Posted in Marketing and Strategy Terms, Total Reads: 454
Sweepstakes are promotional campaigns in which companies give prizes to the winners who are selected by random chance from the entries received. Format of these promotional schemes can be of many types such as, games, contests etc.
It should not be confused with lotteries that are illegal according to the state laws. A lottery has basically 3 components:
Lottery= Prize + Chance + Consideration
Prizes= anything of value, that would be awarded in the promotion.
Chance= A process that is beyond the contestant’s control and based on random choice.
Consideration= anything that requires the participants to spend money in order to participate.
A sweepstake is a type of promotional marketing tool based on random drawing but with the consideration part removed. This makes it different from lotteries and thus legal.
Since, Consideration part is not there, and allows participants to enter without any purchases. This is Sweepstake’s “No Purchase Necessary” criteria that it need to follow in order to be deemed legal.
Reader’s Digest was fined heavily in the U.S. when it launched a promotional campaign with multi-million dollar prize for the winner but that campaign required participant to buy its magazine in order to get the coupon required for participation.