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Warranty Metrics: Consumer Approaches to Extended Warranties in Selected Global Markets

Web: www.finaccord.com. E-mail: [email protected]© Finaccord, 2017 1

Warranty Metrics:Consumer Approaches to Extended Warranties for White,

Brown and Grey Goods in Selected Global Markets

Series Prospectus

November 2017

http://www.finaccord.com/

mailto:[email protected]



Prospectus contents

What is the research?

Which titles are available?

What is the rationale?

What methodology has been used?

For which retailers are take-up rates split out?

What is the report structure?

What are the key features of the research?

How can the research be used?

Who can use the research?

What are some of the key findings?

What is the cost and format?

How can the research be purchased?

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What is the research?

Finaccord’s Warranty Metrics series of reports offers unique, detailed insights into the behaviour of

consumers regarding extended warranties for white, brown and grey goods.

Based on a primary survey of consumers in Australia, Brazil, Canada, China, France, Germany,

Italy, Spain, the UK and the US carried out the second and third quarters of 2017, the research

provides valuable data concerning the extent to which they take out extended warranties with

desktop computers / printers / scanners, dishwashers, fridges / freezers, games consoles, hi-fi /

audio systems / digital radios, set-top boxes plus Blue-ray / DVD players, TVs and washing

machines with data shown separately for each of these eight types of product as well as for each of

the three broader categories of white, brown and grey goods.

Extended warranty take-up rates for these categories are also analysed by gender, age and annual

household income of respondent as well as by the channel used to acquire the underlying product,

differentiating between in-store and remote (mainly online) purchases, and according to the price

band of the underlying product. They are additionally shown for major retail chains covered by the

research in each country as well as for respondents buying through other national chains, other

online-only retailers and local (independent) shops.

continued overleaf





What is the research? (continued)

The investigation also analyses which risks are covered by these warranties (i.e. breakdown only or

also cover for accidental damage and / or theft), whether consumers purchased a warranty for a

specific consumer product or a multi-appliance warranty, which distribution channel and interface

they used to take out the extended warranty (including the split between retailers, manufacturers

and other independent providers), whether they bought an extended warranty at the same time as

the underlying consumer product or at a later point, and whether they acquire an extended warranty

as a result of any particular prompt (e.g. a face-to-face or phone conversation with a sales

representative or web chat).

Finally, the reports analyse claims frequency for extended warranties split between white, brown

and grey goods, as well as between stand-alone and generic cover packaged with banking

products, also showing the claims refusal rate (i.e. the percentage of all claims that were reportedly

turned down).





Which titles are available?

The Warranty Metrics series is composed of nine separate publications:

• an overview study providing comparisons for the metrics gathered across all ten countries as well

as the results for each country;

• ten country-specific titles providing the results for the investigation into extended warranties for

white, brown and grey goods for a single country

The titles of these reports are:

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in Selected Global Markets

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in Australia

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in Brazil

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in Canada

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in China

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in France

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in Germany

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in Italy

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in Spain

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in the UK

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in the USA





What is the rationale?

Finaccord has developed its Warranty Metrics series in order to fill the gap for reliable data

concerning consumer behaviour in the evolving market for extended warranties for white, brown

and grey goods. There is little published information providing detailed insights into consumer

approaches to extended warranties in spite of the facts that many households acquire at least one

qualifying consumer product each year and that extended warranty schemes are now run by a

majority of manufacturers and retailers of white, brown and grey goods.

The market for extended warranties is of fundamental importance both to manufacturers and

retailers of consumer products and the warranty providers with which they work. In fact, maximising

the results from extended warranty programs offers the potential for manufacturers and retailers of

white, brown and grey goods to enhance significantly the margins that they achieve from the

underlying consumer products. Meanwhile, administrators, brokers and underwriters can potentially

benefit from robust growth and attractive underwriting returns from this type of policy.

