Promises Promises Warranties and Guarantees Product Service Management LAP

Promises, Promises Warranties and Guarantees Product/Service Management LAP 4

Objectives Describe types of warranties and guarantees. Explain the purposes and benefits of warranties and guarantees.

Objective Describe types of warranties and guarantees.

• Six months ago, Bryan bought a new laptop. • Now, the laptop isn’t functioning properly. • What should Bryan do now? • Check the laptop’s warranty. • Contact the manufacturer and/or retailer to get the laptop fixed.

What Is a Warranty? • A promise made by the seller to the customer that the seller will repair or replace a product that does not perform as expected

Warranties: Stated or Understood? • Express warranties Ø Expressed in a specific statement concerning product quality Ø May be written statements or oral promises

Warranties: Stated or Understood? • Implied warranties • Are unwritten, unstated, and simply understood by the customer and the seller • Imply that the product will perform as expected

Warranties: What Do They Promise? • Full warranties Ø Cover the entire product

Full Warranties • Reasonable time to fix • No time limits on implied warranties • Problem uncorrected in a reasonable time? Refund or replacement • Warrantor contacted for repairs

Warranties: What Do They Promise? • Limited warranties Ø Do not contain the provisions of full warranties Ø May cover certain repairs, specific parts, or a particular time period

What Is a Guarantee? A promise that the seller will refund the purchase price if the product does not perform as expected

Characteristics of Good Guarantees • Unconditional • Understandable • Easy for the customer to implement • Easy for the customer to collect

Objective Explain the purposes and benefits of warranties and guarantees.

Why Offer Warranties and Guarantees? • To reassure prospective customers • To protect the producer and seller • To gain repeat customers • To increase sales

Why Offer Warranties and Guarantees? • To use as a promotional tool • To use as a competitive tool • To use as an image builder

Customer Benefits Reduced anxiety about purchases Free repairs Legal recourse Service information

Business Benefits • A customer-oriented focus • Establishment of clear standards • Feedback from customers • Increased profits PROFIT$

The Magnuson-Moss Warranty Act • Protects consumers who buy products that have warranties or guarantees • Makes warranties stronger and easier to understand • Covers all consumer products • Requires business to provide product information • Applies to products that cost more than $15 (FTC regulated)

The Magnuson-Moss Warranty Act • Warranties must: Ø Be clearly expressed Ø Be easy to understand Ø Give the name of the warrantor

The Magnuson-Moss Warranty Act • Warranties must state: Ø What the company responsible will do if a product is defective Ø How long a period the warranty covers Ø Whether the warranty covers the whole product

The Magnuson-Moss Warranty Act • Warranties must define: Ø The buyer’s responsibilities Ø Procedures for using the warranty Ø Any expenses that may be involved

The Magnuson-Moss Warranty Act Copies of written warranties must be available where the warrantied products are sold.

The Magnuson-Moss Warranty Act Today’s courts recognize express and implied warranties.

• What major purchases have you made? • Did they come with warranties/guarantees? • Is the coverage appropriate? • What would be suitable? • Why?

• Everything that Be. Bop Fine Attire sells is “satisfaction guaranteed. ” • Some customers, such as Mindy, appear to be abusing the guarantee. • Be. Bop’s manager decided not to sell anything to Mindy ever again.

• Are the manager’s actions ethical? • Is it fair? • What would you do?

Acknowledgments Original Developers: Christopher C. Burke, April J. Miller, MBAResearch Version 1. 0 Copyright © 2012 MBA Research and Curriculum Center

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