Warranties

Requirements of a Warranty

1.Location of a warranty is easily accessible before purchase, easily seen 2.Clearly worded

Where can warranties appear for a product?

1.Packaging 2.Product Literature (pamphlets) 3.Advertisement 4.Point-of-Purchase Display

Disadvantage of an Extended Warranty

12-20% of people who buy it use it

Benefits of warranties

Convince customers of quality of products and services (familiar language-auto warranties)

Are warranties required by law?

No

Warranty of Merchantability

a promise from the seller that the product sold is fit for its intended purpose

Warranty

a promise, or guarantee, given to a customer that a product will meet certain standards; information about product; used most commonly in a series of specific promises

Implied Warranty

a warranty that exists automatically by state law whenever a purchase takes place

Express Warranties

a warranty that is explicitly stated, in writing or spoken words, to induce a customer to buy

Guarantee

another term for warranty, used specifically for promotion; within a given amount of time

How do companies and customers benefit from extended warranties?

businesses receive extra money on an original sale, customers benefit from the assurance of a long-term satisfaction

Characteristics of an Extended Warranty

customers pay extra, may have to pay deductible, overlap existing warranties (paying for something you already have)

Extended Product Features

delivery, installation, billing, service after the sale, directions for use, technical assistance, training

Limited Warranty

excludes certain parts of the product from coverage or requires the customers to bear some of the expense; within warranty period

Purpose of warranties

force a company to focus on customer needs, generate customer feedback, set clear standards of performance, encourage quality control, boost promotional efforts

Full Warranty

guarantees that if a product is found to be defective within the warranty period, it will be repaired or replaced at no cost to the purchaser within a reasonable amount of time, not commonly used because they cost the company too much money

Extended Warranties

provide repairs or preventative maintenance for a specified length of time beyond a product's normal warranty period

Warranty of Fitness for a Particular Purpose

seller advises a customer that a product is suitable for a specific use and the customer acts on this advice; companies don't usually do this

Disclaimer

statement that contains exceptions to and exclusions from a warranty; excludes any other costs that may have been incurred by the owner because of product failure; waives customers' rights under implied warranty laws

Why are disclaimers used?

to limit liability