Number Fever: How Pepsi Nearly Went Pop (Classic)

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Speaker 2 They're now the best network, according to the experts at OoCla Speed Test, and they're using that network to launch Supermobile, the first and only business plan to combine intelligent performance, built-in security, and seamless satellite coverage.

Speaker 2 That's your business, supercharged. Learn more at supermobile.com.
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Speaker 14 Pushkin.

Speaker 22 Hello, Tim here.

Speaker 23 The Cautionary Tales team is taking a well-earned summer vacation.

Speaker 17 Here is another classic episode from the archives, a tale about Pepsi's disastrous bottle cap promotion and a man who bought over a thousand chocolate puddings.

Speaker 30 Enjoy!

Speaker 4 In a tin-roofed shack in a slum of Manila, the capital of the Philippines, Victoria Angelo lived with her husband Juanito and their five children.

Speaker 34 Juanito was a rickshaw driver.

Speaker 35 He made around $4 a day.

Speaker 23 Life was a daily grind.

Speaker 31 Hard work alone offered no route out of poverty.

Speaker 10 So, when the Pepsi-Cola Company started a new promotion in 1992, Victoria took notice.

Speaker 4 Number fever seemed easy to understand.

Speaker 30 Buy a bottle of Pepsi and under the bottle cap you'd see printed a three-digit number and a cash prize amount.

Speaker 30 Every night on the Channel 2 TV news program, Pepsi would announce a winning number.

Speaker 31 If you had a bottle cap with that number, you'd win the amount shown.

Speaker 39 The prizes went up to a million pesos, some $40,000.

Speaker 45 It would take Juanito 30 years to earn that.

Speaker 40 Victoria started buying Pepsi.

Speaker 23 Every night, she watched Channel 2 for the announcement of the winning number and she checked her growing collection of bottle caps.

Speaker 33 And every night she was disappointed.

Speaker 36 Until one night the television announced the number 349.

Speaker 21 Hold on.

Speaker 37 Victoria was sure she had a bottle cap marked 349.

Speaker 37 Here it is.

Speaker 47 Now, what's the amount on the cap?

Speaker 21 1 million pesos. You can finish school!

Speaker 39 You can go to college, she told her children. We can buy a real house.

Speaker 43 It seemed like a dream come true, but unknown to Victoria, something very strange was happening.

Speaker 3 In homes all across the Philippines, exactly the same scene was playing out.

Speaker 30 Families were watching Channel 2, checking their collection of bottle caps, discovering that they had one printed with 349 and a million peso prize, and celebrating their incredible good fortune.

Speaker 41 What had happened?

Speaker 30 It's not clear exactly.

Speaker 10 Instead of printing just two bottle caps with 349 on them, they'd accidentally printed hundreds of thousands.

Speaker 49 And nobody at Pepsi had noticed the problem.

Speaker 36 But 349 had just been announced as a winning number.

Speaker 24 Pepsi would notice the problem soon enough.

Speaker 16 I'm Tim Harford, and you're listening to Cautionary Tales.

Speaker 39 In Worcester, England, a physicist called Phil Calcutt was doing his regular shop at his local supermarket, Tesco.

Speaker 31 As he strolled down the fruit aisle, a special offer caught his attention.

Speaker 36 Buy a bunch of bananas and get 25 Tesco club card points.

Speaker 31 The bananas cost £1.17.

Speaker 49 The points were worth £5 each.

Speaker 58 Mr Calcott did the math.

Speaker 44 He'd get club card points worth 8 pence more more than the bananas cost.

Speaker 21 Could that be right?

Speaker 23 He double-checked his mental arithmetic.

Speaker 10 Yes, he'd make a profit of eight pence on every bunch of bananas he bought.

Speaker 3 So Mr.

Speaker 60 Calcutt piled his trolley seven feet high with bananas.

Speaker 44 Then he got another trolley and filled that with bananas too.

Speaker 61 My living room was stacked from floor to ceiling with 25 cases containing around 3,000 bananas.

Speaker 61 But when I popped back for some more, they said they would only sell me one case, which is quite understandable because they seem to be making a loss on it.

