A Comprehensive Approach
Total Quality Management (TQM) is a well-known philosophy for coordinating all of a company’s production processes, which mandates cooperation by all affected departments. Its three basic principles are employee involvement, continuous improvement, and customer satisfaction. Customers often use the term “quality” to refer to their level of satisfaction with a company’s products.” Companies that incorporate customer satisfaction considerations into production processes are usually referred to as having a market orientation. High-performance companies generally use a market orientation to guide development of products and services to satisfy customers better than competitors—that is, they offer something important to customers that competitors do not offer. Implementing this strategy requires a comprehensive application of market orientation within the firm, as indicated by the recent success of Coach, which is best known for its high-quality, fashionable handbags for women. In the early 2000s, Coach’s rapid sales growth stemmed from a decision by its chief executive, Lew Frankfort, to make its leather handbags more fashionable. Frankfort sought to develop “mixed material bags, a more-fun image and a wider array of styles and products.” To implement this strategy, Coach used extensive marketing research, including test marketing and consumer surveys, to ascertain which styles and functions women preferred in their handbags. This strategy has led Coach to outsource manufacturing to factories that can work in materials other than leather and that can react quickly to changing fashions. Recognizing that the recession has affected consumers’ incomes and expectations, Coach is reducing its average handbag price to less than $300. Keeping its focus on customer needs, Coach seeks to maintain profitability by...
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