Return on Quality (ROQ): MakingService Quality FinanciallyAccountableJournal of Marketing, April 1995Author: Roland T. Rust, Anthony J. Zahorik, & Timothy L. Keiningham指導老師 : 任維廉教授Presenter: 9832505 張嘉修

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Agenda Introduction Literature review ROQ Approach Financial impact Measure alternatives The ROQ Quality Improvement Process Summary of Managerial inputs An Illustrative Application and results Discussion and extension

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Introduction

Disappointed by a lack of results from their quality efforts

“Return on quality" approach Based on the assumptions Managerial input PC-based decision support system

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Literature review

Quality revolution (Dean and Evans 1994)

Near-religious fervor (Greising 1994)

Win the Baldrige , but were bankrupt (Hill 1993)

Not suited to all cultures (Arnold and Plas 1993)

Standardized services than customized services (Fomell. Huff, and Anderson 1994)

Economies of scale (Anderson, Fomell, and Rust 1994)

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Literature review

Do not have obvious profit implications (Aaker and Jacobson 1994)

Do not necessarily reduce costs but increase (Griliches 1971)

The aggregate financial implications of customer satisfaction (Fornell 1992)

Links between product quality, service quality, and market share (Kordupleski, Rust, and Zahorik 1993)

Treated as an investment (Spitzer 1993)

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ROQ Approach

Assumptions: Quality is an investment Quality efforts must be financially accountable It is possible to spend too much on quality Not all quality expenditures are equally valid

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Financial impact

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Measure alternatives Does not require any particular measurement Costs in terms of discontinuity might argue

against change Repurchase intention

(Rust, Subramanian, and Wells 1992; Rust and Zahorik 1993)

Service quality (Bolton and Drew 1991a, b; Cronin and Tayior 1992, 1994)

Customer satisfaction (Cadotte, Woodruff, and Jenkins 1987; Churchill and Surprenant 1982; Erevelles and Leavitt 1992; Oliva, Oliver, and MacMillan 1992; Oliver 1980; Oliver and DeSarbo 1988; Oliver and Swan 1989; Tse and Wilton 1988)

Disconfirmation (Day 1984; Oliver 1980; Olshavsky and Miller 1972; Olson and Dover 1976)

Customer delight (Chandler 1989; Deming 1986; Oliver 1989; Westbrook and Oliver 1991; Whittaker 1991)

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The ROQ Quality Improvement Process

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Summary of Managerial inputs

18 managerial inputs Key management processes Key dimensions of each process Customer retention Customer satisfaction Market size Current market share …………

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An Illustrative Application and results

PC-based decision support system and implemented the system at two companies

Cleaning each bathroom

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An Illustrative Application and results

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ROQ = 44.6 %

NPVAS = 3.767

NPV – NPVo = 1.641

Discussion and extension

A tool for helping the company to do its existing work better

Where, how much ,the likely financial impact Worthwhile and recommended

Tracking the outcomes

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Thanks for listening

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Discussion issue

The impact of price is belong to long term strategy, isn’t discussed in this article (reposition)

The probability to invest the wrong option The value of ROQ is comparative The quantity method in finite option to validate,

not a belief to obey The company to decide the item to measure A view point of financial management

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