Gaming millionaires cash in and crash

BY John Njiraini

Companies are yet again rolling out promotions and competitions to increase sales volumes and maintain brand loyalty.

This is the time when lucky consumers wake up to find themselves in the club of millionaires.

From the just-concluded Lipua Millioni with Safaricom, to the ongoing Wahi Kuwahi with Coca Cola to Bambika with Tusker, the hunt is on for the next bunch of millionaires.

In the three high-flying competitions, 97 entrants most of them ordinary people leading simple lives, saw their lives instantly transformed. Safaricom has crowned 60 millionaires during the two months its competition ran.

Yet in the midst of the excitement and hullabaloo, the big question is who exactly is the real winner between the company and the wild goose hunters.

Going by past experiences, most winners are usually hit by a culture shock and often end up worse off than they were because they are not prepared for the windfall.

With little knowledge on investing and confused by relatives and friends out to get a share, some squandered the money.

However, if companies running the promotions engage winners and equip them basic investing techniques, the money can positively transform their lives.

"For most people who win in a promotion this is the largest lump sum amount of money they have ever handled in life and probably will ever handle. It is important for them to get advice on how to handle it," said Mr Hardy Pemhiwa, the managing director of Amana Capital.

In the Safaricom promotion, the 60 millionaires received basic training on managing and investing the money while East African Breweries gives the winners contacts of where they can seek advise on investing.

Armed with the basics, winners can design an investment plan. They might also seek the advice of experts who are well placed in analysing the available investment options and advice on those that provide the best returns at low risk.

For most winners, who are ordinary people leading simples lives, the guiding principle to invest the money should be age.

Guiding principle

This is because for a 60-year-old the money can just be used to secure the sunset years by just buying an annuity from where one can be drawing a monthly payout.

But the ball game is quite different for a 30-year-old who has many years ahead and the Sh1 million windfall is probably the only opportunity to transform their life for the better.

At 30, its important to plan well on how to invest the money, with starting a business as probably the best option.

However, an individual must critically do a Swot (strengths, weaknesses, opportunities and threats) analysis of the kind of business one intends to venture into as a way of gauging the chances of success.

Also for a 30-year-old, one can decide to set aside Sh500,000 and get into a speculative venture at the stock market where he or she buys low and sells the moment the prices make a slight upward movement.

Though this option has the chances of multiplying the investment in a short while, it’s a double-edged sword because the money can be lost fast.

While for most winners marks the beginning of new trouble, for companies it all celebration — after objectives are realised.

Though companies would rarely admit it, the fact is that they think of themselves first in terms of anticipated returns and the winner as a symbol to entice more participation.

In marketing strategies, promotion are one of the most effective ways of driving up sales because they easily attract consumers and locks them to a particular product, even if it is for a short while.

Consequently, all the promotions are packaged on the premise of rewarding consumers.

But beneath the excitement they generate, where everyone seeks the shortest route to riches, they are an effective tool that companies use to drive sales up, create brand loyalty and attract new customers to the brand.

University study

"Our objective is to reward consumers and also increase our sales," says Mr Charles Gacheru, who is handing the Bambika promotion for East African Breweries.

A common trait in all promotions is the unsaid caveat that by deciding to participate in a promotion, an individual surrenders his/her right to privacy and acknowledges that their winning image will be used to entice many others to participate.

This is why the pictures of winners holding dummy cheques have become a common occurrence in newspapers and televisions and their are heard on radio encouraging others to participate.

Brandishing the images of winners on television and newspapers, though good for the company and its brand, has ended up complicating the livings of some winners.

This is because they open a floodgate of relatives and friends who want to get a share of the money.

They also create paranoia in the winner about their security and force many to disappear or turn off their mobile phones or change their telephone numbers altogether.

According to a study by psychologists at the University of Missouri-Columbia, US, instant wealth particularly from winning a jackpot can be a source of unhappiness.

"Wealth, particularly for people unaccustomed to it, such as lottery winners, can actually cause unhappiness," says the study carried out in 2001.

Due to this, many winners live to remember the words of Brian Koslow, American author and entrepreneur who wrote: "Forget the lottery. Bet on yourself instead."