"Perceived Quality" describes the quality which customers assess through the visual appearance, the touch, and even the smell of a product. For instance, in a manufacturing showroom, prior to purchasing the item, a prospective customer would first look around the display, open the exhibit, and carefully inspect the various components. If he or she observed any flaws or poor workmanship, they would probably not make a purchase. On the other hand, if they walked away from the exhibit with the new laptop, they would most likely rate the product 5 stars. We all know that human behaviors are remarkably consistent. Therefore, by observing these consistent human behaviors, you can gain valuable insight into improving quality throughout the entire supply chain.
The "perceived quality scorecard" is now widely used throughout the manufacturing and wholesale industries. Many believe it is the superior measure of quality to base purchasing decisions upon. Purchasing decisions are based on perceived quality scores, where a company gives a high rating to a product based upon the comments of the majority of customers that have purchased similar products in the past. Thus, high perceived quality in turn drives high demand for that product, leading to increased production levels, even if there may not be an increase in need. Thus, a company could increase production levels despite a decrease in demand because of high perceived quality.
In order to understand how buying decisions are made, it is important to understand the relationship between perceived quality and customer loyalty. Customers who are loyal to a company are also more likely to provide feedback and to participate in surveys. Thus, companies who recognize the importance of customer loyalty are encouraged to implement policies that foster customer loyalty. In turn, increasing perceived quality will lead to an increase in customer loyalty and a corresponding increase in profits.