Presentation on theme: "Describe the uses of grades and standards in marketing"— Presentation transcript:
1 Describe the uses of grades and standards in marketing Obj. 2.06Describe the uses of grades and standards in marketing
2 Grades and Standards Why learn about Standards and Grades? How do Standards and Grades affect YOU?
3 Grades and StandardsWhat did you eat for Breakfast or Lunch?
4 Appearance and Condition Grades and StandardsHow did Grades and Standards affect your food?Fresh FruitMilkInspectedEggsAppearance and ConditionQuality
5 WHAT ARE GRADES AND STANDARDS? = measures of product quality. Standards = statements that specify a product’s size, contents, and/or quality; used as a basis for comparing or judging goods or servicesGrades = are ratings assigned to products that tell to what extent standards
6 Other Examples of How Companies Use Grades and Standards Specific tire sizes to fit our specific carsALL children’s fever-reducing medicine contains:same ingredientssame doses(regardless of what brand it is)
7 Other Examples of How Companies Use Grades and Standards Restaurants:RatingsMovies:RatingsAndy’sRated: 97.5Rated: R
8 REVIEWGrades: Ratings assigned to products that tell to what extent standards were metStandards: Specifications that are used as a basis for comparing or judging goods or services
9 INTERRELATIONSHIP BETWEEN GRADES AND STANDARDS Standards are set. Each product is rated against these preset standards and assigned a grade. Products that don’t meet the lowest standard are scrapped, reworked or sold at a discounted price.Example: School grading system – standards are set. You have to do this to earn an “A” in this class. Your work is compared to the standards and your grade is determined.
10 Grades and Standards What do you have to do to earn a good grade? What are some standards being used in your classes?What do you have to do to earn a good grade?A = Excellent!
11 Grades and StandardsThese requirements now become your standards that the teacher uses as her evaluation toolYour work compared to standards = GRADE
12 Grades and Standards How do Businesses use Grades and Standards? Standards are setProducts are rated against standards and assigned a grade
13 Grades and Standards Why do we use grades and standards? To make sure products are reliableHow to use a product correctly and safelyWhere certain products can be sold
14 WHY ARE STANDARDS USED?Standards are used to establish uniform, consistent products.Example: CD’s made in the USA, Japan, and Mexico all have to fit into the same disc player
15 GRADES AND STANDARDS CAN INDICATE… How the product can be usedEx. Grades on milk and motor oilWhere the product will be soldEx. Gap, Inc. places higher quality clothes at the Gap and their lower grade clothing at Old NavyHow much the product will cost its buyerEx. Buyers will pay more for top gradeWho the user can/should beEx. Movie ratings indicate the audience: G, PG, PG13, and R
16 Grades and Standards Speeds things up! How do Grades and Standards aid in the buying and selling process?Speeds things up!G&S facilitate trade as buyers know what they will receive without physically handling or seeing the product. Consumers do not have to inspect.G&S tell them what products rank higher than others.
17 GRADES AND STANDARDS AID BUYING AND SELLING Their use speeds up the process because consumers can buy products without having to inspectConsumers rely on grades and standards for product information
18 Grades and StandardsWhat do businesses do with products that fail to meet lowest standards?Products are disposed of or revamped
19 Sell at Outlet or Old Navy Grades and StandardsDo you think the GAP will offer low standard clothes at their store?NO!What would the GAP do with these clothes?Sell at Outlet or Old Navy
20 Grades and StandardsWhat are 4 types of standards that businesses use?1. Quantity- ex. how much will be produced in 1 day2. Quality-ex. no returns or defective products3. Time-ex. how many products can be made per hour4. Cost-ex. how much do the products cost to make
21 Identify examples of graded products. What is graded according to its octane rating?What is graded according to hardwood and softwood?Prime, choice, and select grades refer to what product?This grades for bacteria count, odor, and taste in what product?This product is assigned numbers according to its thickness.This product is graded according to its carbon and sulfur content.This product is graded for profanity, violence, and nudity.This product is graded for adult content, especially violence and blood.