As such, the titles in the Warranty Metrics series are designed to allow manufacturers, retailers,

warranty providers and other actual or potential distributors, such as banks, to benchmark their

performance in this arena and identify opportunities for growth.





What methodology has been used?

The research for this study, which covers over 12,000 consumers across ten countries, was carried

out the second and third quarters of 2017 using the online consumer research panel of mo’web

research (www.mowebresearch.com). 1,000 or more respondents were surveyed in each of

Australia, Canada, France, Germany, Italy, Spain and the UK, over 1,500 in Brazil, and around

2,000 in each of China and the US. In all cases, quotas were set in order to ensure representative

survey samples by gender, age, annual household income and geographical location of

respondents. The specific composition of each country sample can be obtained from Finaccord if

required.

Note that for Australia, Canada, France, Germany, Italy, Spain, the UK and the US, it is possible to

compare the latest results with previous research carried out in 2014.



http://www.mowebresearch.com/



For which retailers are take-up rates split out?

AUSTRALIA

AppliancesOnline.com.au

Big W

Bing Lee

Dick Smith

Harvey Norman

JB Hi-Fi

Kogan

Officeworks

The Good Guys

Note 1: take-up rates are for one or more of extended warranties for white, brown and grey goods, depending upon the organisation in question.

Note 2: take-up rates are also given in aggregate for each of a) other national chains, b) other online-only retailers, and c) local (independent)

retailers.

BRAZIL

americanas.com

Casas Bahia

Extra

Fast Shop

Kabum

Magazine Luiza

Pontofrio

Ricardo Eletro

Saraiva

shoptime.com

submarino.com

Walmart

CANADA

Amazon

Best Buy

Costco

Hudson's Bay

Leon’s / The Brick

London Drugs

Lowe’s

Newegg

Sears

The Home Depot

The Source

Walmart

CHINA

51buy.com

Amazon

Black Swan Electronics

Dangdang

Dashang

GOME Electrical

Appliances

JD.com

Jintaiyang Electronics

New Mart

Suning

Tmall

Yihaodian

FRANCE

Amazon

Auchan

Boulanger

But

Carrefour / Rue du Commerce

Cdiscount

Conforama

Darty / Mister Good Deal

Electrodépôt

Fnac

GrosBill

Leroy Merlin

Magasin-u

Pixmania

Price Minister

Ubaldi

Vente du Diable.com





For which retailers are take-up rates split out? (cont.)

GERMANY

Amazon

Conrad

Euronics

Expert

Handelshof

Heine / Otto / Quelle / Schwab

Hornbach

Lidl

MediaMarkt / redcoon / Saturn

Real

ITALY

Amazon

Comet

ePrice

Euronics

Expert

Media World

Mercatone Uno

Pixmania

TRONY

Unieuro

UK

Amazon

ao.com

Appliances Direct

Argos

BrightHouse

Currys / PC World

John Lewis

Littlewoods / Very

Tesco

SPAIN

Amazon

Carrefour

Conforama

El Corte Inglés / Hipercor

Euronics

Expert

MediaMarkt / Saturn

Miró

Tien 21

USA

Amazon

Best Buy

Costco

Kohl’s

Newegg

Sears

Staples

Target

The Home Depot

Walmart

Note 1: take-up rates are for one or more of extended warranties for white, brown and grey goods, depending upon the organisation in question.

Note 2: take-up rates are also given in aggregate for each of a) other national chains, b) other online-only retailers, and c) local (independent)

retailers.





What is the report structure (for the overview report)?

0. Executive Summary: providing a concise evaluation of the principal findings of the report.

1. Introduction: offering rationale.

2. Overview: averaged across all ten countries, and with data split out for each of those countries, this chapter begins

with analyses of the white, brown and grey goods acquired by consumers segmented by type of item, purchase

interface and product price band, as well as by age, income and gender of respondent, before then examining take-

up rates for extended warranty cover segmented by the same variables. It then provides data for the distribution

channels (i.e. manufacturer, retailer, independent) and interfaces (i.e. in-store, remote) used by consumers to take

out extended warranties for white, brown and grey goods, and investigates the type of extended warranty cover held

by respondents (i.e. breakdown only for a specific item, breakdown plus accidental damage and / or theft for a

specific item, multi-appliance) plus the point in time at which the policy was bought (i.e. at the point of sale or either

before or after). Finally, it analyses prompts that persuade customers to acquire extended warranties and examines

annual claims frequency and refusal rates for extended warranties.

