Graeme Hamilton – SPAM - Overview SPAM
Problem Consumers purchase SPAM primarily because they believe it to be cheap. However, at many grocery retailers there are comparable private label equivalents being sold for much lower prices. How can Hormel convert these price sensitive consumers into purchasers of the more expensive SPAM product line? Research First, secondary online research was conducted to begin to understand what the market for SPAM looks like. From this it was learned that over all the brand is in good shape, with a third of American households having purchased a can of SPAM in 2017 according to AdWeek. Further investigation showed that the SPAM consumer skewed heavily towards lower income brackets and that between 2014 and 2015 the largest plurality of baskets that contained SPAM were purchased with the aid of food stamps, according to InfoScout.com. Noticing a similarity to previous research, a survey by Bankrate.com confirmed that the demographics of a normal SPAM purchaser are similar to those of the most avid lottery players. An article on Wired.com, which discussed a new psychological study of lottery players, backed a psychological effect of perceiving one’s income to be low with increased chance of purchasing a lottery ticket. Finally, an internal Hormel presentation, showed that in 2007 there were concerns over the encroachment of private label equivalents on Hormel’s market share. Primary research included observations at a local grocery store, targeted intercepts, and a blind taste test. The observational research found that 12% of the 25 observed buyers of SPAM or private label equivalents chose the private label equivalent (Table 1). When asked why, the unanimous sentiment was that price and value were the deciding factors. The blind taste test was conducted with 50 participants and concluded that the chance of a consumer correctly identifying SPAM was little better than guessing (Table 2). Key Insights 1. “Value” is very important to the target. 2. The perceived “value” of SPAM must be raised to match its price point. 3. The SPAM and Private Label Equivalent buyers likely play the lottery. Communication Strategy From the research it was concluded that a (non-monetary) prize raffle run through codes on the underside of SPAM tops would be extremely appealing to the target. Prizes could include game consoles, expense paid shopping sprees, or other prizes. Prizes that would require time off from work should be avoided. Ads run on OTA TV and pre-roll YouTube advertisements would be well placed to reach this market. In addition, billboards positioned in lower income neighborhoods and automatic coupon dispensers in stores that give out a free play code, to be used in conjunction with a code from a SPAM can, would help to get consumers hooked.