Warranty vs Guarantee
WARRANTY AND GUARANTEE
WARRANTY A written assurance that the manufacturer of a product will guarantee the quality and reliability of a product in terms of correcting any legitimate problems with the product at no additional cost, for some expressed or implied period of time or use.
FACTORS DETERMINING WARRANTY POLICY • Product reliability • Length of warranty period • Features of warranty policy • Warranty cost
FEATURES OF WARRANTY POLICY • One dimensional or two dimensional: One-dimensional warranty is a warranty that is based on calendar time alone. Two-dimensional warranty is a warranty that is limited by the age and the usage of the product. • Free-replacement, pro-rata or rebate: In a free-replacement warranty (FRW), manufacturers will repair or replace the failed items free of charge up to some specified period from the initial purchase. In contrast, under a pro-rata warranty (PRW), manufacturers will refund a fraction of the purchase price or will replace the failed item with a new one at a prorated price, if an item fails under warranty. Under a rebate policy manufacturers agree to refund an amount to the maximum of the selling price if an item under warranty fails. • Renewing or non-renewing: Under a renewing policy, if an item fails within the warranty period, it will be replaced by a new item with a new identical warranty, replacing the old one. In other words, a new warranty period begins with each replacement. On the contrary, the non-renewing policy will replace the failed item but will not add another period of warranty.
TYPES OF WARRANTY • Express warranty • Implied warranty • Lifetime warranty • Extended warranty
ADVANTAGES OF WARRANTY • Safeguards the rights of customer • Protects the manufacturers • Serves as a decision-making criterion • Useful in reuse strategy • Helps to build long-term image and relationship with customer
GUARANTEE
WARRANTY A written assurance that the manufacturer of a product will guarantee the quality and reliability of a product in terms of correcting any legitimate problems with the product at no additional cost, for some expressed or implied period of time or use.
FACTORS DETERMINING WARRANTY POLICY • Product reliability • Length of warranty period • Features of warranty policy • Warranty cost
FEATURES OF WARRANTY POLICY • One dimensional or two dimensional: One-dimensional warranty is a warranty that is based on calendar time alone. Two-dimensional warranty is a warranty that is limited by the age and the usage of the product. • Free-replacement, pro-rata or rebate: In a free-replacement warranty (FRW), manufacturers will repair or replace the failed items free of charge up to some specified period from the initial purchase. In contrast, under a pro-rata warranty (PRW), manufacturers will refund a fraction of the purchase price or will replace the failed item with a new one at a prorated price, if an item fails under warranty. Under a rebate policy manufacturers agree to refund an amount to the maximum of the selling price if an item under warranty fails. • Renewing or non-renewing: Under a renewing policy, if an item fails within the warranty period, it will be replaced by a new item with a new identical warranty, replacing the old one. In other words, a new warranty period begins with each replacement. On the contrary, the non-renewing policy will replace the failed item but will not add another period of warranty.
TYPES OF WARRANTY • Express warranty • Implied warranty • Lifetime warranty • Extended warranty
ADVANTAGES OF WARRANTY • Safeguards the rights of customer • Protects the manufacturers • Serves as a decision-making criterion • Useful in reuse strategy • Helps to build long-term image and relationship with customer
GUARANTEE