Journal Entry Think about an expensive, high-end product you or a member of your family have purchased. What types of extras did the company offer that did not relate to the functioning of the product(gift wrapping, delivery, etc) ? Do you think these extras should always be offered with high end products? Why or why not?

Extended Product Features Why is it important to plan for products and services in the marketplace? Product Planning Section V Marketing II

Warranty-promise that product will meet certain standards Usually apply to materials, workmanship, and/or performance Guarantee is the same thing but is used in promotional phrases “satisfaction guaranteed” Framed set of specific promises for a certain time period or use period Not required to give warranties

Two types of warranties Express - explicitly stated in writing or spoken word –convenient, easily accessible to customers prior to purchase –Full (all parts and labor are covered w/i warranty period) or limited (offers less coverage and may exclude some items) Implied- exists automatically according to state law of place of purchase –warranty of merchantability-fit for intended purpose Ex-electric power saw that will cut wood –warranty of fitness for a particular purpose-suitable for a particular use Ex-a truck can pull a certain amount of weight

Disclaimers-statement that contains exceptions to and exclusions from a warranty Limits damages that can be recovered by the customer Protects the business One type waives customer’s rights under implied warranty law

Why are warranties important to businesses and consumers? Focus on customer satisfaction-help to guide expectations for product performance Set clear standards of performance-tell the customer how it is manufactured or how it will perform Generate customer feedback-registrations help provide feedback about the product Encourage quality control- products that are defective must be replaced under a warranty program Boost promotional efforts- speak for the reputation of the company

Other Extended Product Features Delivery Installation Billing/credit/financing Service after the sale Directions for use Technical assistance Training

Consumer Laws and Agencies Federal –Magnuson-Moss Consumer Protection Warranty Act 1975 $15 or more –Consumer Product Safety Act 1972 CPSC nonfood items –Food, Drug, Cosmetic Act (FDA) State –Lemon Laws 30 days out of service its first year or 4 attempts made –Arbitration Programs impartial third party –Licensing Requirements

Consumer Rights Ability to sue manufacturer –breach of federal law(written warranty) –breach of state law(implied warranty) –negligence Manufacturers can limit liability by –testing products –warning labels –inform consumers

Credit-enables you to obtain products or money in exchange for a promise to pay later By extending credit, businesses provide a purchasing incentive and enhances its sales and profits Issue credit based on income and credit history

Consumer Credit Bank credit cards-sponsored by Mastercard and Visa but banks actually issue(Look at interest rate, grace period, and annual fee) Store and gasoline cards-no annual fee but high interest rates Travel & Entertainment cards-annual fee and service charge usually, higher fees to merchants Rebate cards-reward or incentive to consumers to use them Affinity cards-give money to specific group or charity usually less than 1% of interest paid

Types of accounts Regular charge accounts or 30-day accounts –Paid in full in 30 days, no finance charge Installment accounts –Allow for payment over time, large purchases Revolving accounts –Min. payment amount each month, interest charged on balance Budget accounts –Payment over a certain time period with no interest charged.

Credit legislation Truth in Lending Act-APR, finance charges, penalties, stolen or lost credit cards Fair Credit Reporting-ability to check credit history for errors, and make corrections Equal Credit Opportunity Act-unable to deny based on age, gender, race etc Fair Debt Collection-Prevents harassment in collecting overdue accounts Fair Credit Billing-able to dispute charges

Credit Legislation Fair Credit and Charge Card Disclosure- costs to open credit and charge accounts Fair and Accurate Credit Transactions Act- requires verified ID to open credit, one free credit report per year, opt out of sharing info