3. Australia: this chapter presents similar information as described above exclusively as it pertains to consumer

approaches to extended warranties for white, brown and grey goods in Australia plus additional data illustrating the

share of sales of major retailers of each of white, brown and grey goods plus their extended warranty take-up rates

as measured by the survey.

4 – 12. Brazil, Canada, China, France, Germany, Italy, Spain, the UK and the US (all contents as for Australia).

13. Appendix: including a full transcript of the online survey used to research this subject.





What are the key features of the research?

Key features of the reports in this series include:

• reliable benchmarking of the proportion of consumers buying consumer electrical products

remotely (mainly online) as opposed to in a physical shop or store;

• unique analyses showing the percentage of buyers of consumer electrical products that take out

extended warranties in each country, adjusted for whether they were offered an extended warranty

in the first place, and how this penetration rate varies by gender, age and annual household income

as well as by type and price band of product, and the distribution channel used to buy the product;

• accurate data describing the percentage of consumers in possession of extended warranty cover

through a policy bundled with a payment card or bank account, or through a multi-appliance

warranty covering more than one consumer product;

• robust statistics illustrating the proportion of customers that acquire extended warranty cover

without any particular prompt and those that do so as a result of a specific prompt (e.g. an advert

received by e-mail or SMS);

• valuable insights into claims frequency rates split by category of consumer product and according

to whether the claim was accepted or refused.





How can the research be used?

You may be able to use the reports in this series in one or more of the following ways:

• benchmark your organisation’s performance in the extended warranty sector: are your cross-selling

rates in line with the market averages described in this study?

• appreciate the potential for increasing the penetration of extended warranties through packaging

with banking products or marketing multi-appliance warranties;

• evaluate the opportunities for distributing extended warranties through means other than the

outlets selling the underlying electronic products - to what extent will consumers buy through

alternative channels and interfaces?

• assess the prospects for retrospective marketing and re-solicitation programs - how many

consumers take out extended warranties after they have bought the underlying electronic product

and how long do they wait?

• understand claims experience for extended warranties, how this varies by type of customer and

what this might mean for the way in which your organisation underwrites or distributes this type of

policy.





Who can use the research?

1. Administrators, brokers and underwriters of extended warranties: firms with an interest in

extended warranties for white, brown and grey goods will be able to arrive at a detailed

understanding of the dynamics of this under-researched market which can be used when

negotiating new distribution partnerships;

2. Manufacturers and retailers of white, brown and grey goods: manufacturers and retailers will

benefit from this research by appreciating how their performance in the extended warranty

sector compares to the wider market averages and, if they do not have an extended warranty

program, whether they should consider doing so;

3. Banks and credit card issuers: the results of the research underline the reality that there are

opportunities to develop affinity programs for extended warranties through new channels –

does this represent a viable option for your organisation?

4. Management consultancies: are you helping an entity with an interest in the extended warranty

sector to improve its performance in extended warranties in any of the ten countries in

question? If so, this research will provide you with unique insights into consumer behaviour in

these markets.





What are some of the key findings?

Source: Finaccord Warranty Metrics Survey

1) Averaged across the ten countries, TVs are the item most commonly bought by

respondents in the last three years and set-top boxes the least often purchased

0% 10% 20% 30% 40% 50%

Dishwasher

Fridge / freezer

Washing machine

Hi-fi / audio system or digital radio

Set-top box or Blu-ray / DVD player

TV

Desktop computer, printer or scanner

Gaming console 18.7%

37.7%

17.7%

10.0%

35.6%

31.5%

15.7%

48.2%





What are some of the key findings? (cont.)


