Dr. Pepper's Chinese Democracy press release

[Annie]

yeah?

i wrote an email to the dr pepper company:

dear mr. kooluris,

certainly you didn't anticipate with such a huge reaction because of this announcement...

i'm asking myself if the GNR camp was informed by your company about this marketing gag. is this the first step to a big promotion for the upcoming album chinese democracy ?

sincerely,

XXXXXX



answer:

Hey XXXX?the gunners camp wasn?t in the loop initially, so you can imagine how excited we are to have Axl?s support?we are fully confident that Chinese Democracy will be out in 2008?we can?t wait!

C K

This is great news!

[pilferk]

Does anyone else find the mental image of Axl and Buckethead sharing a can of Dr. Pepper hilarious? 

I also think it's sweet! Rememember the old song be an original drink DR PEPPER! I never drink soda. but Dr Pepper was the one that I Liked!

I'm a pepper, they're a pepper, he's a pepper, she's a pepper....wouldn't you like to be a pepper too.

Be a Pepper.

Drink Dr. Pepper.

Dr. Pepper

[Annie]

Does anyone else find the mental image of Axl and Buckethead sharing a can of Dr. Pepper hilarious? 

I also think it's sweet! Rememember the old song be an original drink DR PEPPER! I never drink soda. but Dr Pepper was the one that I Liked!

I'm a pepper, they're a pepper, he's a pepper, she's a pepper....wouldn't you like to be a pepper too.

Be a Pepper.

Drink Dr. Pepper.

Dr. Pepper

Right on brother! Now people know how OLD we are!

[Ulises]

The question is...?Is Chinese Democracy coming out this year?

That's a very important detail 

[ppbebe]

axl /gnr is obviously eager for it to be so. Lets root for him! don't fall behind dr pepper in this.

[freedom78]

Cool press release.

Good thing I'm not a DP fan - if CD is released in 08, they're going bankrupt! 

I explained, in talking about this "elsewhere" why it won't cost C/S much, at all...especially in light of the exposure/marketing:

With manufacturing and bottling costs (depending on the bottling plant....most use high fructose corn syrup...a few use sugar, which would up the cost), 36 oz of soda (or about 3 cans) costs about .10 to .15 to manufacture. Add the cost of the bottle, and the labor to bottle it. I'd say you're talking somewhere around .05 to .08 a can to bottle and manufacture...something close to that.

IF you were to run this type of campaign, you'd need to do one of two things:

1) Partner with a distribution site (since they don't have one like Taco Bell does) to hand out physical product. I think that's unlikely, all things considered.

2) Dole out coupons via mail. One per person, or per household....something like that. That would require setting up a registration site on the net, and probably a mail drop to collect postcards with names and addresses. Nestle has done that type of thing (with their Carmel Crunch bars, most recently), before.

I think #2 is the far more likely scenario.

In either event, you're not going to get 100% participation in the program. Some won't know about it. Some don't like Dr. Pepper. Some won't go through the process of registering. Some will go through everything to register, and then not use the coupon. What you eventually have is a much smaller sample size, probably around 10 to 20%, max....and probably quite a bit less than that.

So, at the top end of all of that, you have about 60,000,000 x .08 = $4,800,000. Not, considering the size of the company, a huge amount of money. And that's "worst case" scenario, IMHO. You may actually be looking at more like 500k, depending on the % of responses you get.

Not to nitpick (I'm TOTALLY going to nitpick, now!), but we should probably think less in terms of production costs and more in terms of the cost at which it's sold from the manufacturer to either an independent distributor (if there is one) or the retail sector.  In other words, if a 20oz Dr Pepper sells for $1, and the place that sells it bought it for $0.35, then I think that would be the costs of this "promotion" per person who gets one.  Of course, some people who wouldn't otherwise get a Dr. Pepper might get one, so those aren't profits they're actually losing, so for those consumers the cost is probably closer to the actual manufacturing cost.

So I think this would be the formula for their costs:

(Selling price from manufacturer)X(# people who participate who would have drunk a DP anyway) + (manufacturing cost)X(# people who participate who would not have drunk a DP anyway)

If your 60 million people, 0.08 manufacturing cost, and my 0.35 selling price are correct, then this would be:

Assuming 2/3 participants would drink a Dr. Pepper anyway
(0.35)X(40 million) + (0.08)X(20 million) = 15.6 million

BUT...I have my doubts that 60 MILLION people would participate.

