Manufactured products are subject to defects, they occur at random. We know that the defect rate can never be zero so a higher defect rate doesn’t cause problems if you are purchasing the product in large quantities (large sample size). If I buy a pack of 100 straws for my kids, I am ok with some having holes in them – even up to 10 (10% defect rate). I bought them at the dollar store after all! As consumers we access the true cost of the product by including the defect rate in purchase.
Problems occur when the buyer purchases the product in small quantities (small sample size). We typically purchase cars one at a time. A manufacturer may sell cars with a 1% defect rate, but we buy one car and it either works or it doesn’t. When I buy my Prius and discover a brake defect, suddenly that 10% defect rate is not acceptable!
A 1% defect rate may not be statistically significant over the roughly 2 million cars sold by Toyota in the United States every year, but ask a Toyota marketer if it is practically significant. One percent is 20,000 unsatisfied complaining consumers. An article was written about the defective brakes on Prius Hybrids based on 100 complaints – only .005%! Toyota can improve their defect rate, but never get it to zero. That is when Public Relations becomes invaluable.