Promoting your product or service is a tricky business and any action needs to be carefully considered. One person who has found this out the hard way is Rachel Brown, 44, a baker from Reading, who got more than she bargained for after offering cut-price cupcakes through daily deal internet site Groupon.
Rachel, who normally fulfils around 100 cupcake orders a month, had to suspend the deal after 8,500 sweet toothed savers took up her offer of a dozen cupcakes reduced from the usual £26 to £6.25.
The owner of the Need a Cake bakery told The Daily Telegraph that the Groupon deal was: “Without doubt, the worst ever business decision I have made. It’s been an absolute nightmare.”
Despite taking a loss on each deal, a total estimated to be around £12,500; Rachel has hired extra staff and worked around the clock in order to fulfil each order.
What interested me most about the story was how much coverage it received; news rooms around the world picked up the story as well as many blogs and Channel 4 News.
Were she to evaluate the coverage received, its advertising value would exceed her initial £12,500 investment many times over and by agreeing to fulfil each order she further endears herself in the hearts and minds of her customers and the reader.
Whilst she may regret her decision now, if it gives her business a boost she may, in time, feel differently.
The story reminded me of a similar incident involving former off-licence chain Threshers, and a 40% off wine voucher that surfaced on the internet in 2006.
Rumours that the voucher was only intended for retail partners and its wider release was in error helped it spread faster via email. Many have since questioned whether the leak of the voucher was truly an error or a clever stunt. The fact that the company has since ceased trading I think answers those questions.
It’s not just small bakeries or defunct wine merchants that fall victim to marketing idea meeting sour reality.
In the run up to the 1984 Los Angeles Olympics, fast food giant McDonalds gave customers scratch cards that when scratched would reveal an event. If an American was then successful in that event McDonalds would give away either a free Big Mac, fries or a Coke.
What the people at McDonalds could not have expected was the Russian led boycott of the games involving, what was then, the Soviet Union and 13 other Eastern Bloc countries.
The boycott meant the main American competition for medals would not compete, leaving the path clear for America to top the medal table unchallenged and McDonalds with queues of customers demanding a free Big Mac. The chaos was later parodied in an episode of The Simpsons.
There are many other examples of companies making similar, often costly, errors of judgement.
Whilst Rachel’s experience of using Groupon may yet turn out to be positive, similar promotions are not advised without first carefully considering all outcomes and possibilities. And even then, as McDonalds discovered, there may be political and social factors that you just cannot control.