Case Study: Abhilash Surendran

Reese’s Pieces:
And How Product
Placement Became
Mainstream In Films

Abhilash Surendran Page 1

Introduction: The Chocolate Wars

The late Forrest Mars cut a Napoleonic figure. A brilliant strategist, he founded Mars Inc. in 1922, and
through hard work, a steely determination, and an idiosyncratic set of management philosophies, built a
business that is now worth $13 billion. The fanatical desire for perfection extended to Forrest’s attitude
towards his, frankly, non-descript heirs - Forrest Jnr., John and Jackie - whom he left to sink or swim
back in 1973. As children Forrest would interrogate them every dinner-time about their school work,
their friends, their hobbies; demanding excellence in everything they did. The children found the grilling
such torture that none of them can now sit down to a meal, hence the sparse eating facilities at their
head office. Indeed, the family’s foibles define the business today. Mars does not make chocolate bars
with peanut butter. Why? Because the children were raised in England where, peanut butter is,
apparently, ‘despised’. The Mars siblings prefer hazelnuts and have constantly pushed the testing of
hazelnut-based products over peanut butter ones, despite the fact that peanut butter chocolate always
outsells hazelnut chocolate in the States. It is one of the reasons why Hershey is winning the chocolate
war.

Whilst taking the silver wraps off Mars, Inc., one can discover a quietly forgotten fact: that the other M
in M&Ms stands for Murrie, as in R. Bruce Murrie, the son of William Murrie - the unsung President of
Hershey Chocolate Company, and Milton Hersey’s best friend. How could it be that Mars and Hershey,
now litigious enemies, had once collaborated to create Mars’s most popular product?

Hershey was the first man to make milk chocolate in the US and achieved mythical status because of it.
Unwrapping the distinctive purple wrapper of a Hershey bar, and biting your way around the word
Hershey to leave the letters S-H-E has been become one of the definitive moments of the American
childhood. It took many years of experimenting for Hershey to create his special ‘off-note’ chocolate –
his European detractors say it was a result of using a batch of powdered milk that was spoiling – but
when he perfected it, he revolutionized the industry, bringing a luxury commodity to the masses. And
that’s where Hershey’s passion lay, with dreaming up grandiose schemes and trying to make them work.
Some did, some didn’t.

Will Hershey retain its candy king crown for long? Nobody’s sure. What is for certain though is that Mars
and Hershey will remain at the top of the candy rack. Together the two companies control 75 per cent of
the market, making eight out of ten bars on sale in the States today. It’s a sobering thought, and one
that surely neither man could have dreamed of when they first started experimenting with their
condensing kettles and bags of sugar.

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The Hershey Company

The Hershey Company (NYSE: HSY), known until

April 2004 as the Hershey Foods Corporation and
commonly called Hershey's, is the largest
chocolate manufacturer in North America. Its
headquarters are in Hershey, Pennsylvania, which
is also home to Hershey's Chocolate World. It was
founded by Milton S. Hershey in 1894 as the
Hershey Chocolate Company, a subsidiary of his Lancaster Caramel Company. Hershey's candies and
other products are sold worldwide.

Reese’s Pieces

Reese's Pieces are a peanut butter-flavored

candy manufactured by The Hershey Company
for the North American market. They are
circular in shape and covered in candy shells
that are colored yellow, orange, or brown. They
can be purchased in plastic packets, cardboard
boxes, or cup-shaped travel containers. The
candy was introduced in 1978 and launched
throughout the United States in 1980.

The Marketing Question

The important marketing question facing Hershey was this: For a product that closely resembled Mars’
M&M’s, the market leader in candies, how can this item make a market entry, leave alone capture the
market? The target audience was in the 7-18 year age bracket, and Hershey had to do something to
force the product into the psyche of this audience. While the product was introduced in 1978, Hershey
kept looking for that perfect marketing opportunity to make this possible.

What is product placement?

