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3.3.1 Consequences of quality issues

3.3.1 Consequences of quality issues

What customers expect from quality

Definition

Quality: a good or service that consistently meets the expectations of the customers it is aimed at, so that it is fit for purpose.

  1. Fit for purpose: the product does the job the customer bought it for, and keeps doing it for as long as they were led to expect.
  2. The same every time: consistency is what customers notice, so the tenth purchase has to match the first, and a business that is excellent on Monday and careless on Friday has a quality problem.
  3. Expectations in the production of goods: buyers expect the item to work, to be safe, to match its description and to be identical to the last one they bought.
  4. Expectations in the provision of services: customers expect the service to be reliable, delivered on time and handled by staff who know what they are doing, and because a service is produced in front of them it cannot be checked and put right before they receive it.
Common Mistake
  • Quality does not mean expensive or luxury, because it is judged against what the customer was promised.
  • An Aldi own-label pizza and a Greggs sausage roll are high quality when they taste the same every time and match what shoppers expect for the price they paid.
  • A £900 phone that arrives with a flickering screen is poor quality, however much it cost.

How a business identifies quality problems

  1. Customer complaints: complaints made in store, by phone or by email name the fault directly and show how often it is happening.
  2. Returns and refunds: goods sent back, refunded or repaired under guarantee prove that a fault got past the business's own checks and reached a customer.
  3. Online reviews and ratings: star ratings and written reviews on Google, Trustpilot or a retailer's own site expose problems that most customers never bother to report to the business.
  4. Failed inspections: items rejected during checks point to a fault in the materials, the machinery or the method before the goods ever leave the premises.
  5. Falling repeat business: when regular customers quietly stop ordering, there is a quality problem nobody has complained about, which is why sales figures matter as well as complaints.
Example
  • Currys records how many of each washing machine model come back within the guarantee period.
  • One model returning far more often than the rest lets its buyers challenge the manufacturer before the fault reaches the review pages.

How a business measures quality

  1. Wastage and rework rate: the share of output scrapped or made a second time measures how much of production is going wrong.
Example
wastage rate=units wastedunits produced×100 \text{wastage rate} = \frac{\text{units wasted}}{\text{units produced}} \times 100 wastage rate=units producedunits wasted​×100
  • A bakery scraps 300 of the 12,000 loaves it makes in a week.
wastage rate=30012,000×100=2.5% \text{wastage rate} = \frac{300}{12{,}000} \times 100 = 2.5\% wastage rate=12,000300​×100=2.5%
  • That 2.5% is flour, labour and oven time the bakery has already paid for and thrown away, so halving it releases cash without selling one extra loaf.
  1. Return rate: returns as a percentage of items sold show whether faults are reaching customers, and tracking the figure product by product shows which line is at fault.
  2. Complaint numbers and satisfaction scores: counting complaints each week, or scoring survey answers out of ten, gives a figure for service quality where there is no physical item to inspect.
Note

A quality figure means nothing on its own, so a 3% return rate has to be compared with the target, with last month or with a rival before anyone can act on it.

Consequences for customers and reputation

  1. Lost customers: a customer let down once switches to a rival and often never returns, so the loss is every future purchase they would have made, not only the sale that went wrong.
  2. Bad word of mouth: unhappy customers post reviews and photographs that reach thousands of people within hours, and a one-star review stays visible to every future shopper for years.
  3. Damage to the brand: the damage outlasts the fault itself, so a business can put the problem right in a week and still be losing sales because of it a year later.
  4. Lost contracts: a supermarket will drop a supplier whose deliveries keep failing its checks, taking a whole revenue stream with it.
Example
  • If one Greggs shop served undercooked sausage rolls, photographs and reviews would spread far beyond that single shop.
  • Customers judge the whole brand, so a fault in one outlet costs sales in hundreds of others that did nothing wrong.

What poor quality costs the business

  1. Refunds and replacements: money already taken has to be handed back, or a second item supplied free, so the business pays twice to make one sale and often pays the return postage as well.
  2. Wasted materials and rework: a scrapped item destroys the materials, labour and machine time already spent on it, and reworking a fault uses those resources a second time on a unit that should have been finished.
  3. Product recalls: an unsafe or mislabelled product forces the business to trace owners and repair, replace or destroy goods it has already sold, which is expensive and very public.
    1. A car maker recalling one model pays to contact every owner, ship in parts and pay dealers to fit them, a bill far larger than the few pence per car a better component would have cost.
  4. Staff time: handling complaints, processing returns and hunting for the cause use hours that could have been spent producing and selling.

Flow diagram of a quality problem: customer expectations of quality feed into how a problem is identified, through customer complaints and reviews, returns and refunds, inspection results and mystery shoppers, and then into the consequences of higher cost, lower sales, damaged reputation, staff retraining and legal or safety risk, ending with the business response of fixing the cause, improving checks and training staff.

Exam technique
  • Questions here usually read analyse the consequences for the business of poor quality, so take one consequence and follow it through to sales, costs or reputation rather than listing four.
  • Choose the consequence that fits the business you are given, because a village café is hurt most by local reviews while a manufacturer is hurt most by a recall.
  • Where the case gives a return rate or a wastage percentage, quote it and say what it costs that business, rather than describing the fault in words alone.
Self review
  • What does quality mean in business?
  • Why can a cheap product be a high quality product?
  • Name three ways a business identifies quality problems.
  • How is a wastage rate worked out, and what does it tell the owner?
  • Give three costs a business faces when quality goes wrong.
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3.3.1 Consequences of quality issues Revision Guide

  1. GCSE
  2. /Business
  3. /3.3.1 Consequences of quality issues

Revision notes for AQA GCSE Business 3.3.1 Consequences of quality issues. Open the guide for explanations and worked examples. Written against the AQA GCSE Business (8132) specification, so the content matches what's examinable rather than general Business background.