TQM and Its Value-adding Constructs in the Marketing Function - Essay Example

 Introduction Total quality management (TQM) is a systematic methodology that aligns organisational activities and operations which ensure that the organisation continuously improves its processes and systems so that the organisation is equipped to deliver top quality services and outputs (Hoyle 2007). TQM ensures that quality controls are established, utilising a variety of different metrics and internal techniques to provide better quality and efficiency in different departments within the organisation (Assadej and Igel 2009). The management of quality is dependent on cooperation and collaboration with disparate members of the organisation, focusing on improving the inter-dependent processes and systems necessary for an organisation to create value and satisfy the expectations of many different stakeholders (Evans and Lindsay 2005). Through the utilisation of quantitative and qualitative research and measurement tools, processes are improved with emphasis on enhancing leadership capability, ensuring costs are controlled, increasing organisational responsiveness, and generally improving a firm’s competitive position in its established market. Common tools in total quality management include benchmarking, statistical process controls, histograms, Pareto charts, cause and effect diagrams and flow charts (Jaafar 1998). Having offered a definition of total quality management, determining how this system provides value for the organisation can be illustrated in the marketing function, one of the most fundamental methods of achieving competitive advantage. However, what is value? Value is defined as the benefits which a firm is able to create for customers related to the customer’s value chain (Alfadly 2012). This composition explores TQM as an influence and construct of marketing, sustaining an emphasis on TQM’s ability to create value for a firm in its relationship to improving marketing competency and focus. Assessing TQM and its relation to value creation Quality, from a marketing perspective, is defined as being a match between customer expectations and perceptions and the legitimate experiences provided by the firm (Gronroos 2005). Hence, a customer-centric organisation that is reliant on establishing relationships with profitable customer segments must be focused on ensuring that quality systems and quality outputs are aligned with customer perceptions of what actually constitutes quality. In business-to-business marketing, trust is recognised as being one of the most imperative functions between customer and firm, the most paramount value-added aspect of the relationship (Moment 2001). Trust can therefore be established by ensuring that products and services are delivered according to the quality expectations of important customer constituents. One of the most fundamental aspects of what provides competitive advantage to firms is emphasising the marketing mix, especially pertaining to product and price (Boulding and Kirmani 1993). Therefore, it is necessary to ensure that product outputs provided to the customer are aligned with the quality expectations perceived by important customer segments. Many studies have found that when quality is perceived to be superior, businesses achieve increased profitability and higher sales volumes as consumers make purchase decisions related to their perceptions of product quality (Aaker and Jacobson 1994; Gale and Buzzell 1989). Product quality consists of several different dimensions that will attract further customer interest in procuring products from a firm which include high performance, durability, aesthetics, serviceability and general reliability. Therefore, a firm must ensure that it establishes a total quality management system as a means of improving or sustaining quality dimensions of the product if the business wants to retain profitable customer segments. This is how TQM, from a marketing perspective, is able to add value for consumers. For example, a company that utilises a zero defect program to improve quality of product output, will, in the long-run, have a more standardised and streamlined production system with emphasis on recurring quality assurance checks. The end result is market availability of a product that can outperform competition in an established market and a product that is durable, high performance and reliable for the customer as compared to other suppliers in the market. The zero defect program that involves communities of practice to innovate and generate improvement solutions related to the product is part of TQM. The outcome of this TQM activity is the ability of a firm to emphasise product benefits and features in the marketing mix, illustrating to important customers how the business has managed to improve product dependability. This builds the important trust necessary to sustain recurrent customer purchases and emphasises total quality to the customer. One such example of the relationship between TQM, marketing and value is the Audi Company in Hungary. The company recently invested significant financial capital (900 million Euros) to expand and improve production systems in this country. Audi, establishing a joint venture with China’s FAW Group Corporation, made this financial investment as a method of improving quality (Reiter 2012). As part of TQM, Audi determined that it would emphasise training programs to ensure that workers were directly involved in identifying solutions for improving product quality; in conjunction with collaboration with the joint venture partner. The company realised that quality perceptions for consumers were being impacted by two key issues: fingerprint smudges on the finished product and scuff marks occurring as a result of transport cart movements. Using the Delphi Method for qualitative analysis, it was determined that ordering white wheels and covering doors with a variety of different metal sheets would improve quality of outputs thereby better satisfying important and profitable customer segments (Reiter 2012). As a result of Audi’s new total quality management activities and solutions, the business could now use marketing to emphasise product which is positioned in the established