Speaker 32 When he'd redeemed his Tesco club card points, Mr.

Speaker 39 Calcutt ended up with a profit of £25.12.

Speaker 39 A modest sum, perhaps, but far more valuable was all the fun he had distributing free bananas like some comic book superhero around his neighborhood.

Speaker 61 Children in the street now shout, Banana Man, whenever they see me.

Speaker 48 Whoever in Tesco's marketing department had proposed that promotion evidently hadn't done the math, nor had the manager who signed off on it, nor had any of Tesco's millions of other customers.

Speaker 21 Only one man had noticed.

Speaker 2 Banana Man.

Speaker 50 Is that surprising?

Speaker 39 Probably not if you're the mathematician John Alan Porlos, who wrote the classic book, Enumeracy.

Speaker 62 Porlos tells the story of watching the TV news with a friend, a notoriously pedantic friend, the sort who'd correct you for saying continuously when you mean continually.

Speaker 44 The weather forecast came on.

Speaker 64 There's a 50% chance of rain on Saturday and a 50% chance on Sunday. So there's certain to be rain this weekend.

Speaker 31 Paulos turned to his friend.

Speaker 65 Did you hear that?

Speaker 66 How embarrassing.

Speaker 21 What was?

Speaker 17 I'm sure you've noticed the forecaster's mistake.

Speaker 41 In fact, there's a one in four chance of no rain.

Speaker 51 The same probability of flipping a coin twice and getting two tails.

Speaker 65 It's a 75% chance of weekend rain.

Speaker 2 Obviously.

Speaker 21 It is?

Speaker 54 I mean, oh yeah, sure.

Speaker 60 When it comes to numbers, said Paulos, even the smartest among us are unobservant.

Speaker 23 Companies know that.

Speaker 40 They take advantage of it all the time.

Speaker 10 We see the low monthly payment in big type and forget to multiply by the number of months.

Speaker 36 We keep paying our monthly gym membership instead of dividing it by our monthly visits and seeing we should switch to pay as you go.

Speaker 60 We buy extended warranties on household appliances when some simple probability would suggest we should take our chances.

Speaker 40 Number fever played on that numerical laziness.

Speaker 51 Flip the cap off your bottle of Pepsi, see a three-digit number and a million peso prize, and you might naturally get the impression that you have a one in a thousand chance of winning.

Speaker 31 Not too shabby. And not true, of course.

Speaker 44 Think about it, and you'd quickly realise that Pepsi must have printed far more losing numbers than winning ones,

Speaker 21 wouldn't they?

Speaker 31 The true chance of winning was vastly smaller than one in a thousand.

Speaker 31 When consumers fail to do the sums, we get screwed.

Speaker 11 But what happens when it's the companies that mess up?

Speaker 9 As we'll see, the answer is often that consumers still get screwed.

Speaker 4 Often, but not always.

Speaker 32 An engineer called David Phillips was shopping in his local supermarket in Davis, California in 1999.

Speaker 31 He noticed a new promotion by a food brand called Healthy Choice.

Speaker 68 Send in 10 barcodes from their products and they'd give you 500 air miles.

Speaker 55 They'd double it to 1,000 if you sent them in before a certain deadline.

Speaker 42 Just like banana man Phil Calcutt, Mr.

Speaker 55 Phillips paused to do the math.

Speaker 53 How much is an air mile worth?

Speaker 25 That can vary depending on how you redeem them, but Phillips calculated one air mile was surely worth at least two cents.

Speaker 55 His family liked Healthy Choice frozen meals, which cost $2.

Speaker 49 10 frozen meals?

Speaker 55 $20?

Speaker 53 Send in the barcodes and he'd get 1,000 air miles, also worth at least $20.

Speaker 55 Who said there was no such thing as a free lunch?

Speaker 35 Phillips filled his freezer. Then he thought, what else is in the healthy choice product line?

Speaker 9 If he could find products for cheaper than $2, he'd be getting back more in air miles than he would spend on the food.

Speaker 29 I found healthy choice soups that were less than a dollar.

Speaker 69 Tinned soup!

Speaker 70 Perfect!

