Describe the uses of grades and standards in marketing Obj. 2.06 Describe the uses of grades and standards in marketing

Grades and Standards Why learn about Standards and Grades? How do Standards and Grades affect YOU?

Grades and Standards What did you eat for Breakfast or Lunch?

Appearance and Condition Grades and Standards How did Grades and Standards affect your food? Fresh Fruit Milk Inspected Eggs Appearance and Condition Quality

WHAT ARE GRADES AND STANDARDS? = measures of product quality. Standards = statements that specify a product’s size, contents, and/or quality; used as a basis for comparing or judging goods or services Grades = are ratings assigned to products that tell to what extent standards

Other Examples of How Companies Use Grades and Standards Specific tire sizes to fit our specific cars ALL children’s fever-reducing medicine contains: same ingredients same doses (regardless of what brand it is)

Other Examples of How Companies Use Grades and Standards Restaurants: Ratings Movies: Ratings Andy’s Rated: 97.5 Rated: R

REVIEW Grades: Ratings assigned to products that tell to what extent standards were met Standards: Specifications that are used as a basis for comparing or judging goods or services

INTERRELATIONSHIP BETWEEN GRADES AND STANDARDS Standards are set. Each product is rated against these preset standards and assigned a grade. Products that don’t meet the lowest standard are scrapped, reworked or sold at a discounted price. Example: School grading system – standards are set. You have to do this to earn an “A” in this class. Your work is compared to the standards and your grade is determined.

What do you have to do to earn a good grade? Grades and Standards What are some standards being used in your classes? What do you have to do to earn a good grade? A = Excellent!

Grades and Standards These requirements now become your standards that the teacher uses as her evaluation tool Your work compared to standards = GRADE

Grades and Standards How do Businesses use Grades and Standards? Standards are set Products are rated against standards and assigned a grade

Why do we use grades and standards? To make sure products are reliable How to use a product correctly and safely Where certain products can be sold

WHY ARE STANDARDS USED? Standards are used to establish uniform, consistent products. Example: CD’s made in the USA, Japan, and Mexico all have to fit into the same disc player

GRADES AND STANDARDS CAN INDICATE… How the product can be used Ex. Grades on milk and motor oil Where the product will be sold Ex. Gap, Inc. places higher quality clothes at the Gap and their lower grade clothing at Old Navy How much the product will cost its buyer Ex. Buyers will pay more for top grade Who the user can/should be Ex. Movie ratings indicate the audience: G, PG, PG13, and R

Speeds things up! Grades and Standards How do Grades and Standards aid in the buying and selling process? Speeds things up! G&S facilitate trade as buyers know what they will receive without physically handling or seeing the product. Consumers do not have to inspect. G&S tell them what products rank higher than others.

GRADES AND STANDARDS AID BUYING AND SELLING Their use speeds up the process because consumers can buy products without having to inspect Consumers rely on grades and standards for product information

Grades and Standards What do businesses do with products that fail to meet lowest standards? Products are disposed of or revamped

Sell at Outlet or Old Navy Grades and Standards Do you think the GAP will offer low standard clothes at their store? NO! What would the GAP do with these clothes? Sell at Outlet or Old Navy

Grades and Standards 1. Quantity What are 4 types of standards that businesses use? 1. Quantity - ex. how much will be produced in 1 day 2. Quality -ex. no returns or defective products 3. Time -ex. how many products can be made per hour 4. Cost -ex. how much do the products cost to make

Identify examples of graded products. What is graded according to its octane rating? What is graded according to hardwood and softwood? Prime, choice, and select grades refer to what product? This grades for bacteria count, odor, and taste in what product? This product is assigned numbers according to its thickness. This product is graded according to its carbon and sulfur content. This product is graded for profanity, violence, and nudity. This product is graded for adult content, especially violence and blood.

ANSWERS Video games Gasoline Milk Coal Lumber Meat Oil Movies

Grades and Standards Examples of Graded Products Agricultural raw materials- like cotton Food Products: USDA - Meat Dairy (IE Milk – whole, skim, non-fat, 2%) Fresh Produce Fish 3. Oil- Graded according to its thickness 4. Fuel- Graded according to its octane rating 5. Coal- Graded according to its carbon and sulfur content 6. Lumber- Hardwoods are graded according to size, quality, and type of wood

WHO SETS GRADES AND STANDARDS? Businesses Ex. McDonalds buns have an exact size and color, Ford requires suppliers to meet certain standards when making “Q1” parts. Government agencies Ex. FDA – food and drugs, FCA – communication, County Health Dept. - restaurants Trade and professional organizations (to promote product safety) Ex. AAA - motels

Professional Standards Nurses trust ANA because of our dedication to standards, guidelines, and principals. We work hard to elevate the nursing profession by defining the values and priorities for registered nurses across the nation. Through this work, ANA can provide direction to nurses across the nation, influence legislation, and implement a framework to objectively evaluate nursing excellence.