market in terms of quality and superiority over other competing luxury products. Value is therefore created in terms of satisfying the expectations of consumers who purchase these luxury vehicles under the phenomenon of conspicuous consumption in which individuals reflect their sophistication, urbanity and social status through procurement of premium products (O’Cass and McEwen 2004). Collaborative qualitative methodologies to determine solutions for continuous improvement in product quality created value in the marketing function. TQM is also recognised as being a method of improving cost controls, as this system identifies solutions in many areas of the firm’s value chain that improve efficiency, productivity and even employee motivation. For example, a company can conduct a competitor analysis to identify a competing business’ processes and metrics for performance to determine how to align the firm’s practices against these benchmarks. Technical benchmarking in this methodology might, as one example, identify a new technology that improves production efficiency and longitudinal output capability by a margin of 40 percent. After conducting an analysis and evaluation of the existing production systems, this firm might realise that making a one-time expenditure to procure this same technology will greatly improve labour, supply and production systems costs by a particular margin. The company, using TQM methodologies, has just ensured a significant long-run cost savings. What are the implications, then, in providing extended value in the marketing function to customers as a result of benchmarking practices? By saving costs in production, the company is now equipped to alter pricing to make it more attractive to customers, as part of the marketing mix. For instance, a unit price of £15.00 that had been relevant in an old production system without the new technology might now be available to the customer at a new price of £12.50, which is highly valuable to price-sensitive customer segments. This new pricing structure can now be emphasised in the business-to-business marketing function as a result of cost savings achieved in the production processes. Now, as a result of TQM, the company sustains a cost leadership strategy in the competitive market which, prior to benchmarking and procurement of a benchmarked production technology, gives the business substantial competitive advantage in terms of pricing structures on finished products. It is recognised that price promotions are the most significant predictor of how a customer judges quality (Dawes 2004). When total quality management efforts have managed to give a business the opportunity to reduce expenditures in many different areas, including supply chain and procurement, manufacturing, quality assurance systems, or even warehousing, a company is able to extend some of these cost savings in terms of pricing methodology. A company might, as a result of more efficient quality in the organisation, be able to offer important volume discounts on products which incentivise a customer making more product purchases which have instant revenue benefits for a firm. Additionally, a customer that is concerned about pricing would theoretically perceive enhanced value as a result, which strengthened the quality of business-to-business relationship and secured longer-term contracts for procurement as a result of being satisfied in a higher degree over that of competing suppliers in the same market. From a leadership perspective, TQM can even improve employee motivation and organisational commitment that is necessary for ensuring top quality product outputs. Qualitative analysis of the work environment and human resources function might, as one example, identify that employees are unproductive as a result of being micro-managed or lack of autonomy. Using interviews or quantitative surveys, a quality-focused manager might come to understand that dramatic changes in the hierarchy need to be developed to gain employee dedication and motivation. Hence, the TQM method of blending qualitative and quantitative methodologies could alter the organisational structure, allowing for more consensus-based leadership ideologies and a decentralisation of authority within the firm. Langfred and Moye (2004) found that job role autonomy and opportunities for shared decision-making improves motivation and productivity. Why, though, is leadership related to adding value in marketing? There is a growing trend known as ethical consumption in which customer segments seek out organisations that have more focus on corporate social responsibility (Grande 2007). A company that has utilised metrics to determine how best to satisfy and motivate employees have excellent opportunities to promote (as part of the marketing mix) how the company dedicates considerable labour and capital to improving working conditions. Using relevant public relations tools (such as press releases or television advertising) to illustrate this focus, it builds more trust with ethically-minded customer segments who might select this firm over other competitors in an established market that do not maintain such high ethical standards. Hence, not only is leadership strategy changed as a result of continuous improvement methodologies and use of TQM metrics to gain perspectives on the job environment, but now the company is equipped to market this focus which gives perceptions of values to the customer. By satisfying employees through the use of TQM tools and instruments which evaluate job role conditions and job environment, an organisation improves morale which reduces turnover rates associated with employee intention to leave. As a result, this reduces the costs of training new employees and improves a company’s human capital advantages in terms of sustaining employees that have advanced knowledge of systems, processes and best practices. As a result, this could further lead to price reductions on products as a result of reducing internal operational expenses. It could also, theoretically, enhance one’s commitment to providing excellent service to customer segments (such as sales managers working directly with business customers), which would in turn be considered highly valuable to customers that