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

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

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

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

5. 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

6. 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)

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

8. 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

9. 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.

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

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

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

13. Grades and Standards 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

14. 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

15. 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

16. Grades and Standards Speeds things up!
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.

17. 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

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

19. 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

20. Grades and Standards
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

21. 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.

22. ANSWERS
Video games
Gasoline
Milk
Coal
Lumber
Meat
Oil
Movies

23. 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

24. 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

26. 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.

29. EXAMPLE - EGGS STANDARDS FOR QUALITY OF INDIVIDUAL SHELL EGGS
Individual eggs with clean unbroken shells.
Individual eggs with stained or dirty, unbroken shells.
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

31. 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

32. 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

33. 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

34. 4 types of Warranties Express – specific statement
Implied – A toaster should toast
Full – covers ENTIRE product
Limited – only certain repairs/parts covered

35. 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

36. Types of warranties Full Warranty Limited Warranty
Defined as warranties that do not contain the provisions of full warranties, may cover only certain repairs or specific parts
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

37. 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

38. 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

39. 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

40. 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

41. 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.

42. 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

43. PRODUCT LIABILITY
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)

44. 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

45. 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

46. 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