Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic

Marketing: A

Global−Managerial

Approach, 14/e

9. Elements of Product
   Planning for Goods and
   Services

Text © The McGraw−Hill

Companies, 2002

270 Chapter 9

A warrantyexplains what the seller promises about its product. A marketing

manager should decide whether to offer a specific warranty, and if so what the war-

ranty will cover and how it will be communicated to target customers. This is an

area where the legal environment—as well as customer needs and competitive offer-

ings—must be considered.

U.S. common law says that producers must stand behind their products—even

if they don’t offer a specific warranty. A written warranty provided by the seller may

promise more than the common law provides. However, it may actually reducethe

responsibility a producer would have under common law.

The federal Magnuson-Moss Act(of 1975) says that producers must provide a

clearly written warranty if they choose to offer any warranty. The warranty does not

have to be strong. However, Federal Trade Commission (FTC) guidelines try to

ensure that warranties are clear and definite and not deceptive or unfair. A war-

ranty must also be available for inspection before the purchase.

Some firms used to say their products were fully warranted or absolutely guaran-

teed. However, they didn’t state the time period or spell out the meaning of the

warranty. Now a company has to make clear whether it’s offering a full or limited

warranty—and the law defines what fullmeans. Most firms offer a limited warranty,

if they offer one at all.

Some firms use warranties to improve the appeal of their marketing mix. They

design more quality into their goods or services and offer refunds or replacement,

not just repair, if there is a problem. Xerox Corp. uses this approach with its copy

machines. Its three-year warranty says that a customer who is not satisfied with a

copier—for anyreason—can trade it for another model. This type of warranty sends

a strong signal. A buyer doesn’t have to worry about whether the copier will work

as expected, service calls will be prompt, or even that the Xerox salesperson or

dealer has recommended the appropriate model.

Warranty puts
promises in writing

Warranty may improve
the marketing mix

In a competitive market, a
product warranty or a service
guarantee can be a very
important part of the
marketing mix.

Warranty Policies Are a Part of Strategy Planning