Why would somebody put a guarantee on a box? Why would somebody put a guarantee on a box?

Several recent campaigns remind me of a scene from Tommy Boy,where Chris Farley’s character is talking to a customer about why there is a guarantee on the competitor’s product.

Tommy:Let’s think about this for a sec,Ted. Why would somebody put a guarantee on a box? Hmmm,very interesting.

Ted Nelson (Customer): Go on,I’m listening.

Tommy: Here’s the way I see it,Ted. Guy puts a fancy guarantee on a box ’cause he wants you to feel all warm and toasty inside.

Ted Nelson: Yeah,makes a man feel good.

Tommy: ’Course it does. Why shouldn’t it? Ya figure you put that little box under your pillow at night,the Guarantee Fairy might come by and leave a quarter,am I right,Ted?
[chuckles until he sees that Ted is not laughing]

Ted Nelson: [impatiently] What’s your point?

Tommy: The point is,how do you know the fairy isn’t a crazy glue sniffer? “Building model airplanes”says the little fairy;well,we’re not buying it. He sneaks into your house once,that’s all it takes. The next thing you know,there’s money missing off the dresser,and your daughter’s knocked up. I seen it a hundred times.

Ted Nelson:But why do they put a guarantee on the box?

Tommy: Because they know all they sold ya was a guaranteed piece of shit. That’s all it is,isn’t it? Hey,if you want me to take a dump in a box and mark it guaranteed,I will. I got spare time. But for now,for your customer’s sake,for your daughter’s sake,ya might wanna think about buying a quality product from me. 

Ted Nelson:Okay,I’ll buy from you.

Thinking past this humorous exchange,Buy Back Guarantees are an interesting debate is:  Is a guarantee a sign of brand confidence or brand insecurity?

Can you hear me now?
Currently Sprint is offering a 30-day money-back guarantee on their cell service.  Sprint’s share is 18%  in third place behind cellular giants AT&T and Verizon.  They are currently marketing their 4G network,and they own 75% share of the 4G market. 

It seems like they have a lot going for them.  Or do they?  In the battle of the maps (A simple map versus 2,000 postcards.) AT&T and Verizon are saturating the air waves with their claim to dominance.  Verizon owns the 3G map.  AT&T owns a (2G) map,speed,and iPhone exclusivity.  Sprint is (trying) to own 4G —a better,faster network.  Even though 4G is the future, some pundits are predicting Sprint’s market share will decline by over 50% in the next five years.

So why a guarantee?  My guess is Sprint is not getting through the massive noise created by AT&T’s and Verizon’s marketing.  Also, 4G is better,but it has been difficult to relate to consumers the difference 2G,3G,and 4G.   Mobile consumers relate to monthly payments,dropped calls,and phone functionality. 

Speed is important,but it’s like buying a 200-plus MPH Lamborghini Murcielago to drive on our interstate highways –it’s nice to have,but you can never (legally) use the speed.  Similarly,the lightweight nature of mobile content does not require a lot of bandwidth (PC wireless users would benefit more,and they are a primary target for Sprint’s 4g network).  Mobile speed may be a core need for future mobile apps,but today a 2G network is more than sufficient for most mobile users.

Will a guarantee work? If a mobile customer were to think about the guarantee,it may seem like just a big hassle.  Moving your mobile service is a little like quitting your bank or cable company —the effort required dictates a permanent move not a 30-day test period.  If you are to switch mobile providers,you will move your number,account,and switch your phone.  Not pleasant.  To reverse it after 30-days seems like double the effort.  

A guarantee appeals most to shoppers who have apprehension with their future purchase.  Sprint’s goal would be to intercept and convert people within their switching window (e.g. expired contract or desire to switch phone/service).   Given this,if a shopper is concerned about Sprint’s service or phone functionality (e.g. think about someone moving from a regular mobile phone to a smart phone),the guarantee may put Sprint on the consideration list,and could result in a purchase if all other factors are equal.

Minivan or Bust
In February,Chrysler announced a Minivan Pledge which is a 60-day,money-back guarantee.   The premise of the pledge is (from the Chrysler site):

We’re giving you 60 days to experience all 2010 Chrysler Town &Country has to offer. Simply purchase a new Chrysler minivan. Enjoy it for 60 days. If you don’t absolutely love it,we pledge to take it back. It’s that simple. Or,whether you lease or buy,you may opt for $500 cash allowance instead. So give us a try. We know you’ll like Chrysler Town &Country so much you won’t want to give it up.

Like Sprint,Chrysler has a lot going for them.  Way back when,Chrysler pretty much invented the minivan,and have consistently been the innovator in the space (e.g. floor storage bins,Swivel and Go seating).   Even innovators can come with baggage.  You can argue the brand took one hell of a hit with the bail-out,bankruptcy,and revolving carousel of owners (i.e. Daimler,U.S. Government,Fiat). 

So why a guarantee?  It is hard to discern if this is a me-too strategy (e.g. GM recently promoted a 60-day money back guarantee),or a smart marketing ploy.  I would argue it is unnecessary.  The problem with the minivan brand is it’s differentiation —it is about the unpredictability of the brand.  A more appropriate guarantee would be a reverse-Hyundai,job loss, buy back guarantee:  If Chrylser becomes insolvent,(company X) will honor our warranty,our service,our great cars.  This mayaddress shopper concerns,but hardly a recommended strategy.

Will it work for Chrysler?  From the recent ads I have seen on television,Chrysler is not over-promoting the guarantee (there is no mention of the guarantee in the ads).  Therefore I would doubt it is being actively used to motivate minivan shoppers to add the Town &Country to their consideration list.  It seems like a more subtle tactic used to keep the Town &Country on the consideration list.   If a shopper is looking for a good product and security,the guarantee may appeal to them. 

There is a subtle tactic being used in the guarantee —the ability for a shopper to opt for $500 incentive.  I am not privy to the numbers,but I would venture to guess there is less financial risk in giving a new minivan buyer $500 than taking their vehicle back after 60 days.  In this case,Chrysler’s hope is the guarantee is the attention getter,while the $500 is the preferred choice.