[Brundle25]

a free taco was had by anyone who went to a taco bell between 2 PM and 5 PM.

Hypothetically, if Dr. Pepper were concerned about a loss of profit over this promotion, they too could impose a limited timeframe of 2 PM to 5 PM for when people could claim their free soda.

It doesn't say anything about how people will get that free can.....


It could mean anything.

For example, print out a coupon from an e-mail, mail in your name and address to get coupon in the mail, buy something to get a can for free etc etc.




/jarmo

There in lies a problem. What if the promotion is a free can of Dr Pepper, 'When you sign up to purchase a six pack' Or a free can of Dr Pepper, 'when you purchase another schweppes product'

I would think that would have been Dr peppers idea at the beginning. But now the GNR camp is involved they are probably rethinking. I doubt GNR would promote the album with purchasing additional products for Schweppes. Axl and teh GNR camp need to go back to them and say, "You said a fee can for everyone and that should mean exactly what it says, no catch, completely free' 
Just a guesstimate

[pilferk]

Not to nitpick (I'm TOTALLY going to nitpick, now!), but we should probably think less in terms of production costs and more in terms of the cost at which it's sold from the manufacturer to either an independent distributor (if there is one) or the retail sector.  In other words, if a 20oz Dr Pepper sells for $1, and the place that sells it bought it for $0.35, then I think that would be the costs of this "promotion" per person who gets one.  Of course, some people who wouldn't otherwise get a Dr. Pepper might get one, so those aren't profits they're actually losing, so for those consumers the cost is probably closer to the actual manufacturing cost.

So I think this would be the formula for their costs:

(Selling price from manufacturer)X(# people who participate who would have drunk a DP anyway) + (manufacturing cost)X(# people who participate who would not have drunk a DP anyway)

If your 60 million people, 0.08 manufacturing cost, and my 0.35 selling price are correct, then this would be:

Assuming 2/3 participants would drink a Dr. Pepper anyway
(0.35)X(40 million) + (0.08)X(20 million) = 15.6 million

BUT...I have my doubts that 60 MILLION people would participate.

First up, in most of the country, C/S is there own distributor (and bottler).

Second, You're projecting lost revenue, which doesn't really come into play for promotional costs, which this would be.  Most companies I know of would actually look at production/distribution costs, because the other stuff isn't really a factor.

They're not going to care about lost revenue, really.  Only what it costs them to run the promotion.  Thus looking at costs.

At the POS level, they're simply returning revenue to the "owner" of the store that bought the can from C/S, in the first place. They're refunding them THIER money....not paying them out of their own pockets. The only "loss" there is the piece that covers costs....because the rest was profit anyway. You're certainly NOT reimbursing the price the consumer would have paid.

See?

Oh, and I agree....the 20% adoption rate (which gets you the 60 mill) was "worst case" and based largely on the "McDonalds '84" debacle with the US olympics.  It has been, to my knowledge, the single worst promotion, for a company, ever.

Edit: Not that I think you need me to..but here's a gross simplification.

I make a widget for .25.

You buy it for $1.

I tell you that there is someone out there with a coupon for a free widget, and if he sees your widget...he can exchange your widget for his coupon.  I'll either give you your $1, or a free widget to replace the one you gave away, if that happens.

When you come back with the coupon, I give you your $1 (because that's what you want).

I didn't lose a $1.  I lost .25....what it cost to make the widget.  I just don't get to hold on to "your" dollar anymore.

[slashsbaconpit]

We are surprised and very happy to have the support of Dr. Pepper with our album Chinese Democracy as for us this came totally out of the blue. If there is any involvement with this promotion by our record company or others we are unaware of such at this time. And as some of Buckethead's performances are on our album I'll share my Dr. Pepper with him.

Axl Rose

This is the best news EVER. I love Dr. Pepper. So even if the album gets out, I'll get a free Dr. Pepper! If it doesn't get released, then I'll just buy my Dr. Pepper. Either way, I'll be drinking a Dr. Pepper!

