Quality, price and convenience

Agus W. Soehadi, Contributor, Jakarta

Currently furniture manufacturers in Indonesia are worried about the possible "onslaught" of furniture made in China as price-wise local products are not as cheap due to the comparatively higher wages here.

Another problem is that a number of local producers have a copycat attitude, which results in a lack of creativity. So, their range of products in the market also lack variety. All this means local products will face tougher competition in the days ahead.

Chairman of the Indonesian Furniture Club says the key elements to success in the furniture business are producing not only quality products but also those that are liked by consumers. The products should be unique in design, comfortable and attractive. The price-tag should also match the target market. Finally, the company should be able to communicate effectively the plus points of its merchandise, otherwise not many people will know about the superior features.

Noted marketing experts Rust, Zeithmal and Lemon wrote in their book Driving Customer Equity that essentially there are three criteria used by consumers to evaluate any product: quality, price and convenience.

One of the successful local players is Olympic. It is among the pioneers in knock-down furniture for the upper and middle class segments in the country. Olympic's products carry price- tags that are affordable even for a number of customers belonging to the lower income bracket. They come in uniquely simple designs and are widely distributed in the country's large cities. Their products are easy to find as almost every major furniture store stocks this brand. With these competitive factors, Olympic sales are relatively higher than their competitors, such as Ligna, Hakari, Alca, Modera, Big Star, Siro, Future and Sukses.

Quality is defined as the minimum standard or benchmark that is acceptable to consumers. Low quality products will be immediately rejected by consumers. The product in question should also have unique features in comparison with other similar products. These attributes, standard or above-standard quality as well as distinguishing features, have to be properly communicated through creative advertising and promotion to increase brand awareness.

Olympic, for example, uses singer-comedian Jaja Miharja in its advertising where his unique rendering of the "catch phrase" or slogan, "Pic, Pic, Olympic ...", has further popularized the brand.

The second element, the price, has two aspects. First is the value of the exchange which involves a consumer's sacrifice, i.e. his or her money. The higher the price, the greater the sacrifice on the part of the consumer, who, of course, expects a fair exchange in terms of the value of the product he or she purchases. The other aspect of price is that it contributes a positive effect on quality to a certain extent. Often, products that carry high price-tags are considered to be of higher quality as well.

The moment a consumer sees a price tag, he or she makes comparisons based on previous experience or other references. Phrases like "very cheap, a fair price, quite expensive or simply unaffordable" whirl through the mind. Marketers often use various tricks to produce a positive impression on their mind in regards to pricing. Many of them avoid the use of rounded-up figures and prefer prices like Rp 445,000 or Rp 9,900. This way it is more difficult for customers to categorize the product as being expensive. During sales the former price, for example, one million rupiah, is struck out, and another more "tempting" figure, say, Rp 775,000, is written in bold.

In terms of convenience a product is intended not only to deliver superior features that are easy to use but also to have a wide distribution network. This enables consumers to purchase the product at the nearest outlet so that there is no waste of time and energy.

Compared to its counterparts, Olympic's penetration into the market via its nationwide distribution is to be envied. Olympic products can be purchased at almost any major furniture store, including the modern bookstore chain, Gunung Agung, or hypermarkets like Carrefour, Makro and Alfa.

Another of Olympic's strong points is its simple and functional designs for its wide-range of products. Showcasing Olympic products does not require a large space, which makes it convenient for retailers to stock Olympic products. The knock- down system cuts down production and distribution costs, while it makes installing much more efficient, though elegance and design are not sacrificed.

The success story of Olympic serves to illustrate that if all customer-oriented elements -- quality, price and convenience -- are properly taken care of then there should be no need to worry about competition. The bottom line is customer satisfaction. -- The writer is chairman of the marketing faculty at Prasetiya Mulya Business School