Question

What is product? Describe how and why product warranties are important as marketing tool?

Answer 1

PRODUCT

In marketing,  a product is an object or system made available for consumer use; it is anything that can be offered to a market to satisfy the desire or need of a customer. A product can be classified as tangible or intangible. A tangible product is a physical object that can be perceived by touch such as a building, vehicle, or gadget. Most goods are tangible products. For example, a soccer ball is a tangible product. Services or ideas are intangible.

In retailing, products are often referred to as merchandise, and in manufacturing, products are bought as raw materials and then sold as finished goods. A service is also regarded to as a type of product.

In marketing, the term market refers to the group of consumers or organizations that is interested in the product, has the resources to purchase the product, and is permitted by law and other regulations to acquire the product.

MARKETING TOOL

Manufacturers generally use warranties and guarantees as marketing tools to give customers assurance that what they are buying is of good quality. It can also be used to enhance a brand's reputation or serve as a competitive differentiator for the consumer.

Warranty is a legal obligation of the manufacturer or dealer who is liable to the consumers in case of failure of that product. It gives peace of mind to the consumer as well as confidence that the product would work well.

Packaging & Integrating your Warranties and Guarantees

How you package your products is the first step in attracting prospective customers. If your product is not packaged properly your intended market segment may not purchase your product. It is therefore important that you put great effort into your product packaging.

Part of your packaging strategy should be incorporating any warranties or guarantees that you decide to leverage. This includes designing the warranty and guarantee label that you are going to use on the packaging. Consider the color choice, layout, images and text that will appear on the label. Put the product warranty and guarantee label on your packaging and see how it comes out. You can do test trials by giving out a few promotional products to consumers who can give you back feedback on their perception of the product and packaging. Also consider how the warranty or guarantee can be exercised by the customer and include documentation on this within the product packaging.

Warranties and guarantees are suppose to give the customer assurance that the product they are purchasing will not only last, but will also perform optimally during the warranty period. Also decide whether the warranty you are giving is an implied warranty or an express warranty. Implied warranties are suppose to assure the customer that the goods they are buying will perform as required while an express warranty gives the customer an explicit assurance that if any defects arise, the manufacturer will repair and remedy the defects and even replace if necessary. You can also have satisfaction or money back guarantees expressing that you will refund all the money if the product does not meet the customers’ demands.

Product warranty plays an important role in the creation of market for the product and for managers to manage the market. This is because of consumer uncertainty regarding product performance over its useful life. Warranties serve as persuasive marketing tools: (i) promotional and (ii) protectional. As a promotional tool, warranties serve to promote the reliability and quality of a product with longer and better warranty terms implying a more reliable product. As a protectional tool, warranties provide assurance to consumers against defective products that fail to perform satisfactorily over the warranty period. This assurance reduces the risks associated with purchase of the product.

When designing warranties and guarantees it is important to assess the potential increased value it provides in marketing vs. the increased cost you may incur due to increased returns. Analyzing defect rates and return rates on similar products could also be helpful. Overall the goal is to get an idea of what the cost associated with offering a certain warranty or guarantee is compared to the potential for increased revenue. Warranties and guarantees may also allow the company to get better feedback from customers on the exact manufacturing defects associated with their products so that those can be fixed.