Tag Archives | brand equity

Total Quality Management

Total Quality Management (TQM) Definition

Total quality management (TQM) is a management philosophy that says a company should always strive to improve the quality of its products and services. According to TQM, quality can always be improved and should always be improved. Quality improvement is also an ongoing effort that never ceases.

The goal of TQM methodologies is to exceed the consumers’ expectations for quality. Furthermore, TQM advocates argue that customers seek out the highest quality products and services and are willing to pay a premium for superior quality. As a result, companies that are always striving for improved quality will lead to improved customer satisfaction and higher profits.

Furthermore, TQM advocates argue that continuously striving for quality improvements enhances the performance of business operations and improves operational efficiency. This is because TQM demands that a company always seek out, identify, and eliminate problems and operational inefficiencies.

Cost of Quality

The pursuit of total quality will cause a company to incur costs – the costs of quality. There are two types of cost of quality – costs to control quality and the costs incurred from failure to control quality. Costs to control quality include preventative and appraisal costs designed to stop defects before they happen and to evaluate operations. In comparison, costs incurred from failure to control quality are costs that are incurred after the fact. The best way to improve quality is to focus on prevention.

Cost of Quality Examples

Examples of prevention-related costs of quality include the following

Some examples of appraisal activities include the following

  • Inspecting materials
  • Machines
  • Processes

Examples of costs incurred from failure to control quality include the following

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total quality management

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total quality management

Sources:

Hilton, Ronald W., Michael W. Maher, Frank H. Selto. “Cost Management Strategies for Business Decision”, Mcgraw-Hill Irwin, New York, NY, 2008.

Barfield, Jesse T., Michael R. Kinney, Cecily A. Raiborn. “Cost Accounting Traditions and Innovations,” West Publishing Company, St. Paul, MN, 1994.

See Also:
Malcolm Baldrige National Quality Award
Activity Based Management
Capital Structure Management
Retainage Management and Collection
Theory of Constraints

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Market Positioning

See Also:
Company Life Cycle
Pricing Strategies
Marking to Market
Benchmarking
Capitalization

Market Positioning Definition

What is market position? In marketing and business strategy, market position refers to the consumer’s perception of a brand or product in relation to competing brands or products. Market positioning refers to the process of establishing the image or identity of a brand or product so that consumers perceive it in a certain way.

For example, a car maker may position itself as a luxury status symbol. Whereas a battery maker may position its batteries as the most reliable and long-lasting. And a fast-food restaurant chain may position itself as a provider of cheap and quick standardized meals. A coffee company may position itself as a source of premium upscale coffee beverages. Then a retailer might position itself as a place to buy household necessities at low prices. And a computer company may position itself as offering hip, innovative, and use-friendly technology products.

Positioning of a Brand

The positioning of a brand or product is a strategic process that involves marketing the brand or product in a certain way to create and establish an image or identity within the minds of the consumers in the target market. Market positioning of a brand or product must be maintained over the life of the brand or product. Doing this requires ongoing marketing initiatives intended to reinforce the target market’s perceptions of the product or brand.

Repositioning Definition

Repositioning a brand or product means altering its place in the minds of the consumer, or essentially changing the brand’s or product’s image or identity. When you are repositioning, or trying to change the consumers’ perception of a brand or product after it has already been solidified, may confuse or alienate consumers in the target market.

For example, if a premium luxury car maker suddenly slashed the prices of its vehicles and began selling them at the same prices as cheaper brand-name vehicles, consumers would no longer perceive the vehicles made by the luxury car maker as prestigious status symbols, even though the car features may remain unchanged.

Cost Leadership and Differentiation

There are two broad categories of market position: cost leadership and differentiation. Cost leadership and differentiation market positioning strategies are applicable to any business and any industry. A business can choose to position itself using a cost leader strategy or a differentiation business strategy.

Cost Leader Strategy

A company using a cost leader strategy attempts to position itself in the minds of the consumers as a company that provides products the consumers want at a price that is lower than competing products available in the marketplace. Consumers expect basic products with no bells and whistles from a company using a cost leader strategy. Instead, consumers just expect the products to meet their needs and nothing more or less.

Differentiation Business Strategy

A company using a differentiation business strategy attempts to position itself in the minds of the consumers as a company that provides unique products that consumers will pay more for because they cannot find comparable products or product features anywhere else in the marketplace. Consumers expect more from a differentiated product and therefore are willing to pay a premium for a differentiated product. This is true as long as the unique features of the product add some value to the product that makes it more valuable to the consumer, whether a functional feature or an aspect of image or prestige that enhances the perception of the product.

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Brand Equity

See Also:
Market Positioning
Market Dynamics
Marketing Mix (4 P’s of Marketing)
Porter’s Five Forces of Competition
Value Chain

Brand Equity Definition

The brand equity definition is the marketing effects that occur or gather over time in a product because of the brand name or company name associated with that product. At times, this brand equity can extend into other products if the name has been established with a good enough reputation. Best explain the brand equity definition as the reputation associated with a company name or product.

Brand Equity Meaning

Brand equity means that a company has established a brand or product that is associated with a certain product. There are forms of positive brand equity and negative brand equity. If a product is generally in good standing with consumers, then the company’s brand equity value is much higher. This of course is in comparison to a company who is responsible for an oil spill like the recent British Petroleum (BP) spill in the Gulf of Mexico. Brand equity marketing can at times be a fine art. In addition, brand equity valuation can be essential in determining how far a company can extend its brand equity to other products to boost sales in that area.

Brand Equity Example

Some Brand Equity examples are as follows:

Jack Daniels

The Jack Daniels brand name has been associated with Tennessee Whiskey for a number of years. However, the brand name extended into barbecue sauces and other condiments. The use of the name Jack Daniels is meant to boost sales in the area of the market. The company must be careful because every product that they extend the brand name to can result in brand equity dilution or an overuse of the name.

Gucci

Companies like Gucci and other designer firms work hard to establish their brand equity as it is essential in their line of business. The idea here is exclusivity as these companies operate in a niche market. Here they reduce the amount of stores, and drive prices higher. The brand equity established is of a luxurious and exclusive brand only a few can afford to be apart of.

Toyota

The company in the past was known for high quality and low to mid-priced cars, but as of recent the company has had several hits on its brand equity. This has been due to the company’s braking problems in its cars. To restore brand equity and bring sales back to normal, the company has been forced to launch various ad campaigns. In addition, they have had to recall all of the faulty cars.

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brand equity definition

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