[freedom78]

Not to nitpick (I'm TOTALLY going to nitpick, now!), but we should probably think less in terms of production costs and more in terms of the cost at which it's sold from the manufacturer to either an independent distributor (if there is one) or the retail sector.  In other words, if a 20oz Dr Pepper sells for $1, and the place that sells it bought it for $0.35, then I think that would be the costs of this "promotion" per person who gets one.  Of course, some people who wouldn't otherwise get a Dr. Pepper might get one, so those aren't profits they're actually losing, so for those consumers the cost is probably closer to the actual manufacturing cost.

So I think this would be the formula for their costs:

(Selling price from manufacturer)X(# people who participate who would have drunk a DP anyway) + (manufacturing cost)X(# people who participate who would not have drunk a DP anyway)

If your 60 million people, 0.08 manufacturing cost, and my 0.35 selling price are correct, then this would be:

Assuming 2/3 participants would drink a Dr. Pepper anyway
(0.35)X(40 million) + (0.08)X(20 million) = 15.6 million

BUT...I have my doubts that 60 MILLION people would participate.

First up, in most of the country, C/S is there own distributor (and bottler).

Second, You're projecting lost revenue, which doesn't really come into play for promotional costs, which this would be.  Most companies I know of would actually look at production/distribution costs, because the other stuff isn't really a factor.

They're not going to care about lost revenue, really.  Only what it costs them to run the promotion.  Thus looking at costs.

At the POS level, they're simply returning revenue to the "owner" of the store that bought the can from C/S, in the first place. They're refunding them THIER money....not paying them out of their own pockets. The only "loss" there is the piece that covers costs....because the rest was profit anyway. You're certainly NOT reimbursing the price the consumer would have paid.

See?

Oh, and I agree....the 20% adoption rate (which gets you the 60 mill) was "worst case" and based largely on the "McDonalds '84" debacle with the US olympics.  It has been, to my knowledge, the single worst promotion, for a company, ever.

Yeah, I know that the lost revenue costs aren't REALLY factored in...but they do exist.

They can minimize costs if they do a "print your own coupon" thing.  OR, if they're REALLY smart, they'll lower the costs of a case by 1/24 or a six pack by 1/6, thus giving you a "free" Dr. Pepper when you buy the five or 23 others.

You know...like when a bag of chips says "20% more FREE!," knowing that you have to buy the whole damned bag anyway to get your free 20%.

[pilferk]

Yeah, I know that the lost revenue costs aren't REALLY factored in...but they do exist.

They can minimize costs if they do a "print your own coupon" thing.  OR, if they're REALLY smart, they'll lower the costs of a case by 1/24 or a six pack by 1/6, thus giving you a "free" Dr. Pepper when you buy the five or 23 others.

You know...like when a bag of chips says "20% more FREE!," knowing that you have to buy the whole damned bag anyway to get your free 20%.

They exist...but you're talking about opportunity cost and ROI, now...and I'm not sure this is the place for an economics "class".

Suffice to say, the most tangible costs, and the ones given the most consideration, are the "real" costs of manufacture, bottling, and distribution.

The costs of printing and distributing the coupons...given you know they'll go out 3rd class mail, as a bulk mailing...are also pretty negligible.

I tend to think they'll play the "straight and narrow" on this....most companies who've run this type of promo (like Nestle, etc) have and it certainly hasn't broken their banks.  I'm assuming they figure that the "sampling" of their product should increase revenue enough amongst consumers to completely offset the opportunity costs and ROI considerations on the lost revenue for the promotion.  But that's the gamble with ANY promotion like this.

[overmatik]

That seems like a joke, but anyway, any news is better than no news, good to see that Axl is still alive!

[echrisl]

Yeah, I know that the lost revenue costs aren't REALLY factored in...but they do exist.

They can minimize costs if they do a "print your own coupon" thing.  OR, if they're REALLY smart, they'll lower the costs of a case by 1/24 or a six pack by 1/6, thus giving you a "free" Dr. Pepper when you buy the five or 23 others.

You know...like when a bag of chips says "20% more FREE!," knowing that you have to buy the whole damned bag anyway to get your free 20%.

They exist...but you're talking about opportunity cost and ROI, now...and I'm not sure this is the place for an economics "class".

