One of the worst sales promotions I managed to take advantage of was not as grandiose, but still bad marketing.
Iceland (supermarket chain of frozen food) had an offer for buy one get one free on some branded pizza. But those Pizza boxes also has a voucher on the packaging for...a free pizza. So I'd buy a pizza and get two free. Then use those two vouchers to buy two more pizza's and free ones. This I repeated daily throughout the promotional period in low volumes like that, so as to not raise awareness of the oversight. Upshot was I had a whole month of free frozen pizza, two filled up freezers of pizza and on top of that, only ever paid for that initial pizza. Was a good period of savings on the back of that promotion at a time in which money was very tight. Also after the store BOGOF had finished, I still had a pile of free pizza vouchers that lasted for the rest of the year due to expiry date on those vouchers.
What I surmised was that the pizza manufacturer had said it would do a promotion for buy one get one free, they did it via vouchers and Iceland implemented it via the till system. Though equally, still took the vouchers.
I did something similar in college with free sandwiches from online receipt surveys at Arby's and Burger King. The thing is, very very few people go through the effort to take advantage of those systems like that, so it's not really a loss for them. The Hoover blunder was so bad because they assumed it would be like cutting out vouchers from pizza boxes, and that most people wouldn't bother, but the offer was of such high value that everyone wanted in on it.
Hmm, fascinating. I took advantage of the exact same thing on "Mama Celeste" frozen pizza at "Stop & Shop" here in the US a few years ago. But the free pizza vouchers were printed on the sales receipt, rather than on the product. So I could return the single purchased product and end up getting all the pizzas completely free. I emptied their pizza freezer. The store figured out what I as doing pretty quickly, but didn't much care as they were reimbursed by the manufacturer and thought it was pretty amusing.
At one point in time Starbucks ran an ad in The Georgia Straight (weekly entertainment paper printed in Vancouver BC) with a coupon good for one free medium size drink, any type, expiration date somewhere like 120 days in the future.
I went through several newspaper boxes full of georgia straights, they're free, pulled out the coupons and had 120 days of free coffee. It worked out to about $450 worth of free drinks.
On a more basic level, if you like free stuff there's an awful lot of "present voucher to receive free x for signing up to our mailing list" promotions that assume people don't have access to more than one email address (or even prevent you entering multiple name+1@domain.com variants). Always amusing when this is pointed out to you by the guy that actually built the app...
This is reminiscent of MoviePass's antics when forced to pay up for the huge deficit per customer they had promised: Change user's passwords to lock them out, freeze out subscribers arbitrarily from blockbusters, etc. [1]
I wonder if anyone at Hoover got the same treatment of being known as a disruptor -- the founder of moviepass is quoted as saying, "Things went a little sideways, so I thought talking to investors now would be, 'Ugh, you started MoviePass.' But it's 'You started MoviePass!'" [2]
I am constantly astonished by the MoviePass story. The whole business model made no sense.
Even if it could be restricted to be financially viable, the cinema chains were always going to be able to undercut them as they only pay the marginal cost while making money from the concessions.
95% of movie theater seats go unsold* and much of the profit margin comes from the concession stands. Moviepass wasn’t the right solution as a third party but it was a decent opportunity.
*people don’t perceive this because people only go to popular movies
Movie theater chains running the subscription on their own is much more viable. They are paying per showtime anyway so a full or empty theater doesn't make them any money but the concessions do. Paying for extras like comfy chairs or food is how they get their money. Offering a monthly subscription that only covers tickets would really be the best option for them. They get more people in the theater that might feel obligated to buying food since they didn't just have to buy a ticket.
Right, you cut them in on the subscription fees. The theater gets more people willing to go to the movies and the distributor gets pretty much a guaranteed income every month. Figure out the average amount of money people spend on movies every year, divide by 12, and make that the monthly fee. The distributor would see mostly the same income (holiday months might bring in less than years past but the slow months would bring in more than usual). If the average movie goer sees one movie per month with a ticket costing $12, make that the monthly fee. Offer tiered subscriptions if it helps reduce people from going too often.
It's like a gym membership. People like having the option to go to the gym whenever they want. Many gyms offer a per use fees but if you want to go more than once or twice a month, it is cheaper to have the membership. Actual operating costs are fairly low (machines aren't too expensive to fix and clean) but the real money maker is in all of the extra goods and services that you pay extra for.
MoviePass actually did run as a $50 subscription for a few years and had a viable business model.
Many people only know of MoviePass as the $10 a month subscription service that sprung out of nowhere about 2 years ago, but MoviePass had been around much longer than that.
MoviePass started back in 2011 and originally required you to print out physical vouchers at home, and take them into the theater. MoviePass juggled lots of different pricing models ranging from $25 a month for 3 movies, up to $99 for an unlimited movies. And yes, for a while they had a $50 per month unlimited movie plan.
For the first 6 years of their business, they operated in this semi-sustainable way. They had funding from AOL Ventures, True Ventures, and other venture capital companies during the time but ran a fairly sustainable business.
In 2017 they finally had their "exit" when a publically traded analytics company called "Helios and Matheson" purchased a majority stake in the company. Helios and Matheson saw potential in MoviePass (which had been running "successfully" for 6 years at this point) and wanted to expand it to as many people as possible.
This is when MoviePass decided that the best way to get lots of new users is to offer them something they can't refuse. How about $10 a month for unlimited movies. This led to a myriad of articles and free press about the company and a huge influx of customers. This is when most people had first heard of MoviePass as if it came out of nowhere, but it had a solid 6-year history of being in this business.
