1. INDICATOR 2.05 – APPLY
QUALITY ASSURANCES TO
ENHANCE PRODUCT/SERVICE
OFFERINGS
MARKETING

2. WHAT ARE GRADES AND STANDARDS?
• Standards are • Grades are ratings
statements that assigned to
specify a product’s products that tell to
size, contents, what extent
and/or quality; used standards are met
as a basis for
comparing or
judging goods or
services

3. INTERRELATIONSHIP BETWEEN
GRADES AND STANDARDS
• Standards are set. Each product is rated against
these preset standards and assigned a grade.
Products that don’t meet the lowest standard are
scrapped, reworked or sold at a discounted price.
• Example: School grading system – standards are
set. You have to do this to earn an “A” in this class.
Your work is compared to the standards and your
grade is determined.

4. WHY ARE STANDARDS USED?
• Standards are used
to establish uniform,
consistent products.
• Example: CD’s
made in the USA,
Japan, and Mexico
all have to fit into
the same disc
player

5. GRADES AND STANDARDS CAN
INDICATE…
• How the product • How much the
can be used product will cost its
• Ex. Grades on milk buyer
and motor oil • Ex. Buyers will pay
• Where the product more for top grade
will be sold • Who the user
• Ex. Gap, Inc. places can/should be
higher quality clothes • Ex. Movie ratings
at the Gap and their indicate the
lower grade clothing audience: G, PG,
at Old Navy PG13, and R

6. GRADES AND STANDARDS AID BUYING
AND SELLING
• Their use speeds up
the process
because consumers
can buy products
without having to
inspect
• Consumers rely on
grades and
standards for
product information

7. GRADES AND STANDARDS IN GLOBAL
TRADE
• The ISO 9000 are international standards for quality
• This standard guarantees that manufacturers have
meet certain requirements for producing and
shipping their products

8. WHO SETS GRADES AND STANDARDS?
• Government agencies • Businesses
• Ex. FDA – food and • Ex. McDonalds buns
drugs, FCA – have an exact size and
communication, County color, Ford requires
Health Dept. - suppliers to meet
restaurants certain standards when
• Trade and making “Q1” parts.
professional
organizations (to
promote product
safety)
• Ex. AAA - motels

9. TYPES OF GRADES AND STANDARDS
• Read handout and answer review questions #1-9

10. WHAT IS A WARRANTY?
• Warranty is a
defined promise
made by the seller
to the consumer
that the seller will
repair or replace a
product that does
not perform as
expected

11. TYPES OF WARRANTIES
Express Warranty Implied Warranty
• Defined as promises • Defined as an
expressed in a specific unwritten, unstated
statement concerning warranty understood
the quality of the by the consumer and
product the seller that a
• Can be written or oral product will perform as
expected
• The product will do what
it is designed and
recommended to do

12. TYPES OF WARRANTIES
Full Warranty Limited Warranty
• Defined as warranties • Defined as warranties
that cover the entire that do not contain the
product provisions of full
• If the product doesn’t work warranties, may cover
it must be made good in a
reasonable time if not the only certain repairs or
customer can choose a specific parts
replacement or refund
• No time limits on implied
warranties
• The customer need only
notify the warrantor in
order to obtain repairs

13. WHAT IS A GUARANTEE?
• Defined as a promise made by the seller to the
consumer that the seller will refund the consumer’s
purchase price if the product doesn’t perform as
expected.
• AKA – “Money-back guarantees”
• While warranties usually apply to goods, guarantees
are given for both goods and services

14. CHARACTERISTICS OF A EFFECTIVE
GUARANTEE
• Unconditional • Easy for the
• No conditions for the customer to
customer to meet implement
• Understandable • Not a lot of forms,
• Clear language and people to see , and
no difficulty different locations
understanding the • Easy for the
promises customer to collect
• When possible
money should be
refunded on the spot

15. PURPOSES OF WARRANTIES AND
GUARANTEES
• To reassure • To use as a
prospective promotional tool
customers • To use as a
• To protect the competitive tool
producer and seller • To use as a image
• To gain repeat builder
customers
• To increase sales

16. BENEFITS OF WARRANTIES AND
GUARANTEES
Consumer Benefits Business Benefits
• Reduced anxiety • A customer-oriented
about purchases focus
• Free repairs • Establishment of clear
• Service information standards
• Legal recourse • Feedback from
customers
• Increased profits

17. WHY ARE WARRANTIES AND
GUARANTEES REGULATED AND
CONTROLLED BY THE LAW?
• They can cause problems for producers
• Consumers misuse the product
• Customers expect problems to be fixed that are not under
warranty
• There have been times when companies have
“guaranteed” their products without living up t the
terms of the warranty or guarantee and the
customer was cheated.

18. MAGNUSON-MOSS WARRANTY ACT OF
1975
• This Act provides guidelines for businesses offering
warranties and guarantees with their product.
• Protects consumers
• Makes warranties stronger & easier for consumers to
understand
• Covers all consumer products & requires marketers to
provide product information to consumers even before
they make the purchase
• FTC has the authority to regulate warranties on products tat
sell for more than $15

19. PRODUCT LIABILITY
• Product liability is the • 3 major types of
area of law in which claims:
manufacturers, • manufacturing defect
distributors, suppliers, • design defect
retailers, and others • a failure to warn (also
who make products known as marketing
available to the defects)
public are held
responsible for the
injuries those
products cause.

20. PRODUCT RECALLS
• A product recall is a • Recalls are costly to a
request to return to company because
the maker a batch they often entail
or an entire replacing the recalled
product or paying for
production run of a damage caused by
product, usually due use, although possibly
to the discovery of less costly than
safety issues. The consequential costs
recall is an effort to caused by damage to
limit liability (which brand name and
can cause costly reduced trust in the
legal penalties and manufacturer
damage in
reputation)

21. PRODUCT RECALL AGENCIES
• US Coast Guard: Marine • Food and Drug
vehicles and related Administration (FDA): Food,
products (e.g. boats, pharmaceutical drugs,
personal watercraft, life health supplements,
jackets) cosmetics.
• Consumer Product Safety • United States Department
Commission (CPSC): of Agriculture (USDA): Meat,
Consumer products (e.g. poultry, eggs.
toys, household goods, • National Highway Traffic
bicycles, off-road vehicles, Safety Administration
etc.) (NHTSA): On-road vehicles
• Environmental Protection and related products (e.g.
Agency (EPA): Pesticides, cars, trucks, vans,
fertilizers, and anything recreational vehicles,
harmful to the environment motorcycles, tires,
• Federal Aviation motorcycle helmets,
Administration (FAA): children's safety seats)
Aircraft

22. RECALL ACTIVITY
• Use the Internet to locate information about a
recent case involving the Consumer Product Safety
Commission (CPSC). Record the following
information:
• Name of the company
• Nature of the product safety issue
• Outcome of the case
• You will present your findings to the class

23. RECALL ACTIVITY 1
• Use the Internet, newspapers, or magazines and
search for an article that discusses a specific
product recall. Provide the following in a summary
of the article:
• Title of the article
• Author of the article
• Article publication
• Summarize the article in approximately 100 words
• Based on the information in the article, discuss
whether or not you believe this recall was covered
under the product’s warranty