So promo actions are one of the ways to make your product more attractive to the consumer, right? Increasing the value you give him is a nice idea, so you will attract more customers or at least make them buy more of your product, thus your revenues and profits will increase! Yep! After all, the more you sell, the more money your company gets! But just make sure you don't do it like Hoover in the UK, in the nineties...
In 1992, Hoover decided to launch an incredible eye-opener promotion, with a clear aim – to drive up sales, minimizing a too expensive inventory. If you bought €100 on Hoover’s appliances (remember the vacuum cleaners?), you would receive 2 free return flight tickets to Europe. It was a generous offer! And the sales results were extremely positive!
So… they decided to run it a second time – but not exactly the same way, after all, one needs to innovate. This time you would have to expend £150, but you would receive 2 free return tickets to the US! Great! Genious! So much, that some say that about a third of all british households bought £150 on Hoovers appliances, and demanded their free tickets…
Lets face it! This would not be a problem… unless Hoover didn’t do their financial homework right – and guess? Hoover was giving more value to the consumer that they could afford – they were not extracting enough value from each sale to pay for the prize they were offering!
So, this a good example of how a promotion can be a finantial disaster. Hoover in the UK was driven to the verge of bankruptcy due to this promo and almost their entire Board had to resign. Basically, this lesson number one – make sure that you are generating enough value out of a promotion to meet your targets (and make sure that it pays off)! But if you think we are done… guess, we have a second lesson to learn from this promotional disaster – just check the paragraph to see what Hoover did next…
Hoover realized too late that they were running a disastrous action – and they decided to go off air and stop adverstising it But the problem was that Hoover made the decision that they couldn’t afford the promo – and so they decided to start raising difficulties and hurdles to the consumers who bought £150 off their products so they couldn’t ‘cash’ the 2 free return flight tickets they were entitled to! It was a PR disaster! The Hoover Holyday Pressure Group was started, and they numbered several thousand angry customers who brought the issue to the Parliament and to Hoover’s ‘mother-house’ HQs in the US… Some disgruntled consumers even stole Hoover’s company vans, as retaliation for the problems they were facing and the feeling they were cheated! The UK consumer would take a long time to forget about Hoover brand…
In 1992, Hoover decided to launch an incredible eye-opener promotion, with a clear aim – to drive up sales, minimizing a too expensive inventory. If you bought €100 on Hoover’s appliances (remember the vacuum cleaners?), you would receive 2 free return flight tickets to Europe. It was a generous offer! And the sales results were extremely positive!
So… they decided to run it a second time – but not exactly the same way, after all, one needs to innovate. This time you would have to expend £150, but you would receive 2 free return tickets to the US! Great! Genious! So much, that some say that about a third of all british households bought £150 on Hoovers appliances, and demanded their free tickets…
Lets face it! This would not be a problem… unless Hoover didn’t do their financial homework right – and guess? Hoover was giving more value to the consumer that they could afford – they were not extracting enough value from each sale to pay for the prize they were offering!
So, this a good example of how a promotion can be a finantial disaster. Hoover in the UK was driven to the verge of bankruptcy due to this promo and almost their entire Board had to resign. Basically, this lesson number one – make sure that you are generating enough value out of a promotion to meet your targets (and make sure that it pays off)! But if you think we are done… guess, we have a second lesson to learn from this promotional disaster – just check the paragraph to see what Hoover did next…
Hoover realized too late that they were running a disastrous action – and they decided to go off air and stop adverstising it But the problem was that Hoover made the decision that they couldn’t afford the promo – and so they decided to start raising difficulties and hurdles to the consumers who bought £150 off their products so they couldn’t ‘cash’ the 2 free return flight tickets they were entitled to! It was a PR disaster! The Hoover Holyday Pressure Group was started, and they numbered several thousand angry customers who brought the issue to the Parliament and to Hoover’s ‘mother-house’ HQs in the US… Some disgruntled consumers even stole Hoover’s company vans, as retaliation for the problems they were facing and the feeling they were cheated! The UK consumer would take a long time to forget about Hoover brand…
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