Maytag-Hoover Free Flights Promotion

Maytag-Hoover Free Flights Promotion (a ) Short Summary of the Case

Maytag was founded by F .L . Maytag during the 1900s and emerged as the top ranking company selling washing machines . Witnessing lots of ups and downs over the years , the apex management during the regime of Daniel Krum , CEO , made a decision that the company could not remain as a specialty producer carrying out business solely catering to the premium end of the laundry market . Maytag embarked upon a strategy to have a dominating position in the U .S . appliance industry . The strategic

br decision was taken to increase its scale by acquisition within the appliance industry by means of debt and sale of stock . During 1988 understanding that the U .S . domestic appliances market had attained maturity , the apex management of the newly formed Maytag Corporation made a decision to expand the organizational growth strategy into the global arena . The company offered around 1 billion dollars in cash and Maytag stock for Chicago Pacific Corporation -- CP , the owner of the Hoover Company . Through this move , Maytag entered into the global home appliance market with nine manufacturing facilities spanning across UK France , Australia , Mexico , Columbia and Portugal (Maytag Corporation 1996-Back to Basics

Hoover was a familiar name around the world for its floor-care products and across Europe and Australia for its washers , dryers , dishwashers microwave ovens and refrigerators . However before the acquisition , the global revenues of Maytag were too tiny to even report . During the later part of 1992 and initial part of 1993 , in to increase its sales the European division of Hoover began a marketing promotion by offering its customers free international air tickets when they bought appliances for an abysmal low value of 150 . The excessively liberal offer evinced such an overwhelming response from the consumer community that Maytag Corporation was compelled to shell out in excess of 72 million from 1992 to 1994 towards sales and administrative expenses associated with the promotion . The marketing promotion turned into a public relations fiasco since people registered complain that they were facing problems obtaining their free flights promised under the promotional campaign Three British people representing the Hoover Holiday Pressure Group participated in the annual shareholders meeting held in Newton . The named the marketing debacle as Hoovergate ' and threatened to report about their problem to the Ralph Nader 's group in case their problem remained unanswered . Maytag-Hovers sacked three top ranking executives of Hoover Europe division and set up a Task Force to look at the situation and handle the problem (Maytag Corporation , 1996-Back to Basics

b ) of the market problem

From the very launch of the Hoover 's free flights promotion during Aug1992 there were doubts about the veracity of the promotional offer and whether it would really work . Nearly two years down the line the doubts became true . Initially planned to transfer a surfeit of vacuum cleaners and washing machines piled up in Hoover 's warehouse , it culminated in bleeding the company 48 million pounds...