Assignment
QUSING S. & H. GREEN STAMPS
E. J. Reavy telephoned the Fillmore Department Store and informed the credit manager that, because his wife was refused S. & H. Green Stamps on a $145 bill which she had paid the day before, he was closing his account. About five years before, the Fillmore Store executives had started the policy of giving stamps as a result of a study made among their customers. At that time, the customers indicated that one of the most important factors in determining the store from which a national brand item would be purchased was whether or not the store offered Green Stamps. The controller estimated that it would cost the Fillmore Store about 3 per cent of sales to offer the stamps. Therefore, he adopted the general plan used in most other stores, whereby Green Stamps are given on all cash sales and on credit purchases paid prior to the 15th of the month following the date of purchase. Fillmore would not only benefit from the advertising value of giving the stamps, but the plan would also encourage customers to pay their bills promptly. During the five years in which the Fillmore Store had been offering the stamps, a number of problems arose from time to time with the customers. Some people would pay after the 15th of the month and demand their stamps. In other instances, merchandise would be ordered toward the end of one month but would not be delivered until the early part of the next month.
On a number of such occasions, the customers insisted that they had an extra month in which to make payment and to qualify for the stamps. Sometimes when the bills were paid by mail, customers would fail to indicate that they wanted the stamps sent to them. In other cases, the stamps would be lost in mailing. There was also misunderstanding on the part of many of the customers who made installment purchases as to why they were not eligible for stamps when they made their monthly payments. There were problems resulting from delivery of merchandise and from adjustments on trades. In some instances, merchandise was taken out on ten-day approval, which still further complicated the policy of who was or was not entitled to the stamps. Adjustments were constantly being made to keep the customers' E. J. Reavy 59 good will. The controller decided that the method of granting Green Stamps was too flexible and that too many customers were taking advantage of the liberal policy of the Fillmore Company.
As a result, in October, 1958, he sent a written memo to the customers in which he stated that those who had been granted one or more adjustments in order that they might secure their stamps would not be given any more adjustments in the future. Those who had never been given any adjustment would be allowed one, but they would have to show that some mistake had been made. The controller informed Mrs. Terrold, the credit manager, that it was her responsibility to carry out this policy and that he wanted her to be very strict in dealing with people who asked for consideration. The company had kept very accurate records of every adjustment that had been made over the five-year period and was in a good position to enforce this change in policy. The Reavy misunderstanding resulted from Mrs. Terrold's refusing to grant an adjustment to Mrs. Reavy. On December 30, 1958, Mr. and Mrs. Reavy purchased a maple dining room table for $167.50 and asked to have an appraiser come to their home to let them know how much they would receive on a table which they were going to turn in.
The appraiser called at the Reavy home on December 31 and offered $22.50 for the old table. Mr. Reavy then called the store and asked to have the table sent out; he requested that the $22.50 be credited against the purchase price of $167.50. The new table was delivered on January 5, and the men picked up the old table and gave Mr. Reavy a credit memo for it. On January 10, the Fillmore Store sent a bill to the Reavys for $167.50. Mr. Reavy immediately telephoned and explained to one of the girls in the credit department that a mistake had been made in his bill. He asked her to send him a corrected statement so that he could pay in time to get his stamps. She informed him that she would take care of the matter and would send him a corrected bill. The new statement did not arrive until February 1. Mrs. Reavy was not able to get downtown until February 3, at which time she called at the credit office and explained the problem to the credit manager. Mrs. Terrold listened to the explanation and then said, "I will have to check our records before I can give you an answer, Mrs. Reavy, so will you excuse me for a minute." After checking the records, Mrs. Terrold returned, and the following conversation took place: 60 The consumer MRS. T. : I am sorry Mrs. Reavy, but I will not be able to give you any Green Stamps. Our records show that we made an adjustment for you three years ago.
MRS. R. : I am positive that no adjustment was ever made for me. In fact, I don't think that this is an adjustment. The girl in your office made the mistake. MRS. T. : Do you know which girl your husband talked to? MRS. R. : No, my husband didn't get her name. MRS. T.: You should know, Mrs. Reavy, that it is always important to get the person's name. It is impossible for me to find out who talked to your husband. I have told all the girls that they are never to make any agreements of that kind without first consulting me. MRS. R. : The fact is that my husband did not bother to ask the girl's name and believed that she would take care of the request for the corrected statement. MRS. T. : We are having a problem with these girls. They will promise so many things when they have no authority to do so. Yesterday, one of them even went so far as to tell a customer that he could have an extra ten days to pay his account. Luckily, I overheard the conversation and was able to put the customer straight. MRS. R. : While you were talking, I recalled that about three years ago I had to sign a special slip for some stamps. The store had a policy that when purchases were over $100 we had to call for the stamps at the store. We bought some drapes and other furniture and had a bill that month of $475. When I sent the check for payment, I was notified that I would have to come into the store to pick up the stamps.
One of my youngsters became sick, and it wasn't until the end of the month that I was able to get to the store. When I asked for the stamps, I was required to sign a slip before the stamps were given to me. MRS. T.: There might have been such a policy, but I know nothing of it. I have been here for over two years, and we have always sent the stamps in the mail regardless of the size of the check. MRS. R. : I am positive that was your policy at that time. I want you to know that I really do not care particularly for the stamps, but right now it is the principle that is important to me. The Fillmore Store made a mistake, and I feel that you should rectify it. I am entitled to the stamps, and I expect to receive them. MRS. T. : It is impossible for me to do anything at this time. I will have to let you know later. MRS. R. : What do you mean, later? MRS. T. MRS. R. MRS. T. MRS. R. MRS. T. MRS. R. Gruen Watches 61 I will have to check with the controller and will get in touch with you by letter. When can I expect that letter? I will be sure to send you a letter by tomorrow. By the way, since you are emphasizing names so much, what is your name and position?
My name is Mrs. Terrold, and I am the credit manager. Goodby Mrs. Terrold. I will expect to hear from you tomorrow. When Mrs. Reavy returned home she and her husband discussed the matter at some length; both were quite shocked at the way in which Mrs. Reavy was treated. The next day, a form letter arrived from the Fillmore Store stating: "No adjustment can be made on your stamps because a prior adjustment has already been made." Mr. Reavy immediately picked up the phone and called Mrs. Terrold. He said forcefully, "I want you to know, Mrs. Terrold, that I am completely disgusted with the way you treated my wife. I want you to close my account immediately."
QUESTIONS
1. Recognizing that Green Stamps will cost a store 3 per cent of sales, what policy should be followed in giving them to customers?
2. How important do you believe stamps of this kind are in attracting customers?
3. What could the Fillmore Store do at this time to secure Mr. and Mrs. Reavy's business again?
4. Do you believe that the strict policy of the controller in giving stamps is a sound one?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.