Great Financial Disasters of Our Time: The Hoover Fiasco

Tom Stevenson
Saturday 15 August 1998 00:02

IT SHOULD have been the marketing coup of 1992: the most audacious buy-one-get-two-free offer ever made. Michael Gilbey and Brian Webb, two ambitious marketing executives in Hoover's Merthyr Tydfil factory, believed their free flights brainchild would make their careers.

In their dreams. Far from making their careers, it ended them. And they took Hoover's European president William Foust down with them in a welter of recriminations and excuses.

If nothing else, the promotion had the merit of simplicity. Buy a Hoover vacuum cleaner for at least pounds 100 and receive two free flights to America or Europe. It couldn't fail to boost sales, trilled the ill-fated marketing department in Merthyr.

How right they were. More than 200,000 people bought Hoovers they didn't want. Satisfying the demand for free flights would have required more than 500 jumbos. It was no wonder Hoover reached for the small print to limit the ballooning liability.

Enter Harry Cichy, whose Hoover Holiday Pressure Group tirelessly championed the flightless.

Rule number one of promotions: never offer anything that is perceived to be worth more than the product it is promoting. It did not take rocket science to work out that the price of two flights to New York was worth the inconvenience of stuffing an unused vacuum cleaner under the stairs.

Hoover's factories resorted to seven-day working to try to meet the burgeoning demand for the otherwise unremarkable Turbopower Total System. At pounds 119.99 it was the cheapest cleaner to qualify for the free flights. Temporary staff were shipped in to satisfy an unprecedented national enthusiasm for household chores.

For a while Britain was awash with appliances. The free-ads paper Loot reported a 30 per cent increase in its electrical items pages.

There were winners. The airlines happily supplied Hoover with thousands of seats - British Airways provided 20,000. Virgin chipped in the same amount. A further 40,000 charter seats to Orlando, Florida were hastily negotiated. The VAT man was estimated to have trousered an extra pounds 4m thanks to the unexpected sales.

The cost to Hoover, however, was enormous. The pounds 30m of sales generated by the offer was dwarfed by the pounds 50m it spent on airline tickets. And the publicity heaped on the company was devastating. In the end Hoover paid the ultimate price for the fiasco when its European arm lost its independence.

The most famous name in household cleaning suffered the final ignominy of being taken over by a washing machine maker called Candy.

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