Warranties and Guarantees, Grades and Standards, & Product Life Cycles

The Federal Trade Commission has the authority to regulate warranties on any products that sell for more than

$15

A good guarantee should be understandable and conditional.

False, a good guarantee should be understandable and unconditional.

A warranty is a promise made by the seller to the customer that the seller will refund the customer's purchase price if the product does not perform as expected.

False, a guarantee is a promise made by the seller to the customer that the seller will refund the customer's purchase price if the product does not perform as expected.

A limited warranty is one that has all of the provisions of a full warranty.

False, a limited warranty does not have all of the provisions of a full warranty.

Which of the following is a true statement about the growth stage of the product life cycle:

Competitors arrive on the scene

Johan routinely wastes company paper and sometimes takes office supplies for personal use. He most likely has a negative effect on which type of standards:

cost

Two characteristics of a good guarantee are that it should be

unconditional and understandable

An implied warranty is a promise expressed in a specific statement concerning the quality of the product.

False, an express warranty is a promise expressed in a specific statement concerning the quality of a product. An implied warranty is an unwritten, unspoken warranty understood by the customer and the seller that the product will perform as expected.

Guarantees and warranties are the same thing.

False, guarantees and warranties are not identical.

Warranties and guarantees do not cause problems for producers.

False, warranties and guarantees do cause problems for producers.

Warranties and guarantees damage a company's image.

False, warranties and guarantees help to build a company's image.

Guarantees are classified on the basis of whether or not their promises are stated or simply understood.

False, warranties are classified on the basis of whether or not their promises are stated or simply understood.

While guarantees usually apply to goods, warranties are given for both goods and services.

False, while warranties usually apply to goods, guarantees are given for both goods and services.

Which of the following is a reason that customers prefer to buy graded products:

Graded products meet specific quality standards.

Used to specify project or product costs

cost standards

The stage of the product life cycle in which profits begin to erode

decline

A person who purchases a new product before most others do

early adopter

Kevin is standing in line to purchase the latest version of his favorite smartphone. He loves getting the newest technology as soon as it's available. Kevin is known as a(n)

early adopter

During the growth stage, costs are affected by

economies of scale

The phrase that refers to costs going down as a company makes more and more of a product

economies of scale

A price-skimming strategy works well when introducing

electronic products

Which of the following marketing strategies is appropriate for the growth stage of the product life cycle:

expanding the product line

A customer buys a gaming system and receives a printed warranty card stating the actions the company will take if the system does not work properly. This is an example of a(n) __________ warranty.

express

Graded on its octane rating

fuel

A warranty that covers the entire product is known as a(n) __________ warranty.

full

The stages a product moves through from the time it enters the market until the time it exits the market

product life cycle

Indicate the degree of excellence to be expected from a good or service

quality standards

A business specifies that employees must contact a certain number of customers each week. This is an example of __________ standards.

quantity

Melanie must sign 15 new customers up for store credit cards. Which type of standard does this illustrate?

quantity

Specify amount of work to be done

quantity standards

One way in which customers benefit from warranties and guarantees is

reduced anxiety about purchases

Which of the following is a true statement about the maturity stage of the product life cycle:

sales growth slows down

Giving customers a list of locations at which they can obtain repair or replacement as part of a warranty or a guarantee provides the customer benefit of

service information

A strategy that involves setting prices high to recover costs

skimming

"The product should be four inches long and weigh 14 ounces." The preceding statement illustrates

standards

Statements that specify a product's size, contents, and/or quality

standards

Which of the following is a source that businesses use to develop standards:

suppliers

Which of the following is an example of an express warranty:

A salesperson states that if a kitchen blender breaks, the company will replace it.

An express guarantee is not written or stated orally.

False, an implied warranty is not written or stated orally.

Which of the following is a true statement about the introduction stage of the product life cycle:

Profits are usually nonexistent

Which of the following is most likely to result if workers fail to meet time standards:

Reduced number of products available

Which of the following is a true statement about the decline stage of the product life cycle:

The stage can be fast or slow

Which of the following is a way that grades and standards can be used:

To determine how products can be used

Light bulbs are made to fit sockets across the U.S. This is an example of which of the following ways that standards are used:

To establish uniform, consistent products

How can salespeople use grades and standards?

