A website for PG Tips, www.cuppaclub.pgtips.co.uk, seen on 21 May 2015, advertised that a sales promotion where customers collected points when buying tea, which they could then redeem for gifts, would be closing.
A complainant, who had been unable to redeem her points for a gift she did not already have, challenged whether the ad was misleading, because she believed the advertiser had not made a reasonable estimate of demand.
Unilever UK Ltd t/a PG Tips said the Cuppa Club was launched in May 2013 as an ongoing promotion which, in accordance with its terms and conditions, could be terminated by giving its members reasonable notice. On 21 May 2015 an email was sent to all Cuppa Club members informing them that the club would be closing; that they could register points until 11 August 2015; and could redeem points until 10 September 2015. PG Tips supplied spreadsheet information prepared at the time the decision was taken to close the Cuppa Club. They believed the information showed how demand for, and stocks of, the gifts had been monitored in the three months before the decision to close the Cuppa Club was announced, and then in the months before its closure. They pointed out the sudden rise in demand for gifts in the week after the announcement was made to close the Cuppa Club, and how they had spread availability of the remaining stock over the weeks that followed.
They said that, while the Cuppa Club was running, they had monitored stock levels of gifts and had reordered them based on average redemption rates. When the decision to close the Cuppa Club was taken, they worked with a cross functional team, and with an external agency which had had experience of closing down similar loyalty schemes, to manage the process. They said they had taken into account the fact that the Cuppa Club had been running for two years; the number of active members; and the number of points accrued. Before the closure was announced, they evaluated the stock of gifts and made a forecast based on average redemption rates from similar scenarios. They also took advice from the external agency on the impact such factors as residual points balances, membership activity levels and outbound communications would have, and how they should prepare for them. They knew there was a likelihood that, based on the forecasts they had made, some of the most popular gifts would run out. They were confident, however, that there would always be a selection of gifts available for redemption for the full period.
Unfortunately, redemption rates were much higher than forecast. PG Tips attempted to order new stock, but the lead times on many suitable items in the quantities that were needed exceeded the end of the Cuppa Club. They were able to source candles and mugs from UK suppliers and, in addition, coupons for discounts on PG Tips tea, monkey toys and the option to donate to charity through redeeming points were available. PG Tips maintained that at all times there were at least three options available. For popular items that were low in stock, availability of the remaining stock was spread over the time period left so that as many members as possible would have access to the items. They believed this would help prevent disappointment to members who might not have thought of redeeming their points until towards the end of the Cuppa Club. PG Tips maintained that members who wanted to redeem against a specific item had access to their care line and a speedy response to questions posted on social media. They said they had since supplied the complainant with the particular item she had requested. They believed they had made reasonable estimates of demand and that they had taken adequate action to communicate with and provide alternatives for members.
The ASA noted that the CAP Code required promoters to be able to demonstrate that they had made a reasonable estimate of likely response. We welcomed PG Tips' statement that they had taken into account the fact that the Cuppa Club had been running for two years; the number of active members; and the number of points accrued. We noted that PG Tips said they had monitored stock levels of gifts while the Cuppa Club was running and had made a forecast based on average redemption rates from similar scenarios before the closure was announced. However, while we considered the spreadsheet information they had supplied showed how they had monitored demand for, and stocks of, gifts in the three months before the decision to close the Cuppa Club was announced, PG Tips had not explained how the information they held, and their analysis of previous similar scenarios, related to the number and types of gifts that they decided they needed to hold in stock. In addition, we noted that packs that enabled members to continue to accrue points might continue to be available, and that all members would need to redeem their points in the time between the announcement and the closing date. We noted that redemption rates had been much higher than were forecast. We considered that, despite the information at their disposal, which included the number of points still to be redeemed, the number of active members and the relative popularity of the different gifts, PG Tips had not demonstrated that they had made a reasonable estimate of likely response and concluded that the ad was therefore in breach of the Code.
The ad breached CAP Code (Edition 12) rules
Marketing communications must not materially mislead or be likely to do so.
Marketers must make a reasonable estimate of demand for advertised products.
Promoters must conduct their promotions equitably, promptly and efficiently and be seen to deal fairly and honourably with participants and potential participants. Promoters must avoid causing unnecessary disappointment.
Phrases such as “subject to availability” do not relieve promoters of their obligation to do everything reasonable to avoid disappointing participants.
Promoters must be able to demonstrate that they have made a reasonable estimate of the likely response and either that they were capable of meeting that response or that consumers had sufficient information, presented clearly and in a timely fashion, to make an informed decision on whether or not to participate - for example regarding any limitation on availability and the likely demand.
Promoters must not encourage the consumer to make a purchase or series of purchases as a precondition to applying for promotional items if the number of those items is limited, unless the limitation is made sufficiently clear at each stage for the consumer accurately to assess whether participation is worthwhile.
We noted that the promotion had ended and that the ad therefore no longer appeared in that form. We welcomed PG Tips' statement that they had since supplied the complainant with the particular item she had requested. We told PG Tips to ensure they could demonstrate they had made a reasonable estimate of demand in future promotions.