The goal of this promotion was only to gain a large influx of customers. It was never intended to be a long term strategy. I also think that H&C (the parent company) intended to make money back by selling customer data (since they are already in that business anyway).
Unfortunately, like the Hoover story, they underestimated how many people would take advantage of this offer for unlimited movies.
Stories like this, combined with personal experiences, have made me very anxious for the exit coming when I'm still invested in the future of the company.
The new owners always envision a different business model and those often span a gamut from slightly sinister to patently absurd.
Startups can have a lot of BS, it's true, but it's a different flavor from the post-exit BS.
Regal just launched their own unlimited movies subscription for $18 a month. Then again, they don't have to pay full price to a middleman like MoviePass did.
Yes, that was my point. For the cinema chain, the additional cost of a ticket is negligible if they are filling otherwise empty seats, and they make profit on the concessions. So long as they don't cannibalise full price tickets too much, then the maths works well for them. For MP, the arthmetic is completely different
But surely some amount of money from each ticket has to go to the distributor of the movie? I don't think charging 'nothing' for the ticket is just a huge loop hole in the system.
Good point, I'd forgotten about the distributor fees. A quick Google suggest an average of about 50% depending on the film, location and time in the release.
Once you factor in profits from concessions (very high) and the adverts, the maths clearly works out well for the cinema chains. Certainly here in th UK a number of them are really pushing these sorts of schemes.
This is all in comparison to MP, who have to pay the full retail price of the ticket and get nothing from the concessions. The chains can probably absorb two to three times as many visits in a month compared with MP.
I think this shows a significant disconnect between the ostensibly-wealthy managers that cooked up this genius marketing ploy and their customers: if the managers want an intercontinental flight, they just book it at whatever the current price is, because £600 is chump change for them and does not motivate them to invest time into looking for deals. It thus naturally never occurred to them that anyone would even think about buying the cheapest qualifying vacuum, even though they don't need one at all, just to get an awesome deal on flight tickets - basically it's flight ticket buying for £120 with the catch that you must dispose of a cheap vacuum. Anyone to whom those £600 worth of flights appear as a considerable value will immediately come to this conclusion, whereas if £600 means nothing to you, you'd never even think about putting up with the hassle.
The lesson I draw is a bit different. Sure, they might have failed to think of that -- but they didn't personally have to think of it, as long as someone else did and warned them. But, even though they got professionals to assess the risk, they then completely ignored that assessment. Well -- we all know how that story ends...
It's probably a mistake to assume that everyone down the line will look at some promo/ad/etc. with fresh eyes and ask "Do we really want to do this?"
People assume that someone else has vetted the basic concept, get focused on the mechanics, etc. and focus on the how rather than the should.
ADDED: There are plenty of ads that make you ask: "How did this get through?" and it's the same basic idea. Having worked for large companies I totally understand.
It was warned by professionals: "When Hoover ran this plan by risk management professionals, the company was warned that it would be an absolute disaster."
I don't know how formal this warning was though. To me this is a key part of the story that should've had more detail.
Lots of people will question this stuff, but they definitely won't bring up their objections. People are incentivized to collect their paychecks and do what they're told, not to point out the absurd thinking of the managers and executives above them. Nobody is thinking they'll save their company those millions and get an recognition/reward for it. Even the professional risk assessors got ignored.
I'm not really that cynical. But a lot of people do have their jobs to do, may even appreciate that they may not be aware of all the context fo some given decision, and just aren't inclined to fight battles over things that aren't their department at the end of the day.
It's funny, in the early 90s my family flew to Florida (from Glasgow, Scotland) on a £49 per person fly-drive offer. I can't imagine coming across an offer like that these days; even adjusted for inflation. Actually, the taxes involved would probably make it almost impossible.
When you think about it though, it's a simple market arbitrage opportunity. If someone was selling £600 shares of stock at £120, with some odd restrictions, they'd be jumping on it. They're lucky someone didn't buy every vacuum cleaner available, mail-merged, printed and mailed letters and re-sold the tickets to customers at a markup. I'd pay £150 for a £600 flight ticket, if it meant I didn't have to figure out what to do with a vacuum cleaner. Why wouldn't a bunch of MBA-types see that?
When you get paid less than $20 an hour, jumping through hoops for a $50 promotion is time better spent than working an extra shift.
And of course the less you get paid the less disposable income you have, so the ramp-up is pretty severe, but I think there are plenty of analogies one could cook up for themselves if they had a lick of empathy.
Back when iTunes was new, a potato chip company in NZ had a promotion where each packet of chips had a printed code that got you enough iTunes credit to buy one song. By itself it was a good deal - buy a packet of chips for $1.50 (or whatever) and get a song worth 99 cents for free.
What made it amazing was I found that the codes were also printed in the smaller kids-lunch-sized packets that the local discount supermarket was selling in packs of 8 for $6.
Not the most spectacular discount but I still felt I was sticking it to the man each time I ate a tiny packet of chips while listening to a new song.
The real tragedy was it didn't really do anything for Hoover, didn't promote their product, merely turned it into a tool to acquire something else of more value.
Hoover was no longer selling their stuff to the consumer, the sale was guaranteed - whether they made a good product or not - it was selling airline tickets. I would think quality went down as manufacturing realized they could cut corners and no one would really notice. So they probably pushed out a lot of junkier vacuums.
