Quality and value the keys to developing customer relationships

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To build relationship capital, a firm must be able to fulfill the needs of its customers better than its competitors. It must also be able to fulfill those needs by offering highquality goods and services that are a good value relative to the sacrifices customers must make to acquire them. When it comes to developing and maintaining customer relationships, quality is a double-edged sword. If the quality of a good or service is poor, the organization obviously has little chance of satisfying customers or maintaining relationships with them. The adage of “trying something at least once” applies here. A firm may be successful in generating first-time transactions with customers, but poor quality guarantees that repeat purchases will not occur. On the other hand, good quality is not an automatic guarantee of success. Think of it as a necessary but insufficient condition of successful customer relationship management. It is at this point where value becomes critical to maintaining long-term customer relationships.

Understanding the Role of Quality
Quality is a relative term that refers to the degree of superiority of a firm’s goods or services. We say that quality is relative because it can only be judged in comparison to competing products, or when compared to an internal standard of excellence. The concept of quality also applies to many different aspects of a firm’s product offering. Th total product offering of any firm consists of at least three interdependent components, as illustrated in Exhibit 10.4: the core product, supplemental products, and symbolic and experiential attributes

The Core Product 

The heart of the offering, the core product, is the firm’s raison d’etre, or justification for existence. As shown in Exhibit 10.4, the core can be a tangible good such as a Chevy Silverado or an intangible service such as the Verizon Wireless communication network. Virtually every element of the marketing program has an effect on the quality (or perceived quality) of the core product; however, the firm’s product and branding strategies are of utmost importance. Since the core product is the part of the offering that delivers the key benefits desired by customers, the form utility offered by the core product is vital to maintaining its quality. For example, the quality of an entrée in a restaurant depends on the form utility created through the combination of quality raw ingredients and expert preparation. In service offerings, the core product is typically composed of three interrelated dimensions:

• People. The interaction among the customer, the firm’s employees, and other customers present during service delivery.

• Processes. The operational flow of activities or steps in the service delivery process. Processes can be done through technology or face-to-face interaction.
• Physical Evidence. Any tangible evidence of the service including written materials, the service facility, people, or equipment. Includes the environment in which the service is delivered. As a whole, service firms struggle daily with maintaining the quality of their core service offerings. Because services are so people-intensive, effective implementation of the

marketing strategy (through shared goals, employee motivation, and employee skills) is a major factor that helps to ensure consistency and quality. The quality of service also depends more on issues such as responsiveness to customer requests, consistent and reliable service over time, and the friendliness and helpfulness of the firm’s employees. The quality of tangible goods depends more on issues such as durability, style, ease of use, comfort, or suitability for a specific need.

Whether a good or a service, the firm has little chance of success if its core product is of inferior quality. However, even providing a high quality core product is not enough to ensure customer satisfaction and long-term customer relationships. This occurs because customers expect the core product to be of high quality or at least at a level necessary to meet their needs. When the core product meets this level of expected quality, the customer begins to take it for granted. For example, customers take their telephone service for granted because they expect it to work every time. They only take notice when clarity becomes an issue, or when the service is unavailable. The same thing can be said for a grocery retailer who consistently delivers high quality food and service. Over time, the core product no longer stands out at a level that can maintain the customer relationshipin the long term. It is at this point where supplemental products become critical.

Supplemental Products 

Supplemental products are goods or services that add value to the core product, thereby differentiating the core product from competing product offerings. In most cases, supplemental products are extra features or benefits that enhance the total product experience; however, they are not necessary for the core product to function correctly. In many product categories, the true difference between competing products or brands lies in the supplemental products provided by the firm. For example, every hotel is capable of delivering the core product a room with a bed in which to spend the night. Although the quality of the core product varies among hotels, the important differences lie in the supplemental products. Upscale hotels such as Hyatt or Hilton offer many amenities such as spas, restaurants, health clubs, valet parking, and room service that budget hotels like Motel 6 or Econolodge do not. Wireless phone service is another example.

All wireless firms can fulfill their customers’ communication needs; however, customers use supplemental products such as different phone options; rate plans; and freebies like rollover minutes, free roaming, and free long distance to differentiate one product offering from another. In business markets, supplemental services are often the most important factor in developing long-term relationships. Services such as financing, training, installation, and maintenance must be of top quality to ensure that business customers will continue to maintain a relationship with the supplier firm.

It is interesting to note that companies do not market many products with the core product in mind. When was the last time an automaker touted a car or truck on its ability to fulfill your transportation needs (i.e., getting you from Point A to Point B)? Rather, they focus on supplemental product attributes such as special financing, roadside assistance, and warranties. Supplemental products such as these depend heavily on the product, pricing, and distribution elements of the marketing program. For example, in addition to selling a wide range of name brand products, Amazon also offers its own credit card and free “super saver” shipping on many orders of $25 or more, or free shipping with an Amazon Prime membership. These supplemental services, along with 24/7 access and competitive pricing, make Amazon a formidable competitor in many different product categories.

Symbolic and Experiential Attributes 

Marketers also use symbolic and experiential differencessuch as image, prestige, and brand to differentiate their products. These features are created primarily through the product and promotional elements of the marketing program. Without a doubt, the most powerful symbolic and experiential attributes are based on branding. In fact, many brands like Mercedes, iPod, Ritz-Carlton, Coca-Cola, Rolex, Disney World, and Ruth’s Chris Steak House only need their names to get the message across. These brands have immense power in differentiating their products because they can project the entire product offering (core, supplemental, and symbolic/experiential) with one word or phrase. Other types of products don’t necessarily rely upon branding, but on their uniqueness to convey their symbolic and experiential nature. Major sporting events, such as the Super Bowl, the NCAA Final Four, or   the Tour de France are certainly good examples of this. Even local athletic events, such as high school football games, can have symbolic and experiential qualities if the rivalry is intense.

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