A FEW MONTHS ago, a sentence on an online second-hand retailer captivated many consumers: “Honey Butter Chip For Sale.” Although the asking price was higher than the original sales price, the product sold out in the blink of an eye. Even at such an inflated price, people paid for the chip without any hesitation, expecting to receive them within the next few days. However, the chips never came. It turned out that \10,000,000 was swindled in total. Recently yet another product on a different online retailer has drawn attention: an empty bag of Honey Butter Chip, with a slight scent of the fabled chips still remaining. Surprisingly, the empty bag sold within a few days. For what reasons were consumers willing to buy a bag of potato chips at an even higher price than usual, and why were some people willing to part with cash just for the scent lingering in the empty bag? What is the fatal charm of Honey Butter Chip?
Sensation of potato chips
The unique feature of the Honey Butter Chip is its flavor. Unlike typical salty potato chips, Honey Butter Chip is seasoned with honey and butter. This unique sweet and salty combination has drawn great attention and has become the most successful potato chips in Korea. Even though not everyone has been taken by the new flavor, the Honey Butter Chip became a red-hot item. With its increasing popularity, the sales of the Honey Butter Chip also increased. Three months after its first release, the Honey Butter Chip reached the sales of 5 billion won in sales and one month later, the sales reached 13 billion won, which recorded the top sales for among other potato chips. With its skyrocketing popularity, the Honey Butter Chip sold out in almost every store and demand has overwhelmed supply. This turned the Honey Butter Chip into a rare potato chip.
The tremendous increase in popularity of the Honey Butter Chip in such a short time has affected the entire potato chip market in this country. Other companies that produce potato chips have started to release products similar to Honey Butter Chip. Nong-shim released potato chips with honey mustard seasoning; Orion produced “Sweet Cheese” potato chips and many other companies released similar flavors, as well. In recent months, the convenience stores and markets across Korea started to fill with various honey and butter flavored chips. The honey butter fever also spread beyond the potato chip market and other food markets started to apply the honey butter flavor to their product. Auzie Cheese Fries at Outback Steakhouse, Honey Garlics at BBQ Chicken and Twin Crepe Pizza from Domino’s Pizza are all new products that have adapted the honey and butter juxtaposition. MISSHA, one of Korea’s cosmetics companies, even produced a face mask of Honey Butter, which illustrates how the fever of Honey Butter has become pervasive.
Interestingly, Honey Butter Chip was not as famous when the product was first launched in the August of 2014. It was the marketing strategy that allowed the Honey Butter Chip to outrun its competitors. Hae-tae, the company that produces the Honey Butter Chip, turned in the beginning to “Buzz Marketing.” Buzz marketing actively relies upon word of mouth as the primary marketing medium, mainly through social network services (SNS), blogs or other contemporary media. Hae-tae chose SNS for its marketing strategy, which turned out to be extremely successful. Some advantages of SNS marketing are that it is quick, easy and effective. Without much complication, SNS can quickly and easily measure and reflect public opinion. With the ever-increasing number of SNS users, such marketing is definitely one of the most powerful and effective marketing strategies of recent days. Another benefit of buzz marketing is that the advertising fees are low and economical in advertisement fees. The Honey Butter Chip was unprecedented in that it generated a social trend without a single television advertisement. While other potato chip companies have invested heavily in commercials featuring famous actors, the Honey Butter Chip’s only means of advertisement was SNS. The frequent appearance of the Honey Butter Chip on SNS sparked curiosity from the public. Especially, SNS postings from the general public relaying accounts of difficulties people encountered in purchasing the Honey Butter Chip also increased the attention of customers, resulting in the shortage of the product.
The marketing behind the product
Due to the excess demand over supply, the scarcity in Honey Butter Chip has continued for long. Nevertheless, the public intrigue surrounding the product has also continued. The more people could not purchase the chips, the more people craved them. The scarcity generated interest beyond the original fans of the Honey Butter Chip to segments of the population normally indifferent to potato chips. This caused the price of the Honey Butter Chip to surge higher upand created an underground market dominated by scalpers. As a result, a bag of potato chips was not affordable not due to its price, but due to its quantity shortage.