Speaker 10 It would keep forever and didn't need more freezer space.

Speaker 9 David bought all the healthy choice soups in his local supermarket.

Speaker 26 Then he went to other nearby supermarkets and bought all their healthy choice soups too.

Speaker 51 Soon he'd accumulated 800 cans of soup.

Speaker 68 By this point, David's wife, Cindy, was wondering if this might all be a little too good to be true.

Speaker 23 Are you sure you haven't missed something in the small print?

Speaker 10 Maybe there's a limit on how many miles you can claim.

Speaker 24 David poured over the terms and conditions.

Speaker 37 In return for every 10 barcodes and proof of purchase, it said, Healthy Choice would issue a certificate for air miles.

Speaker 67 The certificates could be redeemed with six different airlines.

Speaker 10 And while two of them did indeed stipulate a limit on how many certificates they would redeem, the other four didn't.

Speaker 9 In fact, the offer told consumers to remember there was no limit to the number of miles they could earn.

Speaker 37 With just three weeks to go before the deadline, Mr.

Speaker 68 Phillips stumbled on a startling new opportunity. One supermarket chain, Grocery Outlet, had started selling Healthy Choice chocolate puddings for just 25 cents.

Speaker 9 Remember, Healthy Choice was effectively offering air miles worth at least $2

Speaker 35 on every one of those puddings.

Speaker 23 There was no time to lose.

Speaker 45 I drove to about 15 grocery store outlet stores in a weekend.

Speaker 17 I filled up my van with chocolate pudding.

Speaker 23 After that, I made contact with a local grocery store outlet manager, had him special order me 60 more cases.

Speaker 44 David Phillips now had over 12,000 chocolate puddings.

Speaker 29 And a problem.

Speaker 58 Two problems, in fact.

Speaker 19 How would his family ever eat all those puddings?

Speaker 31 The second problem was more pressing.

Speaker 59 How would he manage to peel off 12,000 barcodes in just three weeks?

Speaker 52 But Mr.

Speaker 17 Phillips was a resourceful man, and he realised he could solve both problems at once.

Speaker 40 He contacted his local food bank and offered to donate all the chocolate puddings if their volunteers would do him the favour of taking off the barcodes for him.

Speaker 54 They said yes.

Speaker 17 Phillips meticulously organized his barcodes into bundles of 10 and filled in the claims forms, over a thousand of them, enough for over a million air miles.

Speaker 3 That would basically be all the long-haul holidays his family could ever want.

Speaker 24 David Phillips posted off his barcodes and waited.

Speaker 24 There was no immediate reply from Healthy Choice, but he'd read the small print that said it would take six to eight weeks for the air mile certificates to arrive.

Speaker 63 Six weeks passed, then eight weeks.

Speaker 55 Now, Phillips was starting to get worried.

Speaker 56 With still no response from Healthy Choice, he phoned them up.

Speaker 9 Disaster.

Speaker 34 They said they had no record of receiving any barcodes from him at all.

Speaker 4 Cautionary tales will return after this message.

Speaker 2 In today's super competitive business environment, the edge goes to those who push harder, move faster, and level up every tool in their arsenal. T-Mobile knows all about that.

Speaker 2 They're now the best network, according to the experts at an OOCLA Speed Test, and they're using that network to launch Supermobile, the first and only business plan to combine intelligent performance, built-in security, and seamless satellite coverage.

Speaker 2 With Supermobile, your performance, security, and coverage are supercharged. With a network that adapts in real time, your business stays operating at peak capacity even in times of high demand.

Speaker 2 With built-in security on the first nationwide 5G advanced network, you keep private data private for you, your team, your clients.

Speaker 2 And with seamless coverage from the world's largest satellite-to-mobile constellation, your whole team can text and stay updated even when they're off the grid. That's your business, supercharged.

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Speaker 47 after Channel 2 News announced that 349 was the winning number on the Pepsi bottle tops, crowds of jubilant customers descended on Pepsi plants to claim their prizes.

Speaker 31 It soon became clear that something had gone horribly wrong.

Speaker 4 How much would it cost Pepsi to honour all the prizes?

