Twinkie Case Study
How did Twinkie turn it around?
How did Twinkie turn it around?
1) Product Development - Twinkie remade their formula, adding preservatives. This made it easier to store and transport product, cutting down on overhead.
1) Product Development - Twinkie remade their formula, adding preservatives. This made it easier to store and transport product, cutting down on overhead.
2) Distribution - Originally, distribution made up 33% of Twinkie's operating costs, because they had to be quickly moved to many places to avoid the product soiling. With central distribution, Hostess was able to have central product storage and transport, reducing transport costs to below 20% of overall costs.
2) Distribution - Originally, distribution made up 33% of Twinkie's operating costs, because they had to be quickly moved to many places to avoid the product soiling. With central distribution, Hostess was able to have central product storage and transport, reducing transport costs to below 20% of overall costs.
3) Manufacturing - a major part of the turnaround was manufacturing. Twinkie sold off factories to create extra capital to invest elsewhere. By moving all production to one factory, Hostess had the extra capital from the sell off + more efficient and centralized production.
3) Manufacturing - a major part of the turnaround was manufacturing. Twinkie sold off factories to create extra capital to invest elsewhere. By moving all production to one factory, Hostess had the extra capital from the sell off + more efficient and centralized production.
4) Finance - Hostess needed to secure liquid assets to get the Twinkie production and distribution up and running again. To do this, Hostess reached a deal to get on the Nasdaq stock exchange. That would allow the company to raise money from shareholders to "pay down debt, invest in upgrades or fund potential takeovers of outside companies."
4) Finance - Hostess needed to secure liquid assets to get the Twinkie production and distribution up and running again. To do this, Hostess reached a deal to get on the Nasdaq stock exchange. That would allow the company to raise money from shareholders to "pay down debt, invest in upgrades or fund potential takeovers of outside companies."
5) Marketing - Hostess' Twinkie marketing was successful for two reasons. First, it was seen as a challenge to the stuck up elite. Having popular media members like Al Roker eating Twinkies on television secured their comeback as "the snack of the common man." Second, increased preservatives helped sell Twinkies on the grounds that they would stay good forever.
5) Marketing - Hostess' Twinkie marketing was successful for two reasons. First, it was seen as a challenge to the stuck up elite. Having popular media members like Al Roker eating Twinkies on television secured their comeback as "the snack of the common man." Second, increased preservatives helped sell Twinkies on the grounds that they would stay good forever.
Main Driver of success
Main Driver of success
I believe the main driver of success was product development. This is because, in addition to the reasons stated above, product development was also the root cause of every other change. Product development firstly allowed for centralized distribution, which was not possible with the old formula. Second, it allowed centralized manufacturing because plant location became less important. Third, the change to the formula was exciting and new, which helped drive funding. Finally, the Twinkies were explicitly marketed on "lasting forever," a direct result of product development.
I believe the main driver of success was product development. This is because, in addition to the reasons stated above, product development was also the root cause of every other change. Product development firstly allowed for centralized distribution, which was not possible with the old formula. Second, it allowed centralized manufacturing because plant location became less important. Third, the change to the formula was exciting and new, which helped drive funding. Finally, the Twinkies were explicitly marketed on "lasting forever," a direct result of product development.