What is quality?
Everybody thinks they can tell a high-quality product from a low-quality one, but in reality things are not always so obvious.
Common wisdom blames the testing procedures. If Coke outsells Pepsi, there must be something wrong with a taste test that shows the opposite.
Quality is a concept that has thousands of adherents. The way to build a better brand, goes the thinking, is by building a better-quality product.
What seems so intuitively true in theory is not always so in practice. Building your brand on quality is like building your house on sand. You can build quality into your product, but that has little to do with your success in the marketplace.
Years of observation have led us to this conclusion. There is almost no correlation between success in the marketplace and success in comparative testing of brands—whether it be taste tests, accuracy tests, reliability tests, durability tests, or any other independent, objective third-party testing of brands.
Read Consumer Reports. And then check the sales rankings of the brands tested compared to the magazine’s quality rankings. You will find little correlation. As a matter of fact, the magazine’s success could be attributed to its ability to find little-known brands that outperform leading brands.
In a recent ranking of sixteen brands of small cars, the number-one brand in quality was twelfth in sales. The number-two brand in quality was ninth in sales. The number-three brand in quality was dead last in sales. If quality translates into sales, the numbers don’t seem to show it.
Let’s say you went shopping for an automobile tomorrow. Does quality matter? Absolutely. Most car buyers look for the best-quality car they can afford.
But where does the concept of quality reside? In the showroom? No.
Quality, or rather the perception of quality, resides in the mind of the buyer. If you want to build a powerful brand, you have to build a powerful perception of quality in the mind.
As it happens, the best way to build a quality perception in the mind is by following the laws of branding.
Take the law of contraction. What happens when you narrow your focus? You become a specialist rather than a generalist. And a specialist is generally perceived to know more, in other words to have “higher quality,” than a generalist.
Does a cardiologist know more about the heart than a general practitioner of medicine? Most people think so. Certainly the perception is true. From a marketing point of view, it really doesn’t matter.
Yet most companies want to be general practitioners. Why? They want to expand the market for their products and services. And in doing so they violate the law of expansion.
Another important aspect of brand building is having a better name. All other factors being equal, the brand with the better name will come out on top.
Being a specialist and having a better name go hand in hand. Expanding a brand and being a generalist tend to destroy your ability to select a powerful name.
There is much misinformation on this subject in business publications today. Omnibus brands are weak, not strong. General Electric, General Motors, and General Dynamics might be well known, but as brands they are weak because they’re too broad in scope.
We know what you are thinking. Some of these omnibus brands are among the world’s leading companies in terms of sales, profits, and stock-market equity. And you’re right. But a weak brand can in fact be a sales success if it competes with even weaker brands. Take General Electric. Most of GE’s competitors are also omnibus brands like Westinghouse, General Motors, Siemens, and United Technologies. Who wins when two weak brands compete? A weak brand that just happens to be less weak than its competitor.
When General Electric tried to compete in mainframe computers with a strong brand like IBM, the GE brand was a multimillion-dollar loser. About $300 million to be exact.
When General Electric tried to compete in household appliances, the GE brand was no match for the specialists. (The products were subsequently sold to Black & Decker, which promptly proved that an omnibus brand like Black & Decker was no better than the GE brand.)
Mile-wide brands like General Electric and General Motors look strong, but in reality are weak. They look strong because they are well known and have been in business for decades. But when they go against the specialists, they are weak.
Another factor in building a high-quality perception is having a high price. Rolex, Häagen-Dazs, Mercedes-Benz, Rolls-Royce, Montblanc, Dom Pérignon, Chivas Regal, Absolut, Jack Daniel’s, and Ritz-Carlton are all brands that benefit from their high price.
High price is a benefit to customers. It allows the affluent customer to obtain psychic satisfaction from the public purchase and consumption of a high-end brand.
The customer who wears a Rolex watch doesn’t do so to be more punctual. The customer who wears a Rolex watch does so to let other people know that he or she can afford to buy a Rolex watch.
Why do blue jeans buyers pay $100 or more for a pair of Replay, Big Star, or Diesel jeans? And would they pay the same price if the label were on the inside of the jeans instead of on the outside?
And what does the sommelier say to the restaurant customer who has just ordered an eighty-dollar bottle of wine? “We have a twenty-dollar bottle that tastes just as good”?
Not likely. Even if the restaurant did have a twenty-dollar bottle that tasted just as good. And even if the customer believed the twenty-dollar bottle tasted just as good.
Conventional wisdom often advocates marketing a high-quality product at a comparable price. This is usually what is meant by a quality strategy. This is what Ford means when it says, “Quality is Job 1.” Everything else, including price, is equal, but we are going to win by having the better-quality automobile.
Not likely. Quality is a nice thing to have, but brands are not built by quality alone.
A better strategy in a sea of similar products with similar prices is to deliberately start with a higher price. Then ask yourself, What can we put into our brand to justify the higher price?
There’s nothing wrong with quality. We always advise our clients to build as much quality into their brands as they can afford. (Hey, it might save you money on service costs later on.) But don’t count on quality alone to build your brand.
To build a quality brand you need to narrow the focus and combine that narrow focus with a better name and a higher price.