How many brands can claim that their consumer goods promotion warranted a statement from the Pentagon? It turns out that the answer is “at least one”. Let’s take a look at how Pepsi inadvertently made that happen back in 1996, and at how this can be used to inform a risk management point of view of marketing – well beyond the obvious.
The promotion
In 1996, Pepsi released a promotion aptly named ‘Drink Pepsi – Get Stuff’, whereby consumers could trade in Pepsi points for items in a catalogue, like sunglasses for 175 points, or a Pepsi branded T-shirt for 75 points.
An ad supporting the campaign included a Harrier fighter jet for 7,000,000 points. Many watching the ad would see it as a joke. But not business studies student John Leonard.
The claim
At the time, the Harrier jet in the ad was worth approximately US$23 million. The promotion included the option to purchase points directly from Pepsi at US$0.10 each. Leonard calculated that he could purchase the required points for US$700,000. Who wouldn’t want a Harrier jet at 97% discount?
So, with the backing of five investors, he pooled the money together, sent a cheque alongside 15 points he had obtained from labels, and requested delivery of one Harrier jet.
Pepsi were quick to point out that the advertisement was a joke (and of course, did not cash the cheque). But Leonard would not be swayed; he lawyered up and filed a court case. In the interim, Pepsi updated the ad and made the required points 700,000,000 and added ‘Just Kidding’ to the Harrier scene.
The Pentagon
The next development in the story was perhaps the most surreal: the Pentagon felt the need to make a statement. While the court action was in play, Pentagon spokesperson Ken Bacon stated that even if the court case was ruled in Leonard’s favour, Pepsi would not be able to buy the plane. I can’t help but wonder what was going through his head when someone handed him his run sheet that morning.
The conclusion
The case did not resolve until 1999, when it was ruled in favour of Pepsi. The particulars of the case hinged around contract law. It was deemed that there was no offer made, but further to this the advertisement was puffery, and no ‘reasonable person’ would expect an offer that amounted to a military aircraft at a fraction of its cost to be real.
So what can we learn?
There are three things we can learn from this bizarre case.
Sufficient disclaimers
The boring and obvious lesson is to have sufficient disclaimers and terms and conditions in marketing material. That’s not particularly interesting. Moving on.
The gap between obligations and expectations
More interesting is that while there might not have been an obligation under contract law, Leonard and his investors had an expectation that without any disclaimer on the ad, they could claim the Harrier jet (and according to pieces published at the time, public opinion was on his side). Sometimes, consumer or stakeholder expectations are of a higher or different standard than what might be required by law or contract.
The lesson: When designing products, delivering services and of course marketing, consider what your stakeholders will expect even if you don’t have to offer or deliver it. The gap between obligation and expectation may cause your stakeholders dissatisfaction, even if they don’t have a legal leg to stand on. If there is no or minimal cost to do so, meet your stakeholders where they are.
Take sufficient risks in your marketing materials
As a risk management professional, you may find yourself reviewing marketing materials to see if they are ‘risky’. In the case of Pepsi, the fully risk-averse approach would be to say “Don’t include the Harrier jet so there is no possibility that someone misconstrues the ad”. I wouldn’t recommend this approach.
Weighing up the decision: how likely did Pepsi think that the campaign would invite a lawsuit (or at least one that might have merit)? They probably didn’t even consider it, but even if they did, the likelihood would have been extremely low.
On the flipside, how much extra buzz (and corresponding market share) did Pepsi generate by including the Harrier jet in this ad? While we don’t have the metrics to show it, it’s safe to assume “more than without it”. A marketing campaign is intended to generate sales – and when you think about your favourite or memorable marketing campaigns, many of them will push the envelope.
If you are in a compliance or risk role and are asked to review marketing material, taking a ‘slash and burn’ approach isn’t going to win you any friends. Think about what the marketing objective is, and try and help them achieve it. Some tips when applying a frontline risk review:
- Provide suggested rewording or presentation that still achieves the same overall intent or objective, while reducing liability or possibility of being misconstrued
- Show them where they can push further if you see opportunities
- Educate them; particularly when it comes to matters of compliance, perhaps they have taken an overly cautious safe approach in areas where they don’t know the boundaries
- Show them where you think there is a possibility that someone might challenge them and why
- If it isn’t obvious, ask questions about the objective or intention of particular statements or design so you can provide the best advice
These lessons aren’t just for marketing: the general principle is simply that you need to take enough risk if you want to achieve your objectives. Just don’t get the Pentagon involved.
About the Retro Risk series
Retro Risk is a semi-regular blog series looking at risks or incidents from across history. Whether it is memorable news stories, pivotal moments that shaped industries or risk-related fields, or just the downright quirky, we will look at what was learned (or whether anything was learned at all).
If you want to know more about taking and accepting the right amount of risk to meet your business objectives, you can download our free Risk Appetite eBook and find out how to incorporate the concept of risk appetite directly into your risk management framework.