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In today's competitive market, the purpose of a firm should be read as “creating loyal customers”. Therefore, for sustainable competitive advantage, a firm should be able to create and retain customers. One of the necessary conditions for this is that a firm's offerings must be able to meet customers' needs and wants. For product planning and development, a firm needs to know what customers want from a product. The objective of this paper is to analyze the notion of customer satisfaction and to discuss the viability of quality as a source of sustainable competitive advantage. Further, how a well‐known quality technique can be adopted for use in service environment and for development of customer focused service is also demonstrated.

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