Speaker 50 Upwards of $15 billion.

Speaker 17 It was roughly half the Philippines' gross domestic product.

Speaker 7 More to the point, it was close to the entire market capitalization of the Pepsi Corporation, not just in the Philippines, but the whole world.

Speaker 9 There was simply no way that Pepsi could afford it.

Speaker 17 Panicked executives held a crisis meeting at three o'clock in the morning.

Speaker 33 They apologised for the computer glitch.

Speaker 18 They pointed out that every bottle cap also contained a security code and explained that this would identify the two bottle caps they had intended to be winners.

Speaker 9 And for everyone else with a 349 bottle top, they decided to offer a goodwill payment of 500 pesos.

Speaker 41 A mere $20.

Speaker 45 The bottle tops came flooding in, 486,170 of them.

Speaker 7 The Goodwill payments cost Pepsi about $10 million,

Speaker 49 five times what they'd initially budgeted for the entire Number Fever campaign.

Speaker 44 But it wasn't enough to quell everyone's outrage.

Speaker 68 Thousands of people kept hold of their 349 bottletops.

Speaker 60 They'd thought their lives were about to change forever.

Speaker 15 Now they were being offered just $20?

Speaker 31 That wasn't going to buy their goodwill.

Speaker 43 They were determined to make Pepsi pay.

Speaker 17 David Phillips was determined too.

Speaker 34 He'd gone to all that trouble, buying 800 tins of soup and 12,000 chocolate puddings, organising all the barcodes, filling in all the forms.

Speaker 37 And now he learned that the package he had sent to Healthy Choice had apparently gone missing.

Speaker 44 This seemed pretty incredible given that I mailed the package registered and someone on their end signed for the package.

Speaker 24 But would a man as meticulous as David Phillips fail to plan for that eventuality?

Speaker 68 Not likely.

Speaker 9 Phillips had photocopied everything.

Speaker 34 He'd even videotaped himself buying the chocolate puddings and stacking them up in his house just to be on the safe side.

Speaker 37 Presented with this evidence, Healthy Choice quickly quickly caved.

Speaker 24 Mr.

Speaker 71 Phillips got his air miles.

Speaker 9 Think for a moment about what David Phillips did.

Speaker 34 He hadn't just done one calculation, the numerical one that showed the sums on the chocolate puddings didn't add up.

Speaker 58 He'd made a second kind of calculation, too, a pragmatic calculation about how things work in the real world.

Speaker 37 All along, I was somewhat worried that healthy choice wouldn't honour the deal.

Speaker 17 Packages do sometimes go missing, it's true.

Speaker 52 So he'd taken practical steps to make it expensive for Healthy Choice to refuse him his air miles, ensuring that if the company tried to back out of the deal, the media would have a field day with the story.

Speaker 44 Companies, too, make both kinds of calculations about their marketing offers, numerical and pragmatic.

Speaker 59 Sometimes they fall down on the numbers.

Speaker 26 It makes no sense to pay shoppers to buy bananas.

Speaker 68 But on some marketing offers, they know the numbers wouldn't add up if everyone took advantage, and they rely on the pragmatic calculation that many customers won't bother.

Speaker 49 That's what's happening when retailers offer rebates on a purchase.

Speaker 29 Rather than simply reduce the price, They make you pay full price, then mail off the receipt or the barcode to claim your rebate.

Speaker 12 Whether such promotions pay off depends on what proportion of customers actually do claim.

Speaker 31 There's even a term of art for the percentage of consumers who fail to follow through.

Speaker 4 The breakage rate.

Speaker 52 Marketing professors Tim Silk and Chris Yanishewski study the factors that affect breakage rates.

Speaker 9 There are principles from psychology textbooks such as hyperbolic discounting.

Speaker 48 That's the tendency to put higher value on more immediate rewards.

Speaker 68 Promise a rebate check quickly and you'll motivate people to apply.

Speaker 9 Promise it in six to eight weeks and maybe they won't bother.

Speaker 21 Then there are sneaky little tricks, putting the barcode on tough, thick cardboard that's hard to cut with household scissors.

Speaker 35 Increasing the breakage rate is a serious and cynical business.

