brand killing 101: case against warranties

Warranties are big business. For a firm to expressly warrant their products they must utilize additional personnel and a sophisticated quality system. All must dovetail with a broad engineering function. Finally, they must feed into corporate’s escrowing for warranty claims. Rather than improving the quality of a widget a warranty can drive down product quality and do nothing for a firm’s brand.

Like money back guarantees generate quick cash flow for short term investment by a guarantor, a warranty lubricates a sale here and now. It doesn’t build a brand though. Many of today’s strongest brands were built outside of today’s express warranty environment. They conjure up not thoughts of great warranties, but of first-in-class performance and premium quality.

The reason is clear in industrial equipment: It’s of no consolation to anyone  in a skyscraper or on a plane how good the warranty is on some   brackets or wiring harnesses. The point is performance.

warranty problems:

  1. A warranty raises the issue in the first place of when the manufacturer’s responsibility to and relationship with the customer ends. Ideally the answer should be never.
  2. Under the American Universal Commercial Code an implied warranty of merchantability covering all goods exists, making the provision of manufacturer declared warranties largely redundant and costly.
  3. For consumers, warranties create the illusion that a benefit is got that wouldn’t be had anyway.
  4. Warranties discourage consumers from asserting rights under the UCC by lowering their expectation of value beyond the warranty, value that is often readily available at reasonable cost to the manufacturer.

Warranties pervert the psychology with which you consume—and with which manufacturers produce.

People don’t really want warranties anymore than they want fire insurance. What they want is a reliable product to begin with. Warranties drive disposability. For example, we have created disposable cars. Despite it having sold in great numbers, the original Ford Taurus does not exist on the road or even in a junkyard today. However, many cars of the Taurus’ vintage are still on the road and readily observable: The Volvo 240 or 740 as examples,  despite how significantly more Ford Taurus’s were sold over Volvos. That’s an amazing quality statement. It lasts. Warranties  never do.


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