They lost their brand notoriety along with it, as people probably now thought of hoover as "the place where we could scam some cheap airline tickets" instead of where to go to get good appliances.
This is where the (illusion of) profit became more important than the product for the board and that took the company down with it.
Every time I see this I wonder why people never mention the obvious follow-up. Which to me at least, is will a version of Uber that charges enough to be profitable and pay their drivers well still be an attractive product? It may still well be for short trips of a few blocks downtown, but for things like taking an Uber from the outskirts of town to downtown to avoid having to drive your car into the thick of traffic, the prices are already close to what I'm willing to pay for that convenience. Datum point of one but at a current round trip cost of $60+, raise the prices 50% and I'll either drive myself or just not go downtown.
McDonald's Austria had a feedback promotion, where you got a QR code with your bill, that led you to a very short survey about your experience, at the end of which you received a voucher code for a free Coke. When I got my Coke I noticed that the (0€) bill again had a feedback QR code. Of course I had to try and see whether I could get another free Coke that way. Sure enough it worked, but I never abused it, because after two free Cokes I pretty much got everything I wanted out of it, and it had the added inconvenience of the survey. (Plus I think you had to get the coke at the same restaurant and I was afraid someone would notice.)
I am not an active patron, but it impresses me how creative some people are at discovering these tricks. It appears that McD doesn't seem to mind, rather they leave the door slightly ajar for some tomfoolery, making the user believe they have outsmarted them; usually they are just open-secrets eg. surveys on receipts for codes, can be a random number.
If I owned a McD franchise and had someone willing to do this repeatedly for free Coke I'd probably allow it indefinitely to create a creature of habit who I know at some point is going to want more than a Coke...
I used to work in retail software services and this was known colloquially as, perpetrating a scam.
Many times, the teams figure out many of the ways that scams can be perpetrated. Probably the coke instance was probably considered and OKed. But you're right, people do come up with some really cleaver techniques, which, when discovered, get added to the pre-rollout test cases.
Coke pretty much costs nothing compared to the rest of the operating costs. This is why many McDs have the price of all the fountain drink sizes the same. I'm guessing only a minority of people would come in for the free drink and leave without eating something. It's the same as the monopoly game pieces they give out. Many just have things like a free hashbrown, or fries, or a drink, small things. People aren't going to both waiting in line just for something small like that so either McDs doesn't lose anything when those people don't come back or they make a real sale when they come back and buy a burger with their free fries.
biggest cost is probably the cup, straw and labour around servicing customers and cleaning the restaurant, collecting garbage, etc. The biggest cost in the coke is likely transportation to the restaurant
There's also the old contract law chestnut of the guy who bought enough Pepsi points to theoretically earn a Harrier jet. The court said no, you don't get a jet.
Among other claims made, Leonard claimed that a federal judge was incapable of deciding on the matter, and that instead the decision had to be made by a jury consisting of members of the "Pepsi Generation" to whom the advertisement would allegedly constitute an offer.
Your honor, the marketing wanks clearly understood the likes of my client to be imbeciles, as such, they should have known better than to offer them a Harrier jet in bad faith.
It's never false advertising if a reasonable person wouldn't believe it. Irn Brew advertised that it is "Made in Scotland, from girders" but no reasonable person would conclude that a fizzy drink would be made from girders, so it isn't false advertising. Likewise Pringles says "Once you pop you can't stop" but it isn't false advertising because a reasonable person understands that they can actually stop.
You can't have a fighter jet. It's not just "They are very expensive" they are not available. Sale is restricted to qualified purchasers. A reasonable person knows they can't have a fighter jet. The plaintiffs in that case knew it. They were just looking for a pile of cash. Too bad.
In the US there would be no problem owning a fighter jet, and it would be entirely reasonable to expect Pepsi to deliver what it promised. Plenty of old Soviet hardware is in private hands over here, for instance. [1]
You couldn't equip it with functioning machine guns or missiles with explosive warheads without the appropriate Federal Firearms License, but other than those narrow exceptions, party on.
> it would be entirely reasonable to expect Pepsi to deliver what it promised.
It's presented in the ad in a totally ridiculous way, and that was part of the reason - it was considered to be effectively be puffery, because even if you believe that Pepsi might reasonably be able to make good on the offer, it's obvious they would not hand a fighter jet to a teenager for them to fly to school. It was fairly obvious from the ad that it was making an exaggeration. Puffery generally does not get sanctioned even when much more realistic claims are made than that.
But the claim also fell down on other reasons - it wasn't taken to be an offer in the form it was presented, and the value (of the points, as per the cost of purchasing them) meant that a written contract would be required to pursue it as fraud.
I don't know what to say. To me it is very obviously a joke. Even if the amount was not a giveaway, a teenager flying a fighter jet to school makes it obvious. The court decision [1] includes a lengthy explanation of why the inclusion is obviously meant to be a joke.
But note that even so the ridiculousness of it is as pointed out only one of three factors called out by the court as invalidating the claim. Even if the ad itself presented it entirely seriously that would not have bound Pepsi to provide one, because they did not make a binding offer.
Importantly, the ad is a humorous ad for the "Pepsi Stuff" loyalty program. The catalog itself did not contain the jet or an order form for the jet.
The court states [1] that "The general rule is that an advertisement does not constitute an offer." But the court goes on to cite precedent that even filling in an order form does not necessarily create a binding offer, and goes on to say:
> Under these principles, plaintiff's letter of March 27, 1996, with the Order Form and the appropriate number of Pepsi Points, constituted the offer. There would be no enforceable contract until defendant accepted the Order Form and cashed the check.
