In the mid-eighties, the Toro company launched a promotion in which snow blower purchasers could refund a portion of their purchase if the next winter brought modest snowfalls. The amount of their...

In 1914 Toro started as a manufacturer of tractor engines and later started manufacturing
lawn movers as well, in 1960’s company took a critical decision to enter into a new segment and
added snow thrower to their list of items and by year 1984 Toro entered completely into outdoor
care products market. List of customers consists of both institutional as well as residential
customers, improved and wide range of products offered by Toro helped it to increase the scope
of market for itself and cater both segments of market. Now Toro is catering needs of
institutional as well as residential customers, residential lawn care services is one of the highest
revenue producing line of business of Toro, rest of the revenue comes from all other products
and services offered by Toro. (Bell, David E. 1994)
This article is written pursuant to a program undertaken by Toro to increase sale of snow
throwers, S’ No risk program is introduced to boost the sale of snow throwers which is highly
dependent on the level of snow fall. Snow throwers are being sold by the company by the help of
its channel of distribution which consist of 26 distributors; these distributors are responsible for
selling snow throwers to retailers and mass merchandisers. During year 1978-79 and 1979-80
Toro experienced substantial rise in the sale of single stage and two stage snow throwers.
Whereas in year 1980-81 the low level of snowfall resulted in loss of sales of snow throwers, in
year 1980-81 due to less sales the inventory of snow throwers piled up leading to high amount of
inventory of snow throwers at the end of the season. The inventory accumulated during 1980-81
was lying in the stores for a period of three years. In order to avoid such fall in sales due to
adverse climate condition company has implemented S’ No risk program. (Bell, David E. 1994)
The initiator of S’ No risk program was an idea given by Good Weather, Good weather is
an organization which deals in providing insurance services for weather related business losses.
Susan Erdahl (program manager of Toro) is the person to whom Good Weather approached and
suggested him to opt for an insurance policy, this insurance policy suggested by Good Weather
will cover the loss of amount refunded by the company to customer due to low sales of snow
throwers which is result of lower snow fall. S’ No risk program is a promotional program under
which the company will refund money to the customers buying Shovels (except those buying
power shovel). In order to make the scheme more interesting the amount of refund is not fixed
rather it is kept variable, the amount of refund will be dependent upon the level of snowfall
which will be measured on the basis of the data provided by various weather stations. (Bell,
David E. 1994)
Payback structure to attract customers
In order to make offer more...