Posted by: David Kiley on June 30, 2005
Michelin Tire. Co., fearing backlash and lasting bad PR in the motorsports world is offering fans of Formula One racing $100 refunds, costing the company about $12 million, after a fracus earlier this month at the Indianapolis Speedway that denied fans a good race. AMC Entertainment Inc.’s theaters are offering full-ticket refunds to moviegoers who don’t like “Cinderella Man,” the Russell Crowe film about Depression era boxer Jim Braddock that has disappointed at the box office.
In Michelin’s case, racing fans this month were served up only six cars at the Formula One Grand Prix because Michelin detected a defect in tires on the cars it was sponsoring and equipping. Rules state that the tires can’t be changed so close to the race, so it advised its teams not to drive. So few cars in the race disappointed the crowd, and had the motorsports world buzzing for two weeks. Expensive, but the right move. Michelin enjoys tremendous brand equity with consumers and racing fans, and when a company offers money back on something like a ticket—something few expect—it goes a long way toward reaffirming brand equity.
In the case of AMC, the strategy is a bit different, and I’d be surprised if it paid off much. Cinderella Man, which I have not seen yet, has been reviewed well by most critics. But my theory is this: People who are still willing to pay $8-$10, or more in some places for some shows, want two hours of escape for the most part. That translates to big comedies or blockbusters like Star Wars and War of the Worlds. It’s too easy a decision to simply wait for a “Cinderella Man” to show up on HBO , pay-per-view or Netflix. Also, the top market for a Depression-era movie, even if it does star Russell Crowe, is over 40, and the over 40-crowd is more apt than any age group to wait for small screen opportunties to watch a non-special- effects driven film.
On the whole refunding is a good strategy, though, to build loyalty and re-affirm brand equity. Two years ago, my family sent back a Land End suitcase to take advantage of an offer it made to replace it if it ever failed. Shortly after my wife bought it, the tab on the zipper snapped off. She continued to use it for five years. Then the zipper failed all together. Thinking the offer was invalid by that time, we sent it back to test the idea. They sent a new suitcase back, which we still use. No questions asked. I know our consumption of Lands End has gone up since then.
Michelin will get back some good will. AMC Theatres, though, is not going to accomplish much with their move because people aren’t loyal to movie theatres. I would like to know where that offer was, though, when I walked out on a movie called “Revolution” back in the mid 1980s starring Al Pacino as a Revolutionary War figure. “Da British Are Comin’” is all I remember from that film fiasco.