Product placement, or embedded marketing, is a form of advertisement, where branded goods or

services are placed in a context usually devoid of ads, such as movies, the story line of television shows,

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or news programs. The product placement is often not disclosed at the time that the good or service is
featured. Product placement became common in the 1980s.

In April 2006, Broadcasting & Cable reported, "Two thirds of advertisers employ 'branded
entertainment'--product placement--with the vast majority of that (80%) in commercial TV
programming." The story, based on a survey by the Association of National Advertisers, said "Reasons
for using in-show plugs varied from 'stronger emotional connection' to better dovetailing with relevant
content, to targeting a specific group."

The History of Product Placement in Films

 Although recognizable brand names probably had appeared in movies prior to the 1920s, the
weekly trade periodical Harrison's Reports published its first denunciation of that practice with
respect to Red Crown gasoline appearing in the 1919 Fatty Arbuckle comedy ‘The Garage’.

 During the next four decades, Harrison's Reports frequently cited cases of on-screen brand
name products, always condemning the practice as harmful to movie theaters. Publisher P. S.
Harrison’s editorials strongly reflected his feelings against product placement in movies. An
editorial in Harrison’s Reports criticized the collaboration between Corona Typewriter Company
and First National Pictures when a Corona typewriter appeared in the 1925 movie ‘The Lost
World’. Harrison's Reports published several incidents about Corona typewriters appearing in
movies of the mid-1920s.

 Among the famous silent movies to feature product placement was ‘Wings’ (released in 1927),
the first film to win the Oscar for Best Picture. It contained a plug for Hershey's chocolate.

 Another early example in film occurs in the 1932 film ‘Horse Feathers’ where Thelma Todd falls
out of a canoe and into a river. She calls for a life saver and Groucho Marx tosses her the Life
Savers candy.

 The Marx Brothers, in the 1949 film ‘Love Happy’, Harpo Marx cavorts on a rooftop among
various billboards and at one point escapes from the villains on the old Mobil logo, the "Flying
Red Horse". Harrison's Reports severely criticized this scene in its movie review and in a front-
page editorial of the same issue.

 The 1946 film ‘It's a Wonderful Life’ by Frank Capra depicts a young boy with aspirations to be
an explorer, displaying a prominent copy of National Geographic.

 In the classic 1949 film noir ‘Gun Crazy’, the climactic crime is the payroll robbery of the Armour
meat packing plant, where a Bulova clock is prominently seen.

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E.T: The Extra Terrestrial

“E.T. the Extra-Terrestrial” is a 1982 American science fiction

film co-produced and directed by Steven Spielberg, written
by Melissa Mathison and starring Henry Thomas, Robert
MacNaughton, Drew Barrymore, and Dee Wallace. It tells
the story of Elliott (played by Thomas), a lonely boy who
befriends a friendly extraterrestrial, dubbed "E.T.", who is
stranded on Earth. Elliott and his siblings help the
extraterrestrial return home while attempting to keep it
hidden from their mother and the government.

Released by Universal Pictures, E.T. was a

blockbuster, surpassing Star Wars to
become the most financially successful
film released to that point. Critics
acclaimed it as a timeless story of
friendship, and it ranks as the greatest
science fiction film ever made in a Rotten
Tomatoes survey. The film was re-released in 1985, and then again in 2002 with altered special effects
and additional scenes. Spielberg believes E.T. epitomizes his work.

E.T: The mother or all tie-Ins

During production of E.T, Amblin productions

approached Mars, Inc about a possible tie-in
between M&Ms and the film. For no specified
reasons, Mars said no to the proposition. Some
of the most commonly stated reasons provided
are: Mars decided that it did not want its candy
associated with an extraterrestrial living with an
earth family, or it thought the film’s premise
just a bit too otherworldly, or an unnamed
M&M executive decided nobody would want to

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see a movie about an alien adopted by a lonely kid. One interesting thing to note is that, when the film
was novelized in by William Kotzwinkle in 1982, M&M was used as the candy.

