Chapter 32 Extended Product Features 1

Marketing EssentialsMarketing Essentials

Chapter 32 Extended Product Features

Section 32.1 Warranties

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SECTION 32.1SECTION 32.1

What You'll LearnWhat You'll Learn

WarrantiesWarranties

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

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Why It's ImportantWhy 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.

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Key TermsKey Terms

warranty express warranty full warranty limited warranty implied warranty warranty of merchantability warranty of fitness for a particular purpose disclaimer

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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

Warranties

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Express Warranties

An express warranty is a 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.

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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

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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.

Implied Warranties

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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.

Warranty Disclaimer

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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

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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

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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.

Consumer Laws and Agencies

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Many warranties have their origins in the Magnuson-Moss Consumer Product Warranty Act of 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

Federal Statutes

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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

Federal Statutes

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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.

Federal Statutes

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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.

State Statutes

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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.

Consumer Rights and Responsibilities

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32.1 ASSESSMENTASSESSMENT

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.

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32.1 ASSESSMENTASSESSMENT

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?

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32.1 ASSESSMENTASSESSMENT

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?

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32.1 Graphic OrganizerGraphic Organizer

Types of Warranties

ExpressExpressWarrantyWarrantyExpressExpress

WarrantyWarranty

FullFullWarrantyWarranty

FullFullWarrantyWarranty

LimitedLimitedWarrantyWarrantyLimitedLimited

WarrantyWarrantyWarrantyWarranty

of of MerchantabilityMerchantability

WarrantyWarrantyof of

MerchantabilityMerchantability

Warranty ofWarranty ofFitness forFitness fora Particulara Particular

PurposePurpose

Warranty ofWarranty ofFitness forFitness fora Particulara Particular

PurposePurpose

ImpliedImpliedWarrantyWarrantyImpliedImplied

WarrantyWarranty

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Marketing EssentialsMarketing Essentials

End of Section 32.1