Marketing Essentials

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Marketing Essentials
n Chapter 32 Extended Product Features
Section 32.1 Warranties
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SECTION 32.1
Warranties
What You'll Learn

• The different types of warranties
• The importance of warranties to product planning
• Additional extended product features
• The major provisions of product safety
  legislation
• Consumer responsibilities and rights related to
  product performance

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SECTION 32.1
Warranties
Why It's Important
Warranties are used by sellers to encourage
customerswhether a wholesaler, retailer, or
consumerto purchase a product or service.
Depending on how warranties are used and the
quality of the product or service, they can
either boost sales or become a major problem for
a business.
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SECTION 32.1
Warranties
Key Terms

• warranty
• express warranty
• full warranty
• limited warranty
• implied warranty
• warranty of merchantability
• warranty of fitness for a particular purpose
• disclaimer

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SECTION 32.1
Warranties
Warranties

• A warranty is a promise or guarantee given to a
  customer that a product will meet certain
  standards. It is usually applied to materials,
  workmanship, and/or performance, and comes in two
  forms
• express
• implied

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SECTION 32.1
Warranties
Express Warranties

• An express warranty is a warranty that is
  explicitly stated (written or spoken), to induce
  a customer to buy. There are two types
• A full warranty covers repairs or replacement of
  a defective product at no cost.
• A limited warranty excludes certain parts of the
  product from coverage, or requires the customer
  to pay some portion of repairs.

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SECTION 32.1
Warranties
Implied Warranties

• An implied warranty exists automatically by state
  law whenever a purchase takes place. They are
  made by sellers. There are two types of implied
  warranties
• warranty of merchantability
• warranty of fitness for a particular purpose

Slide 1 of 2
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SECTION 32.1
Warranties
Implied Warranties
A warranty of merchantability is a promise that
the product is fit for its intended purpose. A
warranty of fitness for a particular purpose
arises when the seller advises a customer that a
product is suitable for a particular use and the
customer acts on that advice.
Slide 2 of 2
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SECTION 32.1
Warranties
Warranty Disclaimer
A disclaimer is a statement that contains
exceptions to and exclusions from a warranty.
Disclaimers are used to limit damages that can be
recovered by a customer.
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SECTION 32.1
Warranties
Role of Warranties in Product Planning

• Customers may make their decisions to purchase
  based on the extended product feature. Warranties
  are significant to a business because they
• force a company to focus on customer needs
• set clear standards of performance
• generate customer feedback
• encourage quality control
• boost promotional efforts

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SECTION 32.1
Warranties
Other Extended Product Features

• Additional features that help create customer
  satisfaction are
• delivery
• installation
• billing
• service after the sale
• directions for use
• technical assistance
• training

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SECTION 32.1
Warranties
Consumer Laws and Agencies
Manufacturers must be sure that their products
meet all the requirements of the law. They must
be safe, adequately labeled, and accurately
advertised if they are not, the manufacturer
could face fines or product recalls.
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SECTION 32.1
Warranties
Federal Statutes

• Many warranties have their origins in the
  Magnuson-Moss Consumer Product Warranty Act of
  1975, which governs written warranties for most
  consumer products. The act
• sets minimum standards
• sets rules for making warranties available
  before sale
• sets provisions for lawsuits if warranties are
  not fulfilled

Slide 1 of 3
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SECTION 32.1
Warranties
Federal Statutes

• The Consumer Product Safety Act of 1972,
  established the Consumer Product Safety
  Commission, which has the power to
• require warning labels
• recall product or order repairs
• prohibit a product's sale

Slide 2 of 3
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SECTION 32.1
Warranties
Federal Statutes
The Food, Drug, and Cosmetic Act of 1938 was
designed to assure that products will be pure,
wholesome, effective, informatively labeled, and
truthfully advertised. It is enforced by the Food
and Drug Administration.
Slide 3 of 3
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SECTION 32.1
Warranties
State Statutes

• Many states have passed their own consumer
  protection laws aimed at poorly made or poorly
  serviced products.
• Lemon laws are designed to protect consumers from
  poorly built cars.
• Licensing and certification laws require certain
  individualse.g., auto mechanics, realtors, and
  building contractorsto meet training
  requirements.

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SECTION 32.1
Warranties
Consumer Rights and Responsibilities

• Consumers have a right to expect quality
  products at fair prices. If not, consumers
  should
• Contact the seller or the manufacturer.
• If the problem is still unresolved, contact the
  government agencies that assist with consumer
  complaints.
• If the problem is still not resolved, consumers
  can take legal action.

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ASSESSMENT
32.1
Reviewing Key Terms and Concepts
1. What are two types of warranties? 2. Why are
warranties important for product
planning? 3. Identify three additional extended
product features that are frequently part of
product planning.
Slide 1 of 2
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ASSESSMENT
32.1
Reviewing Key Terms and Concepts
4. What are the basic provisions that product
safety legislation requires of manufacturers? 5. W
hat can consumers do when they do not feel that a
product's warranty has protected them adequately?
Slide 2 of 2
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ASSESSMENT
32.1
Thinking Critically
Many unsafe and potentially dangerous toys enter
the country from other countries. What should the
federal government do to prevent this from
happening?
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32.1
Graphic Organizer
Types of Warranties
Express Warranty
Implied Warranty
Warrantyof Merchantability
Warranty ofFitness fora ParticularPurpose
Full Warranty
Limited Warranty
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Marketing Essentials
End of Section 32.1