Despite the constant scarcity and ceaseless demand in product, Hae-tae still is not producing a sufficient amount of Honey Butter Chip to satisfy consumer demand. Why is Hae-tae not grabbing this chance to maximize their profit? First, since the Honey Butter Chip has become a cutting-edge exemplar of sweet-flavored potato chips, the full extent of market demand for this product is not yet clear; The market of sweet-flavored potato chips is indeterminable to estimate how high the market will grow. For such reasons, it is inevitable for Hae-tae to be cautious with their maximum production of Honey Butter Chip. It also isn’t clear if the Honey Butter Chip will be a short-lived fad or a popular snack that survives the test of time. If Hae-tae increases production only to watch the fad die down, the Honey Butter Chip could end up being an expensive boondoggle rather than a bonanza. Other than Honey Butter Chip, there have existed many other food products that shined in the limelight for a short period of time and then disappeared. Therefore, the marketing of Honey Butter Chip would play a crucial role in the settle down of other sweet-flavored potato chips and also the steady selling of the Honey Butter Chip, itself.
In an effort to avoid this kind of short-term popularity followed by permanent oblivion, Hae-tae has employed a marketing strategy that has successfully prolonged attention to its product: Hunger marketing. Hunger Marketing is one of the marketing strategies that plays into and manipulates maximum consumer desire to acquire a certain product. The company initially releases its product at an attractive price but keeps the supply restricted as word spreads about the product, which brings a shortage that then has the effect of raising the price and the name recognition of the product. If hunger marketing is successful, the company is then able to generate higher profit. The case of Honey Butter Chip closely resembles such a marketing strategy.
As criticism toward Hae-tae swelled for the lack of availability of the Honey Butter Chip, the company announced that an accidental explosion at its factory had caused a production delay of Honey Butter Chip. However, consumers soon denounced the company again for the production of the alternatives, which were Honey Tong Tong and Calbee-Honey Butter flavor. As a response, Hae-tae stated that Honey Butter Chip and Honey Tong Tong have totally separate production lines, and that Honey Butter Chip will soon be released again after the factory re-opens. Although Honey Butter Chip has now been restarted to be produced, the quantity of Honey Butter Chip is still in a state of deficiency.
Similar to Hae-tae, many other companies have also used hunger marketing to hype key products. The primary reason for such marketing lies in the fact that companies are able to minimize the advertising expenses. Once the shortage in a product draws public attention, the product will obtain, in effect, free advertising through chatter generated on social network services (SNS) and in many cases, news coverage, naturally fueling buzz marketing. Hunger marketing also enables the producer to manipulate and tightly control supply, allowing the companies to take the lead of the market. This indicates that the amount of profit does not depend solely on how long consumers are interested in a certain product, but on how long the companies are willing to operate the hunger marketing. If the Honey Butter Chip were produced in larger quantities, Hae-tae would have made a larger profit in a shorter period of time but through hunger marketing of the Honey Butter Chip, the profit of Hae-tae might have better prospects for long-term growth. Additionally, by devising a hungry market for a product, the company is able to raise its brand value and create a superior image of its product over other products. A product’s persistent sellout by a small amount of supply gives the impression that it has higher sales and better quality, compared with other products.
For these reasons, many other companies have used hunger marketing from time to time. One such representative products within Korea was Ggo-ggo-myun, a type of ramen noodles. Back in August 2011, the release of Ggo-ggo-myun brought a sensation to both the consumers and other ramen companies by breaking the stereotype that ramen noodles should be red and hot. With white broth, which was very uncommon, Ggo-ggo-myun gained a loyal following, and many people started to raise its awareness among people. The consumers longed for Ggo-ggo-myun when the company started limiting the supply, just like the Honey Butter Chip. Yet, today with mass production of Ggo-ggo-myun, it is no longer at the center of the stage.
Another typical company that still uses hunger marketing is Apple. For many years, Apple has been successful in using hunger marketing and therefore has elevated its brand value far up the ladder. Their products, such as the MacBook computer, iPhone and iPad were considered as among the most innovative products in the electronics market. Apple’s unique designs and programs have indeed been loved over the years by many customers, and when demand for Apple products outpaced supply, customers wanted Apple products even more. Today, one technology company following the example of Apple is Xiao Mi, a Chinese smartphone company. Xiao Mi did not only restrict the amount of supply but also limited its store only to the Internet: when Xiao Mi launched its smartphone, the company sold its limited supply only online at an attractive low price. Of course, the company had caught many consumers’ attention and started using hunger marketing. The result of the marketing was astounding: all of Xiao Mi smart phones were sold out within five seconds.
Even though hunger marketing brings a lot of benefits to a company, it does not always work effectively and also cannot be used with any product. For hunger marketing to be successful, the product should be unique, meaning that potential buyers should not be able to find the substitute products easily. Although hunger marketing allows producers to charge a higher price than previously advertised, the strategy also runs the risk of public backlash. Despite the chance of increasing brand value, the company might also go through a side effect of losing potential customers if waiting times for products become more than the public can bear. The company’s reputation might decline even further when a product turns out to be disappointing after a long waiting period, like the case of Ggo-ggo-myun.
