Yet Another Teachable Moment, Compliments of Toyota

One of the outcomes of the Toyota recall situation is a plethora of teachable moments.  These run from supply chain implications, communication strategies, quality and process control, even investing – the list goes on.  So, at the sake of piling on, let me add one more.

I recall from my distant and hazy past that Lee Iacocca once commented, regarding the problems with the Corvair, “Safety doesn’t sell”.   That was always considered to be an interesting observation and one that was discussed in great detail in many schools of business.  The quote was taken apart from a number of directions.  One of the meanings that is relevant today is that “safety” as an attribute or CTQ is a qualifier – a must have.  In other words it is not a differentiator (at least until something like Toyota comes along).

Volvo found a segment that placed a high premium on safety.  In this segment safety did sell because it was a CTQ or attribute that was important.

Qualifiers are interesting little devils.  They often get overlooked because of their lack of sexiness in favor of their sexier counterparts – differentiators.

Qualifiers often start off as differentiators but though the me-tooism in marketing are copied and their significance as a differentiator fades and their relegation to qualifier begins.  There are a number of qualifiers in any industry.  Often, but not always they relate to legislation that sets restrictions on certain issues or factors.  In Australia we were confronted by noise ordinances that limited noise levels on large trucks.  The result was that Caterpillar could not sell their large trucks in certain parts of Australia because they could not qualify (too loud).  Failure to qualify can mean a couple of things.  First it may mean that you cannot sell in certain markets.  In other cases it may simply impede penetration into a market.

Sometimes qualifiers can be resurrected as differentiators.  For example, warranties are typically considered to be qualifiers.  However, some innovative companies have been able to change their warranties (lengthen or make easier to use) and they have become an attribute or CTQ that has a differentiating element to them.

How you handle qualifiers from a marketing standpoint is important.  I have seen companies invest marketing resources into qualifiers in an effort to leverage them.   This is wasteful since, in most cases, qualifiers are a check-the-box proposition.  Either you qualify or you do not.

This is an important consideration when developing new products because the speed of penetration will depend on whether you qualify or not.  Considerations of a market penetration strategy should examine qualifiers carefully.  Often it can be expensive to qualify.  For example, in Western Australia we found out that farmers were willing to buy my clients ag equipment from their dealers but the dealer could be located no more than 30 miles from the farmer.  This meant that any ag company seeking to penetrate this market would have to invest in dealerships located at strategic points throughout the state – a pretty expensive proposition.

Six Sigma Marketing identifies growth opportunities in the DEFINE stage of the process.  Each targeted product/market will have its own definition of value and its own set of qualifiers.  These will emerge in the MEASURE stage.  Value models are based on a regression technique that responds to variance.  Qualifiers typically have small Beta weights (little covariance) or actually drop out of the modeling process.  This is a good clue to their nature.  Does that mean that they are unimportant?  Not at all.  It means that from a value perspective they are not CTQs or differentiators.  It does mean they have to be addressed.

Toyota will have to go back and re-qualify.  They will have to convince their markets that their cars are safe.  It won’t matter how much they differentiate their product from other competitors if the market sees them as unsafe.  Considering the cost of lost sales, direct costs of the recall/repair and additional advertising, this will not be inexpensive. Falling out of qualification and then having to re-qualify seldom is.   Ironically, it will be the dealers that bring Toyota back.  This is where the value is being created and where customer loyalty will be won.