How a Home Warranty Protection Plan Works for You - HSA - HSA Home Warranty
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American Home Shield: The Home Warranty Leader - American Home Shield
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Retailers selling home appliances and electronics goods typically make 15-20 percent profit from these products but realize more than 200 percent profit from selling extended warranties for them. A new study that appears in the January issue of Marketing Science, a publication of the Institute for Operations Research and the Management Sciences (INFORMS), finds that even though selling warranties through independent firms will lower extended warranty prices, the consumers may actually be worse off.
The research, Risk Preferences and Demand Drivers of Extended Warranties, was conducted by Pranav Jindal, assistant professor of marketing at Pennsylvania State University's Smeal College of Business.
Combining conjoint analysis, one of the most widely used market research tools, with economic models, Jindal analyzed stated choices of more than 550 consumers drawn from an online panel, and addressed two key questions -- "Why do consumers buy extended warranties?" and "Why do consumers pay such a high premium for extended warranties?"
"Paying $500 for a new laptop is not the same as paying $500 for repairing or replacing a laptop you already own," Jindal said. "Consumers view paying for repairs as a loss. Consumers feel it hurts 3-4 times worse than paying the price of the product itself. This hurt drives consumers to buy extended warranties."
This behavior of consumers is called loss aversion.
Through an online survey, the author collected data on consumer choices for washing machines and extended warranties to show that loss aversion along with peace of mind are the key reasons why consumers buy extended warranties for their products.
"Consumers search for low product prices but do not search for low warranty prices," says Jindal. "So, they are locked in by retailers selling appliances and electronic goods. Conventional wisdom says that extended warranties should be sold through independent firms selling only warranties, which will make extended warranties cheaper and consumers better off. But according to this new research, obtaining extended warranties through independent firms may be cheaper but it does not make consumers happier."
This unexpected result is based on the finding that retailers discount the price of home appliances and electronic goods and in turn charge consumers a premium for extended warranties. If these retailers are not allowed to sell extended warranties, then prices of home appliances and electronic goods will go up, although extended warranties (now sold through independent retailers) will become cheaper. On average, however, consumers lose more from the increased product prices than they gain from lower extended warranty prices.
While the study focused on the role of losses, it acknowledged that other factors such as over-predicting failure rate, lack of information about repair and replacement policy, and financial constraints may also result in consumers purchasing extended warranties.
"Consumers may buy a warranty for a variety of reasons. Controlling for others, this study shows that consumers' perception of potential losses and peace of mind are important factors, and have important implications for how extended warranties should be sold," Jindal concluded. "Moving forward, it would be really interesting to get into the consumer's mind and understand when they think a product will fail and how much they believe it will cost them to repair or replace the product."
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Selling extended warranties via independent companies lowers price but hurts consumers
Retailers selling home appliances and electronics goods typically make 15-20 percent profit from these products but realize more than 200 percent profit from selling extended warranties for them. A new study that appears in the January issue of Marketing Science, a publication of the Institute for Operations Research and the Management Sciences (INFORMS), finds that even though selling warranties through independent firms will lower extended warranty prices, the consumers may actually be worse off.
The research, Risk Preferences and Demand Drivers of Extended Warranties, was conducted by Pranav Jindal, assistant professor of marketing at Pennsylvania State University's Smeal College of Business.
Combining conjoint analysis, one of the most widely used market research tools, with economic models, Jindal analyzed stated choices of more than 550 consumers drawn from an online panel, and addressed two key questions -- "Why do consumers buy extended warranties?" and "Why do consumers pay such a high premium for extended warranties?"
"Paying $500 for a new laptop is not the same as paying $500 for repairing or replacing a laptop you already own," Jindal said. "Consumers view paying for repairs as a loss. Consumers feel it hurts 3-4 times worse than paying the price of the product itself. This hurt drives consumers to buy extended warranties."
This behavior of consumers is called loss aversion.
Through an online survey, the author collected data on consumer choices for washing machines and extended warranties to show that loss aversion along with peace of mind are the key reasons why consumers buy extended warranties for their products.
"Consumers search for low product prices but do not search for low warranty prices," says Jindal. "So, they are locked in by retailers selling appliances and electronic goods. Conventional wisdom says that extended warranties should be sold through independent firms selling only warranties, which will make extended warranties cheaper and consumers better off. But according to this new research, obtaining extended warranties through independent firms may be cheaper but it does not make consumers happier."
