TWINKIES

“Having been around a long time is not the most powerful selling proposition unless you’re Champagne” – Allen Adamson, managing director of brand consultancy Landor Associates’ New York office (LA Times, July 13, 2013)

This is a Re-Post of my Blog last January re TWINKIES …

A Brand New Case Study in Product Vision

The end of last year there was a very successful product that had been in business for over 80 years with key retail shelf placement and a loyal customer base that simply closed up shop. It had evolved over time from the unique ideas and uses of its customer base rather than through smart timely marketing by the company. How and why does a company with that much tradition simply close shop? Obviously, there are numerous reasons and perspectives on this subject, but from the mere speculation of an outsider, it seems almost incredulous that such a company would “expire” … for lack of a better word … on its own accord.

You’ve probably surmised by now that I’m referring to the Twinkie. I’m confident that soon a new company will surface with “the rights to Twinkie” and a new Twinkie product with an awesome and inspiring marketing program will emerge second to none with key endorsements and a major marketing blitz. I am also just as sure that business schools in colleges across America will include case studies of “what went wrong with Twinkie? And why?” It will join the ranks in college halls of Burroughs, Friden, and Polaroid.

The sudden and unexpected shutdown of Twinkie’s prime location in the snack food world will be dissected even more than it has already been used as a snack whether to be eaten as is or as a base for strawberries, chocolate drizzle, or deep-fried, etc. After 83 years and more than 500-million cream filled, golden spongy cakes each year … how could an American icon simply close down?

Americans were fascinated with the Twinkie from the get-go and up to the very end; it was “a player” in the snack food world … and most likely will be again. But after all the testing and probes concerning the product and the marketing efforts, Twinkie’s history or example teach several lessons to today’s business world … some lessons helped it succeed and others led to its demise. Regardless of your business perspective or philosophy, there are lessons to be learned from the rise and fall of Hostess and its flagship Twinkie.

Let’s take a look at a few that easily come to mind:

• Timely Innovation

There are several factors that led to Twinkies’ ultimate downfall. When it came to innovation, it’s fair to say that Twinkie was slow to respond to the market. In the highly competitive market of consumer-packaged goods, few companies will let their key cash-generator out to pasture to linger and graze indefinitely. One can immediately think of how Coca-Cola or Quaker continuously cultivate their product lines, introducing new, bigger, better, healthier, lighter and different flavors to refine their products and cater to their customer base. However, it appears that rather than innovate its products, Hostess missed the mark and passed up the opportunity to leverage its brand recognition and customer base. Instead of applying aggressive marketing techniques and efforts, Twinkies languished on the sideline after its best days were far behind and simply let it generate cash.

Hostess should have looked at some of the examples in the market place such as Quaker, Apple or Honda and took a page out of their marketing handbook for ideas on the successful art of innovation, improving upon and expanding their entire product line. Constantly introducing improved, better, lighter, more powerful, feature-packed products. Apple has been around 30 years but many look at them as a new company because they are constantly innovating.

• Keep Your Focus on the Customer

Hostess apparently took its eye off customers a long time ago … or at best took them for granted. When the health movement began and Americans began to fixate about weight loss and healthier eating, many food manufacturers took notice and acted, introducing low-calorie and/or healthier options of their products. It was only recently Twinkie finally introduced a lower calorie version. Furthermore, as Hostess was finally working to catch up with the market, perceptions of its snacks plummeted and often became the butt of jokes in an increasingly focused, health conscious community. It seems logical that if the company had moved quicker and committed a major effort to build demand for its lighter version – and marketed it properly, Twinkies most likely would have enjoyed greater sales and success.

There are many examples of well-known companies that have experienced similar situations like Twinkies for not acting in a timely manner. There are also several examples of current companies today who are investing millions to widen their focus and redirect their efforts … such as Microsoft with Windows 8 and Windows Phones and Google getting into phones and apps … based on changing consumer preferences, cultural patterns and demand for the expanding mobile and technology markets.

Learning from Twinkie’s mistakes, when a business has a shrinking customer base coupled with large scale, ongoing shifts in customer preferences and tastes, the key is not to ignore the reality, but to act on the facts… in a timely manner. Would a whole wheat or Gluten free Twinkie have been successful? Probably not … but I have every confidence that some industrious company is going to buy the Twinkie name and show us what can be done with a product that has a loyal customer base and a desire to generate cash. We’ll have to wait and see.

• Financial Strength is a Factor

It is obvious that financial strength is an important factor. It’s fundamental to any business. Unfortunately, Hostess’ balance sheet became its weakest link. Its debt-to-income ratio became unsustainable. The true health of any company is only as good as its balance sheet. There have been many high profile companies that have failed because of their lack of financial wherewithal, from Enron to Lehman Brothers, and they are now history. A company’s financial strength must remain a priority for any business … but having a cash-generator helps. And it appears Twinkie has been a cash-generator.

• Change is Inevitable – Change is Constant

Twinkie’s blazed its own trail and provided many good lessons for companies to emulate.

Over the course of its life, the Twinkie faced great challenges, as any long-term company does. And for years it successfully met those challenges, demonstrating its ability to adapt to the marketplace circumstances. It’s history tells us it survived World War II, which triggered rations for one of its key ingredients – bananas, so the company wisely introduced its now famous vanilla cream center, which went on to replace the original filling. In 2000, a labor dispute created a “Twinkie famine,” resulting in product shortages, which the company managed to overcome as well.

For long-term success a company will have to deal with unexpected crisis or adverse business conditions, which will require that they be willing to change in how they work around unanticipated roadblocks. Such decisions can make the difference between success and failure. The recent adjustments in the auto industry are good examples of how businesses may have to overcome threats or challenges.

 

• Customer Loyalty is Precious

A product or company that is successful enough to last over 80 years is a real tribute. In doing so Twinkie has left a courageous example on many people for over five generations. It was impressive to see what happened when word came out that Twinkie’s days were numbered … immediately customers bought up all remaining inventory. Today, Twinkies can mostly be found on eBay at inflated prices.

With its 80+ year record, Twinkies’ has provided an example that a company can engage and connect with its customers on an emotional basis.

• Example of Product Vision

From the beginning Twinkies delighted customers with a cream-filled center that delivered “a sweet surprise with every bite.” From a marketing perspective, you have to tip your hat to Twinkie’s original product vision … it was powerful, long lasting and set their product apart from the competition.

In an ironic sort of way, maybe Twinkies original concept of providing surprise and delight to their customers is the precursor to Apple’s i-products. The difference may be that Twinkies’ didn’t go beyond the product and extend it to customer service and employee relations as Apple did while enhancing their culture and image. If they had taken a different approach years ago and carried out their initial product vision throughout their organization, maybe they would have been able to avoid their labor problems and be a strong and viable company now and going forward.

I am confident we will hear more of the Twinkie brand … remember they sold over 500-million annually … that is something that has to be applauded and recognized as a success.

Looking forward to the next chapter and how the halls of the college business schools will use this as a case study example to be examined and learned for years to come.

What are your thoughts on the demise / success of the Twinkie?

© Phil Hoffman 2013. All rights reserved

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Tags: Hostess, Marketing, Product Vision, Twinkie, Vision

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