Marketing Essentials

1. Marketing Essentials nChapter 32 Extended Product Features Section 32.1 Warranties

2. 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

3. SECTION 32.1 Warranties Why It's Important Warranties are used by sellers to encourage customers—whether a wholesaler, retailer, or consumer—to 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.

4. 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

5. 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

6. SECTION 32.1 Warranties Express Warranties • An express warranty isa 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.

7. 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

8. 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

9. 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.

10. 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

11. 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

12. 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.

13. SECTION 32.1 Warranties Federal Statutes • Many warranties have their origins in the Magnuson-Moss Consumer Product Warranty Actof 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

14. 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

15. 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

16. 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 individuals—e.g., auto mechanics, realtors, and building contractors—to meet training requirements.

17. 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.

18. 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

19. ASSESSMENT 32.1 Reviewing Key Terms and Concepts • 4. What are the basic provisions that product safety legislation requires of manufacturers? • 5. What can consumers do when they do not feel that a product's warranty has protected them adequately? Slide 2 of 2

20. 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?

21. 32.1 Graphic Organizer Types of Warranties Express Warranty Implied Warranty Warrantyof Merchantability Warranty ofFitness fora ParticularPurpose Full Warranty Limited Warranty

22. Marketing Essentials End of Section 32.1