EXAMPLE - EGGS STANDARDS FOR QUALITY OF INDIVIDUAL SHELL EGGS 87.11. Individual eggs with clean unbroken shells. 87.12. Individual eggs with stained or dirty, unbroken shells. 87.13. Individual eggs with checked, cracked or broken shells. STANDARDS AND WEIGHT CLASSES FOR WHOLESALE GRADES OF SHELL EGGS MARKING OF CONSUMER RECEPTACLES OF SHELL EGGS

How are grades & standards important in a Global Market? Improved Grades and Standards (G&S) have the potential to increase trade by improving the flow and consistency By using certain requirements, products are known safe to use internationally. The standard is known as 1S0 9000

GRADES & STANDARDS IN GLOBAL TRADE The ISO 9000 are international standards for quality This standard guarantees that manufacturers have meet certain requirements for producing and shipping their products

What is a warranty? Warranty is a defined promise made by the seller to the consumer that the seller will repair or replace a product that does not perform as expected

4 types of Warranties Express – specific statement Implied – A toaster should toast Full – covers ENTIRE product Limited – only certain repairs/parts covered

Types of warranties Express Warranty Implied Warranty Defined as promises expressed in a specific statement concerning the quality of the product Can be written or oral Defined as an unwritten, unstated warranty understood by the consumer and the seller that a product will perform as expected The product will do what it is designed and recommended to do

Types of warranties Full Warranty Limited Warranty Defined as warranties that cover the entire product If the product doesn’t work it must be made good in a reasonable time if not the customer can choose a replacement or refund No time limits on implied warranties The customer need only notify the warrantor in order to obtain repairs Defined as warranties that do not contain the provisions of full warranties, may cover only certain repairs or specific parts

What is a guarantee? Defined as a promise made by the seller to the consumer that the seller will refund the consumer’s purchase price if the product doesn’t perform as expected. AKA – “Money-back guarantees” While warranties usually apply to goods, guarantees are given for both goods and services

Characteristics of an effective guarantee Unconditional No conditions for the customer to meet Understandable Clear language and no difficulty understanding the promises Easy for the customer to implement Not a lot of forms, people to see , and different locations Easy for the customer to collect When possible money should be refunded on the spot

Purposes of warranties and guarantees To reassure prospective customers To protect the producer and seller To gain repeat customers To increase sales To use as a promotional tool To use as a competitive tool To use as a image builder

BENEFITS OF WARRANTIES AND GUARANTEES Consumer Benefits Business Benefits Reduced anxiety about purchases Free repairs Service information Legal recourse A customer-oriented focus Establishment of clear standards Feedback from customers Increased profits

WHY ARE WARRANTIES & GUARANTEES REGULATED & CONTROLLED BY THE LAW? They can cause problems for producers Consumers misuse the product Customers expect problems to be fixed that are not under warranty There have been times when companies have “guaranteed” their products without living up to the terms of the warranty or guarantee and the customer was cheated.

MAGNUSON-MOSS WARRANTY ACT OF 1975 This Act provides guidelines for businesses offering warranties and guarantees with their product. Protects consumers Makes warranties stronger & easier for consumers to understand Covers all consumer products & requires marketers to provide product information to consumers even before they make the purchase FTC has the authority to regulate warranties on products that sell for more than $15

PRODUCT LIABILITY 3 major types of claims: Product liability is the area of law in which manufacturers, distributors, suppliers, retailers, and others who make products available to the public are held responsible for the injuries those products cause. 3 major types of claims: manufacturing defect design defect a failure to warn (also known as marketing defects)

PRODUCT RECALLS A product recall is a request to return to the maker a batch or an entire production run of a product, usually due to the discovery of safety issues. The recall is an effort to limit liability (which can cause costly legal penalties & damage in reputation) Recalls are costly to a company because they often entail replacing the recalled product or paying for damage caused by use, although possibly less costly than consequential costs caused by damage to brand name and reduced trust in the manufacturer

PRODUCT RECALL AGENCIES Food and Drug Administration (FDA): Food, pharmaceutical drugs, health supplements, cosmetics. United States Department of Agriculture (USDA): Meat, poultry, eggs. National Highway Traffic Safety Administration (NHTSA): On-road vehicles and related products (e.g. cars, trucks, vans, recreational vehicles, motorcycles, tires, motorcycle helmets, children's safety seats) US Coast Guard: Marine vehicles and related products (e.g. boats, personal watercraft, life jackets) Consumer Product Safety Commission (CPSC): Consumer products (e.g. toys, household goods, bicycles, off-road vehicles, etc.) Environmental Protection Agency (EPA): Pesticides, fertilizers, and anything harmful to the environment Federal Aviation Administration (FAA): Aircraft

BP ACTIVITY – DUE….? Use the Internet to locate information about a recent case involving the Consumer Product Safety Commission (CPSC). Record the following information: Name of the company Nature of the product safety issue Outcome of the case You will present your findings to the class