Copyright MCB University Press Limited 1993There has been increasing emphasis on high product quality by producers worldwide in the last decade. Whole industries and product ranges have changed their quality image. This improvement has been called a quality management revolution in manufacturing firms and has been cited as another industrial revolution[1]. As a result consumers' expectations of quality and reliability of many common products have increased at an unprecedented rate. The car industry is a good example--customers and manufacturers today expect a new vehicle to be in perfect condition when it is delivered to the first buyer, no matter where it was produced. The days of the poor quality "Monday morning" produced car appear to have passed. New cars are expected to perform reliably 15 hours per day for at least three years without any breakdowns and often without any maintenance[2]. The expected life of a car rose during the last decade: it now averages 14 years[3]. Whiteware and household appliances are also good examples of products which we expect to be delivered in perfect condition every time. A few years ago manufacturers would have budgeted for several customer complaints and warranty claims on these products per 100 produced but today these defects have been reduced to almost zero.
Japanese manufacturing firms have strongly influenced these improvements in satisfying customer needs. With their Kaizen philosophy of continual improvements in operating performance, they have pushed customer acceptable quality levels higher and higher[4]. In some industries this has been one of the main contributing advantages which has created new product brand leaders. In many companies this continual striving for improvement has resulted in enhanced customer satisfaction, increased market share and long-term company viability.
A good reputation for a high quality product which gives reliable service is now recognized internationally as a desirable attribute which can provide substantial competitive advantage. A high quality reputation often is necessary to ensure continuity of business in many industries[5]. Customers experiencing poor product quality might tell ten of their friends but, in contrast, a good quality experience will often only be told to two or three people. This news spreads rapidly in today's international product markets through networks of potential customers[6]. The result is that high product quality and reliability are increasingly being seen as essential for long-term survival of a company requiring a reasonable return on investment, especially when faced with strong international competition. This focus on quality has gone well beyond the finished product to examining quality-related issues and processes throughout the total organization[7].
In New Zealand, recently, this increased emphasis on high quality attributes also has been influenced by rapid changes in manufacturing and trading conditions. Substantial trade barriers and industry protection have been progressively removed in the last three years. Export incentives and regional development subsidies also have been phased out. There has been a rapid weaning of all sectors from government support and intervention. The majority of manufacturing and service industries have faced a painful adjustment to the harsh realities of free-market economies[8]. As a result there have been big changes in the cost-effectiveness of New Zealand manufacturing industries and many companies have disappeared or downsized substantially. Industrial companies in New Zealand now have to stand or fall on the merits of their products at true cost. The economic changes have resulted in a more competitive marketplace. Buyers now have available more imported products and more choice. These market changes are still evolving and it may take several more years for the increased competition from new imported products to have full effects on New Zealand firms[9]. It is already clear, however, that price comparison and perceived product quality recently have become more important buying criteria. This increased competitiveness is probably here to stay.
PERCEPTIONS OF NEW ZEALAND-MADE PRODUCT QUALITY
Research was carried out in New Zealand in 1989/90 to seek the views of the buying public about typical product quality and changes in product quality over the last few years. Great efforts have been made by many New Zealand firms recently to improve product quality[9]. These efforts were often as a result of adverse publicity about the quality of locally-made products. Before recent deregulation of import licensing, government policies of import substitution supported companies which could produce at a low cost without much consideration for product quality. Managers probably now believe that their management of product. quality has improved significantly as a result of better quality control systems and quality assurance procedures. The hypothesis for the research study was that most New Zealand operations managers probably believe their products now compare favourably in quality terms with competitive products from other countries.
Public perceptions of product quality were included in a lifestyle survey of over 3,000 households in 1989[10]. This survey included a wealth of data about how New Zealanders live, their circumstances, opinions and values. One part of the study indicated what the principal person in each household buying goods thought about the quality of New Zealand products and whether this has improved in the past few years.
