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The relationship between quality and market share is likely to depend on how quality is de ned.Virtually all empirical work on this topic has employed the Pro t Impact of Marketing Strategies (PIMS) data base.51 All studies have, therefore, used the same, highly aggregated measure of quality.But if quality is de ned as tness for use, superior aesthetics, or improved conformance, high quality need not be accompanied by premium prices.Each company in the PIMS survey was rst asked the following questions: What was the percentage of sales of products or services from each business in each year which were superior to those of competitors?What was the percentage of equivalent products?What was the percentage of inferior products?
The relationship between quality and market share is likely to depend on how quality is dened. If a high- quality product is one with superior performance or a large number of features, it will generally be more expensive, and will sell in smaller volumes. But if quality is dened as tness for use, superior aesthetics, or improved conformance, high quality need not be accompanied by premium prices. In that case, quality and market share are likely to be positively correlated.
Virtually all empirical work on this topic has employed the Prot Impact of Marketing Strategies (PIMS) data base.51 All studies have, therefore, used the same, highly aggregated measure of quality. Each company in the PIMS survey was rst asked the following questions: What was the percentage of sales of products or services from each business in each year which were superior to those of competitors? What was the percentage of equivalent products? What was the percentage of inferior products? Quality indexes were then compiled for each rm by subtracting its percentage “inferior” from its percentage “superior.”
Using these indexes, analysts have found a strong positive association between quality and market share. Those businesses in the PIMS study that improved in quality during the 1970s increased their market share ve or six times faster than those that declined in quality, and three times as rapidly as those whose relative quality remained un-changed.52 Cross-sectional studies using both bivariate53 and multivariate methods54 have conrmed the positive association between quality and market share
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