SECTION 1.12
Customer Relations

Ultimately it is the customers who dictate the success of our company; if no one needs the product or service we provide, we will go out of existence. Customers create the demand for our goods and services. America is still a market economy... the customer is still "king". The two oldest mistakes in customer relations are (1) taking our eyes off the horizon and focusing on the next quarter's profits, and (2) combining this fiscal myopia with a virtual disregard for our customers. A dedicated effort must be made to strengthen all aspects of the customer-supplier relationship.

SECTION 1.12.1
Applications engineering...the technical relationship

Applications engineering is a form of technical assistance provided to the user by us, the manufacturer. The name is derived from the emphasis placed on helping users select the product design best suited for their needs.

Figure 1-6.
Responsibility matrix for determining suppliers

Selecting the most applicable product design requires that the engineer understand a good deal about the problems of the user, including economics. In this way the engineering concept is one of the means available for optimizing user costs. In practice, this form of technical assistance does not stop with the sale of the product; it remains available to help the users if they encounter trouble during use. In providing this assistance during use, the engineer is well placed to provide an added useful feedback to our company. Since it is our policy to provide both the product and the service (engineering assistance), our prices will reflect this.

SECTION 1.12.2
The marketing of quality...the commercial relationship

The "commercial" relationship between our company and our customers is carried out by the various arms of the sales department. They submit bids, negotiate contract terms, fill orders, provide customer service, etc. Product quality plays a role in all of these activities.

Marketing strategy is greatly aided by quality superiority. Marketers are well aware of this and are always urging designers and producers to come up with quality superiorities which can secure a better share of the market or higher prices. Marketers also devote much effort to propagandize those qualities for which their product is superior, in their personal selling.

All other things being equal, superior quality can be converted into higher share of market or higher prices, provided that the customer accepts the presence and usefulness of this quality superiority. However, no manufacturer is able to attain quality superiority for all product features. Hence, each competitor propagandizes those features for which its product is superior. The simple rules relating quality to share of market are as follows:

1. When a product clearly has superior quality which a customer accepts (or can be induced to accept) as present and useful, then market share is decided primarily by that quality superiority, all other things being equal. It is common for industrial customers to seek out the quality differences in products supplied by competing vendors. Sometimes these differences are quantified through systems of quality ratings. The resulting ratings are then used as inputs to the decisions of how to allocate the available business among the competing vendors.
   
   
2. When there is to quality superiority which the customer accepts as present and useful, share of market is decided primarily by superiority in the marketing skills of the competing marketers. Significant quality differences are often translated into price differences. A common example is the price differential system widely used for product grade differences (such as steel). In addition, there is the wide use of price differentials to charge for added special features or options of the product.