6

Corporate Development

7

Product Management

8

Overseas Development

9

Product Distribution & Service

10

Advertising + P.R.

16

New Technology Primers

17

Physical Process & Orders

18

Competition Analysis

19

Product Perceptions

20

Customer Perceptions

Financial

Industry

Markets

Products

Data Grids

World MDB

Research MDB

Product MDB

Corporate MDB

Reference MDB

1

Quality & Product Control:

QUALITY

RELATIVE INDUSTRY PRODUCTS + SERVICES QUALITY IN THE TRADE CELL

The following chart provides a general representation of relative Products & Services quality in the various Trade Cell markets.

Index of Quality over Time

The above chart shows relative Trade Cell quality for products and services. The mid-point line, indicated as '100' represents the Trade Cell average quality of Products & Services.

[ CORPORATE DATABASES:  The section marked indicates the average quality for products and services marketed by the Company. This will show the relative quality differential between the Company's product quality and the various quality norms. ]

INDUSTRY PRODUCTS + SERVICES QUALITY
 

It is essential for the Company to be fully aware of the importance and criticalness of Products & Services Quality.

The arbiter of product quality must be the end user and thus any definition of quality must be decided upon by the customer.

It is not intended here to analyze the actual product quality demanded for Products & Services. This is an evaluation exercise outside the scope of this study, however many End Users perceptions and attitudes are covered in the various survey sections.

Product Quality includes both Products & Services as well as associated or ancillary services, delivery promptness, after-sales services, et cetera.

Products & Services Quality must be analyzed in relation to other product in the market as well as the Company's interaction with the marketplace.

The definition of Product Quality should not consider relative prices or pricing as being part of the definition of Quality.

VALUE SCALE FOR QUALITY

The following Value Scale for Quality will be used below:-

   HQP-LQP

Where,

   HQP = % OF SALES FROM  HIGH QUALITY PRODUCTS

   LQP = % OF SALES FROM  LOW QUALITY PRODUCTS

PROFITABILITY & INDUSTRY PRODUCTS + SERVICES

It will be noticed that if the Company produces no high quality products and services it is less likely to achieve a high profitability.

Producing a relatively high proportion of Products & Services output as high quality products will tend to achieve a higher level of profitability.

By producing a very high proportion of the Product Range output as high quality products will undoubtedly gain the highest levels of profitability.

RELATIVE INDUSTRY PRODUCTS + SERVICES QUALITY & PROFITABILITY

CIRCUMSTANCES WHERE ROI IS GREATER THAN THE INDEX

Producing higher quality Products & Services is more likely to achieve a higher profitability for the Company.

QUALITY / PROFITABILITY & CONCENTRATED MARKETS

The benefits of producing high quality products are most dramatic in highly concentrated market situations.

The higher the product quality produced the greater the profitability in a highly concentrated market.

Market Concentration is defined as being the percentage of the market accounted for by 50% of the End Users (in terms of numbers).

INDUSTRY PRODUCTS + SERVICES QUALITY & RELATIVE MARKET SHARE

Both high Products & Services quality and a high level of relative market share will generate greater profitability.

In most cases high product quality can mitigate against a low level of market share and similarly a high market share can mitigate against low product quality.

INDUSTRY PRODUCTS + SERVICES QUALITY / PROFITABILITY & MARKET GROWTH

High Products & Services quality is essential to profitability during low market growth periods.

In having high quality products the Company will enjoy a substantially higher level of profitability even during periods of low market growth.

QUALITY IMPROVEMENT EFFECT FORECASTS

This section analyses the effects of a Quality Improvements programme and its associated expenditure in terms of the Company's Financial and Operational results.

Quality Improvement involves the re-engineering, repositioning and remarketing of existing products to meet and serve more up-market segments. In general terms the expenditure incurred is some product development costs plus additional marketing costs.

This tactic is regarded as a short or medium-term operation where the benefits are seen over a short period.

Quality Improvement

NEW PRODUCTS / PRODUCT QUALITY & PROFITABILITY

The Company, if experiencing a high level of Products & Services new product introduction, will suffer in terms of overall profitability if their product quality is low.

The Company, if experiencing a high level of Product Quality, may actually benefit in profit terms in periods of limited new product introductions.

INDUSTRY PRODUCTS + SERVICES PROFITABILITY / PRODUCT QUALITY & MARKETING COSTS

A low Product Quality is especially critical to profitability in situations which have a high level of Marketing Costs.

When the Company has high Product Quality it is less affected by high Marketing Costs and its profitability is damaged less.

QUALITY / INDUSTRY PRODUCTS + SERVICES LIFE CYCLE / PROFITABILITY

It will be seen from the above that profitability will not be dramatically different if Products & Services quality is regarded as being 'low' or 'average'. Conversely, if Products & Services quality is regarded as being 'high', then there will be a significant improvement in profitability.

