Rafi Mohammed

It’s Opening Day at Fenway Park for the Boston Red Sox…

Posted on April 8th, 2008 (0 Comments)

…and time for yet another Jordan’s (a local furniture retailer) Red Sox free furniture promotion.

Last year, I wrote a series of blogs (which can be found here and here) on a Jordan’s Furniture sweepstake. The promotion was catchy: if the Red Sox won the World Series, all purchases made during a specified period (March 7 – April 16, 2007) would receive a full refund. Jordan’s purchased an insurance policy to cover its downside. With only two wins in the last century (1919 & 2004), it’s understandable why an insurance company would bet against the Red Sox. As you probably know, the Sox swept the Colorado Rockies to win the 2007 World Series.

As it turns out, over 24,000 customers participated in the promotion and Jordan’s unnamed insurance company made a payout of between $20 – $30 million dollars. So who do you think was rooting harder for the Rockies to beat the Sox…fervent Colorado baseball fans or executives at Jordan’s insurance company?

Jordan’s is back with another promotion this year. As you might expect, the terms are tougher than last year’s. For your furniture to be free (on purchases between March 25 and April 27), the Red Sox have to: (A) Win the World Series and (B) Do so by sweeping their opponent (winning the first four games in a row). With these onerous terms, Jordan’s insurance company has a good chance of dodging a payout this year.

Empirical evidence has shown that consumers are willing to trade off small discounts for the chance of a big payoff. This is why, for example, market research firms don’t offer $10 to participate in an online survey. Instead, they offer a chance to “win an iPod.” My point is that as a pricing strategist and aficionado, perhaps you should offer a sweepstake with a flashy grand prize instead of holding yet another 10% - 15% off sale.

Of course, these sweepstakes can turn bizarre. Bob Fanning, a 69 year old Wisconsin man, is employing a unique promotion to sell his $498,000 home amidst the current housing glut. Whoever buys Bob’s house will be listed as the beneficiary of a $500,000 10 year life insurance policy. The punch line: if Bob dies in the next 10 years, the house will be gratis. This promotion reaped nationwide publicity in early April but to date, Bob’s house is still on the market.

Finally, I want to recommend my good friend Kathy Jocz’s new book, Greater Good. Co-authored with renown Harvard Business School professor John Quelch, they argue that applying principles of marketing to democracy will improve development, growth and governance of societies. Steve Forbes writes “Even those who believe they are not involved in marketing will find this deeply thought out book provocative and enlightening.”

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