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Return on Quality (ROQ): Making Service Quality Financially Accountable

Return on Quality (ROQ): Making Service Quality Financially Accountable. Journal of Marketing, April 1995 Author: Roland T. Rust, Anthony J. Zahorik, & Timothy L. Keiningham 指導老師 : 任維廉教授 Presenter: 9832505 張嘉修. Agenda. Introduction Literature review ROQ Approach Financial impact

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Return on Quality (ROQ): Making Service Quality Financially Accountable

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  1. Return on Quality (ROQ): MakingService Quality FinanciallyAccountable Journal of Marketing, April 1995 Author: Roland T. Rust, Anthony J. Zahorik, & Timothy L. Keiningham 指導老師: 任維廉教授 Presenter: 9832505張嘉修 交大運管碩一張嘉修

  2. 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 交大運管碩一張嘉修

  3. 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 交大運管碩一張嘉修

  4. 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) 交大運管碩一張嘉修

  5. 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) 交大運管碩一張嘉修

  6. 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 交大運管碩一張嘉修

  7. Financial impact 交大運管碩一張嘉修

  8. 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 Zahorik1993) • Service quality(Bolton and Drew 1991a, b; Croninand Tayior 1992, 1994) • Customer satisfaction(Cadotte,Woodruff, and Jenkins 1987; Churchill and Surprenant 1982;Erevelles and Leavitt 1992; Oliva, Oliver, and MacMillan1992; Oliver 1980; Oliver and DeSarbo 1988; Oliver andSwan 1989; Tse and Wilton 1988) • Disconfirmation(Day 1984; Oliver 1980; Olshavskyand Miller 1972; Olson and Dover 1976) • Customer delight(Chandler 1989; Deming 1986; Oliver 1989; Westbrookand Oliver 1991; Whittaker 1991) 交大運管碩一張嘉修

  9. The ROQ Quality Improvement Process 交大運管碩一張嘉修

  10. Summary of Managerial inputs • 18 managerial inputs • Key management processes • Key dimensions of each process • Customer retention • Customer satisfaction • Market size • Current market share • ………… 交大運管碩一張嘉修

  11. An Illustrative Application and results • PC-based decision support system and implemented the system at two companies • Cleaning each bathroom 交大運管碩一張嘉修

  12. An Illustrative Application and results NPV – NPVo = 1.641 NPVAS = 3.767 ROQ = 44.6 % 交大運管碩一張嘉修

  13. 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 交大運管碩一張嘉修

  14. Thanks for listening 運管碩一 張嘉修

  15. 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 交大運管碩一張嘉修

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