D’Onofrio is a Peruvian confectionary brand famous for its ice cream. It’s even more famous for its traditional distribution channel: vendors – known as heladeros – and their yellow tricycle carts can be found on most street corners across the country.
In March 2009, Nestlé-owned D’Onofrio launched a promotion called ‘Gracias Peru’ to thank Peruvians for buying their products. All ice creams bought from a yellow tricycle on Friday 27th and Saturday 28th would cost just one Peruvian sol. This was a huge discount on the regular price of many of their products, which would normally sell for 3.5 soles.
With such a big reduction, word – and excitement – soon spread.
What could go wrong?
As soon as the price promotion went live on the Friday, the problems began. Many heladeros didn’t show up to work.
And those that did claimed either to have run out of the premium products, or that customers had to buy one at full price before the discount applied to a second ice cream.
The public felt let down and cheated. So they complained. A lot.
They called radio phone-ins. They contacted newspapers. And they took to social media. It was a national scandal.
The strength of public anger led to the Peruvian consumers’ association – ASPEC – taking a complaint against Nestlé to Indecopi, the national competition and consumer protection institute. After two years of investigating the campaign, Indecopi found in favour of ASPEC and fined Nestlé 1.4 million soles for deceiving the public through the campaign advertising.
What does good look like?
What turned this promotion – a positive, happy, gratitude-filled campaign – into one that annoyed the Peruvian public so much?
It comes back to the famous distribution channel. The heladeros vendors are not employees of D’Onofrio: they’re independent businesses. They buy the product at trade price and sell to the public at a higher price, like every other retailer.
Some couldn’t resist the urge to hold back stock during the campaign, expecting to make a bigger profit by selling at the full retail price after the promotion had ended.
D’Onofrio doesn’t own or control the distribution channel – and failed to ensure their vendors were in full agreement with the campaign and its terms and conditions. They ran the campaign assuming everyone had the same objective and perspective as they did.
A good promotional campaign needs all your trade partners to be on the same page.
When running a promotion or campaign that relies on a third party, make sure they are fully signed up to your terms and in agreement with the objectives. Consider ways to prevent partners from taking advantage – perhaps by deferring the discount for wholesale purchases.
Now you know the story, what will you do differently in future?