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

2. 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

3. 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

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

5. 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

6. 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.

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

8. 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.

9. 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.

10. 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.

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

12. 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.

13. 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.

14. 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

15. 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.

16. 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.