products. Recognizing that fulfilling customers need fulfils the organizations needs as well, focussing on customer satisfaction by attracting, retaining and enhancing customer relationships has become a goal for every organization. This essay will examine how customer’s perceived quality can have a bearing on the profitability of a company. The essay concludes that providing quality services and products enhances customer satisfaction and perceived quality, which leads to customer loyalty and retention ultimately leading to success. INTRODUCTION

Businesses are embracing marketing concepts and strategies with the objective of fulfilling their needs of increasing revenue, and reducing cost as a percentage of sales at the same time build business to gain a competitive edge (Fanning ,2013; Andronikidis, Georgiou, Gotzamani, & Kamvysi, 2009).Through the study of marketing one is able to understand and analyse the market (Fanning,2013), and adopt strategies to gain competitive edge by understanding the concepts and philosophies of marketing. Kotler (1988) defined marketing as an activity geared towards satisfying human needs and wants by entering an exchange process. Fanning (2013), supports the same that the exchange process involves both the parties (customers and organizations) to mutually benefit by fulfilling each other’s needs. The strategies for achieving this are to attract new customers, retain existing customers and enhance value of relationships (Fanning, 2013). It has been found that due to rising competition in the global environment, businesses are focussing on delivering quality service to achieve market leadership (Dagger & Sweeney, 2000; Parasuraman, Zeithaml & Berry,1985). While every organization aims to deliver 100 % customer satisfaction because it influences the buyers decision to return (Fanning, 2013), it is the customers who judge the quality and value of the products and services to decide the level of satisfaction achieved. The marketing concept of mutual satisfaction emphasises the need for fulfilling customer satisfaction for organizational success (Smith, cited in Fanning, 2013).The steps for achieving this has been outlined by fanning as the circle of satisfaction. Customer satisfaction has gained so much attention and importance because of its ability to influence the behavioural intention, customer retention and profitability of the company (Singh, 2006; Cronin. Jr., Brady & Halt, 2000), but it’s the quality that acts as a bridge between the customers and producers of goods and services (Johnson & Weinstein, 2004).Thus the importance of quality cannot be emphasised further.

The essay achieved its objective by referring through a number of existing literatures on quality management, customer satisfaction, customer and loyalty etc aided by lecture notes, e texts, magazines and browsing through the internet. The main objective of this essay is to establish that perceived quality positively impacts the profitability and performance of organisations by: -Demonstrating that quality improvement leads to lower cost and better performance, -Establishing the link that customer satisfaction leads to customer retention and loyalty, where as customer dissatisfaction can lead to loss of business through negative publicity.

Cho & Pucik, 2005 claim that quality is the universally accepted dynamic threshold that must be met by every organisation to satisfy customers. The concept of quality dates back to the 13th century but it was only in the early 20th century that the emphasis on the quality of goods and services delivered became important (Sisek, Knego & Kolakovic, 2009). This has led to the sprouting of many quality management philosophies like the total quality management by...

References: Ahmad, R., & Buttle, F. (2002). Customer retention management: A reflection of theory and practice. Marketing Intelligence and Planning, 20(3), 149-161.
Andronikidis, A., Georgiou, A.C., Gotzamani, K. and Kamvysi, K. (2009), “The application of quality function deployment in service quality management”, The TQM Journal, 219(4), pp. 319-33.
Bernhardt, K. L., Donthu, N, and Kennett, P.A . (2000). "A Longitudinal Analysis of Satisfaction and Profitability." Journal of Business Research 47(2): 161-171.
Calfa,Jemina Maria. (2010, April 22).What is quality [Web log post].Retrieved from http;//
Cost of Quality
Fanning,S.(2013). MBA 5704 Lecture notes. Retrieved from Edith Cowan University,School of Business and Law website:
Fontenot, G.,Henke, L., & Carson, K
Fornell, C., Johnson, M. D., Anderson, E. W., Cha, J., & Bryant, B. E. (1996). The American customer satisfaction index: Nature, purpose, and findings. Journal of Marketing, 60(4), 7-18.
Hamilton-Smith, K., & Morris, T. (1993). Market-driven quality. CMA, 67(4), 23-25. Retrieved from ountid=10675
Hersh, A
Heskett, James L., Jones, Thomas O.,. Loveman, Gary W., Sasser, Jr,W. Earl., and . Schlesinger ,Leonard A.(1995). Putting the Service-Profit Chain to Work. Harvard Business Review.
Hossain, M.J and Islam, Md.A. (2012). "Understanding perceived service quality and satisfaction: A study of Dhaka University Library, Bangladesh", Performance Measurement and Metrics, Vol. 13 Iss: 3, pp.169 - 182
Kettinger, W
Rust, Roland T; Zahorik, Anthony J; Keiningham, Timothy L.(1995).Return on quality. Journal of Marketing, vol.59,58-70.
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Impact of Total Quality Management for a Manufacturing Industry Essay
  • Quality Essay
  • The Impact Of Service Quality And Marke Essay
  • Impact Of Service Quality On Customer Essay
  • PROFITABILITY Research Paper
  • Essay on Productivity Quality Profitability in research
  • The Impact of Employee Satisfaction on Quality and Profitability in High-Contact Service Industries Research Paper
  • Essay about Perceived Impact of Outsourcing

Become a StudyMode Member

Sign Up - It's Free