At the same time or before purchase

Within one month

Between one month and one year

More than one year after purchase

0% 20% 40% 60% 80% 100%

2) Consumers in China are the most likely to buy an extended warranty

retrospectively although the vast majority of sales in all countries continue

to occur at the same time as purchase of the underlying product

Australia

Brazil

Canada

China

France

Germany

Italy

Spain

UK

US

Unweighted average







3) In Brazil, well over a half of acquisitions of extended

warranties take place as a result of some kind of prompt

Proactively, without any particular

prompt, 41.1%

Face-to-face or phone

conversation, 16.8%

Part of online system for buying the

product, 15.4%

Web chat, 3.0%

Directed to a web page after

buying the product, 7.1%

Email advertisment,

1.9%

Postal offer, 1.5%

SMS text message, 1.1%

Other kind of advertisement,

2.7%

Other prompt, 9.4%






Key findings from executive summaries in this series include:

• looking at the take-up rates for stand-alone extended warranties for each type and category of

consumer electrical product (as opposed to generic cover packaged with a banking product), a

weighted average of 26.7% was recorded across all products and countries;

• in Australia, across all respondents with extended warranties, 68.3% believed they had cover for

mechanical or technical breakdown only, while 23.8% reported holding cover for multiple risks

including breakdown and either or both of accidental damage and theft, and a further 8.0%

reportedly held cover through a multi-appliance warranty;

• in France, 67.1% of respondents with extended warranties cited the retailer of the goods as the

source of their cover while 28.5% named the manufacturer and 4.3% claimed to have purchased

cover from an independent source;

• in Spain, respondents purchasing white, brown or grey goods in a shop were somewhat more

likely to acquire extended warranties than those purchasing through remote means (mainly online),

with the face-to-face take-up rate at 27.1%, compared to 22.7% for remote means.





What is the cost and format?

18

All of the reports in the Warranty Metrics series are available as standard PDF documents and Excel

data annexes. Costs for the various titles in the series and for selected other international consumer

research studies released in 2017 are as follows:

REPORT COST *

USD 8,395

USD 1,395

USD 1,395

USD 1,395

USD 1,395

USD 1,395

USD 1,395

USD 1,395

USD 1,395

USD 1,395

USD 1,395

* GST at the prevailing rate will be added to the basic price for Singapore-based buyers except for where the request is for hard

copy only. Costs quoted are for a single office, single country licence only. For corporate user licence options, please see the next

slide for further details. Invoices can be paid in EUR or GBP, at the prevailing exchange rate, if preferred.

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in Selected Global Markets

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in Australia

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in Brazil

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in Canada

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in China

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in France

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in Germany

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in Italy

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in Spain

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in the UK

Warranty Metrics: Consumer Approaches to Extended Warranties for White, Brown and Grey Goods in the USA





How can the research be purchased?

Simple. Just go to the relevant area of the Finaccord website, create your account (if you do not

have one already) and place your order online. Products paid for online by card will be delivered

immediately by e-mail but please allow up to one working day for delivery by e-mail if you choose to

pay on receipt of invoice.

With regards to the corporate user licence, you will be asked to choose one of the following options:

1. One office, one country: no supplement over and above basic cost of reports ordered

2. Multiple offices, one country: additional 20% over and above basic cost of reports ordered

3. Multiple offices, two to ten countries: additional 50% over and above basic cost of reports ordered

4. Global (unlimited offices in unlimited countries): additional 100% over and above basic cost of reports ordered

Alternatively, you can place an order by sending your request to [email protected], clearly

stating the product(s) required, associated price(s) and billing details for eventual invoice or card

payment receipt.




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Warranty Metrics - finaccord.com · Magazine Luiza Pontofrio Ricardo Eletro Saraiva shoptime.com submarino.com Walmart CANADA Amazon Best Buy Costco Hudson's Bay Leon’s / The Brick