There appears to be little change in profitability at any given Quality level as Products & Services progress from introduction to the mature stage of the life cycle.

INDUSTRY PRODUCTS + SERVICES PROFITABILITY / DEVELOPMENT EXPENDITURE & PRODUCT QUALITY

Mid-Range Development Expenditure appears to be very attractive in terms of profitability if used to improve Product Quality. Mid-Range Development Expenditure can benefit the Company, irrespective of the existing quality of their products, if it is applied to the improvement of Product Quality.

THE RELATIONSHIP BETWEEN THE TARGET COMPANY  TRADE CELL PRICING AND PRODUCT QUALITY

There is a significant difference in the Products & Services market between large share companies and their smaller competitors and their relative retail prices and product quality.

The Products & Services market is willing to accept higher prices from market leaders because it is perceived that the products from these companies will be of a higher quality. Thus market leaders have a truly attractive competitive position and are able to generate better margins and a higher profitability.

The market perception of quality not only includes the physical properties and characteristics of the product, but also the service aspects. Frequently the service aspects are more important to customers than the actual product.

CONCLUSIONS
 

If the Company are seeking profitability then the following questions must be asked:-
 

If the answers to the above questions are in the affirmative then the Company will undoubtedly be relatively more profitable.
 

THE TARGET COMPANY'S CUSTOMERS AND BETTER PRODUCTS

 

In contrast to the smaller competitors in the Products & Services industry the market leaders tend to spend a relatively higher proportion of their turnover on investing in Development thus they are in the position of producing more advanced products.

This factor combined with product quality tends to ensure that large share companies are not only market leaders but also product leaders.

CONCLUSIONS

The above rationale is self-evident and the conclusions implicit here are equally evident:-

1. The need for constant product innovation and leadership

2. The need for a programme to identify customer needs and product benefits

3. The dangers of producing "me-too" products

4. The need for an effective new product development programme

QUALITY CONTROL PROCEDURES

Target Company	Base Reference	QUALITY CONTROL PROCEDURES
		Overall Rating
		Competitive Rating
		Formalized Quality Control Systems
		Quality Control Efficiency
		Quality Control Development
Performance Grid Definitions

HISTORIC FINANCIAL INDUSTRY DATA
 

HISTORIC FINANCIAL INDUSTRY DATA

 Financial Definitions

	Financial Comparisons: Scenarios
	Target Company	Base Reference Industry
	MEDIAN  FORECAST : Financials MEDIAN  FORECAST : Margins & Ratios PRODUCT LAUNCH: Financials PRODUCT LAUNCH: Margins & Ratios	MEDIAN  FORECAST : Financials MEDIAN  FORECAST : Margins & Ratios PRODUCT LAUNCH: Financials PRODUCT LAUNCH: Margins & Ratios
	THE TARGET COMPANY FORECASTS NEW PRODUCT DEVELOPMENT : Financials NEW PRODUCT DEVELOPMENT : Margins & Ratios MARKET SEGMENTATION : Financials MARKET SEGMENTATION : Margins & Ratios NEW TECHNOLOGY Investment: Financials NEW TECHNOLOGY Investment: Margins & Ratios QUALITY IMPROVEMENT: Financials QUALITY IMPROVEMENT: Margins & Ratios RESEARCH & PRODUCT Cost Objectives: Financials RESEARCH & PRODUCT Cost Objectives: Margins & Ratios PRODUCT POSITIONING : Financials PRODUCT POSITIONING : Margins & Ratios NEW PRODUCT & NEW TECHNOLOGY COST Scenarios: Financials NEW PRODUCT & NEW TECHNOLOGY COST: Margins & Ratios PRODUCT QUALITY IMPROVEMENT: Financials PRODUCT QUALITY IMPROVEMENT: Margins & Ratios	FORECAST FINANCIAL SCENARIOS NEW PRODUCT DEVELOPMENT : Financials NEW PRODUCT DEVELOPMENT : Margins & Ratios MARKET SEGMENTATION : Financials MARKET SEGMENTATION : Margins & Ratios NEW TECHNOLOGY Investment: Financials NEW TECHNOLOGY Investment: Margins & Ratios QUALITY IMPROVEMENT: Financials QUALITY IMPROVEMENT: Margins & Ratios RESEARCH & PRODUCT Cost Objectives: Financials RESEARCH & PRODUCT Cost Objectives: Margins & Ratios PRODUCT POSITIONING : Financials PRODUCT POSITIONING : Margins & Ratios NEW PRODUCT & NEW TECHNOLOGY COST Scenarios: Financials NEW PRODUCT & NEW TECHNOLOGY COST: Margins & Ratios PRODUCT QUALITY IMPROVEMENT: Financials PRODUCT QUALITY IMPROVEMENT: Margins & Ratios
	Financial Definitions