This unexpected result is based on the finding that retailers discount the price of home appliances and electronic goods and in turn charge consumers a premium for extended warranties. If these retailers are not allowed to sell extended warranties, then prices of home appliances and electronic goods will go up, although extended warranties (now sold through independent retailers) will become cheaper. On average, however, consumers lose more from the increased product prices than they gain from lower extended warranty prices.
While the study focused on the role of losses, it acknowledged that other factors such as over-predicting failure rate, lack of information about repair and replacement policy, and financial constraints may also result in consumers purchasing extended warranties.
"Consumers may buy a warranty for a variety of reasons. Controlling for others, this study shows that consumers' perception of potential losses and peace of mind are important factors, and have important implications for how extended warranties should be sold," Jindal concluded. "Moving forward, it would be really interesting to get into the consumer's mind and understand when they think a product will fail and how much they believe it will cost them to repair or replace the product."
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Selling extended warranties via independent companies lowers price but hurts consumers: INFORMS
An Education on Home Warranties for Today #39;s Homeowner - HSA Home Warranty
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An Education on Home Warranties for Today's Homeowner - HSA Home Warranty - Video
2-10 Home Buyers Warranty Presents: What is a Home Warranty Service Agreement - 210HBW
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2-10 Home Buyers Warranty Presents: What is a Home Warranty Service Agreement - 210HBW - Video
Why a Structural Home Warranty - 2-10 Home Buyers Warranty - 210HBW
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Why a Structural Home Warranty - 2-10 Home Buyers Warranty - 210HBW - Video
Updated Brick Home, Great Location.
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Michigan (PRWEB) January 05, 2015
Americas number one home warranty review and rating website has announced the winners of its 2015 Annual Home Warranty Awards, and upholding tradition, three companies across three different categories have earned awards. The consumer research website has been recognizing the best companies in the home service contract industry each year since 2012.
Awards were given out in the following three categories: Top Rated, Best In Service and Best Regional. Three finalists were chosen from each of the categories, based on their performance in 2014.
This year, American Home Shield earned the Top Rated award, The Home Service Club won the Best in Service award and Landmark Home Warranty claimed the Best Regional Company award.
Winners of the home warranty awards 2015 are selected after a stringent evaluation process that scrutinizes their customer services, repair services and above all, consumer reviews, among other factors. Claims approval rates, online and self service choices and various other customer satisfaction metrics were taken into consideration.
Receiving the Top Rated award, Mark Barry, president of American Home Shield praised the work of his team. Our employees and contractors focus on delivering the best possible service, coverage and experience for our customers. We respond to three million service requests a year, and as the market leader, it means a lot to be recognized again for providing outstanding, dependable service. We appreciate our customers who continue to give us such great feedback.
"The Home Service Club family is extremely humbled and grateful to receive the Best in Service Award. We have always strived to not only be an industry leader in home warranty service, but to raise the industry standards in general. We have our customers, contractors, and amazingly hard working staff, to thank for this truly amazing distinction," said Dmitiry Krupin, Executive Director of Customer Service of The Home Service Club, which received the Best in Service award.
Katherine Robinson, Director of Marketing at Landmark Home Warranty, which received the Best Regional Company award said, We are honored to receive the award from our industrys top review website. Since the award is based, in large part, on the feedback of our customers, we especially want to thank them for sharing their experiences with us and homewarrantyreviews.com. We dont take this award for granted, and will continue to strive every day to deliver remarkable service to our customers and partners.
The independent rating website HomeWarrantyReviews.com stated that this year too saw a drastic improvement in the services of companies across the nation. The leadership behind the website believes that introducing the awards may have helped bring about a positive effect on the industry as it has pushed the companies to put forth their best. Several companies were seen improving their online reputation through the sites Complaint Resolution Program and providing impeccable services to their customers.
The Complaint Resolution Program is a feature that allows customers and company representatives to communicate with each other and resolve their issues within 30 days.
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HomeWarrantyReviews.com Announces 2015 Annual Awards
Homeowner vs Bank of America: No Deed No Debt - NoDeedNoDebt
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Homeowner vs Bank of America: No Deed No Debt - NoDeedNoDebt - Video