THE EFFECT OF WARRENTY ON PRODUCT EFFICACY
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Product’s warranty is used strategically by firms to create differentiation and attract consumers. Hence, the effect of warranties on consumer decision making is of interest to both marketers and consumer researchers and his research has received much attention in the consumer behavior literature. Studies have shown that product warranty plays an important role for consumers. It influences the expectations and subjective assessments of product's efficacy and thus can signal quality, reduce risks and encourages purchases, based on the belief that offering a warranty for a product that has a high failure rate is not profitable for companies. However, this article documents a new phenomenon, extending the known capabilities of product warranty. Labeling products with a Long-term product warranty, versus products without warranty, improved consumers' objective performance, even when motivation to perform better was unlikely to explain the improvement. Results from three experiments indicate that the efficacy of products carrying “3 YEARS WARRANTY” labels were better than the efficacy of the same products without these labels. Specifically, we compared performance of participants utilizing a product (sunglasses, earmuffs, or chamomile tea) said to assist task performance (visual, auditory, or concentration, respectively) when it carried “3 YEARS WARRANTY” label versus no label. Participants facing a glaring light were asked to read printed words as accurately and as quickly as they could, receiving compensation proportional to their performance. Those wearing sunglasses carried “3 YEARS WARRANTY” label were able to read more quickly yet with fewer errors than those wearing sunglasses without label that were otherwise identical. Similarly, ear-muffs blocked noise more effectively, and chamomile tea improved mental focus more, when otherwise identical target products carried long-term product warranty.