Quality and Liquidity
Very often we see the Terms Quality and Liquidity used interchangeably with Products or Services offered.
Although never directly related these terms are something which is heard everywhere on a day to day basis At one point of time you have the Customers talking about Quality, and the other part you have the Stakeholders discussing about Liquidity.Let us try to understand these terms and find out whether we can relate these terms and decide if ultimately Quality turns to Liquidity.
ISO 9000 defines quality as “Degree to which a set of inherent characteristic fulfills requirements.". The standard defines requirement as need or expectation
American Society for Quality definition lays quality as "a subjective term for which each person has his or her own definition. In technical usage, quality can have two meanings:
The characteristics of a product or service that bear on its ability to satisfy stated or implied needs
A product or service free of deficiencies
Individuals and Organizations of all types and Sizes have always realized that their main focus must be to satisfy Customers
Two Questions that are put forth are
Who are the customers?
When are they Satisfied?
Customers are anybody to whom Products and Services are sold. Customers are satisfied when they get what is needed when it's needed. One should never assume what a customer needs. History in the Market has seen Products been launched and failed customer Satisfaction.
The degree to which an asset or security can be bought or sold in the market without affecting the asset's price. Liquidity is characterized by a high level of trading activity.
The ability to convert an asset to cash quickly. Also known as "marketability".
In Short Liquidity means the capability of a product or an Asset to be sold rapidly in the market. The key consideration for Liquidity is that there are ready and willing buyers and sellers for the product at all times.
In the coming notes let us try to discuss and find out whether quality really impacts liquidity.
Comments
First time I am coming across the definition for liquidity related to a product. Good one!
Though it looks like the liquidity of a product is proportional to its quality, I do not think that we can arrive at a general relation between these two.
The liquidity of the products that are sold in fast food is always high whereas the quality of those food items are not the best! Quality of the items supplied in star hotels is best but I do not think that it has a liquidity that a fast food item has!
Same is the case with a Tiger biscuit and Bourbon.
So I think when we tend to relate liquidity with quality, we need to take various other factors like cost, target customers, nature of the product, etc into strong consideration.
Posted by: Devarajan | January 22, 2009 8:39 AM
Thanks for the Post.
I absolutely agree with you. You really pulled the words out of my Mouth.
Fast food is a very real live example taken.
When talked about Pizza's
Would one Prefer a Domino's as compared to Pizza Hut or a Smoke and Joe? Well the factors that one would consider here is the Product, Service and Price. Price across the three vendors would remain almost the same. Then the point of context would come down to the Quality of the Product and the Service. The Supreme here encashes the Customers pocket
Realized by organizations of the 21st century, Turnover is really not only a game of pricing alone. It also is on the Quality of the Product, Packaging, Branding, advertising and probably a lot of other factors as highlighted by Dev.
But if one really needs to trace quality where does he trace it to.
1) To the Product
2) To the Package
3) To the Brand
4) To the Pricing (Quality Pricing is an Art of setting up a lucrative pricing which keeps competitors away and tempts customers really to go for the product).
I still remember of Rural Banking in the 1980’s and 90’s of being just a term heard and read in the books. But today Qualitative Schemes and marketing has really made this zone a lucrative and potential market to cash out for the banking sector. Thanks to the Competitive market.
Posted by: Ramakrishnan | January 22, 2009 3:09 PM
A very good article that prompts the right and left part of the brain to work!!!!
It would not be appropriate to directly relate liquidity with quality.
It highly depends on the kind of market the product is launched in and need of the masses.
For eg. If in a market like Mumbai, we launch a project for palatial bungalows, the demand may not be high even if the quality is reaching the sky limits.
So a survey and customer know-how i.e the manufacturer should have a feel and pinch of what the customer expects, is very essential.
Posted by: Annapoorni | January 23, 2009 9:05 AM
Hi Anu
Good Observation and a very valid point.
As detailed by you customer expectation is the most essential.
So a Quality Survey and Know How is very much required.
Again the word Quality is associated with the Feasibility Study.
Qualitative Sutdy will lead to Quality products and ultimately to Liquidity.
To be honest when i really started this post i also had the wrong notion of Quality to be related to the Product.
But seems like this term and event is related and can be associated everywhere ultimately leading to Liquidity.
Let us continue shedding the parts of the brian to simulate where quality really cannot be used and does not turn to Liquidity.
Posted by: Ramakrishnan | January 23, 2009 10:36 AM