MEGA: Flat-Panel Warranties Rising
By Alan Wolf -- TWICE, 7/3/2006
Memphis, Tenn. — MEGA Group USA, the $2 billion buying group for independent CE, majap and furniture dealers, said its members are enjoying a high attachment rate on sales of extended warranties for flat panel TV purchases, particularly on lower-priced protection plans.
“There is no doubt that consumers are far more sensitive to investment protection in newer, less established technologies,” said Jim Sendrak, MEGA's merchandise manager for electronics. “Everyone desires product protection — it's just a matter of value. At what price does a warranty on a television ring up good value in the consumer's mind? We've found that the members who price their 5-year plans toward the lower side of the scale are having great sales ratio successes.”
Sendrak noted that MEGA's product protection plans enable members to price extended warranties at approximately 10 percent of the price of the flat-panel purchase and still provide margins of over 50 percent. By contrast, prices on extended warranties at big-box stores are often as much as 30 percent of the price of the product being purchased, he said.
Members have reported that “some customers are thrilled that [extended service plans] are available and at such affordable prices,” Sendrak said.
He added that extended service plans are only one of many add-on and profit-building opportunities that flat-panel TVs afford dealers.
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