How one bad promotion led to the collapse of the Hoover company (3 photos)

Sometimes one wrong step can completely destroy what you have acquired. for years. A vivid example of this is the once successful company Hoover, which lost millions due to one bad promotion.

Hoover has been a market leader for a long time household appliances. The popularity of its products was so high that in many countries the name of the company has become synonymous with the word "vacuum cleaner".





The company was formed in 1908 and sold vacuum cleaners for around the world. In 1923, sales reached $23 million. And when in 1926 Hoover has released the first vacuum cleaner with a removable bag and a special dust knocking device, the popularity of its products has increased even more more. Success grew year after year until the economic crisis hit 1990s

In order to somehow correct the situation and increase sales, Hoover launched a very strange promotion: every client who spent on purchase of £100 or more, offered tickets for both sides to some airports in Europe.

Flights cost much more than vacuum cleaners, so the company was forced to go to certain tricks in order not to incur losses. First, store visitors were tempted to purchase more expensive models. Secondly, in order to receive those most cherished tickets, it was necessary go through a complicated procedure: send an application and a commodity check, receive a registration form in response, fill it out and again send. After that, the client was sent a voucher in which he put down the date of the flight, points of departure and destination, and then sent it to the Hoover office.

However, the company reserves the right to override the selection, made by the participant. In this case, the voucher was sent to him again and the procedure was repeated. If the company rejected the route several times, the buyer either had to agree to those conditions that the company suggested, or refuse to fly at all.



Not all clients had the patience for these clarifications. relations, so only 10% of them received the coveted tickets. Sales vacuum cleaners were consistently high, but then Hoover decided to play in a big way. The company expanded its promotional offer to the United States, and this was the biggest mistake in the history of her 80-year-old existence.

The fact is that at that time tickets to the USA cost about 600 pounds, and to receive them, according to the terms of the promotion, it was enough to spend 100. How you can guess, the demand for Hoover vacuum cleaners has increased by dozens once. The most popular model was "Turbopower Total System" costing 120 mentioned monetary units. Net income from sales of these vacuum cleaners was only 30 pounds.

You do not need to have special economic knowledge in order to count what the losses were on each prize given out. And the action, on wait a second, more than 300,000 people decided to take advantage. This meant that the firm's potential losses would exceed £170 million.

In the hope of avoiding bankruptcy, Hoover in every possible way delayed the moment of issuing prizes to the participants of the action. Some were rejected because they allegedly incorrectly filled out forms, the second was offered insane routes, on which few would agree, the third were sent vouchers at the very Christmas with the expectation that the festive mood will interfere meet the allotted two-week deadline for completion.

But despite all the efforts of the company, she was forced to buy tickets for 220,000 customers worth 72 million. It was enough to lead to catastrophic losses, because during the action the income Hoover from the sale of vacuum cleaners and washing machines amounted to only 30 million pounds.

People turned to the courts en masse, accusing the company of non-compliance with the conditions of the promotion. The resulting scandal led to The British Royal Family stripped Hoover of its status as Her Supplier Majesty.

It all ended with the dismissal of several leaders English branch, bankruptcy and sale of the European division Italian manufacturer of household appliances "Candy". Like this one an unsuccessful marketing ploy crossed out the 80-year history of existence successful brand.