Suffice to say, the most tangible costs, and the ones given the most consideration, are the "real" costs of manufacture, bottling, and distribution.

The costs of printing and distributing the coupons...given you know they'll go out 3rd class mail, as a bulk mailing...are also pretty negligible.

I tend to think they'll play the "straight and narrow" on this....most companies who've run this type of promo (like Nestle, etc) have and it certainly hasn't broken their banks.  I'm assuming they figure that the "sampling" of their product should increase revenue enough amongst consumers to completely offset the opportunity costs and ROI considerations on the lost revenue for the promotion.  But that's the gamble with ANY promotion like this.

I love this discussion, I was just about to chime in about opportunity cost versus what it would actually cost to produce the tangible item being given away for free, but now I guess I won't.  Thanks for beating me to the punch pilferk, economics discussions give me a massive headache!  Suffice it to say that those of you thinking the cost of this promotion would be prohibitive are over analyzing the situation and over estimating both the amount of people who would participate and the actual costs of the product that would be given away.  These types of promotions happen all the time, and on a larger scale than this seems likely to grow to, even assuming that the album is actually released and that this promotion becomes a fairly widespread giveaway.

[GeraldFord]

This has GOT to me an April Fools day joke!

[GypsySoul]

This has GOT to me an April Fools day joke!

So what if it is?  Too much fun for you to handle? 

We still got word directly from Axl and a new pic of him on the official site. 

[freedom78]

Yeah, I know that the lost revenue costs aren't REALLY factored in...but they do exist.

They can minimize costs if they do a "print your own coupon" thing.  OR, if they're REALLY smart, they'll lower the costs of a case by 1/24 or a six pack by 1/6, thus giving you a "free" Dr. Pepper when you buy the five or 23 others.

You know...like when a bag of chips says "20% more FREE!," knowing that you have to buy the whole damned bag anyway to get your free 20%.

They exist...but you're talking about opportunity cost and ROI, now...and I'm not sure this is the place for an economics "class".

Suffice to say, the most tangible costs, and the ones given the most consideration, are the "real" costs of manufacture, bottling, and distribution.

The costs of printing and distributing the coupons...given you know they'll go out 3rd class mail, as a bulk mailing...are also pretty negligible.

I tend to think they'll play the "straight and narrow" on this....most companies who've run this type of promo (like Nestle, etc) have and it certainly hasn't broken their banks.  I'm assuming they figure that the "sampling" of their product should increase revenue enough amongst consumers to completely offset the opportunity costs and ROI considerations on the lost revenue for the promotion.  But that's the gamble with ANY promotion like this.

Yeah, I'm sure they're hoping that for every so many free bottles, someone will actually buy one.  If a free bottle costs them 0.08 and they can sell a bottle to the gas station for 0.35, then one bottle bought because of the promotion will pay for four bottles given away. 

I buy Diet Dr. Pepper fairly regularly, and it's considerably cheaper than other brands.  For example, a 12 pack of Coke costs about $3.75, while the DP costs $2.50.

I've also noticed lately that, contrary to the premise that buying in bulk is cheaper, two 12 packs of pop are often cheaper than a case of the same thing.  Strange.

[Stewie Griffin]

This has GOT to me an April Fools day joke!

Today is March 27th. The day (or night) the press release hit the internet, it was the 25th. And I highly, highly doubt such a creditable company would put their reputation on the line like that: can you imagine the backlash if this was an April Fool's joke? Not only would they lose profit, who would take them seriously again? It's too risky to be an April Fool's joke, and I don't see Axl even bothering to respond to it if it was. I noticed he waited until CS had told dozens of people (myself included) that it was indeed real before making a statement.

[DeN]

the important thing here is Axl's comment about it and the two informations he gave to us.

1) the LP will be out in 2008.
2) buckethead is on the album.

[freedom78]

the important thing here is Axl's comment about it and the two informations he gave to us.

1) the LP will be out in 2008.

...Axl hopes.

2) buckethead is on the album.

This is pretty cool.

[Gaby]

"Tired of a world in which Americans idolize wannabe singers ........... Dr Pepper is encouraging (ok, begging) Axl Rose........"

That's really cool

Edit: BTW hi