expect prompt, courteous, and competent service professionals. TQM, as a method of improving leadership competency and focusing on human relations development internally, has provided a valuable marketing outcome to the customer that exceeds their expectations for quality. Furthermore, in some industries, it is becoming increasingly feasible for competitors to replicate products and processes as a result of a globalised supply chain and ability to rapidly prototype competing products with similar product features and benefits. Available methods in TQM such as quality circles or use of the Delphi Method for problem solution generation can provide a business with the ability to innovate in order to sustain a pioneering marketing position. Communities of practice and similar collaborations occurring as a result of team methodologies in TQM give a business opportunities to be first-to-market with new products after the prototyping stage of product development. First-to-market businesses often define the product category and the benefit is that customers often judge late entrants unfavourably against the original product pioneer (Kalyanaram and Gurumurthy 2008). TQM practices, therefore, have given the business an opportunity to create promotions that focus on the innovative and unique aspects of a new product that was conceived through quality circles and other relevant team-focused problem-solving activities. Therefore, the ability to produce products that give a business significant competitive advantage have impacted marketing strategy to emphasise the new value that a ground-breaking product can provide over that of competing products in a similar market or product category. TQM practices, such as qualitative Delphi Method group collaborations, might also identify that a firm can develop barriers to market entry by new competitive entrants. For instance, a brainstormed new product development strategy might identify opportunities for procuring patents or other intellectual property protections that had not been considered prior to utilising qualitative TQM strategy sessions. As a result, a company is able to promote that it is the only leading supplier of a revolutionary product which gives consumers a perception of not only competency, but value as an inventive supplier partner that manages to better service the manufacturing needs of the customer. If, for example, the customer perceives value in terms of a supplier that can reduce its costs, a ground-breaking product that has advanced benefits could make a customer view value in relation to how their supplier improves its operating expenses. The long-term benefits of TQM has enhanced service quality perceptions with the customer, thereby enhancing word-of-mouth in the industry or generally motivating the customer to maintain long-run relationships with the supplier as a result of trust-building and conviction in the ability of the supplier to improve the customer’s own competitive position in its industry or market. Additionally, organisational responsiveness can be improved as a result of TQM, thereby giving consumers a perception of enhanced competitive value in terms of service provision. For example, quantitative metrics might indicate opportunities for enhancing product reliability and ensuring competent and proficient quality assurance systems to better product outputs. As a result of using histograms, flow charts and other relevant statistical process evaluations, the finished product is more valuable to the customer. In the event of defects, total quality management and the documentation supplementary to the systemic process could identify opportunities of how to correct defects when they occur. As a result, in the event that the customer receives an inferior product, service representatives can have established solutions for correcting the defective product without having to make the customer wait for a new batch run to fulfil their own production needs. Depending on the nature of the product, representatives of the supplier firm can quickly come to the client with important solutions to their problems, make the necessary product corrections, and thereby enhance value perceptions of service competency and timeliness of response that builds more potent relationships. In the marketing function, it is becoming increasingly important to maintain a quality-focused customer relationship management system to gain trust in the buyer relationship. TQM therefore provided the foundation for enhancing serviceability and service quality which are important constructs in the relationship marketing function. Conclusion As illustrated, there is a plethora of benefits in total quality management ideology that is related to value construction for customers as part of the marketing function. TQM enhances leadership competencies, improves employee productivity and satisfaction, identifies solutions for improving finished product output, promotes creation of new innovations, and generally improves quality control systems. As a result, there are many dimensions of the marketing mix that can be promoted that will enhance customer perceptions of value which, in the long-run, leads to higher firm profitability and retention of important customer segments. TQM, whether using quantitative or qualitative measurements and evaluations, serves as the underpinning for improving both relationship marketing and can theoretically affect pricing structures which is often the method by which customers judge quality. It is highly dependent on what specific criteria a customer uses to judge quality by which TQM can improve processes and strategies internally to gain a better corporate reputation for product quality and service competency. Since customers are the ultimate judge of quality and what constitutes value, TQM allows the business to examine its many processes, policies and procedures to ensure continuous improvement and maintain its competitive advantage in terms of customer-perceived value in its operating market. References Aaker, D. and Jacobson, R. (1994). The financial information content of perceived quality, Journal of Marketing Research, 31(2), pp. 191-201. Alfadly, A.A. (2012). 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