These public perceptions were analysed and then compared with New Zealand manufacturing companies' operations managers' perceptions about their product quality by analysing responses from 117 companies. This quality management study was developed from pilot study interviews in 15 companies, followed by postal questionnaires sent to 347 New Zealand manufacturing firms. A usable return rate of 34 per cent was achieved. This was considered to be a representative sample of operations managers throughout New Zealand responsible for quality management and, in most cases, with a good knowledge of quality standards of bought-in items both from local firms and imported. Operations managers' perceptions were compared with the consumers' perceptions on the following questions:
(1) "I find New Zealand goods are of a better quality than most overseas goods." Respondents were asked to indicate how well they agreed or disagreed with this statement. Most managers agreed quite well with this statement (77.6 per cent agreed at least a little). Consumers also generally agreed (69.4 per cent agreed at least a little). The managers were much stronger than the public in agreeing with this statement (see Figure 1). (Figure 1 omitted)
Female consumers felt more strongly (73.9 per cent agreed at least a little) than males (59.3 per cent) that New Zealand goods are better quality than most overseas goods. Consumers who had experienced overseas travel had very similar quality perceptions to those who had not travelled.
Consumers who said they were Maoris and Pacific Islanders felt stronger agreement than average (80.0 per cent). New Zealand residents born in Europe were about evenly divided (53.1 per cent agreed at least a little).
(2) "Over the past few years quality of most products has improved tremendously." Respondents were asked to indicate if they agreed or disagreed with this statement. Most operations managers (59.8 per cent) agreed with this statement. Consumers were about evenly divided between agree, neutral and disagree (see Figure 2). (Figure 2 omitted) The managers' perceptions of improved product quality was much stronger than the consumers' views.
Female consumers disagreed with this statement (40.7 per cent) more than males (30.6 per cent). There was little difference between the views of those who had travelled overseas and other consumers. New Zealand residents born in Europe were about evenly divided in their agreement and disagreement. Maoris and Pacific Islanders were more in agreement (43.2 per cent) than disagreement (31.8 per cent).
Operations managers were asked two further questions which were not included in the consumers' survey:
(3) "The quality of your organization's products has improved in recent years relative to overseas competitors products." Managers were asked if they agreed or disagreed with this statement. This was asked to investigate the managers' confidence in their improved product quality. A large majority of managers agreed with this statement (71 per cent) and 24.3 per cent were neutral (see Figure 3). (Figure 3 omitted)
(4) "Consumers have perceived an increase in your organization's product quality in recent years." Managers were asked if they agreed or disagreed. This was asked to investigate their perception of consumers' views of changing product quality. Again a large majority of managers agreed with this (73.8 per cent) and 19.6 per cent were neutral (see Figure 4). (Figure 4 omitted)
Three further questions were asked in both the consumer survey and the operations managers' survey:
(5) "I am inclined to trade off some quality for a cheaper price." Respondents were asked to indicate how well they agreed with this statement. Most managers did not agree (56.1 per cent) but 43.8 per cent agreed at least a little. Consumers were divided between not agreeing (39.2 per cent), and 60.8 per cent agreed at least a little (see Figure 5). (Figure 5 omitted) Generally the consumers' view was opposed to the managers' view.
(6) "The Government should set minimum standards of quality for all products sold to consumers." Respondents were again asked how well they agreed with this statement. Most managers disagreed (58.8 per cent) but most consumers agreed (74.4 per cent) (see Figure 6). (Figure 6 omitted) Again, the consumers' view was opposed to the managers' view.
(7) "Most manufacturers are more interested in making profits than in serving customers."
Respondents were also asked how well they agreed with this statement. Most managers disagreed (56.1 per cent) but a significant minority agreed (26.2 per cent). Most consumers agreed (53.2 per cent) but some disagreed (17.7 per cent) (see Figure 7). (Figure 7 omitted) Again, the consumers' view was generally opposed to the managers' view.
The quality management survey of operations managers in manufacturing firms included further questions about product quality systems and quality techniques used. The analysis of this information was published separately[9].
CONCLUSIONS FROM THE SURVEY
Operations managers in New Zealand firms feel strongly that the quality of most products has improved tremendously over the past few years. They almost all agree that their company's product quality has increased in recent years and , that consumers should have seen an increase in their product quality compared with overseas made goods. They also mostly agree that New Zealand-made goods are better quality now than overseas made goods. Most consumers in fact are neutral in their perception of improved quality and there are as many disagreeing as there are agreeing. Consumers mostly agree that New Zealand-made goods are better quality than most overseas goods, but they are not as strong in this view as managers. New Zealand consumers generally do not perceive improved product quality in recent years as strongly as the managers.