Whatever the reason for it, Mars’ “No” paved the way
for Hershey’s “Yes”. The offer was then tendered to
Hershey, and the corporation went for it. Hershey Vice
President Jack Dowd then flew to Hollywood to see
still photos from the film and make sure that the
candy was not going to be in a monster film. Unlike
what is normally believed, Hershey did not pay to have
Reese’s pieces used in E.T., but it did agree to do a tie-
in between the movie and the candy after the film was
released. A deal was inked wherein Hershey Foods
agreed to promote E.T. with $1 million of advertising;
in return, Hershey could use E.T. in its own ads.

Reese's Pieces look very much like M & Ms, and the
brand name is not mentioned in the film. But keen-
eyed children quickly spotted the orange Reese's Pieces wrapper, and the rush to the candy counter was
on. Hershey was now giving away an E.T. sticker with every bag of
Reese's Pieces bought in 800 of the 1,100 theaters showing the
movie. Five bags earned a free T shirt. Really sweet-toothed fans can
redeem the labels from five half-pound sacks for a poster of favorite
scenes from the film. That would be enough Reese's Pieces to entice
a spaceship load of E.T.s.

Cut to year 1983 and the folks at

Hershey Foods Corp. are feeling
very happy these days. Reese's
Pieces, a steady but
unspectacular-selling brand of candy, has blossomed into an unexpected summer hit. Sales of the
peanut butter-flavored candy shot up 65% in June after the release of E.T.: The Extra-Terrestrial, which
is filling movie theaters at a record clip. In the film, E.T., an endearing space creature, is lured out of
hiding by a boy who scatters pieces of the candy in his path.

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Product Placement post E.T.

A movie about a child-sized alien lost on Earth placed the advertising practice of product placement into
the public consciousness. In E.T. the Extra-Terrestrial the alien followed a trail of Hershey's Reese's
Pieces to his new home. The movie was a hit, sales of Reese's Pieces increased dramatically, and to
some the product placement industry was born. Product placement in motion pictures is now valued at
$1.2 billion annually, with television revenues exceeding $1.8 billion.

Post E.T., product placement in films has come to be one of the ordinary ways of things in Hollywood.
Exxon paid $300,000 to have its name appear in ‘Days of Thunder’, Pampers paid $50,000 to be featured
in ‘Three men and a baby’, and Cuervo Gold spent $150,000 for placement in ‘Tequila Sunrise’,
according to Danny Thompson, president of Creative Entertainment Services, 1993 magazine article. As
for how effective the practice of product placement is, that same article quotes Joel Henrie, a partner at
Motion Picture Placement, as saying: “Look what happened to Hermes Scarves after ‘Basic Instinct’, Ray-
Ban sunglasses after ‘Risky Business’, and suspenders after Michael Douglas wore them in ‘Wall Street’.”

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Not all product placement deals are “straight-fee” arrangements. There are actually three types of deals,
the other two being the provision of costly merchandise for free just for the exposure (which accounts
for about half of all placements), and the back-end promotion under which big corporations with huge
promotional budgets aim for young audiences through tie-ins with popular films.

In most film, product placement, while noticeable, is kept low-key. However, some Hollywood films
have gone down in the annals of motion picture history as notorious examples of rampant
commercialism. The 1988 snoozer ‘Mac and me’ could be fairly described as a 90-minute advert for
McDonald’s and Coca-Cola, with an alien thrown in whenever things were running slow. Likewise, the
1987 film Leonard Part 6 was deemed by many to be a never-ending Coca-Cola commercial. But
rampant product placement is not merely limited to forgettable films which did poorly at the box-office,
as 1999’s ‘Runaway Bride’ proved. In that film, everyone walks around with a copy of the USA today
newspaper in their hands.

