Warranties Factor Into Consumer Considerations
Despite the view from some that they’re simply an up-sell at the register, extended warranties and service plans do carry some weight among people making certain electronics and appliance purchases.
According to a survey conducted by Fulcrum (a marketing and administration company for manufacturers’ who offer such contracts), nearly two-thirds of those who bought digital cameras (60%) or major appliances (64%) said the availability of an extended service contract was a factor in their purchase decision. Similarly, more than half of consumers buying power sports equipment or outdoor power tools also said the contracts played a role in their decisions.
“They do take them into consideration when purchasing a product,” Tara Piazza, senior vice president of Fulcrum, tells Marketing Daily. “Some of the questions they weigh are the cost of the repair over the cost of the warranty. The next-most commonly cited consideration is peace of mind.”
When it comes to buying extended warranties, people also showed a preference for those offered by the manufacturer of a product rather than a third party, Piazza says. “The service contract experience is an extension of the overall brand experience,” she says. “Consumers, when having a problem with a piece of equipment, want the manufacturer to take care of that.”
Getting people to spend extra on a service plan is closely tied to the timing of the purchase. According to the survey, consumers’ preference for purchasing a warranty declines the further they move away from the actual purchase. According to the survey, 56% of consumers preferred to buy the plan at the time of purchase, compared with shortly after the purchase (23%), near the initial warranty’s expiration (16%) or after it had expired (12%). “They’re already in the mindset of buying,” Piazza says. “The extra cost is just factored in to the overall price.”
"Broken Camera photo from Shutterstock"