There are a number of reasons why New Zealand managers believe more strongly than consumers that product quality has improved. Operations managers have been directly involved in changing quality standards and increased quality training and procedures. During the last ten years, W. Edwards Deming has visited New Zealand, a Deming Institute was formed and influenced quality in many firms. A Total Quality Management Society was formed and has been active in educating and training managers in quality improvements. Independent quality assessors have been trained and accreditation has been forced on many firms by their export customers.
Increased competition is another factor which operations managers have seen at first hand more than consumers. This has made the companies which have survived import deregulation compete on product quality comparisons more than in the past. There has also been a "Buy New Zealand" media campaign sponsored by the Manufacturers Federation which has probably increased public perception of New Zealand made quality.
Operations managers are generally from a higher socio-economic group than average consumers. The type of goods which they are buying for their companies tend to be different than average consumer purchases. Therefore, managers' perceptions of quality will be different. Consumers' perceptions of the quality of products also will be influenced by the sales service given and product reliability, whereas operations managers might think of finished goods quality in the factory warehouse. All of these factors tend to give operations managers a more optimistic view of the improved quality of New Zealand products than average consumers.
Most consumers and managers agree that they will trade off some quality for a cheaper price but only to a limited extent. Consumers mostly believe that the government should set minimum standards of quality for all products, but managers mostly disagree. Consumers also mostly believe that manufacturers are more interested in making profits than serving customers and managers mostly disagree with this. These indications show a public distrust of managers' ethical policies regarding prices, product quality and profitability.
The good news is that most consumers now have a favourable impression about New Zealand goods compared with those made overseas. Time was when a New Zealand-made reputation often included poor quality and limited choice. Most New Zealand manufacturing industry started and grew in the last 30 years on government import substitution policies. If it could be made in New Zealand then import licences for similar products were not granted. Quality then suffered I from lack of competition and company manufacturing policies. If it could be made in New Zealand then import licences for similar products were not granted. Quality then suffered from lack of competition and company manufacturing policies were directed towards volume production at the lowest possible cost with basic standard designs. Clearly this has changed in recent years such that the public perception of New Zealand made quality is generally good. Since the survey results were published in New Zealand recently[9] the media have picked up the news enthusiastically. There have been several newspaper and magazine articles and radio discussions about the improved quality of New Zealand goods.
The survey has shown that the majority of operations managers have an optimistic impression of customers' opinions about the quality of their products. If managers accept these more accurate impressions of customers' opinions then they should be more highly motivated to improve quality further. A lot of useful work has been done recently to improve locally made quality but most of the increased time and cost spent on quality has been in education and training[9]. A lot less has been spent on actually changing quality procedures and systems. The international standards of high product quality are progressively improving, so managers will have to strive continually to secure improved quality and remain competitive.
REFERENCES
1. Feigenbaum, A.V., "Total Quality Developments into the 1990s--an International Perspective", in Chase, R.L. (Ed.), Total Quality Management, IFS Publications, Springer-Verlag, New York, NY, pp. 3-26.
2. Wickens, P., The Road to Nissan: Flexibility, Quality, Teamwork, Macmillan Press, London, 1987.
3. Garvin, D.A., "Competing on the Eight Dimensions of Quality", Harvard Business Review, Vol. 65 No. 6, November 1987, pp. 101-09.
4. Suzaki, K., Techniques for Continuous Improvement, Free Press, New York, NY. 1987.
5. Steingraber, G.G., "Total Quality Management--A New Look at a Basic Issue", Vital Speeches, Vol. 57 No. 13, 1991, pp. 415-16.
6. Wilson, G., Word of Mouth Marketing, Wiley, New York, NY, 1991.
7. Buxey, G., "The Nexus between CAD-CAM and Quality", International Journal of Operations & Production Management, Vol. 11 No. 10, 1991, pp. 19-32.
8. Wenmoth, B.A., "New Zealand's Quality Challenge", Quality Progress, Vol. 20 No. 11, 1987, pp. 45-7.
9. Batley, W., "Management of Quality in Manufacturing Firms", Australia and New Zealand Association of Management Educators Conference, 1991.
10. Feigler, B., Lawson, R., Mueller-Heumann, G. Rummel, A. and Driscoll, A., "New Zealand in the 1990s", Marketing Department University of Otago, New Zealand, 1989.
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