When we look at this theory the first concept that comes to our mind is the method of cost reduction which might help increasing customer satisfaction rates. When we see it theoretically we see that if we reduce costs we would be able provide people (customers) with affordable products (Truitt and Haynes, 1994). For example we reduce costs of a particular item in our manufacturing and naturally this cost reduction would result in a decrease in quality because no business would compromise profits over cost reduction this would ultimately lead to bankruptcy (Bragg, 2010). So, cost reduction will attract more consumers towards the products as they will be getting the same product at a lower price but what happens is quiet interesting (1996). People after using the product will find out that the company has compromised on quality and the quality of the product is no longer the same as it used to be. So, customers will deviate away from that product and they will look for alternatives. In this the company / organization / business would face a twofold disadvantage; first of all the company would not be able to attract new customers as people would be aware of the reduction in quality; and secondly, the previous customers would also move away from the product.
Possible Outcomes of This Technique:
So, what do we calculate from all this? 1) Cost reduction will result in a drop in quality of the finished product or service,
2) If we reduce costs we would also reduce quality which will not be appreciated by the people, and
3) This would result is loss of customer strength and ultimately loss in business. So, form this we conclude that cost reduction is not favourable for the business and this would consequently lead towards the failure of the business.