Speaker 38 When the UK branch of Hoover launched a big new promotion in 1992, they gambled on a high breakage rate.

Speaker 31 They They were offering two free flights to Europe to anyone who spent £100 on a Hoover appliance.

Speaker 43 That's about $250 in today's money. It's not a bad deal at all.

Speaker 50 In fact, it's such a good deal that Hoover knew they couldn't afford for too many customers to take up the offer.

Speaker 9 So they made it logistically difficult.

Speaker 17 You had to snail mail the receipt for the item you'd purchased and wait for Hoover to send you a form, fill that in and wait for Hoover to send you a voucher.

Speaker 54 Then you had to choose three possible dates and destinations and wait for Hoover to let you know if any of them were available.

Speaker 40 And on and on.

Speaker 17 Only the most determined customers had the patience to persevere to the point where they actually got on a plane.

Speaker 68 It looks like Hoover managed to keep the breakage rate high enough to make their giveaway deal profitable.

Speaker 40 Then Hoover became overconfident.

Speaker 43 They They decided to expand the offer to include flights to America.

Speaker 18 This was a much bigger incentive.

Speaker 51 Two return flights from Britain to America cost about five times the price of a Hoover vacuum cleaner, and Hoover's pragmatic calculation about breakage was way off beam.

Speaker 17 Far more people applied for flights than they'd expected.

Speaker 31 Crucially, the applicants also proved far more tenacious than Hoover had hoped.

Speaker 10 Many initially heard nothing back.

Speaker 17 When they followed up, Hoover said their application forms must have been lost in the post.

Speaker 17 They became frustrated and suspicious.

Speaker 31 David Dixon, a horse trainer in Cumbria, was among the disgruntled customers who'd bought a Hoover appliance, a washing machine in his case, and then had trouble claiming his free flights to America.

Speaker 73 I have fucked them, I have written to them, I have phoned them.

Speaker 69 And then, to add insult to injury, his washing machine broke down.

Speaker 67 Hoover sent a technician, who failed to sympathise with Mr.

Speaker 17 Dixon's plight.

Speaker 15 According to the technician, the offer was obviously too good to be true.

Speaker 52 Mr.

Speaker 68 Dixon should surely have realised there must be some kind of catch.

Speaker 61 If you think buying a washing machine is going to get you two tickets to America, you must be an idiot.

Speaker 19 An idiot, eh?

Speaker 30 We'll see about that.

Speaker 17 While the technician technician was fixing his washing machine, Mr.

Speaker 10 Dixon drove his horse box in front of the Hoover truck, blocking it in.

Speaker 55 He told the technician to walk home and pass on a message to his employers.

Speaker 73 When I'll get me tickets, they'll get their fun.

Speaker 17 Mr Dixon became something of a folk hero. The BBC, meanwhile, sent an undercover reporter to investigate what was going on.

Speaker 7 She got a job in the agency that was processing the applications for free flights on Hoover's behalf.

Speaker 69 It went something like this.

Speaker 74 So what would you like me to do?

Speaker 61 Here's a list of people, contact them and offer them flights from London.

Speaker 64 Uh these people all live in Glasgow.

Speaker 1 That's 400 miles from London. That's right.

Speaker 74 But the person sitting next to me is phoning people who live in London and telling them we can only offer them flights from Glasgow.

Speaker 61 You catch on fast, love.

Speaker 17 When the BBC investigation was broadcast, it did not play well for Hoover.

Speaker 40 They eventually, begrudgingly, bought over 200,000 flights at a cost of over $70 million.

Speaker 7 The majority of customers had given up without getting their flights, but the company's reputation had taken a hit.

Speaker 17 So had their market share in the UK.

Speaker 11 Part of the problem was that anyone who wanted a Hoover appliance could find plenty of attractive deals in the classified ads.

Speaker 42 Never used, still in their original packaging, people had bought them just to get the air tickets.

Speaker 10 No wonder Hoover's parent company fired the executives who'd approved the promotion and quietly sold off the European arm of the company for a knockdown price.

Speaker 17 For Pepsi executives in the Philippines, merely getting fired might have seemed like a relief compared to the continuing disaster of number fever.

