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How Spam Came to Rule the World (and why it is shoplifted in Hawaii)

What do you think of when you hear the word, “Spam”? First off, we are not talking about electronic junk mail. 

If you are thinking luncheon meat, you probably have a mixed reaction at best. For most of the grocery product’s 8-decade history, Spam has been disparaged and dismissed. The harshest critics cite is as inedible and mock it as “Something Posing As Meat” or “Scientifically Processed Animal Matter”. Yet, over 8.5 billion cans have been sold since Hormel launched the product in 1937. 

Americans buy 113 million cans of Spam annually. This means 3.8 cans are consumed every second in the United States. To keep up with demand, the slaughterhouse next to the Hormel plant in Austin, Minnesota butchers 20,000 pigs a day. So, how can we reconcile what is so bashed with what is bought (and stolen) in mass amounts?

Spam was successful right out of the gate, having grabbed 18% market share in its first year of sales. By 1940, 7 out of 10 of Americans had tried Spam. This was largely attributed to an economy still suffering from the Depression and it began Spam’s longstanding association with low-cost and frugality. Sales still spike when times are tough. 

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When Commerce Met Art

As my readers know, I am a huge fan of marketing history (to the point of being supremely nerdy). Over the past few years, I went back through the centuries to find great stories for my book, Why Marketing Works. That research missed a very cool tale that I am happy now to share. It involves Walter Paepcke and his company, Container Corporation of America (CCA).

When just 25, Paepcke inherited his father’s Chicago-based wooden crate empire. Predicting the shift to a consumer goods economy requiring smaller, lighter packaging, he moved production from wooden crates to corrugated paperboard containers. He bought a bunch of other packaging suppliers along with paper mills to ensure vertical integration and founded CCA in 1926. One smart fellow…as you will learn (read to the end to see how he and his wife are responsible for the popularity of the town of Aspen).

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Consumer Misbehaviour

An episode of the U.S. version of the television comedy, The Office, involves a Halloween costume contest at the paper supplier Dunder Mifflin. The top prize is a discount book offering coupons from local businesses. The retail cost of the book is $40.00 that offers $15,000 in savings if all coupons are redeemed. One character on the show, Oscar Martinez, is an accountant who takes exception to the irrational exuberance of his colleagues towards this prize.

The employees throw themselves into the contest. They produce topical and highly detailed costumes to best each other. The competition dominates the workday. Oscar’s frustration grows to the point where he challenges their thinking, “Everyone realizes this coupon book is not actually worth $15,000 right? You would have to spend $200,000 on crap you don’t need to get $15,000 of benefits. I am not the only one who sees this, right?”

Apparently, he is.

The employees escalate the competition by upgrading their costumes and strategizing how best to present them. Oscar tries one last time to educate his colleagues on the economics and their behavior. They aggressively rebut or outright disregard his argument.

To them, the coupon book represents $15,000 in real value. Oscar chooses to confront this irrationality head on. He switches from a colorful disco themed dance outfit to a very staid and generic ensemble worn by an everyman. Oscar explains to his colleagues using air quotes that he is now a “rational consumer”.

The contest commences with the participants showing off extremely elaborate creations including a samurai, Lady Gaga, a mummy, film director Michael Moore and a sexy nurse. Each employee casts a vote for the winning costume and to everyone’s surprise Oscar wins but the victory is greeted with little enthusiasm. The show cleverly reveals that the reasons why people voted for Oscar were as irrational as their view of the prize.

Given our confusing behaviors, it should come as no surprise that the earliest writers in marketing were psychologists. Understanding why people do what they do is at the heart of marketing. Yet, marketers constantly struggle to better their performance.

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