Alternatives Available

 RT – Response time
 PG – Performance guarantee
 MB – Money back

Product Line (Xerox total Units vs Total Market)

 HE – High end (45%) Series 1065,1075,1090, 9900, 5090

 MR – Medium Range (26.3%) 1040, 1045, 1048, 1055, 5018, 5028,5042, 5046, 5052
 LE – Low end (11.3%) series 1020,1025,5012,5014

Customer Segment No.of Customers Rev

CMA (Commericial Maj a/c) 5% 32%
NA (Named Accounts) 18% 28%
GM (general market) 62% 15%
I (Institutional) 15% 25%

Probable Product Buy

 CMA – HE/MR
 NA – MR/LE
 Institutional (Govt & Educational) – MR/LE
 GM – LE

This can be visualised in a matrix

Customer Segment HE MR LE
CMA (Commericial ++++ ++
Maj a/c)
NA (Named Accounts) + +++ ++
GM (general market) ++++++
I (Institutional) ++ +++
(No. Of customers that are probable to fall in high end, mid-range and low end product segment.
Plus sign denotes probability)

Our Recommendation & Conclusion

RT PG MB
HE (above 60K) 
MR (4k – 60k) 
LE (less than 4k) 

For HE (high end product) we recommend Response time Guarantee

Xerox has focussed on quality and performance during the 1980” s as is evident from there process
and org structure given in the case. Performance is already their strength and HE customers would
likely have disposable money for parts replacement. They would value quick response time more as
a measure of reliability, as shown in Exhibit 6 “Response time needs” for CMA customer segments
and high vol product category.
Terms for this guarantee – “commitment to send a service executive to customer site within 4 hrs
from receiving the service call

For MR (MID range products) we recommend Performance guarantee

Small NA’s and Institutions are more likely to fall under MR and hence they would prefer PG. Any
additional spend on parts replacement would be a burden on them. This is indicated by Exhibit 6
“Believability matrix for Govt education and Named accounts”. Moreover, these customer segments
are price sensitive.

Terms for this guarantee – “if the machine does not perform as per customer expectations or better
for at least 3 years(to be serviced by xerox authorised service centres) your unit will be replaced at no
charge

For LE (Low end Products) we recommend Money Back Guarantee

This group forms the largest customer group in terms of units sold but least in terms of revenue
earned as indicated on Pg no 591-055 of the case. Response time and Performance guarantee would
be difficult and time consuming to implement across this group, whereas money back would be
easier to implement and would lead to less cash outflow.

Terms for this guarantee – “If your machine is not operating 98% of the time, you will receive money
back post inspection by service executive.