The hungry consumers
Then why do people crave unobtainable products so much? What hunger marketing provokes is not a response of the market itself but the desire of customers to buy a product that they cannot buy. Such a desire is one of the natural consumption psychologies of humans to follow the trend and fashion. As a result of such psychological pressure, the tendency of desiring the same product has arisen. Two economic concepts can explain this phenomenon: “Bandwagon Effect” and “Veblen Effect.” Bandwagon effect indicates a social psychological behavior in which people tend to follow others, regardless of their own situations or perspectives. This term was first suggested by Harvey Leibenstein in 1950 and was derived from people’s behavior of following the bandwagon of a parade out of curiosity. The driving force behind this phenomenon is due to a desire to be affiliated within a community; this is also called the herd effect. Hence, purchasing a product gaining popularity in a decisive uptrend gives the buyer a sense of belonging, thereby satisfying the basic desire to be a part of community. This social behavior affects the determination of the customer when buying a product; it can also affect the tastes of individuals.
Veblen effect, on the other hand, is a consumer’s behavior in which the demand does not fall even as the price rises. Dynamics of pride, pretension and conspicuous consumption are all in play here. In the case of the Honey Butter Chip, such occurrence is resulted from both the Bandwagon and Veblen effects combined to create the high public demand, with scarcity increasing the snack’s popularity. Thirst for the products with high scarcity instead of high price has indeed increased the popularity of Honey Butter Chip. As people often find satisfaction – rightly or wrongly – by depending on recognition and validation from others, consumers have become eager to buy what others desire, in some cases as a substitute for more luxurious items that they probably will never afford. Generally, consumers are breeding self-satisfaction by owning scarce products, regardless of their actual value, and if they do not own one, they start yearning for it. The following interviewdemonstration illustrates this syndrome. Lee Jung-ryung (Soph., Dept. of Biochem.) noted “every friend of mine talks about Honey Butter Chip. Before, I was not particularly interested in Honey Butter Chip but now as I heard (about it) so many times, I feel like I must try it. Now I cannot suppress my curiosity.”
The boom for Honey Butter Chip can also be seen as a consequence of the relationship between hunger marketing and the Bandwagon effect. Although these two concepts are not linked in a cause-and-effect relationship, they are still closely related in stimulating a consumer’s mind. An individual might feel an urge to buy a certain product, such as the Honey Butter Chip, in part because of the Bandwagon effect. However, if the product is not available therefore one’s desire cannot be satisfied, the consumer will often crave the product all the more. Such cravings come not only from the social effect but also from psychological influences such as regarding a product to have a finer quality when it sells out more quickly than other products. For this reason, many advertisements trumpet a “Limited Edition” or label a product as “Almost sold-out” to nudge potential customers and trigger impulse buying.
The Bandwagon effect, on the other hand, also carries side effects. Because a product was not bought entirely based on an individual’s personal preferences or judgment, there are higher chances of disappointment and dissatisfaction toward the product after its purchase. One example is the Ggo-ggo-myun, as mentioned earlier. Although the public’s interest toward Ggo-ggo-myun increased sharply through hunger marketing, the taste of the actual product did not actually satisfy everyone who have ridden on the bandwagon. Some people even expressed higher disappointment because of the inflated expectations. As Yoo Hye-yeon (Jr., Dept. of Comp.) put it in an interview, “A few days ago, I was lucky enough to come across Honey Butter Chip. Although the flavor was sensational, the taste was not as good as I expected.”
Will the Honey Butter Chip have staying power, or will it be a short-lived trend that fades away more quickly then we might expect right now? There is a high possibility that the Honey Butter Chip will follows the ultimately uninspiring footsteps trace of Ggo-ggo-myun. Since Honey Butter Chip is a part of the trend, it is likely that the fever will cool down sooner or later. The constant shortage might even hasten the chip’s demise, if consumers get tired of waiting and eventually find the chip not worth the wait. There is a high possibility that the Honey Butter Chip will follow
s the ultimately uninspiring footsteps of Ggo-ggo-myun.
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Eight months since its launch, the Honey Butter Chip remains in the limelight. One element of its popularity traces back to its distinctive combination of flavors, and without question it is irrefutable that hunger marketing also played a major role in stimulating the public mindset and consumer demand. Currently, the Honey Butter Chip is a rare and desired potato chip, but its scarcity by itself cannot satisfy everyone’s taste. When considering the wider landscape of sales and marketing, public should not be swayed by the marketing strategies of the producers but should instead to make purchases based on each individual’s actual preferences. Companies, in turn, should turn away from hunger marketing, and come up with a more refined marketing strategy that better meets the needs of the public and maximize the firm’s profit, as well.