GNR gives America free Dr. Pepper

[blakat1313]

article

Summary:
Dr. Pepper is treating the entire United States to a round on the house. This is the result of the company saying that if Guns and Roses released their new album before the end of this year they would buy everybody in America a free drink. Chinese Democracy is set to be released on November 23, and if you go to Dr. Pepper's website and enter some information they'll give you a coupon for a free 20 oz. Dr. Pepper.

I have to say that this is a pretty refreshing change of pace. I've heard news of other companies canceling online coupons because too many people were utilizing them or even pretending that such coupons don't exist. Dr. Pepper is prepared to give out over 300 million units for something that they likely never expected to happen.

[Megatriorchis]

Yes!!! I have been waiting for this free soda for the longest.

[Bakemaster]

Hmmm... Free soda... Disliking Dr. Pepper... So conflicted.

[Jack Saladin]

Give it to me! I wuvs Dr Pepper but they don't sell it here.

[Princess Marzipan]

Hmmm... Free soda... Disliking Dr. Pepper... So conflicted.

I'll have yours.

[Azrael]

I'll raise the stakes by *trading* you a comparably (regularly) priced alternative beverage of your choice.

For the record, the promotion doesn't seem to be on the website yet?

[blakat1313]

I forgot to mention this in the synopsis. The promotion isn't going to be added until the album is released, I'm not sure how long it's going to be up though. I'd suggest checking as close to the 23rd as you can.

[anouk]

I love Dr. Pepper, unfortunately I live in Australia , we don't get it at all (not that I have seen).

[RealGrouchy]

I have to say that this is a pretty refreshing change of pace. I've heard news of other companies canceling online coupons because too many people were utilizing them or even pretending that such coupons don't exist. Dr. Pepper is prepared to give out over 300 million units for something that they likely never expected to happen.

It's marketing money well invested.

(note: all assumptions are very much out of my arse. The only research done for this post is reading the article.)

Assume the selling price of one 591 mL Dr. Pepper is $1.50
The selling price of 300 million is $450 million, but this promotion will cost them nowhere near as much.

First off, the cost per unit is a fraction of the price. Considering a customer can buy a flat of 24 cans of soda for something like $0.33 per can at the bulk store (where the normal price of a can is $1), let's assume the store bought it at $0.25. This is probably how much the company will lose, unless the coupon is in the format of "the Dr. Pepper company will reimburse the retailer $1 for this coupon". Actually, that is likely, so let's stick with $1 per can.

Next, there is the fact that only a fraction of eligible people will bother to go through the steps to get the coupon. At most, let's say 1/8 of eligible people (37M)--which would be a high estimate, considering how many people might not like Dr. Pepper, how many people don't have internet access or otherwise wouldn't know about the promotion. But that's just to get the coupon. Assuming it costs $0.25 to print and send the coupons (bulk postage rate), this would cost $14 million.

Now, how many people would actually redeem the coupon? Note that the coupons will only be available after November 23, and will expired in February 2009. BUT, they will take 4-6 weeks to arrive in the mail, and many will probably also get lost in the mail due to input errors/etc. I don't know about you, but most coupons I have expire long before I use them. (Hint: I don't use coupons very often). For something as insubstantial as a can of soda, I wouldn't really go to great lengths to remember to use it. I'd expect at least half of these coupons to expire unused. So about 19M would be used, so the company would spend $19M reimbursing the retailers. (Plus the overhead to manage all the paperwork)

Of course, this also results in free advertising for Dr. Pepper, and it makes them look really good. Whether or not you took advantage of the coupon offer, you still have the impression that they bought everyone a free Dr. Pepper. There's the side bonus that some people might use this to try Dr. Pepper for the first time and will like it and start buying it, but mainly it's brand reinforcement to increase sales: in a word, marketing.

Another important benefit to the company is the information gathered. In return for your coupon for a $1 can of soda, they are getting your mailing address, at the least, and probably more information about you if you are an average "I'll fill this form out with my real information because it asks for it" type of person. That information is worth much more than that, and they can recoup lots of their cost by selling your information to third parties. Despite any laws, you would most definitely have to agree to let them sell your info to third parties when getting the coupon.

