Bidding on Twinkies and The Crazy Value of Brand Loyalty

Twinkies have been a slice of Americana for quite some time.  In days past, they were almost iconic in the realm of convenience or grocery store pre-packaged desserts, the classic processed snack for those with a sweet tooth.  I never really cared too much for them, and really haven’t thought much about them at all in recent years, as people these days have many more options at the store and also think more about nutrition.

However, there were apparently many people out there either still hooked on these things, or still emotionally attached to these snack cakes.  In a great example of the power of a brand, there has been incredible bidding on Twinkies since the news spread regarding the possible future of Hostess Brands.  As in, bidding to the point of spending hundreds of dollars on boxes of Twinkies!

Now, up front, I first wonder if the product will find a way to be out there in the future in some form anyway.  After all, one would think that the Twinkies brand is a valuable asset, and perhaps someone will find a way to have it be actively marketed in the future.  But apparently fans are either not aware of that possibility or just buying up Twinkies just in case.  Just by taking a 2 minute search on EBay, one can see that there have been many people buying these, quite a few paying what amounts to over $1  per cake.  And doing so in bulk, buying many of them.

Panic buying for Twinkies…wow!  What’s interesting is that I know someone who works in that business, who turned away the opportunity to get a ton of those snacks at little to no cost.  He could have turned around and sold them for a big profit if he timed it right.  I joked to him that this was his opportunity for early retirement, and we were both half serious about it!  Well, maybe it wouldn’t have been early retirement, but it could have given him quite a bit of money.

What can be learned from all of this? Well, that irrational behavior can manifest itself a couple of different ways:

Brands can have incredible value.

Some people just go crazy over certain brands.  A somewhat different example is when Chick-Fil-A, a historically Southern chain, opened up here in Chicago.  I happened to be downtown walking out of the building for lunch, and got a few blocks away when I saw some guy dressed up in an animal costume handing out free sandwiches.  He then handed information on the new location they were soon opening a few blocks from there.  For me, it was nice to get an unexpected free lunch (though there is probably no such thing as a free lunch, as we’ve discussed before).  It was also a interesting story.

When I got back to the office, I stopped by the office of somebody with whom I worked, who I recalled was from the South.  I told him, “You know I just got a free Chick Fil-A sandwich outside.”

His face turned white as a ghost.  As if his life flashed before him.  He stammered “No. Way.”  Then paused, staring blankly at me, eyes glazed over with shock.  Then, he uttered “Where?”.  I told him, and he immediately got up, got his jacket, and walked out of the office.  He was like a heat-seeking missile, going after that Chick-Fil-A sandwich.  Clearly, this was a brand from his home area – the South – that he was very loyal to and fond of.  Even to the point of seemingly losing control when he had a sudden, unexpected opportunity to get a taste of home up here in the very northern Chicago area.

The same guy apparently camped out overnight when the new store was set to open some time later.

Money Can Be Made With Brand-Crazed People

Sometimes, people can be so loyal to certain brands that they will pay a massive premium.  This can be seen with Twinkies, as there are people that panic when the brand is perceived to be leaving, to the point that folks are stocking up and hoarding a (supposedly) perishable product.  This can also be seen in that Chick-Fil-A example, where someone can lose control and simply drop everything he’s doing to go get that sandwich immediately – let alone camp out overnight before the grand opening.

In such cases, when brands make a connection with people, there are chances to make money.  There might be other substitutes just as good, or maybe even better, so logically it shouldn’t be a big deal if one brand leaves the scene.  However, sometimes people are so loyal that they just don’t care – and will spend time and money for that brand.

Would I do this? I would like to say no, but I can think of one example where I’ve been very loyal to one brand – or business, anyway.  Growing up, we had what amounted to an annual tradition to visit a certain restaurant during the holiday season.  It was a nice place, but it was 2 hours away in a more outlying area away from Chicago.  It was our own family experience, making the drive out the “country” to this place each year.  The food was good, the atmosphere was good, and it was just a nice tradition we had.

