This is an offer going on at Esso (Canadian Exxon):

Buy a 4-Pack of Rockstar or Full Throttle at $9.99 (reg. Canadian price for a 4-Pack), and get $10 worth of free gas!

You pay for the 4-Pack, fill out a form, mail it, and Esso sends you a free $10 gas card.

Anyone know what's going on? Is Esso/Exxon getting the product for free from Coke? Why do something like that?

Sometimes gas stations will have great deals that just dont make sense how they could ever make money.

I read on the internet that it is limit two deals per house hold, so you better hurry. If you read all the fine print, you'll see you can buy 3 8-pack Coke Products for $10 as well.

It's "loss leader" marketing. Esso is banking on the fact that once you get in the store you will buy other high margin items to help offset the loss. Furthermore, they are trying to get new consumers in the door. They want to get you to walk in the store and see how nice it is, what they offer, their pricing, etc. and then make you a customer for life.
Another angle is the "coupon" for gas. Esso is working on the assumption that thier target market for the drinks will include a younger crowd that is less apt to keep up with reciepts, proof of purchase, etc and therefore will not have to pay out that $10 gas card to every purchaser because not all, or for that matter, not the majority of purchasers, will ever apply for the "coupon".

I wonder how long it takes to get the gas card? They probably also bank on people not properly filling out the form.

Interesting. It's these leading losses that make it so expensive to stay in this business. I wonder if ED companies ever end up losing money on a 12 month agreement with a large chain. With the competition and the amount of SKUs on special, do some companies actually do real volume at full price?

Originally Posted by DudeMan

Interesting. It's these leading losses that make it so expensive to stay in this business. I wonder if ED companies ever end up losing money on a 12 month agreement with a large chain. With the competition and the amount of SKUs on special, do some companies actually do real volume at full price?

Most ED's are sold at full retail. Coke, and Pepsi to a lesser extent, support their respective ED's much like they do their CSD's. They will put them on "sale" every now and then. However, in the ESSO deal mentioned that was probably some sort of discount on the invoice to ESSO for a period of time or for a certain "Buy In". Coke still made or is making money on the deal. However, I will say that some companies do lose money over they year due to crappy shelf programs/slotting fees/ or other voodoo mathematic principles the vendor and retailer come up with.