Speaker 31 They were getting so many death threats they needed round-the-clock security.

Speaker 68 Pepsi erected barbed wire barricades around its processing plants.

Speaker 34 Dozens of its trucks were attacked.

Speaker 43 In one tragic case, a grenade thrown at a Pepsi truck in Manila bounced off and killed a schoolteacher and a five-year-old girl.

Speaker 17 The small print of the Number Fever adverts did mention the existence of a security code on the bottletops, but was it sufficiently clear that the prize depended on the security code, not just on the three-digit number?

Speaker 59 Pepsi found itself fighting thousands of lawsuits.

Speaker 16 After this message, cautionary tales will return.

Speaker 2 In today's super-competitive business environment, the edge goes to those who push harder, move faster, and level up every tool in their arsenal. T-Mobile knows all about that.

Speaker 2 They're now the best network according to the experts at an OOCLA speed test and they're using that network to launch Supermobile, the first and only business plan to combine intelligent performance, built-in security, and seamless satellite coverage.

Speaker 2 With Supermobile, your performance, security, and coverage are supercharged. With a network that adapts in real time, your business stays operating at peak capacity even in times of high demand.

Speaker 2 With built-in security on the first nationwide 5G advanced network, you keep private data private for you, your team, your clients.

Speaker 2 And with seamless coverage from the world's largest satellite-to-mobile constellation, your whole team can text and stay updated even when they're off the grid. That's your business, supercharged.

Speaker 2 Learn more at supermobile.com. Seamless coverage with compatible devices in most outdoor areas in the U.S.
where you can see the sky.

Speaker 2 Best network based on analysis by UCLA of Speed Test Intelligence Data 1H 2025.

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Speaker 20 There's more to San Francisco with the Chronicle.

Speaker 21 There's more food for thought, more thought for food.

Speaker 20 There's more data insights to help with those day-to-day choices. There's more to the weather than whether it's going to rain.

Speaker 20 And with our arts and entertainment coverage, you won't just get out more, you'll get more out of it. At the Chronicle, knowing more about San Francisco is our passion.

Speaker 20 Discover more at sfchronicle.com.

Speaker 4 Even as the number fever lawsuits raged on, Pepsi found itself once again in a numerical dispute, described in Matt Parker's book of mathematical mishaps, Humble Pie.

Speaker 13 This dispute followed yet another promotion called Pepsi Points, this time running in the United States.

Speaker 32 A 30-second advert starts with the caption, Monday, 7.58am,

Speaker 32 and an external shot of an ordinary suburban house.

Speaker 9 Cut to the inside of the house.

Speaker 17 A cool young dude is wearing a t-shirt with a Pepsi logo.

Speaker 55 He slicks back his hair.

Speaker 7 T-shirt, 75 Pepsi points, flashes flashes the on-screen caption.

Speaker 35 He dons a leather jacket.

Speaker 4 Leather jacket, 1450 Pepsi points.

Speaker 68 On go the sunglasses, 175 Pepsi points.

Speaker 9 Then a voiceover.

Speaker 76 Introducing the new Pepsi stuff catalogue.

Speaker 76 Now, the more Pepsi you drink, the more great stuff you're going to get.

Speaker 31 Meanwhile, on screen, there's a school classroom.

Speaker 72 From outside, there's some kind of loud noise and strong wind blowing books and papers everywhere.

Speaker 30 Other students watch in amazement as the cool dude arrives in a Harrier jump jet, doing a vertical landing in the schoolyard.

Speaker 17 He steps out, sipping a can of Pepsi,

Speaker 72 and on screen, Harrier fighter.

Speaker 69 Seven million Pepsi points.

Speaker 76 Sure beats the bus.

Speaker 55 Ah yes, very good.

Speaker 48 But hold on.

Speaker 23 Has anyone done the math on this?

Speaker 17 A can of Pepsi was one point, but once you had a few points from Pepsi purchases, you could buy additional points for 10 cents apiece.

Speaker 68 So a t-shirt at 75 points was effectively $7.50.

Speaker 71 Fair enough.

