Pepsi Number Fever: A Deadly Catastrophe
Marketing is a key factor behind sales, goodwill, and an overall brand existence, and it demands to be impactful. But again, a social impact needs to be contained and designed responsibly. An impact can change lives, and in this case, can take lives too.
Made evident with the famous PESPI NUMBER FEVER contest. A marketing stunt that promised its consumers, their chance at a million pesos. From a campaign that made the revenue charts shoot up skies, to an unnoticed error that left an entire country in deadly havoc, costing at least 5 lives.
So, what exactly happened?
The Philippines, an archipelago consisting of 7100 islands and islets, is situated in the Western Pacific Ocean of South East Asia. A third world country whose citizens lack the basic amenities of livelihood, like healthcare, and higher education. With incomes mainly sourced via agriculture and services, the GDP sits well low, when compared to higher tier countries. Where a million pesos can certainly transform one’s life drastically.
Filipinos are believed to have brief western influence, thanks to their strong ties to Spanish heritage. And these influences give way to a wider acceptance towards western products, one of which was Carbonated Soft Drinks. They were not only influenced but simply loved it, making the Philippines the 12th largest market for Soft Drink Consumers. Broader the market, wider the competition, and everyone wanted their share out of that cheesecake. Because, why not?
One of such share traders in the bait was the American Soda Giant, Pepsi. At the time, the competition was rather vague, with Pepsi holding a market share of a mere 17%, to a much stronger share hold of 75% by yet another American Soda Conglomerate, Coca-Cola.
Pepsi had to get their bags full, and with a host of brainstorming ideas and pulling out several marketing blinders (most of which did not go as expected), in 1992, Christopher Sinclair (then CEO) the youngest chief executive officer at 38, decided to introduce the PEPSI NUMBER FEVER to the South East Asian market, after recording a successful roll out in the United States. Pepsi Number Fever was essentially a brainchild of Pedro Vergara, an executive working with the promotion department of the brand in New York.
The Campaign promised the people of the country, a chance at a million pesos, about $68000 by today’s currency trends. It was by far the largest prize available in the Philippines, where the average salary was about $100 per month, making the amount near to 600 times the average monthly salary of the country.
It was a no-brainer, high yielding campaign (as PEPSI thought it would be) that cannot go wrong. The nature of the campaign was somewhat similar to that of a lottery system. Caps from the soda’s bottles were to be printed with a three-digit number below them, and the winning numbers were to be announced onto national televisions and radio. The prize amount started from 100 pesos to a chance of winning a million pesos.
Pepsi hired a Mexican promotion agency, DG Consultors, to run the Number fever across Argentina, Chile, Guatemala, Mexico, and the Philippines. The Philippines turned out to be the country where the campaign truly took off. Monthly sales went up from 19.4% to an overwhelming 24.9%. The production doubled up, the campaign started commanding the media with 29 radio station and 4 newspapers circulating the winning numbers across the country.
Initiated in February 1992, the campaign was set to be wrapped up by the 8th of May. But the enormous response from the market pushed an extension of 5 more weeks to the campaign, and Pepsi decided to double up the budget to 2 winners, aspiring a greater engagement of consumers. By then, the campaign has had already engaged 31 million people, the Number Fever looked more like a socio-political campaign than a brand’s sales campaign. The whole country was going head over toes. Instances are such, that people were even been put behind the bars for stealing bottle caps.
What was the problem then?
On May 25th 1992, the company announced the winning number for the day, 349. Seldom they knew that the number is going to create history, only in a darker way.
There were winners everywhere, people were running on the streets in the joy of winning the lucky number. Thousands of people gathered at the gates of Pepsi’s bottling plants across the country to claim their rewards. By the night, Pepsi realized the fact that something’s not right. Supposedly, there must only be 2 winners, how can thousands be claiming the number?
Further scrutiny suggested a bottling error that minted over 600,000 bottles, carrying the winning number, responsible for a scenario that Pepsi would never have thought of. The realization sinks in too late and the rage had been fired until then, people started pelting stones onto the bottling plants on the refusal of the claims.
People once engaging with the campaign, had started firing up an ugly riot. Pepsi’s trucks were being put on fire, and even hand grenades were been thrown onto the bottling plants, carving shapes to an unfortunate breakout that took at least 5 lives, leaving at least a dozen injured, and over 40 trucks burnt to ashes.
What was Pepsi’s take on the situation?
Pepsi initially attempted to change the winning number to 134, but it didn’t really help. Protests were still at par, the soldiers and the local authority were busy containing the raging protesters, and Pepsi was yet to make things right.
The protests carried on through the next morning of 26th May. At 3 a.m., Pepsi came up with the consideration as a goodwill gesture, that it will pay 500 pesos ($18) to anyone who will present the 349 caps, over the next 2 weeks. The management calculated that if half of the 600,000 caps that got minted, were to be cashed in, the damage could be controlled at $6 million.
Many of the 349 holders got their claims encashed in the first 2 days of the offer announcement. The company ended up paying more than 12.5 million pesos ($10M). It cost Pepsi $4 Million more to their $6 Million estimated budget, a colossal $10 Million more than the actual budget of $2 Million, and an uncontainable cramp to the brand image.
How did it all conclude?
Pepsi tried convincing its consumers that, 349 was a designated non-winner number in the original series of the campaign that started in February 1992. This number was mistakenly picked up as a winning number in the promotion extension, i.e., after the 8th of May. Both the series of caps with 349, one from the first cycle of promotion and the other from the second cycle, carry different security numbers. And only, the matching security numbers will be considered.
These explanations did not placate the protesters much, neither did the goodwill gesture of 500 pesos. Days turned into weeks, and then months, the protests kept on raging across the country. The ugly and horrifying sight of destruction kept taking pace. The situations were so worsened that Pepsi had to move its American Executives out of the country, and provide personal protection to the one’s staying in the Philippines.
Vicente del Fierro, an advertising consultant and a priest, together with fellow 800 claimants of the rewarded crowns, decided to file a lawsuit against Pepsico Inc. This was one of the many cases filed against the company. Del Fierro took the case to the courts of New York, and claimed a compensation of $400 Million, for the mammoth damage, the company has caused to the country and its people. But to a bland response, the American court dismissed Fierro’s lawsuit and suggested that it should rather be heard in the courts of the Philippines.
The protests eventually died and sorrowed, but the lawsuit kept raging for years. In 2006, a final verdict ruled out from the courtroom of the Philippines, stating that Pepsi cannot be deemed liable for the damages and negligence.
Until now, Pepsi has had shredded down a hefty amount of money in settlements, lawsuits, but more of what leaned down immensely was the company’s market sentiments. However, the long-standing nightmare for the brand, caused by merely a computer error, was finally over.
Interesting to learn that a company known for its stress-relieving drinks, got itself stressed so seriously, thanks to the fact that NO MARKETING IS A PERFECT MARKETING. One must always be cautious about the responsibilities.
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