The Quality is Right (Part 4)

What is marketplace quality?

Marketplace quality is related to market share. It’s how much people want to use your product. Your market share may be small because you’re just starting out, or you have limited supplies, or you’re pursuing a limited niche. But market quality measures how much your position in the marketplace is dictated by something other than a low price.

Among food stores, Whole Foods is trying to have a quality image that allows it to charge a higher price. In electronics, Apple has deliberately focused on high-end smartphones, preferring to keep its brand associated with innovation and quality.

The consumer is the great evaluator: if a product doesn’t offer a unique value proposition—either low prices or a specialized function or elegant design, it doesn’t survive very long. Marketplace quality is hard to measure, but if a firm has a recognizable brand that they willing to defend against cheap knock-offs, that indicates that they have something worthwhile.

Gucci’s saying—“Quality is remembered long after the price is forgotten”—holds true in the marketplace of goods, services, ideas, and stocks. And a company that devotes its resources to continually improving the quality of its offerings will do better—even if those investments are never explicitly recognized.

Because when you’re out of quality, you’re out of business.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2017-07-17T12:34:19+00:00 April 15th, 2014|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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