Quality v Price Conundrum
July 25, 2019
Achieving the harmony between quality, service and price. ITDL’s Chairman and Managing Director, Sushil Jain comments on the unrealistic expectations of ever lower prices.
Talk of any industry (automobile, steel, FMCG, plastics etc.) and there is a limit to the capacity of an industry to absorb the increase in input cost without increasing the selling price of the product and passing it on to the customer. Input cost increase could be due to an energy price hike, higher wages, raw material, freight or packaging, to name a few. There will not be any industry which may not have hiked its output price in the past let us say five years.
However, there is one industry which has not increased the price of the finished product in the past two decades. On the contrary, it has continuously reduced its selling price. This is the compatible pulverised TONER manufacturing industry.
There can be an argument that competition leading to lowering of prices is good for the consumer. Yes, of course, but there is a limit to everything.
Competition does force the industry players to become more efficient in all facets of manufacturing without compromising its quality. However, when it comes to the point where in order for the industry to survive, it starts to bring down the quality of the product to save costs, that is the downfall of the particular industry.
Problems begin to brew when a particular country gives support to the manufacturing sector and encourages more exports to capture overseas markets. These actions directly distort the level playing field between manufacturers in different parts of the world.
Also, in some markets of the world, price plays an important role in capturing the attention of the customers. The customers sometimes ignore the quality aspects over price. Such a phenomenon is dangerous for the industry.
My take on the above problem:
Try to always have a lean operation with a minimum overhead cost, which will enable you to sail through the toughest time.
Never take the short cut route of compromising the quality to bring down the cost of the product being manufactured.
At some stage, there will be consolidation in the industry, and the weak players will automatically shut operations. It is at that time, players with strong roots will survive and play an essential role in the market.
Categories : Around the Industry