So it costs them $30-40 million for the drinks (a lot, but not uncommon for a national ad campaign--they will probably end up spending just as much if not more promoting the damn campaign), and they will get financial returns for it. At this point it is not going to hurt them.


But wait! There's more! When Dr. Pepper announced they would buy everyone in America a free drink if GNR released their album before the end of the year, they did the same thing Who Wants to Be A Millionnaire? does: they got insurance. Essentially, they placed a bet with an insurance company that GNR would not release an album. The insurance company estimates how much it would cost if this happened (using similar logic to the analysis above, though with better source figures), multiplied that by the (fractional) likelihood it would happen, and charged the Dr. Pepper company that much. The insurance company agreed to reimburse Dr. Pepper for the full cost of the campaign.

So really, it costs Dr. Pepper an unknown fraction of the $30-40M cost, and they will derive a decent benefit in terms of both image (priceless) and financial returns.


Incidentally, insurance-based gambling is what fucked up the economy and caused the mortgage crisis.

- RG>

[ameretrifle]

(rather a lot)

Wow, yeah, exactly. Not to mention, much as I would hate to defame the Dr. Pepper company, are we absolutely sure they're never going to do anything else with all those addresses?

I'm not saying they're going to sell them to Publishers' Clearing House (though I could see that happening), but they're probably going to want to do something with all that juicy, juicy marketing information. At the very least I'd imagine there'd be a good old "uncheck this box if you don't want to get a pile of crap about our latest schemes to get your money" deal. Could be wrong, but it's something that would go through my head before I filled out the form.

Luckily, I don't drink carbonated beverages anymore, and therefore have little reason to care.

[The Mighty Thesaurus]

Dr Pepper is single-handedly responsible for the world's economic problems.

[Ashbash]

I love Dr. Pepper, unfortunately I live in Australia , we don't get it at all (not that I have seen).

Lies! I have had one! I'm pretty sure I also got it free in a promotion type deal thing, so I don't know whether they're being sold. And this was years ago.

[Bakemaster]

RG: What about the scenario where Dr. Pepper simply asks you to register an account at their web site and then sends you a printable coupon through email or in a link? They still get contact info, though arguably less valuable info than physical address, and they save the cost of printing and mailing the coupon. The rate of reimbursement probably increases since it's more immediate; on the other hand, I think your "one eighth of Americans" estimate is far greater than the actual number of people who will: be aware of the promotion; remember it on the 23rd; be willing to register and be spammed/have a junk email address to use; have the ability to print the coupon; ever actually redeem the coupon.

Of course, the raw number isn't really as important as the amount they're spending per capita to expand their brand recognition/market share, which hinges on things we don't know: whether they insured the promotion; how much they'll reimburse shops for the coupon; how the coupon is being distributed. Since they decided to go through with the promotion though, it's a safe bet that the per capita number is projected to be significantly lower than a similar estimate for a traditional ad such as a TV spot, movie placement, billboard, or magazine ad.

[Cheese]

But how would stores know it was a genuine coupon, Bake? If it's a print-it-out-at-home coupon (maybe with a reference number for security, not much else), what's to stop people from printing out thirty or so and taking them to different stores? I doubt that would be the case, unless the shops are equipped with the technology to check the reference numbers or whatever's been used to validate the coupons.

[RealGrouchy]

I love Dr. Pepper, unfortunately I live in Australia , we don't get it at all (not that I have seen).

Lies! I have had one! I'm pretty sure I also got it free in a promotion type deal thing, so I don't know whether they're being sold. And this was years ago.

The first line in TFA: "Soda manufacturer Dr Pepper promised a free soft drink to everyone in America."

RG: What about the scenario where Dr. Pepper simply asks you to register an account at their web site and then sends you a printable coupon through email or in a link?

From TFA: "Those who want to claim a free soda can go to the Dr. Pepper website on November 23, enter some personal information and get a coupon for one 20-ounce drink that should arrive within the following 4 to 6 weeks." [The coupon should arrive in 4-6 weeks, not the drink]

It's amazing what you learn when you read.

- RG>

[Bakemaster]

Oh, ah. I skimmed over the 4-6 weeks bit.