Speaker 31 A leather jacket, $145.

Speaker 31 Not unreasonable.

Speaker 32 And a harrier fighter?

Speaker 62 Let's see, 7 million times 10 cents.

Speaker 44 that's $700,000.

Speaker 37 Doesn't that sound cheap for a fighter jet?

Speaker 67 The US military paid over $20 million for each of its AV-8 Harrier 2 jump jets.

Speaker 26 If you could get one from Pepsi for $700,000, that would be an absolute steal.

Speaker 21 There are a few cultures, now very rare, whose counting words only cover one,

Speaker 21 two,

Speaker 51 big number.

Speaker 18 But that's because they rarely need to talk about large numbers.

Speaker 68 Modern marketing executives do.

Speaker 52 And yet, when it came to the Harrier, Pepsi's decision makers were helpless.

Speaker 45 Once those Pepsi points started mounting up, all they could seem to think was big number.

Speaker 69 Enter twenty one year old business student John Leonard.

Speaker 68 He somehow raised $700,000, which he deposited with a lawyer.

Speaker 13 He bought 15 cans of Pepsi and sent off his 15 Pepsi points with a check for $700,008.50.

Speaker 68 That was to cover the remaining $6,999,985 Pepsi points, plus the $10 delivery charge.

Speaker 19 Pepsi wrote back politely.

Speaker 77 The item that you have requested is not included in the catalog or on the order form. The Harrier Jet and the Pepsi commercial is fanciful.

Speaker 77 We apologize for any misunderstanding or confusion that you may have experienced.

Speaker 68 Mr.

Speaker 24 Leonard had his lawyer swing into action.

Speaker 65 Your letter of May 7, 1996 is totally unacceptable. We have reviewed the videotape of the Pepsi Stuff commercial and it clearly offers the new Harrier Jet for 7 million Pepsi points.

Speaker 65 This is a formal demand that you honor your commitment and make immediate arrangements to transfer the new Harrier Jet to our client.

Speaker 9 The case went to court where District Judge Kimber Wood had to decide if the advert was serious.

Speaker 17 She came to the understandable conclusion that it wasn't.

Speaker 66 The callo youth featured in the commercial is a highly improbable pilot.

Speaker 66 The teenager's comment that flying a Harrier jet to school sure beats the bus evinces an improbably insoucient attitude toward the relative difficulty and danger of piloting a fighter plane in a residential area as opposed to taking public transportation.

Speaker 4 Might some other court take a different view?

Speaker 44 Probably not.

Speaker 17 But Pepsi decided to edit its commercial just in case.

Speaker 60 A Harrier now cost 700 million Pepsi points.

Speaker 51 Again, big number.

Speaker 40 But this time, big enough.

Speaker 45 I assume John Leonard knew that his chance of winning the case was small and that if he lost, there'd be lawyers' fees to pay.

Speaker 17 It must have been a calculated gamble.

Speaker 9 Judge Kimber Wood summed up why she wasn't letting that gamble pay off.

Speaker 66 An objective, reasonable person would conclude that purchasing a fighter plane for $700,000 is a deal too good to be true.

Speaker 53 Fair enough.

Speaker 11 But can we predict if a corporate marketing bungle is likely to have a happy ending?

Speaker 43 Can we come up with a taxonomy of the too good to be true?

Speaker 69 From these stories, perhaps we can.

Speaker 70 It's all about that pragmatic calculation.

Speaker 68 Imagine, if you will, a tool beloved by marketing types, a 2x2 matrix.

Speaker 32 How much will it cost the company to pay up?

Speaker 34 And how bad will it make the company look to wriggle out?

Speaker 21 In one corner, expensive promises with an easy get out.

Speaker 17 In this corner is John Leonard with his video of the Pepsi stuff ad.

Speaker 15 Harrier jets are expensive.

Speaker 69 And did it make Pepsi look unreasonable to fight the case?

Speaker 21 Not really.

Speaker 53 At the other extreme, cheap promises, with no means of escape.

Speaker 9 Here stands David Phillips with his stack of chocolate puddings.

