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M&M's Loss Was Hershey's Gain with E.T.

Background information for Exercise 4.4

By October 1981, Steven Spielberg had become a considerably successful and renowned film director. He had written and directed the 1975 classic "Jaws", the 1977 hit "Close Encounters of the Third Kind," and was enjoying the phenomenal success of "Raiders of the Lost Ark," which would win him the Best Director Oscar Award in 1982. It was at this time that Spielberg was at work on another soon-to-be box office sensation, E.T. the Extra Terrestrial. A key scene called for the film's main human character, 9-year-old Elliott, to lure an alien out of the woods with M&M's.

Spielberg's people approached the makers of M&M's, Mars Inc., with a deal to use the candy in the film. Notoriously frugal, unpredictable, and tyrannical in their business dealings, chief executives John & Forrest Mars flatly rejected Spielberg's offer. Looking for the best alternative, the movie's producers turned to Hershey Foods for its Reese's Pieces, a relatively new addition to the Hershey product line.

Despite Spielberg's track record, Jack Dowd, Hershey's Vice President for New Business Development took a substantial risk when he accepted Universal Studio's offer: he was not permitted to read the script but was told the plot; he was not film clips of the alien, told only that it was lovable not scary creature; he never met with Spielberg, only with the studio's lawyers and the film's co-producer; and, he knew that his rival had curiously already turned down the opportunity. Nonetheless, Dowd made an agreement with Universal, guaranteeing that Hershey would spend $1 million over six weeks concurrent with E.T.'s release, to promote the film in return for being allowed to use E.T. -- the movie and its trademarked images -- to promote Reese's Pieces.

Dowd had made an astute decision. Reese's Pieces had been introduced nationally in only 1980, and by the time E.T. was released in June 1982, sales were sagging. However, within two weeks of the film's release date, sales of the candy had tripled; distributors of the candy re-ordered as many as ten times during that 14-day period.

Hershey paid $1 million for an amount of promotion that would have cost an estimated $15-$20 million, according to Dowd. Articles at the time pointed out that some viewers thought the candy used in the movie was M&M's, and that Mars probably experienced some level of "free ride" from the movie hype. A month after E.T.'s release, however, Mars Inc. was clearly abashed by the company's missed opportunity, going so far as to imply that they had never received an offer from Universal.

Written by Mary Murphy under the supervision of Luís Cabral.

Sources: Joël Glenn Brenner, The Emperors of Chocolate. New York: Random House, 1999. Stephanie Mansfield, "Sweet Success: Reese's Cashes in on E.T.'s Candy Cravings," The Washington Post. July 14, 1982.

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