Promotion Clunkers Hurt Brands

Word that the government’s Cash for Clunkers program has run out of money contains a lesson for businesses. The program, which provides financial incentives to consumers to trade low gas mileage cars for more fuel efficient models, is well intended to reduce our dependence on oil. The $1 billion available has been snatched up quickly by eager consumers. The desire was to have $4 billion to fund the program, and it is looking like every dollar of that amount would have been used if allocated.

So, what’s the problem here? We often encounter offers that suggest “hurry- quantities are limited- act now!” The problem is that a promotion poorly implemented can disappoint customers and lead to dissatisfaction with the business offering the deal. Remember KFC’s botched grilled chicken giveaway this spring? The idea was brilliant, the execution was weak. The promotion had to be halted after a few days, leading to a great deal of negative publicity in the media and angry customers in stores. On top of that, KFC spent additional money mailing coupons to consumers for a free dinner to make good on the promotion.

The strategy behind sales promotions is relatively easy to understand. If a marketer can determine what incentives will move the target market to take action, it becomes a matter of creating awareness of the promotion. The more challenging part it seems is in the execution of promotions. Has enough money been budgeted to allow all customers that want to participate to do so (the answer is a definite “No” in the Cash for Clunkers program)? If the promotion is executed at retail, do employees understand the program and how to process the promotion for customers? Is additional inventory needed? Additional customer service help?

When a promotion goes very wrong like the KFC grilled chicken fiasco, one wonders if the brains behind the promotion ever spent any time on the front lines serving customers or if they fully understand the challenges faced. Great promotions can positively impact sales and generate excitement among customers, if implementation issues are thoroughly considered. Conversely, a promotion gone awry has the opposite effect of what was intended and efforts must be made to undo the damage to the brand.

Finding Marketing Opportunity Amid Confusion

Beginning a discussion by saying “the government creates marketing opportunity” is a bit unusual. We tend to think of governmental regulations and influence as limiting for businesses. One exception might be the Consumer Assistance to Recycle and Save (CARS) program, better known as “cash for clunkers.” Its aim is to entice owners of fuel guzzling vehicles to trade for more fuel efficient models. The program itself could be a boon to the auto industry as it offers up to $4500 in incentives to consumers. However, if auto companies rely only on the stimulus effect such a program would potentially create they will miss opportunities to reach potential buyers.

An example of proactive marketing in response to the government incentive program is Ford’s “Recycle Your Ride” campaign. Ford has observed (probably correctly) that the conditions and eligibility requirements of the incentive program will be confusing to many people trying to determine if they are eligible. In response, Ford has an interactive calculator on its web site that will enable consumers to input information on their vehicle to determine their eligibility for the government incentive. In addition, Ford has identified approximately 20 models in its product line that meet the criteria of the government program.

By being a resource for consumers to sort through the details of the Cash for Clunkers program, Ford may be better positioned to reap the benefits of this incentive program than its domestic competitors. A quick perusal of GM and Chrylser web site home pages finds no mention of the Cash for Clunkers program or any marketing efforts that respond to the opportunity. The emphasis of the content on those web sites currently is the company, while Ford’s site tries to help the consumer. Which one do you think potential car buyers will favor? Ford’s tactics illustrate that we should always be looking for an opportunity to provide clarity for customers when uncertainty is present.

Marketing Daily – “Ford Eyes Opportunity in Clunker Confusion”