Choosing the Right Warranty Policy – from the Customer’sto the Manufacturer’s Point of View

Abstract

Product warranty is a powerful marketing tool, but it always involves additional costs to the manufacturer. This paper deals with the warranty cost analysis for one type of passenger car batteries. Costs were calculated for three variants of fully renewing combination free replacement and pro-rata policy and for different warranty parameters. After choosing the price range for the product, a market research was performed to determine which warranty policy customers recognize as most favourable to them. Obtained results are guideline for the manufacturer to choose the warranty that minimizes the costs and maximizes the profit.