What is the purpose of warranties provided by companies?

Warranties serve the critical function of ensuring customer satisfaction and building trust in a company's products. When a company offers a warranty, it is essentially making a promise to the customer regarding the quality and durability of the product. This assurance can lead to increased customer confidence, as buyers feel protected against potential defects or issues that may arise after purchase.

A warranty can also foster customer loyalty, as customers are more likely to return to a company that stands behind its products. When a warranty is clearly defined and honored, it reflects that a manufacturer is committed to standing by their products, which can be a decisive factor for consumers when choosing products in a competitive market.

While warranties may have secondary effects such as potentially increasing sales due to enhanced customer trust, or influencing revenue recognition practices, the primary purpose is centered on customer satisfaction and building a trustworthy relationship, which aligns directly with the correct answer.