The Indicator from Planet Money - Pepsi's Number Fever

Sometimes companies offer sales promotions that are TOO good, ending in livid customers and a disaster for the company.

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This is the indicator from Planet Money. I'm Stacey Vanek Smith woods and I brought something to do with your day, a little prop because you told me to do. So I was going to be about the Glee bottles of Pepsi, Pepsi unscrew the lid and look under under the ball. Put it put it the top to the mic. I want to hear that refreshing crisp. I've been sad.

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Oh, that's that's at. Okay. What's under the bus. It's a series of letters and some numbers. I'm here to tell you about a story of a pretty similar promotional campaign. That Pepsi ran back in 1992 with that number under that bottle. Top, Stacy could have made you a millionaire in the Philippines. What does I think this huge Fiasco? He has economic strata and friend of the show, Tim Hufford, it was cooled, number fever, Pepsi with basic, be promising to make a million that all just everybody, but huge number of people, I mean it's delicious. I'm skeptical of its power to make people Millionaires and still turn a profit. That was the plan. This was a huge mistake among the most egregious mistake ever made in the history of advertising promotional campaigns.

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Zenna, show promotion and companies that have failed to do the math. In a big way, Sales & Sons that promise huge rewards and ended in disaster.

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Victoria and Furniture Angelo with a couple living in Manila in the Philippines they had a pretty hard life when it's our work is a rickshaw driver and the whole family lived in a tin roof Shack but they had a dream to Moffitt talk about this in his cautionary, tales podcast. And that dream, is that they'll win a very unusual Lottery, the lottery is cooled. Number favored in the lottery, numbers printed on the inside of bottle caps on bottles of Pepsi. They set down every night to watch numbers drawn on TV. If the number from your bottle top was drawn in one grand prize, you could win a million pesos that's equivalent to about forty thousand American dollars. That is a lot of money in the Philippines in 1990 to a life-changing about the money for Victoria and her needs her if they were ever to win it. But of course, they would ever win. The number was three.

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For 9.

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One evening. They are watching the television and the lottery draw was held. And the number comes up and it's 349, they can't believe it. $40,000 a million pesos. You think the children, go to to college or needs help doesn't have to work as a rickshaw driver anymore. Would be like winning a million dollars in the u.s. today but Pepsi messed up and 800,000 bottle tops with printed with the winning number 3494 Victoria. And hornita the way I imagined this is that they run out onto the streets to celebrate and everybody else is on the streets and they're celebrating too.

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Because they all have the number 349 on that bottle tops for at least fifteen billion dollars. But that never ends it despective that was about half the Philippines entire annual income as you can. Imagine this place is going to end. Well, we'll let you know how that turned out in a bit because when Tim look into the story, he got obsessed with a lots of other failed promotion campaigns. That got me thinking, hang on, and it was sort of Horror Story says he's deals. Going wrong for the case of Pepsi's number fever. Promotion, that's clearly a mistake. But sometimes you get these promotions that seemed too good to be true but did not necessarily a mistake. I they know sometimes I just noticed how could the deal is? They didn't really follow through with a maths. The other thing that I think is it very common indeed is

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Exploiting something called breakage rights break at rates. Is the industry term for how many people fail to follow up on offers and companies intentionally, try to increase breakage rates, by making it hard for the customer to follow through. Like you have to sign out to a complicated website and type in a long string of numbers that kind of thing is. Offered free transatlantic flight with any who reply-all sit by yourself at night cheap washing machine a cheap vacuum cleaner and you get to fly across the Atlantic. I think it was a pair of tickets so that I may just bet that the break is right behind off the this would work out for them. They would sell it if appliances but people just wouldn't be able to follow through and the flights. They were offered with you deliberately inconvenient, you have to fill in a form to get another phone and then you have to fill in the second form. In order this stuff, in fact, people in Scotland were being offered free flights only from London, which is hundreds of miles.

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Way and people who lived near London were being offered free. Flights. Only if they went up to Scotland, dad is Evo. There was one in for this example, where a guy both have a washing machine from Hoover in order to get the free flights and he was really having trouble claiming his free offer and then to add insult to injury, the washing machine broke down. So then the guy comes from Hoover to fix the washing machine. And then having this conversation, he backs his horse box, a horse trailer across the driveway so he effectively takes the washing machine repairman, svein hostage. So this is found. This truck is parked in the driveway, and he says, you walk home and you can tell them that when I get my flights, you'll get your time and he just became a national hero of everybody was talking about the story.

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So if you actually do the sums and you notice that accompanies promotion is a really, really good deal, maybe seems too good to be true but what are the factors that increase the likelihood that you as the customer will actually get that pay out that you count control? But it's worth thinking about, which is how expensive is it going to be for the company to keep his promise? In the case of number fever is fifteen billion dollars like it super expensive. But some of these other deals there are only a few customers who noticed and it's not really a big deal for the company to pay out. The other thing is something you can affect and that is how bad will it? Make the company? Look, if they refuse to eat that promises I supposed to be interesting cases where the reputational risk is huge but also it's incredibly expensive to follow through the then the companies in a really really difficult situation. A situation Hoover was in.

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D&D Customs, huge amount of money. So what happened in the end with number fever in the Philippines? We're going to give them think it was the equivalent of $20, but it said it up $40,000 is not a million pesos, not life-changing. So that meant that the people who don't lie, 349 bottle tops, they had to make a decision. Do I fight or do I settle on a coast different people? Make different decisions, is very sad story that people were threatening physical violence against Pepsi employee in a bomb at a Pepsi truck, which ended up bouncing off, and at killing two people, one of them a five-year-old child.

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And I need the end. Of course, Pepsi couldn't. I didn't. I went all the way to the Supreme Court in the Philippines and the Supreme Court said, yeah.

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They don't have to pay. And so in the end, the people who who took the Goodwill payments, they I think we're the ones who correctly assess the situation. This is a screw-up, I can get a small payment, I will never get what I was promised and I will ride

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Can I fit? Thanks so much for joining us know. Thank you. You can find more Parables of disaster at the cautionary. Tales podcast, episode of the indicator, and Brittany with help from getting married. Who's that chick by Sam, Tsui and edited by Kate concannon. His MPI. Thanks for listening.
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