In other words, Pepsico did not make an offer. Plaintiff did, and because Pepsico didn't accept his order form and check, they did not enter into a contract with him to provide him with a jet.
The court provided for an exception and explained why it did not apply:
> The exception to the rule that advertisements do not create any power of acceptance in potential offerees is where the advertisement is "clear, definite, and explicit, and leaves nothing open for negotiation," in that circumstance, "it constitutes an offer, acceptance of which will complete the contract."
but:
> First, the commercial cannot be regarded in itself as sufficiently definite, because it specifically reserved the details of the offer to a separate writing, the Catalog.[6] The commercial itself made no mention of the steps a potential offeree would be required to take to accept the alleged offer of a Harrier Jet.
.. and:
> Second, even if the Catalog had included a Harrier Jet among the items that could be obtained by redemption of Pepsi Points, the advertisement of a Harrier Jet by both television commercial and catalog would still not constitute an offer. As the Mesaros court explained, the absence of any words of limitation such as "first come, first served," renders the alleged offer sufficiently indefinite that no contract could be formed. See Mesaros, 845 F.2d at 1581. "A customer would not usually have reason to believe that the shopkeeper intended exposure to the risk of a multitude of acceptances resulting in a number of contracts exceeding the shopkeeper's inventory." Farnsworth, supra, at 242. There was no such danger in Lefkowitz, owing to the limitation "first come, first served."
Interesting because of how it relates to Hoovers infamous campaign is that they'd likely have been in less problems in the US, possibly dependent on the state, both for the above reason, and because of this:
> Fifth, the number of Pepsi Points the commercial mentions as required to "purchase" the jet is 7,000,000. To amass that number of points, one would have to drink 7,000,000 Pepsis (or roughly 190 Pepsis a day for the next hundred years an unlikely possibility), or one would have to purchase approximately $700,000 worth of Pepsi Points. The cost of a Harrier Jet is roughly $23 million dollars, a fact of which plaintiff was aware when he set out to gather the amount he believed necessary to accept the alleged offer. (See Affidavit of Michael E. McCabe, 96 Civ. 5320, Aug. 14, 1997, Exh. 6 (Leonard Business Plan).) Even if an objective, reasonable person were not aware of this fact, he would conclude that purchasing a fighter plane for $700,000 is a deal too good to be true.[13]
This is part of the argument for why it is clear that the offer was made in jest, and was mere puffery.
Basically: If something that appears to you to be an offer looks too good to be true, don't expect the other side to be held to making an offer unless they've actually made a very precise offer with sufficient limitations to make it clear. This alone should stand out in the ad - it is free of the kind of statements of various limitations typical of ads that are less humorous and clearly intended to be taken seriously tend to have in the US.
It worries me that neither the advertisement, the catalog, or the order form would constitute an offer. I do understand that the harrier jet did not exist in the catalog or offer form, but the general point is what scares me
What would a consumer have to verify when they are placing an order to ensure they are not submitting to a practical joke?
If they can't be held liable for false advertising, would they have a case for a civil suit around lost opportunities or something?
I'm not sure how this individual came up with 7,000,000 pepsis worth of points; maybe that's not worth a harrier jet, but surely this individual wouldn't have bothered gathering them if not for the commercial.
Any of them can constitute an offer. The point is that they don't automatically constitute an offer.
For there to be a contract there needs to be a meeting of minds. To rely on a unilateral offer then, the terms stated needs to be such that there is no need for negotiating unstated terms - e.g. the other side has stated a sufficiently complete set of terms so that it is only down to accepting or rejecting it on your side.
When an offer is made in an open ended way like that, the court points out that in past cases leaving out things like what will happen if you run out of stock makes the "offer" sufficiently indeterminate that it is not reasonable to consider it binding. You can solve that by adding a statement such as "first come, first serve" or "as long as stocks last" or similar. The point being that until you have confirmed that there is an actual intent to offer you something, whether you specifically or any taker without qualification, you should not rely on an ad as a guarantee of an offer, but as a statement of a willingness to issue an offer or accept an offer, and if you need a definite offer you will need to contact the entity stating the intent and obtain a clear offer.
> What would a consumer have to verify when they are placing an order to ensure they are not submitting to a practical joke?
That there was an actual intent to enter into a binding agreement.
In this case, the catalog set out specific terms and may well have qualified as an offer for the other items that were mentioned in it, assuming they had suitably specific language. When then seeing there was no jet listed the step to take would have been to contact Pepsico and ask for a confirmation that there was an offer prior to relying on it. At which point you'd have been told no.
> I'm not sure how this individual came up with 7,000,000 pepsis worth of points; maybe that's not worth a harrier jet, but surely this individual wouldn't have bothered gathering them if not for the commercial.
He sent a check. He didn't bother gathering them. The rules allowed him to buy them for 10 cents per point.
This was treated by the court as him making an offer, and Pepsico rejecting his offer by not stating any acceptance of the order form and not cashing his check, given that Pepsico had not made an offer in advance, so sending back an order for with extra stuff written on it and a check could not constitute accepting an offer.
If he had actually spent a lot of time or money on this prior to suing I'd have been slightly more sympathetic, but he kept his money until he started burning it on lawyers.
"it's obvious they would not hand a fighter jet to a teenager for them to fly to school"
You seem to be undermining your own argument here.
