Quality, price and convenience

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