The Economics & Marketing of Quality Assurance

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I recently took some graduate-level courses in Microeconomics and Marketing Management. Yes, I know - what do those have to do with Quality Assurance you ask? I'll tell you.

There are those that feel like quality is binary - either you have it or you don't. Your application has bugs or it doesn't. I'm sure you can guess how naive I think that view is. In reality, your application either has "known bugs" or bugs that haven't been discovered yet. Permutation & combination math show us that it is nearly impossible to fully test all logic paths & permutations of input of an application with no more that 100 lines of code.

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So, what do we do? Well, this is where the marketing aspect comes in. Marketing basics teach of market segments - groups of your consumers based on common characteristics. Every product cannot appeal to every consumer, so you must have a target segment. This target segment has desired characteristics for your product - Speed, accuracy, price, etc. Just as it makes no sense to design a product that looks fantastic, but provides no real value to the customer, it makes less sense to develop a product for sale to a target market without targeting their desired characteristics.

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Here's where the economics part comes in. Each consumer has his level of quality (which is not only of varying degree, but of varying category. The reason a consumer will buy a product is because of the "consumer surplus" it gives him. This is the difference between the consumer's valuation (what the consumer would pay for the product) versus the actual selling price. It is very much like "profit" for consumers. The larger the consumer surplus, the more likely they are to buy.

Each software business needs to focus their quality efforts on what their targeted market segments perceive as high-value. If they are providing value, but at a cost much higher than what the consumer is willing to pay (possibly because they are focusing effort on something their segment doesn't care about - adding unnecessary cost and no value). This focus comes from establishing a "Quality Philosophy" (Thanks Lisa Crispin). But that is a post for another day.