The Woes of Extended Warranties Essay

RadioShack utilized different factors in an effort to ensure the brand’s strength internally. The primary thing the company focused on was growth. It was stated “that at the company’s peak there were approximately 7,300 stores and affiliates” (RadioShackCatalogs, n.d.).By doing the company the company in turn created a wide network of outlets available to consumers creating accessibility. Products such as adapters, rechargeable batteries, speakers, and audio accessories were sold in store locations. Having a diverse portfolio and being dependent on multiple products allows lead way incase one or multiple products do fail or become obsolete. Every business has weaknesses that have potential to drag down and effect business and RadioShack was

2. In your opinion, which of the three approaches to accounting for extended warranty and service contracts is most consistent with the actual substance of a sales transaction involving equipment and an extended warranty contract? Explain your selection and your reasoning fully.

Service contracts (extended warranties) are increasing in importance to most customers because producers are reducing standard warranties.

Best Buy is the world’s largest consumer electronic retailer with over $40 billion in revenue, 1,300 stores and 150,000 employees at the end of 2008 with a US market share of 21% (1). Best Buy’s humble beginnings go back to 1966 in Saint Paul Minnesota where a small audio specialty store named The Sound of Music was opened. Over the course of the last 43 years the world of consumer electronics have changed tremendously, but the one thing that has been successful in the growth of the company is Best Buys approach to meeting the consumer’s needs.

The demand for home warranties is increasing as more consumers are becoming familiar with them. The percentage of consumer’s budget effects price elasticity of demand in the home warranty industry because it is considered when the company regulates or implements price changes. Home warranties are presented as cost saving feature for new or existing homeowners who will experience appliance and system breakdowns. The company knows that significant price increases will reduce sales as consumers a necessary expense for their budget, therefore the elasticity of price demand affected. Specifically for my company, many of our repeat customers feel that our home warranty is a necessity as they compare the monthly price to what the actual repair would cost them without the

A manufacturer's warranty barely last a year on new vehicles. Extended warranties keep your car covered for a few more years after the manufacturer's warranty expires. So much skepticism surrounds extended warranties, and we don't know what to believe. Here are five types of stereotypes we place on warranties and how untrue it is.

The threat of potential new entrants into the consumer electronics retail industry is relatively low. Best Buy has forged a reputation for selling mid- to high-end product and excellent customer service. It would be difficult for an entrant to challenge the company. Furthermore, it would be difficult to undercut incumbent firms who have already established relationships with suppliers to purchase merchandize at the lowest prices.

Semicontronics is an Australian manufacturing company that has been in the business of semi manufactured electronics for over a decade. Semicontronics has a solid reputation for meeting customer demands for quality products on time and on budget. The majority of Semicontronics customers are international, mid-market manufacturing companies that produce generic electronics such as cell phones, digital media players and game consoles. Retail stores in foreign countries purchase the generic products and rebrand them for sale.

Samsung have been outsourcing their business operations to specialist including warranty administration together with repair on display products. Period of range for customer warranty is between two to three years. When customer return their completed warranty card supply with each product and details for future verification then only it is entitled to registered. However the real problem comes when the current outsource provider failed to maintain the level of service. Samsung need to think a better way of solving this problem so that they can have faster equipment repair turnaround, better warranty entitlement management to get high level customer satisfaction.

The last key issue was the company’s decision to be acquired by Sears at $1.9 billion where it had the exclusive right to sell Lands’ End product in its retail stores. This new horizontal integration had left a big question on whether Lands’ End will be able to earn profits under this new organization and whether any conflict will arise with this new establishment. At that time the company was facing declining sales in catalogs and already was in talks with Sears in the previous years’ believing that the retail stores would be a key addition to the platform for selling its products. The retail stores would be used to showcase the Lands’ End products and if any product found unsatisfactory through catalog and online purchase could be returned through these stores as well.

Guarantees, warranties, and refunds - consumers have rights under a national law guarantees consumers’ rights when purchasing goods and services. It also includesthe rights to repairs, replacements and refunds. This legislation can be applied even though they do not have a warranty or extended warranty.

2. How does the contrast between the manufacturer’s inflexibility and unwillingness to accept responsibility contrast with the retailer? Which is likely to build customer loyalty?

• Accurate forecasting of demand so that products do not have to be thrown away as often.Accurate stock control of the raw materials.

It isn’t enough for manufacturers to offer warranties, they need to present financing offers to help move inventory. These change regularly, usually every month, and may cover entire CPO inventories or select models.

Manufacturer Warranty - This has to do with the relationship between the customer and the company. When a consumer chooses a product, any expressed warranty on the product must be upheld. If the company promises satisfaction guaranteed, then they must express what the returned value would consist of if a consumer is not happy, and follow through on that promise. Consumers expect a level of implied warranty as well, this means they expect a certain level of quality with a product, and any failure of that means the company will also need to offer equal value for a failure to meet that warranty. If a thumb is found in a can of Coca-Cola, the company must step up to correct this issue for the consumer even though the circumstance was not outlined as an expressed warranty on the can. Consumers expect a level of quality when they purchase a product, and the company must stand behind the product.