I can think of numerous adverts where upon revealing a prize the winner is magically transported to Disneyland or wherever. Do those advertisers not have to give out the prize because the winner obviously isnt going to be transported instantly to Disneyland?
Of course that would depend on jurisdiction, but with the caveat of same jurisdiction as Pepsico was sued under, the ad in itself would not create a binding contract there either, no, unless it also contains a lot of other elements absent from the Pepsi ad. But it is still not equivalent - the court judgement does not argue that the mere presence of exaggeration implies that nothing in it could be an offer. What it sets out is:
- That the presentation of the jet prize is puffery / exaggerated and meant in jest. If you remove the ridiculous, over the top part from that, there is nothing left but the items actually on offer. In the case of an ad presenting a trip to Disneyland and illustrating it with "magical transport", I'm quite confident the courts would consider the potential offer to be the trip, not the "magical transport".
- The court further held that even if it wasn't puffery, an ad does not automatically create a binding offer; in fact it makes the claim that even an order form (which did not exist for the jet) does not automatically create a binding offer, unless it unambiguously sets out limitations that makes it clear that there's nothing negotiable, and that usually includes making clear the specific terms, such as limitations of supply etc. This would likely be the case for an offer of a trip to Disneyland too, magic or no magic, if it was presented as in the Pepsi ad, with no terms and limitations stated and with a reference to a catalog that did set out terms and and order form, and that in the Pepsi case did not include a jet.
"That the presentation of the jet prize is puffery / exaggerated and meant in jest. If you remove the ridiculous, over the top part from that, there is nothing left but the items actually on offer. In the case of an ad presenting a trip to Disneyland and illustrating it with "magical transport", I'm quite confident the courts would consider the potential offer to be the trip, not the "magical transport"."
That's my point, they aren't (/shouldn't) going to be considering the teenager going to school either.
> That's my point, they aren't (/shouldn't) going to be considering the teenager going to school either.
In the Disneyland example, what is being "sold" is the Disneyland trip, and the magical transport is puffery. In the Pepsi example, what is being sold is t-shirts and other bits and pieces, and the jet is puffery. The "story line" of showing someone flying it to school is part of the courts argument for why presenting the jet at all is puffery; the primary value of offering a jet up as something cool would be to be able to use it - if the intent was to offer something high value that was not exaggerated, then actually offering the cash value would have been less likely to appear exaggerated, but then that also makes the offer clearly too good to be true: You'd be able to pay $700k to get $23m, and turn around and do it again (there was no limitations in the ad).
The exaggeration in both cases is obvious enough that Pepsi faced no other attempts to obtain the jet, and to my knowledge nobody has tried to go to court over lack of magical transport to Disneyland either. There is no requirement that nobody will take it seriously for a court to consider it puffery, though there is no evidence that anyone, including the plaintiff, took it seriously.
In both cases, remove the exaggeration, and you're left with something actually on offer: the Disneyland trip, or the items actually in the Pepsi Stuff catalog.
But in any case: it's irrelevant. Just presenting them in an ad does not create a binding contract to provide one even if you don't believe it was exaggerated, because as the court made clear, an ad only creates a binding contract if it presents a clear unambiguous offer - the absence of any kind of limitations to the offer makes it clear it is not a binding contract. But the absence of those elements also makes it clearer that the "offer" was made in jest - there were no elements in that ad that suggested Pepsi intended to make a binding offer, and nothing to accidentally have caused them to make one.
"In the Disneyland example, what is being "sold" is the Disneyland trip"
In my example the Disneyland trip was a prize. We agree that the magical transportation is puffery, as we agree that the child travelling to school in a jet is puffery. But just as it doesn't automatically follow that just because the magical transportation is puffery, so too is the Disneyland prize. It doesn't automatically follow that the jet plane itself is puffery, just because the teenager travelling to school in one is puffery.
$700k is a lot of money, that in itself is going to limit how many people are going to try to buy anything. And lets say they did believe they were going to get 'a' Harrier maybe they thought it was going to be a second hand Mk1 Harrier that isn't worth nearly so much, and even then how do you go about valuing and selling something like that. A nation state probably wouldn't be interested, so a private collector, but how many of those are there? Would they want to buy from a Pepsi swilling teenager? How quickly? How much storage and transport/fuel fees are you going to incur?
All of that is itself enough risk to justify only $700k on a potential $23m.
You're right that its a contract issue, even if they had advertised an actual Harrier for $700k they still wouldn't have had to sell it ( under UK contract law anyway, I understand it to be the same in the US)
Hence my quotes. The advertising would be selling the reader/viewer on the value of a trip to Disneyland, not on the obviously non-existent magical transport.
> It doesn't automatically follow that the jet plane itself is puffery, just because the teenager travelling to school in one is puffery.
It doesn't automatically follow, but the court spent about a page outlining why the combination is ridiculous to a reasonable person. That only one person attempted it to me strongly suggests that their assessment was right in that. Much more reasonable statements have been accepted as puffery.
Your argument that people might have had difficulties figuring out how to sell it etc. does not ring true to me - the logical consequence of spotting an offer to buy something potentially worth $23m for $700k would be to seek out details of the offer and determine if there was a real prospect of getting it and so determine if there was a possibility to profit from it.
Plaintiff in this case did not do so, presumably because he understood full well doing so would ruin his chances to claim he genuinely relied on the ad being an offer. But neither did anyone else.
Referencing "Pepsi swilling teenagers" is also irrelevant - the ad aired during Superbowl; it would have been seen by plenty of people who could raise $700k. Only one was dumb enough to try, and doubled down when facing judgements for substantial lawyers fees.
