UNIT E PRODUCT/SERVICE MANAGEMENT AND PRICING 8.03 Classify quality assurances.

Warranties Warranty: A promise or guarantee given to a customer that a product will meet certain standards in materials, workmanship, and performance. A vital part of product/service management Optional on the part of a business

Advantages of warranties Can help increase sales and profits Show a focus on customer satisfaction Make the business accountable for performance standards Give companies customer feedback Provide quality standards Increase effectiveness of promotional efforts

Disadvantages of warranties May cost money if product is poor in quality or defective.

Types of warranties Express Warranty Implied Warranty Disclaimer Full Limited Implied Warranty Warranty of Merchantability Warranty of fitness for a particular purpose Disclaimer Extended Warranty

Types of warranties Express warranty: A warranty that is explicitly stated, in writing or verbally, to encourage a customer to make a purchase. Written warranties can appear on a product label, in product literature, in advertising, or on a point-of-purchase display. Written warranties should be clearly stated for easy customer understanding. Written warranties should be available to customer prior to purchase of the product.

Types of warranties (cont.) Express warranties – 2 kinds Full warranty Limited warranty

Types of warranties (cont.) Express warranties – 2 kinds Full warranty: A promise that a product found to be defective within the warranty period will be repaired or replaced at no cost to the purchaser.

Types of warranties (cont.) Express warranties – 2 kinds Limited warranty: A warranty that may exclude certain parts of the product from coverage or require the customer to bear some of the expense for repairs resulting from defects.

Types of warranties (cont.) Implied warranty: The warranty that takes effect automatically by state law whenever a purchase is made and there is no written warranty.

Types of warranties (cont.) Implied warranty – 2 kinds Warranty of merchantability Warranty of fitness for a particular purpose

Types of warranties (cont.) Implied warranty: - 2 kinds Warranty of merchantability: The seller’s promise that the product sold is fit for its intended purpose. Example: An electric power saw will cut wood.

Types of warranties (cont.) Implied warranty: 2 kinds Warranty of fitness for a particular purpose: The warranty implied when the seller advises a customer that a particular product is suitable for a particular use and the customer acts on that advice.

Types of warranties (cont.) Disclaimer: A statement that specifies the exceptions to and exclusions from a warranty. Reduces the damages a customer can receive in a lawsuit Limits the amount of refund to the original purchase price

Types of warranties (cont.) Extended warranty: An agreement that provides repair or maintenance beyond the original warranty. Customers pay extra for an extended warranty. Many times there is a deductible the customer must pay. Benefits Businesses receive more profit on the original sale of the product. Consumers receive additional satisfaction from the original purchase.

Activity Find a recalled product do following: Find an article about a specific product recall Provide: Title of the article Author, website Summarize the article Discuss whether you think recall was covered under product’s warranty.