Page 372 - Marketing Management

SETTING PRODUCT STRATEGY | CHAPTER 12 349

competition. The Fair Packaging and Labeling Act, passed by Congress in 1967, set mandatory
labeling requirements, encouraged voluntary industry packaging standards, and allowed federal
agencies to set packaging regulations in specific industries.
The Food and Drug Administration (FDA) has required processed-food producers to include
nutritional labeling that clearly states the amounts of protein, fat, carbohydrates, and calories con-
tained in products, as well as vitamin and mineral content as a percentage of the recommended
daily allowance. 61 The FDA has also taken action against potentially misleading uses of such
descriptions as “light,”“high fiber,” and “low fat.”

Warranties and Guarantees
All sellers are legally responsible for fulfilling a buyer’s normal or reasonable expectations.
Warranties are formal statements of expected product performance by the manufacturer.
Products under warranty can be returned to the manufacturer or designated repair center
for repair, replacement, or refund. Whether expressed or implied, warranties are legally
enforceable.
Extended warranties and service contracts can be extremely lucrative for manufacturers
and retailers. Analysts estimate that warranty sales have accounted for a large percentage
of Best Buy’s operating profits. 62 Despite evidence that extended warranties do not pay off,
some consumers value the peace of mind. 63 These warranties still generate multibillion dollars
in revenue for electronic goods in the United States, though the total has declined as con-
sumers have become more comfortable seeking solutions to technical problems online or from
friends. 64
65
Many sellers offer either general or specific guarantees. A company such as Procter & Gamble
promises general or complete satisfaction without being more specific—”If you are not satisfied for
any reason, return for replacement, exchange, or refund.” A. T. Cross guarantees its Cross pens and
pencils for life. The customer mails the pen to A. T. Cross (mailers are provided at stores), and the
pen is repaired or replaced at no charge.
Guarantees reduce the buyer’s perceived risk. They suggest that the product is of high quality
and the company and its service performance are dependable. They can be especially helpful when
the company or product is not well known or when the product’s quality is superior to that of com-
petitors. Hyundai’s and Kia’s highly successful 10-year or 100,000 mile power train warranty
programs were designed in part to assure potential buyers of the quality of the products and the
companies’ stability.

Summary

1. Product is the first and most important element of the industrial-goods category has three subcategories:
marketing mix. Product strategy calls for making coor- materials and parts (raw materials and manufactured
dinated decisions on product mixes, product lines, materials and parts), capital items (installations and
brands, and packaging and labeling. equipment), and supplies and business services (oper-
2. In planning its market offering, the marketer needs to ating supplies, maintenance and repair items, mainte-
think through the five levels of the product: the core nance and repair services, and business advisory
benefit, the basic product, the expected product, the services).
augmented product, and the potential product, which 4. Brands can be differentiated on the basis of product
encompasses all the augmentations and transforma- form, features, performance, conformance, durability,
tions the product might ultimately undergo. reliability, repairability, style, and design, as well as such
3. Products can be nondurable goods, durable goods, service dimensions as ordering ease, delivery, installa-
or services. In the consumer-goods category are con- tion, customer training, customer consulting, and main-
venience goods (staples, impulse goods, emergency tenance and repair.
goods), shopping goods (homogeneous and hetero- 5. Design is the totality of features that affect how a product
geneous), specialty goods, and unsought goods. The looks, feels, and functions. A well-designed product offers