Friday, February 8, 2013

Sales Promotions and Top Down Management

Did you hear about the Baltimore furniture store that gave away $600,000 in merchandise as part of a Super Bowl promotion that promised free goods if a Baltimore Raven returned a kickoff for a touchdown during the penultimate game? 

Anyone who bought furniture between January 31 and 3 pm game day last Sunday from any Gardiners Furniture store would have their money refunded. Gardiners had been running a Super Bowl kick return promotion for three years before Jacoby Jones ran 108 yards to pay dirt at the start of the second half of the game the Ravens won. Co-owner Gary Mullaney sponsored the promotion as part of a traffic-building scheme. Fortunately, for Gardiners, he also opted to insure his idea, just in case. The insurance policy cost $12,000 (,0,6257047.story). 

As I write this, it’s snowing outside, the early stage of a blizzard that will blanket the New York metro area as it makes its way up into New England. I’m reminded of a sales promotion tied to snowfall run by Potamkin Auto Centers Limited of Manhattan back in January 1996. Potamkin promised free leases to anyone who signed for a car between December 22 and January 2 if it snowed more than four inches in Central Park on January 8 between 10 am and 10 pm.

Sunday, January 7, it started snowing, and snowing and snowing. The biggest snowfall in 48 years. All told, 20.6 inches fell from Sunday through Monday. But Potamkin escaped unscathed, except for its insurance policy of $32,000, because the devil was in the details. During the 12 promotion hours, only 3.3 inches of snow fell ( 

I was reminded of this brush with snow history because I recall being told the idea for the car lease promotion might have come from an ex-publisher colleague who was working for Potamkin at the time. I can’t verify if Arthur was indeed the originator of the plan, but it worked. Potamkin leased 104 cars during the contest period, worth nearly $1 million in rental fees.

Arthur died recently. I think he’d appreciate being remembered for his salesmanship, even if he wasn’t directly involved.

Top Down Management: With much fanfare one year ago J.C. Penney announced a new policy of everyday low prices. No more sales every week. Just everyday low prices. With little more than a whimper two weeks ago the company reversed course and conceded customers couldn't be enticed to shop its stores without the attraction of sales. So they're back.

This reversal of fortune is a slap in the face of CEO Ron Johnson, who came to Penney from a successful stint as head of Apple’s stores. Decisions by CEOs often run counter to expectations, but are made for personal as well as business reasons.

Sticking with Penney, some 25 years ago the company abandoned its New York headquarters in favor of Texas, because, it was rumored in the trade, its then chairman William R. Howell was interested in running for the U.S. Senate from his native state, Oklahoma. Never happened, to my knowledge, but he did commute by helicopter to the new corporate headquarters in Plano, outside Dallas. 

Target changed its check acceptance policy when its leader couldn’t pay for purchases to furnish a condominium he and his wife bought as a warm weather vacation retreat from Minneapolis’ brutal winters. When Bruce Allbright rolled his shopping cart full of household goods up to the checkout counter, the cashier told him corporate policy stated the maximum personal check she could accept was for $100. Though he complained it was an unrealistically low amount, she responded that even if he were the chairman of Target she could not violate company rules. She stood her ground even when he revealed himself as chairman of the chain. The next day Allbright amended company policy to accept checks up to $1,000. 

Most supermarket chains have one store that stands out from all others, in appearance and in the diversity and quality of its offerings. It usually is known as the chairman’s store, the one where he or his wife shops. So it was with the now defunct Colonial Stores of Atlanta.  

It happened some 30-plus years ago that in its effort to cut labor expenses Colonial’s management team decided meat no longer would be processed in-store. Whatever was shipped to the stores and arranged in the refrigerated bins was the only meat available. And so, the story goes, when the chairman’s wife went to her store to pick up some chop meat, and couldn’t find any, she was stymied in her efforts to get the staff in the meat department to grind up some chuck. Against new corporate rules. 

She bought some prime beef, brought it home and cranked it through her hand grinder for a meat loaf. Her husband praised her cooking that evening, but swallowed harder when she explained what she had gone through and what she paid for the prime meat instead of the chuck she originally sought. Recognizing the inconvenience and the extra expense his customer would face, the chairman rescinded the meat department rules.