Successful Product Placements stories

While E.T paved the way for product placement in Hollywood, several brands have continued the trend
of being life-altered after an appearance on the silver screen. Let’s take a look at some of the top
success-stories in product placement:

1. Budget Rent-a-Truck, Home Alone (1990).

Budget was a major player in car rentals, but its truck-rental

business was being obscured by household names like U-Haul and
Ryder. Budget struck gold when it put polkameister John Candy and
his merry band -- along with Jan Hooks, playing Macaulay Culkin's
mom -- in a Budget moving van making the long haul back to
Chicago.

2. Red Stripe beer, The Firm (1993).

Placement can enhance brand value at strategic times. When Tom

Cruise visits Gene Hackman in the Cayman Islands, Hackman
suggests that he "grab a Red Stripe," so Cruise opens the fridge for a
bottle of the Jamaican-brewed beer. Within a month of the film's
release, Red Stripe sales in the U.S. had increased by more than
50%, and just a few weeks later, company owners sold a majority
stake in their brewery for $62 million to Guinness Brewing
Worldwide.

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 3. Junior Mints, Seinfeld (1990s)

Warner-Lambert Co.'s Junior Mints brand was just one beneficiary of the Seinfeld product-placement
bonanza. But unlike most placements, which try to paint a product in the most positive light, Junior
Mints willingly became comic fodder. "Some companies didn't want to see their candy falling into the
cavity of a patient: They overanalyzed it and lost the humor in it," recalls Patricia Ganguzza, owner of
AIM Promotions, the New York City-based agency that placed the candies on TV. "Now everybody knows
that episode as the 'Junior Mints episode.'"

4. Pizza Hut pizza and Nuprin pain relievers, Wayne's World (1992)

When Michael Myers and Dana Carvey did a scene that highlighted a Pizza Hut box, and the movie cut to
a black-and-white backdrop for yellow Nuprin pills, product placement went self-referential. It was
another sign that the practice had arrived.

5. Reebok, Jerry Maguire (1996)

Reebok sued Sony TriStar Pictures for $10

million, claiming it violated a placement
agreement when it yanked a mock Reebok
commercial slated to run during the end
credits. Reebok got a settlement, but only
after suffering another indignity: The
Company was only mentioned once, when it
was bad-mouthed by the pro footballer
played by Cuba Gooding, Jr.

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 6. Ray-Ban sunglasses, Risky Business (1983), Men in Black
(1997)

Because they adorn the on-screen faces of the stars, sunglasses have
come to occupy a prime role in product placement. The Swiss Army
brand also placed its logo on a pair of plot-critical remote-control
specs used in the asteroid thriller Armageddon.

7. Nothing is enough for 007: Visa card, Avis car rentals, BMW cars and motorcycles, Smirnoff
vodka, Heineken beer, Omega watches, Ericsson cell phones, L'Oreal makeup, Tomorrow
Never Dies (1997)

Purists could stomach the discrete promotion of James Bond's hot cars over the years, from Aston
Martins to the new Z-3 Goldeneye (1995), which helped BMW turn the roadster's launch into one of the
most successful new-car introductions ever. But critics flailed at Tomorrow because it seemed to be one
long-running commercial. "The world's top-secret agent has lent his name to more gadgets than Tiger
Woods. In so doing he has strayed recklessly from Ian Fleming's legendary blueprint," sniffed the New
York Times.

8. Chanel perfume, Anastasia (1997)

Tie-ins between animated flicks and brand marketers have proliferated, but
commercial products hadn't appeared in an animated picture until a Chanel
shop showed up in this Fox feature. It turns out that Chanel didn't pay for
the visibility, but cartoon placements can't be far behind.

9. Hasbro action toys, Small Soldiers (1998)

Back-end promotions now drive most huge movie placements,

but this soon-to-be-released (July 10) Toy Story knockoff takes the
trend to new extremes. The movie is about a battle between
peace-loving toys called Gorgonites and the martial Commando
Elite -- all made by Hasbro Inc., which of course is filling retail
pipelines even now with "real- life" versions of the toys. Director
Joe Dante has said that Hasbro's role was a "serious" part of why
the movie got made at all.

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