> You're right that its a contract issue, even if they had advertised an actual Harrier for $700k they still wouldn't have had to sell it ( under UK contract law anyway, I understand it to be the same in the US)
It's a "contract issue" in that jurisdiction only in as much as because it was not a binding offer there was no enforceable contract, and one of the reasons why there was no binding offer was that the court considered it puffery, so the two are connected. If they had made a clear, unambiguous offer that required no further negotiation (e.g. stated clearly that it would be a demilitarised version, subject to limited availability, and any other criteria that could be reasonably expected to be necessary), and it hadn't been puffery then the ad could have constituted a valid offer. But it didn't meet any of the tests the court examined.
"A reasonable person knows they can't have a fighter jet."
I'm not sure I buy this argument. A reasonable person knows they can't have a billion dollars for winning a silly game. Yet, a billion dollars is indeed (sometimes) the Powerball award, and you can't deny the award to the winner saying "obviously you should have known we wouldn't actually give you the billion dollars at the end".
The lesson should have been for Pepsi: don't do the promo if you can't afford the prize. Instead, they were happy to get the free advertising and yank the prize away at the end.
>I'm not sure I buy this argument. A reasonable person knows they can't have a billion dollars for winning a silly game. Yet, a billion dollars is indeed (sometimes) the Powerball award, and you can't deny the award to the winner saying "obviously you should have known we wouldn't actually give you the billion dollars at the end".
How is that unreasonable? How do they 'know' that considering lotteries absolutely do pay out?
It's perfectly reasonable to expect that a state/Nationwide lottery will pay out what it says it will pay out. The entire point of a lottery is that many pay and a few win.
A barrier jet as a prize is not in any way reasonable.
"Though the ‘girders’ were often thought to be a reference to the ‘rust’ colour of the drink, Irn Bru does have 0.002 per cent ammonium ferric citrate listed among its ingredients – a food additive containing iron hydroxide."
That's not exactly true. Some fighter and fighter-trainer jets, such as the F-5 (a light supersonic fighter with some strike capability) and the T-38 (a related trainer), have multiple examples in private hands in the US right now. They are very expensive to purchase, of course, and almost as expensive to maintain - thoroughbreds are a pauper's diversion by comparison - but that's not the same as saying it is impossible to own one, and depending on the specific mark of Harrier in question, I wouldn't necessarily see it as unreasonable to believe Pepsico could fulfill that claim.
It's considerably less unreasonable when you consider the fact that, less than a decade previously, Pepsi briefly commanded the sixth largest navy in the world.
Are you saying Nigerian 'princes' have a possible valid defence by claiming that no reasonable person would believe they actually were princes with a lot of money they needed help with?
Different jurisdiction. "419" is actually the criminal code for fraud in Nigeria. Nearby countries with a significant presence of similar activity have similar legislation (also see the "sakawa boys" of Ghana). Naturally, collaborators in other countries such as the victim's (or "client", as they are typically referred to by 419ers themselves) would presumably be charged under local jurisdiction.
That said, some of the scams, like those common a few years ago about immense sums of cash in Afghanistan or Iraq could be viewed as less unrealistic--I mean, all of those dollars US shipped over there and "lost" must have ended up somewhere, right?
In my experience, most work out of Nigeria or Ghana. One reason Nigerians tend to catch a bad rep in Gh. Perhaps other countries in the region as well.
The scam is way older though, it used to be known as Spanish Letters or Spanish Prisoner in the 18th century.
I wonder what ever happened to that guy. If I remember correctly he was a college student at the time and somehow managed to raise almost a million dollars to send a certified check to Pepsi to buy enough "Pepsi points" to redeem for the jet. Whatever your opinion of the lawsuit, to be able to raise that kind of cash in the 90's without the help of the internet is pretty impressive.
It's pretty cool what they can get away with in this respect too. Coca-Cola recently successfully argued that "no reasonable person could be misled into thinking Vitaminwater was a 'healthy drink'".
It was, literally, but the US mostly doesn't prohibit false advertising and the claim at issue wasn't false advertising but breach of contract.
Whether something is false advertising and whether it forms a offer that can be accepted to form a legally binding contract are two different questions, and the case illustrates that contract law is not a substitute for regulation of false advertising.
A few years back Wendy's had an offer where if you got a medium or large drink there was a coupon on it. 32 coupons got you a one-way flight in the continental US, 64 got you a round-trip flight. Being a poor college student at the time, a few friends and I went dumpster diving at all the local Wendy's and over a couple nights ended up getting about 4 round-trip tickets. The only drawback was having to throw out those clothes..
Wow i had never heard of this offer. But it seems like it was a good deal without even dumpster diving.
What does a Medium Drink at Wendys cost? Probably $1.50?
So buying 32 medium drinks would cost $48, which would get you a free one-way flight in the US. $48 (plus all the drinks you can handle and diabetes to prove it) is an insane deal for plane ticket.
By this logic a round trip ticket would cost ~$96 which is also a steal.
Even without dumpster diving, $48 is a great deal for a ticket even if you just dumped the soda out or never filled up the cup at the fountain.
Unfortunately not. Closest thing would be Consumer Reports which was never — afaik — televised. Makes sense if you think about it - US networks would never air such a program that could negatively effect the potential for advertisers. I guess the one possible exception being Public Television.
