The Business Book

321

Customers who are loyal purchasers

of a specific brand are valuable even if

that product is a low-cost one. Quality

is one feature that can inspire trust in

and generate repeat business.

difference between life and death.
Superior-quality tires, made from
harder-wearing rubber compounds,
also last longer than tires of lesser
quality, which means that the
driver will not have to face the cost
and inconvenience of replacing
them as frequently.
Great quality is not just about
using the best components. Design
is also crucial to achieving a
superior-quality product, because
design can offer the consumer new
benefits for which they are willing
to pay a price premium. In 2011
the Japanese tire manufacturer
Bridgestone launched its new range
of flat-run tires, based on an
innovative design that enabled
motorists to run a car with a flat tire
for 50 miles (80 km) at a speed of
50 mph (80 kph). This feature enabled
drivers to reach the closest garage to
change a flat tire, rather than having
to change it on the side of the road.
Businesses that have managed
to incorporate differentiating
features into their products can
exploit the added value that these
features provide by charging higher

prices. If in other aspects (such as

function) the products are equal

to their competitors, adding price

premiums to products that are

especially valued by consumers

should lead to greater revenues

and profits.

Quality wins out

Estée Lauder adopted the “quality

sells” philosophy when she set up

her cosmetics business in New

York in 1946. When she was a

child, her mother had lectured her

relentlessly on how exposure to the

See also: Finding a profitable niche 22–23 ■ Gaining an edge 32–39 ■ The weightless start-up 62–63 ■ Leading the
market 166–69 ■ The marketing model 232–33 ■ Creating a brand 258–63 ■ Fulfilling demand 294–95

DELIVERING THE GOODS

Profit in business comes from

repeat customers, customers

...that bring friends with them.

W. Edwards Deming

sun led to premature aging of the

skin. The young Lauder took note

and began making her own skin

creams with her uncle, a chemist.

Like many other successful

entrepreneurs, Lauder genuinely

believed that there was a need for

her product, and in 1935 she began

selling her first preparations: super-

rich, all-purpose crème; crème

pack; cleansing oil; and skin lotion.

In the beginning Estée Lauder

did not use any advertising; she

thought her products were so good

they would sell themselves. She

relied on her customers to promote

the products. Customers would try

her preparations, like them, and

continue buying them. Furthermore,

they would then recommend Estée

Lauder’s products to their friends.

She gave this form of promotion a

name: tell-a-woman marketing.

In more recent times, Samsung

has also used the quality-led

approach to great effect. The South

Korean electronics manufacturer

does not rely on glitzy advertising

campaigns to create its competitive

advantage. Instead, it appeals to a

market segment who favors product

quality over brand image.

In April 2013 the Samsung

Galaxy 4 was launched. Very

quickly it gained market share over

the market leader—Apple’s

iPhone—because it was seen as a

more technologically advanced

product than Apple’s latest model,

the iPhone 5. The display offered

around 100 more pixels per inch

than the iPhone 5, and its built-in ❯❯