Operational Management : Extended Warranty

Extended warranty are more than extended service plan. The consumer may or may not buy the extended warranty that depend on the product itself. The consumer need to think what will be benefit for me after buying the extended warranty. As we know extended warranty cost a money and how much it cost that depends upon the value of the product. The retailer offer an extended warranty to the consumer because they will get some commission on that. Depending upon the product and cost associated with it I will decide whether to buy the extended warranty or not. As we know extended warranty doesn’t cover all the thing that we expect. It generally coverage for electrical or mechanical breakdown.

Most of the reputed company will not offer the extended warranty because it implies and give suggestion that there product are not last and quality of the product is less than the consumer expect. Quality and cost is main two factor which will plays on extended warranty.   If I have to buy a television, I will not buy an extended warranty because the technology is changing every day, new innovation on technology are bringing latest feature on television 3-D, 8-D and more. And technology effect on price, prices continue to drop, to the point that it's often cheaper and better to buy the latest version after a few years so I see I will be more on beneficial if I invest these money in other business.

Somehow the extended warranty are required for those product who cost is very high and its value will not decrease for a long time. Warranty come along with product but the extended warranty is optional. If I have to buy a car, an expensive and reputed branded car I will like to buy an extended warranty because the parts of that product are expensive and to get well services I need to spend a lot of money. It helps me to secure my investment on product. We need to calculate the risk associated with it, after calculating the profit I will decide to take extended warranty or not. I am sure I will be on profit by investing some amount of money on extended warranty then applying than money to other business. 

Depending upon the product and services extended warranty have its one advantage and disadvantage. Some of are

Advantage:

• It helps consumer to make confident to use this product. It plays a mind game.
• It makes easy to replace the damage parts and it will inexpensive in service in sense of its value.
• It creates a long relationship with the company and customer.
• Extended warranty will cover other feature that are not include on warranty.

Disadvantage:

• Extended warranty is some time expensive. It will be more beneficial to invest same amount on another business.
• Extended warranty may reduce the loyalty. As viewing by the consumer point the extended warranty is not needed on quality product. It gives sign that the product will not long last.
• Warranty may not always cover each and every part of the product.