To meet customer needs

Which of the following is a purpose of warranties and guarantees:

To protect the producer and the seller

Why do businesses want to meet quality standards?

To reduce costs

A company providing a full warranty may not put time limits on any implied warranties the product may have.

True

A customer need only notify the warrantor in order to obtain repairs with a full warranty.

True

A full warranty provides that if a product does not work properly, is defective, or does not live up to the warranty, it must be made good within a reasonable amount of time.

True

A purpose of warranties and guarantees is to increase sales.

True

A warranty is a promise made by the seller to the customer that the seller will repair or replace a product that does not perform as expected.

True

A warranty that covers the entire product is a full warranty.

True

An implied warranty is one that is understood by the customer and the seller that the product will perform as expected.

True

Full and limited warranties are two classifications of warranties based on the extent of the promises they make.

True

Companies that build a reputation for carrying out the terms of their warranties and guarantees generally have higher sales and more repeat customers, which result in

increased profits

Which of the following is an accurate statement about the Magnuson-Moss Warranty Act's regulation of warranties:

Implied warranties are enforceable by law.

How does the use of grades and standards affect the buying and selling process?

It enables customers to buy without having to inspect each product.

Guarantees and warranties are both promises to the customer.

True

With a full warranty, if a problem cannot be corrected in a reasonable amount of time, the customer does not have to wait longer and may choose a refund or a replacement.

True

What government agency is usually responsible for rating food products?

U.S. Department of Agriculture

Which of the following is a type of "product" that the product life cycle can apply to:

a brand

One way in which a business can benefit from warranties and guarantees is

a customer-oriented focus

Which of the following is one of the main goals of promotion during the introduction stage:

building awareness of the product

A strategy that involves selling a package of products together for one price

bundling

Grades and standards speed up this process

buying/selling process

The Magnuson-Moss Warranty Act of 1975 specifies that warranties must be

clearly expressed

Any business that transports goods across state lines must comply with standards set by

government agencies

Generally responsible for grading

government agencies

Which of the following is usually responsible for grading goods:

government agenices

An octane rating of 87 is an example of a

grade

How food products can be used is generally determined by their

grades

Ratings that tell to what extent standards are met

grades

The stage of the product life cycle in which the product quickly becomes accepted in the market

growth

"Your money back if not satisfied" is an example of a

guarantee

A promise made by the seller to the customer that the seller will refund the customer's purchase price if the product does not perform as expected is defined as a

guarantee

In its catalogs, a clothing manufacturer states: "If you are not completely satisfied with any item you buy from us, at any time during your use of it, return it and we will refund your full purchase price." This is an example of a

guarantee on goods

Holiday Inn Express uses the slogan "No excuses, guaranteed" as a money-back promise to guests. This is an example of a

guarantee on service

A strategy that involves lowering a product's costs but continuing to sell it

harvesting

When customers buy televisions, they expect them to transmit pictures. This is an example of a(n) __________ warranty.

implied

The importance of grades and standards increases as international trade

increases

Importance of grades and standards increases as this increases

international trade

The stage of the product life cycle in which many products fail

introduction

The product life cycle refers to the stages a product moves through from the time it enters the market until the time

it exits the market

A way grades and standards help salespeople

justify price

Sam's new car came with a warranty that ended after 12,000 miles or one year. The warranty covered major parts. This is an example of a(n) __________ warranty.

limited

Rated on appearance and weight it can support

lumber

A state in which the only chance for increased sales occurs with population growth or a shift in market share

market saturation

Most of the products we use are in which stage of the product life cycle?

maturity

The longest-lasting stage of the product life cycle

maturity

Rated on taste and flavor

meat

Rated on it's thickness

oil

Rated on avoidance of genetic engineering, synthetic fertilizers, and more

organic products

A strategy that involves setting prices low to achieve market acceptance

penetration pricing

Rated on appearance

poultry

Monitor the amount of time needed to complete an activity

time standards

Why do many professional organizations develop standards for their members to follow?

to promote product safety

L.L. Bean promises "100% satisfaction in every way" to those who buy its goods. Items can be returned for refund or credit. This is an example of a(n)

unconditional guarantee

When products are graded by nongovernment agencies, the grading is

voluntary

A promise made by the seller to the customer that the seller will repair or replace a product that does not perform as expected is defined as a

warranty