A warranty is a promise by a manufacturer that a certain product is free from defects and that it will perform optimally as required.  A guarantee, though similar to a warranty, is an assurance by the manufacturer that a certain product is of high quality and will withstand the test of time.  Both warranties and guarantees are used to give customers assurance that they are purchasing quality products that are free from defects.


A 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.  Once the right warranty and/or guarantee has been created for your products, the next step is integrating it into product packaging and testing the value proposition to customers.

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.  Package your products in a way that it: 1) identifies your brand, 2) provides information on what is included with your product and its use, 3) provides protection for the product during transportation, and 4) assists in product storage or sale.  Packaging should be an extension and part of your marketing strategy & message.  Use packaging to convey to customers your brand's message in regards to differentiation, convenience, innovation, high quality or solving specific customer needs.

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.


Managing manufacturer risk

 

Many times manufacturers will provide terms and conditions for their warranties and guarantees so that they are not abused.  For example, if you buy an ornamental box that is warranted against defects and you drop it from a significant height, then the warranty will not cover breakage that might occur.  You will also be required to use it for the purpose that it has been manufactured for otherwise the warranty will be void. 

 

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 or 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.

 

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