Quality Broadly Defined

Business professor David Garvin develops a framework for analyzing quality by considering eight dimensions of quality: performance, features, reliability, conformance, durability, serviceability, aesthetics, and perceived quality.33 To further expand this concept, we might add other dimensions such as availability, timeliness, convenience, and customization. The customer takes into account all these dimensions and arrives at a subjective judgment of the overall quality of the product (or service), and is, by definition, willing to pay a higher price for a product with higher quality—this is the price-quality trade-off. Holding technology and firm capabilities constant, it costs more to produce higher quality products—this is the cost-quality trade-off. To profitably serve the poor, a firm needs to make the cost-quality trade-off in a manner consistent with the price-quality trade-off made by the target customer.

The BOP proposition correctly celebrates the “shared access” model as a way to make products more affordable to the poor. The poor, like the rich, would prefer to exclusively own a cell phone; the poor make a price-quality trade-off, however, and opt to share a phone. The shared access model is not confined to the poor. Very rich people can choose to own private jets, while the merely rich often settle for a fractional ownership. Rich people often own vacation homes, while less rich people settle for time- share ownership.

Even the Aravind Eye Care System achieves its low cost structure partially by trading-off quality. Prahalad in his book argues that the quality of treatment at Aravind is as good as or better than at the best eye care centers in the world by considering the rate of medical complications.34 This is too narrow (and technical) a view of quality. Aravind achieves economies of scale through specialization and attracting patients from a wider geographic radius. The patients therefore give up something in terms of convenience—an aspect of quality broadly defined. It is, of course, a trade-off that the patients of Aravind like, but a tradeoff nonetheless.

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