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Perceived Quality: Does Performance Matter?


How have customer perceptions of the quality of products and services developed over the years? Core to this discussion are two perspectives on what constitutes “quality”—reliability and customizability—and why the latter dominates the former as a predictor of customer satisfaction in today’s economy. The chapter tackles the prospects for continuing gains in satisfaction in the absence of improved quality. Contrary to the perceptions of many businesspeople, quality trumps price and value as an influencing factor on customer satisfaction across almost all industries and sectors of the economy. Plus, the modern economy is a “mass customization” economy, and thus customer satisfaction is more sensitive to the “personalizability” of goods and services than to their reliability.

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  • DOI: 10.1007/978-3-030-13562-1_3
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Fig. 3.1


  1. 1.

    In a poignant comment along these lines, Amazon CEO Jeff Bezos once said: “The right way to respond to this [increased consumer power] if you are a company is to put the vast majority of your energy, attention and dollars into building a great product or service and put a smaller amount into shouting about it, marketing it.”

  2. 2.

    For a brief review of how IoT promises to change the economy, see: “5 Areas Where The IoT is Having The Most Business Impact,”, June 12, 2018.

  3. 3.

    For a good discussion of these trends, see: LeBret, Jabez. “Your Customer Service is Missing One Critical Piece,”, March 10, 2016. Accessed online at:

  4. 4.

    As we observe below when discussing industry-level changes in quality over the past decade, there is some evidence for the “product vs. service quality” divide. Three of the four biggest drops in quality among industries over this period are observed for pure service providers, with the fourth being automobiles and light vehicles, where both product and service quality are measured. ACSI does not produce national-level product and service quality variables for analysis, however, as only a smaller percentage of industries (as defined by ACSI) include both distinct product and service quality components, making sample available for analysis an issue.

  5. 5.

    For more on the SERVQUAL model, see: Parasuraman, A., V. A. Zeithaml and L. L. Berry (1988). “SERVQUAL: A Multi-Item Scale for Measuring Consumer Perceptions of Service Quality,” Journal of Retailing, 64(1), 12–40.

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Correspondence to Claes Fornell .

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Fornell, C., Morgeson, F.V., Hult, G.T.M., VanAmburg, D. (2020). Perceived Quality: Does Performance Matter?. In: The Reign of the Customer. Palgrave Macmillan, Cham.

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