Heh, I got a free flight out of this! It was my second trip to NYC from London, I was 19 or 20 and the markets were saturated with cheap brand-new Hoovers that people didn’t need. Great trip to NY/hapless marketing campaign from Hoover.
In the late 90s dot-com bubble, I had many friends at the Austin software company Trilogy (which hired extensively at our university).
Apparently they had an HR referral promotion where "you refer a person that gets hired, you get $5000, you refer two people, you get $10000, you refer three people, you get $20000, and so on..."
I heard the referral schema was quickly cancelled once HR discovered exponential growth.
I had a friend in the 90s who started at a tech company as an admin assistant. But her husband was an engineer and she knew a ton of engineers, so she started referring them. The company paid $5,000 for each hire. She got so many people in the door that she made more money on referral bonuses than her regular salary.
The company solved the problem by "promoting" her to HR as a recruiter.
This is roughly the same business model as Uber. They should have just raised a billion dollars first and claimed it would all make sense when the roomba was invented.
The Hoover story (decline chapter) goes beyond the legendary sales promotion.
The former factory in Perivale, West London was an Art Deco masterpiece, that closed down in 1982. There was manufacturing in South Wales (the 'China' of it's day) and that factory finally closed about a decade ago. This factory also did the contract manufacturing for the Sinclair C5.
The actual promotion was not that wild a deal. If you look at the privatisations that the UK public were offered you can see some true gift-horses. If you bought shares in anything the government were flogging off then you made a lot of money. You also were bought - you could be expected to vote Conservative from then on - 'brand loyal'.
If we look at the VC funded things that go on today, every early Uber ride was a 'sales promotion'. Same with the early days of Amazon where money was not so important. Even online groceries sales are a bit speculative.
What is sad is the lack of genuine offers from today's brands. In the olden days competitions would have a 'tie breaker' to complete, nowadays they want you to text or call a premium rate number that costs enough to pay for the promotion.
In the 1980's a typical 'really good promotion' could be something like the Weetabix Lego offer. If you bought a dozen packs of Weetabix cereal then you would have enough tokens to get a really good and quite exclusive Lego set, or, if you didn't want to have 576 Weetabix biscuits to eat then you could pay retail equivalent for the Lego offer. There was nothing disingenuous about it and any delay in shipping (28 days of delivery was never realistic) only added to the excitement and anticipation.
I don't know why but in the days before the internet when everything had to be manually transcribed from posted-in forms the offers and promotions were just that bit more honest. Stuff wasn't cheap and made in China then. The Hoover disaster marks the end of this happy chapter of consumerism.
'any delay in shipping (28 days of delivery was never realistic) only added to the excitement and anticipation.'
I fondly remember getting all manner of free-stuff as a kid by collecting coupons. As you say, having to wait so long for delivery made it seem like you were getting something really special.
Nowadays if my Prime delivery doesn't turn up by 11 am the next day I get frustrated.
There was a very similar promotion running in Australia last year where you could get free return flights for buying six bottles of wine (minimum cost around $68). They also required sending in paper forms and nominating three destinations and three sets of dates. I went to Bali on that deal.
I got in on this deal too, nominated 3 destinations in New Zealand and got free flights to Christchurch.
That said a number of people missed out due to the confusing processing and a page where it requested ID (drivers license or passport) but if you only provided a drivers license they refused to accept any international destinations, therefor you hadn’t nominated 3, therefor you got nothing. Of course it would have been trivial to ask for passport details after the fact but obviously the intention was to deny those who tired to claim on any technicality possible. The passport requirement wasn’t mentioned in any terms either which makes it even more dodgy.
I have strong childhood memories of watching the consumer campaign programme Watchdog with my parents. This was one of their biggest and longest running stories. It's hard to overstate just how badly this screwed Hoover in the UK. Their name really was mud by the end of it, and now it's genuinely a bit surprising for me to see a Hoover.
I always wondered why the British word for vacuum cleaner / cleaning is just Hoover (like web search is called Google), and yet I'd never come across a machine that said Hoover on it.
I find it odd that they even thought about this. Why didn't they just limit their losses by saying "only the first x customers"? Surely it's obvious that anyone wanting to fly to the US, a pretty popular destination among the British, would be better off getting a cheap Hoover.
If the point is to get rid of old stock, why not do an offer where you and your friend get a machine each for a sensible price?
At least in my generation (born in 80s), I think the name is so synonymous because of Henry Hoover : https://www.viking-direct.co.uk/en/p/155384 (shopping link -- I couldn't find a non-shopping link). Although it only says Henry on it, everyone knows it's Henry Hoover. This is THE absolute classic vacuum that most people have owned or used at least once in their lives. Not sure if it's much of a thing outside the UK.
FWIW I own a Henry, and I had no idea the name was a play on Henry Hoover's name -- it's not manufactured by Hoover, after all, and it postdates the word becoming a generic term by a long way. I think the article's take on it is more likely -- machines branded Hoover were so ubiquitous in the first half of the 20th century that the term became a common word (the OED has cites for 'hoover' the verb with no capitalization or quote-marks starting in the 1940s), and once something is a common word it gets passed on to later generations regardless of whether the actual device in use is one from the company or not. (Though I remember in the early 1980s the hoover my parents had was indeed a genuine Hoover...)
FWIW, Numatic is a British company, and not in the "Claims to be British but actually based in the Far East and doesn't pay any tax in the UK" way like Dyson.