Speaker 34 Giving one customer a pile of air miles wasn't especially expensive, set against the entire Healthy Choice marketing campaign.

Speaker 21 And, thanks to his videotape, they could hardly wriggle out.

Speaker 53 The other two corners of the 2x2 matrix are more ambiguous.

Speaker 24 Giving Tesco club card points to Banana Man was a trivial expense, but nobody would have cared much if they'd refused.

Speaker 9 The financial stakes were low, and so were the publicity stakes.

Speaker 31 It could have gone either way.

Speaker 10 Tesco's one crate banana limit seems a reasonable compromise.

Speaker 31 It can also go either way when both stakes are high. That's why some Hoover buyers got their flights.

Speaker 68 and some didn't.

Speaker 32 It was the worst possible combination for any company.

Speaker 9 They looked awful for trying to wriggle out of their own promises, and those they were forced to keep were ruinously expensive.

Speaker 69 But perhaps Hoover's marketers had always had their doubts deep down.

Speaker 32 The tagline for their free flights campaign was, two return seats.

Speaker 21 Unbelievable.

Speaker 53 In the Philippines, number fever left the 349 bottletop holders facing their own pragmatic calculation.

Speaker 45 Take Pepsi's goodwill $20

Speaker 68 or fight?

Speaker 11 15,000 Filipinos joined a pressure group called Coalition 349,

Speaker 11 set up by Vicente Delfiero Jr., a public relations consultant and a fiery preacher.

Speaker 17 Mr. Delfiero flew to New York to file yet another lawsuit against Pepsi.

Speaker 73 Modestly describing himself as a Filipino Don Quixote, a biblical David going up against a global Goliath.

Speaker 73 He drew sneers and laughs from the appity New Yorkers, but he remained undaunted and fearless.

Speaker 73 The Pepsi 349 fiasco mirrors how irresponsible multinational organizations abuse consumers in developing countries.

Speaker 43 Vicente Del Fiero was tapping into a sense of injustice that runs much deeper than one botched soft drinks promotion.

Speaker 34 Recall what the thought of winning a million pesos had meant to Victoria Angelo.

Speaker 70 You can finish school.

Speaker 50 We can buy a real house.

Speaker 62 These shouldn't be unrealistic ambitions for anyone.

Speaker 9 But it's hardly Pepsi's fault that life is so unfair.

Speaker 43 And was it ever really likely that a court would make Pepsi pay a sum that was almost its entire market value?

Speaker 9 Remember, nearly half a million bottletop holders had accepted the goodwill payment, far more than joined Mr.

Speaker 35 Del Fiero's coalition.

Speaker 17 They'd pragmatically calculated that this was the most Pepsi could reasonably be expected to do. After well over a decade of legal wrangles, the courts agreed.

Speaker 34 It would be wonderful to imagine a bottletop printing era lifting hundreds of thousands of Filipinos out of poverty. But that was always going to be too good to be true.

Speaker 27 Key sources for this episode include reporting from the Los Angeles Times, the BBC and the Independent, and a paper on consumer rebates in the Stanford Journal of Law, Business and Finance.

Speaker 13 For a full list of references, see timharford.com.

Speaker 10 Cautionary Tales is written by me, Tim Harford, with Andrew Wright. It's produced by Ryan Dilley and Marilyn Rust.

Speaker 27 The sound design and original music is the work of Pascal Wise. Julia Barton edited the scripts.

Speaker 27 Starring in this series of cautionary tales are Helena Bottom Carter and Geoffrey Wright, alongside Nizar Elderazi, Ed Gochan, Melanie Gutteridge, Rachel Hanshaw, Cobner Holbrook Smith, Greg Lockett, Masaya Monroe and and Rufus Wright.

Speaker 27 This show wouldn't have been possible without the work of Mia LaBelle, Jacob Weisberg, Heather Fane, John Schnaz, Carly McGiori, Eric Sandler, Emily Rostick, Maggie Taylor, Aniela Lacan, and Maya Koenig.

Speaker 35 Cautionary Tales is a production of Pushkin Industries.

Speaker 16 If you like the show, please remember to rate, share, and review.

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Speaker 1 This is an iHeart Podcast.