Well, after 20 years of doing this, we eventually discovered that the place closed down.  The tradition came to an unceremonious end.

If we had known that we had only one more chance to visit this place, I think we would have paid a hefty premium to eat there just one last time.  Why? The brand made a connection with us, almost an emotional connection in some way, that translated into loyalty.

My Questions for You

What do you think about this Twinkies craze, where people have been buying them up?

Do you think that the value to brands is always real, or is much of it simply in the mind sometimes?

Are there any brands or businesses for which you might have exceptional loyalty?

Comments

  1. says

    Branding is the marketer’s snake oil: A way to get people to pay for nothing. I like to call the premium people are willing, even eager, to pay for status brands “brand vapor.” I think the Twinkie phenomenon is more about an iconic product not a brand. I might ‘invest’ in Twinkies based on the ‘bigger fool’ theory–that I could depend on someone paying me even more than I paid for a box of Twinkies in the future!

    • Squirrelers says

      Kurt – some brands sure do make some marketers look brilliant. Or, is it that consumers have the propensity to be highly guillible? :)

  2. says

    I honestly can’t recall if I’ve ever even eaten a Twinkie…if I did, it obviously didn’t leave a lasting impression on me. I don’t have a sweet tooth, so I am not really surprised. I am also not a brand name person. I have no interest what so ever in paying top price for something because it is a “X” (insert brand name here). To me, quality at a good price works for me! So to answer your questions directly:
    1) They’re nuts.
    2) Value can come with a brand, but that isn’t 100% of the cases and the value may not be worth the money. Value also comes with generic.
    3) Can’t think of any, so most likely, no.

  3. Christian L. says

    I’m not surprised with how quickly and irrationally people reacted to Hostess’ liquidation. On the whole, people aren’t very bright. But that’s why you see boxes of those spongy desserts going for those prices; some people are smart enough to capitalize.

    Sometimes brand loyalty tricks me. I had Honey Nut Cheerios with the girlfriend a few weeks ago. The next time I went grocery shopping, I bought them instead of the cheaper, same-tasting off brand. I felt like an imbecile.

    But I’m also loyal to certain brands. I’m a bicycle buff, so certain companies make products I’m fond of. They function beyond my expectations, so I buy different components by the same company.

    -Christian L. @ Smart Military Money

    • Squirrelers says

      Christian – you do bring up a good point about how some brands truly deserve our loyalty. While many brands are a function of skilled marketing, some also have some genuine value backing that “perceived” value. That’s where we might really be getting what we pay for with that brand premium.

  4. says

    I think the Twinkies craze is nutballs. I also think they will still be around, just under some other company name. And even if they aren’t, I don’t see the huge loss. But I sort of understand people’s emotional attachment. I may hoard Honey Nut Cheerios if they ever decide to go out of business…

    • Squirrelers says

      Crystal – it has to be emotional attachment, as it seems hard to fathom being so into the taste of those things compared to alternative snacks. Crazy stuff!

  5. Gail says

    This conversation sounds like an economics teacher with a fun project for his students. You all sound too intelligent to just be wasting time chatting about Twinkies. Also, you all used full words.
    I googled this subject because my husband talked me into buying a bunch of boxes of Twinkies when the news came out about them going out of business. Now I’m trying to decide whether I should try to sell them on Ebay or just wrap them up and give them as Christmas gifts as a joke. We don’t really exchange gifts, so it wouldn’t be a big let down for anyone, but might get some good laughs. What do you all think?

    • Squirrelers says

      Gail – yeah, it’s an unusual topic to be sure. As for what to do? I say sell them and get what you can! Assuming the craze is still in place, which I don’t know at this point.

  6. Natalie says

    If Coca-cola (not pepsi, not generic soda, not coke-related products like sprite) ever went the way of the dodo, I would buy up cases in a heartbeat.

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