Yeah a whole lot of the story makes no sense. There’s plenty of ways - sensible ways - to offload aging inventory that don’t involve schemes like this, and I’m left wondering if there is more to this study than what’s in the article. As in, if this random travel agency had some personal connection to Hoover executives at the time.
It sounded like the original promotion with just fights inside Europe went well. It was the expansion of the promotion to include the USA that seemed to have caused the problem.
I suspect "well" might be an exaggeration. I bet they were doing the same complex-claims-process, but no consumer action groups got involved.
Without a consumer action group, most customers will just be disappointed when told that they were disqualified because they filled the form in in black ink instead of blue. The few customers that make a big fuss can be given flights.
It's only when a group gets involved that you have to give them all what they're entitled to, and it gets expensive.
I think the bigger difference is that initially the sort of person that used the promotion was somebody who saw it as a reason to pick Hoover over Zanussi or Electrolux products and often bought the higher end washing machine or fridge they were actually looking for rather than the cheapest vacuum cleaner, so Hoover often did better than break even on the promotion when taking into account their profit margins versus whatever wholesale price they got on the flight tickets. And lots of genuine customers didn't bother filling out forms, and few people looking to buy flight tickets to Italy for about £119 decided to get a vacuum cleaner and some booking hoops to jump through instead...
When £600-£1000 face value tickets were offered, the logic of buying the lowest cost qualifying electrical product instead of the flight to the US started looking entirely different...
The interesting nugget here is that they did this promo for european flights and it _did_ work! Granted, the process was really hard and whatnot but saying "you'll get some flights to Europe if you fill out this form after spending 100 pounds" is kinda bonkers.
1) Flights in Europe are not that expensive (even in the 90s) and they were probably able pay that out of their product margins.
2) People will jump through considerably fewer hoops if all they get is a an 1:30 hour flight to Italy over the weekend.
3) Flying to the USA is something special and has a "dream vacation" vibe to it. In my company it would not be that hard to move a planned vacation around if I could argue that my flights were part of a great deal.
Off topic and maybe you know already, but there's an interesting theory about this movie being a sort of Superman movie, google the theories and have a read.
Google Fi did the exact same thing with their travel promotion that they soon realized was a terrible deal for them. And then they made up some stuff to deny fulfilling the order with the travel credit for me, while still hitting my credit bureau with a hard inquiry.
During the 1984 Olympics, in the US, McDonald's ran a promo where you got a peel off for an event if you bought a large fry, coke or the six piece nuggets. If a US athlete got a medal you won a food prize, potentially multiple prizes if the US placed multiple athletes.
This was the year the soviet bloc withdrew as it was in the US. The US won some absurd number of medals.
The other thing is the prize was always free food, which also had the peel offs. So you could buy a large fry and have a really good chance of completing your meal.
Now you'll see the free food consolation prizes are always for something that doesn't result in another ticket.
Just a hunch, but airlines often have a lot of empty seats, selling them cheap would devalue their offering but giving them away makes them look generous.
Yes, and in the same way, once the AA execs realized how much it was costing them, they started looking for some way to get out from under the agreement they made.
I had something similar happen with a national tire-and-brake chain, from whom I bought a "lifetime alignment" for one of my cars for the cost of about 2 alignments. After a few years had passed, it was always a huge rigamarole: "I don't show that in the computer; do you have your receipt paperwork?" "We don't offer lifetime alignments any more." "This store has a new manager since then and we're no longer honoring that deal." They always gave it to me after I persisted, but never easily.
Look, I'm not responsible for your shortsightedness; I bought the deal on your terms, and now you need to honor the deal.
That thing was the worst product in history. It was not a promotion for a product, but a product in itself, which I consider to be fundamentally different things.
Reminds me a law book on contracts- there were quite a few cases,where companies or people try to weasel out of contract as part of advertisement campaign.Never ends well to them.
Seems to work fine for telcos in the US. You can change retroactively change the price by adding "regulatory recovery fees." If your service is genuinely misconfigured, you will often get the standard line "service is not guaranteed" until(if) you get to a Level III Support Engineer.
And in the worst, worst case, you get thrown into arbitration which is already skewed in the telco's favor.
"Short Version:
France accidentally started a lottery where, under certain conditions, the total prize was worth more than the total cost of all the tickets."
Reminds me of me trying to get those "Cheapest price guarantees" — had been turned back at god knows how many reputable retailers, and booking agencies with replies like "so sue us": Expedia, Booking.com, BestBuy, London Drugs...
I think, many of such cos keep a record of people going for such deals, and once you request a freebie for the 10th time, they look it up and blacklist you
Most British stores won't give refunds just because the customer's changed their mind: there has to be something wrong with the product sold. This was even more so in the 90s.
Iceland (supermarket chain of frozen food) had an offer for buy one get one free on some branded pizza. But those Pizza boxes also has a voucher on the packaging for...a free pizza. So I'd buy a pizza and get two free. Then use those two vouchers to buy two more pizza's and free ones. This I repeated daily throughout the promotional period in low volumes like that, so as to not raise awareness of the oversight. Upshot was I had a whole month of free frozen pizza, two filled up freezers of pizza and on top of that, only ever paid for that initial pizza. Was a good period of savings on the back of that promotion at a time in which money was very tight. Also after the store BOGOF had finished, I still had a pile of free pizza vouchers that lasted for the rest of the year due to expiry date on those vouchers.
What I surmised was that the pizza manufacturer had said it would do a promotion for buy one get one free, they did it via vouchers and Iceland implemented it via the till system. Though equally, still took the vouchers.