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Related Services

13 May, 2016 - 13:23

Behind every product is a series of supporting services, such as warranties and money-back guarantees. In many instances, such services may be as important as the product itself. In fact, at times it is difficult to separate the associated services from the product features. Consequently, companies must constantly monitor the services offered by the company and its competitors.

Based on the results of data-gathering devices such as customer surveys, consumer complaints, and suggestion boxes, the product manager can determine the types of services to offer, the form the service will take, and the price charged. For example, consumers are very reluctant to purchase a stereo that can be serviced only by sending it to the factory, and paying the postage and a high service fee. Maytag, however, has been very effective in selling their appliances with service contracts and local repair. Banks are still uncertain as to whether they should charge the customer for checks, ATM (automated teller machine) use, safety deposit boxes, and overdrafts. An industrial customer might be keenly interested in related services such as prompt delivery, reliable price quotations, credit, test facilities, demonstration capabilities, liberal return policies, engineering expertise, and so forth.

Although there are a wide range of supportive services, the following are most prevalent:

  • Credit and financing. With the increased acceptance of debt by the consumer, offering credit and/or financing has become an important part of the total product. For certain market segments and certain products, the availability of credit may make the difference between buying or not buying the product.
  • 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. An example of the former is a VCR manufacturer that provides a 30-day warranty on the motor drive and no other coverage. The Craftsman tools division of Sears Roebuck reflects the other extreme. A broken shovel will be replaced, no questions asked, after a full summer of use. A good jewelry store has a warranty backing up every diamond ring they sell.
  • Money-back guarantees. The ultimate warranty is the money-back guarantee. To the customer, a money-back guarantee reduces risk almost totally. There are certain market segments (e.g. low risk takers) that perceive this service as very important. It is obvious that this service is effective only if the product is superior and the product will be returned by only a few people. Extensive research should support this decision.
  • Delivery, installation, training, and service. Products that tend to be physically cumbersome or located far from the customer might consider delivery (free or a small charge) to be an integral part of the new product. Very few major appliance stores, lumberyards, or furniture stores could survive without provisions for this service. Similarly, there are products that are quite complicated and/or very technical, and whose average consumer could neither learn how to install or use it without assistance from the manufacturer. Both professional and home computer companies have been forced to provide such services. The slow development of video products or product types that have a history of breakdown and extensive maintenance must offer this service to the customer. In addition, it must be provided quickly and effectively. Although product service and maintenance has been provided to industrial customers for several years, this service is still new to many customer product manufacturers.