2011 ®

® “Extended Service Contracts and Consumer Opinion” Tara Piazza VP, Customer Research

® Agenda Research Background Recent Consumer Experiences with ESCs Past Purchases and Claims Experiences Social Media Recap/ Questions

® Research Background Consumer survey conducted online in Feb 2011 by FULCRUM. 1,161 consumers who recently purchased a new product in one of the following categories, from a retailer, in the last six months: Digital home printers or copiers (n=200) Digital cameras or camcorders (n=202) Digital flat panel TVs or home theatre systems (n=206) Home appliances (e.g. refrigerator, washer etc., n=202) Power sports (e.g. motorcycles, ATVs, watercraft etc., n=151) Automotive (n=200)

® IMPACT OF THE EXTENDED SERVICE CONTRACT ON PRODUCT PURCHASE

® Availability of an ESC is Important to Many Product Purchasers Q: How important were each of the following when deciding which ______________ to purchase? A: Five point scale (1 = Not at all important, 5 = Extremely important) Summary of top 2 box scores shown here.

® Important Factors in Purchase Decisions Digital home printer/ copier Camera or cam- corder TV/ home theatre Home appli- ance Power sports Auto- motive Getting a great deal on pricing84%88%85% 91% Manufacturer’s reputation for product quality83%84%77%84%77%88% The specific item’s style and appeal to you73%80%78%74%86%83% Reputation of the retailer for ongoing customer service 66%57%66%78%70%77% Past experience with the manufacturer’s products 70%65%51%66% 69% Strong manufacturers’ warranty57%58% 69%67%78% Manufacturer’s reputation for financial stability 53%51%46%60%67%72% Availability of an extended service contract42%31%35%46% 52% Incentives (cash back, for example)35%30%24%42%46%58% Availability of financing27%19% 31%54%63% Expected resale value25%20%14%18%64%60% Availability of an ESC is Less Important than Price, Quality, Style Q: How important were each of the following when deciding which ______________ to purchase? A: Five point scale (1 = Not at all important, 5 = Extremely important) Summary of top 2 box scores shown here.

® EXTENDED SERVICE CONTRACT PURCHASE INTEREST

® ESC Purchase Interest is Greatest for Vehicles and Home Appliances Q: Did you buy an extended service contract for your new ________?

® Among the ESC-Interested, Post-Sale Efforts Best for Printers and Vehicles Q: How willing would you have been, or will you be, to consider buying an extended service contract for your new at these various points in time? A: Five point scale (1 = Extremely unlikely, 5 = Extremely likely) Summary of top 2 box scores shown. Base: Respondents who have purchased, have plans to purchase or are undecided about purchase of ESCs for item. Data labels hidden for clarity

® Items that would make an ESC more appealing Digital home printer/ copier Camera or cam- corder TV/ home theatre Home appli- ance Power sports Auto- motive Free/discounted accessories, discounts on related products/events 46%37%34%48%58%43% Tied to product updates, upgrades31%29%26%27%42%27% Adding ‘accidental damage and loss’ coverage39%51%40%n/a Tips on product maintenance, new product introductions communicated to you regularly 23%19%18%23%36%20% Inclusion of tech support31%35%36%n/a Inclusion of maintenance and servicen/a 47%60% None of the above30%29%34%40%11%20% Each Product has Uniquely Appealing ESC “Value Adds” Q: What would make an extended service contract for your ____________ more appealing to you? Multiple answers permitted.

® ESCs are Valued about 75% Higher if Cover All Repairs for Auto, ADH Q: Assuming purchase near or at warranty expiration, what are you willing to pay for three years of… ? coverage of major repairs, full coverage of all repairs, full coverage of all repairs, including accidental damage that you cause. Base: Respondents who have purchased, have plans to purchase or are undecided about purchase of ESCs for item.

® Preference is OEM Parts, but More than Half are Open to Aftermarket Q: How do you feel about the extended service contract being provided by the manufacturer (using OEM parts), versus by a third party (using aftermarket parts)? Base: Respondents who have purchased, have plans to purchase or are undecided about purchase of ESCs for item.

® NON-FINANCIAL BENEFITS OF ESCS

® Availability of an ESC Adds to the Consumer’s Sense of Security Q: Does the fact that the manufacturer of your new _____________ offers an extended service contract make you feel…?

® ESC Availability Does Not Impact Sales Due to Quality Perception Q: Does the offer of an extended service contract by the manufacturer cause you to have concerns about that brand’s quality?

® Customers Feel ESC Availability Extends Their Time of Ownership Q: To what extent do you feel that having an extended service contract on your new _______________ will extend the amount of time that you own it before having to buy a new one?

® IMPACT OF PAST ESC EXPERIENCES ON BRAND LOYALTY

® Less than Half of Past ESC Purchasers Have Made a Claim Q: Have you purchased any extended service contract, or extended warranty, in the past? If Yes, Q: Did you have to make a claim?

® Among the Past ESC Claim Makers, Most Experienced Good Outcomes Q: Was the experience good, bad, or neutral? Base: Respondents who have made claims with extended service contracts or warranties in the past. (n=249)

® Good Claims Experience Increases Likelihood of Brand Repurchase (95%) Q: How willing would you be to buy another product from that manufacturer again in the future? Base: Respondents who have purchased any extended service contract or extended warranty in the past.

® Good Claims Experience Increases Likelihood of Future ESC Purchase Q: Would you purchase an ESC again? Base: Respondents who have purchased any extended service contract or extended warranty in the past.

® SOCIAL MEDIA BEHAVIOR, FROM THE CONSUMER’S PERSPECTIVE

® Compliments More Commonly Posted than Complaints Q: Have you complained about a product’s performance online, in a user review or social media website? Q: Have you complimented a product’s performance online, in a user review or social media website? Base: Respondents who have purchased any extended service contract or extended warranty in the past. Of consumers who post comments get a response from the manufacturer

® What reasons might you become a “fan” or “friend” of a company online? Digital home printer/ copier Camera or cam- corder TV/ home theatre Home appli- ance Power sports Auto- motive Quality/Reliable Product42%35%31%38%36%29% Discounts/Coupons/Offers25%26%23%24%23%19% Like the product19%13% 11%17%13% Customer Service11% 12%10%12%11% Updates/New features/products5%6%3% 7%4% None/would not become a fan30%29%39%30%18%31% Customers Most Likely to “Fan” or “Friend” if Product is High Quality Q: For what reasons might you choose to become a 'fan' or 'friend' of a company online? (Open end) Responses coded and tabulated into categories shown. Top categories shown here.

® RECAP/ QUESTIONS