Pepsi’s Number Fever Promotions: A Descriptive Study on Crisis Management

Abstract

The effective organization excels in handling exceptional situations with perspective and dispatch. In today’s turbulent society, an organization is judged by how well it responds to crisis and critical issues. How quickly and adequately they are detected, analyzed and resolved spells success or disaster for an organization. Last year, Pepsi launched an under-the-crown promotional campaign called Number Fever. This campaign was undertaken to help boost Pepsi’s dwindling sales. The regular promo run was supposed to be from February 17 to May 8, 1992. It was a highly successful contest so Pepsi decided to extend it till June 12, 1992.

Everything was running smoothly during the regular run of the contest. The problem started when the number 349 was announced on radio and TV to be the winning number for May 25, 1992 during the extension period. Apparently, the number 349 was a non-winning number in the regular promo run but was mistakenly included as a winning number in the extension of the promo. The mistake was attributed to computer and human error.

Pepsi officials contend that 349 can’t be a winning number because it released 800,000 crowns with this number having up to P1 million as prize. Obviously, they can’t redeem the 349 crowns for fear of bankruptcy and closure of operations in the country.

Pepsi’s inability to quickly retract the announcement made a lot of 349 crown holders believe that they are already instant millionaires. People flocked to the redemption centers hoping to claim their prizes but were shocked when the cashier refused to redeem them, explaining that the number 349 was not the winning number for the day. The retaliation was enormous. Consumer groups began sprouting overnight staging rallies, filing charges against Pepsi, committing acts of violence to Pepsi offices, trucks, redemption centers and even threatening harm to Pepsi officials. It also caught the attendance of media and government catapulting the problem into a nationwide issue.

The Department of Trade and Industry, government and the Supreme Court intervened and made investigations to probe into the matter of deception and fraudulent advertising. After long deliberation, Pepsi was cleared and acquitted of all charges of deception, fraud, mislabeling and misrepresentation by both DTI and the Supreme Court.

Despite all these, the crisis remains unresolved up to this writing and a small militant group called 349 Coalition are still pressing charges, taking up their cause to the senate and congress as well as to the American courts.

It is worthwhile to document issues of national significance. This researcher believes that conducting a study about the Number Fever crisis is helpful in clarifying the issues about the source, magnitude and resolution of the problem by getting both media’s and Pepsi’s views on the matter. Moreover, it helps us understand the role of crisis management in our society as well as discover how private organizational like Pepsi Cola handle crisis situations. The content analysis and interview methods were used to find out the source, magnitude, and resolution of the crisis. Content analysis of five local newspapers namely: Manila Bulleting, People’s Journal, Manila Times, Abante and Philippine Times Journal were done to determine the answers to the above mentioned issues. Data was extracted from quotations from new reports, commentaries, letters to the editor and editorials. Interviews were conducted with Pepsi Corporate Communications Manager Jeannine Calero as well as with Pepsi’s hired PR firm, Martin and Associates. President Melvyn Martin and Vice President Miguel Marabut were the interviewees from that firm. The purpose of the interview was to find out their answers regarding the source, magnitude and resolution of the crisis and to find out Pepsi’s crisis management approach. This was then evaluated against a set crisis management plan from communication theorists’ Jefkins, Lerbinger and Sperber to check for the presence or absence of some vital components.

Findings from the content analysis showed that the source of the crisis in all the publications were: lack of explanation about the security codes, lack of foresight, lack of monitoring and checking, faulty game formulation and mismanagement of responsible parties.

The magnitude of the crisis were considered to be: problems with consumer advocates, negative consumer reactions, government intervention, legal affairs, emergence of fake crowns, eruption of violence and boycotts.

The crisis was resolved through the following means: suggestions or advices from readers and media for Pepsi, Pepsi’s explanations regarding their side on the problem, presentation of positive consumer reactions, legal affairs hurdled by the company (they were judged innocent of the charges), Pepsi’s appeals to consumers and media, introduction of a new promo (“U Can Cash This) and new logo.

The interview section revealed the source to be: lack of explanation about the security codes, indecisiveness (changing number 349 to 134), an honest mistake, computer error and ibability to stop the announcement in media.

The magnitude was considered to be the following: bad effects of Pepsi’s image and finances, consumer advocates taking advantage and eruption of violence.

Resolution of the crisis was attributed to activities like: repeated explanations of mistakes in the media, setting up a Corporate Communications Department, cost control, legal action, PR, introduction of new products and activities, daily monitoring of events and keeping in touch with the Department of Trade and Industry.

Pepsi’s crisis management approach showed the inclusion of the basic components of a sound crisis plan (assigning a crisis designation decision to specific people, establishment of a central crisis information center, assigning a single spokesperson and decision on parameters of information that can be released) but general effectiveness was lacking because the major factor in preventing crisis from escalating was not considered. The very first component of a sound crisis plan is to anticipate by labelling circumstances as potential crisis or not. In Pepsi’s case, the decision in labelling the Number Fever fiasco as such took too long in coming. Thus, they were effective in crisis communications but ineffective in crisis prevention.

The lessons learned from the Number Fever experience were : to Cultivate good media relations, to monitor and constantly check contests of this nature, to stick to one voice always (your company’s) and to give efforts to quell the media to prevent further distortion of the issue.