5.3.1
Importance of Quality
After reading these notes, test your knowledge with free interactive questions on Seneca — used by over 10 million students.
The Importance of Quality
The two main aspects of a product or service that customers use to make decisions are price and quality. Quality is therefore important for a business that wants to be profitable and compete with rivals (competitors).
What determines quality?
- Quality is determined by lots of factors such as:
- The quality of the materials that are used.
- The quality of the production process.
- The style of a product.
- The durability, speed and quality of a service.
Customer expectations
- When customers buy a product they have expectations about the quality of the product and service.
- For businesses that produce goods, the goods need to be of a certain quality. The product should not break after one use (unless it is a disposable item) and it should be fit for purpose.
- For businesses that provide a service, a customer will have expectations about the benefits of the service and the time it will take for it to be completed.
Customer service
- For all businesses, it is important to have good quality customer service. If a business fails to deliver a good quality of customer service, customers may buy products and services from competitors instead.
Customer returns
- There are costs associated with returns:
- If a customer is unhappy with a good or service then they may be able to return it for a refund. This often means that a product is wasted and the costs of processing a return may be high.
- Businesses like Asos offer free 28 day returns for customers. This is likely to be one of Asos’ largest costs.
- In 2016, the Financial Times reported that it cost retailers £60bn each year to process customer returns.
Lost customers
- Customers who think a business does not deliver high quality products or services are less likely to purchase from that business again.
Product recalls
- A product may be found to be unsafe for use or may violate legal requirements. A business may be forced to recall all products like this.
- In 2015, Volkswagen was found to have cars that exceeded the legal limit for emissions. This meant they had to recall 11 million cars worldwide at a great cost to the business.
1Business Organisation & Environment
1.1Introduction to Business Management
1.2Types of Organisation
1.3Organisational Objectives
1.4Stakeholders
1.5External Environment
1.6Growth & Evolution
1.7HL Only: Organisational Planning Tools
2Human Resource Management
2.1Functions & Evolution of Human Resource Management
2.2Organisational Structure
2.3Leadership & Management
2.4Motivation
2.5Organisational (Corporate) Culture
2.6HL Only: Industrial/Employee Relations
3Finance & Accounts
3.1Sources of Finance
3.2Costs & Revenues
3.3Break-Even Analysis
3.4Profitability & Liquidity Ratio Analysis
3.6HL Only: Investment Appraisal
3.7HL Only: Budgets
4Marketing
4.1The Role of Marketing
4.2Marketing Planning
4.3Market Research
4.4The 4 Ps
4.4.1Product Decisions4.4.2Pricing Decisions & Price Skimming4.4.3Pricing Decisions & Price Penetration4.4.4End of Topic Test - Pricing & Competition4.4.5Promotional Decisions4.4.6Promotional Decisions 24.4.7Promotional Decisions 34.4.8Digital Marketing4.4.9Evaluating Digital Marketing4.4.10Case Study - The Marketing Mix & Promotion4.4.11Place & Distribution
4.5HL Only: The Extended Marketing Mix
4.6HL Only: International Marketing
4.7E-Commerce
5Operations Management
5.1The Role of Operations Management
5.2Production Methods
5.3HL Only: Lean Prodution & Quality Management
5.4HL Only: Production Planning
5.5HL Only: Research & Development
Jump to other topics
1Business Organisation & Environment
1.1Introduction to Business Management
1.2Types of Organisation
1.3Organisational Objectives
1.4Stakeholders
1.5External Environment
1.6Growth & Evolution
1.7HL Only: Organisational Planning Tools
2Human Resource Management
2.1Functions & Evolution of Human Resource Management
2.2Organisational Structure
2.3Leadership & Management
2.4Motivation
2.5Organisational (Corporate) Culture
2.6HL Only: Industrial/Employee Relations
3Finance & Accounts
3.1Sources of Finance
3.2Costs & Revenues
3.3Break-Even Analysis
3.4Profitability & Liquidity Ratio Analysis
3.6HL Only: Investment Appraisal
3.7HL Only: Budgets
4Marketing
4.1The Role of Marketing
4.2Marketing Planning
4.3Market Research
4.4The 4 Ps
4.4.1Product Decisions4.4.2Pricing Decisions & Price Skimming4.4.3Pricing Decisions & Price Penetration4.4.4End of Topic Test - Pricing & Competition4.4.5Promotional Decisions4.4.6Promotional Decisions 24.4.7Promotional Decisions 34.4.8Digital Marketing4.4.9Evaluating Digital Marketing4.4.10Case Study - The Marketing Mix & Promotion4.4.11Place & Distribution
4.5HL Only: The Extended Marketing Mix
4.6HL Only: International Marketing
4.7E-Commerce
5Operations Management
5.1The Role of Operations Management
5.2Production Methods
5.3HL Only: Lean Prodution & Quality Management
5.4HL Only: Production Planning
5.5HL Only: Research & Development
Practice questions on Importance of Quality
Can you answer these? Test yourself with free interactive practice on Seneca — used by over 10 million students.
- 1What determines the quality of a product or service?Fill in the list
- 2
- 3Why is quality important for businesses?True / false
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