product warranty

(noun)

In retail, a guarantee of the reliability of a product under conditions of ordinary use; should the product malfunction within a stipulated amount of time after the purchase, the manufacturer or distributor is typically required to provide the customer with a replacement, repair, or refund.

Related Terms

Examples of product warranty in the following topics:

  • Product Warranties

    • It comes included as standard with all products, offering limited hardware warranty along with phone/Internet support on its products.
    • Behind every product is a series of supporting services, such as warranties and money-back guarantees.
    • Warranty: Warranties are used to mitigate the risks of a malfunctioning product or the risk of making a wrong purchase decision regarding misinformation about a product.
    • There are several types of durable products, retail stores, and even service products for which warranties are expected.
    • Describe how warranties and money-back guarantees act as supporting services for products

  • Developing Services

    • Moreover, behind every product is a series of supporting services, such as warranties and money-back guarantees.
    • Warranty: There are several types of durable products, retail stores, and even service products where warranties are expected.
    • These warranties can provide a wide array of restitution, with a very limited warranty at one end of the continuum and extended warranties at the other.
    • Money-back guarantees: The ultimate warranty is the money-back guarantee.
    • Obviously this service is effective only if the product is superior and the product will be returned by only a few people.

  • Remanufacturing (to as-good-as-new condition)

    • Remanufacturing to as-good-as-new condition is a three-step process whereby: (1) a used product is disassembled, (2) its parts are cleaned and repaired, and (3) the parts are reassembled to a sound working condition.
    • The term ‘sound working condition' is key because in some areas of the world, reassembled products made from used parts are considered new and come with the same guarantee and warranty as products made from virgin raw materials.
    • Conversely, in other regions, remanufactured (or refurbished) products must be labelled as such by law even if they carry the same warranty.

  • Reporting Contingencies

    • For example, to accrue a provision for product warranty costs, assume that minor repairs cost 5% of the total product sales and an estimated 5% of products may require minor repairs within 1 year of sale.
    • The provision is calculated by multiplying 5% of total product cost by 5% of products needing minor repair and then adding 20% of cost for major repair, multiplied by 1% of products needing major repair.
    • A warranty expense is debited for the provision amount that will offset product sales revenue in the income statement and a credit is posted to warranty provision liability.
    • As the warranty claims are made, the liability account is debited and cash is credited for the cost of the repair.
    • The long-term liability warranty provision is moved to the current liability section in the accounting period occurring three years after the product sale.

  • Classifying Liabilities

    • These usually include issued long-term bonds, notes payables, long-term leases, pension obligations, and long-term product warranties.

  • Special topic: just-in-time and lean systems

    • waste from product and service defects (rework, scrap, warranty, etc. )
    • In a manufacturing setting, there are six major ways to pursue JIT goals: inventory reduction to expose waste, use of a "demand-pull" production system, quick setups to reduce lot sizes, uniform plant loading, flexible resources, and cellular flow layouts.
    • By gradually lowering inventory, the weaknesses of the production system can be revealed and addressed one by one.

  • Adjustments to Products

    • Marketers must often make product adjustments in order to keep the product competitive and continue to provide satisfaction to the buyer.
    • Because of factors such as these, a decision is made either to identify ways of adjusting the product in order to further distinguish it from others, or to design a strategy that will eliminate the product and make way for new products.
    • A key question the marketer must answer before modifying the product is: "What particular attributes of the product and competing products are perceived as most important by the consumer?
    • " Factors such as quality, function, price, service, design, packaging, and warranty may all be determinants.
    • A product line extension is the use of an established product's brand name for a new item in the same product category.

  • Benefits and Solutions

    • Both are legitimate product cores.
    • Once the core product has been indicated, the tangible product becomes important.
    • Examples include restrooms, escalators, and elevators in the case of a department store, and warranties and return policies in the case of a lawn mower.
    • The outer ring of the product is referred to as the promised product.
    • Every product has an implied promise.

  • Evaluating Alternatives

    • During the evaluation of alternatives stage, the consumer evaluates all the products available on a scale of particular attributes.
    • During this stage, consumers evaluate all of their product and brand options on a scale of attributes which have the ability to deliver the benefit that the customer is seeking .
    • The brands and products that consumers compare - their evoked set - represent the alternatives being considered by consumers during the problem-solving process.
    • When a consumer commits significant time to the comparative process and reviews price, warranties, terms and condition of sale and other features it is said that they are involved in extended problem solving.
    • Conversely, high involvement buying involves products with many differences.

  • The "Do Anything" Licenses

    • It is the simplest of several minimal licenses that do little more than assert nominal copyright (without actually restricting copying) and specify that the code comes with no warranty.