23 WHO SETS GRADES AND STANDARDS? BusinessesEx. McDonalds buns have an exact size and color, Ford requires suppliers to meet certain standards when making “Q1” parts.Government agenciesEx. FDA – food and drugs, FCA – communication, County Health Dept. - restaurantsTrade and professional organizations (to promote product safety)Ex. AAA - motels
24 EXAMPLE - EGGS STANDARDS FOR QUALITY OF INDIVIDUAL SHELL EGGS Individual eggs with clean unbroken shells.Individual eggs with stained or dirty, unbroken shells.Individual eggs with checked, cracked or broken shells.STANDARDS AND WEIGHT CLASSES FOR WHOLESALE GRADES OF SHELL EGGSMARKING OF CONSUMER RECEPTACLES OF SHELL EGGS
26 How are grades & standards important in a Global Market? Improved Grades and Standards (G&S) have the potential to increase trade by improving the flow and consistencyBy using certain requirements,products are known safe to useinternationally.The standard is known as 1S0 9000
27 GRADES & STANDARDS IN GLOBAL TRADE The ISO 9000 are international standards for qualityThis standard guarantees that manufacturers have meet certain requirements for producing and shipping their products
28 What is a warranty?Warranty is a defined promise made by the seller to the consumer that the seller will repair or replace a product that does not perform as expected
29 4 types of Warranties Express – specific statement Implied – A toaster should toastFull – covers ENTIRE productLimited – only certain repairs/parts covered
30 Types of warranties Express Warranty Implied Warranty Defined as promises expressed in a specific statement concerning the quality of the productCan be written or oralDefined as an unwritten, unstated warranty understood by the consumer and the seller that a product will perform as expectedThe product will do what it is designed and recommended to do
31 Types of warranties Full Warranty Limited Warranty Defined as warranties that do not contain the provisions of full warranties, may cover only certain repairs or specific partsDefined as warranties that cover the entire productIf the product doesn’t work it must be made good in a reasonable time if not the customer can choose a replacement or refundNo time limits on implied warrantiesThe customer need only notify the warrantor in order to obtain repairs
32 What is a guarantee?Defined as a promise made by the seller to the consumer that the seller will refund the consumer’s purchase price if the product doesn’t perform as expected.AKA – “Money-back guarantees”While warranties usually apply to goods, guarantees are given for both goods and services
33 Characteristics of an effective guarantee UnconditionalNo conditions for the customer to meetUnderstandableClear language and no difficulty understanding the promisesEasy for the customer to implementNot a lot of forms, people to see , and different locationsEasy for the customer to collectWhen possible money should be refunded on the spot
34 Purposes of warranties and guarantees To reassure prospective customersTo protect the producer and sellerTo gain repeat customersTo increase salesTo use as a promotional toolTo use as a competitive toolTo use as a image builder
35 BENEFITS OF WARRANTIES AND GUARANTEES Consumer BenefitsBusiness BenefitsReduced anxiety about purchasesFree repairsService informationLegal recourseA customer-oriented focusEstablishment of clear standardsFeedback from customersIncreased profits
36 WHY ARE WARRANTIES & GUARANTEES REGULATED & CONTROLLED BY THE LAW? They can cause problems for producersConsumers misuse the productCustomers expect problems to be fixed that are not under warrantyThere have been times when companies have “guaranteed” their products without living up to the terms of the warranty or guarantee and the customer was cheated.
37 MAGNUSON-MOSS WARRANTY ACT OF 1975 This Act provides guidelines for businesses offering warranties and guarantees with their product.Protects consumersMakes warranties stronger & easier for consumers to understandCovers all consumer products & requires marketers to provide product information to consumers even before they make the purchaseFTC has the authority to regulate warranties on products that sell for more than $15
38 PRODUCT LIABILITYProduct liability is the area of law in which manufacturers, distributors, suppliers, retailers, and others who make products available to the public are held responsible for the injuries those products cause.3 major types of claims:manufacturing defectdesign defecta failure to warn (also known as marketing defects)
39 PRODUCT RECALLSA product recall is a request to return to the maker a batch or an entire production run of a product, usually due to the discovery of safety issues. The recall is an effort to limit liability (which can cause costly legal penalties & damage in reputation)Recalls are costly to a company because they often entail replacing the recalled product or paying for damage caused by use, although possibly less costly than consequential costs caused by damage to brand name and reduced trust in the manufacturer
40 PRODUCT RECALL AGENCIES Food and Drug Administration (FDA): Food, pharmaceutical drugs, health supplements, cosmetics.United States Department of Agriculture (USDA): Meat, poultry, eggs.National Highway Traffic Safety Administration (NHTSA): On-road vehicles and related products (e.g. cars, trucks, vans, recreational vehicles, motorcycles, tires, motorcycle helmets, children's safety seats)US Coast Guard: Marine vehicles and related products (e.g. boats, personal watercraft, life jackets)Consumer Product Safety Commission (CPSC): Consumer products (e.g. toys, household goods, bicycles, off-road vehicles, etc.)Environmental Protection Agency (EPA): Pesticides, fertilizers, and anything harmful to the environmentFederal Aviation Administration (FAA): Aircraft
41 BP ACTIVITY – DUE….?Use the Internet to locate information about a recent case involving the Consumer Product Safety Commission (CPSC). Record the following information:Name of the companyNature of the product safety issueOutcome of the caseYou will present your findings to the class